How much would D&D cost?

[mmadsen]

Some more useful numbers from Buying D&D:

Charles Ryan last year, when he still worked for WOTC posted that their average hardback sold in the hundred of thousands. Be advised that retailers and distributors claim about 55%-60% of the retail price on the book. The printer and publisher get the reminder. IME WOTC collects around $9 on each $30 book, x 100,000 = $900,000. Not bad even if their developments costs are over $250,000 (my estimate) on each book (3-month development cycle I believe they use) and not including other overhead costs.​

You can see how RPGs might scale (or not), depending on development time/effort, size of print run, and sales vs. expected sales. A book's development is a fixed cost -- although a book with more/better development (writing, art, etc.) should sell more copies -- and its print run has to be more-or-less decided up-front, so, with all that operational leverage, profits can end up all over the map. Selling 10% fewer copies than you hoped might mean no profits, and selling 10% more might mean doubling your profits.

 

[Rothe]

If you honestly believe you can run the company (WotC) better than Hasbro, then you should be willing to offer a price more than the company is worth to Hasbro. If the private equity guys and I-bankers agree with you, you can get the money.

Certainly, you can offer them much more than it's worth. But an extraordinary claim that you can run the brand that much better is going to require extraordinary proof.

If you have a business track record that could get a VC, etc. to take notice, you would know how to find this info out or the people to hire to do so. Probably the guys who helped you in your last venture.

If you don't have a proven track record of taking a company and significantly increasing it's value, your business plan had better be rock solid and supported by numbers provided by professionals the VC's etc. trust.

 

[pawsplay]

I seem to recall TSR going into debt for millions, so twenty sounds low. I'm guessing $60 million. Then, you have to figure in the potential for using the well known brand for selling computer games and software; since that's an essentially unknowable figure, if I were Hasbro, I would double the price.

If I were Hasbro, I would ask $120 million, because it's essentially to valuable to me to sell. Conversely, I wouldn't pay more than $5 million, because I have a hard time imagining a small startup getting more than that much value out of it. If I were White Wolf, I might go $25 million, if I thought I could count on making another movie.

 

[Fifth Element]

Three times EBITDA seems a bit low, given the brand name. $30 million seems really high, on the other hand. I'd love to see some detailed financials, of course, but I have trouble thinking that Hasbro makes enough on D&D to value it that high.

 

[Fifth Element]

On the other hand, I just bothered to check Hasbro's financials, and I will say I didn't realize how profitable the company is. They clear over $200 million after tax annually. Don't know how much of a chunk D&D represents (it's pretty small), but that $30 million number doesn't seem so high now.

 

[Imruphel]

(snip) Then, you have to figure in the potential for using the well known brand for selling computer games and software; since that's an essentially unknowable figure, if I were Hasbro, I would double the price. (snip)

The problem is that those rights have already been sold... so the price has to be discounted.

Three times EBITDA seems a bit low, given the brand name. $30 million seems really high, on the other hand. I'd love to see some detailed financials, of course, but I have trouble thinking that Hasbro makes enough on D&D to value it that high.

But what value is the brand name? Without electronic rights you're limited to the RPG's earnings and I am sure that they are not that high. Three times is probably fair.

As for the impact of 4E, it would seem that 4E does not yet exist so the key will be to actually ensure that the creatives are able to deliver a 4th edition.

 

[teitan]

I' d say it is SIGNIFICANTLY less than 30 million for D&D itself. The 30 Mill quote was for the entirety of WOTC, not the D&D brand.

 

[Cthulhudrew]

Dang- if we'd all have started buying up shares of stock in WotC once they took over TSR, and kept it up, we'd probably be majority shareholders (collectively) by now, and could exert some influence over the Dragon/Dungeon online format.

 

[Nightfall]

Let Wizards continue on their course for a couple of months and you'll get change back.

Yeah but there's Necromancer Games, Paizo, Green Ronin and probably Fantasy Flight Games that will probably get my cash.

Oh and Dreamscarred Press too!

 

[MoogleEmpMog]

I actually think it's kind of interesting how WotC/Hasbro, and TSR before them, have pretty much divested all the value from the D&D brand. Not the game, mind - AFAIC, they've all been pretty good stewards of the actual product that shows up on shelves, despite some bad periods under all three companies. The actual D&D brand, though - the reason an IP is valuable in the first place - has been systematically dismantled over the years.

Electronic rights (probably the most valuable) here, film and television rights there, etc.

Thinking about it, if I were Wizards, I would look strongly into DROPPING the D&D name from a flagship RPG. I know, it's nuts, the D&D brand name sells the vast majority of the books, people buy just because it's 100% official - hear me out.

Let's say Wizards decided they wanted to push a brand - I'll say Eberron, though in their shoes I'd have used an RPG version of Magic the Gathering. They release it first with the D&D brand, accepting that this will initially hurt the value of the new IP by tying it to the dead-end deals TSR and WotC/Hasbro have made. Once they establish the new brand's popularity and get RPG players hooked by tying it to D&D, they revitalize it, taking advantage of the superior design work they can do by building off all that's come before (Eberron Saga Edition?), and drop the D&D name from a new Eberron line. They make it clear that the transition will be smooth and the rules (which they themselves gave an OPEN license for years before, clearly divorcing them from the D&D brand) largely compatible, though the new version is better. Suddenly, you have an RPG and a novel line that has value as an IP - an IP you can actually manuever and market as you like, without the bonds the D&D IP has been shackled in.

I have no idea if that would work, legally-speaking, or if it would go over, but it IS an intriguing scenario. If WotC/Hasbro could reclaim some of the lost odds and ends of a brand, I can't help but think they would consider it.