Latest / The David Rubenstein Show / Ynon Kreiz

Transcript

Ynon Kreiz · The David Rubenstein Show

• 0:02
  Speaker 1: Unon Cries is the see of Mattel, one of the
• 0:05
  Speaker 1: leading toy companies in the world. It's the manufacturer of,
• 0:08
  Speaker 1: among other products, the Barbie doll. I had a chance
• 0:10
  Speaker 1: to sit down with the CEO recently talk about how
• 0:13
  Speaker 1: he's trying to transform a traditional toy company into one
• 0:16
  Speaker 1: that takes advantage of, among other technologies, artificial intelligence. Now,
• 0:20
  Speaker 1: the toy world is not a world that I know
• 0:23
  Speaker 1: that well. I do have some young grandchildren and get
• 0:25
  Speaker 1: them some toys from time to time, but I don't
• 0:27
  Speaker 1: really pay attention to where the toys are manufactured. My
• 0:30
  Speaker 1: assumption is that most toys in the United States are actually
• 0:33
  Speaker 1: manufactured overseas, and maybe a large number that was in China.
• 0:36
  Speaker 1: Is that a fair assumption, that's correct.
• 0:38
  Speaker 2: The industry average is about eighty twenty five percent of
• 0:42
  Speaker 2: toys being made in China.
• 0:44
  Speaker 3: Fu Mattel.
• 0:46
  Speaker 2: We've been reducing and rebalancing a manufacturing footprint so that
• 0:51
  Speaker 2: no one country by the end of twenty seven will
• 0:53
  Speaker 2: represent more than twenty five percent of our global manufacturing.
• 0:57
  Speaker 2: China represent for US today around thirty five percent of
• 1:01
  Speaker 2: our global manufacturing. Relative to in this reverage of eighty
• 1:04
  Speaker 2: twenty five percent. But this journey was not about China.
• 1:09
  Speaker 2: It was about balancing and diversifying manufacturing footprint so that
• 1:14
  Speaker 2: we're not dependent on any one country.
• 1:16
  Speaker 1: As we talk today, President Trump is shortly going to
• 1:18
  Speaker 1: be meeting with the President Cigping, presumably that deal with
• 1:22
  Speaker 1: tariffs and other things. But today the tariffs that have
• 1:25
  Speaker 1: been imposed on China has had adversely affected toy companies
• 1:29
  Speaker 1: and particularly in MATEL. Well.
• 1:31
  Speaker 2: At the start of the year, the issue was about
• 1:33
  Speaker 2: cost impact of tariff on product. Then the question became
• 1:38
  Speaker 2: what about consumer reaction to price increase in response to tariff.
• 1:43
  Speaker 2: Now what we're seeing is that we companies have mitigated
• 1:47
  Speaker 2: for the cost impact. Consumer demand for toys is growing,
• 1:52
  Speaker 2: has been growing every quarter in the US and overseas.
• 1:56
  Speaker 2: What we have seen is that retailers have postponed their
• 1:59
  Speaker 2: decision and making orders to the very back end of
• 2:01
  Speaker 2: the year. But seeing that there is demand, there is
• 2:04
  Speaker 2: consumer demand, people are buying product at retailers. We expect
• 2:09
  Speaker 2: to see a good Holia decision and a strong growth.
• 2:13
  Speaker 3: Core of fu MATEL.
• 2:14
  Speaker 1: Now about fifty percent of the tariffs that have been
• 2:16
  Speaker 1: imposed by the federal government have not been passed along
• 2:19
  Speaker 1: to customers. They are being absorbed by the people that
• 2:22
  Speaker 1: are paying the tariffs. Are you absorbing a large part
• 2:24
  Speaker 1: of the tariffs or are you passing along some of it?
• 2:27
  Speaker 2: Well, we have several mitigating actions that we're taking. Much
• 2:30
  Speaker 2: of it is about diversifying manufacturing footprint and using the
• 2:34
  Speaker 2: fact that we are making product in seven different countries
• 2:38
  Speaker 2: so you can optimize and modulate and create a flexible
• 2:41
  Speaker 2: model that respond to tariff and shifting market conditions. And
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  Speaker 2: this is very much part of our journey to create
• 2:47
  Speaker 2: a flexible sublition that is responsive.
