Hasbro's CEO lets AI Peppa Pig help design toys

Hasbro might be a toy company, but CEO Chris Cocks has spent the last several years pushing it more and more into the digital media, gaming, and collectibles space. That makes sense, since adults have money and kids don't. All those IP and licensing deals are working out for Hasbro so far. But Hasbro is also facing a lot of risk from instability: in trade and tariffs, in politics and culture, and in the video game market, which seems to be in a more or less permanent state of crisis. Read the full interview transcript on The Verge. Links: Chris Cocks on Decoder (2023) | The Verge Hasbro just made a massive ‘Harry Potter’ Announcement | Parade Businesses push for tariff refunds as Trump aides hint at fight | New York Times We’re finally seeing more of Hasbro’s forgotten space game | PC Gamer Xbox in is danger. Will Microsoft save it, or kill it? | Decoder OpenAI’s billion-dollar deal puts Mickey Mouse in Sora | The Verge A comprehensive timeline of JK Rowling’s descent into transphobia | Them Subscribe to The Verge to access the ad-free version of Decoder! Credits: Decoder is a production of The Verge and part of the Vox Media Podcast Network. Decoder is produced by Kate Cox and Nick Statt and edited by Ursa Wright. Our editorial director is Kevin McShane. The Decoder music is by Breakmaster Cylinder. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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• 1:34Speaker 03

  Hello and welcome to Decoder. I'm Neelai Patel, editor in chief of The Verge, and Decoder is my show about big ideas and other problems. Today, I'm talking with Chris Cox, the CEO of Hasbro. You know Hasbro, the toys and games company that makes some of the most iconic products in the world, from Transformers and My Little Pony to Monopoly and Magic the Gathering, and of course Dungeons and Dragons. Chris was last on Decoder three years ago. He was a newer CEO then, just a year into the role. And we spent quite a bit of time talking about his plan to collect more data, spin off parts of Hasbro, and really think about the future of collectibles, which at that time meant NFTs. Look, a lot's happened in three years. NFTs just weren't one of them. You'll hear Chris laugh about how wrong he was throughout this conversation. You know what did happen, though?

• 2:19Speaker 03

  Well, a global supply chain and manufacturing nightmare precipitated by tariffs, the AI explosion, and of course, the endless chaos of the video game industry. And then there's the relentless continuation of a trend that defines the modern toy industry: more and more toys and games being made for adults, who have a bunch of money, instead of kids, who don't. Chris and I talked about that quite a bit, and I think his point of view here is at once totally logical and also completely surprising. Chris and I also talked a lot about Hasbro investing so heavily into video games in a time of relative uncertainty in the industry. For example, you'll hear Chris mention several times how important Monopoly Go, the mobile game, is for Hasbro. And while Magic the Gathering and Dungeons and Dragons are already huge brands,

• 3:03Speaker 03

  Hasbro is trying to expand with original video games, like Exodus, which is slated to be released next year. That's another huge set of challenges in an era where video game studios are shutting down more or less weekly, and the distribution market is controlled by a small handful of players, like Sony, Microsoft, and Steam. And being a company that's so reliant on big IP with big fandoms, well, that puts Hasbro right at the center of a bunch of thorny cultural issues as well. Because fans have really strong feelings about the stories they love and the creators they maybe don't love so much. For example, Hasbro just signed a big deal to distribute Harry Potter merchandise for the next several years. So Chris and I spent some time talking about whether the Harry Potter fandom is growing, whether it can grow as fast as he wants it to in the face of J.K. Rowling's politics.

• 3:47Speaker 03

  You can tell, there's a lot going on in this one. Toys are a complicated business. I think you're really gonna like it. A quick reminder before we start: you can listen to this episode, or any episode of Decoder, completely ad-free by subscribing to The Verge. Just go to theverge.com/subscribe. Okay, Chris Cox, CEO of Hasbro. Here we go.

• 4:16Speaker 03

  Chris Cox, you are the CEO of Hasbro. Welcome back to Decoder.

• 4:19Speaker 04

  July, thanks for having me.

• 4:20Speaker 03

  I'm excited to talk to you. It's been about three years since our last conversation. I was looking at that episode. Boy, we talked about NFTs a lot three years ago.

• 4:30Speaker 04

  If we talked about it at all, we talked about it too much.

• 4:33Speaker 03

  Well, yeah, it was interesting what you were worried about then. You had just changed the license terms for Magic the Gathering. You were chasing Creative Commons and you're trying to protect against NFTs. And that feels like it all essentially came to nothing. Would you say it came to nothing?

• 4:47Speaker 04

  Yeah, yeah, I'd say largely that form of the technology came to nothing. Collectibles have taken off. I'm sure there's going to be a digital collectible. I'm just not quite sure we found the right version of it yet.

• 4:59Speaker 03

  I get that feeling and I also just feel like we now know crypto is mostly for crimes. Like that has become... It's like amazing how even like in the crypto industry, it's like, yeah, we're mostly for crimes. Like it's digital gold and crimes and that's what we do here.

• 5:13Speaker 04

  The Attorney General of Washington State, like seven, eight years ago, successfully blocked me from ever investing in crypto and I never picked it up. So there you go. Me and everyone in Washington and everyone in Hawaii basically didn't pick up the habit.

• 5:28Speaker 03

  There you go. So that was one aspect of our previous conversation. I think we can set that aside. I think we've dispatched with that. The other thing that was really interesting about that conversation is you were just one year into the job, just about one year, and you were in the middle of reorganization of the company and you were about to sell E1, which you have now done. You talked a lot. We talked. It was actually one of my favorite episodes of the time because you talked a lot about reorganizing, restructuring a 100-year-old company. Since then, you've completed that restructure. I want to talk to you about how that's going and if there's any more changes to come. You've also moved the company from Rhode Island to Boston. I'm curious about that decision. Let's just start at a very high level. You're not the new CEO anymore. You're just the CEO. What is Hasbro to you today?

• 6:08Speaker 04

  I think it's same as what it was three years ago and... What it's always been when it's at its best, it's a company about play. I think probably the biggest thing we've articulated in the three years since you and I talked is this concept of what our superpower is. And it's kind of borrowing from one of my favorite business authors, Jim Collins. He talks about the hedgehog concept and it's what's the thing that you are best in the world at or could be best in the world at. And I think Hasbro's superpower, what we're best in the world at is inspiring a lifetime of play. We do it across more categories and more brands and more things than just about any company in the world.

• 6:52Speaker 04

  And what we're super good at is, you know, building a relationship anchored in play and pretend and imagination with two, three, four year olds, up to teenagers, and then kind of never letting go. We just keep giving them something that they want to collect, that they want to game with their friends, that they want to play with for an entire lifetime. I'm kind of customer one on that superpower. I've been playing with our stuff since I was two years old and I continue to play with it today.

• 7:22Speaker 03

  Can I ask you about that trend in particular? I think it's obvious to people who pay attention to toys. It's maybe less obvious from the outside, but the idea that toys are now a thing that adults buy and collect and play with, and adults have a lot of money, so the toys can get more expensive. That's pretty new in this industry. It's not so new that it's like a surprise, but it's new in terms of how a company like Hasbro would conceive of itself. What's the balance there? Cause I think there's a lot of criticism that while making this stuff for adults is really lucrative and you might lose sight on the kids who are the, you know, the primary audience with toys.

