Magic Arena Game
Consumer Products

Digital gaming wins big for Hasbro in Q3

The toyco's Magic: The Gathering Arena eSports program continues to drive growth, but a looming trade war between the US and China could "substantially harm sales" moving forward.
October 22, 2019

Hasbro found the magic ticket. Growth for the Rhode Island-based toymaker was driven by its Magic: The Gathering brand for the third quarter in a row.

Overall, the toyco’s revenue was relatively flat at US$1.58 billion in Q3 2019 (compared to US$1.57 billion in Q3 2018). Hasbro’s entertainment, licensing and digital segment, however, saw revenue grow 20% to US$115.8 million. The increase was driven by Transformers: Bumblebee and Magic: The Gathering Arena (pictured). The eSports program based on the popular card game also drove growth in Q1¬†and Q2.

The company’s partner brands segment increased 40% to US$427 million due to products related to the Avengers and Spider-Man franchises, as well as Disney’s Descendants 3. Products connected to the upcoming Frozen 2 and Star Wars films also contributed to growth for the segment.

Revenue for Hasbro’s gaming segment fell 17% to US$232.3 million in the third quarter due to declines in Pie Face and Speak Out. The company’s total gaming segment covers all gaming revenue (including Magic: The Gathering and Monopoly, which are included in the franchise brands segment) and was relatively flat with US$449.4 million in the same period, compared to US$447.8 million in Q3 2018.

The franchise brands segment saw revenue drop 8% to US$779.7 million due to declines in NERF, My Little Pony, Baby Alive and Play-Doh. The emerging brands segment was relatively flat at US$136.2 million (compared to US$135.3 million in Q3 2018).

In the US and Canada, Hasbro’s revenue fell 2% to US$898.3 million while international revenue stayed relatively steady at US$561.1 million. The company’s Latin America and Asia Pacific segments both saw growth (4% and 7%, respectively) but its Europe segment reported a 4% drop in revenue.

Net earnings for the quarter fell 19.3% to US$212.9 million. Hasbro reported its operating income was negatively impacted by lower entertainment, licensing and digital segment margins, a higher revenue mix of lower margin partner brands and incremental shipping and warehouse costs.

In August, Hasbro entered into an agreement to acquire¬†Entertainment One for US$4 billion. The acquisition was approved by more than 99.9% of eOne shareholders on October 17. The deal, which is still subject to regulatory approvals and expected to close in Q4 2019, will see Hasbro take ownership of the company’s entire film and TV production slate, including hit kids IPs Peppa Pig and PJ Masks. The toyco plans to move a significant portion of eOne’s toy business in-house.

Moving forward, Hasbro expects products connected to Disney’s Frozen 2 and Star Wars: The Rise of Skywalker—as well as the US launch of NERF Ultra—will drive growth in the fourth quarter. However, Hasbro cautions that its consumer products business may suffer due to the uncertainties attached to a looming trade war between the US and China. If there were additional tariffs on products manufactured in China and shipped elsewhere, Hasbro expects that would “significantly increase the price of the company’s products and substantially harm sales,” according to its investor statement.

About The Author
Elizabeth Foster is Kidscreen's Copy Chief & Special Reports Editor. Contact Elizabeth at efoster@brunico.com

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