We've previously discussed a time when Dungeons & Dragons was considered as much of a toy as it was a book. The loss of D&D in toy stores was a blow to a hobby that found its footing among a younger generation. Now things have come full circle as the bottom of the toy market fell out from under Wizards of the Coast's parent company, Hasbro.
[h=3]Toys vs. Books[/h]We discussed previously how D&D wasn't just classified as a toy in some markets, but produced its own toy lines as well. D&D was carried in toy stores in the early 80s. The game's success in those markets was due in part to Dr. Eric J. Holmes' Basic version of D&D, which streamlined the rules and made them more accessible to a younger audience.
But D&D was as much of a toy as it was a book, and bookstores carried the game too...until they didn't. Unlike the toy market, the book trade often carries a return policy. Random House stopped fronting then-D&D owner TSR's loans against book sales in 1996 and returned a third of TSR's products -- several million dollars' worth. That accumulated debt sunk the company, only to be rescued by Wizards of the Coast.
Things came full circle when Wizards of the Coast (WOTC) was purchased by Hasbro. WOTC has continued to shepherd the D&D brand, which for years labored in the shadow of WOTC's other major game brand, the much more successful Magic: The Gathering card game. That all changed in the past few years.
[h=3]Roleplaying vs. Card Games[/h]The tension between D&D and Magic goes back years, with several failed attempts to cross-pollinate the two brands. It's also emblematic of two different markets: Magic, with a smaller physical footprint, can be sold everywhere from book stores to the big box franchises like Target in the U.S.; Dungeons & Dragons left both the book and toy store market behind to focus on sales through hobby store and the Internet. Thanks to WOTC's new CEO, Chris Cocks, the two brands have finally managed to produce joint efforts like The Guildmaster's Guide to Ravnica.
Beyond a D&D product, Magic's digital efforts with Magic: The Gathering Arena have blazed a path for D&D esports, which Hasbro CEO Brian Goldner breathlessly reported (and then retracted). It's clear that Cocks isn't playing favorites and sees both brands as fertile intellectual property beyond the original play spaces that spawned them. That's good news for Hasbro, because the market recently bottomed out of places that carry much of their product.
[h=3]Toys Aren't Us[/h]Toys R Us' collapse has sent shock waves through the industry, but it was a tsunami for the two major toy producers, Hasbro and Mattel. Toys R Us accounted for 10% of Hasbro's sales. Brian Goldner explained on the Q4 investor call:
All this added up to Hasbro revenues declining 12% to $4.6 billion, including a 13% decline in the fourth quarter. The implications for Hasbro go beyond the financial. Nerf, for example, had significant shelf space at Toys R Us, and it loses a major opportunity to showcase its brand with the loss of the toy store.
There was one bright spot in Hasbro's Q4, and it was Dungeons & Dragons. Goldner said the brand delivered "another record year" within the gaming portfolio, and that plans continue apace to expand D&D into digital play. Goldner pointed out in the Q&A that D&D being untethered from toy stores was actually an advantage, as they weren't significantly impacted by the loss of Toys R Us.
D&D has long since become an online brand -- at this point, there are so many resources online that it's entirely possible to play D&D for free -- that gives it an advantage in protecting the game's sales from the downturns in distribution channels. The loss of Toys R Us has put that advantage in sharp relief and Hasbro has taken notice. We'll likely see more focus on intellectual property brands like D&D in the future.
Mike "Talien" Tresca is a freelance game columnist, author, communicator, and a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to http://amazon.com. You can follow him at Patreon.
[h=3]Toys vs. Books[/h]We discussed previously how D&D wasn't just classified as a toy in some markets, but produced its own toy lines as well. D&D was carried in toy stores in the early 80s. The game's success in those markets was due in part to Dr. Eric J. Holmes' Basic version of D&D, which streamlined the rules and made them more accessible to a younger audience.
But D&D was as much of a toy as it was a book, and bookstores carried the game too...until they didn't. Unlike the toy market, the book trade often carries a return policy. Random House stopped fronting then-D&D owner TSR's loans against book sales in 1996 and returned a third of TSR's products -- several million dollars' worth. That accumulated debt sunk the company, only to be rescued by Wizards of the Coast.
Things came full circle when Wizards of the Coast (WOTC) was purchased by Hasbro. WOTC has continued to shepherd the D&D brand, which for years labored in the shadow of WOTC's other major game brand, the much more successful Magic: The Gathering card game. That all changed in the past few years.
[h=3]Roleplaying vs. Card Games[/h]The tension between D&D and Magic goes back years, with several failed attempts to cross-pollinate the two brands. It's also emblematic of two different markets: Magic, with a smaller physical footprint, can be sold everywhere from book stores to the big box franchises like Target in the U.S.; Dungeons & Dragons left both the book and toy store market behind to focus on sales through hobby store and the Internet. Thanks to WOTC's new CEO, Chris Cocks, the two brands have finally managed to produce joint efforts like The Guildmaster's Guide to Ravnica.
Beyond a D&D product, Magic's digital efforts with Magic: The Gathering Arena have blazed a path for D&D esports, which Hasbro CEO Brian Goldner breathlessly reported (and then retracted). It's clear that Cocks isn't playing favorites and sees both brands as fertile intellectual property beyond the original play spaces that spawned them. That's good news for Hasbro, because the market recently bottomed out of places that carry much of their product.
[h=3]Toys Aren't Us[/h]Toys R Us' collapse has sent shock waves through the industry, but it was a tsunami for the two major toy producers, Hasbro and Mattel. Toys R Us accounted for 10% of Hasbro's sales. Brian Goldner explained on the Q4 investor call:
For Hasbro, in addition to losing hundreds of millions of dollars in revenue from Toys“R”Us, the liquidation of an additional hundreds of millions of dollars of their retail inventory sold into the market at large discounts was more impactful to 2018 than we, and industry experts, estimated. It is an unprecedented yet finite event. Prior to its initial bankruptcy filing, Toys“R”Us was our third largest customer in the U.S., and our second largest customer in Europe and Asia-Pacific. In Europe, its bankruptcy added to a market already dealing with disintermediation across retail by online and omni-channel retailers, as well as political and economic headwinds, notably in the UK. According to NPD, the European toy and game market declined 4% last year across the top six markets.
All this added up to Hasbro revenues declining 12% to $4.6 billion, including a 13% decline in the fourth quarter. The implications for Hasbro go beyond the financial. Nerf, for example, had significant shelf space at Toys R Us, and it loses a major opportunity to showcase its brand with the loss of the toy store.
There was one bright spot in Hasbro's Q4, and it was Dungeons & Dragons. Goldner said the brand delivered "another record year" within the gaming portfolio, and that plans continue apace to expand D&D into digital play. Goldner pointed out in the Q&A that D&D being untethered from toy stores was actually an advantage, as they weren't significantly impacted by the loss of Toys R Us.
D&D has long since become an online brand -- at this point, there are so many resources online that it's entirely possible to play D&D for free -- that gives it an advantage in protecting the game's sales from the downturns in distribution channels. The loss of Toys R Us has put that advantage in sharp relief and Hasbro has taken notice. We'll likely see more focus on intellectual property brands like D&D in the future.
Mike "Talien" Tresca is a freelance game columnist, author, communicator, and a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to http://amazon.com. You can follow him at Patreon.
