The surprisingly complex business of toys, with Hasbro CEO Chris Cocks

For the final episode in our Centennial Series covering companies that are 100 years old, I’m talking to Chris Cocks, the CEO of Hasbro. And I have to tell you, I did not know the company was started in 1923 by the Hassenfeld brothers… the Has bros. This is my favorite fact now. 

Hasbro is now a big company, and it makes everything from Transformers and Lincoln Logs to My Little Pony and Monopoly. It also makes Magic: The Gathering and Dungeons & Dragons, which are massive and growing businesses. Chris was actually the head of that division, called Wizards of the Coast, before he became the CEO of Hasbro overall last year. Since then, he’s started the process of restructuring the company, which is pure Decoder bait. 

He’s also dealt with some crises: he’s fended off an activist investor that wanted him to spin off Wizards of the Coast into a new company. The Magic community was upset that too many card sets were being released, including rare collector cards that could suddenly be bought by anybody with enough money. Then, an attempt to change the open gaming license for Dungeons & Dragons led to fan backlash, and Hasbro walked the entire plan back. We talked about these challenges, how he handled them, and what it means for toys and games to have such passionate fandoms. It’s really changed how Hasbro operates.

We also talked about his decision to sell off part of Hasbro’s TV and film production company, eOne.

Chris is a lifelong gamer — you’ll hear him talk about that history several times. And he’s keenly aware that toys and games have become a market for adults as much as for kids. This is really a remarkable conversation: toys are a big, complex business.

Okay, Chris Cocks, CEO of Hasbro. Here we go.

This transcript has been lightly edited for clarity.

Chris Cocks, you are the CEO of Hasbro. Welcome to Decoder.

Nilay, thank you so much for having me.

I’m really excited to talk to you. You’re the final episode in our Centennial Series.

We’re talking to the executives of companies that are over 100 years old, and Hasbro just hit the mark this year. That’s pretty exciting. It has come a long way from where it started. I will tell you, I did not know that the name Hasbro is literally the Has brothers. 

Hassenfeld brothers, yeah.

It’s very good that they were like, “We’re bros,” in 1923.

They were before their time.

I could do the whole episode on just that because it’s so good. So you took over as CEO at the beginning of 2022, about a year ago.

Yes, at the end of February last year.

Before that, you were head of Wizards of the Coast, which is where Magic: The Gathering happens. There’s also the digital gaming division. Tell me about your time in charge of that division — which is where a lot of the action and profitability of the company is — and about then stepping into the CEO role.

So I started at Wizards of the Coast around the middle of 2016. I’ve been a longtime fan of Wizards games, the two biggest being Magic: The Gathering and D&D. I started playing D&D when I was around 10 or 11 in my hometown of Cincinnati, Ohio, at my best friend Han Schroeder’s house. His older brother, Thad, introduced it to us. Then I started playing Magic my junior year of college, about a year or so after it came out. My girlfriend moved away to medical school, and Magic cards moved into my dorm to help fill the void. Being able to come on board to a company like Wizards has been such a big part of my life. D&D also helped inspire me to get into the video game industry in the late ‘90s. Back in 1999, after playing the original Baldur’s Gate, I joined a secret project at Microsoft called Xbox.

It was a dream come true and a real honor. I was able to take a torch that I had picked up as a kid, carry it forward, and make it a little brighter for new generations of fans. I joined in 2016. I think by the end of 2015, we were doing about $450 million. Last year, the business grew to a little under $1.3 billion. We had amazing player growth, we had some nice revenue and profitability growth, and we were able to do that across the portfolio of games. Magic was a big driver, but D&D has also had a fantastic run, particularly since the launch of Fifth Edition back in 2014, 2015. That was an amazing experience. It was a really great introduction to Hasbro, which also has a number of storied brands above and beyond Wizards. I think I had a nice part to play in making Wizards — and games in general — an even bigger and more important part of the Hasbro story than what it was even five or six years ago.

So now you’re CEO of the whole company. You mentioned there are other brands there; you have Monopoly, Candy Land, Transformers, and My Little Pony. There’s a part of the company that makes TV shows and movies, and you’re selling it. How are things structured now at Hasbro?

Hasbro has three primary business units. We have Wizards of the Coast and digital gaming, which does our older games, a lot of our video games, and digital services. We then have what we call consumer products, which is really the toys division, which does all these iconic properties like Transformers, My Little Pony, Baby Alive, and our beloved series of board games from Monopoly to Clue to Candy Land to Trivial Pursuit. Then we have our entertainment division, called eOne, which does everything from kids’ animation for big hits like Peppa Pig all the way to blockbuster movies — like what we’re doing this weekend with Dungeons & Dragons: Honor Among Thieves with our partners at Paramount. They also do a host of non-Hasbro IP entertainment for screens both big and small. They have hit reality series like Naked and Afraid; movies that they’ve been a part of like 1917, Mrs. Harris Goes to Paris, and most recently, The Woman King; and also television shows.

Now I feel like I should buy eOne. Let me rummage around the couch and see if I can find enough change to pick this up from you.

Well, it better be a big couch.

Fair enough. I do want to come back to why you’re thinking about selling it, because there has been a lot of news around that and what you’re planning to do with it. But for the divisions — there’s toys, there’s Wizards of the Coast…

Toys, games, and entertainment, basically.

Toys, games, and entertainment. We talk a lot about org charts in the show — it’s secretly a show about org charts. How are they arranged? Do they share a lot of resources at the top? Are they mostly independent? You can see how most people’s conception of Hasbro is: you make Transformers, then you make a Transformers movie, then that turns around into a Transformers video game, and that’s all Hasbro. You actually have three different divisions that might be pulling in different directions and certainly experiencing different kinds of markets. So how tightly aligned are they?

Well, I would say historically we’ve run the businesses fairly independent from each other. Over the last year of being CEO, we’re in the process of reorganizing and driving more commonality between the divisions. Today, we have three divisions: toys, games, and entertainment. We’re transitioning with the sale of the non-Hasbro-related aspects of our entertainment division to two primary divisions: games and then toys, entertainment, and licensing. Those will be supported by what we call five horizontals. Think about the business units as the verticals. They house the brands, they drive the major product innovation for the primary expressions of those brands — and Hasbro being a company all about play, it’s the play experiences. And then these horizontals help to support the brands across the various executions that we have across what we call the brand blueprint, which is the strategy of the company.

