December 10, 2008
Barbie Wins Bratz Catfight
By Tom Ryan
In a hotly-contested
copyright infringement case, a federal judge last week handed the rights
to the Bratz dolls franchise to Mattell Inc., the creator of rival Barbie. The widely-popular Bratz line,
which debuted in 2001, is slated for recall and possible destruction in
February unless the Bratz’s owner, MGA Entertainment, wins an appeal or gains
a compromise with Mattell.
The ruling came several
months after a federal jury found that the creator of the Bratz doll came up with the design while working for Mattel
under an exclusivity contract, and surreptitiously took the concept to
MGA.
The success of Bratz has
come partly because some see the fashion doll as a hipper, sassier
and urban answer to Barbie. They’re often described as "fashionistas." Known
for hip-hugging outfits and bare midriffs, they have also drawn controversy
for being too sexualized for girls.
Mattell can
either discontinue the Bratz line, market the
dolls itself or reach an agreement that would allow MGA to continue producing
the dolls under a license from Mattel.
The Wall Street Journal notes
that while Mattel-made Bratz dolls could prove lucrative for the company, they carry
the risk of cannibalizing Barbie sales and even undermining Barbie’s
"good girl" image. Still, the newspaper notes that Mattel already
shares shelf space with products it licenses from other companies, including
Walt Disney Co. And while Bratz sales have been
declining recently, the dolls will produce an estimated $300 million in revenue
this year.
A joint venture between
Mattel and MGA is "probably unlikely" because of bad blood between
the two companies, including the hiring by Mattell of
private investigators to spy on top-level executives at MGA during the
dispute, according to the Journal.
However, Sean McGowan,
an analyst at Needham & Co., told the Los Angeles Times that
its time for the two sides to talk or the Bratz brand will quickly be worthless. Stores will likely
quickly stop buying Bratz rather than deal with
a February recall.
"It’s still a valuable
brand, it’s still very profitable," he said.
As for the bad blood
between the two companies, Mr. McGowan said, "Get over it."
Discussion Question:
What should Mattell do with the Bratz brand?
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I would equate this to the original OJ verdict of the retail world. Having worked in the toy industry some years ago, I can tell you how valuable the Bratz brand is to retailers. Mattel would be doing everyone a favor by keeping this brand alive and they would also be smart to let MGA continue production.
Business is business and this is a good business. Bratz and Barbie have different positionings on the shelf with many different categories within those brands. While they do share shelf space, the competitive factor is actually minimal. If you look at the products closely, it is apparent they are two entirely different products.
The next step for Mattel and MGA is for them to ‘get over it’. Don’t take this as an endorsement for Bratz. I’m not looking forward to the day when my girls ask for these questionable toys. From a business perspective, the bottom line is that Bratz does turn and there is excellent opportunity in growing the basket with this brand.
The judge did the right thing and I realize that Bratz is profitable, but as a mom of a young girl, I detest the brand. It promotes the polar opposite of what we want our little girls to grow up to aspire to be. Not that Barbie is the ideal, but we hardly want to create a slew of Brittany Spears wannabe’s. If I were Mattel, I’d embrace that there is indeed a market for a hipper doll brand–but create a more “evolved” line that appeals to this market (and their mothers!)
From a product development standpoint, ideas and concepts get shot down all of the time. The person responsible for creating the Bratz concept probably was shot down by Mattel, so they took their idea to MGM where it was appreciated and developed. The Bratz brand has been successful and now Mattel is mad. It is the nature of the business, and Mattel should be kicking themselves for not accepting the concept in the first place rather that suing MGM.
If Mattel and MGA cannot come to some sort of mutually enforceable agreement, the brand may wither as retailers become reluctant to restock inventories. That having been said, there are a number of other considerations:
How fast could Mattel manufacture a new Bratz line? And how much inventory does MGA have in stock and on boats? Could a co-production or producer-supplier arrangement be worked out in the short-term? Does Mattel want to make Barbie edgier and what impact would this have on the Bratz brand?
The answers to these questions may determine whether Mattel and MGA work together to keep the brand alive.
Mattel should continue the line and work a licensing deal with MGA Entertainment while maintaining creative control over the brand.
Bratz dolls definitely took some market share from Barbie but probably helped to maintain what is arguably a declining category. Eliminating Bratz dolls from the shelves of retailers will NOT mean an automatic increase in SKUs devoted to Barbie as the customer is not identical.
Mattel has the opportunity to gain back some of the revenue it lost to MGA as well as to help shore up its shelf space turf at retail.
Licensing income is often 90% profit with no capital investment, so Mattel would do well to make a deal. If Mattel kills Bratz, something similar will come along to cannibalize Barbie, regardless. What other Mattel employees are being ignored today, and what is the value of those ideas? Bratz can’t be the only ignored good idea.