Hasbro's HasLab Is A Scam

This is an opinion piece. It’s my opinion. I will try to explain why I think that Hasbro’s HasLab is a scam. I am not saying people who support HasLabs are dumb or idiots, there are very good reasons why collectors would want to have the HasLab offerings, most of which have been good products. What I want to achieve is that we all discuss and debate the very idea of crowdfunding by multibillion dollar toy giants and how Hasbro is pulling the wool over collector’s eyes. So please click through for my opinion piece and let’s all discuss Hasbro’s crowdfunding platform.

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Crowdfunding is a great idea. It’s meant for small creators to receive funding for something they otherwise could not afford to make. Bigger companies get funding for product development and production in a number of ways. They sell shares and receive fresh capital by investors, they already have a product portfolio which generates revenue and profits and some of that money is re-invested into product development and production. Sometimes you seek out venture capital and try to find investors directly, you pitch an idea to them and they either say “yes” or “no”. But since most of these things are not available to people who operate from their garage or kitchen crowdfunding is a legitimate means for them to get the necessary funding. And this involves almost no risk: a smalltime creator pitches an idea on a crowdfunding platform and either people think this is worth their money or not. If not… nothing bad happens. If yes… you’d better deliver a product that keeps all the promises you made.

In short: crowdfunding is for smalltime creatives and companies operating from a garage or kitchen who do not have the funds to kickstart production and development of something.

So the first basic question is: why would or should a multibillion dollar toy giant need to resort to crowdfunding? Ever?

The usual answers are like this:

– the product would not be carried by retailers, crowdfunding is the only way this can get made

– it’s too risky for Hasbro, people may not buy it, then they’d sit on a ton of unwanted products

– it’s a dream toy that can only be made like this

– it’s too niche

– people would just wait for discounts and not buy it at full MSRP, ruining Hasbro’s profits not making if worth their while

None of these arguments carry any weight.

Point 1: while retailers not wanting to carry an item would have been the death knell for any product in the past this is no longer true because Hasbro now has its own ecommerce platform which is available in all the major core markets.

The added benefit of Pulse is that Hasbro even makes a lot more profit on their own platform. And Pulse is growing, according to Hasbro’s earnings reports. You see, Hasbro sells toys and games to retailers at wholesale prices, since the retailers need their cut as well. But on Pulse Hasbro still sells toys at full MSRP… but does not have to share anything with retailers. So if, for example, a figure had a wholesale price of $14, which is then sold for $17, Hasbro would make an extra profit of $3 per figure for each of these sold on Pulse. In short: Hasbro would love for you to buy from Pulse. It earns them a lot of extra money. So Walmart or Amazon not wanting something? Is a non issue for Hasbro these days, make it a Pulse exclusive and make even more profit. They can even afford to provide discounts and still make profit.

Point 2: it is too risky – Hasbro is in the toys and games business, their entire raison d’être is to make toys. Why do you, does anyone, accept that Hasbro wants to avoid all risk of developing a new toy by asking customers to fund something upfront? This is not how it should work. Very, very few other companies would ever do this and in most other segments it would not be accepted at all. Car companies do not ask people to please fund development up front, Apple does not ask its loyal fans to give them money so they can make a new iPhone or airbud or anything. A multibillion dollar company conducts proper market research and they have managers with various business degrees for one reason alone: to find out what people may want and then to make something they want to buy. And their PR and brand managing department has one purpose only: to get people to want to buy something. The very idea that a multibillion dollar company neither wants to conduct proper market research nor wants to make a product people will want to buy is just nonsensical. In short: Hasbro and all the other companies like them are perverting the very idea of crowdfunding. Hasbro has all the money in the world to fund product development and production, they do not need customers to basically provide them with capital. It’s silly. They have all the means to conduct proper market research, they can find out what people may want. And they have the people who can convince customers they want something, even if maybe they don’t really. And they could always outsource marketing and have an ad agency develop a campaign.