The strategy of the company is basically, “Hey, we have this collection of brands.” We really focus on seven, which we call our franchise brands, and we execute those brands across a blueprint of multimedia experiences. That allows us to reach our consumers, segment them, and then hopefully profitably engage them across a range of products, services, video games, channels, as well as entertainment and location-based experiences. So the verticals drive the brands and the horizontals drive the execution across that brand blueprint, whether it’s movies and TV shows, licensed partners, our channels, our direct assets like Hasbro Pulse — which is our big direct channel — as well as video games and digital services, which is partially what the Wizards team helps to drive.

When you say the verticals drive brands…

Verticals, business units.

The business units. So that’s toys and games, and they’re going to say, “Alright, we’re doing Transformers.” Then your horizontals are… there’s a video game studio.

They’re video games, licensing, entertainment, our channel execution, and other ancillary supports such as location-based experiences.

The reason I say this is secretly a show about org charts is because I feel like the thing a CEO has the most control over is the structure of the company to get whatever outcomes they want. You were at Wizards, you operated in the old structure, and then you became the CEO and said, “This is the new structure.” What made you want to make the change?

Well, I think it’s a couple things. First and foremost, when Wizards was a $450 million company — just to use my own personal experience — our brands were big, but by gaming blockbuster standards they were relatively smaller scale and had relatively constrained audiences. As we’ve doubled and tripled the size of those businesses and those brands, it has become apparent that those brands are bigger than just the primary game expressions they have. Our consumers want to be able to experience those in entertainment. They want to be able to experience those in lifestyle merchandising. They want to be able to collect things. Rather than trying to recreate those functions inside of a business unit — which is pretty hard because you have to do the recruiting and it costs a lot of money — why don’t we leverage that expertise that we already have across the business?

From my perspective, let’s give the business units the P&L. Let’s be the Jiminy Crickets for the brands — the heart and the soul thinking about the consciousness of those brands. Then let’s empower these central functions which are very good at executing and entertainment. They’re very good at executing with license partners to have them cross the brands to make them services that help the business units expand what they’re trying to do. So to me, that just makes good business sense. It helps to drive specialty and expertise, it helps us to be able to scale the business, and it helps us to be able to do it across a relatively standard matrix of executional opportunities and partnership opportunities, which just makes it easier to drive a business at scale. Hasbro is like a $6 billion business, so driving things at scale and being able to drive it efficiently is really important to our success and to our shareholders.

You’re going from the classic divisional structure to this hybrid functional structure. Do those functional units of central teams all report to you?

Well, it’s a little bit of a hybrid approach. For instance, some of the horizontals report into the actual business units. Gaming is good at games, so digital games reports into games. Toys relies a lot on partnerships — particularly for licensed partnerships, out-of-aisle toy opportunities, and licensing opportunities — so licensing reports into toys. The business units are both their own P&Ls and their own business units, but they also have service elements as well. We also have a centralized commercial organization that drives our distribution agreements and our relationships with our major retailers. They have a team that specializes in direct businesses, like we’re developing with Hasbro Pulse. We centralize our supply chain teams, driving that on a global scale. We centralize our finance teams, our HR teams, and our legal functions because that just drives some verticality and specialty and a little bit of being able to cross-reference resources.

So I’ll come back to this topic, but first I’m going to very directly ask you a rude question.

A rude question 10 minutes in, alright.

You had an activist in your stock recently. You ultimately won that proxy battle. One of the things they wanted you to do was spin off Wizards of the Coast and make it its own company — which is pretty easy to do if it’s a division and has some of that redundant functionality inside of it, but pretty hard to do if you have all these horizontal units servicing it. Was that any part of your rationale here, like, “We should make this a harder idea to have”?

No. Obviously, we took a lot of feedback from both that activist investor as well as from our investors as a whole. I wouldn’t say that our organization was led by any one particular piece of investor feedback or activist feedback. Our organizational model was led based on what our strategy is, and our strategy goes back to this idea of a blueprint. At the center of our blueprint is the consumer and consumer understanding, then it’s about the brands that we want to execute on behalf of that consumer, and then it’s a bunch of executional nodes that we want to drive because we believe they are important for us as a play company that is kind of turbocharged by storytelling. Really, that’s what drives all of our decision-making around how we think about how we organize and where we think we can see efficiencies.

Let me ask you a much more fun question now.

You’ve described a structure that’s really good at getting value out of your existing big franchises. We live in a very IP-driven world of sequels and expansions. But most people who I’ve told, “Hey I’m talking to the CEO of Hasbro,” are like, “I’ve got a great idea for a toy or a Nerf gun.” There’s a sense that this is a place where people get to invent fun things to play with. So where do Hasbro’s new ideas come from? Are you prioritizing that?

Yeah. Well, as big and beloved as the brands are at Hasbro, at the end of the day — and this is probably my bias — I think we’re a product company. A games company, an entertainment company, a toy company. We’re dissimilar to a classic packaged goods company in that our products inherently have an emotional connection to people. They create a kind of joy. They create community and socialization opportunities that something like toothpaste or toilet paper never really could, at least not on purpose. So because of that, our products really drive how we think about our brands. The innovation and the customer understanding around those products drives everything that we do as a company. 

Inherent in our business unit structure, the people who are ultimately in charge are the product designers and the product makers, the creators across the company. They’re the special sauce that I think makes Hasbro Hasbro and makes our products great play experiences and ultimately great brands. Marketing is important, sales is important, supply chain and finance is important, but those just help to enable and expand these great play experiences. The innovation ultimately starts with consumer understanding coupled with passion for a space and passion for a product line. We try to make that as unbridled as we possibly can. We say, “Hey, there are five categories in which we want to be the best in the world. We want to be the best play company in the world for preschool. We want to be the best play company in the world for blasters and outdoor play. We want to excel at games. We want to excel at action figures. We want to excel at creativity.”

