The powerful Transformers franchise, launched in 1984, has moved into new media, mobile apps, publishing and new toy lines to appeal to consumers from toddlers through adults. Read More Looking for innovation? Look away from Silicon Valley stocksĮxamples of evolution at work within Hasbro R&D can be seen in the dash of digitally-based personalization that revived the popular 1990s-era Furby, which now syncs with iPad apps, and in My Monopoly, which lets players use an app or online access to produce their own photo stickers and game tiles. Hasbro's annual R&D spending is expected to total an average of $219 million through 2016. He added, "We anticipate it to grow as our business grows, which historically has been in the 4.5 percent to 5 percent of revenue range." "Product development spending is a key investment for us," Duncan Billing, Hasbro's chief development officer, said in an email. Hasbro's historical approach to investment has paid dividends and continues to be reflected in the latest efforts related to classic toy lines. Since founded in 1923 by the Hassenfeld Brothers, Hasbro has relied on two major doctrines intrinsic to the company's philosophy: evolution and revolution. "The fact that a company is on the list is a signal to investors that these are savvy, intelligent companies that are quite productive and that they're exemplars of R&D best practices," Knott said. By comparison, Mattel wasn't even close to making the RQ 50 cut this year, finishing 213th among companies that spend more than $100 million on R&D, which would only generate an increase of $36.4 million in revenue (total revenue for Mattel was $6.5 billion last year).
For Hasbro, whose R&D spending topped $207 million last year, it equates to $58.4 million in additional revenue opportunity if the company were to increase its R&D spend by 10 percent (total revenue in 2013 was $4.1 billion). The CNBC RQ 50 includes companies that spend more than $100 million annually on R&D and forecasts how much additional revenue they would gain from an increase in R&D spending. Read More The R&D Hall of Fame: Who got in? In fact, it's impossible," said Sean McGowan, an analyst at Needham. "If you want to show any kind of growth, it's difficult to keep it going without new product. A big hit today may be gone tomorrow, and the ripple effects, from cost-cutting to layoffs and even bankruptcies, aren't uncommon. To complicate the situation even more, the toy business is cyclical. Traditional toy makers often butt heads with their biggest distributors, such as Target, Toys 'R' Us and Wal-Mart, when they develop their own products.
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