Point 3: it’s too risky, let’s approach this from a different angle… why? In what ways? Sure, each and every new product carries a risk. Apple may produce a stinker of a product, they have done so in the past, a car may not sell. Rose Tico figures may clog up entire warehouses. But this is part of your business. This is why these companies conduct market research and hire all these Yale and Harvard graduates so they make mostly the right decisions. To want to avoid all and any risk means you have no reason to even have a business. This risk is part of your business and you hire talented people and conduct market research to minimize this risk, this is your literal job as a multibillion dollar company. Why do people accept that a toy giant basically admits they neither want to conduct proper market research nor try to find and offer a product people actually want – and instead ask customers to decide for them. Now fan polls are a different thing, it’s ok for Hasbro to listen to what their customers want, this is actually part of market research. But Hasbro should always carry the full risk here, it’s their business!

Point 4: about this being a dream project, being too niche, not enough would buy it… just look at the number of units sold on HasLab – this will tell you that this is basically never true. The Razor Crest sold almost 29,000 units, the Ghost close to 22,000, the Cantina almost 15,000, even the barge, when people were all new to crowdfunding, sold almost 9,000 units. And the same can be said about the various Marvel, Transformers or GI Joe HasLabs. With what these toys are going for, $250-$400 or now even $500 Hasbro’s gross revenue is always in the millions. In short: it’s more than they make with any mainline release. The Razor Crest alone earned them a gross revenue of about $10,000,000. And you think this toy, any other of these HasLabs, would not have sold on Pulse? Even if Walmart and the others do not want to carry these big box items? All these numbers prove there was sufficient demand, even for high end super expensive toys.

Point 5: people would just wait for discounts, it would not sell, it would ruin Hasbro’s margins, not making it worth their while – to say any of that is literally making excuses for Hasbro and for them not coming up with a product people DO want to have and DO want to buy at full price.
Why do products get discounts? Because people feel the product is not worth its asking price or they feel they do not get enough value for money or they may also think the product is just bad and nothing they want. The simple solution to that is: give people value for money, give them a product that convinces people that MSRP is justified, make a product people actually want. People buy full price iPhones for a reason. It is Hasbro’s duty, their obligation, to come up with products that people actually want, they have managers and experts for that in the company, who only think about this all day long. In the case of Star Wars things are somewhat more complicated because Disney and Lucasfilm are always involved here. But the same principle still applies. It just delegates some of the decisions to maybe Lucasfilm. Maybe they should not ask Hasbro to make a Rose Tico figure. Whatever. Normal market mechanisms would provide the necessary feedback. If Rose Ticos continue to fail in the market even Lucasfilm would eventually admit defeat. Accepting HasLabs as “normal” and “needed” basically means we tell Hasbro (and Lucasfilm, who are always involved here) it’s ok to make sub par offerings at exorbitant prices, just add that ONE thing people really want and tell them you can only get it if you buy this other thing as well… and I am looking at you, Tonnika sisters!

Fact is Pulse and even HasLab is basically an outlet store, i.e. it is a direct sale from the company making something to their customers, retailers are circumvented. And you know what… outlet stores have outlet prices for this very reason, also called “factory sale”, people get great deals and they flock to these outlet stores to get products at much cheaper prices. Sometimes companies even make products exclusively for outlet stores. And these companies can afford to offer outlet prices because no retailer gets their cut. It is a direct sale, 100% of the price goes into their pockets. Yet Hasbro’s outlet store asks you to pay full MSRP and maybe, down the line, there will be some discounts. If you are lucky. And HasLab is just the same. You pay full MSRP even though no retailer is involved here.

I sometimes wonder if HasLab being so successful is because of US consumer culture. I assume here that most people who back HasLabs are from the US, and only some from Europe and other parts of the world. US consumers have been trained to accept tipping culture as perfectly fine and normal, it’s part of your everyday life. When in fact most countries across the globe do not have a tipping culture (not like that), in some countries staff is even offended if you offer them a tip (Japan, for example).

Just like with Hasbro and their HasLabs you can come up with any number of excuses for tipping culture: the employees need the money (yes, they do), the poor restaurant owner can’t afford to pay higher wages… but when you really look at things all of this falls apart. A business that can only exist because you exploit your workers and tell them to rely on alms given to them by customers simply has no reason to exist. Your business model should always include fair payment of staff. Calculate prices accordingly. But since restaurants or other things do exist all across the globe where restaurant staff gets substantially higher payment and are not dependent on tips to actually have a living wage it highlights the absurdity of tipping culture. If tipping culture was needed for restaurants to exist no other country but the US would have them. But Germany has them, the UK, Denmark, Japan (where giving a tip is considered an insult)… Yet many in the US, even if somewhat disgruntled, seem to accept it. And say “it can’t be changed”.

