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Businesses The Almighty Buck Games

Hasbro Dilutes the Value of Magic: the Gathering, Bank of America Says (businessinsider.com) 54

Posted by BeauHD from the killing-its-golden-goose dept.
An anonymous reader quotes a report from Insider: Hasbro continues to dilute the brand value of its popular Magic: The Gathering card game, according to a Tuesday note from Bank of America, which said that the company faces a steep decline in its share price if it continues to "destroy customer goodwill." The bank reiterated its "Underperform" rating for Hasbro and its $42 price target, which represents potential downside of 29% from current levels. According to BofA, Hasbro continues to over-monetize the brands within its Wizards segment, which includes Magic: The Gathering and Dungeons & Dragons. "Within its Wizards segment, Hasbro continues to destroy customer goodwill by trying to over-monetize its brands," Bank of America said. The bank said that while it preannounced negative earnings, the stock is still not de-risked "given a host of outstanding issues." Mainly, Hasbro is attempting to squeeze out as much profit as possible from its Wizards products in the short-term without any thought as to the long-term durability of its brands. And the over monetization is irking customers, according to BofA.

"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," BofA explained. [...] "We've spoken with several players, collectors, distributors and local games stores and have become aware of growing frustration. The primary concern is that Hasbro has been overproducing Magic cards which has propped up Hasbro's recent [earnings] results but is destroying the long-term value of the brand," Bank of America analyst Jason Haas wrote in November. The oversupply of Magic cards means "card prices are falling, game stores are losing money, collectors are liquidating, and large retailers are cutting orders," Bank of America explained. The bank names "weak fan engagement with Hasbro's brands" and "fading appetite for Magic releases" as key downside risks for the stock.
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Hasbro Dilutes the Value of Magic: the Gathering, Bank of America Says More

Hasbro Dilutes the Value of Magic: the Gathering, Bank of America Says

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  • The same BofA (Score:2, Interesting)

    by rsilvergun ( 571051 )
    who's analysts help make it so that if Hasbro doesn't show record growth every quarter they get eaten alive by "activist" investors.

    Why do we live like this?

    • Learn to turn a profit, pay your debts, and you become immune to investor meddling.

      • Learn to turn a profit, pay your debts, and you become immune to investor meddling.

        "How to make a small fortune in business: start with a large fortune." <- basically this

      • Ya next thing you know you can buy back shares. Which causes a very fun to watch rocket go off on the chart because of a short squeeze. Course this company will not do that and will slowly die until acquired. The shorts will win in the end. You can tell that cause even a bank can see they are treating their customers like assholes.

      • Re: (Score:2)

        by ebh ( 116526 )

        Until they demand more profit than what you're already giving them.

        And more.

        And more.

        • If you are profitable and don't need to raise money, then you don't need to care so much about the share price. If you don't care about the share price you can scoop up de-valued shares in a buyback. Buyback 50% control and you can start telling any shareholders to go fuck right off.

    • Why do we live like this?

      I'll assume you were just at a loss for how you'd derail this discussion towards yet another political tangent, and this was the best you could come up with. I'll take the bait.

      Over the past few years, I've seen quite a few American institutions fold. Blockbuster Video, Circuit City, Radio Shack, Toys-R-Us, CompUSA, Sears, Ringling Bros. and Barnum & Bailey Circus, et al. Closer to home, several of my favorite restaurants have folded (say what you will about Don Pablos being a chain Mexican joint, th

      • Re: (Score:2, Insightful)

        by Anonymous Coward
        Quite a few of your example companies were taken down by being Bain'ed or some variation thereof (I'm looking at you Sears/K-Mart). Keep in mind that the market doesn't just passively squeeze out companies - there are sharks actively out for blood.
      • Companies have been getting squeezed, bankrupted, etc. since companies were invented. It has nothing to do with any theoretical stage.
        • late stage capitalism means no competion because there is only 1 company making product of type x and entry to market is impossible because of patents, copyrights and other bullshit designed to squeeze the man in the street
    • A sellside shop doesn't collude with activist investors. The activist investor may be an occadional client of the bank, but that's about it.

    • the investors already own most of Hasbro ... this is why they are constantly being pressured to make more money

    • Re: (Score:2)

      by tlhIngan ( 30335 )

      who's analysts help make it so that if Hasbro doesn't show record growth every quarter they get eaten alive by "activist" investors.

      Why do we live like this?

      BofA isn't an activist investor. They are an institutional investor.

      Activist investors are the kind that try to get companies to do things. There are a few that own Apple stock who do nothing but file shareholder motions to quit spending so much money on environmental programs, for example.

      Institutional investors generally want to see positive growth ov

  • Perhaps Hasbro isn't doing anything wrong at all and people just don't have the extra income to spend on this sort of stuff. The economy is becoming difficult.

