Magic The Gathering maker details 'fantastic year' for the company

Wizards of the Coast President Chris Cocks boasts third quarter gains for the Magic: The Gathering and Dungeons & Dragons publisher, fan community responses to rolling out digital properties, and how Facebook may influence online gaming.

Video Transcript

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EMILY MCCORMICK: Welcome back to Yahoo Finance Live. Wizards of the Coast is a subsidiary of Hasbro. And in the third quarter, the digital gaming and trading cards business generated revenue growth of 32%. Some of the big drivers were the game's Magic the Gathering and Dungeons and Dragons.

For more on this, we have Wizards of the Coast president Chris Cocks with us now. Chris, thank you so much for joining us on the program. And as I mentioned, Wizards of the Coast has seen some pretty notable growth this year. Can you talk a little bit about the business and the trends that you've been seeing that have been driving this jump?

CHRIS COCKS: Oh, sure, and Emily and Brian, both of you, thank you for having me on. It's a pleasure. Yeah, Wizards has been having a fantastic year in our third quarter. We were up 32% year over year. And that's on top of three quarters of consecutive growth in the year and an overall growth rate of the past three years in excess of 25%.

What really powers us is great brands. As you mentioned in the intro, Magic the Gathering and Dungeons dragons were founders in their genres and continue to lead them today. Amazing fan communities and incredible partners, both in terms of our channel partners, our hobby stores that we work through primarily, and as well as our digital partners, our developers, as well as the platform partners that we work with, like Xbox.

BRIAN SOZZI: Chris, I really need one of those dragons for my wall behind you. That is very impressive. I made a mental note for myself here. Who's on the platform right now and driving this growth? Who is the core user?

CHRIS COCKS: Well, we segment our user base into five primary segments. You know, our traditional user that's powered our growth over the last decade has been the competitive players, the people who go and play in hobby and game stores around the world, who play in big professional tournaments and draw large audiences on Twitch and YouTube.

But then some of our fastest growth has been from our other segments. Social players has probably been our fastest and most emerging segment. Social players are people who just get around a kitchen table and play with their friends and their family. That growth has been significant. Collectors has been another big area of focus for us. Magic is both a great game, as well as a great collectible. And we've seen amazing growth in that segment.

And then last but not least is digital and then adjacent fan communities. Digital, we've really driven Magic the Gathering Arena, which is now the leading digital CCG in the world, both on the PC and emerging on the phone. We just launched our mobile platform about four months ago. And already, it's driving over 50% of our players via that platform.

And then last but not least is adjacent fan communities. And so in Q3, we really put that to the test with the first crossover product between D&D and Magic. It was the first time Magic ever hosted an outside IP. Now, granted, it was a friendly home turf IP, but that set was the bestselling set we'd ever had in the summer and I think augurs really well for future partnerships that we've already announced with fantasy juggernauts like the Lord of the Rings, Warhammer, as well as gaming companies, like we've done with Epic and Final Fantasy and Street Fighter.

EMILY MCCORMICK: Chris, Facebook, of course, just announced a rebrand to media and a push into building out virtual reality and the metaverse. I'm wondering how do you see Wizards of the Coast pushing into this space and potentially capitalizing on this growth of the metaverse?

CHRIS COCKS: Well, I think we see huge opportunities in digital. Our primary business has historically been through what's called the hobby channel. And the hobby channel are a lot of smaller local game stores. And we've principally been shipping our product through those. There's about 10,000 of them throughout the world that we have formed together in a federation that we call the Wizards Play Network that drives a lot of our play.

But as robust and lucrative as the hobby channel has been for us, there's about 60 or 70 million people who shop in it. Digital games dwarf it from a population size. For the same genres that are popular in hobby, strategy games, role-playing games, and collectibles, those same genres in the digital space offer 8 to 10x the size of player populations. And our brands have equal resonance in both segments. So we see a very rich future in digital and continued growth in our core hobby face-to-face gaming side.

EMILY MCCORMICK: And the other thing that I wanted to ask about is earlier this year, there were some reports that Hasbro and Wizards of the Coast were considering minting NFTs, especially on Magic the Gathering. How are you thinking about the brand and the opportunity potentially in NFTs?

CHRIS COCKS: Well, Magic has been a brand that's been around for over 25 years. In fact, we're going to celebrate our 30th anniversary next year or in 2023. So, you know, we take a long view around any kind of collectible opportunity. We're interested in cryptos. We have been watching the NFT market closely. And as a company, Hasbro has decided to take a brand by brand approach. So just this past weekend at Pulse Con, we announced our first company NFT in association with the Power Rangers brand. And, you know, Wizards of the Coast will continue to monitor it, but we don't have any plans in the near term for executing against it.

EMILY MCCORMICK: All right, Chris Cox, Wizards of the Coast president, thank you so much for joining us.