How profitable is DDI to WotC?

[Odhanan]

One argument I see popping up in various discussions of the state of Wizards of the Coast and D&D is the idea that the company is basically moving from a traditional print business format to an electronic, subscription-based one. Along with this argument, there are various claims being made about exactly how successful the DDI subscriptions are as a revenue stream for WotC.

Now, what I would like to know is exactly what data the idea that this is a big success for WotC is based on. I'm not asking for people's opinions on this. What I would like to see is cold hard facts.

Do we have any numbers? Any statements that are marketing/PR free that would back up the claim that DDI is very profitable to WotC?

 

[Shemeska]

It depends on if it's measured versus what they sunk into it originally or not to get to the point that we're at now. Most of the estimates of DDI subscribers out there, it would take years to recoup it, and that's assuming total profit and no ongoing costs, which obviously it wouldn't be.

 

[Umbran]

What I would like to see is cold hard facts.

Yes, but WotC has never given out cold, hard facts about costs and revenues. Few companies do. So don't hold your breath.

 

[Morrus]

Now, what I would like to know is exactly what data the idea that this is a big success for WotC is based on. I'm not asking for people's opinions on this. What I would like to see is cold hard facts.

Do we have any numbers? Any statements that are marketing/PR free that would back up the claim that DDI is very profitable to WotC?

Nope, nothing more than guesswork based on the number of members in a particular usergroup on the WotC boards. Nobody outside WotC has those numbers.

 

[delericho]

Now, what I would like to know is exactly what data the idea that this is a big success for WotC is based on. I'm not asking for people's opinions on this. What I would like to see is cold hard facts.

Do we have any numbers? Any statements that are marketing/PR free that would back up the claim that DDI is very profitable to WotC?

The only number we have is the membership of one of the groups (I forget which one), which is believed to include many of the DDI subscribers, and no-one who isn't a subscriber. IIRC, I was told that the membership of that group was about 45,000 people.

I'm always sceptical of statistics (and WotC have both means and incentive to inflate that number if they really want), so I'd be inclined to put the actual number of subscribers anywhere between 30,000 and 100,000. Still, however you slice it, it's still a lot of people.

However...

Even knowing the number of subscribers is only part of the story. Firstly, we have no way of knowing how many are high-value monthly subscriptions and how many are lower-value annual subscriptions.

But more to the point, we have no way of knowing how much it's costing to develop and run the thing. The thing is, since starting work on the DDI, Wizards have put lots of resource into a 3D VTT that never worked, and a Character Visualiser that tied into it. Those both had to be scrapped. They also had to change tack on the Character Builder and Monster Builder, turning those from standalone to online-only tools. And work is now ongoing on a new VTT.

I would not be at all surpised to find that the DDI has long since blown through it's initial budget, and all the money WotC has banked from ongoing subs, and is now barely breaking even (or not even) on the renewals as they come up.

(And, worse, while this was going on, D&D took no fewer than three major hits to book sales: one due to the split with Pathfinder, one due to people using the Compendium instead of buying splatbooks, and one because 4e is now fairly well saturated.)

This would certainly explain a lot about the state of the e-magazines.

Still, I suspect that the powers-that-be at WotC probably recognise that the DDI still has the potential to be the way ahead for the game, and could secure the future of the game for years to come. How long they remain patient and willing to allow further investment, though...

 

[BryonD]

I think it is clear that DDI brings in something between a lot and a whole lot.

 

[Matt James]

The thing is, since starting work on the DDI, Wizards have put lots of resource into a 3D VTT that never worked, and a Character Visualiser that tied into it.

You were doing great until this point. No one knows the investment of resources into these projects--so it's difficult to say how much, if anything, was truly lost here. I believe the issues that surrounded the company that was involved in making this, caused a lot of the issues we see today. If that company had not had the problems it did, we could very well have had all of those products right now. And if that were the case, who knows how epic the 4e brand would be perceived as.

 

[Dannager]

Given delericho's numbers, WotC makes between $180,000 and $1,000,000 per month on DDI. That's like selling tens of thousands of hardcover books every month, except without the huge cut that printing and distribution takes out of the share WotC gets.

 

[delericho]

You were doing great until this point. No one knows the investment of resources into these projects--so it's difficult to say how much, if anything, was truly lost here.

We saw screenshots from the Character Visualiser. The Rouse said he'd used the VTT. That suggests that the losses when these were scrapped was significant. Software really isn't cheap, even in getting to a state where the management can play with it a bit.

Ultimately, though, it doesn't matter. Since we don't know the initial budget, we can't know how had the losses were. It could be that the need to redevelop the tools almost killed the project. Or it could be that it was a speedbump.

It's like asking how likely a character is to pass a DC 35 skill check, without telling you what level the character is - you're missing half the information needed to even guess reliably.

 

[Shemeska]

You were doing great until this point. No one knows the investment of resources into these projects--so it's difficult to say how much, if anything, was truly lost here. I believe the issues that surrounded the company that was involved in making this, caused a lot of the issues we see today. If that company had not had the problems it did, we could very well have had all of those products right now. And if that were the case, who knows how epic the 4e brand would be perceived as.

Dancey speculated at one point that it was somewhere around $30 million. I would look at $40ish. The loss/investment was large enough to warrent specific mention in Hasbro quarterly reports at the time. Now before giving WotC a free pass and just blaming the outsourcing, as for what caused the problems in the birth of the DDI, it's worth looking at some of the public statements of some of the folks involved on the in-house team that took over from the outsourced one. It takes some digging online, or finding and asking some of the people involved, but it's not a pretty picture and it certainly explains the purges of management at WotC that occured in the aftermath.