WotC Hasbro's CEO Reports OGL-Related D&D Beyond Cancellations Had Minimal Impact

Hasbro held a quarterly earnings call recently in which CEO Chris Cocks (who formerly ran WotC before being promoted) indicated that the OGL controversy had a "comparatively minor" impact on D&D's revenue due to D&D Beyond subscription cancellations. He also noted that D&D grew by 20% in 2022 (Magic: the Gathering revenues grew by an astonishing 40% in Quarter 4!)

WotC as a whole was up 22% in Q4 2022.

Lastly, on D&D, we misfired on updating our Open Gaming License, a key vehicle for creators to share or commercialize their D&D inspired content. Our best practice is to work collaboratively with our community, gather feedback, and build experiences that inspire players and creators alike - it's how we make our games among the best in the industry. We have since course corrected and are delivering a strong outcome for the community and game.

 

[Saracenus]

Seemingly yes, the typical "they must make profit" argument when they have a revenue of what, 6 billion?

Now where's my violin...

Then

With that kind of logic, you get "Yay, I made $100K this year! I can buy a yacht now!"

Revenue itself tells you little.

I got my accounting degree (well, its really a certificate, very little difference) one thing you learn about company financials is the Profit and Loss Statement tells you a story, but only a distinct part. but the real story is the Cash Flow Statement. Positive cash flow is king.

You can have a great year in revenue and control you expenses (The P&L story) but your Balance Sheet can impact "the bottom line" as it contains things like money owed to you and money you owe, plus all the leverage (see loans, stock, equity). If Cash Flow is negative, that is a big read flag on the health of the company. If cash flow stays negative year to year then very loud klaxons should be going off for investors.

Like a lot of people have said, Yearly and Quarterly reports for public companies are heavily regulated and misleading investors and public can have really bad consequences. Same for earnings calls. This stuff is like watching a Kabuki play and rarely do you see a deviation from the standard scripts.

I would be more worried if Kyle's PR tour or a Press Release was saying these things. I would also fire the PR folk who let that kind of public face to be presented. Public statements have to be carefully vetted (if a company is smart) because you do not want to be accused of trying to influence your stocks performance by what you say publicly (e.g. Elon Musk twitter statements about Tesla*).

Putting some moral judgement on an earnings call is not really productive. There are ethics involved there but morality has nothing to do with it. There is definitely legal consequences for them.

* Yes, I know he got acquitted recently on that, but while he was waiting for judgement he had to clear all twitter post about Tesla with the SEC before posting and he complied. Even he knew that was not something you don't take seriously. Stock manipulation, just don't do it.

 

[Ranger REG]

And some small 3rd-party publishers are fine with that. Especially if they just publish adventure modules, as extra income.

 

[Man in the Funny Hat]

Of course they had minimal impact! That's why you completely changed your tune about doing away with 1.0a. Right? All that no-impact cancellation was insignificant for your long-term plans of leveraging Beyond into your cash machine.

 

[Oofta]

I mean, that's hyperbole, but in the other direction lol.

What went on here would have required quite a few people at the management level, and a significant amount of sign-off, as well as involving the management of multiple departments, as well as possibly external law firms and the like.

And the pedantically correct but totally irrelevant response for this particular thread goes to .... wait for it .... Ruin Explorer!!!

Obviously nothing gets done in a corporation without there being a committee involved, probably multiple. It doesn't really change anything.

And don't you, like me, work in a corporate environment? So you know that's the case. Clueless is spot-on - clearly they were clueless, like 100% without any clues whatsoever, definitely not going to find out it was Col. Mustard in the Drawing Room with the Lead Pipe - but "a manager"? Nah this took a village, and you know it did. A village full of prime village idiots, sure, but a village nonetheless.

And let's be clear - this wasn't an "innocent error", not even by Kyle's account - Kyle was very clear that he was involved, but they wouldn't listen to him. For one specific example, he has said he kept pushing for "much higher" (I believe that's an accurate quote) thresholds (plural) for the proposed fees, and that they just wouldn't listen. It was wilfully not listening to people to push an idiotic and damaging idea. Part of being a half-decent manager is not doing stuff when you're clueless about it and listening to people saying "Uh boss...".

Did I say it was an "innocent error"? No. I said the decision was made by clueless management. Which ... yes ... probably includes multiple people.