    Plus, it could also just be a generational difference. For today's kids, "games" are the things you download from your phone/tablet's app store.

    • Re: (Score:2)

      by skam240 ( 789197 )

      I'm going to guess you don't play a lot of these games. A lot of the fan bases for both games have been upset with Hasbro for a bit now and neither game typically has a problem getting young players.

      A rules edition ago you would have been right about D&D and young players but social media has blown up 5e (the latest edition of D&D) so much there are probably more young people playing D&D then there ever have been.

      • The player base doesn't give a shit about re-issues and more sets, glut just makes the singles cheaper.

        • Re: (Score:2)

          by skam240 ( 789197 )

          Yeah, I'm less knowledgeable about the issues with MTG as I've only ever dabbled in that money pit of a game. From the people I know who play though they're not happy with Hasbro either.

          Card prices going down is actually created several problems by the way. I know a number of players who have justified their large lay outs of money for the game by pointing out that the cards always go up in value so they're a good investment.

          The damage a big drop in card values will do to shops should also worry anyone who

          • It's not only that; the game was built on the secondary market. Local gaming stores would stock sealed product, open some sealed product, buy singleton open products/"cards", and sell for a markup. In return, they joined a network of stores that would host tournaments with prizing sponsored in part by Wizards. The formats of the tournaments would maintain a fair playing field by letting players know what was expected.

            So the value of cards could be tied to the "game meta", rarity, and in select cases, what

            • Re: (Score:2)

              by skam240 ( 789197 )

              ...and there are alternate in-person games that are starting to catch their wind, such as Flesh and Blood (which seems to support their tournament

              This is the part that has me excited about all these Hasbro problems. I'm not the collectable card game player you seem to be but in the context of table top RPGs this might turn into a welcome shake up of the status quo for me. It's great that D&D 5e has brought so many new players to the game but it seems as if it's all anyone else plays and there are so many other good (and I would say better) RPGs out there that I would really enjoy to play more of.

              Plus, small indie developer or Hasbro? I'd prefer

    • Perhaps Hasbro isn't doing anything wrong at all and people just don't have the extra income to spend on this sort of stuff. The economy is becoming difficult.

      A few things tend to continue to do well in recessions, among them drugs, candy, and games. Games have high replay value, so people might stop going to see movies but they will still buy game stuff. When I was a kid and had to scrounge to get a few dollars to my name, I would still occasionally buy gaming supplies. And when I worked part time for minimum wage (at the time, $4.35 — which BTW is still more than some waitstaff makes) as a trackwalker I would cash my itty bitty paycheck before heading to

    • Hasbro's MO since the beginning of time is to take anything with any vague popularity and escalate it to the point where even hardcore fans are utterly burnt out on it and give up. I know this is about the gaming division, but they do the same thing with their toy divisions if there's even an inkling of popularity surrounding them.

      I've been into/out of Transformers since '84. And there's cycles of time where keeping up with the brand even a little is tiring, and other times where it's fun. I've learned to j

  • BofA has shorted Hasbro stock and is doing this to force the price down.

    • And Magic:TG is one of the many businesses Hasbro/Mattel has. There's a lot under that ticker symbol.

    • You have no idea what you're talking about. That's not how sellside research works. At all.
      • I take it you work for BofA. Because this exactly how BofA works. They got caught unethically shorting AMC stock in 2022.

        https://franknez.com/bank-of-a... [franknez.com]
        • I dont work for BofA and never have. And that is still wrong. This is not BofA research shorting AMC. There are firewalls between research and trading. NO WAY would they short a stock and then issue a sell rating. That would be market manipulation. Regarding BofA's AMC short, this begs for more information. What was illegal there? Could it occur to you that they could have been put in that position by client flows (say ppl buying puts?).
          • By the way, if you think short a stock that you deem overvalued is unethical, then this is a different debate which I have no interest in having (and needless to say, I disagree wholeheartedly). It might be reckless, it might be not recommended, it might be a wrong financial decision. But unethical? I call b/s on that qualifier.

  • Since when are banks actually concerned with over monetization that damages a brand? Every other company that self destructs doing exactly this is pressured by the same market that penalizes the stock price if profits don't double every year and exceed their "predictions".

    The feels like an analyst actually cares about D&D and isn't liking the direction Hasbro is going with it, not a bank concerned with the long term health of a company and not it's short term profitability and returns.

    • Banks do analysis of thousands of businesses every year to helo investors. Most research historically has resulted in Buy or Hold ratings, with very rare Sell. If you don't like what you read, discard it and invest as you wish.

    • Since when are banks actually concerned with over monetization that damages a brand? Every other company that self destructs doing exactly this is pressured by the same market that penalizes the stock price if profits don't double every year and exceed their "predictions".

