Bratz Maker Has the Holidays Wrapped Up

Liliya Shlyakman stood in the doll department at a Los Angeles Toys R Us store just before the holidays, oblivious to everything except a wall of big-eyed dolls in tight clothes.

Mattel Inc.’s Barbie didn’t get a passing glance from the 10-year-old girl. She dismissed the company’s new hip-hop-themed Flavas dolls with a crinkled nose. Instead, the fifth-grader from Santa Monica had dragged her mother and older brother to see the toy that has made dolls acceptable again to girls older than 7: Bratz.

Created by North Hills-based MGA Entertainment Inc. in 2001, Bratz have quickly become the most successful fashion dolls since Barbie was introduced more than 44 years ago. The Bratz brand last year was the top seller in the $827-million fashion doll category, according to market research firm NPD Group Inc.

Today, after girls across the country find Cloe, Dana, Yasmin and other Bratz under the tree, the dolls again are expected to top the list.

The $25 dolls with the bee-stung lips, short skirts, belly-baring tops and scores of accessories have raised the ire of some parents, who say they exude too much sexuality and set a bad example.

“They look like gang members, and I think it’s promoting being a brat -- I just can’t do it,” said Iris Aviram of Los Angeles, the mother of three daughters who have longed for the doll. “Why don’t they have ‘nice girl’ or ‘smart girl’?”

But that’s not why Liliya likes them. “They have cooler stuff,” she said. “They’re more stylish and their eyes and faces are more realistic.”

The question now for MGA founder Isaac Larian is whether he is presiding over a company built on lasting brands or one-hit wonders.

“The toy business is a fashion business,” Larian said. “If you don’t innovate and reinvent yourself two to three times a year, you’re not going to be in business. But if you do, you will be rewarded.”

So far, privately held MGA has been rewarded with sales that have grown nearly eightfold, from $97 million in 2001 to an estimated $750 million this year.

The company, which employs 185 workers in the United States and 190 in Hong Kong, hired 37 people last month and has openings for 75 more, Larian said. Those additions are among the reasons MGA is moving from its 45,000-square-foot headquarters to a new 155,000-square-foot building just down the street.

MGA has continued to produce other strong sellers, particularly radio-control toys for boys. Popular are the Land-Air craft, an airplane that launches from an all-terrain military vehicle, and the Land-Sea, a car that collapses its wheels and can ride on water.

But the other endeavors pale in comparison with the cheeky Bratz, which Larian said would make up 70% to 75% of its revenue this year. Some toy industry analysts put Bratz’s share of the company’s revenue even higher, at 80% to 90% -- a precarious lack of diversification in the fickle toy industry.

Undeterred, Larian said he could continue to expand Bratz from a line of dolls into a brand by adding sophisticated play sets. This holiday’s top draw: the $100 Formal Funk Super Stylin’ Runway Disco, a dance floor with real speakers to play music, a dressing area, a makeup station, a smoothie bar and a motorized fashion stage that lets the dolls “walk” the runway.

MGA also has granted more than 200 Bratz licenses, emblazoning the Bratz name on party goods, pillows, luggage and other products.

“I think these guys are very smart and very innovative,” said Anthony Gikas, a toy industry analyst with U.S. Bancorp Piper Jaffray in Minneapolis. “There’s no reason to think they can’t generate new brands and products. They have a very strong track record.”

Bratz’s success has come at a time when domestic sales have shrunk for the queen of girls’ toys. Barbie, which last year registered worldwide sales estimated at $1.7 billion, lost her luster with older girls when they were wooed by electronics and handed down their dolls to little sisters.

But Bratz proved that the so-called tween girls, ages 8 to 12, would return to traditional toys with the right offer. With Barbie aimed at girls ages 3 to 6, Bratz didn’t so much steal Barbie’s market share as it created a whole new market.

Part of Bratz’s allure is the level of detail, which has attracted fans even among high school and college kids, who display the dolls in their rooms as a kind of tongue-in-cheek tribute to their own impish outlook. The cars sold alongside the dolls sport real radios. Their furniture, some of which reclines, comes in pink fur with beaded pillows.

Another draw: Bratz’s multiethnic look. The dolls have a range of skin tones and exotic-sounding names that have made them top sellers in Japan, Dubai, Israel and Brazil, among other places.

MGA’s success is fueling a more pointed attack on Barbie.

Just before the holidays, MGA launched a limited release of 4Ever Best Friends, a pair of preadolescent fashion dolls that hold hands and come in more than 250 variations. The new toys, aimed at Barbie’s younger audience, will be distributed more widely by spring.

MGA’s attempts to move beyond Bratz with new products, such as 4Ever Best Friends, are far from a guaranteed success.

Analyst Linda Bolton Weiser of Oppenheimer & Co. in New York questioned whether the new line of dolls, which are being sold in pairs for $25, would compete with Bratz, which sells for about the same price. And whether 4Ever Best Friends can compete with Barbie, she said, is debatable. “We believe Mattel is now, more than ever, in a ‘battle’ mode, and that the company will respond quickly to the marketplace dynamics, which could significantly change by Christmas 2004,” Weiser wrote in a research note.

Mattel’s attempts to reach 8-year-old to 12-year-old girls mostly have fallen flat. Flavas, the urban music dolls shunned by Liliya at Toys R Us, have been criticized as an awkward copy of Bratz. Just before Christmas, Toys R Us was offering a buy-one-get-one-free deal on Flavas, which were selling for $14.

Although El Segundo-based Mattel said the discount was a planned promotion and not an attempt to clear out poor sellers, the company has acknowledged that the doll has been slow to catch on. Mattel’s My Scene Barbie dolls, an updated, more teen-like version of the classic toy, have been strong sellers, the company said.

“I remember the feeling when Bratz first came out that they were almost a parody of fashion dolls -- they weren’t like the old pouty Barbie, but more of a sassy attitude,” said toy industry analyst Sean McGowan of Harris Nesbitt Gerard in New York. “You look at Flavas and it looks like hip-hop as designed by committee. Bratz doesn’t.”

To Mattel, however, great toys come and go, but Barbie endures.

“When we talk about Barbie, we’re not just talking about a toy, we’re talking about a brand,” said Tim Kilpin, a former Walt Disney Co. executive who started his career at Mattel and rejoined the company in October to head up marketing for girls’ toys. “We pride ourselves on the fact that she is the largest girl brand in the world.”

Within the hit-driven toy business, today’s sensation tends to be tomorrow’s clearance sale. But some note that Bratz could end up surprising the industry yet again.

“If history was your only guide, you’d say it won’t last forever,” analyst McGowan said. “But they’ve already done what no one has done before -- grab a significant portion of the fashion dolls business. So what the future holds is uncertain. Maybe they can keep it going.”