Hasbro: Dungeons & Digitalization
By: Jonathan Wang & Emily Cao
The Ivey Business Review is a student publication conceived, designed and managed by Honours Business Administration students at the Ivey Business School.
Setting Up the Game: Hasbro’s Business Situation
Hasbro—an American multinational toy manufacturer and owner of beloved brands like Transformers, My Little Pony, Power Rangers, and Nerf—has been experiencing declining sales in recent years. Sales in Hasbro’s dominant product segment of toys, board games, and action figures (toys and games) have experienced 11–20% year-over-year losses from 2021 to 2024. Hasbro’s overall sales dropped $900 million (US) last year, from 5.9 to 5.0 billion.
Though known for its children-oriented toy brands, Hasbro historically generated 60% of its revenue from consumers 13 and older. One bright spot in the company’s recent performance is its lesser-known tabletop and digital games segment: the Wizards of the Coast product line, which includes popular titles like Dungeons and Dragons (a tabletop roleplaying game) and Magic: The Gathering (a card-collecting combat game). These games immerse players in complex fantasy settings, relying on rich world-building and complex mechanics to engage players. This segment was the only one to see growth in 2023, with a 10% increase in annual revenue.
Toys R(‘nt) Us: Industry Overview
Down the supply chain, toy retailers are struggling: Toys R Us filed for bankruptcy in 2017 and 2018, and it recently announced the closure of five more stores in Ontario. Similarly, Mastermind Toys closed 18 of its 66 stores and filed for creditor protection in 2023. The Canadian Toy manufacturing industry faced a revenue decline at a CAGR of 14.2% over the past 5 years, with some domestic manufacturers shuttering operations completely. Meanwhile, U.S. Toy manufacturing has shrunk in the past 2 years. Mattel, the other major industry player, has experienced declining sales year-over-year in the past two decades. Though it has been slowly recovering since the COVID-19 pandemic, it finished 2024 with 17% less revenue than its peak in 2013. This pattern suggests that end consumers are losing interest in toys and games, spelling trouble for manufacturers like Hasbro. For all the manufacturing plants and retail shelf space the toys and games industry owns, its most valuable asset in an increasingly digital age may be completely intangible: intellectual property, the beloved stories, characters, and ideas behind favourite toys and games that keep consumers supporting the franchises even as playtime matures from the toybox to the screen. Mattel has realized the value of its intellectual property. In 2023, it partnered with Warner Bros to produce Barbie, a box office hit that made $1.3 billion in global sales, enabling Mattel to collect over $125 million in movie and related merch sales.
Your Turn, Hasbro: Describing the Opportunity
The way we play is evolving. In 2025, the global toys and games market is estimated to generate $133 billion in revenue, while the digital games market is quoted at $522 billion and projected to grow at almost triple the rate of the toys market in the next five years. True to this trend, Hasbro’s digital games segment saw a 10% increase in sales in 2023, not the least due to the massive success of Baldur’s Gate 3. The release of Baldur’s Gate 3 in 2023 launched Hasbro’s Wizards of the Coast line into the video game limelight as its most considerable success in the space to date, with 15 million copies sold as of late 2024. Developed and published by Larian Studios (a AAA role-playing video game studio), its success came from its ability to loop players unfamiliar with Dungeons and Dragons into the game through an entertaining cast of characters, strong writing, and high production quality. This resulted in 650,000 reviews and an “Overwhelmingly Positive” rating on Steam.
Hasbro should build on its recent success to venture deeper into the digital space and capture more older teen/adult consumers using the rich intellectual property of its franchises, like Dungeons and Dragons, in the Wizards of the Coast segment. While Hasbro still has much multimedia to explore with its own Wizards of the Coast line, it will need fresh stories to capture and retain audiences, particularly in the older age range. With the recent widespread success of dark fantasy or sci-fi media adaptations like Castlevania, The Witcher, and Cyberpunk, the originator of the “grim dark” genre may be the shining light Hasbro needs.
Ready Player Two: Games Workshop Overview
Games Workshop, the studio behind the Warhammer franchise, embodies the indie tabletop game studio. Competing on quality and service, its core business model relies on the tightly controlled production of high-quality game figurines, which it distributes through its website and carefully selected retail or independent partners. This strategy has worked well for the studio, enabling it to reach £60.8 million ($74.9 million) in retail sales in FY 2024.
A key aspect of the core game is the collection of model parts and figurines that players assemble and paint themselves, which can take weeks and cost hundreds of dollars before they can even begin playing the game. Warhammer thus attracts a much older and wealthier demographic of customers who can afford expensive hobbies (like Henry Cavill) — just what Hasbro needs. However, despite its profitability, Warhammer’s prices create a high barrier to entry, meaning it may struggle to attract new players in the future.
