Wizards of the Coast, Magic: The Gathering continue to outperform as Hasbro’s deep cost-cutting raises profits

Magic: The Gathering and Dungeons & Dragons owner Hasbro has recorded a jump in profits in the first quarter of 2024, on the back of continued strength from Wizards of the Coast and Magic, and an ongoing cost-cutting programme which has so far involved the planned layoffs of nearly 2,000 people.

Wizards of the Coast, which includes both Magic and D&D, saw revenues rise 7% in Q1, continuing its outperformance for Hasbro across the whole of 2023.

Its operating profit surged 60%, to $122.8m, compared to Q1 2023, greater than the total for the whole of Hasbro, after a $46.9m operating loss from its consumer products segment – including Nerf guns, Transformers and Peppa Pig toys – and costs from the sale of its eOne entertainment division weighed on the company’s overall profits.

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

The company said its tabletop revenue increased 5% in Q1, with Hasbro attributing the rise to shipment timing to support the Outlaws of Thunder Junction Magic release and strong demand for the Universes Beyond Fallout Commander set.

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 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 in 2023.

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 announced another $97.2m cash dividend for shareholders in the Q1 2024 results.

Hasbro CEO Chris Cocks said, “The first quarter was a good start to the year for Hasbro; we are continuing to see the results of our transformation work.

“Performance from our licensing portfolio shows the strength of our brands and we continue to fuel innovation in games and toys as we expand our reach across play patterns to fans of all ages.”

Gina Goetter, Hasbro chief financial officer, added, “We made solid progress in our turnaround efforts in the first quarter.

“We landed revenue where we expected and drove significant operating profit improvement led by our operational excellence program and improved business mix. We remain on track for our full-year commitments.”

Hasbro continues to have a fairly negative outlook for 2024, expecting Wizards of the Coast revenue to drop between 3% and 5%, and consumer products revenue to fall between 7% and 12%.

The latest strong Wizards of the Coast results come just a week after Cynthia Williams, the president of Hasbro’s digital gaming arm and WotC, resigned from the company after only two years in the role.

Williams is stepping down on April 26, with Hasbro saying it is conducting a search for her successor, and will be considering both internal and external candidates.

Hasbro hired Williams in February 2022 to head up Wizards of the Coast and its digital gaming operations, with WotC’s then president and COO Chris Cocks transitioning to become Hasbro CEO following the death of long-time incumbent Brian Goldner.

During her tenure WotC outperformed for Hasbro, with Magic: The Gathering becoming the company’s first brand to exceed $1bn in annual revenue in 2022.

Williams’ time at the company has been marred with controversy too, however. At the end of 2022 she told an investor seminar D&D was “undermonetised” despite the game having “never been more popular”. A month later Hasbro was forced to apologise when leaked plans emerged that would see its long-standing Open Gaming Licence changed to introduce charges and control stipulations over the work of third-party creators – causing a huge backlash from fans.

She also presided over WotC during its decision to send Pinkerton agents to the house of a YouTube creator to retrieve mistakenly sold cards from a then unreleased Magic: The Gathering set, which he had leaked online.