• 2:50
  Speaker 1: As the tariff have now come in and some extent
• 2:53
  Speaker 1: there might be increased, it might be a decreased. But
• 2:55
  Speaker 1: how has that changed your relationship with retailers? Are they
• 2:58
  Speaker 1: absorbing the tariffs or you obs or in the tariffs
• 3:00
  Speaker 1: or as it split.
• 3:02
  Speaker 2: We work very closely with our retail partners. We are
• 3:06
  Speaker 2: fundamentally a business to business company. We sell to the retailers,
• 3:10
  Speaker 2: they sell to the consumers. But together we are trying
• 3:14
  Speaker 2: to create a holistic experience that drives demand and we
• 3:18
  Speaker 2: work with them to help them sell products. We spend
• 3:20
  Speaker 2: significant resources in demand creation. We sell product as a
• 3:25
  Speaker 2: company in five hundred thousand stores globally. This is just
• 3:30
  Speaker 2: a brick and mortar business, not including online retail and
• 3:32
  Speaker 2: e commerce. So understanding the retail landscape and working in
• 3:37
  Speaker 2: close collaboration with our retail partners is core competence to
• 3:41
  Speaker 2: what we do, and we do that really well.
• 3:43
  Speaker 1: The most famous toy you probably have, I assume it's
• 3:45
  Speaker 1: Barbie Doo. When was the Barbie doo actually invented? And
• 3:49
  Speaker 1: why is it so popular for such a long period
• 3:51
  Speaker 1: of time.
• 3:51
  Speaker 2: Barbie was invented in nineteen fifty nine. But Barbie is
• 3:56
  Speaker 2: so much more than a doll. Barbie is a pop
• 4:00
  Speaker 2: culture icon. And we as a company, what we do
• 4:04
  Speaker 2: really well is we keep our brands fresh, relevant, current
• 4:09
  Speaker 2: and culturally relevant a clear a clear part of our
• 4:14
  Speaker 2: playbook is infuse brand purpose and cultural relevance, the relevance
• 4:18
  Speaker 2: into everything we do. And Barbie is the posted child
• 4:21
  Speaker 2: of that strategy.
• 4:22
  Speaker 1: All right, So there's the can dow, there's the Barbie down.
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  Speaker 1: It still is your biggest selling toy.
• 4:27
  Speaker 2: Actually, Hot Wheels right now is a bigger selling product
• 4:31
  Speaker 2: than Barbie. Hot Wheels was created eight years nine years
• 4:35
  Speaker 2: sorry after Barbie, and Hot Wheels is very much about
• 4:39
  Speaker 2: car culture. Hot wheels as a as a toy is
• 4:42
  Speaker 2: the number one selling item in the industry. So these
• 4:46
  Speaker 2: cars are performance cars. The race in orange tracks and
• 4:51
  Speaker 2: around that we make content, video games, location based entertainment,
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  Speaker 2: car shows, races, and it's a whole encompassing experience around cars.
• 5:02
  Speaker 1: Let's talk about film. Barbie had a movie a few
• 5:06
  Speaker 1: years ago which turned out to be spectacularly successful, was
• 5:09
  Speaker 1: nominated for Academy Awards, and it did incredible at the
• 5:12
  Speaker 1: box office. I assume you were behind that because you
• 5:14
  Speaker 1: have a background in that area. Was that your idea
• 5:16
  Speaker 1: to do a Barbie.
• 5:17
  Speaker 2: Film, Well, it was part of our strategy, and yes,
• 5:21
  Speaker 2: three weeks after I started, after I joined the company,
• 5:24
  Speaker 2: we started that journey. The goal was not simply to
• 5:29
  Speaker 2: create a movie, and it wasn't a movie that was
• 5:32
  Speaker 2: designed to sell toys. It was about creating a cultural event.