It wasn't even a strongly-held idea or genuine idea in the end - and that makes it worse, not better! It's good because they gave up, and I give WotC a thumbs up for that. But I don't let them off just because they didn't go through with it! If your see your neighbour setting up a flammenwerfer to burn down a wasp nest in his back yard, and you talk him down from doing that, you remember that this dude was a maniac with a nutso idea, even when his wife brings you cookies to thank you for convincing her husband not to burn down the neighbourhood in order to destroy some pesky insects and promises he won't do it again.


I mean, what do you prefer - that they were willing to let off a nuke to that would have vapourized a significant fraction of the RPG industry, and damaged some of the rest, but like, the majority of the industry might have survived?

Does that sound better to you? Because that's a pretty accurate summary of the effects of deleting the OGL 1.0a and enforcing the OGL 1.1. The devastation would have been extensive. What percentage of companies going out of business for a completely unnecessary decision WotC clearly didn't even really mean (given the outcome), would be acceptable to you lol?

Instead of them being a Disney villain, you'd prefer they were compared to a sort of nuke-happy maniac? It's like "Oh they weren't trying to take over the industry, they were just willing to destroy and damage a large part of it!". Because that's fine right? What on earth!

They backed down because they were stupid and wrong. Maybe we stop trying to rewrite history to make out that it wasn't that bad?

Agreed. My point is that given how much WotC/D&D make, and that I'd imagine Beyond has significantly south of 1m subs (based on other subscription services registered members vs. subscribers), even losing half of them wouldn't really impact WotC overall that much - the vast majority of profits likely remains from books, merch, and so on. So we have no idea - 40k-50k actual cancellations over an issue on a sub service is pretty nuts though - that's the sort of numbers that make even a service with millions of subs immediately sit up and take note - because it's very hard to find an issue which makes people actually cancel! The vast majority of cancellations of any service are because people don't care/aren't using it, not because they care, but but are angry.

(The only subs I've cancelled out of "negative care" rather than "not using" in the last few years have been Netflix and Beyond - I was already unsub'd from WoW when Blizzard had their crisis or they'd be on the list too. And I'm pretty sure I'm more prone to cancelling than most!)

My point is that this wasn't a plan to squash 3PP. It could have easily been based on poor judgment, dismissing people who knew better. Various aspects of the 1.1 sounded like the grab-bag of ideas you'd get out of a committee. But I find it humorous that some of the same people claim that WOTC wanted to steal every idea from 3PP while simultaneously shutting down all 3PP. Like ... if you shut everyone down, who are you going to steal ideas from? I see no reason to believe there was ever a plan to shut down every 3PP, there's no business incentive to do so. There's no reason to believe that it was anything other than a bureaucratic attempt to stop a major competitor ala Pathfinder and protect the brand.

Unless of course you were in the actual meetings when these decisions were made? The problem I see is people claiming that WOTC is lying because they aren't affirming a narrative based on supposition and unfounded hearsay. Was it stupid? Yes. If they had gone forward with it would it have been bad? Yes. Are they outright lying (and, let's face it everybody stretches the truth now and then)? Not necessarily. There's no motivation for them to shut down every 3PP. The VTT was a little different, but again that could have been in large part ignorance.

Or maybe I'm wrong. Maybe they were cackling like a villain in a bad movie, plotting how they're going to somehow crush every other TTRPG in existence. But given Occam's Razor between that and corporate incompetence? I'd bet on incompetence.

 

[Faolyn]

And the pedantically correct but totally irrelevant response for this particular thread goes to .... wait for it .... Ruin Explorer!!!

Dude, you know that's going to get you a mod warning.

 

[LordEntrails]

Now fan projects that take DNDB material and give access to them... I do wonder about that.

I've wondered about the legality and ethics of those since day one. So since I personally did not feel comfortable skirting close to what I see as being the edge of piracy, if that line moves/moved it was not a concern to me. I've always used fully licensed material with my VTT, and one of the top 5 reasons I chose FG.

 

[Justice and Rule]

I've wondered about the legality and ethics of those since day one. So since I personally did not feel comfortable skirting close to what I see as being the edge of piracy, if that line moves/moved it was not a concern to me. I've always used fully licensed material with my VTT, and one of the top 5 reasons I chose FG.