Inside of those spaces, where we have a category captain brand — whether it’s Play-Doh and creativity; Nerf and blasters; or Monopoly, Magic, and D&D for games, for instance — we give our designers a wide purview to be able to innovate and draw inspiration from. If they happen to come up with an idea that maybe doesn’t have a perfect fit inside of an existing brand, we have the capability to execute outside of an existing brand. Toys are a space where probably 50 percent of the category is brand-new every year, and board games are very, very similar. We have to have the capacity to execute both within our brands to have innovation, but also outside of our brands and the categories that we want to play in. That’s the best way to grow and excite our fans.

Is there a room full of secret toys you get to go into and just be like, “That one, that one, not that one”?

Yeah. Well, I mean, I don’t really have a big say inside of that pipeline.

If I was the CEO, I’d be like, “Once a quarter, I’m just going to look at all the toys.”

I definitely get to play with all the toys, particularly with all the games before we go through the various stages of greenlighting. But we have a team of thousands of people who are experts at what they do, who start with thousands of ideas and narrow them down to hundreds of concepts, and then dozens of actual products that we ship every year in a given category. Plus, we work with some of the best inventors in the world who bring in great outside ideas. In a given year, we will probably ship 2,000 to 3,000 SKUs per year, about half of which are new, and over half of those are usually sourced from outside the company. We try to create as big and wide of a funnel as we possibly can. We try to give as wide of a purview to people as we can. From a management perspective, we try to provide priorities and objective metrics about what we want to see a product be able to do and how we want to see it be able to delight a consumer and help enrich our partners, making it a particularly good opportunity for our channel partners and for us. Outside of that, we try to take the gloves off and allow our innovators to innovate.

What’s a metric for a Transformers toy beyond sales?

Oh, well, you have NSAT and viral shareability. How much do people love it? How often do they share it with their friends?

So you ship an Optimus Prime, and you look to see if people are tagging it on social media?

Yeah. If people are talking about it on social media, we have ways to be able to measure how much is positive, how much is neutral, how much is negative, and who’s sharing with whom as much as we possibly can. Now, that does depend on the product line. If the product is going to a six-year-old, we have a fair number of rules that prevent us from getting too deep. If something goes after a 13-plus audience, we have a little bit more flexibility to be able to learn and track how our products are performing and how our brand metrics look.

Is that all from social media, or are there other ways you track it?

Yeah, so we have social media. We have fairly sophisticated proprietary market research, like attitude usage and awareness studies, which help us track the performance of an upcoming film. We do tens of thousands of playtests per year with consumers where we bring in little kids, collectors, moms and dads and have them experience a product in its early stages. We’ll do mock-ups of retail aisles, or we’ll go into stores with partners and actually have people shop to watch how they buy. With all of our digital games and our direct platforms, we’re able to understand what the clickstream looks like as people go through them. What is the heat map of places that people really enjoy inside of a game or spend a lot of time on? What are some areas that are relatively cold or tend to be lossy in terms of being able to play? We’re able to ingest all that together to start building a composite of what’s working and what’s not working across a brand, across a toy, or across a game.

That’s incredible. I never thought about how much testing you must do on an individual toy to see if it’s a success.

It’s a lot. If it’s one of our “hero toys,” you do this very complicated volumetric testing where you get tens of thousands of people giving you feedback on a concept and a product. That is ultimately what leads to our forecasting, and that tends to be pretty accurate.

You announced a strategy at your investor day in October that I think this all feeds into. You call it Blueprint 2.0 — you’ve said the word “blueprint” a handful of times now. One of the pieces of that blueprint was $100 million toward what you called a brand insights platform, which was supposed to help you make better decisions and better forecasts about what people want. Is that just taking all of this data and asking ChatGPT what toys to make? What is a brand insights platform?

Maybe in three years, but right now it’s still a lot of humans. So basically, the brand insights platform is a fancy way of saying how we put together all of our data analytics and market research.

Why does that cost $100 million dollars?

Well, you have to have data analysts, you have to commission market research, you have to pay outside firms to help recruit people to come in for focus groups and playtests, and you have to pay various analysts externally to help you understand what trends look like. The $100 million is over the course of five or six years, so it’s about $15 to $20 million a year, if not more. Then you have to build a bunch of systems. Some of them are off the shelf, but some of them are proprietary and you build them in the cloud to be able to crunch all that data, give your employees access to it, and make it easy for them to be able to ingest and be able to use in their daily work.

This comes up over and over again on Decoder. I think of Hasbro as a hardware company and you think of it as a product company — though, obviously, you make some digital products as well. You’re moving a lot of atoms around in addition to all the bits. Now you’re like, “I have to basically move a whole bunch of business strategy into a cloud system, some of which I will buy, and some of which I will have to build.” How many software engineers do you have on a project like that? That cost tends to rapidly increase. Every CEO I’ve talked to who has made a big software investment finds himself with more software engineers than hardware engineers over time.

Between our IT teams, our data analysts, and our software engineers for building our direct platforms and our games, I would hazard a guess that we probably have in the neighborhood of 1,000 to 1,500 software-related engineers, product managers, and program managers — the people who touch code.

Are they organized as one group or are they split up? The people building the brand insights platform are maybe not the same people writing the code for the next Monopoly, right?

Broadly speaking, it would be split up into three groups. You would have software engineers related to building games and building platforms who would be in product groups. Then you would have IT-related software developers who build underlying systems, and they would manage our AWS cloud, proprietary servers, and industrial-grade software and the vendors that go along with that — like Snowflake, Snowplow, or Tableau. Then you would have a smaller team who would be on the data analytics side and actually code inside of those tools and create proprietary analyst queries.

It’s amazing to think of a toy company that has a data analyst group that employs its own software developers to figure out what toys to make. At the end of the day, that’s what you’re trying to do here: make more products that people want.

Yeah, at the end of the day, everything good starts with a great understanding of your customer and your consumer. The vast majority of our software development is angling toward a better understanding of what our consumer wants and how to best deliver that to them.

Here is another Decoder trope that comes up a lot. Whenever you make a lot of database decisions, you’re trapped in the past. Data can really only tell you about the past. It just feels like there’s tension here. “Okay, we have a lot of franchises that are very popular and have a lot of natural extensions to them. We have a data platform that will tell us what our consumers want more of,” and then 50 percent of the products are new every year. It’s incredible for a market to have 50 percent new products. Where and how do you balance that tension?

