Magic: The Gathering’s recent set of Fallout-themed cards is the franchise’s “best-performing Commander set ever,” said Hasbro CEO Chris Cocks. The announcement, made Wednesday during an earnings call with investors, brings attention to the potential of the trading card games’ ambitious Universes Beyond initiative. But it also highlights the risks of working with intellectual property licensed from other companies.
Following successful experiments with The Walking Dead- and Godzilla-themed cards for Magic: The Gathering, the Universes Beyond initiative was formally launched in February 2021. The first batch of crossover cards included franchises like Warhammer 40,000 and Doctor Who. While all of those sets sold well, it’s the Lord of the Rings set that turned heads in the C-suite. It generated more than $200 million in revenue in less than six months, which is more than double the benchmark set by other historically high-performing sets, according to Hasbro.
Now the Rhode Island-based company wants to produce two similarly sized sets each year. That means incurring some hefty expenses to license the best IP.
The Fallout cards, released in May, were well timed to benefit from the launch of the Fallout streaming television show on Amazon. But Cocks was quick to note that this wasn’t a Lord of the Rings-sized win for Hasbro.
“I would say Fallout has been a great set,” Cocks said. “It’s probably our best-performing Commander set ever, whether it’s a Universes Beyond set or not. However, Commander sets tend to be quite a bit smaller than our overall premier sets, so you have weight that accordingly.”
The Commander format generates far less revenue for Hasbro than its “premier” sets — that is, the larger multiformat sets designed for multiple communities within its player base. Weighed against the cost of licensing Fallout from its owners at Bethesda, the Fallout set likely generated less revenue for the company compared to The Lord of the Rings.
The next Universes Beyond release scheduled for 2024 is Assassin’s Creed, and a portion of the earnings from those cards will need to make their way to the IP owner, Ubisoft. The same is true of the next two Universes Beyond sets planned for 2025: Marvel (owned by Disney) and Final Fantasy (owned by Square Enix).
Can any of those three sets compete with The Lord of the Rings? Cocks seems to think so, and his messaging to investors is that the revenue earned from selling those cards will outweigh the expense of licensing the IP — potentially to a greater extent than was the case with The Lord of the Rings.
“I think Final Fantasy and Marvel are going to be pretty significant sets,” Cocks said. “I would put them in the same league, at least, as what we saw with Lord of the Rings.”
The reasons, according to Cocks, are clear: Marvel has a massive international fandom, and Hasbro has signed a multiset agreement with Disney, meaning it will have several bites at the apple. Final Fantasy, on the other hand, is likewise big in the U.S. and Europe, but it’s even bigger in Japan.
“Our sales in Japan will probably dwarf what we did with Lord of the Rings,” Cocks said, “because of the resonance that [Final Fantasy] has in that market — which, you should remember, is the No. 2 market for Magic and the No. 2 market overall for trading card games.”
The cost of licensing IP puts an increased emphasis on the performance of Hasbro’s own cards created with its in-house IP. Those sets essentially have a lower overhead cost to produce. Cocks said he was still waiting to see how the company’s latest in-house set, Outlaws of Thunder Junction, performs. The irony here is, of course, that at the same time that Hasbro is using licensed IP to bolster its game sales, it’s also hoping to license its own IP out for video games, movies, and other media projects.
“I think what you’re seeing in Q1 is kind of our overall strategic thesis playing out,” Cocks said, “that Hasbro is a games, IP, and toy company, effectively, in that order.”
The trick will be making sure that Hasbro puts as much effort into its homemade IP as it can, thereby making it as attractive to other developers and publishers as possible.
