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

Yes D&D is a niche. Now you know why WotC wants to expand the market!

manhammer said:

I am dying to know what Ryan Dancey said 8 years ago, my hunch is it has something to do with the OGL and giving D&D to the people. Maybe we need to take it away from WOTC.

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Try googling and searching the old ogl lists, you'll see plenty of things Dancey said, and no, albeit I could well have missed it but he didn't say anything about 'giving' D&D to the people.

And note, you can't take D&D away from WotC unless you can persuade Hasbro to sell it to you (incredibly unlikely).

This speculation about D&D going down, pressures on WotC etc. is exactly that, speculation, and it's entirely unsupported. There is precisely zero business evidence for any of the wild rumormongering going on in this thread.

evilref said:

Try googling and searching the old ogl lists, you'll see plenty of things Dancey said, and no, albeit I could well have missed it but he didn't say anything about 'giving' D&D to the people.

And note, you can't take D&D away from WotC unless you can persuade Hasbro to sell it to you (incredibly unlikely).

This speculation about D&D going down, pressures on WotC etc. is exactly that, speculation, and it's entirely unsupported. There is precisely zero business evidence for any of the wild rumormongering going on in this thread.

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there never is. why would a company say to its customer base who they still want to make money off of "hey, we might be selling off the company, btw. but please invest in us and buy our books."

what you have to do is read the signs based on past experiences.

this is a quote from monte cok from an article i was reading last night. i can't tell exactly whe he wrote it, but it looks to be 2006-ish. the link to the full article follows, but take a look at this prescient quote:

.....

"[FONT=Arial, Helvetica, sans-serif]But what about the long term? At some point, Wizards will decide to do a 4th Edition, which is a good thing. What would be a bad thing is if it happened just because they needed to boost their bottom line when it came time to answer to Hasbro. [/FONT] [FONT=Arial, Helvetica, sans-serif]Let me preface this by saying that nothing I'll write here on the subject of 4th Edition is based on any kind of direct knowledge. No one's told me a thing. But I did work at Wizards for years, and I knew the original plans. Moreover, I know the kinds of products that you release before a new edition, and the kinds of things you post to the Internet and say at conventions when you're working on a new edition. And so based on all that, my wild guess is 2008, with an announcement in 2007. That said, I think it maybe could come as early as 2007, with an announcement this year. If that were to happen, however, and I was working on D&D at Wizards, I'd polish up my resume, because a release that soon would seem to indicate that Hasbro was forcing the issue; it would suggest the corporation wants squeeze the game for what it was worth and then dump it, because the timing would be wrong for optimal success. It would indicate that they (Hasbro) just didn't care. To be blunt, 2007 would be too early--sales would not be as good, and the finished game would likely have been rushed. It would be very bad news for the game, for people working on the game, and likely for the rpg hobby as a whole (remember, so goes Wizards...)"[/FONT]


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[FONT=Arial, Helvetica, sans-serif]full article here http://www.montecook.com/cgi-bin/page.cgi?mc_los_155[/FONT]


[FONT=Arial, Helvetica, sans-serif]pretty damn accurate huh? and he had no "business evidence", but he based it on business experience, and the signs, just as we are.[/FONT]


my thought after reading this was---who's to say that for the reasons he says it would have been wrong to do 4e in 2007, it is not still wrong in 2008? the signs seem to be there that it was rushed.



joe

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joethelawyer said:

my thought after reading this was---who's to say that for the reasons he says it would have been wrong to do 4e in 2007, it is not still wrong in 2008? the signs seem to be there that it was rushed.

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Wow, so basically, you just want to twist any fact you can to doomsay.

Very nice.

joethelawyer said:

[FONT=Arial, Helvetica, sans-serif]pretty damn accurate huh? and he had no "business evidence", but he based it on business experience, and the signs, just as we are.[/FONT]

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Uncanny. Monte is a smart man...

my thought after reading this was---who's to say that for the reasons he says it would have been wrong to do 4e in 2007, it is not still wrong in 2008? the signs seem to be there that it was rushed.

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Maybe because Monte said that 2007 would be bad, and not that 2008 would be bad? Why should Monte make this distinction if it wasn't important?

Basically, saying that 2008 is also wrong for a release is saying that Montes prediction are faulty. So you just can't use his predictions as a cue or evidence to imply that 4E was released early because of Hasbros pressure and might lead to selling off the game. 4E was not released in 2007.

*LOL*

Hasbro sell off a property?

As a former stockholder with Hasbro and as someone who actually had the opportunity to attend their general stockholder meeting back in the 90s, I disagree with joe's argument.

Hasbro simply won't sell a property it owns. This is just not done. They'll shelve it and keep it.

Furthermore, I think people are reading WAY more into this transcript than can be believed.

(seriously, the recent recall of the Cranium boardgame are WAY more of a concern to Hasbro than the outlay for DDI. Especially, since they only bought Cranium Inc for roughly 20 million. The 2007 toy lead paint scare seriously affected Hasbro sales that quarter...)