I think you use data as an inspiration, but you shouldn’t be shackled by it. It should be something that helps you understand what’s working and what’s not working. You should have a tolerance for risk and an ability to test and learn very rapidly. A lot of our data is around sharing new concepts with consumers, doing wrapped prototyping in small-scale AB market tests, and understanding what hits and what doesn’t hit.

From that, we can scale a product relatively rapidly in six to nine months, from detecting a hit to being able to scale it into something that can be quite big. Our data analytics don’t have to be the only thing we do, we can also look at what other people do. A great source of insight for us is what happens on page three-plus on Amazon product results. What are the small companies or new innovators doing on things like Kickstarter or e-commerce to find an audience? If a large company like ourselves can either partner with that company — maybe even buy them if it’s M&A — or get inspired by what that product and category is, then we can pick up insights from that and learn from the trends.

This brings me to the classic Decoder question. You obviously have a lot of decisions to make about structure, new products, and which areas of the business to focus on. How do you make decisions? What’s your framework?

I would say it’s a three-part framework. The first frame is always what’s best for the consumer or best for the fan. What would delight them? Because, generally speaking, if we’re able to delight the fans, we’re usually able to profit from it. There’s usually a fair value exchange based on that. The second area that I focus on is what’s good for the shareholder. How do we make sure that what we’re doing is profitable? It helps position us for growth. It’s not just a sugar boost that kind of maximizes short-term area under the curve but rather the long-term area under the curve. The last area I really think about is what inspires the employee. People come to Hasbro for a variety of reasons. It’s a good company, it has a great reputation, and it tends to do well for the world. We have a fantastic mission: we’re all about bringing joy and community to people. It’s very rare for me to go to a cocktail party where people are not jealous, like, “Wow, you get to do that?”

It’s the toy room. Everyone wants to go to the toy room at work.

Yeah, totally. Fundamentally, I think the most important thing that drives our employees is that they have a similar story to mine. In my story of growing up, Candy Land was the first board game I remember playing. Transformers and G.I. Joe were my favorite action figures. D&D was the first serious game I started playing; Magic helped me bridge a tough time in college; and Baldur’s Gate, an original D&D video game, helped to inspire me to get into the video game industry.

Hasbro is an important part of my life and my fandom of it is genuine. That is echoed across the majority of our employees. I think everyone here wants to not just help drive the fandom, they want to put the fandom in a better place. If we’re able to stack up and align those three lenses of what’s good for the consumer, what’s good for the shareholder, and what makes our employees feel good, generally speaking, then we make really good decisions that tend to be good for our brands and for the company.

Let’s put that into practice a little bit. You’ve had a busy year, and there have been some bumps in the road. Let’s start with Magic: The Gathering. A lot of new card sets were released last year, and there was a lot of flak from people saying, “Okay, we’re devaluing some of the legendary cards.” One of our writers called it the Willy Wonka effect, where you never knew if you might get the golden ticket, you might get the rare card. Now it’s pay to play. You can just pay $1,000, or whatever it is, and get all the rare cards. How are you coming through that? That feels like, “Alright, we’re going to really get the money out of this brand right now. We’re going to make more expensive products, because it’s not just kids, it’s adults with money now. We can just ask them to open their wallets.”

With Magic, I think it’s important to keep in mind that the brand has been having great growth, and it has been fairly balanced growth. It’s been about growth of new players, engaging existing players, as well as bringing back players who were lapsed. They might have stopped playing Magic because they moved away from their gaming group or from their favorite store, and a couple of years later they’re able to find the game again. Being able to grow a brand on a balanced basis is important, and that’s something I think we’ve been adept at doing. The strategy for growing Magic overall over the last five years has been what we call segmentation. 

When I started at Wizards, the primary, almost sole audience that we focused on for Magic was called the competitive player. That was the classic player who liked to play in-store and with a version of the game called Standard, which was this rapidly rotated version played mostly in our high-end tournaments. We saw that there were these other versions of play, but frankly we were a little scared of them because we weren’t sure what it would do to the business. Probably the biggest version was this player-created format called Commander, which was a four-player format that had these hundred-card decks. We were concerned, “Is that as lucrative of a market for us and should we really focus on that, or should we just have the players do it?”

We discovered that if we embraced a growth mindset and new segments to actually build bespoke products for them — and again, focus on doing right by the player — then we would tend to be rewarded for it. Fast-forward five to six years later, and that competitive segment is still an important segment for us, that’s even a little bit bigger than before. But almost all of the growth in the brand has been from that social player, that Commander player, and building products specifically for them. We also realized the collectors wanted more bespoke products and ways to bling out their decks — to have fun things that they can collect. 

While we have grown the overall engagement for a player and the amount of money that a player might spend on the game, in general, we haven’t seen a huge growth in the total amount of spend that these players have. Before we made these products, they were going out and buying them on the secondary market, spending about the same money as they would spend with us when we actually gave them a packaged product. So the growth of the brand has been tremendous. The secondary market has grown with the new player growth, which is good for everybody. The primary market has also especially grown because we’ve had a segmentation approach to embrace segments that were previously ignored. That made them happy, and I think it aligned everything from the player, the shareholder, and the employee.

The criticism here is that maybe you’re aligned more toward the shareholder. At one point, there was a note from Bank of America that said, “Hasbro is over-monetizing Magic,” which is frankly just an incredible thing for a bank to say about any product. Their argument was, “Hasbro is making it less valuable, making it less special, and trading short-term profits for long-term brand durability.”

Well, yeah. Bank of America certainly had their opinion in that report, which was done by an analyst who had covered the brand for about three months. Just to give it a little bit of perspective, the brand has grown for 13 out of the last 14 years. Going back to the data point, we will typically poll tens of thousands of players per year on a brand like Magic. We talk to thousands of individual stores, and the most important channels for Magic are probably all the mom-and-pop game stores around the world that do relatively modest business. They are small businesses, with like 250,000 to 400,000 of total ring registers, and maybe the owner is only pulling in $50, $60, $70,000 a year. They’re doing this because they’re passionate about it, not because they want to get uber rich. So we’re very careful about how we curate the experience for those stores to make sure that they and the players have a good experience. I think success speaks for itself, and growing for 13 out of the last 14 years…

Growing by both revenue and player growth. The one year that we didn’t grow, we declined by about 2 percent. That’s a pretty darn good track record that is tough to second-guess.

