• by Sarah Mahoney , Yesterday

 
Hasbro just released strong second-quarter earnings, not just beating expectations but raising its forecast for the full year. And in doing so, company execs decided to lift the veil -- at least a bit -- on the massive army of grown-ups that continues to drive the toy company’s massive "Magic" franchise.

Second-quarter net sales shot up 16% year over year, rising to $1.14 billion. Sales in its consumer product group, which includes properties like Monopoly, G.I. Joe and Nerf, rose 5% to $463 million, with gains coming from Star Wars and Marvel. Revenues in the Wizards division soared 27% to $664 million in the quarter. And Hasbro raised its profit and sales forecast, betting on continued strength from Wizards fans.

Wizards includes both tabletop and digital "Magic" and "Dungeons & Dragons" games, and while those fans are legion, they are also a demographic that skews more mainstream than cultural reputation suggests.

While "Magic" is “by far our biggest brand, in many ways it is also the least understood,” said Hasbro CEO Chris Cocks, in the company’s earnings call. “So let’s define it: While 'Magic’s' roots are based in the thousands of local game stores around the world, 'Magic' is not a niche hobby business. It is a mega franchise. 'Magic: The Gathering' belongs in the same company as Pokémon, EA Sports, 'World of Warcraf,' and 'Minecraft.'”

The 30-year-old brand notched a 32% gain in second-quarter revenues and is up 34% for the first half. It’s all about longevity: Since 2009, Hasbro’s tabletop and digital "Magic" businesses compounded revenue at over 17% a year and grew in 15 of the last 17 years.

“It's also a deep game, and that depth and complexity is precisely what our players love. 'Magic' fans play and collect for years because mastery never ends.”

The company said its average tabletop player is about 35 and has been playing for more than five years. And they are not lonely: The network now includes 12,000 stores, with more than 1 million unique players last year.

That retention powers a robust secondary market, “and a passionate community of tens of millions of fans who treat the game as a lifelong pursuit rather than a passing trend,” Cocks said.

That explains the company’s stepped-up investment, including an additional $20 million in marketing spending for upcoming video game launches.

They aren’t the only properties Hasbro is aiming at adults. The Rhode Island-based company recently launched Play-Doh Blooms, a floral craft kit for adults. It says the properties sold out in 24 hours.  

Wall Street is noticing and thinks the company has a distinct role in the $46 billion U.S. toy market. With such launches attracting new fans, Hasbro is “further penetrating the 'kidult’ consumer with higher discretionary income,” writes Jaime Katz, an analyst who covers Hasbro for Morningstar, adding that Hasbro’s rich digital and games arenas give it a differentiated niche. “Peers have failed to erode share, given the loyal history of players.”