Turtle tempest: Can Playmates Toys fight back after losing its prize Ninjas?

The toymaker will end its exclusive 37-year agreement to make products based on Teenage Mutant Ninja Turtles at the end of 2026

Key Takeaways:

• Playmates will soon lose its exclusive rights to Teenage Ninja Turtles toys, part of its licensed toy business that accounted for 36% of its revenue in the first half of last year
• The toymaker’s revenue plunged 58% in the first half of this year to HK$186 million, dropping the company into the red

By Lee Shih Ta

They represent childhood memories for many who grew up playing with the four famous fighting figurines. But for Playmates Toys Ltd. (0869.HK), the Teenage Mutant Ninja Turtles were equally valuable, if not more so, as one of its key money-spinners. The company has produced Ninja Turtle toys since 1988, establishing it as an industry titan during Hong Kong’s manufacturing golden age. That distinction also propelled Playmates to global prominence, gaining its Hong Kong base a reputation as the “world’s toy factory” by manufacturing products across Chinese border in adjacent Guangdong province. Yet all good things usually end.

That’s certainly the case for Playmates, which last week announced its longtime Ninja Turtles licensing agreement won’t be renewed when it expires Dec. 31, 2026, ending a 37-year relationship. After that happens, Playmates said it will seek new licensing opportunities while continuing to develop some of its other existing franchises, including Power Rangers, MonsterVerse and Winx.

Father of Ninja Turtle toys

Playmates’ history dates back to 1966 when Hong Kong entrepreneur Sam Chan Tai-ho, originally from Shantou in Guangdong province, founded Playmates in Hong Kong’s industrial Tuen Mun district. The company shot to fame with its Cabbage Patch Kids dolls, which became a major cultural phenomenon in the U.S. in the 1980s. Not long afterwards, Playmates secured global master toy rights for Teenage Mutant Ninja Turtles in 1987.

Two years later, the “Teenage Mutant Ninja Turtles” live-action film, made locally by Hong Kong’s Golden Harvest Pictures, boosted not only the franchise’s popularity, but also Playmates’ fortunes, lifting the company’s profits over tenfold to HK$1.21 billion ($156 million) the next year. Chan became known as “Father of the Ninja Turtles,” while Forbes named Playmates as the world’s most profitable toy company as it became the first in its class to record more than $100 million in annual profit.

The 2014 Hollywood take on the “Teenage Mutant Ninja Turtles” drove Playmates’ toy sales higher still to a record HK$2.16 billion, with Ninja products accounting for 95% of that.

The Turtles’ importance to the company quickly swam to the surface when Playmates’ shares sank 14.7% to HK$0.435 on the first trading day after the announcement, extending their year-to-date decline to 30%. Revenue from such licensed products climbed from just 8% of the company’s total in 2021 to 77% two years later, before falling back to 36% in the first half of 2025.

Playmates’ overall revenue tumbled 58% year-on-year in the first half of 2025 to HK$186 million, dropping the company into the red with a HK$25.61 million loss, reversing a HK$91.46 million profit a year earlier. It blamed the tumble on an absence of major new entertainment content during the period for its core licensed brands, particularly the Ninja Turtles, which saw no new live-action or animated films released. U.S. tariffs, rising mold and development costs, and discontinued product clearances also pressured the company’s margins.

The sudden reversal of fortune reflects a major weakness in Playmates’ licensing model, whose sales depend heavily on external catalysts, most often promotional efforts by owners of the intellectual property (IP) it licenses.

Early warnings?

IP holders like the owner of Ninja Turtles are always tweaking their strategies to squeeze the most money from their characters. Simply being able to manufacture products is no longer enough. In addition, such IP owners now demand wide-ranging distribution, digital marketing and cross-category integration capabilities from their licensees — putting pressure on long-term partners who may lack in those areas. High costs and tariff pressures may also narrow room for negotiation, as license-dependent toymakers navigate a fine line between profits and losses. Playmates’ gross margin fell from 56% to 43% in the first half of this year, giving the company less room to negotiate mutually agreeable terms with its IP partners.

Playmates also faces a new generation of competition from Mainland China, with new rivals catering as much to a rapidly expanding home Chinese market as to other countries. One of those is Bloks (0325.HK), which makes Lego-style block-building toys using IPs with frequent updates. Another is Miniso’s (9896.HK; MNSO.US) Top Toy unit, which leverages the company’s vast retail network of novelty stores. And the king of the toy box is Pop Mart (9992.HK), which took the world by storm in 2025 with its Labubu franchise.

Its newer rivals depend on a mix of self-developed and licensed IPs, while Playmates remains dependent on partners for its traditional licensed toys, putting it a disadvantage. While the Ninja Turtles loss will prove painful after 2026, that pain could become even more acute if the IP owner licenses the rights to one of Playmates’ Chinese competitors.

Whatever the future may hold, Playmates post-Ninja Turtles future will hinge less on finding a single replacement, and instead on diversifying its business to reduce reliance on a single license. With its strong history and capabilities in manufacturing, mold-making and distribution, the company certainly has a strong base to work from. Now, it just needs to find some good content to put into that machine during this critical period of transition.

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