• 7:57Speaker 04

  I think kids are always the first handshake audience, the, you know, the people that you want to build a relationship with as young as possible and kind of grow with them. But I think, you know, just looking at like the basics and the fundamentals of the addressable market, there's less kids today being born today than there was 10, 20 years ago, and there's more substitutions than ever. So you've got a smaller base of children, especially in Western markets that we tend to distribute in, like the US, Europe, a lot of Asian countries. And those kids start to shift decisively into video games and mobile

• 8:38Speaker 04

  phones and digital experiences at younger and younger ages. So as an industry, you can either say, okay, I'm going to accept that my traditional market is declining, or you can say, okay, what else could I do? And I think adults are kind of the natural space. And it's not artificial. I think going back to, you know, baby boomers, but certainly Gen X, millennials, Gen Z, we like to collect stuff. We like to play. It's how we socialize. You know, when you talk to a group of millennials, or you talk to a group of Gen Z'ers, you know, if you ask them, name your top 10 kind of brands, especially entertainment brands, you know, fully five or six of them, the majority of them are going to be either from video games or games in general. So it makes sense that we would

• 9:23Speaker 04

  want to cater to that audience. I think it's lucky for us and fortunate for us that a 26 year old has more spending power than a six year old. And, you know, they tend to want more sophisticated playthings and collectibles. And so, you know, if you're a company that has the expertise in that and has the brands for that, like a Hasbro, I think it's pretty good for you.

• 9:44Speaker 03

  I'm curious about that shift broadly. One, I think just the demographics you outlined are are true. And it's really interesting, you know, I have a seven month old. And it's just interesting to see what toy brands exist now that didn't exist for our seven year old, right? So even in that space of time, just seven years, you see some brands have just left this market behind, and there's some new brands that exist now. And then, you know, there's things like Cocomelon, which when my seven year old's baby was pretty nascent, and is now just this juggernaut. And I'm curious if you see the dynamics there changing. You talked about digital experiences. Do you see more, like a Hasbro classically, when I was a kid in the 80s, it would advertise toys during Saturday morning cartoons. And this is where you would like find the customer.

• 10:27Speaker 03

  And now it's like a bunch of weird YouTube slob. Do you, is that like, you know what I mean? Like, is that the space where the new toy brands are going to come from? And you're just not willing to play there quite as much? Or is the dynamic of the industry changing more aggressively than that?

• 10:41Speaker 04

  Well, I think there's a bunch of things happening in kind of the traditional toy space. It's never been easier to become a toy company. There's a city in China, just a couple of hours drive north of Shanghai, or sorry, of Hong Kong called Shantao. You can go there and walk through 10 Costco's worth of a showroom of toys that, you know, a thousand different manufacturers are coming with you. And you have, you know, if you have a decent sized checkbook, you can go and go and walk through and say, I'm going to pick that one and that one and that one and buy a bunch of toys. And suddenly you are a toy OEM. And then you have a massive amount of distribution options ahead of you, especially with the rise of e-commerce. But on the flip side, it's never been harder to be a traditional toy company.

• 11:26Speaker 04

  There's more competition than ever. Like we talked about before, there's more substitution, especially from digital than ever. And you've got a narrowing set of customers to be able to appeal to. The great thing about that is there's going to be more choice for a kid. And there's going to be a higher cycle time. Uh, the bad thing from a business perspective is it's really hard to establish a mode. The kids cycle through and they learn about things in unpredictable ways. A lot of kids are exposed to social media, even though they're not supposed to do it earlier and earlier ages. They watch YouTube, uh, they watch all these kinds of influencers. Um, and the whole notion of like Saturday morning cartoons,

• 12:07Speaker 04

  or even just watching cartoons after school on a linear network has totally flipped upside down. You know, I think as a toy company, you have a choice. You can either kind of double down on that market and try finding, you know, these big entertainment moments that really punch through. Or, uh, you can try finding kind of like a different market to be able to appeal to and build like a more durable mode in those spaces. And I'd say we have been doing both. We certainly license with a bunch of huge kind of mega brands. You know, we just announced Harry Potter. We do K-pop Demon Hunters. We announced Voltron and Street Fighter. You know, the Walt Disney Company, we've been in business with since 1954 with Marvel and Star Wars.

• 12:51Speaker 04

  So we do a lot that appeals to kids. And then we have some of our own house brands like My Little Pony and Peppa Pig and Transformers. But increasingly, I think we're choosing to, you know, invest our capital and some of our best talent in kind of that older audience. Where you can build a play system, where you can establish more kind of strategic brand modes and distribution modes. And the comp, and it's a little harder for new competitors to edge in. And the brand loyalty tends to last a bit longer than the attention span of a typical four-year-old.

• 13:23Speaker 03

  Can I ask you about K-pop Demon Hunters for a variety of reasons? One, I'm personally curious. Two, my daughter will kill me if I don't ask you about K-pop Demon Hunters. It's the IP that runs our house. Is it true that K-pop Demon Hunters was a surprise to the industry? And you weren't ready for Christmas this year?

• 13:37Speaker 04

  Oh, yeah. Netflix, Netflix, to their credit, shopped that around quite a bit and no one bet. And I remember it was the weekend it came out. And, you know, I'm an old business person, so I was like flipping through LinkedIn. And someone was posting about K-pop Demon Hunters. It's like not only my daughter's favorite show, but it's my favorite, my favorite new movie of the year. And I was like, K-pop Demon Hunters, that sounds like a cool title. So I picked it up on my Netflix queue and started watching it. And a half hour in, I, I texted our head of toys, Tim Kilpin, and I was, I won't include the explicative. I included in the, in the text message, but I was like, what the heck? Like, why didn't we pick this up? Who has this? And he's like, no one has it.

• 14:21Speaker 04

  And we called Netflix, I think on Sunday night and said, hey, we want in. Then on Monday and Tuesday, every other toy company on the planet did the same.

• 14:32Speaker 04

  But yeah, yeah, the the industry was surprised by it.

• 14:35Speaker 03

  Take me inside that negotiation, right? You you saw it. Nobody wanted it. Suddenly it's super hot. You obviously understood watching it with a little bit of LinkedIn validation.

• 14:43Speaker 04

  Yeah.

• 14:43Speaker 03

  Importantly, that it was going to be the hottest thing. What's that negotiation with Netflix like?

• 14:48Speaker 04

  Well, I mean, you know, by that time Netflix knows they have a, I think they have a pretty sophisticated piece of data that says everyone's watching this and it's the number one movie on the planet, basically. And not only are people watching it, like people are rewatching it and the songs are starting to chart on Spotify. So like, we basically come in and be like, okay, hey, we give them our pitch and we're like, hey, we think this isn't a typical children's movie. We think this is multi-generational. We specialize in products that appeal to all ages. We have multiple categories that we can execute that in. And, you know, I think, I think within two weeks of us having

• 15:33Speaker 04

  that initial conversation with them, which probably happened on like a Monday or the Tuesday, we were in pitching them, showing them full-featured products. Two years ago, that would have been impossible. But now, you know, with the advent of AI-enabled design tools, we can go in and do what used to take us two or three months in basically two or three weeks, sometimes two or three days, and come in with very high-fidelity pitches and very high-fidelity product lines. And not only just show it digitally, but when you couple that with like 4K level of 3D printing with full color, we can actually come in with models. That used to take us like six to eight

• 16:15Speaker 04

  weeks because you'd have to go to Hong Kong or Shenzhen and be able to source it from there. And so we had really good conversations with them. The rest of the industry also wanted to pitch them. They maybe took a little more time than us, but eventually it kind of materialized that Mattel and Hasbro and Lego kind of came out on top and we kind of split the license.