This is something that’s very important to you. You talked about how you grew up with these brands playing these games. Whenever you’ve mentioned them, the games in particular, you’ve lit up. You’re obviously very engaged. Your fans are saying, “Hey, the dynamic of this game is changing because anyone can just go buy the rarest cards.” Does that resonate with you as a criticism?

Well, I think what resonates for me is that fans were concerned about the frequency of card set releases, particularly in Q4 last year, and we had some supply chain issues. Magic wasn’t immune to some snafus in the supply chain. We had one card set that got delayed by six months because we couldn’t get a specialty glue for the double-sided land cards we had inside of it. We had another one that got delayed by about two months simply because demand for cardstock across all trading card games — sports card games as well — was just too much. So we had a couple releases last year where, rather than having our traditional five to eight weeks of spacing, we only had a couple weeks of spacing.

I think some of the other complaints we’ve heard — particularly if you go on a site like Reddit or Twitter — are a side effect from a strategy that is purposely saying, “We’re making products that aren’t necessarily for all players. We’re trying to segment things.” There’s definitely a section of players who are completionist. They want to be able to buy and engage with everything. As your brand gets bigger and bigger, it becomes harder to be able to service that player. We would love to, but sometimes we make a casual product for casual players that are not really appropriate for high-end collectors and vice versa.

The last thing you have to realize is that you’re starting to measure your player base in the tens of millions of active fans, particularly for a game like Magic, which is so hyper-engaged and for which the tenure of players can be so long — you have some players actively playing today who have never stopped playing since they first picked up a card in the late ‘90s or early 2000s. Like any kind of player population, you’re going to have this Pareto curve of players who are more open to change and less open to change. Of course, there are some people who maybe started playing in 2002, and they want the game to be exactly the same as it was in 2002. They don’t really like change very much, and they might be quite chatty online. I think you have to balance out that individual feedback with the totality of feedback from tens of thousands of inputs to make sure that you’re doing the right thing overall.

So, don’t let the haters get you down and stay the course, or are you making any changes to tweak the strategy?

Well, we always make changes, but our job is to bring joy, not to make people mad. We recognize that inside of a high-passion player base, sometimes you’re going to do some things wrong that will bristle some people the wrong way. We try to minimize that.

This year, you’ll definitely see better spacing across our product releases, and I think we’re going to be more focused on new player acquisition, particularly with some of our new products like the Universes Beyond. We just announced and started previewing our latest Universes Beyond set based on The Lord of the Rings. We think that’ll be cool for existing players, but more importantly, I think it’s a great opportunity to introduce some new fans to Magic who might be geeks about Tolkien’s work but haven’t picked up a card game yet. Generally speaking, being able to bring in new players is a tide that lifts all boats. It helps our stores and it helps our player community because there are more fans to be able to play with, and if you participate in the secondary market as a collector, there are more people to share your fandom and trade with.

So I want to talk about some Dungeons & Dragons drama. You had an open gaming license. People could just make stuff for D&D, and I think that served that community really well. It was part of the growth story of that product. There was a proposed update to that license that would have made it more restrictive. It leaked, and it caused a major backlash in the community. You backed off of that, but part of that was obviously because, “We’re worried about NFTs.” Right? That was part of the rationale there. “We need to change this license to get ready for a world of digital scarcity.” Is that on your mind? Is scarcity an important part of the project?

I think what was more on our mind with D&D and the open game license was two things. First off, very fairly, our fans have a high bar for how we represent the brand and the fandom of the brand. The original open game license didn’t give us a lot of liberty to be able to police what people were doing in our name, so that was certainly something that was important for us. Diversity and inclusion is very important across all our brands, but notably with the D&D team.

The second thing we were thinking about was, “Okay, we’re investing a lot in content, in building, and in digitizing the brand. How do we make sure we modernize this license that was originally created for books in this modern and technological context?” That was to make sure the trademarks weren’t misused and that we didn’t get in trouble by using someone else’s content inappropriately and vice versa, whether they were a fan or another large company. Those were the two animating forces for making a change in the license. Now, the way that we rolled things out and the way that we did it, that was just a screw-up. We did it wrong, and we definitely heard the feedback. I think we backtracked reasonably quickly, and I think we ended at a place that’s good for our creators and ultimately good for our fans. It did cost us some trust, particularly with some of our most ardent creators, but we’re building back. In general, I think people are pleased with the result, so we’re moving forward.

So, has the license actually changed?

No. The only change that we made to the license was we put the content into the Creative Commons. If anything, it has even more robust protections for creators. It also gives us a little bit of protection on our trademark, because we can police it a little bit through Creative Commons. It makes the license irrevocable, so people can use it in perpetuity.

Does that let you do the policing for diversity and inclusion that you want to do?

It does on a light basis, because we have a little bit of trademark protection with Creative Commons where we can revoke the trademark. But one thing we definitely learned through the process is that the community is very good at policing itself and making its feedback known pretty well.

Fair enough. I’ll connect this to the org chart questions. The executive producer of Dungeons & Dragons, Kyle Brink, publicly said that part of the issue with this whole proposal — which you said was a screw-up — was that the creative and community teams at Hasbro, at Wizards of the Coast, didn’t get a chance to give feedback. That is just structure, right? You have teams that are not aligned in a structure to even create that feedback, especially when you’re all remote — because I imagine this was all happening when you guys were mostly remote. Have you addressed that structure?

Yeah. This all came about when we were having a leadership transition on the brand. People were well-intentioned. It was biz dev people and legal people who were given a task to say, “Hey, we need to update this for X and Y reasons,” and they went out and started executing their marching orders. They just did it in a way that firmly applied foot to mouth. I think if we would have done it through our more traditional means, which is playtesting, having the product people in charge, and really trying to drive it through an executive producer and our designers — who are super tied into the community and super tied into our fans — we would’ve done it in a far different way. Ultimately, we would have landed in a similar place, but I think it wouldn’t have caused as much churn and burned so much trust equity with our fans.

