About Spin Master
Spin Master Corp. operates as a children’s entertainment company worldwide. The company creates, designs, manufactures, licenses and markets a portfolio of toys, games, products, digital toys, and entertainment franchises. The company develops and produces global entertainment properties, characters and content, and also monetizes that content through the creation and sale of products and licensing of content to third parties. Since the 2007 launch of the Bakugan television series, the company has produced eleven television series, comprising over 800 episodes. The company has various children’s series and short form content being aired on television and various digital platforms, including PAW Patrol, Rusty Rivets, Super Dinosaur, Hatchimals, Bakugan: Armored Alliance, Abby Hatcher, Dragamonz, Zo Zo Zombie and Toca Life. The company has strategically invested and focused in all areas of content consumption, which includes the mobile digital presence with Toca Boca and Sago Mini. The acquisition of Toca Boca and Sago Mini in 2016 provided the company with a strong brand presence in the digital mobile space and has allowed the company to develop a leadership position in the children’s mobile app and direct to-consumer space. The company sells its products in over 100 countries and has offices in many major markets, including the U.S., Canada, Mexico, the U.K., France, Germany, Slovakia, the Netherlands, Italy, India, Poland, Sweden, Russia, China, Hong Kong, Australia, Japan and Vietnam. The company is a valued partner for major toy retailers, inventors, entertainment companies and suppliers. The company’s international scale provides access to a large network of inventors, product developers and smaller regional toy companies. In addition to toy inventors and designers, this network includes major entertainment studios, local and international broadcasters, engineering companies with unique technical expertise, animation studios, writers, broadcasters, directors, game developers and other toy companies. The company markets a diversified range of children’s products, brands and entertainment properties that appeal to a variety of age groups. In 2019, the company’s product offering included over 9,700 unique stock keeping units across more than 130 product lines. As of December 31, 2019, the company had produced eleven television series, with multiple seasons comprising over 800 episodes. The company has various series being aired on television and digital platforms: PAW Patrol, Rusty Rivets, Super Dinosaur, Bakugan: Armored Alliance, and Abby Hatcher. Product Categories The company’s portfolio of toys, games, products and entertainment properties is managed in ten global business units and is reported under five product categories, such as Activities, Games & Puzzles and Plush; Remote Control and Interactive Characters; Boys Action and Construction; Pre-School and Girls; and Outdoor. Activities, Games & Puzzles and Plush Activities The company’s first product, the Earth Buddy, a nylon stocking-covered head of sawdust, topped with grass seeds, which grew to emulate hair, was launched in the Activities category and was later followed by, among others, such as Catch-a-Bubble, which allowed children to catch and stack bubbles; Aqua Doodle, a Pre-School mess-free drawing activity kit that enabled children to draw using water; Moon Sand, a mouldable compound that combined sand with a chemical compound making it less messy, and the related Kinetic Sand, a mouldable sand / polymer product which is designed to look and feel like sand but does not stain, dry out or stick to surfaces; Cool Baker, a baking product that does not require ovens or heating, and the related Sew Cool, a threadless technology that allows the sewing of fabric with the mere application of pressure; and Bunchems, a concept developed by Spin Master, which replicates the structure of natural burs, allowing the product to be joined together to create a near-infinite variety of shapes and designs. The Activity category offers a wide range of products that integrate fun, fashion, trends and popular culture, such as Kinetic Sand and Cool Maker, the line of innovate do it yourself sets, including TOTY-nominated GO GLAM Nail Stamper. Meccano, now Erector by Meccano in the U.S., empowers and inspires the next generation of budding builders and engineers. In addition, as of December 31, 2019, the company acquired the Orbeez brand, which further strengthens the Activities category. In 2019, under the Cool Maker brand, after a successful 2018 introduction, evolved the Kumi Kreator with the launch of the 2 in 1 Kumi Kreator, which can braid bracelets and necklaces. Also, under Cool Maker the Go Glam Nail Stamper, a way to stamp and style your nails launched. The Kinetic Sand brand continued to expand with the addition of the Sandisfying Set, which allows children to showcase their creations. Etch A Sketch launched an updated trace feature to the Etch A Sketch Freestyle. Bunchems introduced Bendy Bunchems, which provides a flexible wire to bend and shape creations. Games & Puzzles The Games & Puzzles category targets gamers of all ages, from children to families and adults. The portfolio includes a wide-ranging library of owned and licensed titles, adult and children’s puzzles and classic games (i.e. chess and dominos), which have generally