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Hasbro reboots Furby toy for an iPad-obsessed generation

BLOOMBERG FILE PHOTO/DANIEL ACKER
IN AN EFFORT to appeal to a tech-obsessed generation this holiday season, Hasbro Inc. is rebooting its Furby toy.
COURTESY HASBRO INC.
IN AN EFFORT to appeal to a tech-obsessed generation this holiday season, Hasbro Inc. is rebooting its Furby toy.
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Posted 10/10/12

NEW YORK - In early 2011, Hasbro Inc. CEO Brian Goldner convened a team of designers, engineers and marketers to figure out the Next Big Toy.

They asked themselves a simple question: “What’s the most alive thing a toy can do?” After eight months of prototyping and kid focus groups, they had their answer: Reboot Furby, the cuddly robot that seems to develop a personality as you play and was one of Hasbro’s biggest-ever hits.

In resurrecting a plaything that had its heyday when Bill Clinton was president, Hasbro is betting the toy will appeal to adults who played with Furby as kids as well as tech-obsessed children this holiday season.

Still, a retro toy from the 1990s will be hard to market as a true innovation, said Sean McGowan, an analyst for Needham & Co. And at $60 -- double the original’s price -- it may be a tough sell for shoppers recovering from the recession.

“I don’t want to denigrate the technical innovation,” said McGowan, who is based in New York. “In terms of the basic toy, yes it’s probably better, but it’s the same.”

The Furby reboot is one of the most expensive and complex product-development projects in the Pawtucket- based company’s history. The largest U.S. toy sellers have also invested in its success. Wal-Mart Stores Inc., Target Corp. and Toys “R” Us Inc. all put Furby on their lists of hot toys, a sign they’re dedicating plenty of shelf space to it.

Declining revenue

Hasbro could use a hit after revenue declined 7.6 percent to $1.46 billion during the first half of this year and is projected by analysts to be little changed in the quarter ended Sept. 30. The toymaker traded at a premium on a price-to-sales basis to the 80 companies in the Standard & Poor’s 500 Consumer Discretionary Index from early 2003 through late 2011. It peaked at a premium of more than 100 percent in 2008. At $37.57 through yesterday, it now trades at a discount of 1.6 percent.

In part, the company’s sagging sales reflect an industry that’s being transformed by the surging popularity of mobile devices. As more kids of all ages turn to tablets such as Apple Inc.’s iPad for play, the more Hasbro and competitors such as Mattel Inc. need to invest in innovation, McGowan said.

Hasbro’s innovation is “pointed in the right direction, and they are certainly taking it seriously,” McGowan said. “There just needs to be a lot more, and that’s true for the entire industry.”

The new Furby is the first of more than 20 products the company plans to bring to life with technology, said Kenny Davis, the marketing director of new brand franchises, including Furby.

Puffball return

After years of contemplating a return of the puffball that sold more than 40 million units in the late 1990s, Hasbro indulged because advancements in computing power and robotics had become cheap enough for a substantial improvement to be affordable.

“It’s certainly something we couldn’t have done in years past,” said Davis, who was part of the innovation group. “I wonder if we could have done it a year earlier.”

Bringing back Furby was also a chance to leverage a built- in audience, a trend seen across toys as well as entertainment. Hasbro estimated that in 2000, when it stopped making Furby, half of girls and a third of boys ages 6 to 12 in the U.S. had one.

While the new Furby resembles its predecessor with a face that looks like Gizmo, the good character in 1984’s “Gremlins,” its innards feature an upgraded system of sensors and computer circuits. That and eyes made from liquid-crystal displays will bring Furby to life in new ways, according to Hasbro, and convince parents, teenagers and even shoppers in their 20s to shell out $60.

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