RPG Evolution: The Child Becomes the Parent

D&D is doing really well, well enough that Wizards of the Coast is starting to take over its parent company, Hasbro. So what's next?

Graphic courtesy of Hasbro.​

Chris Cocks is Doing Really Well​

The untimely death of Hasbro's CEO Brian Goldner triggered a leadership shuffle that resulted in President and Chief Operating Officer of WOTC, Chris Cocks, being named Hasbro's Chief Executive Officer and a member of the Board of Directors, effective February 25, 2022.

Cocks was named CEO of WOTC on April 11, 2016. He was CEO of WOTC for six years before being promoted to lead Hasbro. Cocks in turn was replaced by Microsoft's General Manager and VP of Gaming Ecosystem, Cynthia Williams.

The move is surprising until you take into account just how well WOTC is doing.

Wizards is Doing Really Well​

As Russ posted previously, WOTC made over $1 billion in total sales in 2021, including $952M in tabletop games (some of that at least due in part to Magic: The Gathering sales). Tabletop games grew 44% and accounted for 74% of the $1.3B sales for WOTC in 2021. WOTC was responsible for a staggering 72% of Hasbro's total operating profit.

With numbers like that, it's not surprising that Hasbro noticed. Investors have noticed too.

"Let My Wizards Go"​

Alta Fox Capital Management, an activist shareholder group, has a problem with Hasbro's Brand Blueprint. Here's what Hasbro has to say about their strategy:

The Brand Blueprint is Hasbro’s strategic framework for bringing our brands to life in exciting new ways. We see our brands as story-led consumer franchises that we bring to life through compelling content across a multitude of platforms and media, with a wide variety of digital experiences, music, publishing, and location-based entertainment, and an impressive array of consumer products, spanning a broad range of diverse categories. Each brand activates the Blueprint differently, but the result is consistent: deeper consumer engagement, innovative brand and product experiences and increasingly expansive opportunities for our portfolio.

We can see this in action in how the D&D brand is being leveraged across multimedia. Hasbro's strategy is to do the same with all of its brands, including My Little Pony and Transformers. The idea is that Hasbro is not merely a toy or game company, but a brand company that spins products out of its core brands, from toys and games to movies and esports.

Activist investors Alta Fox Capital feels differently:

We believe Hasbro, Inc. (“Hasbro” or the “Company”) is severely undervalued due to its ineffective “Brand Blueprint” strategy, flawed corporate structure and consistent misallocation of capital ... Alta Fox sees a three-year path to $200/share, more than 100% higher from current levels, with a refreshed Board, new strategy, improved capital allocation and tax-free spin-off of Wizards of the Coast.

To address what they see as these inequities, Alta Fox nominated a slate of five candidates to the Board of Directors to "improve alignment, restore accountability, bring fresh ideas and ultimately reverse Hasbro’s chronic underperformance."

We're finally at the point that investors like Alta Fox think WOTC is now better off without its parent. It's no accident that Alta Fox is making this proposal at the same time a new CEO from WOTC has been announced. Hasbro's response:

The Board and the Board’s Nominating, Governance and Social Responsibility Committee will review the proposed director nominees and present its recommendation regarding director candidates in the Company’s proxy statement and accompanying WHITE proxy card, which will be filed with the U.S. Securities and Exchange Commission. Proxy materials will be mailed to all shareholders eligible to vote at the Company’s 2022 Annual Meeting. The date of the Annual Meeting has not yet been announced.

Whether or not Alta Fox's play will work remains to be seen. But one thing is certain: the D&D and Magic: The Gathering brands are so powerful that they are now calling the shots for older board game companies. Here's hoping that's good news for fans of D&D.

 

[Scruffy nerf herder]

Yeah. Do we really need another Spider-Man/Batman/Avengers/Fast and Furious movie? Don't get me wrong, I really enjoyed the most recent Spider-Man movie, but I'm getting prequel/sequel/remake-itis.

I mean, come on already! Branch out! How about a Fast and Furriest movie. I can see it now, Vin Diesel in a Bugs Bunny suit carrying a giant stuffed carrot speaking in his usual gravelly voice "What's up ... doc.". Practically writes itself.

You're digging into a problem right under the surface of what you're talking about. Hollywood, Hasbro, Disney, etc. all of the big companies that sell entertainment media suffer from the same problem: formula-ism. If something works, works multiple times, looks like it might work every time, then it's the new iron yoke for publishers to lord over the creators they employ.

The more money that's invested into a project, the more control the investors have, and more germaine for us is that this makes them risk averse.

How are other content creators any different? Their customers. They have a more targeted audience and "narrow target audience" has become a synonym for "those people who rebel against the mainstream content". They are willing to take some financial risk because the reward outweighs the risk, and if they don't take creative risks they'll lose their customers altogether that is the whole point, the social contract they have with their consumers.

People go to work in companies like that because they understand this and want more freedom to be creative. They don't want to be a shoe salesman they want to be an artist.

And the sad truth is that there are great content creators whose investors and publishers view and treat them as shoe salesmen.

