Hasbro jeopardizes share value by alienating customers

The Future. Hasbro, Inc. has caught flak recently for their increased efforts to monetize their popular brands — especially Dungeons & Dragons and Magic: The Gathering. This drive to grow profits has alienated Hasbro’s customers so much that Bank of America has predicted the company’s stock may lose up to 29% of its value if the company doesn’t restore goodwill quickly. Otherwise, it may be game over for Hasbro.

Magic: The Warning
Insider recently covered Bank of America’s warning and the rationale behind it.

• BofA reiterated its “Underperform” rating for Hasbro’s stock this Tuesday. The bank initially issued the rating back in November, giving the stock a double downgrade due to brand mismanagement.

• According to BofA, the most pressing issue is Hasbro’s overproduction of Magic cards for the sake of generating short-term profits. While this strategy has worked up until now, it’s also lowered the long-term value of the game.

• As a result of this effort, BofA explained that “card prices are falling, game stores are losing money, collectors are liquidating, and large retailers are cutting orders.”

Across the board
Hasbro’s issues with fan approval go beyond Magic: The Gathering. The company recently tried to roll out licensing changes to Dungeons & Dragons — which has operated on an open license for 20 years — that would have forced content creators to pay significant fees to Hasbro for making money off the IP. Huge community pushback forced Hasbro to backpedal this initiative and instead put D&D under a creative commons license.

That was certainly a good move, but Hasbro’s just treading water. If they don’t win back the trust of their customers by curtailing production, their house of cards just might come down.