longer life cycles and stable, recurring revenues. The company entered this category in 2010, when it acquired a portfolio of games from an Australian company, Imagination Games. The acquisition provided a platform for expansion and was later followed by the acquisitions / licenses of, among others: Hedbanz, LOGO, Boom Boom Balloon, Cardinal and Editrice Giochi SRL. The company has a wide-ranging library of company-owned game titles, as well as Cardinal’s product lines, such as adult and children’s puzzles, classic games (e.g. chess and dominos), giant sized games and licensed titles (e.g. Uno and Othello). The company’s portfolio of games and puzzles consisted of over 500 titles and the company continues to introduce new game designs and concepts. The company expanded its games portfolio in 2017 with the acquisition of certain assets of Marbles, which consist of brain-building game titles, as well as the acquisition of Perplexus, a 3-D puzzle maze that the company has been distributing since 2013. In 2019, Games and Puzzles carried forward titles, including Soggy Doggy, Hedbanz, Otrio and Perplexus. The company expanded Hedbanz with the addition of a new junior version and acquired the international Hedbanz IP and launched a new Hedbanz App. The Perplexus brand launched Perplexus Light Speed, an electronic version, and Perplexus Minis. In 2019 with newly acquired licenses, the company expanded its line-up of games as it entered into a license agreement to distribute a line of millennial-focused games from Big Potato. In addition, the company launched games developed for the slate of children’s movie released in 2019, including Frozen 2, Toy Story 4 and the Lion King. The company will continue to launch new games and puzzles supported by strong license franchises, as well as focusing on the global expansion of its classic games portfolio and growing adult games business. Plush The Plush category represents a consistent revenue generator that uses licensed movies, video games and television images or characters in its product lines. In 2003, the company collaborated with an Australian company to bring the Flip Open Sofa to North America, a snug child-sized foam loveseat that converted into a mattress. Following this success, the company established a furniture division under the Marshmallow brand. Marshmallow is a leader in the children’s furniture market and holds licenses from various major entertainment companies to decorate its products with recognizable characters. In 2018, the company acquired certain assets relating to the Gund line of business, a manufacturer and distributor of plush toys and is best known for its line of teddy bears. In 2019, the company entered into licensing agreements with brands, including Line Friends and Hilda, an animated adventure Netflix series. The company also is license partners for Sesame Street and Pusheen. Remote Control and Interactive Characters Remote Control The Remote Control category includes a wide range of land vehicles and flying toys. The company is constantly innovating and developing original products to preserve its market position in this category, including stunt planes, altitude sensing hovercraft, shielded helicopters, land to air vehicles, cars that can drive up walls and a stunt quad-copter. In 2019, Air Hogs launched the Upriser, a motorcycle which performs wheelies on the ground and in the air, which is licensed as the Ducati Panigale V4 Superbike. In addition, Owleez, the company’s first interactive flying toy pet launched, and is the only interactive pet that can be nurtured and taught to fly using programming and sensors to create a flight experience without any controller. Interactive Characters The company developed the Zoomer brand of interactive characters in 2013 and was a natural fit with the company’s focus on innovation and the application of advanced technologies and robotics. The company launched Hatchimals in 2016. The Hatchimals brand continues to be a play pattern that the company will continue to innovate and support the brand. In 2019, the company launched Juno My Baby Elephant, who has moving ears and a full-motion trunk that can pick up her accessories. In 2019, the company launched Hatchimals CollEGGtibles mini figures with several new themes and segments, including the new Mermals and a line of micro plush with bonus access to the new Hatchtopia world-builder app. Boys Action and Construction Boys Action The company provides Flick Trix, a line of 2.5 inches die-cast replica BMX finger bikes that are decorated with brands licensed from major participants in the BMX sport. The company followed the success of Flick Trix with, among others: Mighty Beanz, a new approach to the Mexican Jumping Bean product that was modernized as one-inch plastic capsules inscribed with decals; Tech Deck, a line of miniature skateboard replicas called fingerboards, complete with moving wheels and actual board graphics; and the company’s greatest success to date in this category Bakugan, a collectible toy composed of a small ball that morphs into a character by way of magnetic trigger when rolled over a metal playing card. In collaboration with Sega and Nelvana, the company also produced 186 episodes of the popular Bakugan: Battle Brawlerstelevision show that aired globally between 2007 and 2010. In December 2018, the Bakugan property