D&D 5E How much money is D&D 5e actually making?

[Benjamin Olson]

Um, note: There's not just manufacturing/printing costs. There's a distributor, a wholesaler, and a retailer in the typical physical book sales chain. If you buy through Amazon, you basically cut out the end retailer.

Some quick Google work tells me that for a typical hardcover book that goes for $30, the publisher gets maybe $6. The profit margin there is something like 40%.



Similar google work for e-books says that for a $15 e-book, the publisher gets somewhat over $7, with a profit margin of 75% or so.

Mind you, D&D Beyond isn't a typical e-book sale, so we may not be able to easily say how the numbers work out there.

Above numbers from varous articles int he past decade. Your searches may vary.

All fair points, though much of their sales even of physical copies are through atypical distribution (I'm guessing the local game shop doesn't negotiate prices the way Barnes and Noble does). The profit margin is probably pretty thin on Amazon, it was just the easiest place to get a sense of sales figures.

In any case the basic point is that they have several books that are continuous bestsellers with little risk and very limited ongoing development costs, the dream of every publisher. When they print another fifty thousand copies of the PHB they know they will sell, and won't have to be discounted.

The same is obviously not true of campaign books, at least not on remotely the same scale since it is usually one bought per group and interest somewhat flags off over time. Probably why they come out with a somewhat limited number per year versus other editions to heavily promote. But those are also help to market the overall game.

 

[Zardnaar]

D&D might only make 10 million or so a year off books.

Might not even be that.

All fair points, though much of their sales even of physical copies are through atypical distribution (I'm guessing the local game shop doesn't negotiate prices the way Barnes and Noble does). The profit margin is probably pretty thin on Amazon, it was just the easiest place to get a sense of sales figures.

In any case the basic point is that they have several books that are continuous bestsellers with little risk and very limited ongoing development costs, the dream of every publisher. When they print another fifty thousand copies of the PHB they know they will sell, and won't have to be discounted.

The same is obviously not true of campaign books, at least not on remotely the same scale since it is usually one bought per group and interest somewhat flags off over time. Probably why they come out with a somewhat limited number per year versus other editions to heavily promote. But those are also help to market the overall game.

Sean K Reynolds wrote an article explaining the economics of books and Umbran put a post above saying something similar.

The publisher only gets a small % of the cover price. Then they have to pay expenses it of that.

Even a D&D game selling million won't get that much unless it has microtransactions.

 

[Benjamin Olson]

D&D might only make 10 million or so a year off books.

Might not even be that.

Still better than what the game stores make. There's one where I play every week, they provide free snacks and I don't think most people in my group have ever purchased anything.

In any case, $10 million on books isn't so bad when the permanent D&D staff is only a couple dozen people, including those working on other revenue streams like licensing minis, paints, and periphery products, some of which must be pretty dang profitable (the character sheet pack is a suggested retail $9.95 product that is 24 sheets of paper in a folder!).

 

[Benjamin Olson]

Sean K Reynolds wrote an article explaining the economics of books and Umbran put a post above saying something similar.

The publisher only gets a small % of the cover price. Then they have to pay expenses it of that.

Even a D&D game selling million won't get that much unless it has microtransactions.

Sure. But once again a lot of that is from products where there is large volume, little further development costs, and predictable sales, which is different than the overwhelming majority of all books published, which make little or no profit at substantial risk. The fact that they do come out with a new edition keeps it from being as safe a bet as established children's books (for which people not only purchase the same ones for decades and may well actually prefer the exact same formatting they remember from their own childhoods over anything new that would require further work).

I will concede the point that profit margins are mostly low, and thought I already had in the quoted post, in fact, perhaps I was unclear. Likely it just got lost in my discussion of ways the economics of D&D books are somewhat different than most publishing. Another example is that they have the DMs guild, where I believe they take 25% percent of the proceeds on the ebooks they don't actually have to invest in creating, I may be misremembering. But yes, they make a slim cut on Amazon and other online and bookstore sales. Game Store sales and D&D Beyond may run differently, I suspect they are more profitable because WotC has an atypically strong bargaining position there. In conclusion, on most of their profit margins; you are right and I am wrong. Maybe that is just to alien a thing for someone on the internet to say fo it to register, or maybe I was unclear. Sorry.

But what do you mean by "microtransactions"? Unless you are just talking about sales of character options without the books through D&D beyond and such (which most players I know don't really do, your mileage may vary) I don't know of any D&D microtransactions.

 

[Zardnaar]

Sure. But once again a lot of that is from products where there is large volume, little further development costs, and predictable sales, which is different than the overwhelming majority of all books published, which make little or no profit at substantial risk. The fact that they do come out with a new edition keeps it from being as safe a bet as established children's books (for which people not only purchase the same ones for decades and may well actually prefer the exact same formatting they remember from their own childhoods over anything new that would require further work).

