D&D 5E How do they generate revenue?

[aurance]

Hi guys. I haven't posted in a super long time. But just curious...

With the slower schedule of D&D 5e releases, does anyone know how the revenue stream is for this edition compared to the previous sales models? How is it maintained? Is it a net positive or is the D&D budget being bolstered by other WotC products?

 

[happyhermit]

According to a Verge article 2016 was the most profitable year ever for Wotc D&D and 2017 is looking to surpass. Expanding playerbase, adoption of new media, event based release cycle, curated release schedule with each book selling many copies and multiple print runs.

https://www.theverge.com/2017/11/16...-roleplay-rpgs-critical-role-streaming-gaming

 

[Oofta]

Various people have posted amazon sales, apparently the core books are still selling quite well. With a relatively small staff, they don't have a lot of overhead so they don't need to crank out a book a month.

Slightly different business model, but as [MENTION=6834463]happyhermit[/MENTION] pointed out, they're making record profits so it seems to be working.

 

[Dausuul]

It's quite possible the top-line revenue is lower than 3E or 4E; but profits are higher because their staff is about one-sixth the size it used to be (not an exaggeration, they used to have about 100 people and now they're around 15). Those layoffs were brutal - for a while it was a grim joke on these boards that WotC celebrated Christmas every year by firing a bunch of people - and it sucks for everyone who was let go, but they left 5E in a strong position. Wizards can take its time figuring out how to move forward, and tailor their release schedule to sustain the hobby rather than to meet the next month's payroll.

 

[aurance]

Okay - so basically fewer staff plus selling more per title. Makes sense.

 

[Gadget]

I don't know that they ever had 100 people working just on D&D? But it is true that they have kept the staff small and lean for 5e and done a lot more market research, targeted social media campaigns and things of that nature. By going slowly and steadily they have concentrated on making each product they do release appeal to and sell to the widest margin of consumers. The PHB (and presumably DMG & MM) are still selling in huge numbers. They are on record as saying that they are approaching the numbers of the early 80's apex of the hobby. They also have a licensing department that is focusing on licensing D&D and D&D properties to other companies for specific products, that brings in some revenue. Also, with third parties who choose to sell through the online store, I think they get a small percentage out of each sale.

In addition, I think a confluence of events in the online and business world have combined to help D&D. WOTC is now sponsoring Twitch streaming events, which are very popular and bringing many into the hobby. There is a ton of free publicity and marketing for all the youtube and streaming D&D stuff out there that is, by all accounts, drawing people into the hobby. All this combines to make D&D the most successful it has been in many years (though I have not seen the raw numbers of course).

 

[FrogReaver]

I imagine a slower release schedule also bolsters the sales of each given book. It's easier to go ahead and buy the book that's out now if you know it's going to be quite a while till the next new material. If new material comes really quickly then most people will start to only buy the material that really interests them.

Having a slower releases schedule with fewer player options also is more inviting to newer players which is honestly the best way to scale revenue IMO. More people buying your product is a better model for most things than fewer people buying more of your products.

5e has hit a lot of good points for that. I'm fairly certain many 4e players have made the switch to 5e. A lot of old school players have made the switch to 5e. Pathfinder offers big competition to 3.5e players but enough of them either switched to 5e or play it now as well. Then to top it off adventure league gives d&d 5e nice exposure and somehow RPG streaming has became very popular which is helping bring in many new players to d&d.

All in all I think they really thought out their business model this time around.

 

[Parmandur]

Streaming shows aren't even just advertising, they are potential revenue streams as well: hence why WotC hosts 50 streaming shows now, rather than two last year.

Licencees are also a revenue source: any video game or product you see paid WotC to use the property.

 

[cbwjm]

I'd imagine that the DMs Guild is providing a small but steady revenue stream which supplements the book sales.

The signature of champions.

 

[Parmandur]

It's quite possible the top-line revenue is lower than 3E or 4E; but profits are higher because their staff is about one-sixth the size it used to be (not an exaggeration, they used to have about 100 people and now they're around 15). Those layoffs were brutal - for a while it was a grim joke on these boards that WotC celebrated Christmas every year by firing a bunch of people - and it sucks for everyone who was let go, but they left 5E in a strong position. Wizards can take its time figuring out how to move forward, and tailor their release schedule to sustain the hobby rather than to meet the next month's payroll.

You are right, but the way the books are selling suggest that the top-line revenue may even still be higher, since the core books have outsold the combine lifetime sales of 3.x so far, and are continuing briskly.