Roll for Combat reveals the terms of the "sweetheart deal" offered to 3pp

[J.Quondam]

I don’t think they were born yesterday. They want to keep more of their own money. I don’t think that’s stupid. Neither do I think it’s something that’s intrinsically good for the hobby or somehow better than WotC having some of it. They’re all capability entrepreneurs.

It's. Not. Their. Own. Money.
Stop saying this, please. This phrasing suggests that the OGL1.0 is somehow equivalent to theft or embezzlement or something. Obviously that is wrong, and suggesting it is not helpful.

WotC is trying to re-gate a few bits of IP that they've had out there for 20+ years, even as they have managed to keep massive amounts of other premium IP neatly cordoned off by regular IP law-- and to the entire industry's satisfaction, to boot. There's zero evidence that they've ever lost a single penny, or that they'd stand to gain much. And there's a pretty fair argument that the cost of having that IP out there all this time has more than been made up for by the 3pps and fans who have helped keep the "D&D lifestyle brand" vigorous enough to monetize today.

 

[mamba]

So substantial amounts of advertising and getting your product in front of millions of people… for free… below $750,000 and only paying one sixth on revenues over that…

not free, see the 15% over 750k part... Also limited to 2 years, unlike the 15%. This is an awful deal, but I guess you would have taken it, says more about you than the quality of the offer...

 

[mamba]

If you are substantially over the $750k mark then it may not be worthwhile. If you are under then the advertising opportunity is golden.

They only offered it to ones making more / the top 10 or so....

 

[Haplo781]

not free, see the 15% over 750k part... Also limited to 2 years, unlike the 15%. This is an awful deal, but I guess you would have taken it, says more about you than the quality of the offer...

The entire contract was limited to 2 years, including the 15%.

 

[mamba]

The entire contract was limited to 2 years, including the 15%.

So it goes up to 25% after? That is even worse..

Here are $100 now, in the next two years you will pay me $15 each and in every following year you pay me $25, deal ? Not sure why you are hesitating

 

[Haplo781]

So it goes up to 25% after? That is even worse..

Here are $100 now, in the next two years you will pay me $15 each and in every following year you pay me $25, deal ? Not sure why you are hesitating

Wizards could offer to re-up, but I'm sure by that point they'd have little incentive to do so.

 

[J.Quondam]

So it goes up to 25% after? That is even worse..

Nah, It just means the contract ends. It could be renewed at 15%. Or at 25%. Or withdrawn entirely, thereby killing off the product at WotC's whim.
See? It's all cool!

 

[Haplo781]

Nah, It just means the contract ends. It could be renewed at 15%. Or at 25%. Or withdrawn entirely, thereby killing off the product at WotC's whim.
See? It's all cool!

Wow! You'd have to be some kind of moron to turn that down!

 

[Maxperson]

Also people are fundamentally misunderstanding/misrepresenting the maths…

$750,000 revenue annually = $0 commission 0%
$800,000 revenue = $7,500 commission 0.9%
$1,000,000 revenue = $37,500 commission 3.75%
$1,500,000 revenue = $112,500 commission 7.5%

THIS is the misrepresentation.

750000-80000 = 15% of revenue paid to WotC which means they make nothing on that 50k.
The same with the 1 million and 1.5 million numbers.

There's no point in a 3PP ever going above 750k since at that point they are no longer working for themselves but are basically working to give all of their profits to WotC.

It's not like 750k makes you a lot, either. If their margin is 15%(and I've heard it's closer to 10%), then they are only making $112,500 before taxes. So they make $112,500 for the first 750k, and $0 for the next 750k. Not a good choice to make.

 

[Jer]

Nah, It just means the contract ends. It could be renewed at 15%. Or at 25%. Or withdrawn entirely, thereby killing off the product at WotC's whim.

That's the thing about all of this. Everything they've proposed is at their whim. There are no checks in place to ensure that they won't just change their mind tomorrow and end your business.

And what's worse is I'm sure that there are guys at Wizards are thinking "two years is a really good deal - why that's 8 whole fiscal quarters! Who plans THAT far ahead?" and would be shocked to discover that some folks running small business have to think carefully about what will be going on years from now and can't just focus on impressing shareholders with this quarter's numbers.