Games Workshop and Hasbro show diverging returns in tabletop gaming

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Games Workshop and Hasbro returns

Highlights

Games Workshop investors have tripled their money this decade including dividends, while Hasbro shareholders from 2020 have only seen $1.02 for every $1 invested.
Games Workshop trades at 32 times forward earnings versus Hasbro's 15 times, reflecting stronger investor confidence and recent inclusion in the FTSE 100.
Hasbro's consumer products division revenue has declined in all but one of the past 15 quarters, while Magic: The Gathering revenue jumped over a third and Wizards of the Coast achieved a 51 per cent Q1 operating margin.

Business models and shareholder returns

As reported by Financial Times, Games Workshop and Hasbro have taken different paths in monetising tabletop entertainment, despite both drawing revenue from loyal hobby audiences rather than conventional toy buyers.

Games Workshop focuses on a broad sci-fi and fantasy miniature gaming hobby, while Hasbro's key tabletop assets are Magic: The Gathering and Dungeons & Dragons through its Wizards of the Coast division. Yet their market outcomes diverge markedly, with Games Workshop investors having tripled their money this decade including dividends, while Hasbro shareholders who invested at the beginning of 2020 have seen total returns of about $1.02 for every $1 invested.

Games Workshop has also joined London's FTSE 100, underlining stronger investor confidence. Bloomberg data cited in the article shows the company trades at 32 times forward earnings, compared with 15 times for Hasbro.

Scarcity strategy and toy market pressure

One explanation for Hasbro's weaker showing is concern over how it manages card supply in Magic: The Gathering. Bank of America analysts said in 2022 that the company was "killing its golden goose" by printing too many cards, a strategy they argued hurt secondary markets and weakened player enthusiasm, while some shareholders earlier this year launched a lawsuit over that approach.

At the same time, Wizards of the Coast remains highly profitable and is now Hasbro's biggest division by sales. Its operating margin reaches 51 per cent in the first quarter of the year, and Magic: The Gathering revenue rises by more than a third from a year earlier.

Hasbro's broader challenge is that it remains tied to the children's toy business, where demand is under pressure. Revenue at its consumer products division, which includes Nerf, Scrabble and My Little Pony, has declined year on year in all but one of the past 15 quarters.

For Games Workshop, a more narrowly focused hobby model appears to be working. The company also takes a cautious stance on AI, with chief executive Kevin Rountree telling investors in January that none of its executives are yet excited about the technology, even as it this week publicly denies that an apparent sixth finger on a Warhammer Space Marine image came from a generative bot.

In our earlier update on Target’s shareholder vote on corporate governance, we reported that investors rejected a proposal to split the board chair and CEO roles, keeping Brian Cornell as executive chair after the leadership transition to CEO Michael Fiddelke. We also noted that support for the measure increased versus last year but still fell short of a majority, as Target faces a tougher growth backdrop and ongoing macro pressures.

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