• 16:37Speaker 03

  When you say you used AI tools to make fully featured models to show them, how does that process work now? Is it your designers went away and came back with ideas? Was it, did you personally prompt ChatGPT to make you roomy toys?

• 16:50Speaker 04

  I don't, I don't do that for our products, but I do that all the time for kind of like just personal passion projects. And Dungeons and Dragons is kind of my jam and I DM like probably three or four groups. And there is so much AI based animation and images and text and and sound effects and voice cloning on my PC, it would, it would floor you. But like, you know, basically our design teams are all enabled with like a suite of the latest tools from basically every major company. And then we've trained a bunch of models ourselves with our IP. And so from doing that, we can have pretty sophisticated renderings pretty fast of products and ideas.

• 17:36Speaker 04

  And, you know, when we have a little bit more time, we actually can even program in a character and the character from the IP can actually be a co-designer with us and help us with ideas and help us with like, that's authentic, that's not authentic. And that's actually been pretty wonderful in how we've been creating things.

• 17:56Speaker 03

  Wait, so you, you code in like the personality of a character from working franchises?

• 18:01Speaker 04

  So, you know, like we can, we have a Peppa Pig, co-designs Peppa Pig products with us. Optimus Prime co-designs Transformers products with us.

• 18:10Speaker 04

  Optimus Prime and Megatron are two of the DJs that we have on the, on our main hall of our office building. Kind of where people can ask them to play songs and, you know, Optimus is always very serious and tells you the soulful reason about the song and Megatron basically makes fun of you for not picking Thrasher Rock. And it's just a fun way to kind of bring the creative process to life. And, you know, at the end of the day, at the end of the day, it's really kind of, it's a bit garbage in, garbage out. It's really a human that's kind of making the decisions and a human that's inspiring, like the good ideas. And a human that's selecting them and then taking them to the next level.

• 18:48Speaker 04

  But man, like the amount of content we can create and the amount and the speed in which we can create it. It just it just transforms how good we are at being able to bring an idea to life and pitch things.

• 19:05Speaker 03

  That back and forth between the taste of your designers and the people who manage your brands and the ability to generate slop at massive amounts of scale. That it feels like the tension for every entertainment company right now. I'm wondering how you see it. I know I know Hasbro has talked about you've talked on earnings calls about how you're past experimenting with AI, right? It just integrated in your workflows and people can use it however they want. So the company with that tension between slop and quality, slop and productivity, it's not going away in this industry. It feels like it's only rising. How are you thinking about it?

• 19:37Speaker 04

  Thinking about it a lot and in a lot of different ways just to be at the 50,000 foot level. You know, at the concepting phase, I suppose it depends on the context, you know, from a creative context, you know, I think you have to think about it very carefully. There are some brands that the audience, the creators just don't want it. So we don't even have it in our pipelines for our video games or for Magic the Gathering or D and D. For things like toys where we're basing it on kind of existing IP or like a long legacy of ideas, we are able to use it and use it pretty effectively. And in that concept phase, especially when you're kind of like figuring out different

• 20:19Speaker 04

  ideas for toys and clever kind of derivatives of play patterns, it's pretty magical. You know, you might generate a thousand ideas and, you know, 999 of them aren't that good, but one of them might be magical and it's basically free to be able to create it. And what we find is is that it's a lot more than 999 out of 1,000 are pretty good, especially when you pair it with a really good set of designers and a good team that's kind of brainstorming with the system. And then once you get to a decent idea, to decent fidelity or a couple of different ideas, you can kind of take them. And use the AI to simulate focus groups and simulate kind of playtest labs and then do

• 21:01Speaker 04

  that along with real humans doing playtest labs as well and get a better idea and a second opinion on how good the ideas are. And basically, it just kind of turbocharges this whole process where, you know, in the past, maybe we could take one or two things to kind of that full prototype phase. Now we can take 10 or 20 things to that full prototype phase. And I just think we have a richer selection and better idea about what ultimately the audience wants at the end. And then, you know, I think from a just basic productivity perspective, we're deploying it across the company. We've employed it as a general productivity tool for everyone in the company. And I think, you know, we're

• 21:41Speaker 04

  seeing people are using that probably on average 20, 30, maybe 40 times a week. It's helping to save time and crafting emails and in doing action steps from meetings and just kind of with idea generation and researching. It's probably saving the average person in the company maybe an hour or two from a productivity perspective. And then in pockets, we're able to like employ it on a much deeper basis as basic agents. And, you know, probably one example, it's probably the most, the farthest along is we process a huge number of like purchase orders every year to buy toys from mom and pop toy stores to huge

• 22:25Speaker 04

  mega giants like Walmart or Target. And our IT systems just traditionally haven't been super effective at being able to standardize those orders. We're able to use AI agents to basically take hundreds of thousands of man hours out of the system where we don't have to touch orders. They can be standardized processed in our system and it nets out in a material savings for us. A lot of that work was outsourced already. So that's not necessarily saving our employees a lot of time, but it is kind of saving the bottom line a bit of time. So, you know, when we did You know, a couple of different gut checks on what we think the impact of AI was going to be this year.

• 23:06Speaker 04

  You know, we saw it in the neighborhood of a million to a million plus man hours of savings that we can redeploy.

• 23:14Speaker 04

  And, you know, a lot of that work wasn't the fun work, like no one likes to write the action steps from a meeting. No one likes to kind of touch an order from a toy store in Peoria. And instead, we can kind of invest it back into, I think, what ultimately counts, which is delivering for our customers and kind of dreaming up new ideas and new ways to play.

• 23:34Speaker 03

  I hear a lot from creatives who listen to the show, who read The Verge and other ways. And, you know, the fear in the audience is that being a creative has been a pretty hallowed, a pretty special role, especially at a company like Hasbro. And AI makes everyone feel like they can have taste, right? You can prompt Gemini and you can, you can just get a nano banana image of whatever. And you're like, now I'm creative too. And the audience can participate in that with your brands and your IP as well. And there's something there that has a lot of people very skittish. You can see it actually in games. You mentioned gamers don't want AI anywhere near their games, like even the audience in some categories really doesn't want this to happen. How are you managing that inside a company like Hasbro?

• 24:15Speaker 03

  How are you keeping your designers and your creatives protected or empowered instead of fearful?

• 24:21Speaker 04

  Well, it's really giving them the tools and putting them on the vanguard of it. And, you know, if, if Joe or Sally Sixpack feels like they're suddenly like an avant garde creative with these powerful tools. Take a legitimate avant garde creative and give them these tools and they just level it up way more. And I think what we found is, you know, when our creatives had have a chance to use it. And then they're able to collaborate with other creatives who are using it and see all the playful ways that they can bring ideas to life. It hasn't been a difficult tour to get us to get people to adopt. And you know, at the end of the day, it's all about delivering a better idea.

• 25:05Speaker 04

  You know, I, who knows what's going to happen with an explosive technology like this. So like, I don't want to make too many long-term prognostications. I'll be as wrong about this as I was about NFTs. But like, from our perspective, I don't see it costing creatives jobs. I see it only making the quality of the creative we have better. And that's how we've been deploying it to date. And that's how I think we'll continue to deploy it. It's a, it's a tool that kind of levels us up and makes what we make better.

• 25:37Speaker 03

  We have to pause here for a quick break. We'll be right back.

