Yesterday morning, Hasbro management team shared the toymaker’s financial results for the 2023 calendar year with investors. This marks the one-year anniversary of this little blog, which started off with a brief analysis of last year’s report. Despite a depressed consumer toy market, the 2022 investor call was much cheerier, with Hasbro CEO Chris Cocks celebrating a milestone for Magic: the Gathering: breaking the “billion barrier” in terms of annual revenue. With only modest growth within Wizards of the Coast (frequently abbreviated here to “WotC”) and even worse outcomes for the rest of Hasbro, this year’s call was much less exuberant.

The Facts

In brief, fantasy gaming vertical Wizards of the Coast was the saving grace of Hasbro in 2023, representing the only business unit with a positive fiscal year. And within WotC, Magic: the Gathering represented a massive 75% of revenue — no small feat in a year with licensing fees from Game-of-the-Year-winning Baldur’s Gate 3 bolstering the financials for the Dungeons & Dragons brand. 

They did it: 2023 was Magic’s second year with over a billion US dollars in revenue. While only sporting a modest 2% growth over last year’s number — the smallest delta in five years — it would be wrong to categorize Magic: the Gathering as having anything but a stellar year, financially speaking. 

Prior to 2022, only four expansions in the game’s 30 year history had generated at least $100M in sales. Per Chris Cocks on yesterday’s investor call, five of the 2023’s six major releases reached the $100M revenue threshold. Magic is able to consistently produce expansions that get players to open their wallets, and that’s true even in years with much-discussed launches from a competitor sporting Disney characters and where up-and-comer Flesh & Blood’s annual revenue is speculated to have doubled to somewhere between $50 and $75 million. 

The headlines from Hasbro’s report are worth outlining briefly, even if most of our interest here is the new details regarding Magic: the Gathering specifically. Hasbro as a whole generated just over $5B in revenue in 2023, a similar sum to rival toymaker Mattel. Unlike the company behind the Barbie, though, Hasbro lost money in 2023: nearly 1.5 billion US dollars, or an operating margin of -30.8%. Most of this amount — just over $1B — is attributed to the sale of their production house, eOne Film & TV, which has lost most of its value since it was purchased in 2019. However, their consumer products line did not hold flat like Mattel’s did, with revenue sinking 19% year-over-year. 

Wizards of the Coast & Digital Gaming continues its second year straight as the only profitable part of the company and simultaneously taking up an increasing percentage of the overall business. We’ll discuss some of the potential implications of this later in the article, but in short, Magic: the Gathering now accounts for nearly 22% of the company’s total revenue, up from only 7% just five years ago. 

Magic: the Gathering in 2023 is a topic that should be centered on one expansion in particular: Lord of the Rings: Tales from Middle-earth. Affirmed as the game’s best-selling release of all time, Tales from Middle-earth surpassed $200M in under six months — a milestone it took the previous best-selling set, Modern Horizons II, two full years to hit. According to Hasbro CEO Chris Cocks, “Lord of the Rings was the most successful product at bringing in new players into the franchise that we’ve ever released. We would anticipate that would be the same or even greater for IP like…Marvel or some of the other things we have in store.” While the company has not laid out any numbers as to the growth of the game’s player base, if The Lord of the Rings did indeed bring in any meaningful influx of card slingers, one would have to assume that, with revenue nearly flat year-over-year, that one or both of the two following scenarios is likely true: players spent less money on Magic than they did the year prior and/or the game is churning players faster than it is gaining them. 

I would caution folks from trying to determine to what degree either of those are true based on their own experiences. Even if you believe you have an understanding of a Magic audience that’s beyond what you believe is anecdotal, the 40M reported players of Magic worldwide are going to exist in so many different verticals and circumstances that you will still be experiencing some type of bubble. For example, according to Chris Cocks during his most recent fireside chat, 70% of Magic players play Commander. From both survey data and other quantitative research conducted by team here at Cardboard by the Numbers, a clear supermajority of Commander games are played in a private residence, making them hard to assess for the armchair analyst (even for me!) Add to that the biases that come with experiencing the small fraction of the Magic community that discusses the game regularly online, and your perspective will be warped. That’s one of the reasons this website exists, to try to study and understand the larger picture of our favorite cardboard pastime.

Universes Beyond 

Speaking of the online fan community, one of the most discussed elements from the announcement was the increased focus on Universes Beyond sets, Magic releases that feature third-party properties on the cards. In 2023’s Q2 investor call, Chris Cocks called out a 42% decrease in operating margin from the same quarter in 2022, primarily due to licensing costs. Indeed, the company spends more on royalties than they do on advertising or product development, with $428M in costs associated with the line-item in their 2023 financial statement. 

Based on the impact The Lord of the Rings had on WotC’s operating expenses, we assume that the royalty fee for Universes Beyond is somewhere between 15 and 25% of gross sales. Where it falls in that range will, of course, depend on the licensor and other particulars. 

Considering that, Universes Beyond is not strictly the cash cow its perceived to be by the community, but rather, its primary goal is as a point of leverage to generate more interest in the game as a whole and grow the total addressable market for Magic. After they’ve acquired the users, it’s in Hasbro’s best interest to move those new audiences to higher-margin products that exist in the game’s owned universe. “The special emphasis for Universes Beyond is new player growth,” said Cocks. And from Hasbro’s perspective, in the long-term, the core focus of Magic should still be Magic IP, even with a significant expansion in UB to drive continuous growth. 

