Guesses

So, where is D&D going?

I stumbled across some rumours about Tencent Holdings Inc. acquiring Wizards of the Coast, something that's arises primarily from financial analyses and reports highlighting Hasbro's financial difficulties. Hasbro's significant financial losses, including layoffs and reduced revenue from its toy business, have spurred speculation that it might sell off profitable divisions like WOTC to stabilize its finances. Tencent is a publicly traded company listed on the Hong Kong Stock Exchange; it's also a Chinese multinational conglomerate founded in 1998, with shareholders that include investment firms and funds. It's one of the world's largest technology companies, with a market cap of 400 to 500 billion, USD. Hasbro's market cap is around 10 to 15 billion.

Hasbro has absolutely denied that any such acquisition is going to take place, saying, "We don’t make a habit of commenting on internet rumours, but to be clear: we are not looking to sell our D&D IP." Still, a report by the Chinese news outlet Speed Daily, which suggested that Hasbro was considering selling, published on Jan 31, 2024 and was thence translated and disseminated by platforms like Pandaily.

Here's where the story gets interesting. Balder's Gate 3 officially released on Aug 3, 2023. Larian Studios, which developed and released the game, was not the original developer of the Baldur's Gate series. The original Baldur's Gate games, Baldur's Gate (1998) and Baldur's Gate II: Shadows of Amn (2000), were developed by BioWare and published by Interplay Entertainment. As such, Larian had to approach the WOTC with the proposal to develop Baldur's Gate 3, and after discussions, WOTC granted Larian the necessary rights to use the Baldur's Gate name and the Dungeons & Dragons mechanics and lore.

BUT ... Larian had wanted to do on developing further works based on that property. In December 2023, Larian Studios' CEO Swen Vincke expressed frustration and sadness publicly when he learned that much of the company's D&D team were sacked ... these being the same persons who, essentially, had given Larian "carte blanche" to further develop Balder's Gate. This story, published by PCGamesN on December 15, 2023. According to the article, these layoffs were part of a broader reduction in workforce by Hasbro, which had announced substantial job cuts due to financial difficulties.

So, let's review the timeline. Balder's Gate comes out in August '23; four months later, in December, Hasbro fires all the people that Larian had worked with. In January, Tencent is "rumoured" to be in line to buy the WOTC.

Oh. Nearly forgot. Tencent holds a minority stake in Larian Studios, which has facilitated collaboration and support, particularly visible with the success of Baldur's Gate 3. Essentially, Tencent is Larian's monster big buddy, who this last year made a whack of money from Balder's Gate, unquestionably the game of the year.

So, as I was saying, this "rumour" suddenly appears. Hasbro absolutely denies it, which makes sense, since it's common for companies to withhold information about potential mergers or acquisitions until deals are finalized to prevent market instability. It's also common to throw rumours out there, knowing that they're false, in a bid to cause market instability. A huge Chinese company, seeing a successful product line threatened, which has control over a lot of Chinese media, invents a rumour, gets the rumour passed around various outlets and ... instability results.

In March, 2024, with the rumours in the water, Vincke announced that Larian wouldn't be continuing with any future Baldur's Gate projects after Baldur's Gate 3. And now, since March, Hasbro's stock has risen approximately 23%. Arguments have been made that Hasbro has been able to strengthen it's digital capabilities and supply chain productivity, and that it's riding the wave of a positive momentum in the market. But, Hasbro's recent layoffs at Wizards of the Coast (WOTC) appear paradoxical given the division's strong performance. Despite substantial layoffs, including key personnel involved in Dungeons & Dragons and Magic: The Gathering, WOTC has continued to thrive.

Any investigation into why dredges up the standard company boilerplate answers, that a broader strategy by Hasbro to cut costs and focus on "fewer, bigger brands" amid challenging market conditions has steadied the company's financial health. That new appointments like Tim Kilpin as President of Toy, Licensing & Entertainment, and Gina Goetter as Chief Financial Officer are part of ... get ready for this ... Hasbro's "Blueprint 2.0 strategy" aimed at enhancing the value of its brands and improving operational efficiency.

I have a theory. It could be evidence of a proxy fight. If Tencent is steadily acquiring Hasbro's stock, that could account for the irrational jump, after years of the stock performing badly. Tencent might see strategic value in influencing Hasbro, particularly due to the lucrative Wizards of the Coast division. Acquiring control, or at least significant influence, over Hasbro could provide Tencent with substantial leverage in the gaming and entertainment industry. By circulating rumours of a potential acquisition, Tencent might aim to create uncertainty or pressure on Hasbro’s current management. This tactic could be designed to lower the stock price initially, making a takeover more feasible, or to rally shareholder support for changes in leadership or strategy that align with Tencent’s interests.

Hasbro has been circling the drain for a while now. It could be ripe ... and it apparently has poked a bear large enough to smack it down once and for all. None of this, obviously, has anything to do with the WOTC's design problems, but I stumbled upon this and I thought the reader might be interested. It's a bit more like the writing I do for my day job, so it's going to look odd here.