Toy industry pressures make digital the star

The hole is widening between rival toy makers Hasbro and Mattel — thanks partially to a 30-year-old buying and selling card recreation.

The toy giants have flip-flopped dominance within the house for many years, jockeying for probably the most coveted grasp licenses to place new fan favorites — Disney princesses and “Star Wars” characters amongst them — on retailer cabinets. However because the business recovers from a interval of declining gross sales, Hasbro is the one successful over Wall Avenue.

For the fiscal yr 2025, Hasbro reported income beneficial properties of 14%, reaching $4.7 billion, whereas Mattel noticed its internet gross sales drop 1% to $5.3 billion.

Although Mattel’s income is bigger than Hasbro’s, its progress has been stagnating, in response to Eric Handler, managing director and senior analysis analyst at Roth Capital Companions.

“[Mattel’s] income has been in a really tight vary for 5 years now, and 2026, on an natural foundation, is identical,” he advised CNBC.

Mattel shares are down greater than 20% within the final 12 months, buying and selling at round $17. In the meantime, Hasbro’s inventory is up roughly 46% over the identical interval, with shares buying and selling at round $100.

After all, Hasbro’s journey post-pandemic has not been with out its personal headwinds. The corporate’s income took a success when it divested its movie and TV enterprise, eOne. Additionally, its leisure phase, which incorporates movie and TV licenses, was deeply impacted by Hollywood’s twin labor strikes in 2023.

“Regardless of market volatility and a shifting shopper setting, we returned this firm to progress in a significant approach,” Hasbro CEO Chris Cocks advised traders throughout an earnings name earlier this month.

All through these adjustments, one key piece of Hasbro’s enterprise has been steadily rising — Wizards of the Coast.

The Hasbro division contains Dungeons & Dragons, Magic: The Gathering and the corporate’s portfolio of digital and video video games.

In 2025, Wizards’ income grew 45% to $2.1 billion, fueled by gross sales of units tied to Magic’s Universe Past and smaller, limited-edition Secret Lair packs — some that promote for near $200.

Whereas the phase accounts for lower than half of the corporate’s income, it represents 88% of its adjusted earnings.

The strategic buying and selling card recreation Magic, which was created in 1993, sometimes options two gamers going head-to-head utilizing customized decks of collectible playing cards to forged spells, unleash creatures or use artifacts to defeat their opponent.

Within the final 5 years, Hasbro has expanded past the lore of the preliminary recreation to launch card units primarily based on mental property from third events, together with “Avatar: The Final Airbender,” Marvel’s “Spider-Man” and “Lord of the Rings.”

These units aren’t solely in style with long-standing Magic followers, however act as a gateway for shoppers from different fanbases into the world of Magic. In mid-2025, Hasbro launched a “Last Fantasy” set that grew to become the fastest-selling growth pack in Magic: The Gathering historical past, producing $200 million in gross sales in a single day.

“They’ve achieved a incredible job of widening the funnel within the final couple years, and it is develop into a multigenerational sort of product,” Handler stated. “The participant base is rising. It is a sticky participant base that’s displaying eagerness with new merchandise and new methods to play.”

By way of the tip of 2025, greater than 1 million distinctive gamers participated in organized play — that means sanctioned tournaments — in response to Cocks. That is a 22% year-over-year enhance, he stated.

Moreover, the variety of recreation shops that host occasions, known as the Wizards Play Community, has grown to greater than 10,000, a 20% enhance from 2024.

“Taken collectively, this reinforces our confidence in Magic’s long-term progress,” Cocks stated on the corporate’s earnings name. “We’re constructing a system of play with a number of entry factors, product varieties, and engagement paths, and that system is positioned to proceed driving progress into 2026 and past.”

In 2026, Hasbro plans to launch new Magic units primarily based on “The Hobbit,” “Teenage Mutant Ninja Turtles” and “Star Trek.”

The corporate has forecast mid-single-digit progress for its Wizards enterprise in 2026, however Keegan Cox, affiliate vice chairman and analysis analyst at D.A. Davidson, in a analysis notice printed shortly after the corporate’s earnings, known as that estimate “conservative.”

Hasbro’s Wizards unit additionally contains the digital and licensed gaming house, which noticed revenues soar 6% in 2025, fueled by the success of “Monopoly Go!”

Cocks has beforehand famous that fashionable shoppers and fashionable play is more and more shifting into on-line boards, and the corporate has launched new video games and an in-person online game studio in Montreal to spice up play.

Whereas Hasbro’s digital gaming division is rising, Mattel is simply getting its personal digital unit off the bottom.

Earlier this month, Mattel introduced it might purchase out companion NetEase from its 50% stake of their Mattel163 three way partnership, taking full possession of the enterprise. Mattel163 develops digital video games primarily based on the toy firm’s manufacturers and since 2018 has launched 4 digital video games: Uno, Uno Surprise, Part 10 and Skip-Bo.

“In our view, [Mattel] is within the early levels of an funding just like Hasbro’s funding in gaming over 7 years in the past,” D.A. Davidson’s Cox wrote. “Whereas we don’t suppose [Mattel] can be chasing to compete with Hasbro … we do imagine [Mattel] could make profitable cell video games tied to their IP and will add to revenue margins over time.”

Mattel’s push into digital comes as two of its flagship manufacturers battle to make gross sales.

“Barbie’s been on a significant decline, as has Fisher-Value,” Handler famous. “That is form of been negating loads of the excellent news that is been taking place with Scorching Wheels.”

The autos division noticed gross billings soar 11% in 2025, whereas the dolls phase fell 7% and the toddler, toddler and preschool house slipped 17%.

That phase for the youngest shoppers has been in decline for over a decade, the results of shrinking inhabitants progress and the truth that kids are being launched to electronics earlier of their improvement. Shifting play habits have meant toy makers need to adapt, and quick.

However there’s hope for Mattel and the toy business as a complete. In 2025, complete annual greenback gross sales have been up 6% within the U.S., in response to knowledge from Circana. And, maybe extra importantly, the variety of models bought elevated 3%, quelling fears that price-conscious shoppers are pulling again on toy purchases.

“Unit gross sales being up, I believe, is an important metric we are able to have a look at,” stated James Zahn, senior editor of The Toy Insider and The Toy E-book. “If unit gross sales have been down, that is when persons are actually shopping for much less, and that did not occur.”

Mattel and Hasbro, alongside different toy corporations, are additionally anticipated to get a lift from a strong theatrical calendar this yr.

Mattel has two of its personal manufacturers being represented on the field workplace with “Masters of the Universe” coming in June and “Matchbox” arriving in October. Whereas Mattel will not see a significant bump from ticket gross sales, its toy gross sales might get a lift. In spite of everything, the 2023 launch of “Barbie” helped gas a 16% enhance in gross billings of the doll within the quarter after it hit cinemas.

Mattel additionally holds the grasp toy licenses for “Toy Story” and Disney princesses, that means it will deal with the majority of the product for “Toy Story 5” and the live-action “Moana.”

Hasbro may have toy traces for “The Mandalorian and Grogu,” “Spider-Man: Model New Day” and “Avengers: Doomsday.”

Collectively, Mattel and Hasbro have additionally collaborated on the a lot anticipated product line for Netflix’s hit animated movie “KPop Demon Hunters,” promising dolls, foam roleplay objects, video games and plush objects.

“‘KPop Demon Hunters’ is gonna do massive enterprise for each Hasbro and Mattel,” Zahn stated.