DDI and the future viability of Online D&D products

[Arlough]

This is a split from a thread called Combining Vancian and Will/Daily from 4E Where we diverged from the topic of magic into the viability of DDi.

What are your thoughts?
Should DDi continue it's consumption of what has traditionally been a print resource? Or should it go back to being a supplement to the print resources?
Do you now and/or would you use DDi in 5th edition.
Is DDi a functional way for wizards to manage a "living system", and do we want our system to be alive.
Who would win in a fight, DDi or Cyborg lesbian ninja pirates? What if DDi had a parrot, who would win then?...


Also, I guess I should fill everybody in on the "discussion" so far.

[sblock]

First off, 60,000 people isnt . It just really isnt.

Secondly those people are paying a small fee for an online service rather then a large amount for a print book. Over a very long period of time it might be a good financial move but over short and medium periods the whole subscription idea is stupid financially. Its not as bad as free torrents on their bottom line, but its certainly not adding to it either.

3rdly. Wheres a link to this group. I seriously doubt the 60k number is even accurate.

How can you distrust 60,000 when you said it was 60,000? And why ask for a link if you have the numbers?


I don't consider ddi instead of book sales but WITH book sales... Yes the frosting is not a cake, but it sure taste good on top of one.

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I don't know if it is frosting, I think it may be another cake.
Consider, with DDi, you get, for a year's worth of subscription, between $72 and $120 from someone. That is what WotC gets, directly.

In books, assuming someone bought all the books (no tiles, screens, miniatures, etc.) available for 2011, that person would have spent between $160 and $275, assuming that they were immune to taxes and had a resist all to shipping costs. (The other assumption here is that the places advertising the books for the cheapest actually have the books for that price.)

Those prices are marked up because the said retailers would like to make money. So we can assume that WotC is making less than the $182 off that, given that is what it would cost to buy all these from Amazon, pre-tax.

Let's figure that Amazon is marking the price up by 10% as a conservative estimate, and that all the retailers that are offering it cheaper are just trying to go out of business. That puts WotC income at about $160 for a full set of books for 2011. These are full color books, so figure at least $25 for printing, binding, and shipping, and you come out at $135.

Now, most players are not going to buy every book, so let us assume they only buy half. (That's significantly more than any of the players I know would buy, but only a little high if we also assume that every player is a DM in another group.)

My estimated WotC revenue off of an average player/DM for a year is now $67.50
WotC could take that to the bank and I believe they would slowly go the way of TSR.

Or, WotC could offer customers an online service, that includes (basically) a Google search of all the books, a program that helps you create and optimize your character, and a VTT to play on that lets you play over distance, reduces clutter, and is your collection of maps and figs for less than the price of half the books, that makes WotC more money. Top it off with complete DRM controls (something that they have been very worried about) and the facts that customers have to keep buying to keep using (unlike the books) and subscriptions have proven to be more profitable than single sale due to people being lazy (see Netflix history) and you now have a consistent money stream from a player of about $70 that costs you relatively little to maintain. As a bonus feature, you have free ad space to sell the next product or idea.

Hell, maybe the books are the frosting.

While I feel they have missed many opportunities, and their execution has been slipshod at best, I have to argue that DDi is a brilliant idea from a business standpoint.

Of course, there is always the possibility that I am wrong. I think all my assumptions are reasonable, but that in and of itself is an assumption. And you know what assumptions do, don't you...

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LoL at the ignorance of how retail marketing works here. 25$ a book to mass print? Try closer to 5$ per book.

And very few people who are members of DDI are paying the month to month fee so you can only assume the 70 a year price.

Theres between a 10 and 20% markup on books in a store. And 20% is so high as to be fairly rare.

So when you buy a WoTC book for 30$ about 19 of it is before tax profit for the company.

The idea that somehow DDI is free for WoTC is also somewhat laughable. They have to have huge server space and processing speed to handle that. That costs money. They need staff to populate it with info and maintain it. That costs money.

Out of the 5.95$ a month you pay DDI for a membership they probably profit 3$ of it pre-tax (yes internet ventures are taxed too. And in some cases, like members in Illinois, double taxed).

So that 70$ a year is more like 30$ a year in their pocket.

If WoTC can sell you 2 books a year they make 25% more then by selling you a DDI subscription. And if they cant sell you at least 2 books a year then they should probably focus more on putting out decent books.


DDI is a dud as a main profit line and anyone with a shred of business acumen could have and probably did tell them that before starting it.

As a side venue. Something with a few goodies and maybe games that you pay 5$ a month for it could help pad the bottom line a little but thats about it.

