Pondering RE: Monte Cook / Long-term roadmaps for both Wizards and Paizo

[AntiStateQuixote]

You think that the RPG industry might have revenues as low as $1 million? That really is a wild guess, or it uses odd definitions of "revenue" or "order or magnitude," or it has some strange assumptions about running small businesses.

Yeah, I think monthly revenue for all of the tabletop RPG industry could be as low as $1 million.

 

[innerdude]

I'm not sure what the total market cap is on pen-and-paper RPGs, but it's an interesting question.

I bet most of us would be shocked at how little the actual, total world-wide sales revenue of RPGs actually is.

For example, the PFRPG Core Rulebook sold out its first print run before the product had ever been released back in '09. I've seen several posters on this board with experience in the printing industry stating that at the retail price point of $49.99, that the first print run was probably between 50,000 and 65,000 copies.

They're on what, the fourth printing now (though likely in smaller batches than the first)?

I'm totally generalizing with the numbers here, so let's say that since August 2009, Paizo has sold roughly 125,000 total PFRPG Core Rulebooks, at a wholesale price to distributors of approximately $20.

That's only $2.5 million in sales, before any overhead--printing and materials, labor (salaries), and the like.

Just to give an idea of how little that actually is, I work for a mid-level SaaS software company with approximately 700 clients and 70 employees. And we're consistently pulling in $600,000-$650,000 monthly. In other words, between July 1 and October 31 this year, our company likely has had more total sales volume than Paizo netted from the core rulebook since it first hit shelves 25 months ago.

Now obviously, Paizo has multiple revenue streams and product lines, but all told, it wouldn't surprise me in the least to hear that Paizo's total company revenue was between 6 and 8 million annually, and I'd be just as unsurprised to hear it was half that.

To give a comparison, when our company was doing $4 million in annual sales, we had maybe 40 total employees, including upper division management.

Now don't get me wrong, a company doing $4-8 million in annual revenue is nothing to sneeze at, and I'm sure the folks at Paizo love the work.

But let's not kid ourselves that in terms of actual revenue, they're anything more than what they are--a big player in an absolutely miniscule market.

I'd guess that world-wide, the entire tabletop RPG industry has a market cap well under $100 million annually, and of that, WotC represents at least 60% of it.

And once again, in case anyone thinks I'm bagging on Paizo: I am actively GM-ing a Pathfinder game right now, and am a big supporter of the system and company.

 

[Mattrex]

Now obviously, Paizo has multiple revenue streams and product lines, but all told, it wouldn't surprise me in the least to hear that Paizo's total company revenue was between 6 and 8 million annually, and I'd be just as unsurprised to hear it was half that.

For what it's worth, I recall reading on the Paizo forums a few months back, from one of the designers (can't remember who), that Paizo's real cash horse is the Adventure Path line, and the rest of their published material is essentially supplementary income to that primary revenue stream. It makes sense if you compare it to something like an MMO subscription: like Brent_Nall said above, a successful RPG publisher that is not a cottage industry or labor of love has to have some kind of persistent income.

At $20 per volume, twelve volumes per year, that's $240 annually that Paizo gets from someone subscribed to the Adventure Path. Taking your guess of 125,000 core rulebooks sold, if only half of those people end up subscribing, that's an annual $14.5 million in revenue just from those books. Add in all of their other subscriptions--they have, what, five or six different lines now?--and you're probably looking at $20 or $30 million annually, at least. To the extent that success in the modern RPG industry needs subscription-based services, Paizo seems to have the right idea so far, and I'm surprised that WotC hasn't followed in their footsteps yet. Maybe we'll see something like that when this business with Monte Cook is unveiled.

 

[Mark CMG]

As much as I love tabletop role playing, I know that the future of the hobby is fairly limited as a money making enterprise.

(. . .)

In order to be commercially successful D&D (and tabletop RPGs generally) either becomes a labor of love, cottage industry or has a signficant MMO/subscription component.

Except that you are discussing two, albeit crossover, hobbies. Tabletop roleplaying isn't going anywhere any more than tabletop wargaming or other such niche hobbies that basically grow because of word of mouth and general population increases.

I do believe you are correct in that some former tabletop-only rpg pubs will eventually shift to crossover design that isn't all one hobby or the other, tending to lean toward the one where more money can be made. We're already seeing that, though, with D&D leveraging the brand over many types of product.

However, I think it is a false assessment to suggest that tabletop roleplaying is actually going to go away or change all that much itself. That prediction has proven false since first made in the Eighties, a quarter century ago, when PCs started becoming fairly common in households.