      The feels like an analyst actually cares about D&D and isn't liking the direction Hasbro is going with it, not a bank concerned with the long term health of a company and not it's short term profitability and returns.

      ummm since always. banks do investment analysis and provide buy/sell/hold recommendations and future valuation estimates to investment clients. No the analyst doesn't give a shit about D&D, They care about the value of goodwill which is actually a very real number analysts attach to companies values and is absolutely something that Hasbro has been destroying.

      • Re: (Score:2)

        by tlhIngan ( 30335 )

        No the analyst doesn't give a shit about D&D, They care about the value of goodwill which is actually a very real number analysts attach to companies values and is absolutely something that Hasbro has been destroying.

        That's the big thing - people who play the game knew this for years what was happening. The fact that institutional investors are starting to hear the grumblings is why this news is rather big. Hasbro's incompetence has basically brought all the discontent that was previously confined to th

    • When their position is too large to unwind without crashing the stock.

      Not to say that's what's going on here.

  • to Magic: The Hasbroing...

  • Hasbro has killed MTG (Score:5, Insightful)

    by mabu ( 178417 ) on Wednesday February 08, 2023 @08:15PM (#63276965)

    I sold off my collection, around 2014. I made quite a bit of money. I then watched prices skyrocket even more, and after a few years tried to get back into it, but I was absolutely flabbergasted at how predatory Hasbro has been just releasing expansion after expansion. And then adding additional tiers of rarities and other odd things making it more of a speculative commodity than the game knew and loved. I'm so glad I got out when I did. I feel sorry for the people holding huge batches of cards thinking they're going to forever go up in value. They're in for a rude awakening. When you piss off the player base, you undermine the entire value proposition of the whole franchise.

    • I never got into MTG, although I've played it a few times. But if I did, I would only be interested in it as a game, and not as an investment. I decided over 40 years not to buy extra comics in order to speculate on future value, and while I definitely could have made some money over the years, I don't regret it. I bought comics because I enjoyed them. When I got tired of the direction of the industry in the mid 90s, I quit.

      When things explode in popularity, the value can soar. When a company tries to

  • Hasbro removes value from everything (Score:3)

    by Ogive17 ( 691899 ) on Wednesday February 08, 2023 @08:16PM (#63276969)
    Has anyone purchased any of their board games in the past 10 years? The quality of everything they produce is garbage. Been milking the brand name for the past 3 decades.

  • Huh? (Score:1)

    by kellin ( 28417 )

    This is nothing new. Wizards of the Coast was doing this before they were bought by Hasbro. When they came out with Fallen Armies I walked away from the game.. I still have some boxes of cards, but I doubt any of that stuff is worth anything.. pretty sure I sold off all the good cards in the early 2000s..

    • Fallen Armies, or Fallen Empires?

      I only ask because either I missed one of the MAAAAANY releases that happened between The end of Mirage and the start of Ravnica, which was when I almost got back into M:tG.
      I say almost because try as I might, I just can't afford even the Arena. Well, unless I wished to be capped at around Silver ranking anyway..... ...then again, you just play against the same 5 decks anyway so I don't think I'm missing much aside from the AMAZING LORE that they've always had. The newest se

      • I found it not too expensive to play arena, unless you count time.

        I could pretty easily crack gold (I just did the subscription), but it turned into a real grind after that.

        I stopped paying when I stopped having excessive free time.

      • > BTW, I got IN to magic with Fallen Empires lol....hence my curiosity at your comment. :)

        That's when I came in, too. For most of my HS career, I spent way too much of my piddly Highschool-Job money on that crap. Thankfully, nobody seemed to be into it when I went to college, and was able to exit with only minor stupid feelings mid-Mirage.

        Pretty sure I still have my cards in a drawer in the garage somewhere.

  • I bet this has entirely to do with their overly expensive and elaborate Proxy Set (non-tournament legal cards which are basically proxy cards). You're better off printing your own non-tournament legal cards.

  • And this way is in two parts:

    One, they need to fire or otherwise reassign the CEO executives who were responsible for the OGL debacle last month.

    And two, they need to sign on to being a collaborator of ORC.

    I realize that people think that the latter will never happen, but nobody seriously expected WotC to back down on the deauthorization thing either... they had already seen the backlash and doubled down on suggesting they would deauthorize it, so there was no reason to think they were going to chang

  • Sad (Score:3)

    by TwistedGreen ( 80055 ) on Thursday February 09, 2023 @12:25AM (#63277559)
    This is really sad to hear much beloved games spoken of like this. "Over-monetize the brands within its Wizards segment," god damn. Gary Gygax is spinning in his gold coffin.

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