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LoL at the ignorance of how retail marketing works here. 25$ a book to mass print? Try closer to 5$ per book.

My turn to LoL, did you read? The $25 is for for printing, binding, and shipping for all the books that came out in a year.
Of course if you want to go by your estimate of $5 per book, I can adjust that number from $25 to $45. That would strengthen my argument unfairly, though.

And very few people who are members of DDI are paying the month to month fee so you can only assume the 70 a year price.

Which would still be profitable in my estimate.

Theres between a 10 and 20% markup on books in a store. And 20% is so high as to be fairly rare.

So when you buy a WoTC book for 30$ about 19 of it is before tax profit for the company.

As I said, I was basing this off of the fact that almost all of these books can be found for 10% - 20% cheaper than Amazon, who is already selling them for 10% - 30% off the cover price. Since Amazon's business plan most likely does not involve hemorrhaging money, I feel pretty safe assuming the price they are selling the books for is at least cost.

But you may be as in the know as you believe. Can you point me towards anything that indicates the wholesale price of the D&D books published last year?

The idea that somehow DDI is free for WoTC is also somewhat laughable. They have to have huge server space and processing speed to handle that. That costs money. They need staff to populate it with info and maintain it. That costs money.

Granted, I didn't account for server costs, nor IT. But given the number of customers they serve, they would have to have the most expensive IT department I can currently imagine being staffed by human beings in order to have the cost per person exceed $0.05 per month.

Again, though. I would gladly review any references you have to the contrary.

Out of the 5.95$ a month you pay DDI for a membership they probably profit 3$ of it pre-tax (yes internet ventures are taxed too. And in some cases, like members in Illinois, double taxed).

I admit being suprised that you have the gall to laugh at my logic while you propose a 49% tax on a web database and app set. Even at 24.5% state and 24.5% local, that seems far beyond credible.

So that 70$ a year is more like 30$ a year in their pocket.

If we accept your figures, then yes. Your math is correct. Your claims, though, I doubt somewhat.

<snip>
And if they cant sell you at least 2 books a year then they should probably focus more on putting out decent books.

I will never disagree with increased quality, but it isn't nessasarily the fault of the book if it doesn't sell. Betamax was superior to VHS, Sega was superior to Nintendo, the Tucker was superior to any other car at the time, yet all failed.
Nonetheless, if they cannot produce a profitable product, then yes, the market will have spoken.

DDI is a dud as a main profit line and anyone with a shred of business acumen could have and probably did tell them that before starting it.

"Well there's your problem."
Obviously, nobody in WotC or Hasbro has a shred of business acumen, or at least, they keep all those people in the mail room...

No, I think instead we can say this. Obviously they believe differently than you based on the information they have available.[/quote]

As a side venue. Something with a few goodies and maybe games that you pay 5$ a month for it could help pad the bottom line a little but thats about it.

So, Facebook? Don't they have a D&D thing now. (I honestly don't know, I abandoned my Facebook account ages ago.)

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I work on the IT side for a printing company (lots of technical manuals, some text books, etc). Depending on the type of printer used, it can go from 20 cents (digital color) a page to as low as less than a penny a page (black and white). Due to the costs being all over the place, it's hard to guess what it runs for a book.

As for the IT costs, you are seriously underestimating them. Assuming only 4 people support all of DDi from the IT side, you'd be looking at 16-20K a month in just salary. This would mean over 3K subscribers are needed JUST to pay the salaries. Hosting, bandwidth and infrastructure costs would increase that. So, 1% of their costs being IT would be, in my opinion, a gross underestimation.

That being said, I doubt they are losing money or even just breaking even. DDI is obviously a moneymaker, just a question of how much compared to book sales. That we will likely never know unless they list it all seperately in their tax filings.

[/sblock]

 

[UngeheuerLich]

I haven´t used the DDI tools for quite some time now. But they are useful. However I´d like to be able to create PCs as easily as i do npcs for 4e. An idea anda couple of mnutes, some paper and a pencil. Oh, and dice please.

 

[Arlough]

So, if DDi had, maybe as part of the character builder, an NPC builder, that would help.

What it really sounds like you want, though, is more strait forward rules regarding NPC creation. Am I correct in that?

 

[the Jester]

Digital tools must be completely optional and must not discourage house rules and player & dm creativity- a burden that the 4e DDI has not met (the tools didn't allow house rules last I knew, which means that you cannot, f'rex, build a character with a custom magic item, paragon path or race, in the builder).

