Kre-O and the Elephant in the Room

[Tyrant]

Honestly, I think LEGO is the one that ripped off Hasbro in this case. Hasbro paid good money to Lucasfilm for exclusive rights to produce Star Wars action figures, and yet LEGO was able to produce minifigures of Star Wars characters. Sure, they're "constructable", but they're clearly in violation of the spirit of the law there. LEGO made out like bandits by producing Star Wars figures, which are probably on par collectible-wise with the Hasbro figures. LEGO Star Wars is now a big brand on its own-- I expect Hasbro's kicking themselves for not haggling more with Lucasfilm over this.

DaveE

If what I have read is accurate, Lucas is a shareholder in Hasbro. To the tune of millions of shares. I have my doubts that he would allow LEGO wiggle room. This is the guy who sued a medical device company for calling a medical laser a lightsaber and if you pay attention to the commercials for Droid phones you will see the notation that Lucasfilm owns the term Droid. Lucasfilm doesn't sit idle when they believe they have grounds to sue. If, somehow, this works I do expect Lucas to transfer the SW building license to Hasbro. It happened with the card game. It was produced by Decipher, until the entire game license was transferred to Wizards of the Coast, which is owned by Hasbro (though the game license is now up for grabs). It made sense from a business standpoint to have everything under one roof. Especially one that allows Lucasfilm to double dip (money directly from licensing and then indirectly from increased share prices) since they own part of that roof. Of course, Kre-O has to succeed first and I don't think that will happen.

[MrCRskater]

It happened with the card game. It was produced by Decipher, until the entire game license was transferred to Wizards of the Coast. . .

That was so sad! The Decipher game was outstanding, and any Wizards of the Coast game just couldn't stand up. God forbid Lucas ever pulls the rug out on LEGO that way. . .

[Tyrant]

It happened with the card game. It was produced by Decipher, until the entire game license was transferred to Wizards of the Coast. . .

That was so sad! The Decipher game was outstanding, and any Wizards of the Coast game just couldn't stand up. God forbid Lucas ever pulls the rug out on LEGO that way. . .

I don't think Kre-O will last long enough to make it a viable option. Beyond that, the deal with LEGO may be too profitable for Lucas to consider changing things. WotC did recently have to abandon the Star Wars license because they weren't making enough money to justify the expense so who knows. If Kre-O does somehow last though, I would be mildly concerned.

[legodavee123]

If what I have read is accurate, Lucas is a shareholder in Hasbro. To the tune of millions of shares.

Well, if it's only a million shares, that's peanuts. I believe there's in the ballpark of 136 million shares outstanding for Hasbro, so a million, while a decent chunk for a single holder, is small potatoes overall. We're not talking about a level of majority ownership or anything.

Lucasfilm doesn't sit idle when they believe they have grounds to sue.

I missed the part where Lucasfilm would have grounds to sue? Hasbro could try, but precedent's been established, so it's unlikely to be successful to any degree.

Back in the late 1990's, as I understand it, there was a bidding war between toy companies on the various licenses for Star Wars merchandise. As I recall, Hasbro won the major license for toys, and LEGO won the license to produce constructable toys. I seem to remember that there was one other company that one some sub-area of the licensing (I don't remember what for), and Hasbro immediately purchased the company in order to have more control over the full SW license.

Anyway, my guess is that when Hasbro got the rights, they didn't really consider the appeal of the LEGO Star Wars combination, and figured it probably wasn't worth their time fighting to make sure that LEGO couldn't produce figures. But hey, what do I know? Maybe they really DID fight really hard? I never heard about it if so. But now, LEGO Star Wars is huge-- probably bigger than either Hasbro or LEGO expected. I mean, who would've guessed that a movie franchise where the final film was released in 2005 would still be so actively popular 6 years after the fact?

The point I was making is basically that Hasbro got the rights to produce Star Wars action figures, but there's LEGO producing their own Star Wars figures. To me, that's a pretty clear infringement on Hasbro's rights-- LEGO just gets off on a technicality because they own the "construction toy" rights, and the figures are "constructable", regardless of how little their figures' constructability has had to do with their success. IMHO, LEGO got lucky by being able to produce Star Wars minifigures, and Hasbro got more competition than I think they were expecting.

