Tuesday April 27 4:40 PM ET

## The Force May Push Hasbro to No. 1

By TERRENCE PETTY Associated Press Writer

PROVIDENCE, R.I. (AP) - Out on the Toy Wars battlefield, Luke Skywalker is slashing away with his light saber - but Barbie's leaps are keeping her beyond reach.

Barbie is defending Mattel's title as the world's No. 1 toymaker. Luke is trying to snatch it for Hasbro.

But wait. Obi-Wan Kenobi, returned from the dead and years younger, is about to come onto the field for Hasbro. And he's got about 100 ``Phantom Menace'' figures to back him up.

Will the force be with Obi-Wan? Will Hasbro rule the toy trade?

It's anyone's guess.

Hasbro, the No. 2 toymaker, has battled Mattel for what seems like light years, launching competing products designed to win the hearts of children and the money of parents.

Now, Hasbro is about to launch a major offensive.

On Monday, the company will introduce the most-hyped line of toys in the history of the industry: a series of action figures based on ``Star Wars: Episode I - The Phantom Menace,'' the eagerly awaited new film by George Lucas.

About 100 figures will begin appearing in stores 16 days before the May 19 release of the movie, which tells the story of Darth Vader before he became evil. Hasbro will have other spinoffs as well.

With the new toy line, said industry analyst Chris Byrne, Hasbro has ``a good shot'' catching Mattel in sales. Hasbro, based in the Providence suburb of Pawtucket, reported a record $668.4 million in revenues in the first quarter of the year - a 38 percent increase from the same period a year ago. Mattel, headquartered in El Segundo, Calif., reported first-quarter sales of $692.1 million, down 2 percent.

Hasbro expects great things from the new ``Phantom Menace'' toy line, which has generated hoopla nearly as noisy as that of the new movie. In an unprecedented move, most Toys R Us stores will open at 12:01 a.m. on May 3 to greet the expected hordes.

``Put on your seat belt,'' said Byrne, editor of the New York-based Toy Report newsletter. ``I think you're going to see lines of people around the blocks at Toys R Us.''

With two more ``Star Wars'' movies planned over the next few years and Hasbro holding a 10-year licensing agreement, analysts say the toymaker could see $5 billion in ``Star Wars'' spinoff sales over the next decade.

``It's an opportunity that doesn't come often,'' said Alan Hassenfeld, Hasbro's chief executive officer.

Hasbro went to great lengths to woo Lucas, the brain behind ``Star Wars.''

Hassenfeld even dressed up as Obi-Wan Kenobi for a presentation at Lucas' Skywalker Ranch in California.

``I will do some strange things'' to get a deal, Hassenfeld conceded.

Rights to the ``Phantom Menace'' line were not cheap.

Hasbro has agreed to pay about $600 million in advances on royalties to Lucas in installments over nine years. That amount includes advances promised to Lucas by Lewis Galoob Toys, which was bought by Hasbro last year.

While excited about the Phantom Menace toy line, Hasbro executives point out that they have already introduced some of the 1990s biggest hits - like Furby, Pokemon and Teletubby.

Another star performer for Hasbro is its interactive division, the maker of video game versions of classic board games like Monopoly, Scrabble and Risk.

Earlier this month, Hasbro Interactive announced it had obtained the rights to make and distribute video games based on 11 Namco Ltd. properties, including the well-known Pac-Man and Ms. Pac-Man.

Mattel, which has seen declining sales of traditional toys like Barbie dolls, has also been aggressively developing CD-ROMs and other high-tech toys to better keep pace with sophisticated interests of today's children.

Even if Hasbro overtakes Mattel, there's no guarantee it will keep the crown. Hasbro was the No. 1 toymaker in the 1980s, but lost out to Mattel.

And so the Toy Wars grind on.

In October, Mattel will launch Mattel.com, a Web site through which it will sell popular toy brands like Barbie dolls and Matchbox cars.

The Toy Wars, it appears, may be increasingly fought in cyberspace.

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Article is quoted from Yahoo News and is not edited in any way.
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