• 5:36
  Speaker 2: And this movie went on to become one of the
• 5:39
  Speaker 2: most successful movies of all time, and in fact, became
• 5:42
  Speaker 2: Warner Brothers most successful movie at the box office ever
• 5:46
  Speaker 2: in one hundred years.
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  Speaker 1: Now. Hollywood is not famous for doing sequels, right, so
• 5:51
  Speaker 1: I assume there will be a sequel. Barbie and Barbie two,
• 5:54
  Speaker 1: three and four right.
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  Speaker 2: Well, we always said we're looking to build film franchises.
• 5:58
  Speaker 2: We haven't announced anything a second live action movie, but
• 6:02
  Speaker 2: we have announced that we're developing an animated Barbie movie
• 6:06
  Speaker 2: with Chris Maladandris Illumination, which is one of the most
• 6:10
  Speaker 2: successful animated filmmakers of all time. So it's going to
• 6:14
  Speaker 2: be a very exciting project that we'll reimagine Barbie in
• 6:18
  Speaker 2: a new way.
• 6:18
  Speaker 1: Now, in many companies, when there's a manufacturer product, the
• 6:22
  Speaker 1: CEO tests the product and says works or not. So
• 6:26
  Speaker 1: how do you say, yes, let's do this toy, or
• 6:28
  Speaker 1: we're not going to do this toy. Who's your expert
• 6:30
  Speaker 1: in deciding to do this or not?
• 6:32
  Speaker 3: This is what we do as a company.
• 6:36
  Speaker 2: We make product that engages and connects with people, and
• 6:40
  Speaker 2: we have experts all over the world. We have people
• 6:43
  Speaker 2: that specialize in different categories of product, and of course
• 6:47
  Speaker 2: we do a lot of testing, a lot of trials
• 6:49
  Speaker 2: and testing in our own labs, innovation labs, play labs.
• 6:54
  Speaker 2: One such example that just recently came to life is
• 6:59
  Speaker 2: a reinvention of the hot wheels orange tracks that have
• 7:02
  Speaker 2: been around for decades, and we discovered through research that
• 7:07
  Speaker 2: it's actually a little hard for young kids to connect parts,
• 7:12
  Speaker 2: and we came up with a whole new system that
• 7:14
  Speaker 2: is very simple and easy to connect with a snap
• 7:18
  Speaker 2: just to one hand, and at the same time is
• 7:21
  Speaker 2: actually higher performing in terms of speed the speed of
• 7:24
  Speaker 2: the car that the cars can drive on the tracks.
• 7:26
  Speaker 2: So it was a way to reimagine a tried and
• 7:30
  Speaker 2: tested play pattern in new and exciting ways through research.
• 7:34
  Speaker 1: When you have advertisement for toys, are you doing the
• 7:37
  Speaker 1: advertisement so it appeals to a child four or five
• 7:40
  Speaker 1: sixty seven or to the adult? How do you make
• 7:42
  Speaker 1: the advertisements appear to both if possible, or just do
• 7:45
  Speaker 1: you tag target just one age group, the children or
• 7:48
  Speaker 1: the parent.
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  Speaker 2: We don't think of it in terms of advertising or
• 7:52
  Speaker 2: even marketing. It's about demand creation. Children are the most
• 7:57
  Speaker 2: sophisticated consumer out there. They can smell any thing that
• 8:00
  Speaker 2: is not authentic a mile away. So whatever we do
• 8:04
  Speaker 2: has to be authentic and connect to the brand values.
• 8:07
  Speaker 1: So let's talk about most recently, you had earnings and
• 8:10
  Speaker 1: your earnings didn't go quite what the analyst thought it
• 8:12
  Speaker 1: was going to be. Is that always a problem with
• 8:14
  Speaker 1: analysts or always have higher expectations and the reality, you.
• 8:18
  Speaker 2: Know, we don't manage the company quarter by quarter. We
• 8:21
  Speaker 2: guide it for certain numbers for the full year and
• 8:23
  Speaker 2: we expect to meet those numbers. As I said that
• 8:27
  Speaker 2: at the beginning, part of what is shaping this year
• 8:30
  Speaker 2: is shifting orders by retailers to delay some of their decisions.