If, somehow, this works I do expect Lucas to transfer the SW building license to Hasbro.

I would be surprised if that happens, but I could see Hasbro trying to make it happen. If Kre-O makes it as a brand, then sure, Lucasfilm might consider distributing the license over the Hasbro. Certainly I expect Hasbro has the capital to make it more profitable to Lucasfilm in terms of royalties. Only question would be the success of the line, which would have to overcome a huge hurdle in the already established LEGO brand.

DaveE

[Tyrant]

Well, if it's only a million shares, that's peanuts. I believe there's in the ballpark of 136 million shares outstanding for Hasbro, so a million, while a decent chunk for a single holder, is small potatoes overall. We're not talking about a level of majority ownership or anything.

Millions. Plural. What I have read, here, indicates that he was given warrants potentially enabling him to own (if I am understanding it correctly) around 40 million shares through himself, Lucasfilm, and Lucasfilm Licensing. Doing a little more research I came across this indicating that Hasbro excercised their right to buy the option from Lucas for $200 million. So, from the most recent data I can find, I do not know if Lucas owns any stock. However, until 2007, he had the option to buy several million shares at a reduced rate meaning he still had an interest in the stock doing well overall so he could collect on both ends.

I missed the part where Lucasfilm would have grounds to sue? Hasbro could try, but precedent's been established, so it's unlikely to be successful to any degree.

If Hasbro had sole rights to manufacture figures and the LEGO figures are a violation of that contract then I believe Lucasfilm has grounds to sue because LEGO is violating the contract with Lucasfilm. I have my doubts Hasbro would take the lead. If Lucas is in disagreement they may upset the goose that's laying the golden eggs. So, Hasbro takes the shots that it can, but won't try anything serious without the backing of Lucas.

Back in the late 1990's, as I understand it, there was a bidding war between toy companies on the various licenses for Star Wars merchandise. As I recall, Hasbro won the major license for toys, and LEGO won the license to produce constructable toys. I seem to remember that there was one other company that one some sub-area of the licensing (I don't remember what for), and Hasbro immediately purchased the company in order to have more control over the full SW license.

As far as I know, Hasbro has never had to seriously outbid someone for the license. It was originally held by Kenner. Kenner was bought by Tonka and they were purchased by Hasbro at some point (where certain members of their team tranferred and in a rather spiteful move did everything they could to kill G.I.Joe, as I understand it). Galoob also produced Star Wars toys (micro machines) and they too were bought by Hasbro. Decipher got the rights to make a card game (no clue what else was involved). Some time after TPM came out but before AotC came out they lost the license as it was granted to WotC, who was previously purchased by Hasbro (to get ahold of Magic the Gathering). WotC recently opted to not renue the license because they couldn't justify the cost (they were just about down to only selling miniatures and they were about out of characters for that and there was pretty obvious power creep between sets). Given that part of the WotC deal included miniatures, I have to assume that these licenses have a somewhat fluid definition of "figure" and that it is possible that word has come down from Lucas for the various license holders to play relatively nice with one another.

Anyway, my guess is that when Hasbro got the rights, they didn't really consider the appeal of the LEGO Star Wars combination, and figured it probably wasn't worth their time fighting to make sure that LEGO couldn't produce figures. But hey, what do I know? Maybe they really DID fight really hard? I never heard about it if so. But now, LEGO Star Wars is huge-- probably bigger than either Hasbro or LEGO expected. I mean, who would've guessed that a movie franchise where the final film was released in 2005 would still be so actively popular 6 years after the fact?

The point I was making is basically that Hasbro got the rights to produce Star Wars action figures, but there's LEGO producing their own Star Wars figures. To me, that's a pretty clear infringement on Hasbro's rights-- LEGO just gets off on a technicality because they own the "construction toy" rights, and the figures are "constructable", regardless of how little their figures' constructability has had to do with their success. IMHO, LEGO got lucky by being able to produce Star Wars minifigures, and Hasbro got more competition than I think they were expecting.

