Surprise! Toy Giant MGA Entertainment Takes Aim at Content and Gaming With Studio Launch, Pixel Zoo Animation Acquisition (EXCLUSIVE)

Toy giant MGA Entertainment is the latest big player from outside Hollywood to take aim at the content business.

The privately held firm, based in Chatsworth and home to popular retail brands such as L.O.L. Surprise!, Rainbow High, Bratz and Little Tikes, has launched MGA Studios, a content division backed with $500 million in capital and assets to drive acquisitions and new production. The unit will be headed by Jason Larian, son of MGA Entertainment founder and CEO Isaac Larian.

MGA has produced animated series tied to its toy brands over the years, but the MGA Studios launch is an effort to dramatically up the production quality. The first step toward building out a studio operation is the acquisition of Brisbane, Australia-based animation shop Pixel Zoo Animation. The deal is valued in the low eight-figure range. Paul Gillett, Pixel Zoo founder and CEO, will join MGA Studios as a partner.

Pixel Zoo will remain in Australia and continue to handle some work for outside clients. Now, however, it will also focus significant resources on developing content to help enliven what Isaac Larian calls “safe mini universes” online and through apps for kids to interact with company’s brands.

Isaac Larian, CEO of MGA Entertainment, poses for a portrait at the Company's headquarters in Chatsworth, California, U.S., September 17, 2021.  Picture taken September 17, 2021. REUTERS/Mario Anzuoni - RC2VRP9QG7Y3

Isaac Larian, CEO of MGA Entertainment

The elder Larian launched the company in 1979. It went through several iterations before changing its name in 1996 to MGA Entertainment (from Micro Games of America). Today, MGA’s leader is proud of his company’s track record for growing innovative toy brands from scratch, such as L.O.L. Surprise! and Rainbow High doll franchises. MGA’s launch of the edgier-than-Barbie line of Bratz dolls generated controversy in the early 2000s that helped put the company on the map.

The L.O.L. Surprise! phenomenon, which took off in 2016, took a cue from the YouTube generation’s love for low-tech “unboxing” videos by building that sensation into the toy itself. The basic baseball-sized L.O.L. packages come covered up in a ball of onion-like layers to be removed piece by piece, each revealing an accessory item to be used with the small doll found at the center.

At present, MGA Entertainment, controlled by Larian and his family, does about $4 billion to $4.5 billion a year in retail sales and has nearly 1,700 full-time employees in multiple cities.

“We as a company have created 100 brands from zero. 25 of them have gone on to do $100 million in retail sales,” Isaac Larian tells Variety. “Back then my idea (for the name change) was that we need to really entertain children. Not just sell them toys.”

MGA has carefully watched the content boom and the merging of streaming platforms with original content, gaming, in-app purchases, e-commerce and immersive experiences in recent years. It was the first toy maker to cut a deal with the popular kid-focused gaming site Roblox to establish an online universe populated by toy brands. MGA’s larger rival, Mattel, has also stepped up its efforts to deliver higher-caliber movies and TV shows in order to turn content into a new profit center for the company.

MGA is making a big investment in content production because it hopes to more seamlessly bake in movies and TV shows, e-commerce and gaming opportunities, social media campaigns and other brand-building strategies into its core business of toy development.

Jason Larian, president of MGA Studios

Jason Larian, president of MGA Studios

“At the beginning the content was a vehicle to sell more toys. It was almost an after-thought,” Jason Larian, president of MGA Studios, tells Variety. “With this structure, we’re bringing in the storytelling from ground zero with the design of the toys. It will be seamless and continuous.”

MGA Studios’ development focus will go beyond TV and film to include gaming and other formats.

“We’re not just looking at purely content but we’re looking at innovative companies to partner up with on gaming and digital experiences,” Jason Larian says. “We’re looking to find unique ways that people can interact with IP.”

The pair confirm that they are in the market for more production, IP and library assets. Isaac Larian also emphasizes that they may well be open to good ideas that will connect with target kid and adult audiences even if they’re not directly tied to consumer products.

“We are not just looking for toys. We want to do great movies, great content,” he says. “We focus on children. We know children well. We know what they like. It’s all about the storytelling. We’re not making entertainment for the sake of selling products.”

Pixel Zoo was a natural acquisition for MGA after the companies worked together on a number of recent projects, including MGA’s “L.O.L. Surprise! The Movie” for Netflix; “L.O.L. Surprise! House of Surprises” series for YouTube and Netflix, as well as series and specials tied to MGA toy lines Rainbow High, Mermaze Mermaidz and Let’s Go Cozy Coupe. The company’s other brands include Baby Born and Na! Na! Na! Surprise.

Paul Gillett, founder and CEO of Pixel Zoo Animation

Paul Gillett, founder and CEO of Pixel Zoo Animation

Pixel Zoo, founded in 2013, has also fielded content and brand work for such clients as Lego, Entertainment One, Sesame Workshop and Saban. The company has about 200 full-time employees.

“There’s so much we can do with all the established (MGA) brands,” Gillett tells Variety. “The potential of our stories is endless. But we want to start with story first – the story is king. It’s all about making sure we’re telling a story and not selling a product. We’re excited to be a part of developing these brands from the start.”

(Pictured top: MGA Entertainment’s “L.O.L. Surprise! Winter Fashion Show,” a movie special that premiered on Netflix in October.)

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