Decline of RPG sales

[DaveMage]

Just to add to this, John Nephew is also one of the friendliest industry figures online, sharing information and experiences and hard data about how his business is doing (eg the costs of producing rpgs broken down in detail).

*AND* his company's namesake holds the world on his back...

Pretty impressive if you ask me.

 

[Nikchick]

I thought that my comments about that were light enough to make that point? if not I apologize to him (not you) if he found them insulting.

Well, you certainly told me.

I thought this was a message board where many people were engaged in conversation on this topic. I was merely sharing my own observations and opinions on the direction of the conversation, and surprise at your ignorance about who you were lecturing. Since you have so charmingly stated that you're specifically unwilling to apologize to me (not that I ever asked for an apology, but is there any reason to say you specifically won't apologize to someone other than to insult them?) I'll just leave you two boys to your pissing match.

 

[JohnNephew]

Thanks, everyone, for coming to my defense. Yer makin' me blush.

2. I don't concede based upon someone's resume'.

No, but it would help if you read the SEC documents of Hasbro, if you want to say anything useful about them.

If you did, then you would find for example that in the Form 10-K405 (annual report: http://ccbn.10kwizard.com/xml/download.php?repo=tenk&ipage=1370318&format=PDF) for the year 2000 -- the year that D&D 3rd Edition was launched, an event that was probably the biggest and most successful product launch in the history of the roleplaying game industry -- the term "Dungeons and Dragons" is found exactly once in the 286 page PDF document.

Given that the biggest product launch in the history of roleplaying didn't even get a mention in Hasbro's annual report for the year 2000 (the single mention of D&D is this sentence: "WIZARDS OF THE COAST trading card and roleplaying games include the popular MAGIC: THE GATHERING, DUNGEONS AND DRAGONS, POKEMON and MAJOR LEAGUE BASEBALL SHOWDOWN."), I think that my point, which you seem to be disputing, stands: D&D RPG's financial performance is pretty much not material in the big picture of Hasbro's finances, as it does not even warrant mention in their reports to shareholders.

I'd love for you to bring your expertise to bear on Hasbro's financial reports and enlighten us all as to what they tell you about the performance of D&D over time.

I stated the fact about a REIT as he used that as an example in fault;

You quibbled with my phrasing, and then agreed with my point, as though it were a different point. Specifically, you said:

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).

This was my point. GAAP earnings sometimes provide a deceptive view of how a company is doing, particularly for companies such as REITs (Real Estate Investment Trusts, for those who don't know all these abbreviations) that may have a lot of depreciation in their financials. Investors in REITS prefer to look at FFO (funds from operations), which is similar to but not the same as cash flow. In some industries people tend to look at EBITDA (earnings before interest, taxes, depreciation, and amortization). I'm not simply talking about cash flow, but a more general "how is the health of the business" question (which is harder question to answer for any company in any industry).

To repeat my original observation: "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)."

I'm sorry I didn't phrase this with the technical precision required to avert confusion at your "high level" of expertise. I should perhaps have said: "In some industries, profit as measured by earnings calculated under generally accepted accounting principles (GAAP) is a very unreliable indicator of the performance of a company. For example, Real Estate Investment Trusts have GAAP earnings that are strongly influenced by the certain financial characteristics of their industry, such as the depreciation of real property; such depreciation appears on the profit and loss portion of their financial statements, affecting GAAP earnings, but does not actually indicate cash expenditures. Consequently, a REIT that shows an operating loss or very small profit in its GAAP earnings could in fact be a very healthy business."

I can come up with lots of other examples of industries and specific companies where GAAP earnings may provide a misleading impression of fiscal health (painting either too rosy or too gloomy a picture). Of course, as you say, you can too. (So I'm not sure why you needed to make a big deal out of intentionally misreading the example I offhandedly gave...) Having some personal business experience in the game industry, I am especially familiar with the ways that true financial statements and claims in our field may be subject to misinterpretation by people who hear a given statement but don't have the raw numbers behind it (which, in this field, tends to be everyone except the individual making the statements or claims).

 

[SBMC]

Well, you certainly told me.

I thought this was a message board where many people were engaged in conversation on this topic. I was merely sharing my own observations and opinions on the direction of the conversation, and surprise at your ignorance about who you were lecturing. Since you have so charmingly stated that you're specifically unwilling to apologize to me (not that I ever asked for an apology, but is there any reason to say you specifically won't apologize to someone other than to insult them?) I'll just leave you two boys to your pissing match.

You were not engaged in a conversation; you were going after me for challenging someone else – as if it is your place to do so. Reading below he certainly does know how to take care of himself.

No, but it would help if you read the SEC documents of Hasbro, if you want to say anything useful about them.

If you did, then you would find for example that in the Form 10-K405 (annual report: http://ccbn.10kwizard.com/xml/download.php?repo=tenk&ipage=1370318&format=PDF) for the year 2000 -- the year that D&D 3rd Edition was launched, an event that was probably the biggest and most successful product launch in the history of the roleplaying game industry -- the term "Dungeons and Dragons" is found exactly once in the 286 page PDF document.