First, I don't consider them action figures. Second, I am assuming we don't know the exact wording of the contract. I believe it is a very real possibility that a scale is specified in the Hasbro contract. Third, I am continually surprised anyone in charge at Hasbro has the ability to walk and talk at the same time. Fourth, again, we do not know if Lucas is telling everyone to play nice so he gets even more money. Fifth, if there were ground to sue, I believe Lucas would or would threaten it as a means of renegotiating the contracts so LEGO pays him even more to be "granted" the right to also produce action figures.

[legodavee123]

Galoob also produced Star Wars toys (micro machines) and they too were bought by Hasbro.

Yes! That's the one I was thinking of.

Given that part of the WotC deal included miniatures, I have to assume that these licenses have a somewhat fluid definition of "figure" and that it is possible that word has come down from Lucas for the various license holders to play relatively nice with one another.

So-- the WotC miniatures were only produced while WotC was under Hasbro?

First, I don't consider them action figures. Second, I am assuming we don't know the exact wording of the contract. I believe it is a very real possibility that a scale is specified in the Hasbro contract.

Well, I would normally suspect that to be true except for the fact that Hasbro supposedly complained about the old Star Wars minifigs that LEGO was selling more-or-less individually. Granted, again, I don't know if we ever received official confirmation of that from LEGO and/or Hasbro/Lucasfilm, but that's the rumor. So if it was just a matter of explicit scale, there should've been no beef. Of course, that's not to say that Hasbro didn't complain to Lucasfilm, who in turn urged LEGO not to produce the sets, despite not being in breach of contract, but that's just speculation, not based on any evidence that I know of.

Fifth, if there were ground to sue, I believe Lucas would or would threaten it as a means of renegotiating the contracts so LEGO pays him even more to be "granted" the right to also produce action figures.

That part makes sense to me. Hasbro may see it as competition that hurts them, but Lucasfilm probably doesn't care worth beans if there's competition, since they get royalties either way. In fact, it probably actually means MORE money for Lucasfilm if the two are competing, so I'd fully expect them to try to play the negotiations.

Anyway, I still feel like LEGO got lucky in their ability to make Star Wars figures-- so I'm not inclined to begrudge them any additional competition that they want to throw at LEGO. I won't support it of course, but I'm fine with them doing it.

DaveE

[LL918]

The point that many people have made that I would query is that these Transformers don't transform and therfore this Kre-O line will fail. I think that for a building toy they do work in the right way. You pull them apart and put them together again. OK it didn't transform in the same way as the movie, but this is a construction toy. May be they will have a larger UCS range that does work that way.

I think it is a good thing to encourage kids to pull apart their LEGO and build something new. Perhaps this will stimulate LEGO to bring back the old alternate builds. Even Bionicle included alternative instructions for combining sets. The Exo-Force line dabbled with it, specially commisioning a Japanese designer to create some alternative models.

http://www.brothers-brick.com/2006/02/05/exo-force-alternate-design-van-force-by-shoji-kawamori/

And another that does tranform...

http://www.brothers-brick.com/2006/09/26/new-van-force-design-from-shoji-kawamori/

And speaking of Exo-Force - perhaps we will see a new Mecha line from LEGO in response to the Transformers?

[Tyrant]

Given that part of the WotC deal included miniatures, I have to assume that these licenses have a somewhat fluid definition of "figure" and that it is possible that word has come down from Lucas for the various license holders to play relatively nice with one another.

So-- the WotC miniatures were only produced while WotC was under Hasbro?
DaveE

My point about that was that WotC had to get a license for their games. It was not part of the larger Hasbro license, evidenced by their recent decision to not renew it even though Hasbro will continue to make other SW toys. So, it was a third license that (I believe) granted someone the ability to make figures based on the property. I believe if someone else chooses to take up the game license that they will be able to also make figures (miniatures at least). A further twist is that LEGO is allowed to make Star Wars LEGO video games, even though other companies also make Star Wars video games. Will a future license holder of the game license also be in some way involved in a Star Wars video game? Were KotoR 1 and 2 based around the D20 system because WotC, owned by Hasbro, owns that (though there is the OGL, but I don't know if that covers video games) or because WotC was making (or was going to make, have to check the timeline) the SW RPG? The SW license is an enigma.

