With Hasbro constantly trying to compete with Lego by trying things like Built To Rule and Kre-O, their main rival Mattel, just went ahead and bought Mega Blocks, who are an established construction block company, and a growing competitor to Lego for licensed/themed series.

If Mattel plan to invest in the Mega Blocks Brand to take on Lego even more (who themselves are experiencing massive growth recently), it will probably leave Hasbro struggling even more to get noticed with their own construction blocks, that is yet to get a foothold in Retail Stores after 3 years since it was launched.
After all, Mattel have a lot of their own licenses that they can now give to Mega Blocks for free, and they have a lot more capital behind them to produce and market Mega Blocks than Mega Brands had.

So unless Hasbro starts competing on price, or expanding their library of Brands into Kre-O like Mattel did with Mega Blocks (with the Barbie brand), Kre-O is going to start looking like "beating a dead horse".