• 8:35
  Speaker 2: So we saw a lesser third quarter and we expect
• 8:38
  Speaker 2: a higher fourth quarter.
• 8:40
  Speaker 1: So as people are getting ready to buy toys for
• 8:43
  Speaker 1: Christmas season, what do you want them to know the
• 8:47
  Speaker 1: most about what they should be buying in the toy world.
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  Speaker 2: You know, we are so proud of what we do
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  Speaker 2: Every Christmas. We create product that we believe stands out
• 8:57
  Speaker 2: in a very crowded aisle, the toy isle, and our
• 9:01
  Speaker 2: job is to continue to do things that will excite
• 9:04
  Speaker 2: and delight fans and partner with our retailers to create
• 9:08
  Speaker 2: an offering that will be very compelling. Of course, it's
• 9:10
  Speaker 2: always about Barbie, Hot Wheels, American Girl, Fisher Price U,
• 9:17
  Speaker 2: No Monster, High Endless collection across multiple price points. You
• 9:23
  Speaker 2: can buy a Hot Wheels Dykas's car for a dollar
• 9:27
  Speaker 2: twenty five, or you can buy a collector set that
• 9:31
  Speaker 2: we did together with Daniel Arsham, a famous artist, for
• 9:35
  Speaker 2: seven hundred dollars on matel creation.
• 9:38
  Speaker 1: And when you're dealing with Christmas, you have to figure
• 9:40
  Speaker 1: out you get new toys designed so that that's something different,
• 9:45
  Speaker 1: or you get old, reliable toys that you know the
• 9:47
  Speaker 1: parent is going to say, yes, this kid will like
• 9:49
  Speaker 1: it because it's been around for a while.
• 9:51
  Speaker 2: It's it's a combination of both, and it's art and science.
• 9:55
  Speaker 2: There's no playbook and there's no predictable you know Panett
• 10:00
  Speaker 2: patent that you try to follow in many ways, you
• 10:02
  Speaker 2: invent and you create product and create the demand. But
• 10:06
  Speaker 2: what we are seeing in a world of unlimited shelf
• 10:09
  Speaker 2: space and ubiquitous distribution, the big brands win. The big
• 10:15
  Speaker 2: brands that have the awareness and built in fan base
• 10:19
  Speaker 2: always have the advantage.
• 10:21
  Speaker 1: So if I could ask you the obvious question, what
• 10:23
  Speaker 1: is somebody who was born in Israel, educated to some
• 10:27
  Speaker 1: extent the United States, and really a media executive doing
• 10:30
  Speaker 1: running a toy company.
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  Speaker 2: Well, the opportunity was to take a company that thought
• 10:35
  Speaker 2: it's a toy manufacturing company and turn it into an
• 10:38
  Speaker 2: IP company.
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  Speaker 3: We own one of the strongest.
• 10:41
  Speaker 2: Portfolios in the world in children and family entertainment, and
• 10:45
  Speaker 2: the opportunity that I saw that excited me was to
• 10:49
  Speaker 2: come in and help the company capitalize and capture the
• 10:52
  Speaker 2: full value of our intellectual properties outside of the toy isle,
• 10:56
  Speaker 2: not instead of what we're doing toys, but in addition
• 10:59
  Speaker 2: to that.
• 11:00
  Speaker 1: So when you recruited to run Mattel, they had already
• 11:03
  Speaker 1: had a lot of CEOs who didn't last. So why
• 11:05
  Speaker 1: would you take this job?
• 11:08
  Speaker 2: Yes, being the fourth CEO in four years is a
• 11:11
  Speaker 2: challenging start, but I always believed in the company. I
• 11:15
  Speaker 2: believed in the brands, and I really saw the potential
• 11:19
  Speaker 2: of taking a company the thought it's in the manufacturing
• 11:22
  Speaker 2: business and tended to become an IPA company. And today
• 11:27
  Speaker 2: we're evolving even further from being an IPA company to
• 11:31
  Speaker 2: being a brand management company. And in a world where
• 11:34
  Speaker 2: everything revolves around big brands, this is a very exciting opportunity.
