Decline of RPG sales

[WizarDru]

I don't know if this has been touched on but do you know if he was referring to D&D RPGs or the D&D Brand. As I understand it, he's the brand manager for all of D&D and thus I would assume that him saying "D&D is doing well" means that its sublicenses, its books, its RPGs and its miniatures lines combined are doing well. That tells us nothing about how D&D RPGs are doing.

If you check earlier in the thread, you'll see that Charles Ryan specifically said that this comment did NOT include D&D Minis.

 

[JohnNephew]

For those interested in the primary quote from Charles Ryan, I reposted it earlier in this thread. Here it goes again, from a similar thread last year:

"We’re doing great! 2004 was probably the best year ever for D&D (that's right: ever), as measured by a wide variety of standards. All of our key trends are up and continuing to accelerate upward. We expect 2005 to be the next best year ever for D&D." - Charles Ryan.

It's a little more broad than just "best year ever".

Thanks for repeating that quote. Do you recall when exactly he said it? It may have been before the really sharp cratering in sales at the retail level that seems to have started around April or May of this year.

Apparently Charles was just laid off (http://www.gamingreport.com/article.php?sid=19503). I suppose they may have let him go after he delivered two years of record sales or profits for his brand, but this seems like evidence that the year's sales didn't turn out as well as managers were predicting.

Charles Ryan is a good guy and an asset to the industry, and it's a shame to see WotC let him go.

 

[Dannyalcatraz]

Hell, if a coach in the NFL can get fired after making the playoffs for several years in a row but not getting to or winning the Conference championship or Superbowl, CR can get laid off for not quite meeting sales expectations.

Especially if the expectations were unreasonable in the first place.

 

[Monte At Home]

but this seems like evidence that the year's sales didn't turn out as well as managers were predicting.

Probably true, John (it certainly isn't evidence that WotC is trying to maintain flexibility in an ever changing marketplace or whatever their embarrassingly ridiculous spin was). However, from what I understand, it was Magic's sales that were strikingly bad, not D&D's.

This wouldn't be the first time that people working on D&D got laid off because WotC's larger brands suffered. (It happened right after the launch of 3E, when arguably D&D sales were better than they had been in about 20 years.) It looks to me like higher-end middle managers across the board got the axe.

Charles Ryan is a good guy and an asset to the industry, and it's a shame to see WotC let him go.

Agreed. Big time.

 

[MerricB]

Thanks for repeating that quote. Do you recall when exactly he said it? It may have been before the really sharp cratering in sales at the retail level that seems to have started around April or May of this year.

It was late in 2004; the quote is on ENworld somewhere. (He's also said that 2005 was the new best year ever).

Apparently Charles was just laid off (http://www.gamingreport.com/article.php?sid=19503). I suppose they may have let him go after he delivered two years of record sales or profits for his brand, but this seems like evidence that the year's sales didn't turn out as well as managers were predicting.

I'd agree - indeed, with the number of people that were let go, and from what positions, I'd say that it really shows Wizards are in trouble.

The problem is that we've learnt from past, bitter experience that if the profits of Wizards of a whole slump, people get cut from areas that were doing well.

From everything I've heard (including Hasbro's own reports), Magic has lost sales signficantly over the last couple of years. It has generally been blamed on the rise of Poker, although there may be other factors involved.

So, D&D may *still* be doing well, but Wizards' or Hasbro's previous policy in this area is nasty (and particularly stupid).

Once upon a time, I saw a quote that went like this: D&D has ten times the players of Magic, but Magic makes ten times the money of D&D.

Cheers!

 

[diaglo]

It was late in 2004; the quote is on ENworld somewhere. (He's also said that 2005 was the new best year ever).



I'd agree - indeed, with the number of people that were let go, and from what positions, I'd say that it really shows Wizards are in trouble.

The problem is that we've learnt from past, bitter experience that if the profits of Wizards of a whole slump, people get cut from areas that were doing well.

