Gaming industry economics, essay discussion, HELP!

[Umbran]

Absolutely. And a charismatic leader who could convince rpg companies to increase their dues and fees to fund these projects wouldn't hurt either.

The RPG companies need to have the excess funds. You're correct in noting that acting collectively could help close the gap.

Especially for GAMA, though, this sounds a little like trying to teach your grandmother to suck eggs. We're talking as if they've never thought of such a thing before, and how dumb they must be! The other alternative is that perhaps they're bright, and know their business, and maybe the money and/or cooperation isn't there.

This is absolutely not the case. Derivatives are designed to hedge against variable future outcomes, but as for turning a profit, it's highly speculative and exceptionally risky.

It was a joke. This is absolutely not *supposed* to be the case, with ethical financiers. Recent history being what it is, however....

But we can't assume that all businessmen are created equal. Companies are rarely victims of circumstance. More often companies are victims of the people controlling the operations.

Nor can we assume that just because they aren't doing stellar business, that these folks are somehow idiots who cannot see the plain and simple ways to do better.

The question is, are the people running these RPG companies the best people for the job, or are most of them excellent game designers without any real practical business education? It's hard to say, because as we all know, few are public. Without a sound financial analysis we may never know the answers.

We can get a fair approximation, out of history. It isn't like the situation is new, you know. The RPG industry has been marginal basically since it began, decades ago. You may suggest that the industry has always been filled with incompetents if you want.

I would prefer to assume that the folks actually doing the business, at fairly successful companies (like WotC, Paizo, Steve Jackson Games, and some others), actually have significantly more knowledge about what's possible in their realms than we duffers out here, and that if it were reasonable for them to do what you suggest, they'd already have done it.

 

[OnyxPharaoh]

The other alternative is that perhaps they're bright, and know their business, and maybe the money and/or cooperation isn't there.

This is probably a more likely scenario.

Nor can we assume that just because they aren't doing stellar business, that these folks are somehow idiots who cannot see the plain and simple ways to do better.

Also very true.

You may suggest that the industry has always been filled with incompetents if you want.

It may sound otherwise but I wouldn't suggest that. I might suggest that the industry has more people innovating games (a great thing by the way) and not enough people innovating their business models.

The truth is I have the highest possible respect for game designers. I've always been a gamer and will likely spend my declining years playing D&D in some retirement home somewhere.

I would prefer to assume that the folks actually doing the business, at fairly successful companies (like WotC, Paizo, Steve Jackson Games, and some others), actually have significantly more knowledge about what's possible in their realms than we duffers out here, and that if it were reasonable for them to do what you suggest, they'd already have done it.

I have to say yes and no. I want to believe that all that can has been done. But at the same time I know how easy it is to get stuck in this rut of 'business as usual'. You focus on the product and not the infrastructrue. Sometimes we get so fixed in a groove that we forget how to operate outside of it.

Of course I am very biased when it comes to my analysis of the RPG industry. The truth is I love this industry so much that I want to see it grow and thrive at all costs. I'm sure a part of me has to believe that something can be done to drive this industry to new prosperity.

Also, I think Paizo and Steve Jackson Games are two of the industry's greatest success stories. But I hate listing WOTC among the 'successful' roleplaying companies. I say this only because TSR collapsed financially and for all intents and purposes would now likely be defunct had WOTC not purchased the company. And when Hasbro purchsed WOTC it was for their multimillion dollar Pokemon' CCG rather than their line of RPGs.

Personally I like to think of D&D in two lights. The first is that it served as the catalyst for this great hobby. The second, is that it has had an incredible run of luck in its lifetime. But that is strictly my opinion.

 

[invokethehojo]

A few secondary concerns:


2) The best point buried deep upthread is that you have to have a line of products to be financially successful. Or, more generally, you have to be able to produce something "far" into the future. The upfront costs of both time and money are too large for there not to be a long-run payoff even for the most dedicated hobbyists.

I imagine this was the issue for many of the d20 companies in the early 2000s; they started with their best idea (highest value product) but didn't continue to produce good products after that.

I'm breaking into the industry and this is one of my chief concerns.

As I've worked on my project I've come to realize that what looks like my biggest barrier is this: if I'm releasing my own RPG, I have to have new products that live up to the quality of my initial rule book to keep generating money, but I can't sell customers those products without them buying the rulebook first. It makes managing your production resources hard to do, having to plan several moves ahead, allocating money you won't be sure you get a return on till it's too late.


My family has a small concrete business, which is going the way of the dinosaur. I have always wanted to go into the RPG business, but never thought it was that profitable. When I saw that my families business was not a viable option for my future I took a harder look at it. Sure, the chances of me making a full time living off it are not high, but when compared to other business ideas I was interested in it required much less start up cost.

I don't see many people mentioning the upsides to this industry, specifically how easy it is to get into. The OGL drastically opened up the market to small upstarts. The subsequent fracturing of the D20 system (from just D&D to many others like Paizo and Green Ronin) expanded the market quite a bit. Combine that with the constant evolution and innovation, usually in favor of the little guy.

Try being a smaller-end concrete producer in this economy, where: your customers (small time contractors) almost never have any business sense and don't/can't pay their bills, big time competitors can sell their product for cost in a small market area to squeeze out the little guy, oil dependency and govt regulations make costs of materials skyrocket, and your subject to unrelenting labor union policies. There are no options, other than to hold out until the economy improves, then sell and move on.

The RPG industry looks pretty good to someone like me: an educated and loyal customer base, multiple ways to print books for lower costs then ever before, digital distribution via the internet, evolving methods of producing a product in cheaper ways, the ability to do all this from your home and with very little staff or overhead. Sure, I could buy a Subway franchise and have a much better chance of making a living off of it... but I gotta pump in $100,000 up front. For $10,000 I can start my own RPG company in my basement, and if I only sell half my very small initial print run, I can go out of business short around $5,000, the cost of a new ATV. Do the same thing online with no print run, and you can cut those figures by 75%. With a little luck and business acumen I can turn a few grand into becoming a published author, entrepreneur and game designer. And if it fails, well I tried my dream, and my friends and I at least have an RPG we are totally happy with and never have to look up rules clarifications for.

What a great industry.

 

[Longtooth Studios]

I'm not sure how they supplant WOTC, or even erode its revenues sufficiently to reduce profitability to zero. Just my two cents', but I think WOTC would have to mess up in some spectacular fashion to lose its dominance, and with it, their profits. (Much like TSR did for a time) If that ever happens, I don't see the OGL as the cause, but their own mistakes.

I have always been very surprised by the OGL. It allowed me to buy the central rules and then completely stop supporting the company that created them (not that I did), while still spending my monthly allotment of "gaming money." I figured that they were running the risk of being targeted by some form of antitrust suit or something.

Even though I don't fully understand what went on behind that decision, I am still thankful for it. It placed a very strong rule-set of the biggest TTRPG in the world into the hands of the fans, and has allowed that rule-set to survive it's attempted assassination.

I would love to know who championed the idea during that meeting at WOTC. Thank you!

The fact is though that the breathing room at the top has become a bit crowded as of late. Many more of us would still be spending our money with the d&d brand had they not given the ability to produce 3.x content to someone else.