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• 27:43Speaker 03

  Welcome back. I'm talking with Hasbro CEO Chris Cox about how all the IP licensing Hasbro does turns into actual toys and products. But I actually want to take one step back and ask the Decoder questions to set some of that up. You know, from the outside, when, just in talking about Hasbro as we have been, it seems like, you know, the IP is at the center. Whether it's you're going to go get the license from Netflix for K-pop Demon Hunters, or you have your own, like Magic and Monopoly, there's other stuff. It feels like the IP licensing, having that, is really at the center of the company. And then you've obviously restructured. So just talk about how Hasbro is structured now and how the IP licensing flows through the structure you have now.

• 28:25Speaker 04

  I'd say at the center is, call it the customer insight or the market insight. That's how we structure everything. That's how we craft our strategy. And basically, the customer insight that is animating the company and animating our strategy is this acronym that we call GEM-Squared. Gamified, Entertainment-Driven, Multipurpose, Multi-Purchase, Multi-Generational. Like, that's what we think kind of the power core is of play and the future of play. That's where things are growing. That's where, you know, people have purchase power and they have passion. And so everything we do and everything we invest in is gearing towards that GEM-Squared

• 29:10Speaker 04

  insight. And so we've organized around it. We've built our strategies around it. And I think you're going to see more and more our products kind of geared towards that and our partnerships geared toward that.

• 29:23Speaker 04

  So like I said, gamified, entertainment-driven, multi-purchase, multi-generational. We then apply it to a play company that we think our superpower is inspiring a lifetime of play. And then we kind of flow it through the businesses that we have. And, you know, we organize our businesses across three primary lanes. There's games, which is really anchored by Wizards of the Coast and then Hasbro Games, which is our, you know, beloved board game portfolio with Monopoly included in the game of life. Then there's licensing and entertainment, which is, hey, how do we take our brands and execute it more broadly across categories that we're not experts in or we don't have powerful distribution in.

• 30:08Speaker 04

  And so we do that with entertainment companies, with like location-based entertainment, which is a fancy word for like theme parks and quick service restaurants and, you know, things like play centers that you go to in like a mall or something. And then publishing and then other toy and kind of soft good categories. And then the last area we execute is probably the area that most people, if you met someone from Hasbro at a cocktail party and they said, I work at Hasbro, it's toys. So like kind of the toy and game aisle. So we execute that gem squared insight and that inspiring a lifetime of play mission through those three categories. And then we break down kind of like how we kind of address that gem squared insight across like about five or six building blocks across the company.

• 30:52Speaker 04

  So how do we become relevant in digital games? How do we scale through partners? How do we age up? How do we make play available anywhere in more occasions? So how do we win more occasions where you could pick a candy bar or you could pick a toy? How do we convince you to pick a toy? And then last but not least, how do we expand kind of like the demographics of who we serve and the play graphics of who we serve? So like, you know, Hasbro to date over indexes with kind of play patterns and collectible patterns more associated classically with boys. So we want to win more with people who identify as girls. And then likewise, you know, Hasbro is very strong in markets like the US and France

• 31:34Speaker 04

  and the UK and for Wizards of the Coast and Japan. But really, we're only servicing a market of, call it a billion and a half people on a planet that has 8.5 billion. So then how do we execute kind of gem square based products to the other 7 billion people that we aren't building for and that we aren't distributing for? That kind of manifests into a bunch of different product categories that we drive, how we think about where we want to invest in versus where we want to leverage partners for, what partners do we want to in-license with that we think really powers that kind of particularly gamified and entertainment-driven kind of insight? And where do we think we can best service?

• 32:14Speaker 03

  How does that work with the IP? So let's say Monopoly. You're like, we make the Monopoly board game, that's one division, but we want to make a Monopoly movie and we want to make a Monopoly video game. Who gets to make those decisions across the structure?

• 32:26Speaker 04

  So we have a person called a global play lead and they'll sit in a different part of those three verticals that we execute from, depending on what we think kind of the power center is of the brand. So the Monopoly global play leader sits inside of toys. They execute our board game kind of product strategy, but they work with our entertainment team to kind of forge like a movie and reality TV show kind of slate like we have today. They'll work with our licensing team to figure out like soft goods and T-shirts and other toys that might be related to Monopoly. And then they'll work with our digital team to drive, you know, Monopoly based

• 33:06Speaker 04

  games. And I think, you know, there's probably two dozen Monopoly based video games and casino games that you can play with, the biggest being Monopoly Go, which is the biggest mobile game in the world. And so then they think about, how do I bring, what are the franchise moments associated with Monopoly? How do I kind of take my retail distribution and make a bigger kind of marketing moment for more of our licensing partners? And as the other verticals kind of launch things, like, you know, if Monopoly Go does something big, how can I parlay that into everything else? If a movie comes out with like our partners at Lionsgate, how do I parlay that into everything else? And so you basically build a multi-year rhythm associated with it.

• 33:44Speaker 03

  Can I just ask you, what is the Monopoly play lead like? Do they wear the hat and the monocle? Like, what is that? What is that person like?

• 33:50Speaker 04

  No, he's, uh, his name's Brian Baker. He's, uh, he's, he's very boring, very much like me. He likes Monopoly. I don't know if he and his family cheat quite as much as my family do, but when they play, because cheating is our favorite part of the game.

• 34:08Speaker 03

  Yeah.

• 34:09Speaker 04

  But yeah, he's a big board gamer, former Nike. We replicate that across. So Peppa Pig would be more of an entertainment-driven platform where, you know, the global play leads kind of live over inside of entertainment and licensing and toy kind of helps support them. Match at the Gathering and D and D are anchored and Wizard of the Coast and kind of what we do with the hobby channel, but like increasingly we're doing more video games, we're doing more entertainment across those. So the three verticals kind of operate independent, but then they also are highly collaborative with each other utilizing the brands.

• 34:44Speaker 03

  So it's a pretty hybrid structure, right? It sounds like these play leads, they sit in the division that is most naturally associated with whatever property and they get to use all the functions of the other divisions. There's some resource constraints there. You can see how there would be some division of who gets to do what at what time, depending on the capabilities of all these divisions, how many resources you have overall. Who breaks those ties?

• 35:07Speaker 04

  Usually it's me. So, you know, we have to do prioritization. We have, you know, not every brand is kind of built equally. So we have a hierarchy for our brands called grow, optimize, and reinvent. So our growth brands are the ones where we see the highest three-year kind of continuous growth potential. We see the highest kind of like operating profit margin potential and we see them operating in markets that are pretty buoyant. You know, they tend to be more blue ocean and less red ocean. And so those growth properties tend to get first pick on available capital and available talent. Optimized brands tend

• 35:50Speaker 04

  to be in less high-growth categories. You know, we tend to see them as kind of like kind of steady eddies, maybe low growth. They still do a decent operating profit for us. And so then they get kind of next tranche. And then reinvent brands are, you know, like, like we talked about at the beginning of the discussion on toys, toys are kind of a fast fashion, like cyclical business. You know, what's popular this year is likely not going to be popular three or four years from now. And so the reinvent brands tend to be the ones that are in that kind of late stage cycle where they're either rest investing, or we're thinking about what the next phase of them is so that they can be a future growth brand. And so they get mostly kind of like

• 36:35Speaker 04

  conceptual product development and market research support, but not a lot of go to market or inventory support.

