D&D 5E Greg Leeds talks about D&D

[Mistwell]

Revenue is...

You don't need to tell me what revenue is, but you should do your peers the courtesy of actually reading what you're replying to. He said net revenue. That first word, "net", has a lot of meaning. Net revenue is not the same as revenue. In fact, it's kinda unfortunate use of terms in finance as it tends to confuse people like you just got confused. I will say it again (since it's obvious from your reply you didn't read what you were replying to). "Net revenue" (which is not "revenue") is the money left from sales after you deduct the sales expenses and cost of the goods. Are you getting it now? It's not "profit" as it does not account for all possible expenses (like it does not count capital expenses) but it does account for most expenses (like cost of sales and cost of goods sold). It's what most people mean when they use the term "profit" in common parlance. Net revenue should not be confused with simply "revenue". He's definitely saying the books are making them more money than they cost - that's (in a nutshell) what positive net revenue means.

ICv2 was behind the previous interview, too where Leeds described sales as 'very, very strong'

The question is not what is necessarily happening now. At some point in the relatively near future, unless there's lots of growth in players of D&D, sales of the core 3 books must drop.

They've also said there is a lot of growth in players. Assuming they're not lying, that means the sales of the core 3 do not have to drop. And so far, all reported numbers from objective sources confirm that.

 

[Mistwell]

What the heck are you talking about?

Your statement that you should work on a new edition when the prior one is doing well.

Someone implied...

No, you inferred that. Your post, which did not say anything about 4e, was just a general statement. So I made a general reply. That you were back-door edition warring isn't really relevant. Either your statement stands on it's own as a general statement, or it does not.

... that it didn't make sense that 4e was doing fine in 2011 since they had already started working on 5e by that time. I was saying (paraphrasing here) that you don't wait until your product tanks before starting to work on its replacement (if you can help it).

What you said is, "The best time to work on a replacement product is when your current product is still doing well." Which isn't a helpful comment as by definition then there IS no time when it would be a bad idea to work on the replacement since you'd want to work on a replacement when the current line is doing either good or poorly.

I never said you have to start working on the replacement product the minute the current product is released. Only that you should start working on it before the current product tanks.

No, that's not what you said though maybe that's what you were thinking. What you said was, "The best time to work on a replacement product is when your current product is still doing well." It's still doing well the minute the current product is released, all the way through whatever point it's not doing well anymore.

So I agree with you that if it takes three years to delevop a replacement product and you don't think you will need it for ten or twenty years then now is not a good time to spend much resources on that replacement. Nothing I have said it incompatible with this.

I didn't say it was incompatible, just not helpful as it's way too broad a statement. By your standard there is virtually never a time when you should not be working on the replacement product. But that leads to a mentality of rapid edition cycling - if your R&D is being spent on the replacement, that means those same resources are not being applied to the current edition, which makes it sort of a self fulfilling prophecy. The current strategy is to try and run a long term edition (or as Greg Leeds says in this interview, to maintain a long tail). If it's working, then now would be a bad time to work on a replacement even if the current product is still doing well.

 

[Corpsetaker]

How on earth would you conjure up such a statistic? How many copies has this edition sold? That's the very minimum data point you need to make such an assertion. I strongly suspect that you do not have any such data, and are in position to be making such an assertion.

How on earth could I not?

How many copies of all the 3rd and 4th edition books have sold next to 5th edition? Let's say the 5th edition sold 100,00 and the 4th edition sold 50,000. Well the Martial 1 could sell 25,000 while the Arcane sells 40,000, while the primal sells 30,000.

You have a lot more material that was sold during the last editions than you do this one.

It's really not hard and you sit back and take a look overall.

Not to mention, look at how Amazon and it's cheap prices have influenced the sales as well.

If Amazon wasn't around to offer the books at crazy low prices how well do you think it would be doing? It's kind of one of those well since it's this cheap I might as well get it.

 

[Mistwell]

How on earth could I not?

How many copies of all the 3rd and 4th edition books have sold next to 5th edition? Let's say the 5th edition sold 100,00 and the 4th edition sold 50,000. Well the Martial 1 could sell 25,000 while the Arcane sells 40,000, while the primal sells 30,000.

You have a lot more material that was sold during the last editions than you do this one.

It's really not hard and you sit back and take a look overall.

Uh, Corpsetaker, that's bad logic. You're assuming numbers that you just don't have any evidence for, and you have one basic assumption behind it all that's flawed.

You're assuming selling 10 products will by definition sell more than 1 product, just by sheer quantity of products.

