Artificial intelligence has reduced the time from concept to prototype by around 80% for toy design, according toHasbro CEO Chris Cocks, who says the company is deploying AI across financial planning, forecasting, order management, supply chain operations and daily activities.
But while AI boosts innovation efficiency, it does not solve the more immediate problem facing the toy maker: tariffs that could cost the company hundreds of millions of dollars annually.
Hasbro estimates tariffs could cost it $100 million to $300 million annually, prompting a $1 billion cost-cutting plan targeting inefficiencies in manufacturing, logistics, and marketing. The dramatic range reflects genuine uncertainty about how long current trade restrictions will remain in place.
Designing Faster, Manufacturing Harder
Hasbro has cut about 80% of the time from concept to prototype, where before the company might have had two or three cuts at an idea, now it can have 200 or 300.The company is partnering with Google Gemini, OpenAI and ElevenLabs to embed AI into its workflows.
Hasbro expects that the inclusion of the tech will free up over 1 million hours of "lower-value work," which will give workers the ability to reinvest the time into innovation, creativity and serving its customers.Teams within the company have a choice on how they use the technology, including not to use it at all when it doesn't fit their objectives.
The approach reflects a deliberate balance.According to Cocks, great IP plus great storytelling is durable as technology evolves, and it positions the company to benefit from disruption rather than being displaced by it.
Tariff Reality Sets In
For all the productivity gains AI provides in the design studio, the company faces material headwinds on the factory floor.The current 30% minimum tariffs on China and apparent agreement to place 20% tariffs on Vietnam's goods are "pretty significant," and China and Vietnam are Hasbro's main international suppliers.
If the same toy were manufactured in the US, labour would make up 80 to 90% of the cost.For consumers, that means a doll sold for $10 now could cost up to $18 to maintain profit margins.
Hasbro is looking to onshore sourcing and production where feasible, continuing to source from Cartamundi in East Longmeadow, Massachusetts, which manufactures most of Hasbro's US games.The company can shift the sourcing of Play-Doh, for example, from China to its factory in Turkey. Butmanufacturing board games in the U.S. is significantly more expensive to manufacture here than it is in China.
A Tale of Two Businesses
The tariff impact falls unevenly across Hasbro's portfolio.The Wizards of the Coast division, which includes Magic: The Gathering and Dungeons & Dragons, has a tariff exposure of less than $10 million, as much of the domestic product is made in North Carolina, Texas and Japan. That insulation matters:Wizards of the Coast saw revenue surge 86% in the final quarter of 2025.
By contrast,the toy segment faces higher exposure, as a larger portion of those goods are made in China.That segment's adjusted operating profit was just $1.2 million, as higher costs, uneven demand, and retail order volatility weighed on performance.
Cocks said the company is working to keep half of its products priced under $20, pointing to Hasbro's $1 billion cost-savings plan, which aims to wrap up by 2027. YetCocks acknowledged that "We are going to have to raise prices inside of 145% tariff regime with China," but is "just trying to do it as selectively as possible and minimise the burden to the fans and families that we serve."
The company's position is genuinely complex. AI gives Hasbro a tool to innovate faster and work smarter. But no amount of design efficiency resolves the underlying economics of moving production to more expensive locations or absorbing tariff costs. For toy companies dependent on global supply chains, trade policy poses questions that no technology can answer.