transcript july 21, 2008 hsbro earnings conference call and business overview

Zaruthustran · Jul 30, 2008

So what's the solution, joethelawyer? If you were directing WotC, would you instead focus on customer acquisition (collect as many $90 as you can!)? Or DDI and other ways to derive revenue from existing customers (DDI!)? Or both?

Also, let's not forget that miniatures are one way to get regular income from existing customers. IMHO the miniatures lines have gotten to a very high level of quality. I'm glad they're available and happy to buy them--I no longer have the time to assemble and paint metal minis, and it's convenient to stuff them by the ziplockfull into a backpack.

Thunderfoot · Jul 30, 2008

joethelawyer said:
<Massive Snippage>
thats why i think the gleemax thing is a bad sign. a sign of a sinking ship. once you start hacking away at the main components of the plan, you are just buying time, throwing the heavy weight overboard, but not stopping the sinking of the ship.

if insider does not get up and going soon, and if it doesn't blow people away and get them signed up, i expect that the pen and paper aspect of dnd will no longer be supported within the next business cycle-- 12-18 months. they'ss still keep the brand itself and make money off of the licensing rights, as long as they aren't able to make more money off it it by selling it. i doubt though that paizo or any third party publisher would have enough money to buy the dnd IP though. i predict though that based on the failure of gleemax and every other electronic initiative they take on, that insider will fail and that the dnd brand will make money for hasbro through licensing and a much slimmed down pen and paper publishing schedule.

perhaps karma for closing down the ftp site greyhawk.stanford.edu.

for purposes of projected revenue streams, look at it in terms of software and mmorpg's. the books are the software. the mmorpg is insider. you make your income projections based on both. if only one comes through, and the smaller one at that, your chances of keeping your position as head of wotc is looking slim. think about it this way---how much does the phb, mm and dmg cost? 90 bucks? if they cost that much, wotc will go the way of tsr.

most every person who purchases the three core books are expected to earn wotc $90 plus $120 plus $120 plus $120, assuming 10 bucks a month subscription and someone subscribing to insider for a few years.

now tell me, with those projected numbers in mind, with those budget demands placed upon your company, how much does it matter that you made $90 per customer when you were projected to make $240 the first year, and that you just dumped millions of dollars into a money pit called gleemax which will never be recouped?

puts things in perspective huh?

just my opinion.

joe

But an interesting opinion. If your projections ring true the D&D brand could be up for re-sale at the behest or Hasbro OR WotC could cease to exist and the brands absorbed for profitability and marketing make-overs ~ meaning what can be saved is saved and what isn't is sold off. M:tG is a larger money maker due to the sheer number of products sold and the D&D minis game is as well; the Star Wars line could be mass marketed in mainstream toy stores and D&D becomes an online only brand name taken over by a programming company for distribution ala WoW or some clone like it.

More likely is the shelving of mass market plans, reduction in resources and a return to the niche from whence it came. No more multi-million dollar strategy and planning sessions, promotions and the like and D&D, M:tG and all related products simply become a dust off and roll out kind of product. THIS destroys the market for 3pp and keeps the original untouchable, just like it has for years. No growing of the market, but no major losses either ~ once again happily stagnant.

Dedekind · Jul 30, 2008

joethelawyer said:
thats why i think the gleemax thing is a bad sign. a sign of a sinking ship. once you start hacking away at the main components of the plan, you are just buying time, throwing the heavy weight overboard, but not stopping the sinking of the ship.

(To pick one thing out of your response.)

I disagree with the dire portents you throw out as a result of Gleemax. I think it is a bad sign -- someone, somewhere was too optimistic. However, Gleemax wasn't meant to be much of a revenue generator was it? Nothing I have seen indicates it was put up for direct revenue. Like OGL, the revenue effects should have been secondary.

In fact, if WotC was going to cut just one thing, Gleemax should be it. It doesn't generate much revenue, it doesn't tie directly to the new edition and it wasn't getting a lot of community support.

Also, if WotC only generates $70 million in sales a year, than my D&D sales estimate is way too high. I think I put WotC at $90-120 million a year of which I thought a 1/3 was D&D. If that's the case, then D&D only gets about $20-25 million. Which makes the success of DDI even more important (see my prior guesstimate of $7 million as target DDI sales).

Regardless, considering the complete lack of a direct competitor of similar size, I have no idea why no one can give a firm sales number for D&D.

Joshua Randall · Jul 30, 2008

Imminent death of D&D predicted.

The story, at 11:00.

Dannyalcatraz · Jul 30, 2008

if insider does not get up and going soon, and if it doesn't blow people away and get them signed up, i expect that the pen and paper aspect of dnd will no longer be supported within the next business cycle-- 12-18 months. they'ss still keep the brand itself and make money off of the licensing rights, as long as they aren't able to make more money off it it by selling it. i doubt though that paizo or any third party publisher would have enough money to buy the dnd IP though. i predict though that based on the failure of gleemax and every other electronic initiative they take on, that insider will fail and that the dnd brand will make money for hasbro through licensing and a much slimmed down pen and paper publishing schedule.