• 11:39
  Speaker 1: Let's talk about your background for a moment. You don't
• 11:41
  Speaker 1: have a Los Angeles accent where you live now, so
• 11:44
  Speaker 1: let's talk about where you were born. Where were you born?
• 11:47
  Speaker 1: I was born in Tel Aviv, Tel Aviv, and how
• 11:50
  Speaker 1: long did you live there?
• 11:51
  Speaker 3: I grew up in Israel.
• 11:52
  Speaker 2: I lived there until I was twenty six, and then
• 11:55
  Speaker 2: I came to America, went to Los Angeles to study
• 11:59
  Speaker 2: business to UCLA, and I stayed in the US and
• 12:04
  Speaker 2: lived in Europe ever since.
• 12:06
  Speaker 1: So when you were a boy, what was your ambition
• 12:08
  Speaker 1: to be a toy manufacturer or what.
• 12:10
  Speaker 2: I was a very happy kid, into sports and outdoors
• 12:16
  Speaker 2: and always wanted to get into business. When I grew up,
• 12:21
  Speaker 2: I always had a map of the world in my bedroom.
• 12:26
  Speaker 2: My mother came from England and her side of the
• 12:30
  Speaker 2: family lived in the UK, and we used to have
• 12:34
  Speaker 2: guests and friends from her side coming to Israel. And
• 12:37
  Speaker 2: I was always fascinated meaning people from other countries, other places,
• 12:43
  Speaker 2: and that probably formed part of my interest to do
• 12:46
  Speaker 2: things that would be more global.
• 12:49
  Speaker 1: But you were a champion athlete as a child, Is
• 12:53
  Speaker 1: that true?
• 12:54
  Speaker 2: I was an active athlete. I used to compete in swimming.
• 12:59
  Speaker 2: I played soccer in the league. I got into water sports.
• 13:03
  Speaker 2: Always did something to do with sports.
• 13:05
  Speaker 1: Okay. So you went to university in Tel Aviv, Tel
• 13:09
  Speaker 1: Aviv University, and what did you major? In?
• 13:11
  Speaker 3: Economics and management?
• 13:13
  Speaker 1: Okay? So you get your degree and you say to
• 13:14
  Speaker 1: your parents, thank you for raising me here, but I'm
• 13:17
  Speaker 1: going to move all the way to the United States.
• 13:19
  Speaker 1: In fact, so far in the United States, it's going
• 13:21
  Speaker 1: to be in California, so you maybe not see me
• 13:23
  Speaker 1: too much anymore. Is that what you said?
• 13:25
  Speaker 3: Pretty much? And what did they say?
• 13:27
  Speaker 2: They say, we'll support you, We right behind you. It's
• 13:30
  Speaker 2: what my mother did to her parents when she moved
• 13:33
  Speaker 2: from London to Tel Aviv and ended up doing the
• 13:37
  Speaker 2: same thing to her right.
• 13:38
  Speaker 1: She went to business school at UCLA. When you showed
• 13:41
  Speaker 1: up at UCLA where a lot of Israeli students there
• 13:43
  Speaker 1: then or not.
• 13:44
  Speaker 3: There were no no Israeli students.
• 13:46
  Speaker 1: No no, So you said to them, I want to
• 13:49
  Speaker 1: break into the movie business, and they said to you,
• 13:51
  Speaker 1: nobody Jewish is in the movie business right the uh?
• 13:55
  Speaker 2: You know, back in the day, it was a lot
• 13:59
  Speaker 2: about making building connections and relationships. Of course, today with
• 14:04
  Speaker 2: the advent of the Internet and availability of information, is
• 14:09
  Speaker 2: a lot harder. Back in the day, you had to
• 14:11
  Speaker 2: really find your way around, and I exactly did that.