That's not a truism, and often false. The 10 products can sell fewer copies than the 1 product. In fact that's exactly what the phrase "Long Tail" was meant to speak to. That a single product can sell more in the long term than a series of burst sales that die off.

To use your example, let's say the 5th edition sold 1,100,000 and the 4th edition sold 500,000. Well the Martial 1 could sell 25,000 while the Arcane sells 40,000, while the primal sells 30,000. Those last three products? Almost meaningless for overall sales. Quantity of products doesn't necessarily have any correlation to quantity of total sales. In fact, a lot of people argue that increasing quantity of products often decreases total quantity of sales as the quantity of products spooks potential buyers from buying in the first place.

 

[robus]

If I look back 10 years ago, what would be a great store 10 years ago would be an average store today. And everything we do at Wizards of the Coast is to make the great store of today an average store of tomorrow. So that’s the evolution we’re seeing.​

I know what he's trying to say here - but a first glance it seems like they're actively bringing everyone down to mediocrity Perhaps "We're doing our best to disseminate the best practices of the top game stores so that everyone can have a great experience no matter which game store they visit."

 

[DEFCON 1]

It's really not hard and you sit back and take a look overall..

It's also not hard when you just pull random numbers out of your ass...

 

[Morrus]

How on earth could I not?

How many copies of all the 3rd and 4th edition books have sold next to 5th edition? Let's say the 5th edition sold 100,00 and the 4th edition sold 50,000. Well the Martial 1 could sell 25,000 while the Arcane sells 40,000, while the primal sells 30,000.

I'm really not interested in a conversation in which you just make up your own numbers to support your assertion.

 

[Warmaster Horus]

Businessman talks about business aspects of D&D (and Magic) in business terms. It's not really shocking - for the soul of D&D, if there is such a thing, you probably want a different thread.

Not saying it's shocking. Just not something I enjoy. Like sports shows that just talk about the money side of sports. Yeah, it has to exist but cheapens the experience I enjoy. IMHO.

 

[Parmandur]

Nice interview. One misapprehension in this thread: when Amazon or whoever sells a book at discount, that does not change what WOTC gets. Wizards sells the book, and the retailer sets a price they are comfortable with: the discount comes from Amazons' bottom line, not Wizards'.

 

[MwaO]

"Net revenue" (which is not "revenue") is the money left from sales after you deduct the sales expenses and cost of the goods. Are you getting it now? It's not "profit" as it does not account for all possible expenses (like it does not count capital expenses) but it does account for most expenses (like cost of sales and cost of goods sold). It's what most people mean when they use the term "profit" in common parlance. Net revenue should not be confused with simply "revenue". He's definitely saying the books are making them more money than they cost - that's (in a nutshell) what positive net revenue means.

You might want to reread what he actually said, not what you think he said...
"From a business perspective, revenue is up."(note that he doesn't say net)
"So you get more people buying fewer products for greater net revenue?"
"That is correct."(note that he doesn't say what he's using as the comparable nor does he say positive)

i.e. he agrees with the statement given to him, which can mean any number of things. Such as that's their intent rather than what is actually happening. He could be comparing this year to the year before 5e came out(which had basically no new product and no sales), etc...

They've also said there is a lot of growth in players. Assuming they're not lying, that means the sales of the core 3 do not have to drop. And so far, all reported numbers from objective sources confirm that.

Now normally, I wouldn't try to look at things that closely, but look again at this quote from the previous interview:
"Over-all our business is up significantly. I think anyone you talk to about what’s going on with Magic and D&D will tell you that we are having very, very strong sales."

i.e. he often makes really positive sounding statements and it very well may be positive, but you can't just assume it actually is positive. Because we have an objective instance of lousy sales where he somehow spun it to be positive.

 

[Dausuul]

How many copies of all the 3rd and 4th edition books have sold next to 5th edition? Let's say the 5th edition sold 100,000 and the 4th edition sold 50,000. Well the Martial 1 could sell 25,000 while the Arcane sells 40,000, while the primal sells 30,000.

No, let's say the 5th edition sold 100,000 and the 4th edition sold 50,000, while Martial I, Arcane, and Primal sold 10,000 each. See? I can pull numbers out of my rear end too. And my pulled-out numbers say 5E is selling 20% better than 4E did. (Now, if you'll excuse me, I'm going to go run for political office.)

But even assuming that more publications equals more sales, each book has a substantial overhead. You have to pay writers and editors and designers and marketers to create and advertise the thing. It has to sell enough copies of that individual book for the net revenue to cover the overhead, or it's a money-loser. There's a base number of copies you have to sell just to break even, and that number is not small.