Given that the biggest product launch in the history of roleplaying didn't even get a mention in Hasbro's annual report for the year 2000 (the single mention of D&D is this sentence: "WIZARDS OF THE COAST trading card and roleplaying games include the popular MAGIC: THE GATHERING, DUNGEONS AND DRAGONS, POKEMON and MAJOR LEAGUE BASEBALL SHOWDOWN."), I think that my point, which you seem to be disputing, stands: D&D RPG's financial performance is pretty much not material in the big picture of Hasbro's finances, as it does not even warrant mention in their reports to shareholders.

I'd love for you to bring your expertise to bear on Hasbro's financial reports and enlighten us all as to what they tell you about the performance of D&D over time. .

I never said it did – if you thought I had then either my postings were unclear or you misunderstood. Reading all of my posts to this thread you will see that I agree with this; before I even saw the financials.

You quibbled with my phrasing, and then agreed with my point, as though it were a different point. Specifically, you said:

Originally Posted by SBMC
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). .

If that was your point I missed it. You referred to the P&L not cash flows; they are not one in the same.

This was my point. GAAP earnings sometimes provide a deceptive view of how a company is doing, particularly for companies such as REITs (Real Estate Investment Trusts, for those who don't know all these abbreviations) that may have a lot of depreciation in their financials. Investors in REITS prefer to look at FFO (funds from operations), which is similar to but not the same as cash flow.

What you state is correct – you never said this to begin with; your original point was unclear. Here you refer to the cash flows – which then makes your statements accurate.

In some industries people tend to look at EBITDA (earnings before interest, taxes, depreciation, and amortization). I'm not simply talking about cash flow, but a more general "how is the health of the business" question (which is harder question to answer for any company in any industry).

To repeat my original observation: "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)."

I'm sorry I didn't phrase this with the technical precision required to avert confusion at your "high level" of expertise. I should perhaps have said: "In some industries, profit as measured by earnings calculated under generally accepted accounting principles (GAAP) is a very unreliable indicator of the performance of a company. For example, Real Estate Investment Trusts have GAAP earnings that are strongly influenced by the certain financial characteristics of their industry, such as the depreciation of real property; such depreciation appears on the profit and loss portion of their financial statements, affecting GAAP earnings, but does not actually indicate cash expenditures. Consequently, a REIT that shows an operating loss or very small profit in its GAAP earnings could in fact be a very healthy business."

This is a bit wordy but does indeed clear things up as to the intent of your original statement.

I can come up with lots of other examples of industries and specific companies where GAAP earnings may provide a misleading impression of fiscal health (painting either too rosy or too gloomy a picture). Of course, as you say, you can too. (So I'm not sure why you needed to make a big deal out of intentionally misreading the example I offhandedly gave...) Having some personal business experience in the game industry, I am especially familiar with the ways that true financial statements and claims in our field may be subject to misinterpretation by people who hear a given statement but don't have the raw numbers behind it (which, in this field, tends to be everyone except the individual making the statements or claims).

I did not intentionally misread anything. I am guilty of perhaps failing to comprehend the “spirit” of your statement and taking it at pure face value (see my notes above).

I wish you had stated before what you stated here.

With all of the arguments that have occurred on this thread and some of the complete idiocy of some arguments I was in got by “dander up” and thus I came in guns blazing – to my own undoing. The folks previously that were talking about financials and such really had no idea what they were talking about – and I made assumptions going forward.

I stated “high level” because, to be quite honest, with what I read (be that good or bad, idiotic or not) I thought that you were yet another college freshman fresh out of financial accounting class who claims they made a great investment because they were so smart, etc, etc. I wanted to just shut it down and go home and get back to the conversation at hand.

Thus – I do indeed feel like a complete ass for responding in the fashion that I did, making assumptions regarding what I had read - and I am now off of my high horse. I could have challenged what you had stated without being so high and mighty about it.

My apologies. Especially since I agree with all of your statements now that I understand them.

 

[JohnNephew]

To Nik you wrote:

You were not engaged in a conversation; you were going after me for challenging someone else – as if it is your place to do so. Reading below he certainly does know how to take care of himself.

Nicole has known me for about 17 years now (going back to when we both worked at Lion Rampant), as a friend and colleague (and competitor!). I think she was trying to be helpful by identifying me, something that I had failed to do for myself in this thread (I don't suppose I could excuse myself by chalking it up to my world famous excessive modesty?).

With all of the arguments that have occurred on this thread and some of the complete idiocy of some arguments I was in got by “dander up” and thus I came in guns blazing – to my own undoing. The folks previously that were talking about financials and such really had no idea what they were talking about – and I made assumptions going forward.

Well, that's par for the course on the internet. The truth is, any discussion like this requires a compromise between rigor and accessibility. If you lean to the side of precision, you wind up with very complex statements with lots of qualifications, which can totally fail to communicate your point to anyone without experience and the technical vocabulary (and you can sound really stuffy to boot); if you simplify things and use common-usage meanings of words and ideas, you run the risk of oversimplification and running afoul of those who do have financial/business/accounting backgrounds. Sometimes you get to the end of a long argument with someone only to find that you were trying to say the same thing, but starting from different points on the language continuum between "layman" and "expert" in trying to communicate an idea.