• 36:43Speaker 03

  Where do new ideas come from in this system? This is the thing I worry about most in our current like information environment, that existing IP has so much value associated with it because you don't have to try to get attention for it. And new things, you're just, you're sort of waiting for the next weird influencer to show up with an idea that goes viral. You know what I mean? Like, did you have a meeting where like, we have to make a six, seven toy? Like, I don't know where the new ideas come from.

• 37:07Speaker 04

  We didn't have a meeting on that, but we did carefully avoid saying six, seven around little kids in any play test labs. I think we purposely capped our rating scale at one to five and no longer one to 10.

• 37:19Speaker 03

  That's very good.

• 37:20Speaker 04

  I mean, to be perfectly candid, I think it's a structural weakness of most large companies is thinking about new category development. You know, you, you tend to get focused on your existing business and very obvious adjacencies. And then you tend to lose sight of, hey, this new thing that's kind of coming up the path, coming up the pike. And I think we've been as guilty of it as anyone. The way that we're countering it is in two ways. The first way is our licensing business isn't just a very high profit, high growth business for us. We also use it as a learning lab. So we tend to be very liberal

• 38:05Speaker 04

  in how we license out many of our brands, especially in markets or regions where we don't have a lot of go to market capacity. So like China. And we're able to learn from the local partners about what's hot and what works in a fantastic collectible and innovation market like China and Southeast Asia. And so we actually learn about new categories kind of popping up there. The great thing about that is it's a real win-win for the partner. They basically get a clear market where we're not really competing with them. We get a learning lab and then we can apply the lessons from that learning lab, like the winners from it, to our distribution and our marketing and licensing muscle outside of that core market.

• 38:48Speaker 04

  So that's actually been pretty powerful for us. You know, like an example of one that we learned a lot from was My Little Pony. My Little Pony, three years ago, like maybe we made five or $10 million on it. Like, you know, in 2024, I think our partner in China, Caillou, I think they did more like $400 million of trading cards on My Little Pony. And they've parlayed that into a whole line of kind of teen-oriented collectibles. And it's kind of reinvented how we conceive of the brand and what the potential is of the brand. And we're starting to execute against that outside of that core market, both with Caillou and ourselves. So that's been pretty valuable for us.

• 39:32Speaker 04

  And then the second area that we've done it in is what we call CEO initiatives. So it's like we take high-performing people out of our business units, out of kind of like a traditional global play lead role, and we give them like an assignment for six to nine months and say like, hey, go run after this. And we keep their job kind of on the side and they can go back to it at any time. And we recognize that probably nine out of 10 times, those things aren't going to yield fruit, but it's a fun stretch assignment for a high performer, high potential person. And, you know, sometimes it yields something fun. So, you know, that's a relatively recent thing that we've been doing over the last two years.

• 40:17Speaker 04

  You're probably going to see the first fruits of those. Probably within the next six months, we'll do our first announce of those. And I think you'll think it's pretty cool.

• 40:28Speaker 03

  Let me ask you the other questions and I want to get to tariffs. I want to get to video games. There's a lot of stuff left on my list here. You've kind of answered this already in a way. How do you make decisions? What's your framework?

• 40:38Speaker 04

  Well, I think first and foremost, it's kind of starting with the customer and starting with that insight. So. You know, that that GEM squared acronym, it's memorable and it's very accurate. Like it replaces kind of the kid ults, which is a term I hate. It's like trying to describe someone else rather than being actually descriptive about what they want. So you start off with the customer and then I think you're going to go through our strategy. We call our strategy playing to win. And we try to inject and remind the idea of play and everything we do. Hey, does this hit the insight? Hey, when we execute against this, does it hit one of our strategic goals that we think kind of adds value and adds capability to our superpower of inspiring a lifetime of play?

• 41:22Speaker 04

  And then you kind of think through the dollars and sense of it. It's like, okay, is it, does it make money? Does it have a return? Are we investing sensibly, given the opportunity? Like, you know, if we think it's kind of like a flash in the pan, kind of a cool idea, but not going to be durable, you you take one investment profile on it. But if you think, hey, this might be a new power kind of play pattern and a new category, then I think you go in with the expectation of, hey, I don't need to make money on this for the first couple of years. What I need to do is establish capability in it and establish presence in it. And then kind of the market will take care of itself. So that's generally, that's generally the paradigm I go through.

• 42:03Speaker 03

  I think that makes sense in the context of creativity and making stuff. There's a set of decisions you've had to make recently that just seem on the ground, in the weeds about how to manufacture things in the world that we live in today, especially around tariffs. So tariffs are obviously uncertain. They're coming and they're going. You've had a lot of layoffs, some of which you've attributed to tariffs. There was a pretty big round in 23 and smaller rounds in 24 and then in 25. What do you think the tariff situation is now? How are you making decisions around that now as you make toys?

• 42:36Speaker 04

  Most of the headcount reductions we've had to do had nothing to do with tariffs. It had to do with, we kind of lost sight of our core business and we had to kind of correct it. So we got over our skis and unfortunately there is a, there's human impact to it. And it's probably the worst decisions you have to make, but sometimes you have to make them. As regards tariffs. I think what we took the perspective on is they were going to change and they were going to be unpredictable. And so in a world that is unpredictable and subject to pretty sudden changes, we need to have more options and more resilience.

• 43:18Speaker 04

  The tough thing about that is, is it just costs more money because rather than tooling a line once, you have to tool it now for three different times, for three different factories and three different countries. But I think the smart thing about it is it allows us to kind of shift with the changing policy environment and not allow us to be overly exposed to one region or one manufacturer or one set of policies. So it has added costs to the business. They're manageable, albeit unwelcome, just to be honest, but I'm glad we did it because I don't think that that unpredictability is going away anytime soon.

• 44:01Speaker 04

  And, you know, it's nice to have the options.

• 44:04Speaker 03

  Are you going to sue for tariff refunds? I saw today like thousands of companies are suing for tariff refunds.

• 44:09Speaker 04

  We did submit a brief to, I think the, I'm not sure which court, but one or two courts, so yeah.

• 44:17Speaker 03

  And if you actually get refunds, do you pass them back to consumers or you just keep it?

• 44:20Speaker 04

  I mean, the funny thing about that is, is we, we didn't really pass along many of the costs to our consumers. We took a couple targeted price increases at the end of last year, but it was only on a couple skews in our line. So I don't think there will be a lot of rebates to consumers and then it's kind of difficult to calculate how you'd even do that. So, you know, our perspective was we're a pretty diversified company. We have a pretty sophisticated supply chain, so we're able to absorb the initial impacts of it. Some form of tariffs are going to stick around, so the price increases we did make, they didn't cover the previous tariffs.

• 45:02Speaker 04

  You know, depending on what the tariffs set allowed at, they probably will roughly cover those, so. I'm not sure there's going to be a lot to give.

• 45:09Speaker 03

  The goal of the tariff policy as stated by the administration is to move manufacturing back to the United States. You were just talking earlier about how easy it is to go to China and just become a toy manufacturer because that capacity is there. Have you moved any manufacturing back to the United States? Is it worth it to do so?

• 45:23Speaker 04

  I think we do something like 35%, maybe upwards of 40% of our manufacturing in the US. And we're a, we're a different kind of toy company. Like a lot of our toys are board games. A lot of our stuff is trading cards. And then we do a lot of licensing. So that tends to be more nearshore production. We did retain more domestic production here, particularly for board games than we otherwise planned to. I think the tough thing about toys is it's a super low margin business, especially in manufacturing, and it's a very labor intensive business. And the SKUs change a lot every year. I think, I think close to 60% of our toy SKUs are new every year.

