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TheStreet Open House

'Monster High': Mattel's Big, Bold Move

Stocks in this article: MAT


NEW YORK ( TheStreet) -- Mattel (MAT - Get Report) has officially unveiled its new Monster High franchise, reported to be one the largest the company has ever undertaken.

While the risks of creating the Monster High franchise has been significant, the rewards -- both financially and in a broader cultural context -- could be broad.

"What is important to keep in mind is that many of the larger toy manufacturers often define $100 million in sales as a 'successful' brand or product, so if it does reach those sales levels over the next year or two, the Monster High franchise could be meaningful to Mattel's top line," UBS analyst Robert Carroll said.

According to Carroll the, development costs for the franchise are expected to be in the tens of millions. He also noted that while this launch isn't without risks, the timing of it has been fortunate for the Mattel; it will be occurring at a time when the company's sales will be benefiting from new entertainment licenses such as Thomas and WWE, and greater growth from the upcoming Toy Story 3 movie release and the 2011 release of Cars 2, which the company also has toy rights to.

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"So even if the Monster High launch does not gain traction at retail, it will be at a time that Mattel will have other growth drivers supporting the company's top line, helping to balance the risk and reward."

Sterne Agee analyst Margaret Whitfield has noted that Mattel's lineup is the strongest she has seen in a decade.

The momentum will likely "build in 2011 with added toy lines and a full year of marketing the new Monster High franchise," she noted.

Mattel's Monster High franchise targets tween and teenage girls, and is designed to bring the "hip" teenage descendants of the world's most famous monsters, like Dracula and Frankenstein, to the trials and tribulations of high school.

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