My apologies. Especially since I agree with all of your statements now that I understand them.

No problem; all's well that ends well. I too apologize if I misunderstood or misrepresented your statements, or (what's even more common in these really long threads) confused what you said with what someone else said.

 

[Schwebs]

In reply to Diaglo about the experience of the two VPs -
Joe Hauck was involved with MtG in marketing positions for quite a while before becomming VP. He was also a long time D&D player. I do not believe he worked on D&D before getting the VP role though.
Cornelius Lee came from outside of WOTC/Hasbro less than 2 years ago with no game industry experience, but with Sr. level expereince in consumer product and entertainment marketing.

To me, these layoffs indicate a dissatisfaction with sales results and corporate strategy more than a simple effort to trim salaries. If the company still believed in the direction, the people setting the direction would still be there despite the salaries.

 

[diaglo]

In reply to Diaglo about the experience of the two VPs -
Joe Hauck was involved with MtG in marketing positions for quite a while before becomming VP. He was also a long time D&D player. I do not believe he worked on D&D before getting the VP role though.
Cornelius Lee came from outside of WOTC/Hasbro less than 2 years ago with no game industry experience, but with Sr. level expereince in consumer product and entertainment marketing.

Thanks. I knew there was more to the story just couldn't get the old noggin working.

 

[SBMC]

In reply to Diaglo about the experience of the two VPs -
Joe Hauck was involved with MtG in marketing positions for quite a while before becomming VP. He was also a long time D&D player. I do not believe he worked on D&D before getting the VP role though.
Cornelius Lee came from outside of WOTC/Hasbro less than 2 years ago with no game industry experience, but with Sr. level expereince in consumer product and entertainment marketing.

To me, these layoffs indicate a dissatisfaction with sales results and corporate strategy more than a simple effort to trim salaries. If the company still believed in the direction, the people setting the direction would still be there despite the salaries.

I agree; in many industries that deal volume sales - things get ugly for the managers at all levels if the numbers don’t turn up regardless of the experience levels of such managers. “Failure” is not handled lightly.

They could be turning to a new development strategy; such as using more contract work as opposed to full time employees (they probably do that a lot already; but perhaps now more so). Charles Ryan may find himself self employed doing almost the same job from home! (maybe not?).

I have no idea what the numbers are here – this is all opinion:

However think about this: Hasbro is really stuck here; D&D gives them more clout than they already had; it is a legend in and of itself - if they nixed D&D they would go down in history as the ones who destroyed a legacy – like when Pan Am air went down the tubes, or AT&T was split up (not that the dollar figures or social impact are as big as those were of course). Think about the “hatred” toward TSR for fouling DnD? People (I know I would) might even boycott Hasbro! (and I got plenty of kids to buy stuff for!)

D&D is one of those things, like Monopoly, that they will keep onboard for eternity because to stop will hurt the Hasbro Brand as a whole; they are staples of the gaming world (not just RPG) psyche. If they sell off WoTC (or just D&D) some competitor will pick it up; for the same reason – exposure and be the one who “saved” the D&D name.

And even if WoTC stopped altogether and D&D did go away, Mongoose, Atlas and others would pick up the slack and feed the demand…where there is demand a supplier will show up sooner or later if not already there.

So even if the worst happened there would be gaming out there for us to enjoy and partake in.

 

[SBMC]

To Nik you wrote:



Nicole has known me for about 17 years now (going back to when we both worked at Lion Rampant), as a friend and colleague (and competitor!). I think she was trying to be helpful by identifying me, something that I had failed to do for myself in this thread (I don't suppose I could excuse myself by chalking it up to my world famous excessive modesty?).



Well, that's par for the course on the internet. The truth is, any discussion like this requires a compromise between rigor and accessibility. If you lean to the side of precision, you wind up with very complex statements with lots of qualifications, which can totally fail to communicate your point to anyone without experience and the technical vocabulary (and you can sound really stuffy to boot); if you simplify things and use common-usage meanings of words and ideas, you run the risk of oversimplification and running afoul of those who do have financial/business/accounting backgrounds. Sometimes you get to the end of a long argument with someone only to find that you were trying to say the same thing, but starting from different points on the language continuum between "layman" and "expert" in trying to communicate an idea.



No problem; all's well that ends well. I too apologize if I misunderstood or misrepresented your statements, or (what's even more common in these really long threads) confused what you said with what someone else said.

Thanks for tolerating an old fart (well I am not that old; but I am a fart at times!)

 

[Hussar]

*raises hand through the dust*

Belen, just a question. You mentioned some time back about not seeing many younger players coming out to demos. What do you consider a "younger player"? To me, anyone under the age of about 18 would qualify. I've mentioned before about seeing about 30% of the gamers I deal with online that would fit into this category. Certainly a lot more than the two or three that you mention. I'm wondering if we're talking about the same thing.