World’s Top 25 Most Valuable Toy Brands Could Lose up to US$3 Billion of Brand Value From COVID-19

21 September 2020
  • Toys sector heavily impacted by COVID-19 pandemic, brands could lose up to 20% of brand value, equating to a US$3 billion loss cumulatively
  • Lego retains title of world’s most valuable toy brand, brand value US$6.6 billion
  • Nerf is sector’s fastest growing brand, up 43% to US$587 million
  • My Little Pony claims title of world’s strongest toy brand, Brand Strength Index (BSI) score 89.8 out of 100

View the full Brand Finance Toys 25 2020 report here

Top 25 toy brands could lose up to $3bn from COVID-19

The world’s top 25 most valuable toy brands could lose up to US$3 billion worth of brand value as a result of the COVID-19 pandemic, according to the latest Brand Finance Toys 25 2020 report. Brand Finance’s analysis shows that the toys sector is a heavily impacted industry globally and could face a potential 20% loss in brand value.

Looking beyond the toys sector, the value of the 500 most valuable brands in the world, ranked in the Brand Finance Global 500 2020 league table, could fall by an estimated US$1 trillion as a result of the Coronavirus outbreak.

Brand Finance has assessed the impact of COVID-19 based on the effect of the outbreak on enterprise value, compared to what it was on 1st January 2020. The likely impact on brand value was estimated for each sector. The industries have been classified into three categories – limited impact (minimal brand value loss or potential brand value growth), moderate impact (up to 10% brand value loss), and heavy impact (up to 20% brand value loss

Lego retains top spot

Lego remains the world’s most valuable toy brand by a long way, despite its brand value dropping marginally by 3% to US$6.6 billion. Loved by generations of children around the world, the iconic toy brand has managed to remain relevant in a sector that has been under never-ending threat by the increased digitalisation of children’s games and accessibility of animated television online since the turn of the century. For decades, Lego has defended its brand value by positioning itself at the forefront of current events, from tailoring its advertising strategy after being criticised for reinforcing gender stereotypes, to – most recently – releasing an animated COVID-19 PSA featuring a Lego Batman figure.

Richard Haigh, Managing Director of Brand Finance commented:

“While the toys industry is predicted to suffer a heavy impact to its brand value, Lego’s strong marketing strategy and customer loyalty may allow COVID-19 to be an opportunity for the brand to reach new customers who are looking for ways to stay busy at home. However, marketing and brand awareness campaigns will only take the brand so far, as it is most likely to be faced by manufacturing and distribution issues heavily impacting both the toys and retail sectors”.

Nerf’s brand value blasts up impressive 43%

Nerf is the fastest growing toy brand this year, following an impressive 43% brand value growth to US$587 million. Despite the Hasbro-owned blasters brand citing significantly increased competition within the space from major retailers, which are undercutting their price, Nerf has made strong progress with its new product lines including Nerf Fortnite and Nerf Ultra. New product launches, paired with greater innovation across the brand, are supporting Nerf in rising to the challenge of this increased competition.

My Little Pony is sector’s strongest

In addition to measuring overall brand value, Brand Finance also evaluates the relative strength of brands, based on factors such as marketing investment, customer familiarity, staff satisfaction, and corporate reputation. Alongside revenue forecasts, brand strength is a crucial driver of brand value. According to these criteria, My Little Pony is the world’s strongest toy brand with a Brand Strength Index (BSI) score of 89.8 out of 100 and a corresponding elite AAA+ brand strength rating.

As well as overtaking long standing leader Lego to become the sector’s strongest brand, My Little Pony has celebrated an impressive 20% brand value increase to US$302 million. The brand’s cartoon series hit the headlines last year as it featured the show’s first same-sex couple, with the episode airing on US television in time for Pride Week.

Following delays in the production of the 2021 My Little Pony feature film, due to Coronavirus, animation work has restarted on the movie, which is being created under Hasbro’s global entertainment studio, eOne. The 2017 My Little Pony: The Movie grossed over US$61 billion in the box office globally.

View the full Brand Finance Toys 25 2020 report here

Note to Editors

Every year, Brand Finance values 5,000 of the world’s biggest brands. The 25 most valuable toy brands are included in the Brand Finance Toys 25 2020 report.

Brand value is understood as the net economic benefit that a brand owner would achieve by licensing the brand in the open market. Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors.

Additional insights, charts, and more information about the methodology, as well as definitions of key terms are available in the Brand Finance Toys 25 2020 report.

Data compiled for the Brand Finance rankings and reports are provided for the benefit of the media and are not to be used for any commercial or technical purpose without written permission from Brand Finance.

Media Contacts

Florina Cormack-Loyd
Florina Cormack-Loyd
Senior Communications Manager
Brand Finance

About Brand Finance

Brand Finance is the world’s leading brand valuation consultancy. Bridging the gap between marketing and finance, Brand Finance evaluates the strength of brands and quantifies their financial value to help organisations of all kinds make strategic decisions.

Headquartered in London, Brand Finance has offices in over 20 countries, offering services on all continents. Every year, Brand Finance conducts more than 5,000 brand valuations, supported by original market research, and publishes nearly 100 reports which rank brands across all sectors and countries.

Brand Finance is a regulated accountancy firm, leading the standardisation of the brand valuation industry. Brand Finance was the first to be certified by independent auditors as compliant with both ISO 10668 and ISO 20671, and has received the official endorsement of the Marketing Accountability Standards Board (MASB) in the United States.

Methodology

Definition of Brand

Brand is defined 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

Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors. Brand Finance evaluates brand strength in a process compliant with ISO 20671, looking at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance. The data used is derived from Brand Finance’s proprietary market research programme and from publicly available sources.

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 Brand Rating up to AAA+ in a format similar to a credit rating.

Brand Valuation Approach

Brand Finance calculates the values of brands in its rankings 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, while 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 Discount post-tax brand revenues to a net present value which equals the brand value.

Disclaimer

Brand Finance has produced this study with an independent and unbiased analysis. The values derived and opinions presented in this study are based on publicly available information and certain assumptions that Brand Finance used where such data was deficient or unclear. Brand Finance accepts no responsibility and will not be liable in the event that the publicly available information relied upon is subsequently found to be inaccurate. The opinions and financial analysis expressed in the study are not to be construed as providing investment or business advice. Brand Finance does not intend the study to be relied upon for any reason and excludes all liability to any body, government, or organisation.

The data presented in this study form part of Brand Finance's proprietary database, are provided for the benefit of the media, and are not to be used in part or in full for any commercial or technical purpose without written permission from Brand Finance.

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