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Wizards Of The Coast Leads Hasbro Revenue Segments

TLL Editor in Chief
A lot of people still think of Hasbro primarily as a toy company, but the firm’s financial results tell a different story.
As of Hasbro’s Q1 financial results, Hasbro is now a broader entertainment and play company, with a strong accent on gaming through its Wizards of the Coast and Digital Gaming segment, which generated 75 per cent of the company’s operating profit in Q1. WOTC is primarily made up of the wildly popular gaming franchises Magic: The Gathering and Dungeons and Dragons. 
This is also the first time Hasbro has reported its income after restructuring its operating divisions, making direct comparisons with previous financial reports more difficult.
However, that restructuring of its business units happened precisely because the nature of Hasbro’s business was changing, and the new segments better reflect that reality. Those new product segments—Consumer Products, Wizards of the Coast and Digital Gaming, and Entertainment—will be supported by a new management structure, which means the company, like Disney, has begun rolling out a significant realignment of its senior management. For more information on that development, check out our earlier Special Report: The Future of Hasbro.
When Hasbro announced this realignment in its last quarterly and year-end report, it also provided some historical context by reporting what the segments earned under what was then the future structure of the company. To provide some reference, it’s worth noting that Wizards of the Coast and Digital Gaming (aka WOTC) earned 72 per cent of operating profits in 2020, meaning the segment has grown its share of Hasbro’s overall operating revenue.
Sales for the segment were up 15% in Q1, from $210.6 million in 2020 to $242.2 million this year.
Also worthy of note is the fact that, while WOTC and Digital Gaming generate 75% of the profits, they only generate 22% of the $1.1 billion in sales the company reported in Q1. Hasbro sales overall were up 1% for the quarter, with net earnings of $116.2 million, a big turnaround from a $69.7 million loss in Q1 2020.
In their financial report, Hasbro attributes growth in the WotC and Digital Gaming segment to strong growth in both Magic: The Gathering and Dungeons & Dragons.
It also shows just how important these two games are for Hasbro, as they produce three-quarters of the company’s profits, and three times more than all other segments combined.

By way of comparison, Hasbro Gaming sales, which includes sales of games other than Magic: The Gathering, Dungeons & Dragons and Monopoly, were down 3% in this quarter, although that is largely because the segment showed very high numbers in Q1 2020. Total Gaming, which includes Magic, Monopoly, and all the other game titles, was up 7% from 2020.

Hasbro CEO Brian Goldner also pointed to a number of factors that are impacting profits in the company’s overall toy and game sector. COVID-19 is still impacting freight capacity around the world, so higher logistics costs is affecting the profitability of hard consumer products in general, and toys are no exception to the rule.
Goldner and the Hasbro team are communicating the news that there will be price increases on Hasbro toy and game products for its customers.

In terms of dollars, Hasbro’s consumer products continued to generate the most revenue at $653.9 million, up 14% from the same period last year, with an operating profit of $32.3 million. That was a major improvement over the $9.7 million loss in that segment last year.

Wizards of the Coast and Digital Gaming brought in $242.2 million, up 15% from last year, with $110 million in profit.

The company’s entertainment division didn’t fare as well, with revenues falling 32% from $322.5 million to $218.7 million. However, there was some good news, as the Entertainment division (primarily consisting of eOne) posted a $17 million profit, while pandemic restrictions on movie theatres and on film or TV production resulted in a $64.3 million loss in Q1 2020.

Goldner also briefly discussed the sale of eOne Music, saying the $385 million garnered from the sale will be used to pay down corporate debt.

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