I see HasLab in the same category… Hasbro tries to convince us they neither can fund product development nor carry the risk of selling an item on the free market so customers providing the necessary funds upfront and at fixed prices is the only way they can make certain things.

And it’s absurd. But given how successful most HasLabs are they have already successfully pulled the wool over our eyes.

Hasbro circumvents the free market with HasLab, they are allowed to have fixed prices that are not influenced by one of the core principles of a free market: that demand has an impact on prices. People cite the throne room and how it apparently did not sell well enough on Pulse as an example for why the Cantina or other things need to be HasLabs. Which is absurd reasoning: all this proves is that Hasbro failed to make the throne room compelling and attractive enough. If a product does not sell then because customers either think it’s bad or not worth the price. So Hasbro’s job is to come up with a version of the throne room that checks all these boxes. Add more figures. Make it more attractive. Saying “it needs to be HasLab” basically means you admit it’s a bad product that would have no chance on the free market. It must not be like this. There is no excuse for Hasbro not to give their customers value and a compelling product people want to have. And as evidenced by the Razor Crest and all the other things they even DID come up with something people want. It never ever needed to be a HasLab to begin with.

Hasbro already successfully convinced collectors that they have to buy bad products in order to maybe get better products down the line. To “support the line or else it will be cancelled out of spite”. Just think about it and the logic behind this. No. Products that are bad must fail so the product developers and decision makers learn what people actually want. Conduct proper market research to avoid Rose Tico disasters. If you feel Hasbro is holding you hostage or blackmailing you think long and hard why you would ever want to buy something from such a company.

And if it really is so that Hasbro cannot afford to make Star Wars toys anymore… because margins are too low, they cannot afford discounts anymore… then maybe it’s time for Hasbro to quit the business of making Star Wars toys altogether and to let a small company take over without all this overhead. It would be entirely ok for a very small company like Big Boss Studios to crowdfund a Star Wars playset or diorama. But you can rest assured they would give you real value for your money. Hasbro as a multibillion dollar toy giant, the #3 or maybe #4 toy company worldwide, with revenue in the $5 billion dollar range, does not need crowdfunding. Ever. For nothing.

They resort to HasLab because HasLab is a profit margin protection scheme. It prevents discounts. It removes most of the risk for them.

And collectors who support this are only hurting themselves and their wallets. Hasbro perverts the crowdfunding idea. Their HasLab is mostly just a scam. Virtually none of the things offered on HasLab could not have been sold either directly through retailers or on their own ecommerce platform and by other etailers. Not when these things often sell in excess of 20k units. Even close to 15k Cantina units is more than enough given how much Hasbro is asking for. We talk something in the $6.5 – $7 million revenue range here. Margins could be in excess of 20% perhaps. Much more than for a mainline release.

And yes, the Cantina would not have sold for $400 or $500 on Pulse, ultimately, and I would say almost everyone agrees here. They would have needed to offer discounts. But why is that so? Because its perceived value is not $400 or $500. It lacks ANY play functionality, it has no electronics, the alcoves are barebone structures, it’s basically an assortment of tables, chairs and many, many, many cups and glasses. If Hasbro had sold this on Pulse or through retailers they would have needed to try harder, to make it more compelling, to make people believe it’s worth all this money, add electronics, add more figures, anything to make it a deal customers want to make. Same with the Razor Crest: why do the engines have no light? When even basic $60 vehicles usually come with lights and even sound? My $50 Playmobil DeLorean comes with lights and an illuminated Flux Compensator. Hasbro could get away with the minimum because it’s HasLab.

Supporting HasLab means not only that you give Hasbro the license to fleece you, you also tell them they can be lazy. It is not up to the customer to ever fund anything upfront when a multibillion dollar company is making a new product. It’s Hasbro’s job to come up with things we want and we feel are worth the money. It’s their job to make it an attractive offering. And if Hasbro can no longer really do that… then it’s time for them to exit the business. Let an actual garage company take over. At least crowdfunding would make sense then.

Ok, this is what I have to say on the topic. But what do you think? Do you think HasLab is a great idea and you love it? Or do you tend to agree with my assessment? Do you feel the genie can be put back in the bottle?

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