The Future

Five years ago, in Hasbro’s “About Us” blurbs for corporate communications, “TRANSFORMERS” was frequently the leading brand cited under their catalog of IPs. A few years later, “NERF” was considered the most identifiable brand according to the toymaker’s public relations team. Now, it’s clearly Magic: the Gathering, and the company is not projecting a change in the pecking order any time soon, if CEO Chris Cocks is to be believed. This creates some interesting implications for Magic.

In their 2024 guidance, although their revenue is anticipated to drop across all verticals compared to 2023, Hasbro leadership laid out their targets for next year’s OP margins: between 38% and 40% for Wizards of the Coast and between 4 and 6% for consumer products, i.e. toys and board games. WotC’s target is slightly higher than 2023’s 36%, due to the lessened reliance on revenue from the licensing fee-heavy LotR product line, but consumer products is no longer projected to be a net negative on the company’s balance sheet. Many Magic: the Gathering players reasonably worry that the rest of Hasbro will continue to be an albatross for the game they love, forcing business decisions they may not like. However, this annual report, while bad for the rest of Hasbro, doesn’t represent that. If anything, it shows Magic’s apparent need for growth is a response to the general flatness of its revenue post-pandemic.

“Going forward, you should see as part of our six premiere sets per year, two of them will be Universes Beyond branded…that’s underlaying a lot of our bullishness on the growth for Magic.”

Chris Cocks, Hasbro’s FY 2023 Earnings Report

Chris Cocks previously referred to the period between 2016 and 2019 as a “plateau”. Modest but reliable growth year-over-year was not going to get the then-WotC CEO promoted to the top of the Hasbro food chain, and so he led the shift of Magic: the Gathering into a new era of explosive growth. That up-and-to-the-right mentality is the name of the game on Wall Street, and to avoid getting sued by shareholders, Cocks can’t be satisfied with what looks like a new plateau either. 

As discussed earlier, it’s unlikely that Magic players are spending more per person if LotR was indeed successful at increasing the size of the player base. Collector boosters and new Commander pre-cons with every expansion were amongst the biggest drivers in climbing to the current rung of the revenue ladder, but more recent experiments like “Epilogue” boosters have been unsuccessful and early sales numbers for “Play” boosters are not looking promising for increased spend. With no product line changes remaining on the Magic calendar with potential to meaningfully boost annual spend-per-player, a UB-led strategy for acquisition is Magic’s greatest hope — in the eyes of Hasbro.

Which brings us to sentiment over these changes among the player base: if one reads or watches feedback for Magic in online communities, one would imagine the audience is a literal stone’s throw away from a riot. With player dissatisfaction threatening to expand as Hasbro relies on ever-increasingly desperate attempts to maximize the size, shape, and grade of eggs laid by their golden goose, one would anticipate a greater degree of substitution in CCG (Collectable Card Game) dollars spent on other games, but that’s not something evidenced by the data.

Indeed, even ignoring an assumed drop in player base that’s more than made up for by new players brought in from The Lord of the Rings, the perceived increase in alienation within the Magic community is not represented in their appetite for new cards. While a disproportionately visible cohort of Magic players are dismissive programs like Universes Beyond and the multiplayer focus of new expansions, quantitative measures of Magic interest register strength. Strength may be relative, but on a relative basis, Magic is hot, both to other collectables and even when matched against the hyped up-and-comers in the CCG world.

The hearty sales of Magic sealed product is an underreported story. The occasional dud is the exception rather than the rule, and almost a given considering that the quantity of new product releases has more than doubled in the last half decade. When it comes to search traffic on Google, Magic is king, having grown since 2022 and taken back its crown briefly pilfered by the Pokémon CCG during the throes of the pandemic. These data are reflected everywhere the Cardboard by the Numbers team has researched sans Twitch, and will likely be the source of an entire article in the near future. 

For one particularly illustrative example, though, Magic has more page views on Wikipedia than the next ten card games combined, excluding the second-place CCG Pokémon. While not necessarily the most damning piece of evidence on its own — particularly compared to something more tangible such as aggregate LGS traffic — it is notable how Magic pro Brian Kibler gets more interest on Wikipedia on his own than the entire game of Disney Lorcana. 

I encourage any of you who are interested in the state of Magic to read the documents yourself; the analysis provided here is that of just one person. Here you can find the financial results, the Q4/FY 2023 earnings report, the management remarks, and a recording of the conference call featuring Q&A that were used to compile this article. 

Thanks so much for reading. We have basic land coverage on the regular as well as new Magic: the Gathering infographics and analysis every week, so if you’ve enjoyed this article, sign up for our newsletter and be sure to follow us on Facebook, Instagram, Twitter, and Threads!!

Miles Atherton is the editor-in-chief of “Cardboard by the Numbers” and has been playing Magic since 2006. Since studying Agricultural Economics at UC Davis, he’s built a career as an award-winning marketing executive in the entertainment industry with a love of data journalism. He’s also written for Anime Buscience, Anime News Network, and Crunchyroll News, serving as Executive Editor of the latter from 2016 to 2021.