relaunched with the anime adventure series ‘Bakugan: Battle Planet’ in North America and was followed by the global launch through 2019. The Bakugan relaunch, included an all-new television show, short-form content, with a multichannel content approach, encompassing television, SVOD, and YouTube; and a series of Core and Ultra Bakugan balls. Bakugan is a fusion between action figures, transformation, gameplay, and collectability. In 2019, the company added two new licensed entertainment properties to the growing global Boys Action portfolio: Monster Jam, which includes die-cast vehicles and RC/Motorized vehicles; and ‘How To Train Your Dragon 3’, which toy line features new characters, deep collectability and innovative technologies. Construction The company entered the Construction category through the 2013 acquisition of Meccano (known as Erector in the U.S.). The company’s strategy for Meccano was to acquire the established platform and then revitalize the brand as the company saw potential to leverage its expertise in advanced technology and robotics to add ‘electronics’ and ‘software’ to the firmly established ‘mechanical’ engineering play experience to create a new segment of construction. This shift was intended to elevate Meccano to a new level of interactive learning based play, creating a springboard for the next generation of high-tech innovators with technical, robotic products that fit within the science, technology, engineering and mathematics curriculums being introduced in schools around the world. The resulting line of robotic products, called Meccano Tech, is a unique fusion of mechanical, electronic and software engineering. The first product launched under the Meccano Tech product line, the Meccanoid, launched in the fall of 2015. The Meccanoid is a programmable four-foot tall robot made from Meccano parts that can be programmed either using a tablet or smartphone to trace intended movement or with a mimicking feature that allows the user to record their own voice, move Meccanoid’s limbs and create a unique playback routine. The Meccanoid has the flexibility to use servos, construction parts and open source programming, and the ability to build a near-limitless number of other robotic shapes. The open source software allows users to play with the code as is or program new code. In 2019, the company added to the Meccano/Erector line, with new open-play sets branded as ‘Inventor Sets’, which allows children to use their imagination to build multiple items rather than creating one specific design. Pre-School and Girls Pre-School The Pre-School category develops toys and children’s entertainment for children aged 2 to 5 and is driven primarily by entertainment on both linear and digital platforms. The company develops entertainment programming and toy lines in unison with a strategy to maximize integration and distribution on a global basis. The company will continue to leverage successful entertainment properties with toys and licensing opportunities, driving licensing and merchandise revenue. The company has been focused on the creation of company-owned entertainment properties, characters and content in the Pre-School category, and in collaboration with Nickelodeon, the company developed and launched the PAW Patrol animated television show in 2013. PAW Patrol has been broadcast in over 160 countries and territories, airing over 60 times a week on Nickelodeon and Nick Jr. Season 6 of PAW Patrol is airing and the company has already delivered episodes from season 7 to Nickelodeon. In 2014, the company launched an initial set of products leveraging the characters and content from the popular show and experienced very positive consumer response. Additional PAW Patrol products were launched in North America and international markets in 2015 and 2016 and continue to sell well in the geographic markets in which the series airs. The company and Nickelodeon control the licensing of the PAW Patrol IP for use in non-toy categories and share the royalties. The company announced a feature length animated film PAW Patrol: The Movie is set to be released in theatres in August 2021. The pre-school show Rusty Rivets, targeted at boys and girls aged 2 to 5, follows Rusty and Ruby, a pair of 21st century children, who save the day by relying on imagination and resourcefulness to turn spare parts and found objects into wild, cool contraptions, launched on Nickelodeon and Nick Jr. in 2016 with the full Rusty Rivets product launch in 2018. In 2019, the company premiered the new original animated pre-school series, Abby Hatcher internationally on multiple channels. Girls The Girls category is targeted at girls aged 5 to 9. The company’s strategy focuses on internally created IP tapping into the play patterns and trends that girls love. The company had early success with the Bella Dancerella home ballet studio, which it followed with, among others: the Liv line of teenage fashion dolls; Zoobles, a Girls version of its popular Bakugan brand; La Dee Da, a line delivering a unique combination of fashions, accessories and activity booklets complete with the doll’s backstory (which was also extended into the digital space with interactive content); Flutterbye Flying Fairy, a unique doll with wings that can hover or ‘fly’ over a child’s outstretched hand. In 2019, the company continued to grow and refresh Twisty