· Lego remains the toy industry’s most valuable and strongest brand, with a brand value of nearly US$7.6 billion and an exceptionally high AAA+ brand rating.
· At US$1.0 billion, Bandai Namco maintained second place for brand value, despite the company’s other brands recording severe declines.
· Jockeyed to success by My Little Pony, Hasbro is the best performing toy brand of 2018, growing 29% to US$272 million.
Lego remains the world’s most valuable and strongest toy brand, with a brand value of nearly US$7.6 billion, an exceptional Brand Strength Index (BSI) score of 90.6 and a corresponding brand rating of AAA+. Despite this position, Lego’s brand value actually slipped this year, down 0.3%. Whilst not substantial, it represents a wider challenge for the brand as revenue fell 6% in the first half of 2017 and net profit was down 3%.
China is the brand’s biggest developing market, enjoying double-digit growth in the first half of 2017, but the more established markets have not been as fortunate. Since sales in Europe and the US account for approximately 75% of all revenue, to increase its brand value Lego must turn to untapped markets, especially in Asia, and make adjustments to remain relevant in the established ones. Lego recently formed a partnership with tech giant Tencent to develop licensed games, videos, and other content for Chinese children. This provides an opportunity for Lego to maximise growth in China by entering the digital space, which should positively impact its brand value in the future.
David Haigh, CEO of Brand Finance, commented:
"Exceptional growth levels, like those enjoyed by Lego in recent years with revenue going up 25% in 2015 and reaching an all-time high in 2016, are very difficult to sustain. However, thanks to its focused brand strategy and global presence, Lego retains a competitive advantage in brand strength. Building on the success of partnerships with franchises such as Star Wars and Batman, that allowed it to branch out beyond the iconic bricks, and on continued expansion in emerging markets, especially China where it enjoys double-digit growth, Lego has substantial potential as a brand."
Bandai Namco defends second place
Bandai Namco remains the second most valuable toy brand this year, with a brand value of US$1.0 billion, up just 1%. Its slow growth coincides with a drastic decrease in brand value for the company’s other brands in the table, as Yo-Kai Watch, Mobile Suit Gundam, and Power Rangers have fallen 25%, 26%, and 35%, respectively. The Japanese toy market has experienced falling sales in recent years due, in part, to a population decrease in the 0 to 14 age group.
Despite these challenges, Bandai Namco has managed to keep its second position through a global diversification plan and new agreements. The company recently announced a strategic partnership with Dontnod Entertainment to facilitate the creation of a new IP game based on a narrative adventure experience to take place in a fictional US city. This represents the next stage of Bandai Namco’s diversification strategy, keeping a worldwide audience in mind, and likely benefitting its brand value and brand strength in the future.
My Little Pony jockeys Hasbro to success
Owing to the success of its portfolio of brands in the table, including My Little Pony, Nerf, and Monopoly, Hasbro is the fastest-growing toy brand, with brand value increasing 29% to US$272 million. The majority of Hasbro’s brands improved this year, with several increasing their brand value by more than 20%. Although Mattel’s portfolio of brands in the table have a higher value than Hasbro’s, Mattel dropped from sixth to ninth, swapping places with Hasbro, with a 4% decline in brand value to US$243 million.
My Little Pony, Hasbro’s best-performing brand, galloped up the ranks growing 27% in brand value to US$252 million. It is the second strongest toy brand in the table, with a BSI score of 87.9 and a brand rating of AAA. The brand has transformed itself over the years, bringing its traditional dolls into the entertainment world and reaching its audience through different channels. Most recently, the ‘My Little Pony’ movie was well-received, which led to the creation of a new TV show and a line of ‘Equestria Girls’ dolls. Placing the My Little Pony brand on the big-screen is a step in the right direction and capitalising on this will help boost the brand’s revenue and improve its brand value in the future.
Note to Editors
Every year, leading valuation and strategy consultancy Brand Finance values the world’s biggest brands. The 25 most valuable toys brands in the world are included in the Brand Finance Toys 25 2018 league table.
Brand value is equal to a net economic benefit that a brand owner would achieve by licensing the brand. Brand strength is used to determine what proportion of a business’s revenue is contributed by the brand.
More information about the methodology as well as definitions of key terms are available in the Brand Finance Toys 25 2018 report.
Data compiled for the Brand Finance Toys 25 league table and report is provided for the benefit of the media and is not to be used for any commercial or technical purpose without written permission from Brand Finance.
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About Brand Finance
Brand Finance is the world’s leading brand valuation and strategy consultancy, with offices in over 20 countries. Brand Finance bridges the gap between marketing and finance by quantifying the financial value of brands. Drawing on expertise in strategy, branding, market research, visual identity, finance, tax, and intellectual property, Brand Finance helps brand owners and investors make the right decisions to maximise brand and business value.
Definition of Brand
Brand Finance helped to craft the internationally recognised standard on Brand Valuation – ISO 10668. It defines brand as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.
Brand Strength is the efficacy of a brand’s performance on intangible measures, relative to its competitors. In order to determine the strength of a brand, we look at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance.
Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding rating up to AAA+ in a format similar to a credit rating.
Brand Valuation Approach
Brand Finance calculates the values of the brands in its league tables using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668. It involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ understood as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.
The steps in this process are as follows:
1 Calculate brand strength using a balanced scorecard of metrics assessing Marketing Investment, Stakeholder Equity and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100.
2 Determine royalty range for each industry, reflecting the importance of brand to purchasing decisions. In luxury, the maximum percentage is high, in extractive industry, where goods are often commoditised, it is lower. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database.
3 Calculate royalty rate. The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.
4 Determine brand-specific revenues by estimating a proportion of parent company revenues attributable to a brand.
5 Determine forecast revenues using a function of historic revenues, equity analyst forecasts, and economic growth rates.
6 Apply the royalty rate to the forecast revenues to derive brand revenues.
7 Brand revenues are discounted post-tax to a net present value which equals the brand value.