Every day it feels like the lines between what is considered “Magic” writing and what is considered “real journalism” is becoming more and more entwined. As I’ve moved onto the coverage team for Wizards and started doing more general stuff on the podcast, more and more I see the blending of this with my “day” job as a journalist.

And here I am breaking down the walls some more, writing an article analyzing Hasbro’s annual report, a duty typically reserved for business journalists in big newspapers or CNNMoney (one of my favorite stops in the morning, incidentally).

But here we are, and here we go. As people with a vested interest in Magic finance, the contents of this report are pretty vital to understand.

Let’s start with the basics.

• Hasbro, Wizards’ parent company, posted revenues up 8 percent from a year ago.

• That growth stemmed from increases across the company, but not the games division and not Magic.

• Magic revenue was down single digits year-over-year, with an international increase but slightly decreased sales in the United States.

• Margins on Magic remain high.

There’s more, but those are the main points. The next thing we have to consider is the remarks that accompanied these numbers, by Hasbro’s CEO Brian Goldner. There’s also some information that we don’t have that is worth mentioning.

Before We Go Any Further…

Let’s clear something up. This is not the death knell of Magic. We’ve grown so used to seeing 20 percent increases over the past few years that it almost seemed inevitable, when of course it wasn’t. Revenues declined slightly, but it’s been one quarter (after they posted growth last quarter).

People have also drawn the connection to the lack of Modern growth, which I believe is another flawed argument. Modern prices stalled (as I wrote about here before the season even began) because the train had run so far ahead that the market needed to correct. Players were, and are, in a holding pattern until fetchlands get reprinted, and that has little to nothing to do with Magic decreasing single digits in the United States. Correlation is not causation, and I implore you to not read too much into an alleged connection there.

Healthy companies post down quarters all the time. Apple misses analysts’ predictions, and yet no one is claiming that Apple is on the fast track to a quick death.

With that out of the way, let’s move onto some specific points from the conference call.

On Hearthstone

“In terms of Magic and competitors, the brand you note is a very casual brand, that’s more focused on action. It would be more analogous to our Duels of the Planeswalkers product which is for entry level and it’s played on the iPad in a casual way.

Magic has a very deep strategic root 20-year history.

The analog card game is still the most important element of that business, the fact that people are playing face-to-face, the fact that we are executing so many face-to-face tournaments in so many geographies on a regular basis, tournaments going on literally all the time around the world, and that differentiates Magic versus a lot of competitors, that organized gameplay organization that Magic team has in place, the ability to go out and execute that.

Then Magic online gives us the opportunity to allow players to play at great distances and also to reignite players who may be dormant because they don’t have a lot of friends around who used to play Magic with them. So it’s a very different, much more deeply seated strategic gameplay in Magic.

We take all competition seriously, but I would tell you that they are different games.”

There are a few ways to look at this. On the one hand, I consider Hearthstone an inferior game to Magic. On the other, I play Hearthstone regularly and won’t touch Magic Online. And while I personally wouldn’t play MODO regardless of the existence of Hearthstone, I don’t find it hard to believe that some people have given up Magic Online for Blizzard’s new game.

That said, I don’t view Hearthstone as a long-term threat to Magic. Like many of us who got into Magic after playing Pokemon or Yugioh as kids, I believe people who play Hearthstone will eventually discover Magic. Even if Magic Online never becomes as easy or popular as Hearthstone (more on this later), the gameplay of Hearthstone comes nothing close to that of Magic, nor does the community. Sure, it seems scary now, and while it’s certainly nothing to be ignored I do agree that it’s more analogous to Duels of the Planeswalkers than anything else.

On Year-to-Year Growth

“If we look at MAGIC business, it is clearly driven by releases. And as we were looking at 2013 year-to-date versus 2014, last year we had our large and a small release in the first half of the year. And this year we had two small set. And yet MAGIC year-to-date is basically flat.

As we go into the fall, the MAGIC team will talk this week at Comic-Con and begin their talk about the size of each of the releases and what's coming up. So we haven’t really talked yet about what that is. But overall again looking at MAGIC, the growth internationally, where we are so far year-to-date, the size of the sets that we put out.

So we feel very good about MAGIC. So far this year, we feel we're in a solid place and a strong position as we go into the second half of the year.”

I will tell you what I consider to be the two most important factors here: Gatecrash and Modern Masters.

Namely, Gatecrash was a large set with shocklands, while Modern Masters is one of the most-hyped sets in the game’s history. Is it really any surprise that small-set Born of the Gods and casual-flavored Conspiracy can’t compete with that?

All of that leads to single-digit losses? That, to me, is not all that concerning. What it does show, pretty clearly I think, is that Magic is no longer growing at the absurd rate it was. We aren’t going to see duals double in price again in the next two years. We aren’t going to see Modern cards going crazy every week. We may not see the dual land cycle from a certain block triple in price the next Standard season because of an influx of new players.

And all of that is okay. Magic’s been around a long time, and none of these things suggest to me it’s going away.

Another note: We haven’t seen player numbers. It’s entirely possible the player base grew by a few percentage points, but because of the factors outlined above that didn’t translate to higher sales. If that’s the case, it’s a good sign moving forward. If not, it’s not the end of the world. But with only revenue numbers to work with, we’re not getting a full picture.

On Magic Online

“We feel good about the MAGIC business and we are investing to continue to build the business, focused on the MAGIC online business so that we can run more concurrent gaming sessions more broadly and more online tournaments. And so we’re building our capabilities there and that is some of the investment Deb had spoken to.”

Now we come to Magic Online, the program most dangerously affected by new card games coming out online. The switch to Version 4 has gone about as well as expected, which is to say there’s a ton of complaining just like everything in Magic, even if some (most) of it is warranted.

I’ll say it bluntly: Magic Online will never look as good or as smooth as Hearthstone. The nature of the games are simply too different. When it’s not my turn in Hearthstone I can get up and walk into the kitchen for a drink. When I discard a card I never have to care about it again. There are no elimination tournaments the system has to support. These are fundamentally different programs built to accomplish different things.

Yes, Magic Online is ugly. Yes, improvements are slow. But they are happening, and it’s possible to glean from this quote that perhaps things will receive an influx of money and manpower to move it along.

Takeaways

Remember, bears can make money just the same as bulls. If these numbers do continue to stabilize in the coming months and years, it is by no means a reason to jump ship.

Today, Magic is larger than it was at any point in the 18 years from 1994-2012. Don’t forget that.

Thanks for reading,

Corbin Hosler

@Chosler88 on Twitter