Do you think your new structure — the horizontals inside the verticals — is going to solve this problem?

Yeah. I mean, I think it solves it in that you have very strong product-led leadership in charge of each brand. We’re not perfect; we are going to step in it now and then. What you need to do when you step in it is to take a step back and say, “Okay, what was I trying to achieve? Is that still achievable? What’s the right thing for the fan?” Sometimes even big organizations and highly successful brands like D&D need to learn that. I’m pleased that we ended in a place that’s good for our creators, and I’m pleased that the community is rallying around the brand and what we’re doing again. We have a great movie coming out this weekend that is — knock on wood — tracking really well. The reviews are great, and I think the movie does a great job of introducing D&D to non-fans. Most importantly, it’s a real love letter to the fans. Hopefully, it’s something that millions of people around the world who love to roll dice and use funny pretend voices around a table can have a real celebration moment for.

My dad was an ER doctor, and he was like, “When you were little, I just let you stick your finger in the outlet, because you have to learn somehow.” He’s very confident. 

So, I want to ask one more question about D&D, and then I want to wrap up with entertainment. It does seem like one of the things you could do without a license that is more restrictive is to keep the NFT companies and the metaverse companies outside of this brand. Just keep them at bay, and you can put out your own NFTs. If there’s one use case for NFTs that I’ve ever heard anyone say is good, it’s D&D Beyond. You get the cards in the game, you can trade and sell those cards or digital goods, and you could do a smart contract and get a cut of those secondary sales. It actually makes sense, unlike almost every other NFT idea I’ve ever heard in my entire life. This is one where I’m like, “Alright. There’s a glimmer of something here that makes sense.” Do you want to go into the world of digital scarcity? It does seem like scarcity is important in the physical world.

Well, I think for something like D&D, scarcity is maybe a little less important for us. For Magic, that thought of rarity and specialness tends to be important in the collectible. D&D tends to be more of a collaborative game, where scarcity isn’t a real idea. It’s more about social fun and helping to enable that. I’m not a huge fan of NFTs. When I was at Wizards, I was always very skeptical of them, and that’s why our brands didn’t really participate in them. That said, the concept of digital ownership and digital collectability is obviously going to happen. I don’t think it’s going to be NFTs, but it’s obviously going to be something that happens. 

The permanence is going to be important for people. It’s something that we’re investing R&D and some partnership resources against. As it relates back to the OGL, I think that’s probably separate from something like that because what the opening game license really focuses on is rules and concepts, not imagery or proper nouns. Platforms like D&D Beyond, future video games, or even Magic: The Gathering Arena have this concept of digital ownership and digital tradeability that is definitely something you’ll see from us in the future. I don’t know if that future is three years from now or five years from now, but it’s definitely in that kind of time range.

When you say it’s not NFTs, do you mean it’s not NFTs as we know them or that it’s not the blockchain? What specifically do you mean?

I’m saying I don’t know what it’s going to be. I’m just pretty darn sure that the solutions we have now aren’t going to cross the chasm.

Fair enough. You actually just bought D&D Beyond, right? You bought it last year for almost $150 million, and that was a really winding road for that product. It was at Curse, then it was at Twitch, then it was at Fandom, and then finally it was back home. Why wasn’t that a thing you already had in-house? These things seem like very natural extensions of the games to me, putting them on a phone.

For sure. I mean, back in 2016, D&D was maybe a $30, $40 million product. It wasn’t very large, and we didn’t have a huge budget associated with it. This whole concept of, “Gosh, would people really want to play on their phones or use things like Skype video calling?” That was state-of-the-art back then, as shocking as that is. “Would that really be a thing? Would that replace in-person play?” We had a couple different partners, among them was Curse, who wanted to come up with D&D Beyond, and there was Roll20, Fantasy Grounds, and a whole bunch of others since then. From our perspective, it made sense for us, given the size of the brand and nascency of the opportunity, to do a partnership approach to see 1,000 flowers bloom and to see what actually made sense.

We found that as the Fifth Edition started taking off, and Twitch streaming was a real enabler of it, more and more people wanted to use digital intermediaries, either because they couldn’t connect with their friends in person or because they wanted to bring kind of a rich visual palette to the game that theater of the mind and/or people’s pocketbooks didn’t fully allow because they couldn’t afford $10,000 of Dwarven Forge high-end minis. But they could do it on something like Roll20 or D&D Beyond. As we saw how important D&D Beyond was becoming to D&D-based play, it made more and more sense for us to think about, “Hey, maybe we should be talking to the current owner about insourcing it into D&D.” So we had a fairly lengthy amount of discussions around that and ended up at what we thought was a fair price. They got rewarded for a pretty good investment that they made a couple years prior, and we got a fantastic platform at a good valuation that’s been high growth for us since we bought it.

What are your plans now that you have it? Are you going to try to accelerate it? Are you going to make it more of a constant companion when you’re playing the game? How are you thinking about the goals for that product?

The general trend we saw with D&D Beyond before we bought it is what we’re trying to continue moving forward. Today, probably about close to 50 percent of D&D games are played using some kind of digital tabletop, most frequently it’s D&D Beyond, as an intermediary for play. We see that trend only continuing so that the vast, vast majority of play is going to involve a screen of some form, either to manage your character or to manage the visuals associated with the game. We think D&D Beyond is one of the best platforms for that. It has deep integration with the content, and there are a lot of fantastic opportunities for adding visuals to it. We’ve had a friends-and-family playtest of an Unreal-based digital tabletop that’s kind of a compendium to D&D Beyond. It adds an isometric, high-end 3D tabletop RPG experience to it that we think could be really cool, and it’s something that we think people would enjoy playing. With the pandemic, people are having to play remotely and are relying more and more on these digital tools. It just accelerated that trend. That’s where we see D&D Beyond. We think it’ll continue to work with third-party digital tabletops and compendiums. We see a rich ecosystem for that, but we always think the thing that comes from the brand will probably have a pretty important part in the ecosystem.

Let’s wrap up by talking about TV and movies. You have a big movie coming out this weekend, D&D. There’s also a Transformers movie that I’m very excited about. Have you noticed that I love Transformers? I keep bringing them up at every turn. They were mine when I was a kid.

