On February 16, 2023, Hasbro conducted their fourth-quarter earnings call, talking about their business results through December 31, 2022 as well as their 2023 guidance. Among the items discussed were Dungeons & Dragons, D&D Beyond, and the OGL crisis. Below are some of the quotes taken from “Hasbro (HAS) Q4 2022 Earnings Call Transcript” by Motley Fool Transcribing at the Motley Fool.
Chris Cocks — Chief Executive Officer
Within our growth initiatives, our direct business comprised of Magic Arena, D&D Beyond, Hasbro Pulse, and Magic Secret Lair was up 15% in 2022.”
D&D Beyond delivered user growth in excess of 20% since we acquired the service in May of 2022 and, as forecasted, was EPS accretive in Q4. Wizards of the Coast and digital gaming grew 5% in constant currency, outperforming a games market that, by most measurements, was flat to down, with Magic Tabletop leading the growth. Importantly, we celebrated our first billion-dollar brand in Magic: The Gathering, a huge milestone, not just for Hasbro, but for the thousands of hobby shops, our most important and fastest-growing channel for the brand, and millions of fans who make both Magic and D&D more than just games but vibrant global communities.”
We navigated significant supply chain disruptions that, while resolved for 2023, compressed our set release schedules in 2022, particularly in Q4. We were too aggressive in some of our pricing assumptions, notably, our 30th anniversary edition of Magic, and pulled back on available supply, impacting Q4 results. Lastly, on D&D, we misfired on updating our open game license, a key vehicle for creators to share or commercialize their D&D-inspired content.“
Our best practice is to work collaboratively with our community, gather feedback, and build experiences that inspire players and creators alike. It’s how we make our games among the best in the industry. We have since course corrected and are delivering a strong outcome for the community in game.”
Looking at our segments, Wizards of the Coast and digital gaming revenues increased 5% in constant currency. Tabletop revenues were up 12% behind strong Magic : The Gathering releases. Digital declined 23%. This was expected given the comparison with the 2021 launches of the premium game Dark Alliance and Magic: The Gathering Arena mobile.”
Jason Haas — Bank of America Merrill Lynch — Analyst
And then you mentioned that — I think you described it as a misfiring on some of the proposed changes to OGL. Was there any sort of financial impact to that in the first quarter? I think that-I guess the controversy is kind of behind us at this point.”
“But just curious if there’s anything to look out for in 1Q.”
Chris Cocks — Chief Executive Officer
Yeah, I mean, we had some — we had some subscription cancellations, but they were comparatively minor in the totality of both the D&D P&L and the Wizards P&L. You know, of course, we take anything like that seriously. We’re in contact with the people who canceled. And, you know, in general, what we’re finding is a lot of them are very open to restarting their subscriptions.”
D&D Beyond is a great platform. It’s a really good value, and it’s something that’s been a good growth factor for us. You know, we find it — we feel, you know, about eight months into owning the asset, it’s been a really good purchase for us. It was EPS accretive within six months of joining the company, and we had over 20% user growth through the end of 2022.”
And the revenue growth was roughly commensurate with the user growth as well. So, you know, I think D&D should be on pace for a healthy 2023 with everything we have going on.”
Jason Haas — Bank of America Merrill Lynch — Analyst
Great. Thank you.”
Check out the full transcript on Fool.com.
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