Wizards of the Coast was founded in Renton, Wash., in 1990. (GeekWire File Photo / Kurt Schlosser)
A new round of layoffs at Hasbro has impacted its subsidiary Wizards of the Coast, despite Wizards' strong recent performance and its status as a linchpin for Hasbro's overall revenue stream. The result could spell trouble for both companies as they head into 2024.
Hasbro announced Monday that it would eliminate an additional 1,100 workers throughout its global operations, as part of what CEO Chris Cocks called a "strategic transformation." This was on top of previously announced cuts in January.
It was initially unclear as to whether those layoffs would hit Renton, Wash.-based Wizards of the Coast, which seemed like it might've been protected given its value to Hasbro's portfolio.
As has been the case for the last couple of years, Hasbro's gaming endeavors, led by Wizards of the Coast, have been the only consistently profitable part of the company. In its most recent earnings report, Hasbro wrote that its toy and entertainment segments are both losing money, while its Gaming segment's revenue grew by 40% in Q3 2023.
Despite that success, reports this week indicate that at least 20 employees of Wizards of the Coast and its own subsidiaries had been laid off.
Those affected, as per a list assembled by ComicBook.com's Christian Hoffer, include Mike Mearls, Magic: The Gathering director and former Dungeons & Dragons creative director; Amy Dallen, D&D Beyond host and producer; Eytan Bernstein, D&D senior development editor; Larry Frum, senior communications manager; and Bree Heiss, D&D art director. Some employees also opted, according to an internal memo from Cocks, to voluntarily accept early retirement.
At time of writing, it's unclear why Hasbro's chosen to lay off employees at the single strongest company in its portfolio. This year, Wizards debuted a critically if not commercially successful major motion picture, earned a Game of the Year trophy at the 2023 Game Awards, and was consistently profitable, but Hasbro's still sacking its employees. It's the sort of math that only makes sense if you've got shareholders to placate.
Hasbro's official Q3 report, released Oct. 26, shows rising revenues for Wizards of the Coast at a point in time when its other departments are slowing down. (Hasbro filing)
The dismissals at Wizards play into a disturbing trend across game development and related fields throughout 2023. Over 9,000 developers worldwide have been dismissed over the course of the year, as per independent tracker VideoGameLayoffs. Since there are a couple of studio closures that aren't yet on VGL's list, that number could easily break the 10,000 mark by New Year's Eve.
The traditional impact of these sorts of layoffs on video game studios has been to tank morale and destabilize the business. If overwhelming success can't protect your company from cuts, then the smart response from workers is to take your talents elsewhere. We've seen that happen in the Pacific Northwest with companies like Bungie, 343 Industries, and Amazon.
On the other hand, Wizards of the Coast is in a unique position in its industry. While it does handle a lot of video game development right now -- it just debuted the first project from its Texas studio Archetype at this year's Game Awards -- Wizards dominates both collectible card games and tabletop RPGs. It's got competitors, but most of them have a fraction of the audience and visibility of Wizards' core franchises. Dissatisfied employees would seem to have nowhere to go but down.
As of this year, however, that may be changing, due to ongoing fallout from a recent controversy at Wizards.
For those who are coming in late: a leaked report in January suggested that Wizards was looking into ways to abolish the Open Gaming License, a public copyright notice that it adopted in 2000 to allow third-party developers to make new material for Dungeons & Dragons. After a couple of weeks of controversy, Wizards reversed course on that decision, but not before it triggered a series of reactions from its competitors in the tabletop gaming space.
Most notably, Redmond, Wash.-based Paizo Publishing announced it was spearheading a coalition of companies that would create a new, independent licensing agreement. The result, the Open RPG Creative License (ORC), was finalized in June and published on the website of Seattle legal firm Azora Law.
Paizo is an independent shop that's built its own tabletop business around the Pathfinder series, which itself began as a heavily modified version of an earlier version of D&D. While D&D has a massive lead in both player population and brand recognition, Pathfinder is one of several competing products that got a huge boost in visibility after Wizards' short-lived attempt to revoke the OGL. Paizo's workforce also unionized in June.
For the last year, Paizo has been going out of its way to make itself look like a preferable alternative to Wizards of the Coast, for both players and professionals. Its audience is growing rapidly, thanks to dissatisfied D&D fans switching systems, and now it's a union shop in the same state as Wizards.
With Hasbro's most recent round of layoffs, there's a real possibility we could see a brain drain from Wizards to Paizo and other independent shops in the Washington area, such as Kobold Press.
Wizards already has a packed schedule for D&D's 50th anniversary in 2024, with a big rules update and several new projects in the wings. It's positioned to have a good year. If Hasbro continues to treat Wizards this carelessly, however, it could bring D&Ds (and Magic's) current boom period to a sudden stop.