Were you a nineties kid? Did you do the Beasts?

Eighties and nineties. No. Beast wasn’t out.

Yeah. I was an eighties kid, so Beasts were a little bit after my time, but I’ve seen the movie and it’s pretty cool.

Alright, send me a copy. Let’s do it. 

The production studio, eOne, was put up for sale — parts of it, anyway. You just bought it, basically, for $4 billion in 2019. They had a music division, which definitely didn’t seem like a fit.

Death Row Records? For sure.

Yeah. That didn’t seem like a fit for Hasbro. You sold that off, and now the rest of it’s up for sale, apart from the children’s division. Why get out of that business? It seems like a very natural extension for what you’re doing.

The parts that are up for sale are the non-Hasbro-based IP. We looked at, “Okay, if our strategy is this thing called the brand blueprint, and it’s all about creating play experiences and merchandise experiences for content and brands that we create, what brands fit in that envelope and what brands don’t necessarily fit in that envelope?” Transformers, it’s natural that we would have entertainment and help to execute entertainment for Transformers. We want to make sure that we retain those capabilities, whether it’s live-action movies or kids’ animated TV shows. Naked and Afraid, the reality TV show, is probably not going to do an action figure, at least not one that would ship at Walmart. Mrs. Harris Goes to Paris Monopoly is probably not going to be a huge business opportunity for that.

We’re taking a fairly large chunk of the film and television division, and we’ve had a pretty robust process with a lot of interested parties, and we’re putting that up for sale. We’ll be able to retain the ability to do creative development, business affairs, and co-productions and co-financing for our own IP in film and TV. We’ll have really robust production capabilities in animation, which is very core for a toy and game company like Hasbro. For the balance of it, I think we’ll be able to find a good home with someone who has really high scale in production and can drive more cost savings and synergies, someone who has their own distribution platform, or someone who is looking for their own first-party IP that they can then put on their platform.

I’ve seen some names floating around the Hollywood trades. How close are you to a deal?

We had a very robust first round. We’re in the second round now, and we should have an update in the next couple months.

A lot of the conversation about running a business like that was what you might call a zero interest rate phenomenon in the streaming wars. All of the streamers were just throwing money at everyone to build a catalog, attract an audience, and I think become a monopoly. I’m not actually sure what the end goal of all that was, but that has pulled way back. The Netflixes and HBO Maxes of the world are not spending nearly as much as they were, and they’re certainly not spending an arms race with each other. Is that part of the rationale here? “This market has totally cooled, so we want to stick with the winners”?

I think the original rationale of, “We have a brand blueprint, and we want to make content that injects into it and drives merchandise sales,” still holds. If anything, that has become more important as people are focusing on quality over quantity; they want to have brands that break through. That’s why Transformers continues to be a blockbuster film franchise, why D&D is seeing such a warm, critical fan reception in the early previews, and why we’re seeing success with the Hasbro portfolio. For the non-Hasbro-based IP, I think what people are looking for is consistent executional quality and people who really are a team, who really know how to get this done, and can do it cost efficiently because margins are becoming compressed in that space.

As you think about a content spend and production, it’s either, “I’m going to drive scale to really be able to drive efficiency so that I can have a better margin structure than my smaller competition,” or, “I have a distribution platform that I need to inject content into cost efficiently, and I want to have some IP and teams that can do that.” Those are really the two nodes of interested bidders inside eOne. We’re fortunate in that the eOne team has some fantastic content, some fantastic brands, and they have some really good teams that I think are generating significant interest.

When you talk about quality over quantity, you’re an IP-based business. You have these big franchises and a brand-based strategy. I can just make the comparison to something like Marvel, where they have made too much stuff and the fans are just reacting to this latest phase. It felt like I had to do a lot of homework and then the homework never paid off. This comes back to the animating tension that I’m kind of poking at here. The risk is that you’re making too much stuff, and you’re not making enough new stuff. You won’t turn the volume down and let it breathe before you come back with something new and bigger and better. Does that worry you with these franchises? With Transformers and now with D&D being turned into movies, are these things always going to be on?

No. I mean, maybe if I was as fantastically successful as Marvel, I might have that concern. From Hasbro’s perspective, we have over 1,500 brands in our vault. We have a ton of different IP and trademarks that we can mine. Where we are in our journey, 100 years in and thinking about what our next 100 years will look like, it’s, “Hey, where do we really want to focus and where do we really want to break through?” Again, it goes back to that three-part decision-making: what’s best for the fan, what’s best for the shareholder, and what’s best for the employee and the teammate? We’ve really focused with our new strategy on the five categories we think we can deliver the best play experiences on. We have one or more brands in each of those categories that we think can be a category leader inside of that. We’re really going to focus on those and drive those to breakthrough. 

Where we are on developing each of those IPs is maybe the second inning of a nine-inning game. We have a lot of upside, and we’re still allowing our teams the ability to think about a breakthrough. It’s not like we’re just going to focus on these five categories and seven focus brands inside of them. If someone comes up with a great idea, we’re going to chase it. For instance, we have a sci-fi RPG in development by the former chief creative at BioWare, James Ohlen — who created the game that inspired me to get into the video game industry, which ultimately led me to Hasbro. He’s developing a new IP for us. Our toy teams are developing new IPs and new ways to extend and push the boundaries of where things like Nerf or My Little Pony live. I feel like we have a decent balance on that now, but maybe have me back in a year and a half and test me and see how we did.

We’ll see how phase three is going.

You brought up Nerf. I actually have a Nerf question. We have an editor here, Sean Hollister, who is a hardcore Nerf fan. He gave me so many Nerf questions, but I wanted to ask you just one.

Here it is. It’s very direct.

I hope it’s a soft dart.

I’m not a Nerf person, so I’m just going to say the words and you react to them. This is from Sean. “The Nerf community’s top ask is for Hasbro to embrace short darts so you can carry more and be more accurate, but instead, they’ve introduced several new ammo types that are less reliable. How do you crack the enthusiast market?”

Well, the first thing I tell you, Sean, is you should try our new Gelfire Blasters.

Oh my God. If he was here, he’d be freaking out right now. I’m sure you’d have an immediate response to this.