• 46:07Speaker 04

  So it's tough to automate, just because stuff changes. I think that's a tough business to nearshore to the US. Like the way you nearshore is usually through automation. I think for there to be meaningful nearshoring for something like toys, you would need, you would need a step change technology. Like you'd have to really be able to figure out 3D printing on a mass scale, which was the equivalent quality and cost of mass-produced plastic mold injection.

• 46:41Speaker 03

  Yeah, no, I was looking on the website, just before we started, on hasbro.com, there's a Green Bay Packers transformer, which is laser targeted at me. It's 27, it's 27.99 on the website. I'm assuming you're not making that here. How much would it cost to make something like that here in the United States?

• 46:56Speaker 04

  It's probably in the neighborhood of 50 to 60% more to make a toy in the US than it is, than it is in Southeast Asia. And that's a factor of labor.

• 47:05Speaker 03

  And so you're saying you would need massive automation to equalize that labor cost to you here?

• 47:10Speaker 04

  Yeah, you need real automation, real standardization, or some kind of, kind of massive process innovation, like a whole new way to kind of make things. And then it would just kind of negate like a labor advantage, like because it wouldn't really create a lot of net new jobs. Because so many of those jobs would just be automated.

• 47:34Speaker 03

  We have to take another quick break. We'll be back in just a minute.

• 47:45Speaker 01

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• 49:40Speaker 03

  Welcome back. I'm talking with Hasbro CEO Chris Cox about automation and AI.

• 49:45Speaker 03

  So let me ask you about the other piece of automation. So the last time we're here, 2023, you talked a lot about a system called Blueprint 2.0, which was $100 million investment into a brand insights platform, like a data platform that would help you figure out what to make and how much to make. We've already talked a bunch about AI. I'm reliably told that you can now just buy Claude code for like 20 bucks and just like build $100 million brand insight platforms. Is that working out? Is it, did that investment pay off the way you wanted it two, three years ago? And how are you seeing it now in an age of AI software development?

• 50:18Speaker 04

  That $100 million was kind of all in to like outsized data sourcing and do data analysts and market research, custom market research and all that kind of good stuff. And I would say, I would say it's, it's worked out pretty well. Like, you know, certainly businesses like Magic the Gathering, which I think since we talked is maybe 80 or 90% bigger. It's really worked out. Like, it's really helped us be able to understand what the customers want, how to segment products, what people to partner with that would appeal to that customer base. I think it's helped us in making better toys that are more targeted and really turning around kind of like a

• 51:01Speaker 04

  pretty negative point of sale trend that I inherited when I first started where we were, you know, in 2022, we were probably indexing 15 to 18 points behind the market in terms of our growth versus the market growth. And today I think we're at or ahead of the market.

• 51:21Speaker 04

  So it's been good on all those aspects.

• 51:26Speaker 04

  You know, I think in terms of the future about how we engineer things and how we build platforms, I just had a conversation with our, our CIO the other day where he was taking me through like, hey, this is how we're AI automating the company and how we're building in new workflows. And the number one question I had for him was, hey, how are we doing it inside of IT? Like, how are we building more capability inside of our own coding organization and inside of our own kind of engineering organization? He had to kind of take that back and think, think through that a little bit. My personal point of view about- What AI is going to do to at least, I can't talk about the economy as a whole, but what it's going to do to how we employ people and how we deploy people.

• 52:10Speaker 04

  I think it's going to be a labor savings tool, but I think it's going to be ultimately savings that you redeploy into the product and you redeploy in the partners. So there might be some changes about the nature of who we employ or what we pay for. But the total amount of people that we pay and the total amount of labor that we deploy, I don't see going down. My hope is that redeployment drives growth and that goes up.

• 52:37Speaker 03

  Yeah.

• 52:37Speaker 04

  I definitely think it will affect like stuff that we've already outsourced. Cause stuff that we've already outsourced tends to be kind of that grindy, kind of quote unquote, low value operational or process level work. Stuff like touching a bunch of orders and making sure that they're filled out correctly. Like nothing that's super glamorous. And so we already outsourced that outside of the US. So I think those will be kind of the first work streams that get AI automated. I think everything else is more a kind of enrichment and kind of feeds people, gives people hours back in the week that they can go and hopefully exceed what they did the prior year.

• 53:17Speaker 03

  One of the iron laws of Decoder for however many years I've been doing this now is once you start investing in software, your investment only ever increases.

• 53:24Speaker 04

  Yeah.

• 53:25Speaker 03

  Right? So like, once you hire a software engineer to like make you a software platform, like Blueprint, you're only going to hire more software engineers and spend more on the software.

• 53:33Speaker 04

  The rule at Microsoft was don't worry about what it costs to make, worry what it costs to maintain.

• 53:38Speaker 03

  Right. And this, it just feels like every Decoder conversation for years now, I could just rely on that. Maybe AI changes that, right? Where maybe you're not making an infinite investment in software over time because you can hold it steady with automation. Does it feel like that's real to you?

• 53:53Speaker 04

  Well, I think what we're seeing in the early stages of AI is, you know, if you take that million man hours savings that we're estimating, which is kind of a rough and tough number, but I think directionally right and probably on the low end, that basically translates to a low single digit to mid single digit productivity gain for every employee.

• 54:14Speaker 04

  And that's just at the early stages.

• 54:18Speaker 04

  At that level, you know, you're basically just covering inflation for kind of how benefits increase and salaries increase for your base. So I, I, I don't think it's going to massively decrease like any of our given functions. Once again, like you're in this hyper competitive industry where expectations raise every year and you want to delight your consumers in a new way. And get them to buy something which logically, if you were an economist, you'd say this is an illogical purchase. Like it's a passion based purchase. So you gotta delight them and go bigger. That's not a recipe for cutting back on your development or cutting back on your customer support.

• 54:58Speaker 04

  That's a recipe on figuring out how you get more efficient. So you can do more with the same.

• 55:04Speaker 03

  All right, noted. Chris does not think the cesspocalypse is here. We'll have you back in a few years. We'll see if that's true. But let's talk about video games and.

• 55:12Speaker 04

  I really hope I'm more correct on that than I was with NFTs.

• 55:16Speaker 03

  I wanna, I wanna wrap up here by, by talking about video games and then the culture and IP broadly. Cause I, I feel like the way fandoms respond to IPs over time is changing and I really wanna get your take on it. Let's just start with video games broadly. Do you know how to fix the video game industry? Cause it doesn't seem like they know.

• 55:33Speaker 04

  I think what that, what's happening with the video game industry is you have, it's growing, but it's, you know, not growing like double digits. It's growing kind of like, you know, mid-single digits and it probably will continue to. They're starting to suffer from more substitution, which is probably just a, in, if you look, if you look at it in hindsight, it's just a different way of delivering video games. But you have like this massive cost inflation for delivering kind of the amount of content. Like if you want to develop a triple A video game, it's a thousand man years of effort minimum. With an audience that's growing, you know, growing but not growing leaps and bounds,

• 56:13Speaker 04

  with more kind of substitution or new categories, with inflation which is going significantly faster than what your market is growing or what your pricing power can support, I think you have to think about things differently. I think you have to think about like, hey, when you make a game, you know, are you, are you always going to go to San Francisco or Austin, Texas to, you know, recruit that team? Or are you going to go to, you know, these fantastic areas of talent in Southeast Asia or China or Eastern Europe and pair them with the team who really understands the marketing question? I think a lot of gamers don't like AI in games today, but I think eventually someone's

• 56:56Speaker 04

  going to figure out how to use AI in a way that's high quality and is fun and makes games better. So I also think you have to think through that. I really think it's just kind of this classic kind of equation of, hey, your input costs are X, your, your output is Y. How do you make sure the ratio between X and Y is acceptable for the risks that you take? Because, you know, any given video game has like a 20, 30% chance of being successful. So you got to be able to cover a whole bunch of unsuccessful bets inside of whatever you invest.

