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WotC WotC Generates 75% Of Hasbro's Profit

ICv2 is reporting that WotC generated $110M of Hasbro's $147.3M operating profits in the first quarter of this year, with an increase of 15% on last year.

wotc.jpeg


Of overall sales, WotC generated (only!) 22% of Hasbro's $1.1B.

The growth is attributed to Magic: the Gathering and D&D. Recently, Hasbro restructured with 'WotC and Digital Gaming' getting it own division.

 

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Russ Morrissey

Russ Morrissey



Then WotC is now Hasbro "golden girl" or blue-eyed boy, the favorite or darling. I am really surprised. WotC is not only a "cash-cow" but now practically the main income source. More money than with transformers or my little pony toys? But theses are super-famous IPs, even with movies in the big screen.

You know I love speculation about merger and acquisitions. Do you think Hasbro will buy more companies?

This could change all market strategy about the possible future franchises.
 


They don't give a breakdown between D&D and Magic revenues, so it's hard to tell exactly where the growth is coming from. It's really striking that WotC is 75% of the profits but only 22% of the sales though - D&D/Magic must be seriously high-margin products to get that sort of ratio. Vindication for people who rant about how money-grubbing and overpriced they are?

What this does mean though, is that WotC is now a Big Deal in the context of Hasbro's financial viability. It's probably a more prestigious role for a manager etc seeking advancement in the company, and it's probably going to get watched more closely because it's so critical now. When Hasbro initially bought WotC we all comforted ourselves that D&D was too small a part of a huge company to get interfered with by higher management, and panicked that D&D was so insignificant to the huge company that it might just get absentmindedly wound up in some larger corporate restructure and D&D would never be heard of again. Neither of those two possibilities is true any more. D&D is here to stay, but Hasbro is reliant on WotC now, so will be watching like a hawk.
 


I guess Hasbro's plans for WotC is the management of the no-for-children brands/IPs/franchises, and the digital market, where the money is moving. Hasbro wants to be the next Disney and they can if they play well their cards, at least in the section of TTRPGs. I wouldn't be very surprised if Hasbro buys RPG publishers, even little companies, only for an IP with a potential value as multimedia franchise.

There were rumors about Disney would want to buy Hasbro, but this would rather to be independient. My intuition tells me Disney in January 2022 will be different from the December 2020. A lot of things are going to happen.

I have told Hasbro would like a new-brand no-D&D RPG, better based in some famous franchise as Star Wars (now this is being published by Asmodee/Fantasy Flight Games/Edgeent). After this the next option would be Star Trek (now being published by Mophidius) or some famous videogame (Starcraft, Overwatch, Fortnite: Save the World). But a sci-fi d20 game needs a lot of previous testing, and here the experience will arrived with the future project of the videogame studio "Archetype Entertaiment". The next step would be a videogame based in Gamma World, something like Borderlands.

 


Cossaw

Villager
Regarding other brands, toys especially, it seems the higher price of oil impacts the margins of Hasbro's line like My Little Poney or Transformers. This is the reason why Hasbro published their plan to increase prices, and thus margins on toy lines.
 


With so much revenue, will Wizards of the Coast ever be able to purchase freedom from the Hasbro corporate enslavement? Like is there an escape clause in the contract that sold WoTC to Hasbro?

There is no Wizards of the Coast separate to Hasbro. Wizards can't 'purchase its freedom' from Hasbro because Hasbro owns everything WotC has to purchase with, and there's no Wizards decision-making capacity separate to that of Hasbro.

Once a company is sold, it's sold. There's no going back unless the purchasing company decides to sell to someone else. Wizards has no more autonomy than the Hasbro accounting division.
 

Marc_C

Solo Role Playing
With so much revenue, will Wizards of the Coast ever be able to purchase freedom from the Hasbro corporate enslavement? Like is there an escape clause in the contract that sold WoTC to Hasbro?
WoTC is just a division with a logo. It's no longer a legal entity. The only way WoTC could leave Hasbro would be when Hasbro decides to sell the WoTC brand. With the numbers they are cranking out these days that will not happen for the foreseeable future.
 


Mannahnin

Adventurer
WoTC is just a division with a logo. It's no longer a legal entity. The only way WoTC could leave Hasbro would be when Hasbro decides to sell the WoTC brand. With the numbers they are cranking out these days that will not happen for the foreseeable future.
Wizards of the Coast, LLC is a legally incorporated entity. It is also a wholly-owned Subsidiary, though, so your conclusion is correct and I agree with your prediction.
 



Mannahnin

Adventurer
Just for clarity, an LLC is definitionally a legally-incorporated entity. A Limited Liability Company is like a hybrid between a partnership and a corporation. It has its own tax ID. Though if it is a wholly-owned subsidiary it may file taxes through its parent company. Similarly to how a child is a legally separate being from its parent, though dependent thereon.

This is a bit different from being "just" a division with a logo, which means there's no separate legal entity. Merely a DBA (Doing Business As) name (some states require a Registration of Fictitious Name, to document that entity A also uses this alternate name, rather than entity A owning entity B).
 

AmerginLiath

Adventurer
It makes sense. Production and especially shipping/distribution of toys and games is much more expensive right now. Meanwhile, WotC is a mix of publishing, printing of card stock, and selling of digital files. Even without taking into account the increased visibility of D&D et al during the pandemic, there’s a vast difference in overhead between divisions and thus a lot more profit coming from the sales of this division. The brand has managed itself very well in recent years, and Hasbro has found a good balance of support and hands-off involvement to maximize how it grows in its particular sector — while any of us may have different qualms one way or another with editorial direction, WotC as a brand line is indisputably running very well.
 

Burnside

Space Jam Confirmed
Supporter
They don't give a breakdown between D&D and Magic revenues, so it's hard to tell exactly where the growth is coming from. It's really striking that WotC is 75% of the profits but only 22% of the sales though - D&D/Magic must be seriously high-margin products to get that sort of ratio. Vindication for people who rant about how money-grubbing and overpriced they are?

Not necessarily. I suspect there's a ton of profit from licensing deals with DNDBeyond, Roll20, Larian Studios, and OneBookShelf - all of which cost WotC nothing. So that's profit WotC is generating but not based on direct product sales.
 

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