I read many different publications, so I sometimes see sharply conflicting perspectives on the same issue. Such is the case with Hasbro, a company that is being applauded and heckled simultaneously.
The point of contention is Hasbro’s Wizards of the Coast subsidiary. When it comes to profits, Wizards of the Coast and its highly profitable “Magic: The Gathering” are the tail that wags the Hasbro dog.
That tail got a lot bigger yesterday when Hasbro announced that “Magic the Gathering” is Hasbro’s first billion-dollar brand. In fact, it is Hasbro’s only billion-dollar brand.
And Hasbro needs “Magic: The Gathering” to continue its growth. Why? Because Hasbro is having a rough year. Its stock is down 39% from this time last year. It lost 130 million dollars in the fourth quarter and laid off 15% of its workforce. When you factor in inflation and note that the same quarter saw an 80 million dollar profit last year, it’s easy to see why “Magic” The Gathering’s” ascendance is a timely diversion.
However, the good news about “Magic: The Gathering” is not seen as good news in some quarters. Hasbro and its subsidiary, Wizards of the Coast, have been under steady fire from two very different stakeholders: The investment and collector communities.
These communities differ in their approach, but their complaints are congruent. They believe Hasbro has been so aggressive in growing “Magic: the Gathering” that it has lost its connection with its fans and the collector community.
Serious collectors want to collect every card set. They will however, drop out if there are just too many to collect. That appears to be happening with “Magic: The Gathering.”
How bad is it? Here is how New York Times writer, Gregory Schmidt put it in his article, “Magic: The Gathering Becomes a Billion-Dollar Brand for Toymaker Hasbro:”
Hasbro faces challenges making Magic even bigger, particularly player fatigue brought on by the release of 39 new card sets last year, up from 15 in 2019, according to an analysis by Bank of America. New sets can start around $50.
“Magic: The Gathering Becomes a Billion-Dollar Brand for Toymaker Hasbro,” Gregory Schmidt, New York Times, February 16, 2023
This is where the investment community comes in. Bank of America has, since November, been steadily criticizing Hasbro’s relationship with its “Magic: The Gathering” fans. Here are some headlines:
“Bank of America says Hasbro could fall 34% due to company ruining ‘Magic: The Gathering’ card game”
CNBC, November 14, 2022
Hasbro Slapped by Bank of America For ‘Destroying Customer Goodwill’
BOLS, Febraury 23, 2023
“New Bank of America Report Slams Hasbro for MTG Monetization”
MTG Rocks
Those kinds of headlines don’t help your stock price.
Here is what I think: The collector and fan communities see toys as more than something fun with which to play. They see them as having significant economic and emotional value. They keep a close eye on how the companies who make these toys treat them. They see any threat to either as a betrayal. Collectively they have a great amount of power. We would all be wise to get closer to these communities and learn about what they value and why.
