Get Ready to Rumble

For each of the past 47 years, Barbie has traded in her most prized accessories for something new, depending on the fad of the moment: one season, it's cowgirl boots; another, leg warmers. Next year she's trading up to an iPod--just plug her in, and she becomes a karaoke singer, belting out whatever songs you've downloaded. Mattel's top-selling brand has been remade before, but now she's going positively bionic: the Fairytopia Magic of the Rainbow Barbie has an infrared transmitter embedded in her torso that allows her to double as a TV remote. Wedding Bride Barbie has a rock on her finger that sparkles brighter than a Tiffany, thanks to a light bulb. My Scene RollerGirl, a member of the Barbie family, electronically performs splits on giant purple skates.

If Barbie seems to be turning into RoboDoll, that's because she's preparing for the battle of her life. Her opponents? The Bratz dolls--Yasmin, Cloe, Sasha and Jade--midriff-baring girls who flaunt their "passion for fashion" with sequins, fur and heavy eye shadow not seen this side of Studio 54. Since their debut in 2001, Bratz have been stealing shelf space right out from under Barbie's heels. Some $2 billion of Bratz are sold worldwide at retail each year, says Isaac Larian, CEO of closely held MGA Entertainment of Van Nuys, Calif., which makes the doll. That's only a little more than half of Barbie's numbers, but Bratz's figures are growing while Barbie's stats are, well, deflating (down 13 percent in gross global sales in 2005). In some countries like England, Australia and South Africa, Bratz even outsell Barbie, cornering as much as 60 percent of the market. Larian says he expects a "double digit" sales jump this Christmas as compared with a year ago; that's on top of a 3 percent domestic increase for the year-to-date through October. Mattel won't divulge Barbie's holiday prospects, though it claims domestic sales have been rising this year--despite an 8 percent drop-off in sales worldwide in the first quarter. "Bratz are hipper, more fashionable dolls that girls can relate to," says Larian. More fashionable than Barbie in her Bob Mackie gowns?! No wonder she's ready to rumble with the panethnic Bratz.

This being Barbie, the rumble will be held in court. Mattel claims it actually owns the rights to Bratz, and that the doll was conceived by one of its former designers when he was still working for the company. The designer, Carter Bryant, left Mattel in October 2000 and approached Larian sometime that same year with a sketch of what would become the first Bratz doll. ("To me, they looked like aliens--big heads, with big eyes," Larian says, but his 11-year-old daughter liked the sketch and persuaded him to make a prototype.) Mattel sued Bryant in 2004, then last month amended its complaint to include Larian and MGA, accusing them of copyright infringement, misappropriation of trade secrets and violation of the Racketeer Influenced and Corrupt Organizations Act. Bryant declined to talk to NEWSWEEK; Larian says the suit is unfounded. "That's the way Mattel does business: they flex their muscles," Larian says. "If you look at the history of Mattel, they've basically destroyed every fashion doll that's come around to challenge Barbie." (Mattel declined to comment.)

The legally blonde battle doesn't stop there. In a separate lawsuit filed last year, MGA accuses Mattel of "serial copycatting," surgically altering its My Scene dolls, which were introduced in 2002, to take on the Bratz look. Included in MGA's complaint are before-and-after photographs in which the My Scene girls look nipped and tucked. As the years have progressed, their eyes have grown "more heavily lidded and thickly lined ... [their] make-up is more markedly pronounced and dramatic," the complaint alleges. The lips are thicker, too, as if they've been injected with collagen--a hallmark of the pouty Bratz. The My Scene dog, Churro, bears a strong resemblance to the Bratz pooch, the suit claims, since both "wear a jacket, a cap and carry a purse."

To win this catfight, Mattel first needs to get Barbie through her midlife crisis. "We've been struggling for several years," says Chuck Scothon, general manager of Mattel's girls division. "But we've brought the divisions together [Fairytopia, Princess World and Fashion Fever], made Barbie more consistent." The latest Barbie ads focus less on separate versions of the doll, and more on the brand, where Mattel still hopes to find loyalty among moms. Bratz, after all, are the dolls you can't take to school because they don't meet the dress code. Barbie-doll boxes now feature a new pink logo at the bottom and animated-cartoon-style renderings that are intended to convey her personality (Bratz boxes also sport cartoon drawings). And then there's Barbie's iPod and the remote control in her high-tech torso, which Mattel hopes will allow it to compete for older girls, who gravitate toward Bratz.

But is Barbie ultimately too plastic to be fantastic? MGA's big selling point up to now has been innovation, and the Bratz will continue to pull Barbie's hair. One of this year's top holiday toys is the Bratz Forever Diamondz line, which comes with an actual diamond ring that little shoppers can wear. OK, it's just a diamond chip, but MGA thinks it's better than a light bulb. "Nobody that I know of in the history of the toy business had combined these two things: a nice-looking doll, and a piece of jewelry with a real diamond," says Larian, who bought the stones in bulk. Shoppers have been buying the doll in bulk--1.5 million sold, at $30 apiece, since MGA introduced it this past summer. Next year a line of Bratz dolls themed to the characters in DreamWorks Animation's "Shrek" will accompany the upcoming sequel. There's also a Bratz live-action movie in the works, which Lionsgate Films is set to release in August. "In our first hour of casting, 700 girls showed up," says Avi Arad, the film's producer. "In the next hour, there were another 700. You can imagine the power of the brand." Barbie doesn't have to imagine. It's her worst nightmare.