08 April 2009

D&D’s death spiral

On the business of role-playing games...

Ryan Dancey made a comment on a post at RPGpundit’s blog. I found it interesting enough that I’m quoting the whole thing below.

One of the reasons I find Ryan’s opinion interesting is because he’s a former Wizards of the Coast Vice President.

(I saw this due to Randall posting about it on the RetroRoleplaying blog.)

This is a classic example of Death Spiral. As things go bad, the regressive forces inside the organization (lawyers, commissioned sales people, creative folk who feel stifled by history, precariously tenured executives) are increasingly able to exert their agenda. It always makes a bad situation worse, but there’s no magic bullet that would likely make the bad situation better so you get a rapid unbalance in the Corporate Force towards the Dark Side.

OGL?
Risky (someone might make us look bad, steal our ideas before we print them, or create a competitive brand that siphons off sales), and lack of faith in network marketing devalues ROI assumptions. Kill it.
PDF?
Causes endless problems with hardcopy partners creating pressure on sales team they could really do without, and revenues are so small as to be non-strategic. Cut it.
Online?
Every time you talk about it someone produces a $10 million minimum cost estimate to “do it right”. After spending 3–5× this amount in a series of failed initiatives (lead by utterly unqualified people), executives assume Online is plutonium. No qualified lead or team will touch it.
Evergreen?
Sales of each unit are going down and few products have any staying power. The only (seemingly viable) solution is to put more books in production—make up for the revenue hole caused by lack of evergreen sales by getting more money out of each customer. The Treadmill.

The next things that will take hits are the RPGA (costs a lot to operate—slash its budget), then quality (put fewer words and less art on fewer pages and raise the price), then consistency (rules varients generated by inexperienced designers and/or overworked developers start to spawn and cohesion in rulings breaks down leading to ad hoc interpretations as the de facto way to play).

Meanwhile sales just keep going down, the gap in the budget keeps getting bigger, and no matter how many heads roll, there isn’t any light at the end of the tunnel.

Wizards is about to be forced into the D&D end-game which is something that many publishers have gone through but none ever with a game the scale and impact of D&D (TSR walked right up to this cliff but WotC saved them from going over the edge). There are 3 outcomes:

  1. A total collapse, and the game ceases meaningful publication and distribution at least for one gamer generation and maybe forever.
  2. Downsizing until overhead matches income; could involve some kind of out-license or spin off of the business—think BattleTech in its current incarnation.
  3. Traumatic rebirth, meaning that someone, somewhere finds some way to cut out the cancers that are eating the tabletop game and restarts the mass market business for D&D.

Note that 2 and 3 can be mileposts on the road to 1.

2 comments:

Matthew James Stanham said...

Yeah, I read this today as well. Interesting point of view, though I am not convinced that we are really seeing the death spiral (unless it is the one that started in the 1980s...).

In my opinion, the chances are that we will see all the PDFs for sale in the near future on a WotC online shop (I seem to recall they had one back in 2000 or so as well), perhaps improved in quality, and almost certainly for a higher price than previously.

Will WotC go under and sell D&D? Wishful thinking, I would say. If Games Workshop is anything to go by, they will just continue strongly protecting their intellectual property and targeting the youth market.

The real problem for them is that Hasbro holds all the computer game rights directly, so any profits that they could develop and claim from that market are dislocated from the main brand.

Robert Fisher said...

Wizards’ fate has never been tied to D&D. It has never been a primary revenue stream for them. (When Ryan talks about “downsizing”, I believe he means only the RPG portion of Wizards.)

I’m not sure I agree with Ryan’s conclusions either, but I think the diagnosis rings true. Plus, I have to give his opinion a lot of weight, because he’s certainly more likely to understand the situation better than me.

I certainly could criticize the 3.0 era Wizards, but it looks clear to me that they understood—with D&D not being a primary revenue stream but a strong brand—that it was about maximizing the long-term value of the brand rather than short-term profits.

Yeah, and the computer game aspect is unfortunate.