What the CEO of toymaker Hasbro learned from a failed media acquisition that led to $1.7B loss: ‘We’d strayed from our core mission’

Since becoming CEO in early 2022, Hasbro CEO Chris Cocks' biggest move has involved radically shrinking the business to better reset it for growth. How? By focusing on what it does best: making toys and games.

Last year, Hasbro sold its eOne television and movie business to Lionsgate for about $500 million, a steep drop from the $4 billion that Hasbro paid only four years earlier. (Hasbro had sold off some eOne assets previously but kept things like the Peppa Pig brand.) For Hasbro, best known for brands like Play-Doh, Monopoly, and My Little Pony, the original rationale for the deal was to evolve into a media contender, combining the indie studio's film and TV unit with its own.

However, film and TV production is expensive, and the deal hurt Hasbro's financial results. Hasbro was blowing up to $600 million in production a year. Additionally, the newly acquired eOne diverted resources from Hasbro's toymaking faction at a time of stagnation in the industry when innovative toys were especially needed to shake off the doldrums.

"We hadn't paid enough attention to our core toy business. We hadn't been upgrading our internal talent or investing in our supply chain or our innovation pipeline," says Cocks, who, before Hasbro, had held a top job at Microsoft's Xbox division.

While business is still tough for Hasbro, thanks to a toy market that has slowed after its pandemic boom, and lower revenue now that eOne is gone, Cocks says that Hasbro can now focus on its lane and go all-in.

"Nobody's really purely toys anymore or pure video games. It's just kind of all mushed into one now. I think we are in the industry of play."

This interview has been edited and condensed for clarity.

Fortune: Let's start with a macro question. When does the toy market stabilize and even begin to return to growth?

Pre-pandemic, the toy industry was growing by about 2% per year. Then the pandemic happened, and growth ballooned to 40% a year between 2020 and 2022. Basically, we are returning to what would have been the baseline.

Does the industry need a blockbuster toy like—I'm dating myself here—Tickle Me Elmo to shake off the doldrums?

A hit always helps for sure, and it still is a relatively hit-driven business. That said, I think some of the big brands have done a good job of building hits to have continuity for those brands and franchises. Last year, our Furby Kirby was one of the top toys in 2023, and it is doing really well in 2024. You have a brand like Play-Doh that doesn't have a hit product, but it's always a top-performing toy. We are focusing more and more on evergreen play patterns. And if there happens also to be a hit or a big entertainment moment, we will chase it.

Why are Furbies hot again?

The great thing about the toy industry is that you have a new set of customers every three or four years. We've kind of reinvented the premise of the Furby, which is a very special toy, like a kid's best friend. The real innovation is that not only did we have the traditional $60 to $70 Furby, but we added a $10 little buddy version called Furblets, and that product has really taken off.

You recently cut half of your product assortment. Why is that?

In just about any category, customers are getting overwhelmed. Interestingly, when there is more choice, top-performing items become even more dominant, as you can see with music on Spotify. You see that with Netflix, and you see that in the toy aisle. About half of the items we cut generated less than 2% of our sales volume and were unprofitable for us.

Let's talk about Dungeons & Dragons, a Hasbro game revered by countless geeks. How do you revitalize a decades-old product? 

Dungeons & Dragons was big for Gen X, and now it's big for Gen Z. Gen X played it with their kids to a certain degree. A couple of things went into bringing it back. It's still kind of crunchy, and it's for nerds like me, but it's a lot more accessible than it was. We made it more flexible with rules and paired it with streaming, and that really helped popularize the game. Forty percent of our player base is women.

Last year's D&D movie did okay but not great at the box office. Did that give you pause about tying products to movies?

The movie taught us that we can create better adjacencies for Dungeons & Dragons. It has a bright future. While movies are an option, I'd be more of a fan of more game streaming.

Is the stereotype about D&D players being socially awkward true? 

I don't claim to be the biggest social butterfly in the world, but over the last eight years, I probably made more new friends playing D&D than I have since college. And that's not supposed to happen in your forties. It's a great way to connect with people, and it's very social.

Games are such a big part of Hasbro now. But if someone still calls Hasbro a toy company, does that irk you?

I understand why they would. I think we're more of a games company than a toy company, but toys are obviously important to us and a big part of our legacy. Nobody's really purely toys anymore or pure video games. It's just kind of all mushed into one now. I think we are in the industry of play. The center of our company is play.

You came to Hasbro from Microsoft’s gaming division. What have been some of the challenges you've faced overseeing Hasbro's toy side?

I had already been at Hasbro six years before becoming CEO, so I was an outsider insider, running most of our games. That portfolio helped me understand the company, how it distributed its products, what its supply chain was like, and the personalities inside the company. I've been a lifelong fan of toys, and I play with them. It's probably a little bit embarrassing how late in life I actively played with toys. I was 12 or 13 when I put them down.

Your biggest move at Hasbro was selling your movie studio eOne to Lionsgate in 2023 at a fraction of what Hasbro bought it. That helped with profits but still lowered revenue by nearly 20%. What prompted the move?

When I became CEO, I thought, What is our core? What is our focus as a company? And it became quickly clear to me that it's about play and creating shared joy through play. One of my first decisions within my first few months was to get out of film and TV production, which had little to do with our core mission. We'd strayed from our core mission. We had spent three years trying to integrate it, and it wasn't going well, and we hadn't paid enough attention to our core toy business. We hadn't been upgrading our internal talent or investing in our supply chain or our innovation pipeline.

Given your tech background, do you think more toys need more tech?

Our great Furby toy has animatronics associated with it, and there are basic interactions between Furbies powered via some version of Bluetooth. But so many other digital integrations don't really work. A toy should just come out of the box and be ready for a kid to play with. So, tech can create friction.

Correction: The headline was updated to reflect the fact that Hasbro had sold off some components of eOne before selling the division entirely last year. The $1.7 billion figure comes from a goodwill write down and loss on the disposable of a business that is listed in Hasbro's most recent annual report.

This story was originally featured on Fortune.com