Dragons and Space Marines: Strategic Recommendation
Given each company's challenges, we recommend Hasbro and Games Workshop collaborate on a digital role-playing game inspired by the universes of Dungeons and Dragons and Warhammer 40,000. Using Warhammer’s lore, Hasbro can further establish itself in the digital games market and target an older demographic while helping Warhammer to reach a much larger, casual consumer group in the US without compromising Games Workshop’s core mini-figure business.
Through a partnership with Games Workshop, Hasbro can gain more experience in successfully publishing a digital game and establish a more substantial presence in this growing market. From a profitability standpoint, Hasbro can earn more from this game as a publisher, increasing its involvement in the development process and enabling it to take a larger share of the sales. For reference, Larian Studios spent $100 million to develop Baldur's Gate 3, earning it $260 million in 2023 following the game’s release.
Hasbro and Games Workshop can co-publish the game to finance its development, dividing risk between the two companies. The stories of both franchises share similar elements, and a recent rise in the success of dark fantasy or sci-fi media like Castlevania, The Witcher, and Cyberpunk creates a good opportunity for Warhammer’s story to capture a more mainstream audience. Given the success of Baldur’s Gate 3, the two companies should commission Larian Studios to help develop the RPG through expertise. Larian Studios stepped out of producing Baldur’s Gate 4 as it believed the adherence to the Dungeons and Dragons universe and its rules restricted its creativity and development. However, the studio still maintains a positive relationship with Hasbro, creating an opportunity to bring it on board again through combining the lore from Dungeons and Dragons and Warhammer 40,000, which would give the studio the opportunity it’s looking for to experiment with new stories and ideas.
We’ve Played These Games Before: Rogue Trader vs Baldur’s Gate 3
Warhammer has also recently been adapted into a smaller-scale RPG by Owlcat Studios. Released in 2022, Rogue Trader was well received in the community, with over 20,000 Steam reviews and a “Very Positive” rating, proving that Warhammer’s lore can succeed as a digital RPG. However, Rogue Trader didn’t see the same success as Baldur’s Gate 3 because Warhammer is a more niche franchise, and players who weren’t familiar with Warhammer felt overwhelmed in the game's expansive universe and complicated mechanics. A crossover could borrow the best of both worlds, introducing Warhammer’s story in an accessible and appealing way to a more mainstream audience.
The Best of Both Worlds: Previous Collaboration
In 2022, Hasbro and Warhammer collaborated on a smaller scale in Hasbro’s trading card game, where Magic: The Gathering Universes Beyond adapted Warhammer factions into playable cards. This proved hugely successful for both the companies and fans alike. The strong alignment between both games' fantasy lore made the collaboration a huge success for fans, unlike Magic: The Gathering’s past collaborations, such as with The Walking Dead, which received backlash for having misaligned themes. The Warhammer cards sold out and had to be restocked three times, further showing the incredible demand and interest in such a collaboration. The partnership exposed Warhammer to a larger casual demographic to tap into for future growth, demonstrating the potential of collaboration between the two companies.
Superman Saves the Day: Henry Cavill’s Warhammer Show
The timing of this new game is also critical. In early December 2024, Amazon announced that Henry Cavill would produce and star in a show based on Warhammer 40,000 set to stream on Prime Video. Demand for the game will likely spike if the show is successful. For example, the Fallout show aired on Amazon to a positive reception, increasing the number of active players in the video game from 200,000 to 1 million, a x5 increase. Given Cavill’s love for Warhammer and his devotion to source material (demonstrated by his involvement in The Witcher TV adaptation), we anticipate a similar pattern will play out when Cavill’s Warhammer show hits Amazon, where the show drives sales for the related game.
From Tabletop to Laptop: Hasbro’s Long-Term Potential in Digital Gaming
Hasbro has shown that it can expand into the digital games market from Baldur’s Gate 3 and its own internally developed video game Magic: The Gathering Arena, a strategic mobile trading card game. Since 2024, Hasbro has invested over $1 billion in its gaming department of four smaller AAA game development studios, which advance its credibility in the digital games space while providing backups should Larian Studios refuse the project. Hasbro also has the retail connections to secure strong placement and promotion for future games.
Game On
Through a collaboration with Games Workshop and a AAA video game studio like Larian Studios, Hasbro can capitalize on its most recent success in the digital gaming space and expand into an industry that caters to an older consumer group with more purchasing power, the group that Hasbro needs to capture and is well-positioned to with its Wizards of the Coast franchise. This partnership also takes advantage of Warhammer 40,000’s rich intellectual property without risking reputational damage to its core miniature figure business. It also enables Games Workshop to expand to a more significant segment of casual fans within Hasbro’s base in North America. Ideally, this is just the start of an exciting partnership between two very different yet similar companies, who combine their complementary strengths in a quest to conquer new markets in the digital age.