I will concede the point that profit margins are mostly low, and thought I already had in the quoted post, in fact, perhaps I was unclear. Likely it just got lost in my discussion of ways the economics of D&D books are somewhat different than most publishing. Another example is that they have the DMs guild, where I believe they take 25% percent of the proceeds on the ebooks they don't actually have to invest in creating, I may be misremembering. But yes, they make a slim cut on Amazon and other online and bookstore sales. Gamestore sales and D&D Beyond may run differently. I was wrong; you are right.

But what do you mean by "microtransactions"? Unless you are just talking about sales of character options without the books through D&D beyond and such (which most players I know don't really do, your mileage may vary) I don't know of any D&D microtransactions.

I was talking about a D&D game. If they made a AAA title and sold 10 million they could lose money on it. The developers not WotC.

Games are costing north of 100 million to develop, they only get a small % of game sales so they try to make money off microtransactions or subscriptions and DLC.

It's why were never gonna get a great AAA D&D game anytime to soon. It's basically financially impossible.

At best you'll get a smaller scale game that's good and that's probably being optimistic.

 

[Haffrung]

I can only assume that the strategy, this time around, is to have a larger, but 'shallower' fanbase. Not to flog as much revenue as possible out of a few devoted fans, but to sell a starter set or PH to 10 or 100 or 1000 people who may or may not ever even read it, for each such new devoted fan they might have been able to acquire had they tried?

I think that's clearly WotC's strategy with 5E: grow the player-base dramatically, but expect far fewer purchases per player.

In the leadup to 5E Mearls talked a lot about what the Next surveys taught them. And one thing he mentioned was things that appeal to hardcore players don't appeal to casual players. And in fact, when it comes to splat-books and the whole culture of char op, that complexity and perceived barrier to entry actually turns casual players away.

So while I'd happily spend more money on WotC D&D books if they published more, it's probably smart business* of them to keep the release pace slow, the perceived barrier to entry low, and cultivate as wide a player-base as possible.

* Assuming that a big part of the business is the D&D brand itself, and keeping in widely popular and prominent.

 

[Zardnaar]

I want a bit more bloat in 5E but even if I was magically put in charge of WoTC there would only be one more setting book or one more Xanathars type book.

 

[Mistwell]

D&D 5e is very successful in terms of players - and the 5e PHB is selling better than probably anything since the classic red box in the early 80s. But I had a look round my table last night - six committed players (including me) and two at least dolphins and probably whales in there and realised something. None of us had bought much from WotC. We have two copies of the PHB between us. A copy each of the Stranger Things and Rick & Morty boxed sets. One copy of Xanathar's Guide to Everything. We'd borrowed a DMG. And ... that's it. Not that we're short of other stuff (minis, battle maps, terrain, one of the players is making a computerized gaming table, etc.) Just ... not much that has much to do with WotC.

This hasn't been true for past editions - indeed my 5e books are outnumbered by my 4e books, my Pathfinder books, my 3.5 books, my 3.0 books, my 2e books, my 1e books, and even my oD&D books. For that matter I have more 13th Age books than I do 5e (this might be an extreme example). And when I look at my main 4e group (now scattered to the winds) the other whale in that group only has slightly more books than I do (all the core 3) and she's also running a 5e campaign. She's also got a lot of Pathfinder books plus a shelf full of 4e.

And when I think about other groups the whales among us were in the habit of buying books for D&D - and WotC made money hand over fist with D&D Insider with its $10/month or $70/year subscription; that subscription was almost pure profit. Pathfinder has its adventure paths and APGs.

Is this "not a lot to buy for 5e and not in the habit of buying 5e books" normal for everyone else? And what does it say about how D&D is doing?

I think they have shifted from a model which depended on selling a lot of books to a few people, to a model of selling a few books to a lot of people.

It's a safer model because the loss of a customer risks far less than the prior model.

 

[Umbran]

Hasbro Gaming The Hasbro Gaming portfolio declined 12% in 2018 compared to 2017. Lower net revenues from PIE FACE and SPEAK OUT and certain other Hasbro Gaming products were partially offset by net revenue increases from DUNGEONS and DRAGONS...

Also interesting to see is the news of Hasbro prepping WOTC and DnD being prepped for sale by 2023

I'd want to see substantiation of that news, primarily because it makes little sense given 1) Hasbro is not in the habit of selling off properties. If they are unsuccessful, they sit on them, rather than sell them off, and 2) the note above - a property is growing, increasing revenue, helping to offset other losses... and you prep to sell it off? What?

 

[Giltonio_Santos]

Also interesting to see is the news of Hasbro prepping WOTC and DnD being prepped for sale by 2023

Where did you find that? I couldn't find anything about it, but I'm not used to reading this kind of report.