• 14:15
  Speaker 2: I interned at five different companies when I was a
• 14:19
  Speaker 2: student at UCLA. With the calling card of an NBA student,
• 14:23
  Speaker 2: you can open a few doors. But from then on
• 14:26
  Speaker 2: it's about gaining the experience and building the relationships.
• 14:29
  Speaker 1: You graduated what did you do when you graduated UCLA
• 14:32
  Speaker 1: Business School.
• 14:33
  Speaker 2: One of the things I did not want to do
• 14:34
  Speaker 2: is to follow the bit and path of what NBA
• 14:38
  Speaker 2: students use to do at the time, get a job
• 14:41
  Speaker 2: in consulting or banking. I try to. I said, I
• 14:45
  Speaker 2: would find my own thing or do something unique and
• 14:49
  Speaker 2: different that is not in line with the business school playbooks.
• 14:53
  Speaker 1: In other words, you didn't want to be something important
• 14:55
  Speaker 1: like a private equity investor that's excited not to all right,
• 15:00
  Speaker 1: and you didn't want to be a McKinsey consultant. So
• 15:03
  Speaker 1: what did you do?
• 15:04
  Speaker 2: I ended up as part of my networking meeting Heim Saban.
• 15:10
  Speaker 1: A famous Israeli born businessman in the la right. But
• 15:13
  Speaker 1: at the time and he just started to come out
• 15:16
  Speaker 1: to the Power Rangers. He was not the hims Saban
• 15:19
  Speaker 1: that you know today. It was actually an American friend
• 15:21
  Speaker 1: who connected us. We spoke English in the beginning when
• 15:24
  Speaker 1: we met. He was not looking for to hire anyone
• 15:29
  Speaker 1: and I was not looking for a job. But within
• 15:32
  Speaker 1: fifteen minutes there was a physical clique between us, and
• 15:37
  Speaker 1: he said to me, why didn't you join me? I'll
• 15:40
  Speaker 1: teach you everything about my company. I always say that
• 15:43
  Speaker 1: I got my BA from Tel Aviv University, my MBA
• 15:48
  Speaker 1: at UCLA, and my PhD with him. Saban now Heim
• 15:52
  Speaker 1: Saban made a lot of money in cartoons. I think
• 15:55
  Speaker 1: it was at one point he sold it I thank
• 15:56
  Speaker 1: to Disney or it was it Disney or the Fox,
• 15:58
  Speaker 1: I can't remember who he sold it to. He sold
• 16:00
  Speaker 1: his UH cartoon company at a very good price and
• 16:03
  Speaker 1: then stayed in UH. The m the motion picture book
• 16:06
  Speaker 1: world and and the communications world. So you went into that.
• 16:10
  Speaker 2: He had a small production company UH in Los Angeles.
• 16:14
  Speaker 2: We ended up creating a joint venture with Fox that
• 16:17
  Speaker 2: was called Fox Kids or Fox Family at the time.
• 16:21
  Speaker 2: I moved to London to build the European business for
• 16:25
  Speaker 2: him for this joint venture for him and group at
• 16:27
  Speaker 2: Murdock at the time, and the UH opportunity was to
• 16:31
  Speaker 2: create and launch children's channels in local languages across Spay
• 16:36
  Speaker 2: television in Europe. This was the beginning of digital television
• 16:40
  Speaker 2: in Europe and we ended up building a company that
• 16:44
  Speaker 2: broadcasted children channels in over fifty countries and seventeen languages
• 16:49
  Speaker 2: that we took priv We took public and eventually sold
• 16:52
  Speaker 2: the whole group to Disney.
• 16:55
  Speaker 1: And uh, what background did you have that qualified you
• 16:58
  Speaker 1: to do all this?
• 17:00
  Speaker 2: It's a question that I used to ask myself at
• 17:03
  Speaker 2: the time, because the deetre for this joint venture was
• 17:07
  Speaker 2: to take the success in the US and export it
• 17:11
  Speaker 2: to the world. I was actually looking for someone to
• 17:14
  Speaker 2: run this business, to build this business from scratch and
• 17:17
  Speaker 2: run it, and we couldn't find the right person. And
• 17:20
  Speaker 2: I was going down the list of candidates with time
• 17:22
  Speaker 2: one day and no one was quite right for the job.
