Gray Merchant of Asphodel | Theros
30, Oct, 23

MTG Is a Victim of Its Own Success, According to Analysts

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As Hasbro is quick to point out, Magic: The Gathering has been doing incredibly well recently. Going from strength to strength, this beloved TCG has seen a monumental boom in popularity over the past few years. Thanks to this, MTG has managed to achieve the remarkable feat of becoming a billion-dollar brand. 

Beyond the surge in new players, MTG has also been going from success to success with hit sets. Between The Lord of the Rings: Tales of Middle-earth, and March of the Machine, Wizards has been working wonders! While this is obviously great news for Wizards, MTG players, and Hasbro alike, this success has caused some concerns. Namely, that MTG has been a little too successful for its own good recently! 

Wizards Is Working Wonders

Galadriel, Gift-Giver | The Lord of the Rings: Tales of Middle-earth
Galadriel, Gift-Giver | The Lord of the Rings: Tales of Middle-earth

As we mentioned mere moments ago, Wizards of the Coast has absolutely smashed it out of the park in 2023. On the MTG side of things, this is largely thanks to The Lord of the Rings: Tales of Middle-earth. Capturing lightning in a bottle, promising immense flavor and fun, this Universes Beyond set had it all. So much so, in fact, that everyone wanted to play, collect, and have a great time with this MTG set, leading to immense sales success.

As if this wasn’t enough, however, Wizards also released Baldur’s Gate 3 this year. Easily a candidate for game of the year, this game similarly sold like mad, taking the internet by storm. 

Recently, during a quarterly report by Hasbro, we got to see the impact of these two major releases continue. Boasting a 40% increase in net revenue over 2022, Q3 has been nothing short of stellar for Wizards of the Coast. Unfortunately, for Hasbro, this trend hasn’t been seen over their entire toy empire. 

Throughout the Q3 report, Hasbro revealed that their other Consumer Products and Entertainment sectors have been faltering. Dropping by 18% and 42% respectively year on year, it seems Hasbro isn’t doing too great. Overall, the net revenue for Hasbro is down 10% for Q3 year on year.

From these numbers, it may seem like Wizards of the Coast is entirely propping up Hasbro at the moment. While this isn’t exactly true since the Consumer Product sector is still two times larger, it’s nonetheless a valid concern. After all, right now Wizards of the Coast is the only sector that’s growing and showing promising forecasts. 

That being said, however, these forecasts may not last too long. 

Too Good to be True

Moment of Truth | March of the Machine
Moment of Truth | March of the Machine

While Wizards and MTG have been going from success to success in recent months, unfortunately, there is a problem. For better or worse, we don’t know how long this will last. Obviously, 2023 has been a year filled with great successes so far, but there’s no guarantee that 2024 will be. Considering Wizards’ strength within Hasbro, this has some analysts concerned about the future finances. 

Highlighting this possibility, Bank of America Analyst Jason Haas recently raised this point in a post-presentation note. Released via Business Insider, Hass stressed how following up 2023 won’t be an easy feat. Ultimately, this could make the Q3 returns for 2024 look rather disappointing unless Hasbro really turns it around. 

“We’re impressed by the very strong Wizards of the Coast results this year which meaningfully exceeded our initial expectations but now set up for a hard compare as Hasbro needs to lap Lord of the Rings and Baldur’s Gate 3.”

Jason Haas

As if this fear for the future wasn’t bad enough, even Hasbro isn’t expecting a dramatic improvement. Over the year, Hasbro is now expecting fiscal 2023 revenue to decline by 13%-15% in total, which is a jump from past estimates. Previously, Hasbro only expected revenue to drop by between 3%-6%. 

Following the investor presentation on the 26th, Hasbro’s stock has, somewhat unsurprisingly seen a dramatic dip. Falling 16% in just a matter of hours, it’s clear that investors aren’t enamored with recent results. Due to this decline, the Bank of America has downgraded Hasbro to “Neutral.” As if that wasn’t bad enough, Bank of America also slashed the stock’s price target from $90 to just $53. 

What the Future May Hold

Sword of Once and Future | March of the Machine
Sword of Once and Future | March of the Machine

As much as Q3 2024 may be a long way away, it certainly seems like Hass’ analysis is accurate. Due to this incredible quarter, WotC and MTG will almost assuredly make themselves look bad next year in comparison. While this is already bad enough, we have to wonder what this will mean for the future of MTG as well. 

On the one hand, it’s very easy to see how Hasbro might decide to lean on Wizards of the Coast. Potentially increasing the number of sets releases and Universes Beyond crossovers, Hasbro could try and milk the brand. In an ideal world, this could cover the losses of other sectors until things improve. Unfortunately, however, I don’t think we live in that ideal world. 

For better or worse, MTG sets take a long time to develop, often being worked on for over two years. Thanks to this, even if Hasbro wanted to crack the whip, they wouldn’t see results for a long time yet. Even if this did happen, however, there’s no guarantee the hypothetically increased number of sets would sell well.

Already, MTG players have plenty of complaints about the speed of the over-bloated product calendar. Should this increase even more in the future, Wizards is at serious risk of pushing away enfranchised players. Ultimately, this could do more harm than good to the brand overall. Thankfully, while this is a real concern, at the moment, there’s no guarantee this will happen. Ultimately, we’re just going to have to wait and see what 2024 and beyond has in store

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