Hasbro Inc. and Mattel Inc. combined would result in a toy company with a large but hardly dominant share in a highly fragmented industry, according to a commentary in today’s Wall Street Journal. The two companies, which recently engaged in talks about a possible tie-up, would control just over one-third of the U.S. market for traditional toys and games, according to Euromonitor International Ltd. On a global scale, they would control 22 percent of overall sales. With a low barrier to entry, the toy industry is populated with hundreds of inventors and small firms seeking to create the next hit. Nevertheless, Hasbro buying Mattel would have a significant impact on the sector. According to toy consultant Richard Gottlieb, inventors would have one less potential buyer of their ideas. Entertainment companies like Walt Disney Co. would no longer be able to play the two biggest companies off each other to extract the best terms on licensing deals. Retailers would face a supplier with much greater sway. “It’s highly destabilizing to an industry to have such powerful and prominent players in the industry having this kind of disruptive situation,” Gottlieb said. “If you’re an inventor, licensor or retailer, this is a concern.”