• 17:26
  Speaker 2: And he said to me, you know what, why don't
• 17:30
  Speaker 2: you do it? Why didn't you do it? And I said,
• 17:33
  Speaker 2: you know what, I will. When will you start? I
• 17:37
  Speaker 2: just did and I ended up we were on our
• 17:40
  Speaker 2: way to New York at the time. I continued from
• 17:41
  Speaker 2: New York to London, hired rented an office on my
• 17:45
  Speaker 2: way to the airport in London, went straight from the
• 17:48
  Speaker 2: airport to the office and launched the business.
• 17:51
  Speaker 1: So a headhunter presumably called you and said, what about
• 17:54
  Speaker 1: running a toy company? And you said, I don't really
• 17:57
  Speaker 1: know toys, or you didn't say that.
• 17:59
  Speaker 2: The opportunity in Mattel and what I was doing back
• 18:02
  Speaker 2: then is much broader than that. I was not pay
• 18:06
  Speaker 2: television executive per se. But we saw the opportunity of
• 18:11
  Speaker 2: taking brands and building businesses around them, and leveraging the
• 18:16
  Speaker 2: fandom and the relationship would have with people to create
• 18:20
  Speaker 2: commercial enterprises.
• 18:21
  Speaker 1: You're a toy manufacturer, but what percentage of your revenues,
• 18:25
  Speaker 1: let's say five years from now, would you like to
• 18:27
  Speaker 1: actually have revenues and er earnings coming from non toys,
• 18:31
  Speaker 1: let's say pictures or motion picture television, things like that.
• 18:35
  Speaker 2: We expect a significant amount of profit to come through entertainment.
• 18:40
  Speaker 2: This is all of the activities around around the brands
• 18:44
  Speaker 2: and IP. Most of this business is royalty driven, so
• 18:50
  Speaker 2: you see most of the lift in profit, some in revenue,
• 18:53
  Speaker 2: but mostly in profit. So much higher margin and better
• 18:57
  Speaker 2: quality profit and growing at a significant rate.
• 19:01
  Speaker 1: The toy that I remember brand that I remember buying
• 19:04
  Speaker 1: a lot of toys was called Fisher Price, and the
• 19:07
  Speaker 1: theory was that these were educational toys more than regular
• 19:10
  Speaker 1: display toys. But is that what Fisher Price was about.
• 19:13
  Speaker 2: Absolutely, Fisher Price is for obviously younger consumers, babies, toddlers,
• 19:20
  Speaker 2: and infants, and this is about quality, trusted product that
• 19:24
  Speaker 2: has deep educational and developmental value. We spend significant resources
• 19:30
  Speaker 2: in defining and creating product that do exactly that. And
• 19:34
  Speaker 2: we still have labs the headquarter of Fisher Prices in
• 19:39
  Speaker 2: East Aurora, Upstate New York, and this is what the
• 19:42
  Speaker 2: team does. This part of the industry is product driven
• 19:48
  Speaker 2: where you sell to the parents under the umbrella of
• 19:51
  Speaker 2: the Fisher Price brand, which stands for trust, quality and
• 19:56
  Speaker 2: developmental values for the child.
• 19:58
  Speaker 1: Now, every parent I know always says when their child
• 20:01
  Speaker 1: is about six months old, my child might be a genius,
• 20:04
  Speaker 1: really brilliant.
• 20:05
  Speaker 2: You know the many proofs that play is a very
• 20:10
  Speaker 2: important part of developing children, and we think about it
• 20:15
  Speaker 2: all the time in terms of what patterns, what engagement
• 20:19
  Speaker 2: can we do to develop children through play.
• 20:22
  Speaker 1: When I talk to somebody, the question you invariably want
• 20:25
  Speaker 1: to ask is how is artificial intelligence affecting your industry.
