Decline of RPG sales

[SBMC]

Sure they can. If you look not too far back in time, you'll find a lot of dotcoms that claimed one "best year" after the next, right up until their liquidation in bankruptcy court. They found all kinds of ways to measure performance (number of free user accounts, number of ad click-throughs, total dollar value of products sold at a loss as a "temporary" effort to build market share, number of underpants stolen by the gnomes, etc.) that, in truth, had little bearing on the ultimate success of their business model. In some cases, the "better" they did, the more money they were losing.

Of course – ever seen or been part of one of the scores of lawsuits that follow; many of them based upon this very fact – the company said “best XYZ ever” and did not produce. Ever look at the pending legalities of a major corporation? Ever look at the pending legalities involving securities trading? If you did your statement would change.

I have – did it for years – do now. Your statement is true in that SOME companies do it and it is when they are typically falling down. But then again in those rare cases the companies really had little to loose – as the “company” was liable and they knew they were going down. NOW the PEOPLE are liable; very different story. I know since I was directly effected and still am by the regulatory and legal changes.

Someone quotes Charles as saying there are now (according to their polling studies) 4.6 million active D&D players, the highest in all the time they've done their polling. On that basis alone, he would be justified in calling it the best year ever for D&D.

I was not privy to the exact language used; I had been told it was not “best year ever for D&D” but instead “best year ever for WoTC” or something that indicated that it was related to sales and the like. If this is true; then your statement is also true.

In the odd chance that someone called him on it in a lawsuit (very unlikely, given the lack of any specific numbers and the round-off-error level of significance…

They would not call him – they would call Hasbro (it has deeper pockets). If say D&D had a bad year; fewer players per polling, low sales, lower revenue, etc. then he could be held liable (as in most financial things being negative not positive). Noting the COULD. As you noted above there could be one item he can claim that it is connected to.

After all, his audience for these remarks is not an investor conference, but a congregation of fans…

From a legal standpoint unless he is talking inside his own home or to a professional bound by confidentiality laws; it is irrelevant. Him saying this on the commuter train home so others can hear is just as bad as him saying it at an investor conference. Why? Because it is far more than what goes on in the investor conferences that effects stock price, price of debt, lines of credit etc. “word on the street” is the term used in investment circles.

Investing in Hasbro because D&D has had its "best year ever" would be like investing in my company because I got a bargain price on my plane flight to Gen Con this summer. Nice and all, but not really material to the bottom line.

People do it. Take a look at the financials again (I will note I never looked at Hasbro’s). You will note someplace the reserves for legalities and legality payouts. At the very least with the business they are in (kids) they have a healthy chunk in there.

Having said that, I know no specifics about worldwide sales of D&D, so I don't know how broadly Charles' claims should be interpreted...it just seems that they could be interpreted in multiple ways, without accusing him of being deceptive or dishonest.

To note I NEVER said he was being deceptive or dishonest; I was supporting him. All of my responses came from folks actually saying, to effect, that “…he, like all big company guys, is lying for some great evil purpose. You can believe me - I have a crystal ball!” (ByronD said it far better than I could (see his post above)).

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As an aside: Some stores that send data to C&GR are bookstores, and some are online retailers. This doesn't prove that the sample is representative of the industry at large or any segment thereof. C&GR gets cited simply because it's numerical data that is available in public to be seen and discussed.

There are other sources of data, but anything that comes from the private realm couldn't be independently verified even if someone felt comfortable in sharing it.

To support this, note to all; privately held companies are subject to very different disclosure requirements than a corporation that is publicly traded (as in on the NYSE, NASDAQ, AMEX, ext. Public companies have to report almost everything to everyone. Private companies do not – and they can lie without incurring the same legal risks as public companies; seeing as investors are unaffected (unless of course one of the co-holders of that private company is affected…doubtful scenario). They are still subject to advertising legalities however.