Wow. I can't believe the rumormongering that is spinning out of this routine quarterly financial conference call.

Guys, take a deep breath and think through the math just a bit.

Hasbro is one of the Big Two in the toy industry, an industry that is absolutely huge. It makes billions of dollars every year. Even if D&D generates tens of millions of dollars a year (and it does), that's really just a percent or two of Hasbro's income.

Guess what? Hasbro doesn't make billions from one or two brands or products; it has a portfolio of scores of brands and thousands of products. D&D is, frankly, about an "average" sized brand in the Hasbro portfolio.

The conference call isn't about giving a shout-out to your favorite Hasbro game. It's a conversation with financial analysts and journalists interested in the most important factors driving changes (good or bad) in Hasbro's financial performance. Thus, the only brands, products, initiatives, management decisions, etc. that get mentioned are those that A. Rank among the most important, and B. Drive substantial change in the current or future financial performance of the company. That's all the recipients of the conference call are interested in, and that's all they get. Many other issues might be cool or interesting or fun or noteworthy or whatever, but they aren't important to the content of the conference call.

Here's the upshot of all this:

• D&D is not a big enough driver of changes in Hasbro's fortunes to warrant a mention. That simply means it's performing within expectations.
• D&D isn't a monster brand within Hasbro's portfolio. Big deal. That doesn't mean (or even imply) that it's insignificant, either, or that Hasbro is going to cancel it. In fact, if a brand its size really was in trouble, you probably would hear it mentioned in the call.
• For those of you constantly invoking the spector of Hasbro "suits" or "beancounters" forcing this or that decision on D&D: As a company with scores of brands, Hasbro can only function by effectively delegating brand authority. D&D decisions are made by D&D experts (just like Tonka decisions are made by Tonka experts), not by uncaring corporate suits in some distant glass tower.

If you really must believe that D&D is on the rocks, or if your sense of self-worth hinges upon amateur internet prognostication, whatever. But don't try to claim that this conference call somehow backs up your dire predictions. It doesn't.

Interesting.

My comment about "taking D&D" was meant to be tongue-in-cheek (which means I was joking).

I didn't realize we were rumormongering, I thought we were engaging in wild speculation and discussion about something we obviously all love in one way or another.

I mean were posting on a third party website in an obscure post about a financial report that we all read through to check if everything was ok (or to see if everything was falling apart).

I always try to preface my opinions, as such. But, I worry about other people's decisions about my hobby of choice.

I still get all goofy excited about new product - will this be the edition that finally plays fast, realistic and solves all the yucky parts? I have the 4th edition books, I will probably test DDI when it's available. However, I am still a little skeptical about the course of events. I have seen the release of 2nd and 3rd editions (plus 3.5) and the tingly buzz is missing for me this time. Granted I'm older but my lifestyle hasn't changed that much. I'm waiting for Privateer Press to chime in about their RPG plans and I read the quality stuff that Paizo is putting out.

I love roleplaying and have stuck with D&D for years because of the product support and feel of the game. I am worried that the Hasbro relationship may have hurt/will hurt my devotion.

Anyway, I applaud the "talent" who works on these game and I am not just a "nay sayer" or hoping for a failure.

Dedekind said:

((SNIP))
From the annual report, I think HAS expects DDI to become a cash cow. $10 a month equal $1.2 million sales a year for every 10,000 users. If we define a successful DDI as one that puts out a Dragon's and a Dungeon's worth of material a month plus a game table, we already know the content can be profitable at $10 a month (given the cover prices of Dungeon and Dragon). (Less leasing revenue or whatever to Paizo.)
.

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I don't think I'm following you very well, so if I'm misinterpreting correct me...but I always get a little irked when people say things that are essentially:

Cost of DDI = Cost of Subscription to Dungeon and Dragon = $120

I don't think delivering content equal to the magazines, in a form that you must have on a computer or print with your own paper, is equal in value to the printed magazines, but even if it was I'm not aware of anyone who bought a 'subscription' to either magazine for $60 / year.

I think you were more making a point about profitability, but I tend to immediately (as a long-time subscriber to both) get my hackles up when something that sounds like DDI is the same cost as the magazines.

CharlesRyan said:

Hasbro is one of the Big Two in the toy industry, an industry that is absolutely huge. It makes billions of dollars every year. Even if D&D generates tens of millions of dollars a year (and it does), that's really just a percent or two of Hasbro's income.

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Err... unless the toy industry has a pretty 'long tail' of a very large number of mid-sized companies in it, then it's not all that big. Hasbro is a $5 billion company, which is a very large company, granted. But put it in perspective... the 'big two' in computer hardware are HP, a $110 billion company, and Dell, a $50 billion company. Amazon.com is a $32B company. Wal-Mart is a $230B company. GM is a $6B company (but Toyota is a $150B company, and makes slightly fewer cars per year most years, so the stock market is a bit odd sometimes). Exxon-Mobil is a $450B company. You get the idea.