• 57:32Speaker 03

  So I'm curious about this in, in your own slate of games. You got a big bet this year on Exodus. It's supposed to be a big cornerstone IP. It's a huge investment. You also just had Baldur's Gate 3. It was, I think, made in the system you're describing, right? That studio was in Belgium.

• 57:48Speaker 04

  Yeah, they had resources in Eastern Europe, in Europe, and Canada. They had them all over the world.

• 57:54Speaker 03

  But you're not working with that studio anymore and you've got a big bet on a new IP. That feels like a, you know, it feels like a different set of risks. Like you balance that risk maybe differently than what you're describing. How'd you make those decisions?

• 58:05Speaker 04

  When we think about digital games, we think about, okay, what does the audience want? What brands do we have and capabilities do we have that we feel is relevant to those needs? And then what's the best way to kind of build that capacity? We decided that, you know, we had really relevant brand and IP and kind of design sensibility and communities to hardcore role-playing games and action-adventure games. And then inside of, and card games, of course, from Magic.

• 58:37Speaker 04

  And so we decided, hey, those kind of make sense for us to execute, but it's going to take time for us to execute it. So as we kind of build that capacity, how do we, we have a lot of brands that are relevant. How do we partner with some of the best in the business to go execute on our behalf? While we kind of build our capacity and build our learning to be able to do that. And I think Baldur's Gate 3 and what we did with Larian was a fantastic example of that. Probably best in class example of that. And then on an ongoing basis, since, you know, we're going to focus on more hardcore gamers and these kind of more traditional PC and console audiences, genres like role playing games and action adventure.

• 59:21Speaker 04

  You know, that covers maybe seven, eight hundred million gamers, but there's probably 3.5 billion in the world. What can we do to kind of appeal to those other 2.8 gamers around the world? And that's really where our licensing team comes in. So we've got the biggest digital licensing business in the world by probably, I think a significant margin. Got this fantastic board game portfolio. We've got some great kind of hardcore games like Magic and D and D that we license out with some of the best in the business, Scopely being one of them in mobile. And that's pretty lucrative and pretty high growth for us and helps to kind of pay the bills. That allows us to have a long runway to be able to invest in our own studios, in our own publishing capacity.

• 1:00:04Speaker 04

  And it also de-risks those efforts. So it's not like we're making a bet, the company bet on any individual game. You know, if a game does well, it's great for us. But if a game underperforms or we need to delay it so that we can make sure it's good, we've got this fantastic licensing business that can help kind of cover it for us. So I think we've been pretty smart with it.

• 1:00:28Speaker 03

  I'm curious about Exodus in particular, right? This is a big investment. It's, it's, it's one of the big games you're talking about. The studio head left in December, right after the last trailer launched. This is all feels stable to you. This industry feels stable to you because from our perspective, from the audience's perspective. Everything just feels up for grabs all the time in gaming right now.

• 1:00:47Speaker 04

  I think you get in games because it's a passion play. And you can do amazing things like with the technology and the art. I don't think you get into games because it's a stable career and predictable day in and day out. It's kind of like the ultimate confluence of art and technology. And it changes all the time. You know, the team on Exodus has been working on it since 2019. Our goal is to ship it in the first half of next year. I think it looks pretty good based on what I've played of it. I'm pretty bullish on it. And then, you know, we'll be pairing that with another game called Warlock later in the year from a team up in Montreal. So, you know, I think we won't just have Exodus.

• 1:01:32Speaker 04

  We'll have Warlock and we'll have like this fantastic stable of digital games. And so, you know, like I said, any individual game has probably less than a 50% chance of being in the money. But when you hit, it hits well. And our perspective, this is one of those businesses, like I referenced earlier. We don't think digital games is just a flash in the pan market. We're going to be patient. We're going to invest. And if we lose money in the short term, we're going to build up our community, build up our capacity and build up our ability to be able to execute with excellence. And I think over time, it's going to be a difference maker for us and something that we're happy we invested in.

• 1:02:11Speaker 03

  Talk about being in the money in video games. I feel like I've spent a lot of time trying to understand the economics of video games and I still kind of don't. I'm not sure, like, based on the industry, maybe no one does. Do you have to be on Game Pass to get distribution? Is it, is all the money DLC? Is it, are we just going to do prediction markets in video games? Like, how do these things make money over time in a way that's sustainable?

• 1:02:32Speaker 04

  I think there's a ton of different ways to make money in video games. And it's kind of publisher dependent and brand dependent. The three ways that we do it. First off, we have Magic the Gathering Arena, which is a fantastic extension of one of the biggest card games in the world. People love it. It's highly sticky. It's been around since 2018. It's a good, nice business for us. We do it with digital licensing, working with some of the best people in the world. That's super high margin, very high scale for us. Helps us really propagate and drive reach for our brands. And then we're selectively investing in publishing where we want to build that relationship with consumers and we're doing that with a more traditional business model.

• 1:03:14Speaker 04

  We're not, we're not doing a whole bunch of complex battle pass or free to play economics. We're doing it more like, hey, here's price for your game. You get 40, 50 hours of content, you have a lot of fun and then hopefully you want to go buy the sequel. And we think that works with our brands and you know, based on the economics that we have and the studios that we have, like I said, the first couple of games are going to cover up a bunch of, cover a bunch of startup costs. And so, you know, those might not be as profitable as we want, but we think over time, as we start to optimize those studios, figure out how we leverage, you know, great talent spots

• 1:03:55Speaker 04

  like Eastern Europe and markets like Montreal where we have one of our biggest offices, we think we can get profitable at that over time and delight a lot of people in the process.

• 1:04:07Speaker 03

  I want to wrap up by, by just talking about the relationship between these franchises, these brands, all this IP and fandoms. I have this joke in our newsroom right now that copyright law doesn't exist anymore. It's just a framework for business negotiations, but then you go out on the internet and it's just, everything's all for grabs all day long. And you can open Instagram and you can see literally any cartoon character punching any other cartoon character in the face. And it's just like, I don't even know what's going on here anymore. There's a part of that that, you know, maybe is bad for business, whatever. There's a part of that that's great for individuals because you get to participate more. And there's a part where the creators have totally lost control of their creations. Where do you stand on this? Like, do you feel like the fandoms have an appropriate amount of authority over your IP? Do you think you need to take some more back? Do you think OpenAI has just stolen it all from you?

• 1:04:52Speaker 03

  Like, where are you situated in all this?

• 1:04:55Speaker 04

  I think the fandoms have a lot of authority over our brands and what we make. Like, you know, any, anyone who makes a great game that endures or a great IP that endures has to listen to their fans. And they have to be able to figure out the signal through the noise. But that's always been the case, you know? My view on AI and user-generated content is, as owners of multiple brands, you can't ignore it. You can't stick your head in the sand and just, it's not a game you're gonna win if you just play defense. You gotta figure out a way to engage the fans. You gotta figure out a way to engage the platform and hopefully empower people to use your brands and use your content responsibly.

