Magic, D&D maker Hasbro lost over $1bn in Q4, predicts WotC revenue decline in 2024

Magic: The Gathering and Dungeons & Dragons owner Hasbro lost more than $1bn in the final quarter of 2023, as huge expenses associated with selling its eOne film and TV business far outweighed growth from its Wizards of the Coast and digital gaming segments.

Hasbro suffered a bigger-than-expected drop in its Q4 earnings, with a poor Christmas of toy and games sales also weighing heavily on its results.

While Wizards of the Coast and digital gaming saw a revenue bump of 7%, that was massively offset by a 49% decline in its entertainment segment, which includes eOne, and 25% in its consumer products business, which includes Monopoly, Transformers, Nerf and My Little Pony.

The huge $1.2bn operating loss in Q4 was largely made up of charges associated with eOne. Hasbro agreed to sell eOne’s film and TV assets to Lionsgate for about $500m last year, bringing to an end its plans to expand beyond a toy and game business into a multimedia giant.

Wizards of the Coast, which includes both Magic and D&D, outperformed for Hasbro across the whole of 2023, with its revenues up 10% year-on-year compared to a 15% revenue slide for Hasbro as a whole.

That has been underpinned by the ongoing strength of Magic: The Gathering and Dungeons & Dragons – particularly the “blockbuster” August release of the hugely popular video game Baldur’s Gate III.

WotC’s outperformance is under threat in 2024, however, with Hasbro predicting the business unit’s revenue will fall by 3% to 5% amid an expected drop in licensed digital gaming in H2.

Wizards also suffered an operating profit drop of 2% in 2023, Hasbro revealed. It ascribed the fall to higher royalty costs associated with its Universes Beyond sets, which feature characters and brands from other IPs including Doctor Who, The Lord of the Rings and Warhammer 40,000.

Hasbro announced just before Christmas last year that it was slashing another 1,100 jobs as ongoing macroeconomic concerns ate into consumer demand.

The company, which owns brands including Monopoly, Transformers, Nerf, Play-Doh, My Little Pony and Peppa Pig, in addition to its Wizard of the Coast operations, emailed staff on December 11 to say it was cutting 20% of its workforce, on top of 800 job cuts which had already taken place this year.

Those cuts are far deeper than Hasbro initially planned. The company began a cost-savings programme in October 2022, and in January 2023 confirmed it planned to cut about 1,000 roles, representing 15% of its workforce.

Hasbro paid out $388m in cash dividends to shareholders last year, and paid down its debt by more than $500m.

Company CEO Chris Cocks, who earns about $1.5m each year, said, “Guided by our strategy of ‘Fewer, Bigger, Better’, we had important wins across both toys and games while making progress in our transformation during a challenging 2023.

“Despite the macroeconomic backdrop, we are entering 2024 with a healthier balance sheet, a leaner cost structure, and a diverse portfolio of industry-leading toy and game brands that support our capacity to invest in the business and maintain our commitment to returning cash to shareholders via our category-leading dividend.

“Our refreshed leadership team is bringing innovative new products to our fans. At the same time, we are taking the necessary actions to transform Hasbro and deliver long-term profitable growth starting with driving significant profit growth across our segments in 2024 and building momentum in our innovation pipeline between now and 2025.”

Hasbro CFO Gina Goetter, who joined from Harley Davidson last April to replace long-serving CFO Deborah Thomas, said, “2023 was a productive year for Hasbro, although not without some challenges.

“As we navigated the current environment, we took aggressive steps to optimize our inventory, reset the cost structure, and sharpen our portfolio focus on play with the eOne film and TV divestiture.

“Taken together, the actions throughout the full year have positioned the company for improved financial performance in 2024 and beyond. We are encouraged by our recent progress and remain laser focused on execution to deliver on our transformation objectives.”