In November, analysts at Bank of America issued a rare double downgrade of Hasbro stock, claiming that the gaming giant was “destroying the long-term value” of its Magic: The Gathering brand by overprinting cards. On Thursday, CEO Chris Cocks and Wizards of the Coast president Cynthia W. Williams pushed back hard against those claims. The executives spent nearly 45 minutes during a “fireside chat” publicly defending their strategy, while at the same time revealing important details about the future of the collectible card game — and its sibling, the iconic role-playing game Dungeons & Dragons.
The presentation, which is archived online, opened with a detailed look at the Magic player base. Then, around 25 minutes in, host Arpiné Kocharyan, an analyst from UBS, got to the point.
“There’s been this claim that you’re printing too many cards,” Kocharyan asked. “What is your one-sentence answer to that?” Williams began by explaining that major releases are not produced on a limited basis. Instead, the company uses a “print-to-demand” model, whereby Hasbro pushes more cards into the sales channel following its initial release when retailers demand more. Williams continued:
Our average post-launch sales quantities for our tentpole, premiere sets remained unchanged in 2022 compared to 2021. In aggregate, there is no evidence that Magic is overprinted, and the sentiment of “Magic needs to cut print runs to support prices” — that’s a misunderstanding of our business and our customers. If our prices for a potential product rise significantly soon after our launch, that simply means that we’re not adequately meeting customer demand and we are making millions of players unhappy at their lack of ability to acquire the card they want to play.
Later, Williams pressed back against another claim, this one coming most recently from vocal members of the Magic community online — namely, that falling prices on the secondary market are evidence that Hasbro is releasing too many sets of cards each year. Williams’ response:
We do understand that some players focus on the collectible trading aspects of our product, and we are always thrilled to see players enjoying and valuing our products for years after the initial release. But we don’t participate in secondary market activity for Magic products, nor do we derive any revenue from trading or selling. What we do hear from some of our [Wizard’s Play Network-affiliated local game] stores that trade and sell cards after an initial sale, is that like any market for any other collectible products, some products and individual cards do become more collectible than others, and values can change over time due to a multitude of external factors — many entirely unrelated to the number of cards printed. We have no indication that there [have] been any broad negative changes to interest in trading or post-purchase selling of Magic products.
Williams and Cocks also spoke plainly about fans’ response to the recently-released Magic: The Gathering 30th Anniversary Edition. The announcement of the nearly $1,000 box of four 15-card booster packs angered many long-time players because it included reprints of incredibly rare cards, including the legendary Black Lotus. Williams said that Hasbro heard that feedback loud and clear, and responded in kind by releasing fewer of those sets into the market. Meanwhile, Magic’s Warhammer 40,000 set of cards — part of its burgeoning Universes Beyond initiative — is now in its third printing, and Hasbro is making as many of those cards as possible to meet consumer demand.
“Magic will be our first billion-dollar brand this year,” Williams said. “We’re growing that brand ahead of the industry, and pushing the boundaries of where we can take the product. More often than not, we get that right [...] and sometimes we step back and listen to customer feedback.”
Williams went on to say that fans should expect six tentpole releases in 2023, just like 2022. However, those releases will be spread out more evenly throughout the year.
“In the second half of 2022 we had a really compressed release schedule that was partially driven by supply chain issues,” Williams said. “But in 2023, we will return to our preferred release cadence of approximately two months between our tentpole sets, with individual micro-sets sprinkled in between.”
Die-hard fans of Magic should also expect more crossover with non-Magic intellectual properties, like The Lord of the Rings and Doctor Who. The executives said that, going forward, these kinds of collaborations will become the primary method of onboarding new players.
So what does this all have to do with D&D? Williams said that many of the growth factors that have led to the success of Magic will also be applied to D&D — especially when it comes to digital content. Magic’s biggest area for growth, the executives said, is in the digital space. So-called “hybrid players” — that is, players who play Magic with both physical cards and online using Magic: The Gathering Arena — spend 40% more than other Magic players. Therefore, the goal is to open up similar opportunities for players to spend money through the newly acquired digital toolset D&D Beyond.
“Dungeon Masters [...] only make up about 20% of the audience, but they are the largest share of our paying players [today],” said Williams, who previously worked at Microsoft as general manager and vice president of its Gaming Ecosystem Commercial Team. “For the rest of the players at the table, we believe digital will allow us to offer a lot more options to create a rewarding experience.”
You don’t have to work too hard to read between the lines on this one. Hasbro is already getting customers used to downloading digital content through D&D Beyond with free material right now — like this holiday season’s digital advent calendar. Players should expect more micro-transactions on D&D Beyond throughout 2023.