[theone]

all i can say is to war we go lego is better desinged and better qulity. kre-o will crash and burn

[mrfootball]

If floorspace is any indicator of Lego Star Wars popularity, they (Target, WM, TRU, etc) seem to have more room dedicated to Lego Star Wars throughout the year than they do Hasbro Star Wars. Heck, we're not even counting the Lego Star Wars merchandising, Games, T-shirts, clothes, books, etc that are doing record sales themselves. Lego Star Wars video games are the best selling Star Wars franchise in history, the books (i.e. Lego Star Wars Visual Guide) has been on the NY Times Bestsellers for Children for the past year or so (60 weeks). Lego, like Apple, has an eco-system of products that few can compete with.

Lego is one of the last of the good, value-driven, independent companies in the world. More power to them. The licensing is producing some really great offerings across the board right now, though I would still like to see it split further so more players could enter. I can see a scenario where Hasbro needs to be careful not to rock the boat too much with their greedy desire to control everything In a very Palpatine-ish way, could backfire on them.

I see Kre-O as an interesting entry, however I believe Mega Bloks has a lot more to be worried about than Lego.

[onions]

tfw2005 posted a press release from hasbro that has all the pricing for the transformers: crap from the moon toys including kre-o. they also posted a picture of the optimus model that we posted in our flickr stream and in the op of this thread. I'm reposting the relevant bits here to save you a click:

Hasbro 'Builds' Its Portfolio with Introduction of KRE-O, a Unique New Construction Toy Brand
Inaugural KRE-O Building Set Collection Features Popular TRANSFORMERS Characters

PAWTUCKET, R.I., Feb 14, 2011 (BUSINESS WIRE) -- This fall Hasbro, Inc. (NASDAQ: HAS) will bring action and adventure to the construction aisle with the introduction of the KRE-O brand. The KRE-O brand provides builders ages 6 and up with the unique opportunity to enjoy popular Hasbro brands, like TRANSFORMERS, in a construction play pattern. Similarly, KRE-O will allow Hasbro fans to build and create with their favorite brands like never before.

From favorite characters and high quality materials to unique accessories and collectible mini figures, the KRE-O collection will excite builders of all ages. At launch the KRE-O brand will offer twelve building sets featuring popular TRANSFORMERS characters.

"Consumers have been asking for something new in the construction category. With our introduction of the KRE-O brand and KRE-O TRANSFORMERS, we are delivering terrific innovation and creativity," said John Frascotti, chief marketing officer, Hasbro, Inc. "With KRE-O TRANSFORMERS, we are giving TRANSFORMERS fans the unique opportunity to build and interact with iconic characters like OPTIMUS PRIME and BUMBLEBEE and several other TRANSFORMERS robots and vehicles as never before."

The KRE-O brand brings quality and innovation to the construction aisle. Each KRE-O TRANSFORMERS set is 'MORE THAN MEETS THE EYE,' with two types of builds: create a robot and then disassemble to build a vehicle, disassemble the vehicle to build a robot. Packed with play, most sets come complete with themed accessories and a poseable KREON mini figure in robot or human form.

The KRE-O TRANSFORMERS collection will feature classic characters and include a variety of offerings from basic sets priced at approximately $7.99 to deluxe sets priced at approximately $59.99. KRE-O bricks are compatible with most other brick based construction sets on the market. The KRE-O TRANSFORMERS building sets will 'roll out' in fall 2011.