I for one am absolutely not interested in a version of D&D that depends on digital offerings; 4e goes way to far in that direction for me.

 

[BobTheNob]

Im all for digital tools, the trick is to not be dependent on them. They should make your jobs easier, but not be a pre-requisit. To me its like the building the fence analogy. I have my hammer, or I can go out and hire a nailgun for the day...Im not obligated to use the nailgun, but it sure makes my life easier if I do.

Of course, I want to see core rules free and WOTC makes its money through its digital services, but thats just me.

 

[El Mahdi]

I did have a DDI account at one time. However I did not play 4E, so it was of limited use to me. I did however get it for the adventures (Dungeon Magazine), to keep abreast of the game, and to have it in case I did happen to play a 4E game (for easy character generation). However, I got rid of it during the WotC pdf debacle. I would most definitely get a DDI account again for 5E, but only if they finally return availability of electrically downloadable books (both current and past edition products).

As to who would win in a fight: The scenario you posit would obviously be won by DDI...through forfeit as any kind of ninja pirate is impossible to exist. The inclusion of both in one entity would be like introducing matter to anti-matter, destroying the entire Universe (including all Cyborgs, Lesbians, and Cyborg Lesbians).

The inclusion of a parrot would simply mean that DDI would kill the parrot first, before killing the Cyborg...simply due to it's extreme annoyance (though that may give the Cyborg an initiative advantage...).

Especially if it was this parrot:

 

[Tallifer]

I like the mantra, "Everything is [part of the] core." I include the Dungeons & Dragons Insider in that. However the advent of Fortune Cards and the increasing need to make house rules for the Character Builder mean that I have had to change my mind about that mantra. The lack of support for many races and classes also necessitates working outside of the limited resources of Character Builder.

Now I have to agree with many that a modular approach to everything including the on-line tools is preferable. The new Character and Monster Builders should have a plethora of blanket campaign options for the user. (With a simple default set.)

 

[Rhenny]

If WoTC does not gain revenue from DDI, they will have little to no incentive to improve it, update it or fix bugs. For that reason alone, I think it should be based on subscription.

The table top with character builder and monster builder is enough to make it well worth what it costs now.

It would be terrific if all of the tools were available for 3.5, 4e and 5e.

 

[jsaving]

If WoTC does not gain revenue from DDI, they will have little to no incentive to improve it, update it or fix bugs.

I do not think this is correct.

In the early days of 3e, Ryan Dancey used to speak often about revenue drivers for WotC, arguing that -- contrary to what some believe -- their revenue came primarily from core rulebook sales rather than ancillary products like adventures. As a result, WotC adopted a business strategy in which it stopped focusing on penny-ante accessories (for a while) and instead created the infrastructure for a third-party adventure marketplace (via the OGL). There was a lot of opposition to this both internally and externally, on the grounds that it wouldn't directly help WotC's bottom line. But what Ryan and others understood was that strong ancillary material would generate interest in 3e, driving up sales of the core books and thereby providing a sizable boost to WotC's profits.

I think the current situation is broadly similar. At least in my judgment, WotC went through a period where it forgot what its actual revenue drivers are and decided it could become a subscription-based enterprise. The problem was, there wasn't nearly enough value-added for most customers to justify the subscription fee -- exactly the same problem newspapers across the country have run into when *they* have tried to charge for digital content. To make matters worse, people who didn't already own the core books couldn't see the modest innovations on DDI that might have convinced them to give the core books a try, turning off a key channel through which core rulebook sales might have risen.

What I'm really saying is that ancillary materials like adventures and DDI are best viewed as commercials for WotC's bread and butter: core rulebook sales. This is why I think the premise under which some people are thinking about DDI is exactly wrong: a free or reduced-cost DDI is what can best help WotC over the long run while the current high-monthly-cost model provides the least incentive for improvement.

 

[Alaxk Knight of Galt]

If I was in charge of DDI, I'd do the following things

1. End the monthly subscription to the product.
2. Give away the Core Tools for free (Character Builder, Compendium, Monster Builder). The only material that would be included in these would be the Player's Handbook 1, Dungeon Master's Guide 1, and Monster Manual 1
3. Upon the release of each new book / product, I would sell that products info. Example, Complete Warrior comes out. For $X, you purchase the Complete Warrior Digital Rules and that data is added to your Core Tools.
4. Dungeon and Dragon would continue being published as is, but cost $Y to purchase and add the content to your Core Tools.
5. As time went by, I would add older editions to the Core Tools with the same model to make revenue on WotC's back catalog.