From everything I've heard (including Hasbro's own reports), Magic has lost sales signficantly over the last couple of years. It has generally been blamed on the rise of Poker, although there may be other factors involved.

So, D&D may *still* be doing well, but Wizards' or Hasbro's previous policy in this area is nasty (and particularly stupid).

Once upon a time, I saw a quote that went like this: D&D has ten times the players of Magic, but Magic makes ten times the money of D&D.

Cheers!

the two VPs let go, however, had as far as i can remember no experience with RPGs until they were made head of their respective divisions. they were brought in by Hasbro... maybe it was a move on Hasbro's part to get rid of them and now they can.

 

[eyebeams]

What's unfortunate is that people thought I was *pleased* at this state of affairs. I'm not -- and I'm not happy at this news. People I count as friends work at WotC, and at least one of them was affected by recent events.

What amazes me as that even now, in the face of this, some will continue to think that things are just gangbusters. Me, I would have preferred supportive consumers who knew the score, bought things accordingly and kept my friends working.

 

[SBMC]

Yes, I've looked very closely at the press releases, SEC fiilings, and lawsuits related to many companies. For example, I made a some nice money short selling eToys stock all the way to zero. I have a good idea of what I'm talking about.

I don’t mean to perhaps discount your capabilities – but the fact that you made a good decision on a stock deal (or series there of) does not make anyone an expert at anything. Some top notch Portfolio Managers have made some very stupid Mistakes in their careers; does that make them an armature?

If you're interested in an extended analysis I wrote on the topic of one publicly trading company and their financial statements (a company that was planning to acquire three major game distributors some years back), look up an article I wrote on Pyramid entitled "Due Diligence." (The deal subsequently fell through, and the would-be acquirer's stock did indeed go in the toilet as I predicted it would, and has never recovered.)

It sounds like you are a Financial Analyst, Portfolio Manager? CFA perhaps? I have not read this yet however again; making a “good call” does not qualify anyone to be an expert on anything. Do it 25 times in a row…well then that’s another story – but then again it means you can pick them based upon data available; not the context of that data. The data you had may have very well made it blatant what the most likely outcome would be (as it is with many failed acquisitions or mergers); maybe not.

I stand by my original point. Companies describe their performance by many measures, not simply gross sales or gross profits. It is not wise to read too much into a single performance measure.

Yes they Describe their performance in many ways; and there are many ways to measure it. However, regardless, the bottom line is where it ends up. Every one of those measures is shown there; good or bad. If a description is made that does not match the bottom line; there is liability. Your own analysis above exemplifies that.

I disagree. Companies have totally legitimate reasons to provide performance metrics besides simple profit/loss/gross sales, and providing such metrics to investors or to the public at large is not evidence that a company is "going down."

I never said that – I was responding to one who had said that companies do indeed make false claims; I provided a description of why that would be so.

In some industries, profit is a very unreliable measure of the performance of a company (for example, REITs, where depreciation and amortization have a huge impact on the P&L sheet and distort reported and taxable earnings).

Ok – now you have told me something regarding yourself here with that statement and your delving directly into places that I deal with directly – at a high level mind you. Depreciation and Amortization (Note that in Accounting Terms these are NOT THE SAME) in no way shape or form distort the P&L. Amortization & Accretion is a natural progression of to a real value at a point in time not to mention required by GAAP and the SEC in most cases (especially in securities) and thus, like it or not, are valid impacts to the P&L. You also do not note exactly the function of a REIT is; how the specific investments of that REIT effect things. REITS are a complex issue; but none the less to make the claim that Amortization upsets income is nuts. If you want to state that it upsets how cash flows compare to income then so be it as that is true (unless that REIT realizes gains & losses a great deal).

As an example, Netflix reports their total subscribers. In the context of describing their subscriber growth, they might quite accurately say that they are doing better than ever (i.e., they have more subscribers than ever), even if in the same quarter they might have lost money due to the cost of increased subscriber acquisition (advertising, free trial periods, lowering of monthly subscription rates, offering of cheaper but more limited subscription plans, etc.).

