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8, Feb, 23

New Bank of America Report Slams Hasbro for MTG Monetization

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Throughout recent years, MTG players have been getting progressively more discontented with Wizards of the Coast’s parent company, Hasbro. Believed to be the reason behind many of WotC’s dubious business decisions, Hasbro has faced consistent complaints from MTG players. Typically, these complaints have always lingered in the background when discussing topics such as MTG’s bloated release calendar. Recently, however, disgruntled players have been making their voices heard. Following the announcement of 30th Anniversary Edition, for instance, Wizards of the Coast and Hasbro faced significant backlash from MTG fans. So much so, in fact, that the Bank of America took notice, releasing a scathing report which condemned Hasbro’s business practices.

Unfortunately for Hasbro, their troubles didn’t end there. After almost four months, and just as many controversies, the Bank of America is back again. Delivering another scathing report against the company, this time, Hasbro is being accused of destroying customer goodwill through over-monetization.

Dubious Dealings

Squee, Dubious Monarch
Squee, Dubious Monarch | Dominaria United

In their initial report from November 2022, Bank of America analyst Jason Haas accused Hasbro of “killing its golden goose.” This damning assessment followed waves of changes pushed upon MTG that angered and disenfranchised the game’s devoted player base. Out of these myriad changes, Hass claimed their main concern was that “Hasbro has been overproducing Magic cards.” Beyond the confusingly crowded release schedule this created, the overproduction also devalued huge swathes of secondary market products, crippling local game stores. Alongside this, the release of the much-mired 30th Anniversary Edition set was scrutinized by Haas for its “excessively high” price. 

As a result of their damning report, the Bank of America double downgraded Hasbro’s from “buy” to “underperform.” This accompanied a new stock target, which was reduced from $73 to just $42. Despite facing criticisms and their stock being devalued by industry analysts, following this report, Hasbro didn’t change tack. Instead, speaking in a fireside chat with UBS Wizards of the Coast, President Cynthia Williams explicitly denied the overprinting claims. “In aggregate, there is no evidence that magic is overprinted. The sentiment Magic needs to cut print runs to support prices, that’s a misunderstanding of our business and our customers.”

Following this dismissive response, MTG’s Lead Designer, Mark Rosewater, would go on to explain why Wizards won’t be slowing down. Utilizing a buffet metaphor, Rosewater reasoned that Wizards is trying to attract as many “diners” (players) to Magic as possible. Subsequently, it’s within Wizards’ best interests to release as many products as possible, as each player has their own tastes. While this approach makes sense, in theory, it nevertheless supports Hass’ assessment that Hasbro is “destroying the long-term value of the brand” in favor of short-term profit.

“Here’s the challenge. There are a lot of different Magic players that want very different things. We want to produce what makes Magic special for each player in enough volume that they stay invested. That’s what’s going on, we’re trying to make sure our proverbial buffet always has the food that excites each individual diner.”

Mark Rosewater

Seconds Out, Rounds Two

Round Two (Seize the Day)
Round Two (Seize the Day) | Arcane x Secret Lair

Within 2023, there are a lot of products and releases for players to look forward to. March of the Machine, for instance, is one of the most anticipated set launches in recent memory. Similarly, the Lord of the Rings: Tales of Middle Earth set promises to be another stellar Universes Beyond release. While there is plenty for players to look forward to, 2023 is off to a bad start for Hasbro. In a follow-up to their November report, the Bank of America has again criticized the company while reaffirming stock targets. As reported by Business Insider, Bank of America has reiterated its “underperform” rating and $42 stock price target. 

Alongside affirming their rating of the stock, the Bank of America further criticized Hasbro for the handling of their brands. “Within its Wizards segment, Hasbro continues to destroy customer goodwill by trying to over-monetize its brands.” Subsequently, even despite Hasbro preannouncing negative earnings, the stock will not be de-risked “given a host of outstanding issues.” Once again, the main issue highlighted by Bank of America, according to Business Insider, is Hasbro’s focus on short-term profit. This approach continues to destabilize the brand’s long-term health while frustrating Wizards of the Coast’s devoted customers. 

“We remain especially cautious on Hasbro’s Wizards segment given its over-monetization of Magic. Wizards recently tried a similar tactic with D&D-proposing changes to its licensing agreement which led to substantial pushback from the community including calls to boycott the D&D movie.”

Bank of America | Via Business Insider

In early January, Wizards was again subjected to immense backlash following proposed changes to Dungeons & Dragons’ Open Gaming License. These changes would have introduced royalties and clauses that allowed Wizards to license creator-made content freely. Following the immense backlash, including a petition signed by nearly 70,000 D&D fans, WotC canceled their OGL overhaul. While this may have prevented Bank of America from further lowering stock price targets, it did validate concerns about Hasbro. Subsequently, with “weak fan engagement with Hasbro’s brands” and “fading appetite for Magic releases,” the stock maintains its “underperform” rating. 

Over-Printing for Good?

Kels, Fight Fixer
Kels, Fight Fixer | Jumpstart

While the Bank of America continues to criticize Hasbro for its business strategy, MTG players aren’t entirely displeased. For instance, when reacting to the news on Reddit, several MTG players highlighted how overprinting might actually be a good thing. “[MTG] is a game, not an investment. I dislike WotC screwing over LGSs, but I think the pieces to be able to play the game being available is a good thing,” u/ThatGirlOverThere9 commented. “This reeks of investor bro stench to me, which IMO is the worst part of the magic community.”

Given how expensive MTG can be, falling prices are something that many a player can get excited about. However, other Reddit users such as u/Crulo warned that over-printing MTG still has potentially expensive consequences. “All that model leads to is WotC just releasing all-new, more powerful stuff every set in order for people to buy the new sets. The most expensive cards may be $5-$20, but you just have to rebuy everything every set. […] It’s a collectible and a game. It’s not just a game. And collecting (maintaining and building value) is how many people primarily engage with this hobby.”

Following this, other commenters on Reddit highlighted how falling prices don’t just affect MTG players. Local game stores, which have been vital to Magic’s success throughout the past 30 years, often end up paying the price. Subsequently, as u/F0me points out, over-printing can lead to stores giving up on MTG products. “Every LGS I know has significantly downsized their inventory of MTG while increasing their stock of Pokemon, Yu-Gi-Oh, Flesh and Blood, and other TCGs. Why risk it when Amazon will just undercut you with prices even lower than distributor pricing.”

Read More: Wizards’ Latest Announcement Reveals Insane Spoilers!

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