While the risks of creating the
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
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
, which the company also has toy rights to.
"So even if the
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
franchise," she noted.
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.
Carroll said that Mattel is seeking increased control over the growth of its entertainment revenues, and "while the company has historically been a major licensee of entertainment content from such companies as
, it is now looking toward the successful launch of the
franchise to demonstrate that it, too, has the ability to create a franchise that can become culturally relevant among teen and tween girls."
In a press release, Mattel said that the property will be delivering "rich" content and "relatable" storytelling through publishing, Web, animation and live-action theatrical entertainment, and launching consumer products in toys, apparel and accessories.
While there have been concerns about Mattel's margins due to higher raw material costs, labor, freight and distribution, KeyBanc Capital Markets analysts believe that Mattel should be able to offset them and preserve margins, given that it's implemented low to mid single-digit price increases on the 2010 product lines.
Those analysts believe that Mattel has the ability to further push up prices if input costs continue to rise.
5 Consumer Product Launches to Watch in 2010
-- Reported by Andrea Tse in New York
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