 

[Oofta]

You're digging into a problem right under the surface of what you're talking about. Hollywood, Hasbro, Disney, etc. all of the big companies that sell entertainment media suffer from the same problem: formula-ism. If something works, works multiple times, looks like it might work every time, then it's the new iron yoke for publishers to lord over the creators they employ.

The more money that's invested into a project, the more control the investors have, and more germaine for us is that this makes them risk averse.

How are other content creators any different? Their customers. They have a more targeted audience and "narrow target audience" has become a synonym for "those people who rebel against the mainstream content". They are willing to take some financial risk because the reward outweighs the risk, and if they don't take creative risks they'll lose their customers altogether that is the whole point, the social contract they have with their consumers.

People go to work in companies like that because they understand this and want more freedom to be creative. They don't want to be a shoe salesman they want to be an artist.

And the sad truth is that there are great content creators whose investors and publishers view and treat them as shoe salesmen.

Trying to get a new idea going in Hollywood or other mass market media is difficult at best. Video games are another example, I mean how many Resident Evil games have there been? Do we really need another Call of Duty?

But I don't expect it to change anytime soon. WOTC is obviously hoping that can leverage D&D name brand into it's own franchise. At least with a D&D franchise you could tell a wide variety of stories and not yet another version of Batman.

 

[Von Ether]

We believe Hasbro, Inc. (“Hasbro” or the “Company”) is severely undervalued due to its ineffective “Brand Blueprint” strategy, flawed corporate structure and consistent misallocation of capital ... Alta Fox sees a three-year path to $200/share, more than 100% higher from current levels, with a refreshed Board, new strategy, improved capital allocation and tax-free spin-off of Wizards of the Coast.

Maybe I am slow, but this wording seems to imply that getting rid of WotC will improve Hasbro, or is this some sort of corporate double talk to fool someone who isn't aware of the numbers?

(e.g. You always have to talk like your mark is going to come out on top, even if their not)

 

[Inxanity]

I'd just like it if they start writing/publishing novels again (and more than just Drizzt)

 

[Eyes of Nine]

Company’s proxy statement and accompanying WHITE proxy card

Serra Angels are pretty common, no need to proxy them...

 

[Erdric Dragin]

Here's to hoping they allow content creators to publish D&D material of ALL editions on the DMs Guild so we can all be one big happy community where everyone's favorite edition is supported and the hate is finally gone.

 

[Hussar]

Trying to get a new idea going in Hollywood or other mass market media is difficult at best. Video games are another example, I mean how many Resident Evil games have there been? Do we really need another Call of Duty?

But I don't expect it to change anytime soon. WOTC is obviously hoping that can leverage D&D name brand into it's own franchise. At least with a D&D franchise you could tell a wide variety of stories and not yet another version of Batman.

It is pretty understandable too. A big tent movie or a AAA game is a hundreds of millions of dollars investment. That's a ridiculous amount of money. If the return is less than what I'd get if I just put it in a savings account, why am I doing it?

Yeah, yeah, art and all that, but, at the end of the day, these are businesses. Which means if you want these huge budget events, then it's not going to be blazing new paths.

OTOH, the last time WotC tried being creative, it was a massive failure. They went back to tried and true and found spectacular success. Not really surprising that they aren't all that interested in making new stuff. The market definitely spoke. And the market told WotC that they want WotC to stay in the lane, don't change too much and keep things pretty much static forever.

Sure, we can blame the "corporate suits" all day long. Doesn't change the fact that D&D gamers have zero interest in innovation.

 

[LuisCarlos17f]

I had forgotten Disney wants to produce a sequel of Willow. Warner wishes to continue with "Game of Thrones" but they can't notice this is special because the own author adds his personal touch, some pearls of wisdow you can't find in the most of the current speculative fiction.

Today the cinema ticket is too expensive if we compare this with the streaming services, and here the door for new ideas is. And the strategy is not only produce movies and teleseries, but the merchandising, where here they shouldn't worry too much about internet piracy.

Let's rebember lots of role-players are relatively casual. You only need to turn on the computer, videoconsole or the mobile to play Fortnite or another videogames, but a TTRPG needs a group meeting together (but they use virtual tabletops) and not always all the players can go the next game.

I am afair the TTRPG industry will be to create new IPs, and these used later for other products, as comics, videogames and TV shows in streaming services.

* Hmmmm, a puppet with the image of Strand von Zarovich would be an interesting skin in Fortnite. Dark Powers dare with that type of "jokes" and we shouldn't worry about the coherence with the canon.

 

[Paul Farquhar]

Here's hoping that's good news for fans of D&D.

I think it's bad news for fans of traditional board games.

 

[LuisCarlos17f]

The board games have survived the arrival of the videogames. Maybe Hasbro worries more about to sell a merchadising version of Monopoly, Clued or Risk based in famous franchises, but there are other companies, for example Asmodeus (and just now I would be surprised by the new of a future merger between both).

Hasbro wants to be a new Nintendo. Let's remember the Japanese company didn't start with the videogames, but selling cards. But AAA videogames may need more stuff, money and time than produce a blockbuster movie.