• Barbie Beats the Bratz
  • January 27, 2009
  • Law Firm: Manatt, Phelps & Phillips, LLP - Los Angeles Office
  • A California district court has essentially handed control of MGA Entertainment’s Bratz franchise over to Mattel, the maker of the iconic Barbie.

    It’s a huge win for Mattel and a potentially fatal blow for MGA, the manufacturer of the pouty-lipped, big-headed hip-hop-themed Bratz dolls, which had been cutting into Barbie sales in recent years.

    The court’s decision came several months after a jury found the Bratz dolls were originally conceived by a designer who secretly worked on the concept with MGA while he was employed by Mattel.

    The order prohibits MGA from making, producing or licensing a wide range of products, including the Bratz line’s main characters, Sasha, Jade, Cloe, and Yasmin. In a further setback for MGA, the ruling requires it to return all unsold product to Mattel. However, the order will not go into effect until February at the earliest, meaning MGA can continue to sell Bratz dolls through the holidays.

    For both Mattel and MGA, the court order represents a watershed event. After being handed control of Barbie’s fiercest rival, Mattel must now decide whether to make and market the dolls itself, strike an agreement allowing MGA to continue making the dolls under a license from Mattel, or snuff out the brand entirely.

    Mattel-made Bratz dolls could represent a sizable profit stream, but also bring the risk of cannibalizing Barbie sales and even damaging Barbie’s “good girl” image. On the other hand, Mattel already shares shelf space with products it licenses from other companies, including Walt Disney Co. And although Bratz sales have recently been on the decline, the dolls will generate about $300 million in revenue this year for MGA.

    As Mattel mulls what to do, Bratz’s relationship with retailers is increasingly iffy. Analysts predict that stores will probably stop buying Bratz products to avoid the headache of seeking reimbursements from MGA for any inventory returned to Mattel. MGA is already facing a reduction in orders. For instance, Target has reduced shelf space for Bratz by 50%.

    Observers say a joint venture between Mattel and MGA is unlikely, although that is probably the best bet for MGA. Bratz is, by far, MGA’s most lucrative brand.