 

[Mistwell]

You might want to reread what he actually said, not what you think he said...
"From a business perspective, revenue is up."(note that he doesn't say net)
"So you get more people buying fewer products for greater net revenue?"
"That is correct."(note that he doesn't say what he's using as the comparable nor does he say positive)

i.e. he agrees with the statement given to him, which can mean any number of things. Such as that's their intent rather than what is actually happening. He could be comparing this year to the year before 5e came out(which had basically no new product and no sales), etc...



Now normally, I wouldn't try to look at things that closely, but look again at this quote from the previous interview:
"Over-all our business is up significantly. I think anyone you talk to about what’s going on with Magic and D&D will tell you that we are having very, very strong sales."

i.e. he often makes really positive sounding statements and it very well may be positive, but you can't just assume it actually is positive. Because we have an objective instance of lousy sales where he somehow spun it to be positive.

Oh brother. Please...you're spinning. Badly. From my perspective, you look dead set to declare 5e isn't profitable no matter what facts are presented. OK then...you don't want to have an above-board discussion, we don't have to have one.

 

[Shasarak]

So external producers can do a better job than Wizards can?
That makes it sound harsh, but there are areas where we are very happy to collaborate with experts outside of Wizards of the Coast to provide the best fan experience. So in essence, I’d say a meek ‘yes.’

Well, at least it is official now.

 

[Reinhart]

Given that revenue is up I think it's pretty safe to assume that profit is up too. If D&D's revenue is up then the only way for it to be making less profit is if it's spending more per book. Given their skeleton crew vs. 4e's bloated roster, it's certainly unlikely they spent more on payroll for 5e. The fact that they relied on an American printer probably causes a significant increase in their production costs, but I doubt it's enough that it would counter-act the other cost-cutting measures. Past that, they've also increased the retail cost of their books and probably nothing holds them to printing future books in the US.

This means that they almost certainly made more per unit, and if they just sold orders roughly equal to 3e or 4e they're probably breaking a record. More importantly, ROI is going to be up, and hopefully now competitive with the other table-top game brands that Hasbro manages. Of course, don't hold your breath for production to increase.

Now all of this assumes that Leeds is being intellectually honest and comparing 2015 sales to 2008 and 2001 sales. Let's hope he's not comparing it to sales from 2014-2012, because then it's basically a vacuous statement. He's probably not being totally financially honest though, in that he's probably discounting the two and a half years of development costs where there was virtually no revenue for D&D. But that's the sort of thing no sane CEO would bring up in an interview.

 

[Corpsetaker]

Well I know corporate speech and spin when I see it because I see it everyday in meetings at my own job so I take it all with a grain of salt.

 

[MwaO]

Oh brother. Please...you're spinning. Badly. From my perspective, you look dead set to declare 5e isn't profitable no matter what facts are presented. OK then...you don't want to have an above-board discussion, we don't have to have one.

No, I'm not saying that at all. I'm just saying, there's no financial information about how well D&D is doing in this interview really and we have a previous interview with the same group where basically Greg Leeds flat out gave out misinformation about how well D&D was doing.

You view that as me spinning by pointing out obvious potentially truthful meanings to his statement, you're the one who has a deadset viewpoint...

 

[darjr]

No, I'm not saying that at all. I'm just saying, there's no financial information about how well D&D is doing in this interview really and we have a previous interview with the same group where basically Greg Leeds flat out gave out misinformation about how well D&D was doing.

You view that as me spinning by pointing out obvious potentially truthful meanings to his statement, you're the one who has a deadset viewpoint...

Wait, what? You mean the 'on a tear' thing? Sorry but that is the opposite of what I got out of that whole affair, other than nothing was proven either way. Though many within wotc were surprised at how well it was doing. I'd hardly call that misinformation.

 

[Corpsetaker]

It's really down to how much goes into a product and what your return is. It is possible to make more profit from a product without selling more than the previous product.

 

[Uchawi]

The majority of the discussion is just WOTC corporate selling points. There is no reference to comparisons between the rates of release for different editions and what the expected profit margins where.

I guess the other way to state is they will not increase the rate of products, because that would be a negative gain. So you wonder how many new players they are gaining each month. Either way if WOTC is happy then for those that enjoy the game it will be around for a while.

 

[Morrus]

Well I know corporate speech and spin when I see it because I see it everyday in meetings at my own job so I take it all with a grain of salt.

Out of curiosity - is there anything you like? You repeatedly spin everything about anything we discuss on this site into a negative. Do you have anything positive to say about anything?