By MICHELLE R. SMITH

Associated Press Writer

PROVIDENCE, R.I. - - Hasbro Inc. struggled when the toy company tied it's fortunes too closely to toys based on movies.

But a movie based on it's toys? That could be a different story.

Hasbro is banking the DreamWorks/Paramount movie "Transformers" - - based on Hasbro's "robots in disguise" toys introduced in the 1980s - - will herald a new era for the company that in the past few years has been remaking itself from a toy maker to an entertainment company.

"'Transformers' sort of opens another chapter for us," said Brian Goldner, Hasbro's chief operating officer, who is listed as an executive producer on the movie. "In the past, I think that the company may have thought too narrowly about it's brands as forms of entertainment."

In 2000, the Pawtucket, R.I.-based company was struggling. The toy maker lost $144 million after fads for Pokemon trading cards and the electronic pet Furby faltered. It cut hundreds of jobs. Then-chief executive Alan Hassenfeld called it "a very painful year."

Part of the problem was an over-reliance on movie-related toys, like tie-ins to the "Star Wars" franchise, said Sean McGowan, an analyst with Wedbush Morgan Securities.

"They would be hot for a while, then not hot," McGowan said.

So Hasbro's executives went back to basics. They turned their focus to time-tested "core brands," names consumers knew and trusted: Playskool, Monopoly, My Little Pony, Transformers and others. They looked at the brand's core idea and thought of ways to contemporize it and parlay it into new products that would turn the company around and keep it growing.

Since then, they've developed new versions of Monopoly, released a line of Playskool products for CVS drugstores, including diapers and baby bottles, created a "My Little Pony" live stage show - - based on the toy - - to name a few.

While Hasbro still does it's share of movie tie-ins - - "Spider-Man 3" and "Star Wars," for example - - it still has a treasure trove of stable properties, McGowan said.

Another upside for Hasbro is that it owns the Transformer brand, so on most Transformers-related products it doesn't have to pay royalties and can license the name. Hasbro signed up 230 licensees for "Transformers" the movie, items such as video games and cell phone games, Goldner said.

"The last couple years have been the best years they've had in a very long time," said Jim Silver, editor-in-chief of Toy Wishes Magazine.

Hasbro started the year strong, reporting a profit of $32.9 million for the three months that ended April 1, versus a loss of $4.9 million in the year-ago period. The company credited core brands and strong sales of games, led by Monopoly. Shares surged to an eight-year high, but some analysts have since downgraded their projections, warning that the stock price already factors in the high expectations for "Transformers" and that sales could slow down next year.

The idea for the "Transformers" movie started percolating in 2002, when Goldner and his team began re-examining Hasbro's properties for boys. At around the same time, "Spider-Man" was making it's debut as a live-action, blockbuster movie and Goldner realized Transformers could do the same.

"I looked at Transformers and G.I. Joe as opportunities to enter that same arena," he said. "Three-quarters of now-adult men had played with these products as children."

Hasbro licensed the Transformers to Dreamworks and did not produce the film, but Goldner is listed as a co-executive producer. In contrast, Marvel Studios, a division of Marvel Entertainment, was involved in producing the Spider-Man movies based on Marvel characters.

"Transformers" is not the first movie to be based on a toy or game. The 1985 movie "Clue" took themes and characters from the popular Hasbro board game. Indeed, there was an animated Transformers movie in the 1980s (when the "Transformers" animated TV show and comic books were wildly popular).

But in recent years, toy companies have ramped it up. Marvel has had great success of late with movies based on it's comic book characters: "Spider-Man," "X-Men" and "Fantastic Four: Rise of the Silver Surfer," the 20th Century Fox film, which debuted as the No. 1 weekend flick last week with $57.4 million in sales, slightly surpassing the $56.1 million opening of "Fantastic Four" two years ago.

Mattel also has released a series of successful direct-to-DVD movies based on Barbie, Silver said. Later this summer, Lions Gate Films plans to release "Bratz," a live-action movie based on the MGA Entertainment dolls popular with tween girls.

"At the end of the day, Hasbro and some of the other large toy companies realize they're in the entertainment business," Silver said. He describes Hasbro today as "a family entertainment company."

The movie is one of the most anticipated of the summer. It won an MTV Movie Award this month for the best "Summer movie you haven't seen," and is opening on what has traditionally been one of the biggest moviegoing holidays of the year.

"They put their stake down and everybody avoided it," Silver said. "That is the biggest statement of how Hollywood expects the movie to be."

Goldner said Hasbro is now working on a movie based on G.I. Joe, and he won't rule out other Hasbro-related movies down the line.

"You could imagine what a Monopoly movie would be like," Goldner said. "It's not a film of a board game. It can be the whole experience people have, and all the iconography of Monopoly."

Independent toy analyst Chris Byrne said the idea could work.

"Monopoly makes a lot more sense than some of the movies we've seen," he said.

Goldner said he doesn't want to stop at Transformers or movies.

"Our brands have great salience among so many audiences and have been enjoyed by so many generations," he said. "There's a bigger story to be told, and that can be done through numerous forms of entertainment."

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