They’re super hydrated little pellets that melt away after you blast them. They’re super high-velocity and a heck of a lot of fun. To the second part of the question, we have this new sport that we’re developing called Nerfball. It’s dodgeball meets basketball meets paintball, and I think Sean is going to be really psyched with the Nerf darts we have for those specific blasters.

Alright, we’re going to have you come back and just do an hour on Nerf. It’s incredible. I love that you own Nerf on top of everything else. It’s very good. You said you had a blaster division?

Incredible. We’ll have you back just for the Nerf hour with Chris Cocks.

Well, we should make it a twosome with Adam Kleinman who runs it for us.

Very good. Here’s the last big-think question. I’ve been thinking about this throughout this entire interview. You have described Hasbro as going from a toy company for kids to an entertainment company for adults. There’s a Nerf community, and they are vocal and they want things. There’s a D&D community that pushed back on a copyright license change. I mean, that speaks to me. That’s incredible. There’s a Magic community. There’s a Transformers fandom. You now operate a company that services these huge fandoms that are basically adults with money. I think the toy industry phrase is “kids at heart.”

This is a new phenomenon in business. You are a company that services fandoms. The fandoms are huge and they’re vocal, and they’re adults with money. When did you see that shift, and how much farther do you think that shift goes?

Oh, I think it’s a seismic shift inside of the entertainment industry, and in the toy industry in particular. When I was a kid, it was weird to be the comic book guy or the pop culture nerd. I think artists like Steven Spielberg and George Lucas helped to pave the way for a whole new generation of fans who would not just be fans when they were young but lifelong fans. I think Gen X is among the first generations who really drove that. Just look at Gen Z and millennials’ favorite brands; they’re usually game brands. They are things they played on their consoles, on their PCs, or on their phones. It’s the highest engagement entertainment property they have.

It’s incumbent upon the entertainment industry, and the toy and games industry in particular, to adopt a very similar methodology as professional sports have. The NFL has an ethos that, “I need to mint a fan by the age of 13,” because if they don’t start watching football or playing football by the age of 13, they probably never will. Likewise, we have this amazing opportunity where we start to build a relationship with kids as early as the age of two or three in preschool. It’s up to us to keep that relationship strong well into adulthood, and to make sure that the brands are big enough, flexible enough, and evolved enough that we can simultaneously continue to serve the next generation of fans when they’re young but have them age up and do amazing games, amazing entertainment, and amazing collectibles as they grow older and more sophisticated.

The dynamic of, “Our market is a fandom, and the fandom is very vocal about our products,” is definitely new in toys.

That didn’t exist before. No one was mad about Mask going away, which was my favorite line of toys. I was furious about it, and I had nowhere to go with this information. I called my cousin in New Jersey, long distance on nights and weekends, to be pissed that my toy was going away. That’s it. That was as far as I got. Now, you have people with money. You have lawyers in the Reddit comments talking about your licenses. That’s just a very different dynamic and it’s a very different audience. I’m just wondering if you think there is yet another turn to it?

Take this for what it’s worth. I think you’d maybe get a deeper philosophical answer if you were talking to a typical toy person, someone who grew up working on Barbie, Nerf, or Lego. My first job in the entertainment industry was the product manager for Halo. I started at Hasbro working on Magic and Dungeons & Dragons. I just think it’s natural that the audience that’s 13-plus is super passionate, hyper engaged, and has tremendously high expectations because they spend so much of their time and money on a product. I just think that’s natural. That’s how you engage with people. Our company needs to be proficient at embracing them. We need to be willing to take feedback — even when it’s negative, because it often will be negative — but we also need to recognize that when people care enough to give you negative feedback, to post on a Reddit thread about a brand, that means they really love the brand. What you should be worried about is if they stop doing it. It’s not that we wanted to create negative feelings or negative feedback loops, but I think we need to be adults about it and understand that people are passionate. Ultimately, if you do the right thing over time, when you make the occasional little blip or bloop, things will even out and people will ultimately be happy and continue to be engaged.

If I had to take the most reductive version of the criticism, though — and I think this is too simple, but it’s worth saying out loud — it’s that toys aren’t for kids anymore. The best toys are for rich adults, not children. I think that’s a little too reductive, but you can see what that criticism means. The market is moving over here to richer adults and you might leave the children behind.

I mean, yeah, I would say that’s too reductive versus our strategy. Again, going back to that NFL or MLB analogy, you can never forget the core audience, because that’s where you mint the next generation of fans. Going back to the overall idea behind the podcast, we’re a company that has been around for 100 years. If we want to be around for 100 more, we have to not only embrace the people who are 20 to 50 today who are the hardcore fans giving us feedback and wanting products a certain way, but we have to also continue to engage with the two- to 12-year-olds, because they are going to be the people who, three versions from me, are going to be servicing the next generation of 20- to 50-year-old fans. You have to do both, and you have to do it well.

You have been listening, because you led us right into the last question that I ask everybody. What should we be looking for next?

Oh, gosh. I think from Hasbro, we’re going to be doing more for that engaged fan with our direct business and more bespoke products. HasLabs are these amazing things that we have. I think mass personalization of toys is the next big thing, and it’s going to be that more engaged fan who helps us drive that. We have a very early iteration of it in our selfie series, and I think there’s much more that we can do. The next area that you’re going to see us focus on is digital, by trying more ways to digitally express our brands and by having more games either done by us or by partners. 

Then, last but not least, I think you’re going to see Hasbro thinking more like an overall brand company. We’re not going to be tied to traditional views of who our competition is. We’re going to have our brands in all kinds of categories and in all kinds of places, and we’re going to embrace working with the best in classes on that. If you’re a Transformers fan and you want to see something in an aisle that we’re not in, like Lego, you’ll be able to see our brands in the Lego aisle. Hopefully, you’ll start seeing more of that vice versa, with things in creativity like action figures and board games. You’ll see other people’s brands pop up where you’d expect to see Hasbro products.

That’s great. Well, Chris, thank you so much for coming on Decoder. It was really fun talking to you.

Thank you so much. I had fun, and I’m looking forward to coming back and doing a status check in 18 months.

The blaster episode. Yes, totally. We’ll do the full Nerf episode.

Amazing. Thank you so much.