Cut Your Losses
27, Jan, 23

Hasbro To Cut 1000 Jobs Following Q4 Disappointment

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While MTG players are all too aware of how much Magic costs, the brand’s value has always been somewhat nebulous. That was, at least, until Hasbro boasted and announced MTG was on track to become the company’s first billion-dollar brand. Thanks to the business decisions that brought about this valuation, MTG players weren’t all too happy with this news. Despite the discontent, however, there is no doubt that Magic: the Gathering makes a lot of money. With new products and the expanding presence of Universes Beyond, profits are set to increase even further throughout 2023. While MTG may be the golden goose for Hasbro, not all of the company’s brands are so lucrative. Subsequently, Hasbro has announced that they’re looking to mitigate their losses by laying off around 1,000 employees. 

Wall of One Thousand Cuts

Wall of One Thousand Cuts
Wall of One Thousand Cuts | Modern Horizons

Anticipating a fall in revenue of 17% from Q4 2022 compared to previous years, Hasbro has announced they’ll be implementing “leadership and organizational changes” in a recent press release. Alongside these leadership changes, Hasbro intends to eliminate “approximately 15% of its global workforce this year.” Taking place across the coming weeks, it’s unclear if these job cuts will target underperforming areas or be indiscriminate. Given the exceptional performance of the MTG brand, however, we imagine cuts at Wizards of the Coast are less likely. As a result of the extensive layoffs and continued “supply chain investments,” Hasbro aims to save between $250 million and $300 million per year by the end of 2025. 

“Despite strong growth in Wizards of the Coast and Digital Gaming, Hasbro Pulse, and our licensing business, our Consumer Products business underperformed in the fourth quarter against the backdrop of a challenging holiday consumer environment.

We are focused on implementing transformational changes aimed at substantially reducing costs and increasing our growth rates and profitability. While the full-year 2022, and particularly the fourth quarter, represented a challenging moment for Hasbro, we are confident in our Blueprint 2.0 strategy, unveiled in October, which includes a focus on fewer, bigger brands; gaming; digital; and our rapidly growing direct to consumer and licensing businesses. Through this strategy, we are putting the consumer at the center of everything we do, and our Operational Excellence program is on track to drive significant cost savings across the business and improve our overall competitiveness. These strategic pillars helped to improve our results, particularly operating profit margin and revenue growth in key categories, in a challenging fourth quarter, and lay the groundwork for continued progress in 2023.”

Chris Cocks – Hasbro CEO

While Chris Cocks and Hasbro leadership remain committed to their business strategy, recently, lucrative brands such as Wizards of the Coast have been beset by controversy. In November 2022, for instance, the Bank of America accused Hasbro of overprinting MTG and “killing its golden goose.” As a result of this report, the Bank of America double-downgraded Hasbro’s stock from buy to underperform. Despite the scathing nature of this report, Hasbro has since confirmed that they’re not slowing down their product release strategy.

Alongside controversy plaguing MTG, Wizards of the Coast’s Dungeons & Dragons brand has also faced substantial backlash. Following proposed changes to D&D’s Open Gaming Licence (OGL), Wizards faced immense criticism from the community. This led to many players boycotting the brand and canceling their D&D Beyond subscriptions. Responding to this backlash, Wizards scrapped many of their planned changes to the OGL, which has been in place since 2002. While this move has restored some faith in the brand, D&D’s reputation has nevertheless been tarnished by this experience. 

Cut of the Profits

Cut of the Profits
Cut of the Profits | Streets of New Capenna

Despite all the controversy surrounding Wizards of the Coast, in the press release, Hasbro stated the company is nevertheless anticipating record profits. Generating approximately $339 million in Q4 2022 alone, WotC and Hasbro’s “Digital Gaming segment” is an exceptionally lucrative asset. Across the entire year, WotC and the Digital Gaming segment are expected to generate $1.33 billion in revenue. This is a 3% increase year-over-year. 

While Wizards’ increased revenue should protect the company from extensive layoffs, MTG players were nevertheless concerned their beloved game could be impacted. On Reddit, for instance, players such as u/ALongOverdueSpanking and u/smashtheguitar highlighted how Hasbro may lean on MTG more to boost profits. 

“IDK, I’d be worried this could lead them to double down on milking the MTG D&D crowd to cover losses in other categories. I also worry it will mean further talk of a buyout/merger situation. I think that could be fundamentally disastrous for the game, especially if Disney gets their hands on it.”

u/ALongOverdueSpanking

“It just means they’ll continue to squeeze more and more out of the cash cows (WOTC products) to keep afloat. This only puts further pressure on WOTC heads to continue unsustainable growth.”

u/smashtheguitar

Currently, for better or worse, it’s unclear exactly how WotC and MTG may be impacted by this round of changes at Hasbro. As we stated previously, due to the company’s financial success, we very much doubt they’ll suffer extensive layoffs. That being said, it is entirely possible that Hasbro will look to increase Wizards’ profit margins elsewhere to ensure profitability. For now, there’s no telling what Hasbro and Wizards may have up their sleeves, however, MTG players have pitched plenty of worrying solutions.

“Only one solution. $10,000 packs. PRINT THEM NOW!!!!!!”

u/BookkeeperMountain

“Time to sell 60 random fake cards for 2000 dollars then!”

u/mateogg

“In unrelated news, Hasbro announces that MTG Standard sets will now be released monthly instead of quarterly.”

u/_Zambayoshi_

Read More: Spiking Commander Staple Has Shocking Reprint Announcement!

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