February 17, 2023
MagicCon, the huge convention devoted to Hasbro’s Magic: The Gathering, starts today in Philadelphia. MTG is a huge pop culture phenomenon. Just yesterday Hasbro announced that MTG is their first brand to gross a billion dollars in one year in the company’s history. With over ten million avid players and 30 years of history, Magic: The Gathering is a generational game-changer, one that seems to have displaced fraternal lodges as the primary “get-out-of-the-house” social activity for many young people.
Just look at our local area. Two of the largest local Moose lodges, in Charleston and Nitro, have closed in recent years, while places to play collectible card games are springing up all over the place.
There is no denying that Magic: The Gathering is a big part of many people’s lives.
Which is why it’s important to realize that Hasbro may well be killing its golden goose.
Before we go any further, I need to confess to a great ignorance and indifference to MTG. I’ve never played it. I can’t even begin to even tell you what it’s about. I’ve never been into the social aspect of collectible card gaming, and I’m not the world’s biggest fan of “grown-up fairy tale” fantasy. Apparently, the game is about wizards or some shit.
I treat it with the same respect and bemusement that I reserve for organized religion. If people enjoy it and it doesn’t hurt anyone, great. It’s just not for me.
What this is all about is something that I am all-too-familiar with: Hasbro’s strip-mining of a beloved property that runs the risk of burning out and turning off its core audience. Hasbro is a huge corporation, and their primary reason for existence is to make money. With MTG, they have done this by releasing more and more product, raising prices and milking the fans for every penny they can wring out of them. Hasbro bought Wizards of the Coast, the parent company of MTG in 1999.
As the website Markets Insider wrote, “The reported boom in Magic: The Gathering sales comes as fans and local game store owners have voiced growing complaints that Hasbro is over-monetizing the game by producing too many new expansions and releasing too much peripheral content.”
The New York Times reported on “player fatigue brought on by the release of 39 new card sets last year, up from 15 in 2019, according to an analysis by Bank of America. New sets can start around $50.”
Last November Bank of America downgraded Hasbro’s stock from “buy” to “underperforming,” specifically because of the way they’ve “over-monetized” Magic: The Gathering. MTG makes up about a third of Hasbro’s operating profit, and if that market were to collapse, it would be catastrophic for the company.
Bank of America said Hasbro has been overprinting cards and destroying the long-term value of the business.
Beyond Hasbro, however, there would be a domino effect that could be a total disaster. Thousands of hobby shops depend on MTG to support their business. More than half the comic book shops in the country sell MTG to subsidize their comics and collectibles customer base, and if Magic: The Gathering were to go bust, it’s a safe bet to say that half the comic book shops in the country would go with it.
As a life-long fan of comic books, I’ve seen what boom-bust cycles can do to a hobby.
In the early 1990s, there were close to 7,000 comic book shops in the country. It was a boom period, fueled by speculators who had been whipped into a frenzy by the investor-hype coming out of Wizard Magazine and the huge PR push that was mistaken for genuine newsworthiness surrounding the launch of Image Comics.
When that boom went bust it hit particularly hard. More than half the comic book shops in the US went out of business in a matter of months. Ironically, most of those that survived did so by diversifying into collectible card games. Magic: The Gathering pretty much saved the direct sales comic book industry.
Hasbro is really pushing their customer base to the breaking point. Markets Insider goes on to describe one particular set, “The 30th anniversary release angered fans with an eye-watering price tag, with a set of four booster packs, which contain 15 cards each, selling for $1,000.”
This set reprinted some of the most rare MTG cards, which hurt the secondary market, and then in an attempt to “fix” that problem, they declared the reprints ineligible for sanctioned play.
And again, I have no idea how this game is played or what a tournament entails. All I know is that, if a hobby completist wanted to buy every MTG product on the market, they’d have to spend thousands of dollars more than they would have had to just five years ago. That’s enough to drive people out of the hobby.
Again, admitting my ignorance here, I’m not sure why you would need to keep buying booster packs to enjoy playing the game. I guess that’s why MTG has become such a cash cow over the past thirty years. It’s not like a board game that you buy once and then play until the board falls apart and the pieces go missing. You apparently have to keep buying new cards to keep playing.
As such, you’d think Hasbro would have a better concept of how important customer service is for repeat business.
Back to what might happen if MTG went bust: Hasbro would take a huge financial hit. They’ve already announced layoffs and cutbacks, and that’s with MTG making a billion dollars last year. Imagine what they’d have to do if over the course of the next year half the MTG players left the hobby.
What if a sizeable percentage of players decided to just stick with the billions of cards that have been printed over the last three decades and just stopped buying new product?
Because of the nature of corporate culture and Wall Street, now that MTG has hit a billion dollars, if they don’t exceed that next year, Hasbro’s stock price will tumble. Even if they only make a billion, it’ll be seen as “flat” and Hasbro’s value will go down.
If MTG goes bust, half the comic shops in the country would likely shut down, or have to start selling vapes or something.
If your local comic book shop devotes a big chunk of their floor space to tables where people can play MTG, then it’s at a high risk of shutting down if Magic: The Gathering starts shedding players.
If half the comic book shops in the country shut down, Diamond Distribution will have a hard time staying afloat. They’ve already watched DC Comics and Marvel exit for other comic book distributors in recent years, this could be the final nail in their coffin.
If Diamond goes under, their toy company, Diamond Select, probably wouldn’t survive either. However, Diamond also buys toys directly from other toymakers like Playmates, McFarlane Toys, Mattel and…Hasbro. And they buy those toys on a non-returnable basis, so they’re even higher profit items for the toymakers. That would all go away.
Comic book publishers would have to shut down or trim the amount of titles they offer. Toy companies would lose a chunk of their business.
None of this would happen overnight, but it could happen over the course of three or five years if we get a perfect storm of people quitting MTG.
You may have noticed that Books A Million and Barnes & Noble both sell a lot of Magic: The Gathering product, as well as action figures. They have also depended on diversifying to prop up declining book and magazine sales. Nobody can afford to see such an important product for their bottom line burn out and decline.
This is why it’s vitally important for Hasbro to manage MTG properly. I’m not trying to be hyperbolic here. That MTG fans complained so loudly that Bank of America downgraded Hasbro’s stock is a stunning development.
Maybe Hasbro knows what they’re doing, but decades of watching them mismanage everything from GI Joe to Atari to The Hub does not make me optimistic.
And that is this week’s PopCulteer. Check back for fresh content every day and all our regular features.