Mattel Reduces Manufacturing to Focus on Movies

Mattel, the second-largest toy company in the U.S., is making big changes. It is reducing its manufacturing operations and relying more on movies and licensing. CEO Ynon Kreiz spoke about this shift at an investment conference. The company is closing factories and focusing on intellectual property. Instead of making all its own toys, Mattel is letting other companies use its brands like Barbie, Hot Wheels, and Uno. It earns royalties from these deals while producing fewer toys itself.

Barbie Movie Success Leads to Major Business Growth

The Barbie movie in 2023 was a huge success. It helped Mattel earn money in new ways. More than 15 companies created Barbie-themed products, including clothes, furniture, and even toothbrushes. While Barbie dominated pop culture, Mattel also restructured its manufacturing. In recent years, it has closed or consolidated five factories. Another factory is set to close this year. The company is making these changes to stay competitive and focus on new opportunities.

Reducing Dependence on China for Toy Production

Mattel has been cutting back on manufacturing for six years. This shift began before tariffs became a concern. The company wants to depend less on China, which currently produces about 40% of its toys. It is working with other low-cost countries to spread production. By shifting manufacturing, Mattel hopes to avoid problems caused by rising tariffs. This strategy is also being used by other toy companies looking to reduce risks.

Tariffs Could Make Toys More Expensive for Consumers

The toy industry faces serious challenges from tariffs. China produces about 80% of the world’s toys, and a 20% tariff on these goods could increase costs. Mattel also manufactures in Mexico, which could face a 25% tariff after April 2. The company is exploring other options to avoid price hikes. Toy makers everywhere are looking for alternatives to reduce their dependence on any single country.

Mattel Plans to Spread Production Across Multiple Countries

Mattel wants to make sure no single country is responsible for more than 25% of its production. CFO Anthony DiSilvestro shared this goal at the conference. He did not provide an exact timeline for achieving it. By spreading out production, Mattel hopes to reduce risks tied to tariffs and supply chain disruptions. Other major toy companies are likely to follow the same strategy.

New Movies Are a Key Part of Mattel’s Future Strategy

Mattel is not just making toys anymore. The company is producing more movies to boost its brands. Right now, it is filming Masters of the Universe in London and Matchbox in Morocco. CEO Kreiz also revealed that 14 more movie and TV projects are in development. He believes that even without another Barbie-level hit, these projects will help Mattel grow. The company is investing in entertainment as a long-term strategy.

Hot Wheels Sales Surpass Barbie Merchandise

Mattel shared another key detail about its business. In the past year, sales of Hot Wheels products were even higher than Barbie-related merchandise. This shows that the company’s strength lies in multiple brands, not just one. Mattel plans to continue expanding its biggest franchises through movies, licensing, and strategic partnerships. This approach will help it stay strong in an evolving market.