See, I don't see it as piracy because, technically speaking, the person who uses it has to own that stuff. It's not like I could access stuff that I couldn't normally from my account. At the same time, scraping the website like that without permission feels incredibly fraught if someone is going to decide to get litigious, so that makes actually developing unlicensed versions of the system very difficult.

 

[LordEntrails]

See, I don't see it as piracy because, technically speaking, the person who uses it has to own that stuff. It's not like I could access stuff that I couldn't normally from my account. At the same time, scraping the website like that without permission feels incredibly fraught if someone is going to decide to get litigious, so that makes actually developing unlicensed versions of the system very difficult.

I was trying not to open that can of worms in this thread

 

[Justice and Rule]

My point is that this wasn't a plan to squash 3PP. It could have easily been based on poor judgment, dismissing people who knew better.

I mean, it could also be based in poor judgement but simply driven by greed and high profit expectations. I don't see why you are so dismissive of that idea and have to create a benign explanation for it.

Various aspects of the 1.1 sounded like the grab-bag of ideas you'd get out of a committee. But I find it humorous that some of the same people claim that WOTC wanted to steal every idea from 3PP while simultaneously shutting down all 3PP. Like ... if you shut everyone down, who are you going to steal ideas from? I see no reason to believe there was ever a plan to shut down every 3PP, there's no business incentive to do so. There's no reason to believe that it was anything other than a bureaucratic attempt to stop a major competitor ala Pathfinder and protect the brand.

I don't understand this defense. If you shut down 3PPs, you don't need to steal from anyone anymore because there's no one working in the same space that people can compare your product with.

Also it weakens your defense to say "It wasn't meant to destroy 3PPs" and then go around and say "Actually it was probably an attempt to stop this 3PP and also 'protect the brand'". Like, there's no reason to believe it had to be that specific given how low Wizards specifically set the bar on the royalties (and we know this because Brink has basically said as such in interviews).

Also also, "protecting the brand" is not some sort of magical defense against criticism and could be done just as maliciously as anything else. In fact, it doesn't preclude greed coming into the picture: if you want to hit high profit targets (like sextupling your profits), you might see competitors as being impediments and hurting your brand in the long run.

Unless of course you were in the actual meetings when these decisions were made? The problem I see is people claiming that WOTC is lying because they aren't affirming a narrative based on supposition and unfounded hearsay. Was it stupid? Yes. If they had gone forward with it would it have been bad? Yes. Are they outright lying (and, let's face it everybody stretches the truth now and then)? Not necessarily. There's no motivation for them to shut down every 3PP. The VTT was a little different, but again that could have been in large part ignorance.

I mean, there's really no reason to assume it's not an attempt to maximize profits given what we know about Wizards and how they view D&D right now. They need to go from $150M to $1B, so acting like these decisions aren't being taken in an effort to clear the field and make it as easy as possible to farm big profits seems to be way more biased than anything.

Honestly, there is plenty of motivation for them to control as much of what they view as their space as possible, and that can involve shutting down 3PPs or bringing them to heel under an agreement that is more beneficial to Wizards.

At this point, it would be more biased to simply ascribe this entirely to ignorance than simply them making a move to dominate what they view as their own market. There's no reason to give them the benefit of the doubt in the matter and all the reason in the world to think that they wanted to seize a whole lot of market so that they can become the $1B they told their investors they could be. This action was meant to be future-proofing for that target.

Or maybe I'm wrong. Maybe they were cackling like a villain in a bad movie, plotting how they're going to somehow crush every other TTRPG in existence. But given Occam's Razor between that and corporate incompetence? I'd bet on incompetence.

You don't need to be cartoonish to be malicious, nor does incompetence remove maliciousness from the equation.

And you can't really bring in Occam's Razor when you are simply removing profit motive entirely from the reasons as to why they would do these things (and you are). The simplest explanation is that they did this because they wanted to maximize their hold on the market, and that is really reflected in OGL 1.1, OGL 1.2, and their VTT policy.

 

[mamba]

They clearly assumed, by their internal projections, that this would increase their profits and thus it was necessary for WotC.

sorry, but ‘increased profits’ is not something that excuses the means you use to achieve it, so saying it was ‘necessary’ is wrong.