I'm not so sure they have that short a leash. It depends upon somthing I don't know that there has been any direct market research upon- namely, how much of D&D related products value is predicated upon the underlying P&P game.

That is to say, if support for P&P D&D folds, what is the likelyhood that it will drag related products like DDM, computerized versions of the game, and so forth, down with it?

And then there is the question of the 3rd party publishers. They're not simply going to fold up their tents. A folding of "D&D Actual" could lead to Paizo or some other company's explosion with their FRPG products. OTOH, the mere existence of quality FRPGs might keep D&D related products viable despite the absence of "D&D Actual."

evilref · Jul 30, 2008

joethelawyer said:
i agree. with my corporate background as an upper level sales exec in NYC, and also as an attorney, i can tell you that all that the quote above is dead on. every year each division gets a sales goal and has to set a plan in place to achieve that goal.

<snip>

puts things in perspective huh?

just my opinion.

joe

This is all entirely unsupported guesswork. And calling the closing of gleemax a coverup is ludicrous.

The DDI doesn't=Gleemax, just as Magic online isn't Gleemax. Gleemax wasn't a money maker, it was an attempt at a social hub that might then drive sales by site visits, but in and of itself it was a loss leader.

Moreover, to suggest that the RPG side of Wizards won't be supported in 12-18 months is again ludicrous. WotC isn't Vivendi Activision, and Hasbro doesn't dictate individual product lines to WotC. If it's meeting its bottom line (which the sales of 4e would certainly suggest) then it's succesful.

Ohh And Dedekind, from WotC accountants and brand managers through to managers at companies such as Diamond there are plenty of people who could give a firm estimate on D&D sales. They're just bound by NDAs not to. There is no current reporting system for rpg sales in the industry and short of every individual company releasing their figures it's not going to happen.

Erik Mona · Jul 30, 2008

joethelawyer said:
perhaps karma for closing down the ftp site greyhawk.stanford.edu.

Woah. Surely you're not _that_ Joe!

See you at the Citadel!

--Erik

Imaro · Jul 30, 2008

Where do people keep getting this idea that Gleemax wasn't suppose to make money? It was suppose to (just like DDI) have both free content and premium content. I actually believe that the original plan for Gleemax was that it was suppose to have a wider appeal and thus generate greater revenue than DDI, this is supported by the fact that it was implemented first and has had the most work done on it.

I also think that ultimately it ended up costing too much and not getting or being able to get to the point where it would generate revenue fast enough to justify it's cost. What I'm wondering is if DDI will be any different?

joethelawyer · Jul 30, 2008

Zaruthustran said:
So what's the solution, joethelawyer? If you were directing WotC, would you instead focus on customer acquisition (collect as many $90 as you can!)? Or DDI and other ways to derive revenue from existing customers (DDI!)? Or both?

Also, let's not forget that miniatures are one way to get regular income from existing customers. IMHO the miniatures lines have gotten to a very high level of quality. I'm glad they're available and happy to buy them--I no longer have the time to assemble and paint metal minis, and it's convenient to stuff them by the ziplockfull into a backpack.

What would I do? beats the hell out of me.

there is so much that we don't know.

1. we don't know what they were goaled to bring in.
2. we don't know how that goal was broken out by product line
3. we don't now the past several years' successes or failures of wotc---by the numbers. not by the spin they put out to their customers.
4. we don't now the interpersonal relationships between management of wotc and higher management of hasbro. in my experience that's often the most important factor on whether a product line or an employee is given a second chance, or more time to pull off the goal.
5. we don't know the timeframe given to wotc for success for each of the various product lines.
6. we dont know how far behind they are on insider.
7. we don't know how much they dumped into gleemax and how much return they expected to get from it.
8. we don't know when the first iteration of insider is due out.
9. we dont have any intelligence on the market conditions, competitors, nor any past history of those factors.

most of the options a person could take to make 4e and insider happen are dependent on the unknowns above, as well as many other factors.

it all depends in general on the amount of time wotc has to make this happen, the amount of power they have to pull off their goals (money, no higher level interference, etc), and the raw force of will/power/ability of the person heading up wotc. whether they are a steve jobs/bill gates/andrew carnegie/donald trump type person, or just a regular corporate hack.

one thing i know for sure. whatever decision is made by wotc will be made STRICTLY on the basis of the bottom line and in the interests of covering their asses, not love of the game.

and that's a shame.

joe

joethelawyer · Jul 30, 2008

Erik Mona said:
Woah. Surely you're not _that_ Joe!

See you at the Citadel!

--Erik

i am that joe, if you mean the one in 93/94 who was ranting and ravng on the usenet newsgroups about T$R's online tactics . hehe. my reputation preceeds me still?

joe

transcript july 21, 2008 hsbro earnings conference call and business overview

Zaruthustran

The tingling means it’s working!

Thunderfoot

Hero

Dedekind

Explorer

Joshua Randall

Legend

Dannyalcatraz

Schmoderator

evilref

Explorer

Erik Mona

Adventurer

Imaro

Legend

joethelawyer

Banned

joethelawyer

Banned

Similar Threads