 

[Belen]

Sure they can. If you look not too far back in time, you'll find a lot of dotcoms that claimed one "best year" after the next, right up until their liquidation in bankruptcy court. They found all kinds of ways to measure performance (number of free user accounts, number of ad click-throughs, total dollar value of products sold at a loss as a "temporary" effort to build market share, number of underpants stolen by the gnomes, etc.) that, in truth, had little bearing on the ultimate success of their business model. In some cases, the "better" they did, the more money they were losing.

My sense is that WOTC is telling the truth. They have dramatically upgraded the delegate program, including adding a messload of new delegates. The program is not cheap. I have a feeling that Hasbro corporate would not increase marketing on this level if Wizards was seeing a decline.

 

[GVDammerung]

I apologise for my words. They were ill-considered.

I also think my stated reason for believing Charles is rather stupid. (The real reason is irrational, and also likely stupid).

However, when Charles does say that play of D&D is trending upwards, it does seem to indicate that Wizards are doing something right. Doesn't it?

Cheers!

Not a problem. I apologise, as well. I do, however, appreciate your sleuthing.

I agree with the idea that D&D is apparently trending upwards and that, to all appearances, Wotc seems to be doing well and thus doing something right. Two points -

(1) Given Wotc's then apparent position, I find myself frustrated that they don't push the envelope more. They would seem to have a cushion they could exploit. Of course, "playing it safe" may be the better business strategy.

(2) As a consumer, "the industry" _to me_ consists of all the companies that produce the products I see at my FLGS - regardless of the market size of any one company. If Wotc is doing well and then by their dominant market position the industry in absolute terms might be said to be doing well, this is as nothing to _my_ view of the industry as a consumer, if a number of the other d20 publishing are sucking wind. I see Wotc as one d20 producer among equals as I only look to product on the shelf; at that level market size is largely beside the point. Thus, even if Wotc has 80% of the RPG market and is going great guns but the other 20% can't catch a break, while the market is largely doing well, I see only that among all the d20 producers (of which Wotc is only one), things are not going well. This is the luxury of being a consumer and not answerable to the accountants. While it can be interesting or fun to play "fantasy RPG executive" at the end of the day, I am a consumer. My interest is in a lively market that sees Wotc and at least a half dozen or more d20 producres all doing well enough to keep me having to make hard decisions over where I will spend my gaming dollar.

Cheers

 

[GVDammerung]

I think you entirely missing my point. "another book on e.g., the sea, new/variant races, old products updated to the latest rules, the Forgotten Realms (again!)" is exactly what I'm suggesting a publisher not do. . . . You have to be very careful when you do something truly innovative that no one has ever seen before, because if there isn't a market for the product, you have to create it. . . . Big players in the industry can create the buzz that will sell a product, but they aren't the companies that are saying the market is shrinking. That product that you've never/seldom seen before better have a built in market, or it will likely fail. Without real advertising, relying on RPG net and ENWorld won't likely create a buzz that sells a product on any real scale. And that's what's ultimately being discussed in this thread: if you can't sell your product on a mid to large scale, you're going to be hurting, and the hurt will keep getting worse.

I stand corrected. I then agree with you - particularly your latter points. You articulate well what lies behind my frustration with Wotc. They have the cushion to innovate more as they seem to be doing big boxoffice. They also have the resources and market shaping power to "shape the battlefield" so that a more "risky" product stands a chance to catch fire. The smaller d20 publishers are really "playing with fire" when they innovate because they lack the cushion, resources and market shaping power.

Smaller d20 companies who innovate usually need to hedge their bets. I think Privateer Press is a good example. I consider the Iron Kingdoms rather innovatative in its seemless presentation of "steam punk" and traditional D&D. I think, however, Privateer could only do the job they did on IK because they hedged with a successful miniatures operation. Good for them, but other companies may not be able to replicate the feat as with Warhammer, D&D minis and Privateer the field for this type of hedge may be largely occupied. And what would IK's success be if IK had been produced with Wotc's much greater resources behind it? I suspect IK would be even more successful.

