Yesterday, toy giant Mattel reported a worse-than-expected loss in its first quarter earnings after the market closed, while rival Hasbro reported greater-than-expected revenues and a slight profit, causing its stock price to jump by as much as 13%. The difference? Hasbro has a strong digital gaming division, which includes cards and accessories for in-person games of Magic The Gathering and Dungeons and Dragons, and the recent success of the Dungeons and Dragons: Honor Among Thieves movie.

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Hasbro CEO Chris Cocks said in an earnings call with analysts that the movie was a “perfect opportunity and a perfect entry point into the brand” and that the company is investing in new digital experiences, such as a Dungeons and Dragons virtual table top, to make the game accessible to new players. Cocks said that this “low barrier-entry digital experience is really going to be kind of the flywheel that drives the brand’s growth over the next couple of years.”

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Both Hasbro and Mattel saw their sales of traditional toys decline as retailers continued to clear out overstocked inventory left over from last year. Hasbro’s consumer products segment saw its revenues drop by 21%, primarily due to markdowns needed to clear excess inventory. Mattel reported that net sales were down 21% in constant currency, with traditional categories such as dolls, action figures, and infant, toddler, and preschool seeing bigger percentage drops.

Mattel CEO Ynon Kreiz said in the analyst call yesterday that he expects the inventory issues that caused those declines to continue in the second quarter, but to be fully resolved as the third quarter begins. He said he remains optimistic about the year and said Mattel is on track to meet its goals for the full year.

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Sources: https://www.forbes.com/sites/joanverdon/2023/04/27/hasbro-outplays-mattel-scores-a-win-with-digital-gaming/