Magic: The Gathering Becomes a Billion-Dollar Brand for Toymaker Hasbro

Richard Neal has been playing Magic: The Gathering, a fantasy card game, for nearly two decades. Two or three nights a week, he heads to Mox Boarding House, a game store in Bellevue, Wash., wielding a deck he has painstakingly built over the years.

“I go there probably more that my fiancé would like,” said Mr. Neal, a 31-year-old software engineer for Apple. His devotion, and that of millions of other fans, has helped Hasbro steadily build the game into a global behemoth.

On Thursday, the company announced that Magic had become its first billion-dollar brand in terms of annual sales, surpassing other toy lines in its stable, like Transformers and G.I. Joe.

That milestone was achieved after 30 years of nurturing the game for longtime fans while finding ways to coax new players to pick it up. It was a “winning playbook,” as Chris Cocks, the chief executive of Hasbro, put it in an interview.

Since it was introduced in the mid-1990s, more than 50 million people — including the rapper Post Malone and the actor Joseph Gordon-Levitt — have played Magic in hobby shops and around kitchen tables around the world. The game casts players as wizards who derive their powers by picking cards from the decks they have built, drawing from an ever-expanding universe of cards that are bought, sold and traded in a thriving secondary market. Magic’s popularity has spawned a cottage industry of video games, comic books, a Caribbean cruise and an animated series in development for Netflix.

On Friday, Wizards of the Coast, the Hasbro unit that publishes the game, will kick off MagicCon in Philadelphia.

After the initial buzz when it first appeared, Magic flew under the radar for many years, said Gerrick Johnson, an analyst at BMO Capital Markets who covers the toy industry. “Now you get to see how big it is,” he added. “I don’t think there is any toy brand that is even half that size.”

But Hasbro faces challenges making Magic even bigger, particularly 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 at around $50.

With consumers squeezed by inflation and economic growth slowing down, Hasbro’s reliance on Magic for growth has taken on a new urgency. On Thursday, the toymaker reported a loss of nearly $130 million in the fourth quarter, versus a profit of more than $80 million in the same period a year before, as consumers spent less on toys during the crucial holiday shopping season. Last month, the company said it would lay off 15 percent of its workers as it seeks to cut up to $300 million in costs.

Magic generated nearly $1.1 billion in revenue in 2022, up 7 percent from the year before. The game accounted for 18 percent of Hasbro’s overall revenue last year, higher than its 16 percent share in 2021.

Magic, which was created in 1993 by a mathematician, Richard Garfield, was the first modern trading card game, combining “the excitement of cards with the thrill of trading and collecting,” according to Guinness World Records. Its initial success helped inspire other games, notably Pokémon.

Themed sets and booster packs for Magic are sold at 6,500 mom-and-pop game stores like Mox Boarding House that are part of Hasbro’s Wizards Play Network, as well as in mass retailers like Amazon, Target and Walmart.

“Magic is a complicated game and we try to demystify that,” said Mary Holocher, the operations manager at Mox Boarding House, which has three stores in the Seattle area and is planning to open another in Chandler, Ariz.

In 2019, Wizards of the Coast released Magic: The Gathering Arena, a digital version of the game, which attracted players when pandemic restrictions kept them at home. “It’s been our most valuable tool for engaging new players,” Mr. Cocks said.

Mr. Neal tries not to miss Mox’s Friday Night Magic event, a tournament for amateur players that is organized by the Wizards Play Network. He is aiming for a spot on Hasbro’s pro tour, but that requires a strong deck, which can take time and money to build.

He estimated that he spent $20,000 on Magic last year. “I buy a lot of cards,” he said.

As Magic expands, it is drawing new audiences to venues like Mox, which embraces inclusion and diversity. “I am a nonbinary person, and traditionally the scene is male dominated,” said Katelyn Hassan, 34, a stay-at-home parent who went to Mox last Friday to play Magic competitively for the first time. “If I go anywhere to do this, I’m going to go there.”

As players seek the strongest cards to bolster their decks, they often turn to the secondary market, buying and selling cards at stores like Mox and on websites like TCGPlayer.com.

“Last year, I sold a couple of cards that I had in my collection for a long time,” said Chris Crilley, a 34-year-old Target employee in Wantagh, N.Y. “They were just sitting there, and I realized one was a $500 card.”

Some cards can fetch far more: The most valuable card is the Black Lotus, which was sold at auction in 2021 for more than $500,000. But some players say they have become concerned that an oversupply of card sets is diluting the value of their collections.

Last November, a Bank of America report took Hasbro to task for what it saw as an overly busy release schedule, saying it lowered the value of Magic cards and weakened the franchise. Hasbro’s shares fell 10 percent the day the report was released, underscoring how important the card game has become to the 100-year-old company.

Mr. Johnson, the BMO analyst, agreed that flooding the market could hurt a collectible brand like Magic. “If you have a weak secondary market, that weakens the primary market, too,” he said. “Collectors get disillusioned; that’s the worst thing that could happen.”

Hasbro’s stock has fallen 40 percent over the past year, lagging rival toymaker Mattel as well as the broader stock market.

Hasbro has defended its strategy, saying it is necessary to attract new players. That includes a series called Universes Beyond, which incorporates other franchises into Magic like Final Fantasy, Lord of the Rings and Doctor Who. The release of a Warhammer 40,000 crossover set last year was seen as a major success. “We couldn’t keep it in stock,” said Ms. Holocher of Mox.

“That’s a nice area of growth for us,” Mr. Cocks said of the brand extensions. But he added that Hasbro took Bank of America’s warning about overproduction seriously. “I don’t think you can be a winning team unless you can be open to self-reflection,” he said.

But Mr. Cocks said he was confident in the staying power of Magic. “When you look at the long sweep of 30 years — same-store sales, the value of the product, the size of the business — in general, everything is going in the right direction,” he said.