• 20:29
  Speaker 2: We're very excited about AI. We just recently announced a
• 20:32
  Speaker 2: partnership with open AI that has two parts. It's about
• 20:37
  Speaker 2: how we work and how we do things in terms
• 20:39
  Speaker 2: of infusing technology to accelerate innovation, invention and do what
• 20:45
  Speaker 2: we do even better and faster. The other part is
• 20:48
  Speaker 2: infusing technology into product and experiences and elevating and elevating
• 20:54
  Speaker 2: the play pattern and creating something that would be even
• 20:57
  Speaker 2: more attractive and more engaging to fans.
• 20:59
  Speaker 1: What type of toys do you imagine would come out
• 21:02
  Speaker 1: of a relationship with an artificial intelligence company.
• 21:05
  Speaker 2: As we're being very mindful of creating product that will
• 21:09
  Speaker 2: leverage and benefit from the technology, clearly thinking about safety, privacy,
• 21:14
  Speaker 2: and other important issues when we think about product that
• 21:19
  Speaker 2: infuses AI. This is not about an AI speaking Barbie.
• 21:25
  Speaker 2: We're thinking of AI in other ways to elevate the
• 21:29
  Speaker 2: play pattern and create experiences that are more engaging through technology.
• 21:33
  Speaker 1: You had a Barbie movie, maybe you'll have another one.
• 21:36
  Speaker 1: You have any other toys that might be made in
• 21:38
  Speaker 1: the movies or theatrical presentations.
• 21:41
  Speaker 2: Well, we are releasing next year in twenty twenty six
• 21:44
  Speaker 2: two big movies Masses of the Universe, a big world
• 21:49
  Speaker 2: creation superhero franchise that we are launching as a big
• 21:53
  Speaker 2: movie in partnership with Amazon MGM, and right after that
• 21:58
  Speaker 2: a movie based on Matchbak the Cars together with Skuidance.
• 22:03
  Speaker 2: What will be interesting is for people to see the
• 22:06
  Speaker 2: breadth of our offering from the Barbie Pink through the
• 22:11
  Speaker 2: dark world of Eternia and everything in between. But it's
• 22:15
  Speaker 2: important to say this is not just about Barbie and
• 22:18
  Speaker 2: not just about movies. It's about creating holistic experiences across
• 22:23
  Speaker 2: multiple verticals, multiple entertainment verticals that are all looking for
• 22:27
  Speaker 2: big brands to drive the business.
• 22:29
  Speaker 1: Masters of the Universe. Is not about Wall Street investment bankers, right, It's.
• 22:34
  Speaker 2: About he men, and I promise you you will enjoy
• 22:37
  Speaker 2: this movie as much as you enjoyed Barbie.
• 22:39
  Speaker 1: So today, what is your biggest single challenge as the
• 22:42
  Speaker 1: CEO of this important toy company? What is your biggest
• 22:45
  Speaker 1: worry every night when you go to sleep?
• 22:48
  Speaker 2: Mostly about missing opportunities. There's so many opportunities out there,
• 22:54
  Speaker 2: especially given the strength and appeal of our brands, that
• 22:59
  Speaker 2: priority prioritization becomes a key part of what we do,
• 23:03
  Speaker 2: and you always think about how do we not miss
• 23:06
  Speaker 2: on so many opportunities in front of us. There is
• 23:10
  Speaker 2: so much to play with and so much to play for.
• 23:14
  Speaker 2: The value creation is enormous for Matil, given the strength
• 23:18
  Speaker 2: of our brands and given what we do. Toys as
• 23:21
  Speaker 2: an industry is growing, is not going anywhere, and the
• 23:25
  Speaker 2: opportunity for Matil is to continue to grow within the
• 23:28
  Speaker 2: toy aisle and find so much more upside in all
• 23:32
  Speaker 2: these other verticals in a world where everybody is looking
• 23:37
  Speaker 2: for big IP and big brands to rise above the
• 23:39
  Speaker 2: noise level and reach the consumer.
• 23:42
  Speaker 1: Thanks for listening to hear more of my interviews. You
• 23:44
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• 23:48
  Speaker 1: wherever you listen