MONTREAL – Mega Brands has concluded its third major new licensing deal in the past year by joining with Britain’s Mind Candy to develop toys based on the Moshi Monsters online world.
Under the multi-year agreement announced Tuesday, the Montreal-based company will work with Mind Candy to develop a range of Mega Bloks construction sets, Rose Art activity sets as well as 3D Breakthrough puzzles for the global market.
The companies are aiming to bring the Mega Brand (TSX:MB) toys to retailers in time for the 2011 holiday buying season.
Mind Candy is a British-based company founded in 2004 by Michael Acton Smith, who previously founded firebox.com.
With Moshi Monsters, children choose from one of six virtual pet monsters that they can create, name and nurture. Once the pet has been customized, players can navigate through Monstro City, play games, and communicate with friends.
Moshi Monsters has more than 50 million registered users worldwide, the companies say. According to the Business Insider, the toy intended for children six to 12 years old, has been gaining about two million new users per month.
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“We’re very excited to enter into a partnership with Mind Candy, the creators of such an engaging and fun online game world,” Vic Bertrand, chief innovation officer of Mega Brands, said in the announcement.
“Moshi Monsters has really captured the hearts and imaginations of kids everywhere, and we look forward to bringing this world to life with a full range of toys that will encourage and reward creative expression.”
Martin Landry of GMP Securities estimates that Moshi Monsters could generate up to US$20 million of annual revenues once fully implemented.
While the toy seems to gaining traction, he said it was too early in the brand’s life cycle to determine if it has staying power, he wrote in a report.
“Today’s announcement highlights Mega Brands’ momentum in the licensing arena,” he said, adding the company also extended partnership agreements with two of its major brands.
“These votes of confidence by the licensing community should reassure investors that the company has turned the corner.”
Landry also said he’s not adjusting his forecasts for Mega Brands because there will likely be a limited number of offerings on store shelves by this holiday season.
Neil Linsdell of Versant Partners added that the Moshi deal is another sign that Mega Brands is “moving full speed ahead” at rebuilding their brand and toy portfolio.
“I think some people will be surprised at how good the third-quarter numbers turn out and hopefully that will rejuvenate a lot of interest in the stock,” he wrote in an email.
On the Toronto Stock Exchange, Mega Brands shares lost 27 cents, or 3.25 per cent, at C$8.05 in morning trading.
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