The continued popularity of Baldur’s Gate 3 and a Fallout-licensed crossover with Magic: The Gathering may have saved Hasbro from an even worse quarter than the one it reported to investors on April 24. However, the future of its reconstruction efforts in 2024 remains in doubt due to the success of these two properties.
Global toy empire and parent company of Dungeons & Dragons publisher Wizards of the Coast suffered a setback in its toy division last year, parting ways with a film studio whose D&D adaptation underperformed at the box office. This led to 1,100 job cuts at the end of 2023 and further bad reputation for the company as it promised to rebuild in 2024.
The first quarter results? Revenue fell 24%, largely due to the elimination of eOne Film. And yet, without Baldur’s Gate and MTG, things could have been worse, although the alienation of Baldur’s Gate maker Larian certainly clouds the outlook for this year.
Hasbro maintains gaming returns in Q1 report
Gaming was a catalyst for Hasbro’s sole growth, whose report detailed a significant 7% increase for Wizards of the Coast and the company’s dedicated video game segment.
No wonder, as Baldur’s Gate 3 was a huge success in 2023, winning almost every major Game of the Year award for titles released that year. The Universes Beyond: Fallout set released in early March also helped and should continue to support Hasbro’s continued recovery in 2024.
An Assassin’s Creed Universes Beyond is planned for this summer, which will help Hasbro keep the board wolves at bay in subsequent 2024 financial reports.
The company’s shares have recovered compared to the same period last year, but total first-quarter revenue fell 24%, coming in at $757.3 million this year compared to $1 billion last year.
The divestiture of eOne Film and Television was due to the failure of Dungeons & Dragons: Honor Among Thieves at the box office. The fantasy setting production failed to break even and cost $208 million worldwide.
This phase in the company’s life cycle has been rocky and is a difficult strategy to assess for one of the most recognizable brands in the world. Still, “We made solid progress in our turnaround efforts in the first quarter,” Gina Goetter, Hasbro’s chief financial officer, told investors.
What awaits Hasbro’s future?
Viewers don’t know exactly what the company is evolving into because there were significant gaps in the annual report. Entertainment failures, slumping global toy sales and mass layoffs have been synonymous with the company over the past year.
We reported last year on the mass layoffs just before Christmas that rocked the gaming world and would be a massive catalyst for Larian’s relationship with Hasbro. Viewers were baffled by the decision to lay off loyal and creative employees after record-breaking profits.
Chris Cocks, former president of Wizards and now CEO of Hasbro, said: “Given the state of our business [the layoffs] are a lever we need to pull to keep Hasbro healthy.”
The lever has been pulled, but it would have significant implications for Baldur’s Gate 3 and its future. Larian’s CEO Sven Wicke said at the time: “Wizards of the Coast has experienced massive layoffs… there is no one left from the original meeting with them.” They share so much knowledge about D&D (Dungeons and Dragons). It’s sad and I’m not judging anyone, but they’re gone but their knowledge is out there now.”
Larian then announced that they would no longer be involved in the work on Baldur’s Gate 3 in the future and would move on to new goals. Fans were disheartened by the news and Wicke’s statement that involvement in BG3 or future installments is “literally the opposite of what Larian is about.” We want to do big and new things. We don’t want to rehash what we’ve already done.”
Wizards of the Coast in turmoil
Wizards of the Coast, the owner of D&D’s intellectual property (IP), has been a house of disharmony for much of the year, despite being the only significant stable factor in Hasbro’s financial reports.
The gaming industry has seen manufactured art debacles, large-scale plagiarism, and the unnecessary layoffs mentioned above. Shortly before this earnings report was released, Wizards of the Coast President Cynthia Williams resigned, capping a year of spectacular financial drama.
Williams took home record pay from the previous fiscal year and remained silent about the layoffs. The $6.55 million she was paid could have gone a long way toward securing some of the jobs at stake, but she left under a cloud of turmoil and missed opportunities.
The biggest failure of their time was the inability to keep the only thing keeping Hasbro afloat: Baldur’s Gate 3. To make matters worse, the developers at Larian are planning to expand the title’s modding opportunities within the vibrant community expand. This could end up rivaling, if not killing, Hasbro’s efforts to make more profit from the blockbuster role-playing game, if not the death knell for those financial hopes.
So where does Hasbro go when its entertainment division is dusty and there is no longer a golden gaming title to keep its balance sheets looking remotely acceptable for a company of its size?
If the toy maker can’t find the answer, it needs to find more assets to offload. Still, in an important year with Dungeons & Dragons’ 50th anniversary, fans are expecting a lot more from Hasbro and its CEO, who spent a lot of time as president of Wizards.
This could be a turning point in Hasbro’s future as a leading global brand capable of reinventing lucrative outlets for existing IPs. Larian’s CEO recognized the signs of the times and moved away from the lucrative studio to do “big things.” Hasbro’s status in the gaming world is definitely worth seeing.
Image: Ideogram.