• 1:05:38Speaker 04

  And, you know, hopefully figure out a way that you can make an ecosystem where everyone wins. From the voice talent and the writers and the creators behind the properties to the fans who just wanna have some fun with their friends and share cool things with each other. Is it going to be disruptive? Yeah. Have people figured out the business model yet? No. But, you know, people were writing about the demise of the music industry back in 2000 with the rise of Napster. And I think last I heard, the music industry is more profitable than ever because they figured out a way through it.

• 1:06:10Speaker 03

  Yeah, but I would say middle-class artists are not more profitable than ever, right? I mean, that's what I'm curious about. Like, the music industry might make more money than ever, but it's Spotify and a bunch of big labels and musicians themselves are making maybe less money than ever. When I look at, you know, you open Instagram and there's the Monopoly man doing the electro-breakers dance with Donald Trump. I'm like, I think the only person making money here is Mark Zuckerberg. Do you think the platform should have to pay you when your IP gets used in that way?

• 1:06:38Speaker 04

  What I think they should do and what I think will happen, I think, is probably two different things. So I think you have to accept what's going on and figure out a way to work with it rather than trying to work against it. Because with AI and user-generated content, the genie's out of the bottle and it's not going back in. You either accept that and you figure out how you work with it, or you don't accept that. And I think it's probably gonna be a negative for you, an even bigger negative for you if it's gonna be a negative.

• 1:07:06Speaker 03

  I'm also very curious about fandoms and IPs and how they live and die and how they persist and how they find new audiences. Actually, Harry Potter is a good example of this. You have a big deal upcoming with Harry Potter. That fandom, I can't tell if it's reaching younger people.

• 1:07:22Speaker 03

  Right? Or if it's just the particular audience of Harry Potter from its height, getting older and having more money to spend. And I can't tell if there's new fan creations happening that would sustain Harry Potter in a way that you might need that to sustain IP now.

• 1:07:35Speaker 04

  Yeah, I mean, I think going back to that acronym, gem squared, gamified, entertainment driven, multi-purchase, multi-generational. I think Harry Potter is like a power brand that exemplifies all four of those aspects. I can't share kind of like the the research data we have, but certainly it's a very powerful multi-generational brand. It's almost like a rite of passage for a lot of kids to read the stories or watch the movies. With my kids, we spent three years for each of them reading the stories at bedtime, and it was probably one of the nicest memories I have with them. I go to theme parks. I probably go to like three or four theme parks every year. I'm a huge theme park fan, and I don't do it professionally. I do it because I'm a big nerd. When you go to the Harry Potter World's inside of Universal

• 1:08:18Speaker 04

  Studios, A, there's some of the best theme parks ever imagined, and B, like, it's all ages. It's little kids holding stuffed owls, hedgehog owls, to adults who have the Harry Potter glasses and like showing their school colors. Go Slytherin, I suppose, in my case. I just think it's something that is really powerful. And, you know, to that prior question about AI and user-generated content, you know, when you have a brand that has an authentic connection with people and has a powerful kind of like core of lore and an authenticity associated with that, I think fans respect that. You know, they might make other stuff,

• 1:09:03Speaker 04

  you know. I saw a pretty cool DinoBots movie from probably made with Sea Dance 2.0 over the weekend. It was pretty neat. But people know what the authentic Michael Bay movies are. People know what the authentic toys are. I think when you have that and you have that power center like a Marvel does, like a Star Wars does, like a Harry Potter does, yeah, you need to protect it. You need to make sure people are using it responsibly. But I think you also need to have confidence in it, that it will help drive you through like these kind of sea changes. And that's certainly kind of what I think.

• 1:09:35Speaker 03

  Let me ask you about that. I think this is why I'm asking about Harry Potter specifically. I know what a Michael Bay movie is. Because Michael Bay made those movies. He's the author of those movies. And I think Michael Bay's entire worldview is explosions. You know, like I know what his politics are and it's like stuff should blow up more. J.K. Rowling has very loud politics that are turning off a lot of younger consumers, right? Her transphobia is turning off a lot of younger consumers. That's who I'm talking about fandoms coming to an end. I can see in our, the feedback we get about when we write about Harry Potter, younger people saying, why would I support this fandom? Why would I support this IP? And maybe she should just shut up and it'll be fine and it would become the power center that it is. But you've got creatives on your team, right? The last time you were on the show, you talked about being stewards of inclusion.

• 1:10:20Speaker 03

  How do you make this decision when the creator of the property is sort of actively reducing the fandom and in fact hurting a lot of people in that fandom?

• 1:10:29Speaker 04

  Yeah, I mean, for me, it's separating the art from the artist and going to kind of what the core fans want. And, you know, I'm not going to get into the politics around it other than to say we very strongly support diversity and inclusion inside of Hasbro. We're very proud of it and we're very proud of the diversity of viewpoints and backgrounds that we have in our employee base. And so, you know, I think Harry Potter is a wonderful franchise. I think it's done a great job of bringing joy to the world and I'm enjoying, I'm looking forward to being part of that.

• 1:11:03Speaker 03

  Yeah.

• 1:11:03Speaker 04

  Just like I am with all the other franchises for.

• 1:11:05Speaker 03

  How do you think broadly about, again, when I say new IP, all the people who make new IP are also out on the platforms, right? Every new creator is an influencer and they have like a huge library of things they've said and done in the past. Is that something that you think of as a danger? Is that something that you're on the lookout for? Or is it your laser focus on the commercial potential of the franchise?

• 1:11:25Speaker 04

  I definitely think you have to be cognizant of it and I think you have to make a business decision. You have to balance kind of, again, I tend to focus more on the art than the artist, but obviously, obviously you have to think about both.

• 1:11:39Speaker 03

  Chris, what's next for Hasbro? What should we be looking out for?

• 1:11:41Speaker 04

  You're gonna see some cool aged up properties or toys and collectibles from maybe brands that you wouldn't expect. We have a new Play-Doh line called Blooms, which kind of takes the whole flower mystique and applies it to Play-Doh geared towards adults. It's pretty cool. I think it was probably one of the best in show at Toy Fair last week, at New York Toy Fair. I think you're gonna see some of those exciting new innovation initiatives that I talked about, that we've been incubating for the last couple of years. And then, obviously, my hope is that you're gonna see some really kick-ass video games come from us that are gonna blow you away.

• 1:12:19Speaker 03

  Well, you're gonna have to come back sooner than three years. Thank you so much for being at Decoder.

• 1:12:22Speaker 04

  Yeah, no, thanks too so much for having me.

• 1:12:26Speaker 03

  I'd like to thank Chris for taking the time to speak with me, and thank you for listening. I hope you enjoyed it. If you'd like to let us know what you thought about this episode, or really, anything else at all, drop us a line. You can email us at [email protected]. We really do read all the emails. You can also hit me up directly on Threads or Blue Sky. We're also on YouTube. You can watch full episodes at DecoderPod. We also have a TikTok and an Instagram. They're at DecoderPod as well. They're a lot of fun. If you like Decoder, please share it with your friends and subscribe wherever you get your podcasts. Decoder is production of The Verge and part of the Box Me Podcast Network. The show is produced by Kate Cox and Nick Statt and edited by Chris Wright. Our editorial director is Kevin McShane. The Decoder music is by Breakmaster Cylinder. We'll see you next time.

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