Wotc is then in a unique position to "lead the market/industry" in innovative design. It may not be in their business interest to always do so (giving them credit for Eberron) to the degree I would like to see but, I enjoy the luxury of being a consumer. I am not a RPG executive. My wants as a consumer, I would argue, are as legitimate in that vein as Wotc's business needs, particularly as I am not convinved the two are mutually exclusive.

 

[GVDammerung]

One factor that hasn't really been discussed is the "First Entrant/First Mover" factor.

That is, the single most accurate predictor of success of a given product or service is whether it is first in the market. Its not universally true- first movers can make mistakes just like anyone else- but it is a common factor with more successful companies than any other.

Part of this is because the first mover gets a head start over any potential competition. They are first in the consumers' minds (name brand recognition). They are the benchmark by which all others are measured in terms of quality. They get the first stab at grabbing market share.

Here, as much as any other product, as much as any other RPG, D&D is the first mover.

Very good point. They will not only enjoy the benefits on a sales or market share level but also in their ability to "shape the battlefield." Wotc leads, intentionally or unintentially. If they produce competent but otherwise unstartling designs, their status as first mover will have some tendency to shape the market toward acceptance of such as a norm.

 

[GVDammerung]

"Best year ever," without more, is not actionable as it lacks any foundation by which it can be judged. To be actionable a statement must be "material." Materiality requires context. "Best year ever," without more, lacks any context of any sort. A statement is not material if someone reads into it meaning that is not supported or encouraged by the statement itself upon a fair reading. Sarbanes-Oxley does not effect this materiality requirement.

Mr. Nephew is correct. "Best year ever" could mean anything and be based on any number of possible criteria. As such, without more, it is fatally vague and thus not actionable. Any suit brought on the basis of "best year ever," without more, would not survive summary judgment and arguably would not survive a "12b6 motion" to dismiss for failure to state a claim.

 

[JohnNephew]

Of course – ever seen or been part of one of the scores of lawsuits that follow; many of them based upon this very fact – the company said “best XYZ ever” and did not produce. Ever look at the pending legalities of a major corporation? Ever look at the pending legalities involving securities trading? If you did your statement would change.

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.

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.)

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.

I have – did it for years – do now. Your statement is true in that SOME companies do it and it is when they are typically falling down. But then again in those rare cases the companies really had little to loose – as the “company” was liable and they knew they were going down.

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." 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).

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.). 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.

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.

People do it. Take a look at the financials again (I will note I never looked at Hasbro’s).

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

They would not call him – they would call Hasbro (it has deeper pockets). If say D&D had a bad year; fewer players per polling, low sales, lower revenue, etc. then he could be held liable (as in most financial things being negative not positive). Noting the COULD.

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. 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?

Public companies have to report almost everything to everyone.

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.

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).

 

[buzz]

It really is easy to find a middle ground.
It is less easy to convince some to let go of the all or nothing POV (or perhaps I should call it a nothing or nothing POV).

I'd be helpful if people (myself included, likely) could be more explicit about what can only be anecdotal data, as that's pretty much all we have to go on given the lack of public info in this industry. E.g., instead of proclaiming "the industry is dying because of X", people would post "I dunno about the industry, but I know I've been buying less product because of X."*

That, and giving publishers, big or small, who contribute to the discussion the benefit of the doubt when they talk about their own company's experience... but keeping the salt shaker handy.

But, I guess Web fora are pertty much all about hyperbole.


*For the record, my gaming budget has remaind pretty steady for about four years now. If the industry is hurting, it ain't my fault.

 

[MerricB]

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).

Indeed, they have an obligation *not* to tell the world at large. In the very early days, Wizards reported on how many packs they made of Magic: the Gathering. This was quickly discontinued when they realised that it was giving their competitors way too much information.

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".

Cheers!

 

[jmucchiello]

"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".

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.