Ya – I already said that. See Pizza Hut above.

Depending on how you view things (and the market exists because people take different points of view), you might care more about the subscriber growth figure (believing it is indicative of long term trends, and that ultimately more subscribers will translate into more bottom line profit growth), or you might care more about the profit today. It cuts both ways -- you might sell a stock if subscribers are down (possibly indicating a plateau in growth or market potential), even if profits are up at the same time.

Net Flix is a new an nearly unique company. I have no way of making an accurate statement regarding trends as they relate to growth, revenue, profits or anything else and thus I won’t. Unless you deal directly with this industry then you should not either. If say we were talking about Cars – there is tons of data readily available to start making assumptions and solid predictions about trends.

If the only thing you heard was "Netflix has more subscribers than ever before," and you leapt to the conclusion that the company had more revenues and more profit than ever before, you would be making a serious mistake.

Ya – I said that with the Pizza Hut example; the point I was making was that if someone made that stupid decision to do such a thing AND the company (say in your example Net Flix actually had FEWER subscribers) that investor would indeed have a basis for a suit. That does not mean it is valid or right; but that that is why firms are so cautions about what they release especially these days.

Perhaps you should. They're easily accessible on the internet. See if you can find anything concrete about D&D's performance in them. Here's a direct link to the SEC filings on Hasbro's investor site: http://phx.corporate-ir.net/phoenix.zhtml?c=68329&p=irol-sec

Every company has an investor site – if I have time I will dig in there and see what they have.

As others have noted, you can file suit against anyone for any reason. My contention is that D&D's performance is pretty much not material to the performance of Hasbro.

In everything I have read here (especially in this post) I did not hear that message at all. My points had nothing to do with the materiality of DnD to Hasbro.

If D&D revenues declined sharply or even vanished entirely, it would hardly register on Hasbro's P&L statements (and in any case it wouldn't be broken out in detail, so we wouldn't know). According to their last Annual Report, Hasbro's FY2004 revenues were nearly $3 billion. How much of that do you want to guess is D&D revenue?

No idea; No idea if WoTC is even broken out – probably rolled up into the main set of books based on what your saying here.

If this is true, then you don't need to guess how much of Hasbro's total revenue is provided by D&D...they'll have to report it to you. Just give 'em a call, and report back when they tell you. If you can, see if they will e-mail you a chart of PHB sales each year going back to WotC's purchase of the game from TSR.

Now you are just trying to use semantics to be plain silly – you and everyone else knows the context that I made that statement in.

Or, as I think is the case, they don't have to report trivial details about their financial results to you or anyone else outside the company -- whether it's how many player's handbooks sold, or how exactly many copies of Monopoly were returned as defective in the 1st quarter of 2005 (to pick a random statistic that they surely know, and certainly has some impact on their financial results, however tiny; but they have no obligation to tell the world at large).

To Note: They actually would have this information available and depending upon the corporation, the state they are in, etc. they may very well have to disclose certain material things. Regardless the data is kept in detail as there are documentation and retention requirements for accounting – and all of that is stated in numbers.

 

[Nikchick]

I don’t mean to perhaps discount your capabilities – but the fact that you made a good decision on a stock deal (or series there of) does not make anyone an expert at anything.

With all due respect, John Nephew is one of the sharpest, shrewdest, and most well-respected businessmen in gaming. I realize you feel he's treading on your personal area of expertise, but that does not discount the fact that he is indeed an expert businessman with a firm understanding of what he's posting about here. Trying to take him to task because he didn't note exactly what the fucntion of of a REIT is when he mentions REIT as a tangental example, or because he hasn't listed his entire personal investment history is silly and doesn't contribute to the discussion at hand whatsoever.

 

[Turjan]

Some top notch Portfolio Managers have made some very stupid Mistakes in their careers; does that make them an armature?

A weapon? An armor? The moving part of an electric device or a machine? Interesting metamorphosis !