Highlights from the KRE-O collection include:

KRE-O TRANSFORMERS OPTIMUS PRIME Set
(Ages 8 years & up /Approx. Retail Price: $59.99/Available: Fall 2011)

'Roll out' and get hands on with the biggest building set in the KRE-O line up: the KRE-O TRANSFORMERS OPTIMUS PRIME set. Complete with more than 500 pieces, the largest amount featured in any of the 2011 KRE-O sets, builders can assemble the popular OPTIMUS PRIME character in 'vehicle' mode as the notable semi-hauler or in 'robot' mode to create the leader of the AUTOBOTS. When in 'vehicle' mode, the truck's removable cab converts into a mini-command station and the trailer opens to fit the two motorcycles and four unique KREON mini figures included with the set. The trailer can also be disassembled and built into a command center playset for the KREON mini figures. When in 'robot' mode, builders can blast into action with a projectile launching brick! The KRE-O TRANSFORMERS OPTIMUS PRIME set includes orange traffic cones and cool decorative decals. Available at most major retailers nationwide and HasbroToyShop.com.

KRE-O TRANSFORMERS BUMBLEBEE Set
(Ages 7 years & up /Approx. Retail Price: $24.99/Available: Fall 2011)

Bring the popular BUMBLEBEE character to life like never before! The 2-in-1 KRE-O TRANSFORMERS BUMBLEBEE set allows fans to create and recreate their favorite AUTOBOT character in 'robot' mode or in 'vehicle' mode. In 'robot' mode, builders can convert the wings on BUMBLEBEE into a glider for KREON mini figures to balance on. In 'vehicle' mode, open up the driver's door and take up to two KREON mini figures for a spin. Set includes two KREON mini figures and more than 300 pieces. Available at most major retailers nationwide and HasbroToyShop.com.

KRE-O TRANSFORMERS STARSCREAM Set
(Ages 7 years & up /Approx. Retail Price: $29.99/Available: Fall 2011)

Take your construction skills to new heights! Builders can construct the KRE-O TRANSFORMERS STARSCREAM set to form the STARSCREAM character in one of two modes: 'vehicle' or 'robot.' In 'vehicle' mode, builders can open this DECEPTICON 'jet's' canopy to fit a KREON mini figure into the cockpit, blast off removable 'rockets' and 'turbo thrusters,' or use the retractable wheels to pretend they're taking off the runway. Comes complete with more than 300 pieces and two KREON mini figures. Available at most major retailers nationwide and HasbroToyShop.com.

[onions]

it should be noted that based on what i've read at tfw2005 and elsewhere, the trans fans are just as skeptical about the success of the line.

[masterX244]

it should be noted that based on what i've read at tfw2005 and elsewhere, the trans fans are just as skeptical about the success of the line.

Ihope this will be a epic fail.and a big shelf-warmer. Then they discontinue it(maybe)

[masterX244]

Update: new pictures on the internet
http://www.ntf-archive.de/modules.php?n ... e&sid=3185

[that guy]

Destined for your local Big Lots, Pic-n-Save, Piggly Wiggly, or whatever cheeze-mo discounter is near you....

[GIR3691]

They sure like the words "quality" and "innovation."

[Tohst]

They sure like the words "quality" and "innovation."

When you know the criticism against your product is that it will be a low quality rip off, you say the opposite as much as possible.

-Tohst
fair and balanced.

[meeotch]

I know I'm late with this, but...

HIYO!!!

[Legomancer]

Of course, Kre-O has to succeed first and I don't think that will happen.

You'd be surprised at how many non-LEGO enthusiasts (and there are a lot of them) can't tell the difference between LEGO and MEGA BLOKS. The same situation will inevitably occur between LEGO and Kre-O.

I literally have a relative who got me a MEGA BLOKS puzzle or something, but kept calling it LEGO. I wanted to soooo badly, but it was a Christmas present so I couldn't.

[JamesBenjamin]

These sets have started showing up at TRU in the states, and will (apparently) launch at other stores (WM, Target) when the movie hits. Reviews are starting to show up online, but they're all action figure guys and they're totally lost from a building/lego prospective.

I saw the sets myself, but haven't purchased any yet. I am a TF fan so I'll probly pick one up eventually, once I do I'll post a Lego-minded review.