Petz, which was launched in 2018 and is a full line of cute collectibles that transform pretty pets into bracelets. In addition, in 2019, the company launched Candy Locks in the small doll/playset category. Each Candy Locks doll features characters with hair that is super soft, long, scented and easy to style allowing unique hairstyles to be created. The brand was supported with short form, animated content to immerse girls in the world of Candy Locks. Outdoor The Outdoor category primarily consists of four core pillars: Swimways, Aerobie (Aerobie Inc.), Coop and Kelsyus businesses, offering a diverse portfolio of innovative toys, floats and sporting goods for the backyard, pool and beach. The company created the Outdoor category in 2016 following the acquisition of Swimways, a leader in the Water/Sand Toys & Accessories, which is part of the Outdoor and Sports Toy category. In 2017, the company acquired certain assets of Aerobie, a major producer of outdoor flying disks and sports toys. The company’s Outdoor growth strategy is to leverage the global R&D network, introduce product innovation, build out adjacent product categories and increase the company’s global penetration with its brands by tapping into its well-established international sales, marketing and distribution pipeline, making the Swimways, Kelsyus, Aerobie and Coop brands available globally. Swimways products are offered under the brands Swimways, Kelsyus and Coop and include the popular, patented Spring Float line of products, complemented by pool category licenses from a number of popular entertainment franchises. The Aerobie portfolio includes the Pro Ring, Superdisc and Sprint Ring flying discs, as well as the Orbiter Boomerang, a high performance boomerang. In 2019, the company ran a national marketing campaign in support of the patented Spring Float product line. Spring Float launched Aqualinx, a new seated pool float designed to connect multiple floats together and a new Infant Spring Float designed to allow babies to float safely in a pool. The company also expanded its licensed swim and pool items and expanding into international markets. For the Aerobie line of outdoor products, the company will focus on new branding, increasing global distribution and gaining promotional placement. Growth Strategies The company’s principal strategies are to innovate using the company’s global internal and external R&D network (continue to invest in advanced technology and robotics; strategically acquire entertainment licenses to build out product pipeline; and cross platform exploitation of toys and mobile gaming); increase sales in international developing and emerging markets; develop evergreen global entertainment and digital toy franchises; and leverage global platform through strategic acquisitions. Customers The company has long-standing relationships with its customers, which include mass and discount retailers, specialty toy and game retailers, hobby shops, department stores, drug stores, online e-retailers and distributors in select international markets. The company primarily distributes its products in the U.S. through mass and discount retailers. Distribution Channels and Sales and Marketing The company utilizes all channels of distribution, however, the sale and distribution of its products can be generally categorized as follows: Retailers: Retailers sell the company’s products to consumers through their traditional ‘physical store’ locations or through their online platforms. The company services retailers in North America directly through its sales and marketing offices in Toronto, Los Angeles, San Francisco, New York and Bentonville. Retailers in North America also purchase product directly from the company’s wholly-owned subsidiary in Hong Kong. Outside of North America, the company has wholly-owned subsidiaries in various major territories represented by local offices that carry on sales and marketing efforts for the company directly with retailers in their respective markets. The company’s international sales and marketing offices are located in London, Paris, Amsterdam, Munich, Milan, Mexico City, Moscow, Warsaw, Sydney and Hong Kong. Distributors: The company enters into distribution arrangements with third-party distributors, who purchase the company’s products for sale to retailers in that country. Consumers: In North America, the company distributes certain products directly to consumers, typically in the Activities, Games & Puzzles and Plush business segment, primarily through a direct to consumer ecommerce site and through television direct response. Seasonality The majority of the company’s sales in 2019 were made in the third and fourth quarters (year ended December 2019). In the company’s experience, the first quarter is the period of lowest shipments and revenues in the toy industry and therefore, the least profitable because of certain fixed costs. Intellectual Property As of December 31, 2019, the company on a global basis had approximately 375 registered and pending design patents; approximately 540 registered and pending utility patents; approximately 3,700 trademarks (which are either registered or pending) and approximately 650 copyright registrations; and approximately 4,350 Gund copyright registration files. History Spin Master Corp. was founded in 1994 by two childhood friends, Ronnen Harary and Anton Rabie.