I also agree that the subscrption model will continue to be used for as long as it continues to serve so well by companies of a certain size and larger who have the ability to maintain the sort of release schedule that can satisfy the model. That, however, isn't really a prediction so much as an observation, since it has pretty much become standard practice for both industries.

As to the one actually prediction you made of 2 years for 5E? Maybe. They like to release in June to get the full summer bump ending with the big conventions, so maybe a bit less than that. I think we'll see admission of them working on 5E in earnest by next Gencon at the latest and a June 2013 release at the latest as well. I think they will also move away from the big core release followed by the supplement, supplement, etc, etc, etc, model that doesn't seem to work for them very well anymore.

 

[AntiStateQuixote]

For what it's worth, I recall reading on the Paizo forums a few months back, from one of the designers (can't remember who), that Paizo's real cash horse is the Adventure Path line, and the rest of their published material is essentially supplementary income to that primary revenue stream. It makes sense if you compare it to something like an MMO subscription: like Brent_Nall said above, a successful RPG publisher that is not a cottage industry or labor of love has to have some kind of persistent income.

At $20 per volume, twelve volumes per year, that's $240 annually that Paizo gets from someone subscribed to the Adventure Path. Taking your guess of 125,000 core rulebooks sold, if only half of those people end up subscribing, that's an annual $14.5 million in revenue just from those books. Add in all of their other subscriptions--they have, what, five or six different lines now?--and you're probably looking at $20 or $30 million annually, at least. To the extent that success in the modern RPG industry needs subscription-based services, Paizo seems to have the right idea so far, and I'm surprised that WotC hasn't followed in their footsteps yet. Maybe we'll see something like that when this business with Monte Cook is unveiled.

I would be stunned to learn that Paizo has even 20,000 annual subscribers to their Adventure Path.

 

[fireinthedust]

That prediction has proven false since first made in the Eighties, a quarter century ago, when PCs started becoming fairly common in households.

Not as common as we RPGers would like! ...er, wait, you mean Personal Computers, don't you. darn.

I also agree that the subscrption model will continue to be used for as long as it continues to serve so well by companies of a certain size and larger who have the ability to maintain the sort of release schedule that can satisfy the model. That, however, isn't really a prediction so much as an observation, since it has pretty much become standard practice for both industries.

As to the one actually prediction you made of 2 years for 5E? Maybe. They like to release in June to get the full summer bump ending with the big conventions, so maybe a bit less than that. I think we'll see admission of them working on 5E in earnest by next Gencon at the latest and a June 2013 release at the latest as well. I think they will also move away from the big core release followed by the supplement, supplement, etc, etc, etc, model that doesn't seem to work for them very well anymore.

I think the new 5e discussions Mearls has posted hint that they'll have a very basic system as the core, then future releases will be supplemental rules like skills, feats, psionics, ship combat, mounted combat, aerial combat, monster races, underwater fighting, horror mechanics, new items, new monsters and all manner of things that can be added onto the core or ignored.

Add to that the usual adventures, adventure paths and settings, each with new areas published via the subscriptions, and you've got 5e.

The point being that they'll offer much less with the core mechanics next time around, maybe.

Money-wise, there are other companies out there, including Goodman Games and White Wolf that seem to make a buck or two. Enough that books are sold regularly in all sorts of comic stores and book chains, at least, if not online. Any stats from their sales? I find this interesting.

Frankly, I'm impressed Paizo makes as much as you say. I'm glad, but those numbers are huge, imho. Granted, this isn't personal income it's the budget of a company, but still. Divide the sum you mentioned by the number of staff names on a module and that should be most of the company's salaries (approximately) or so (not including monies sunk into production, obviously, and I can't think of the reasonable amount for that, as I don't work in finance/economics).

 

[AntiStateQuixote]

Tabletop roleplaying isn't going anywhere any more than tabletop wargaming or other such niche hobbies that basically grow because of word of mouth and general population increases.

I didn't say it's going away. I said it's going to be a cottage industry or one supported by significant (probably MMO) online subscription content/services.

 

[Hussar]

D&D 5e is coming. Two years or less from now is my prediction.

If you complain about the "video game" or "board game" aspects of D&D 4e, I think you're going to be very disappointed with 5e. There will absolutely be a near mandatory subscription model of some sort to "keep up with the changes." It will be simplified to the point that it can easily become a successful MMO./snip

Umm, I'd point something out here.

4e, with its focus on allowing characters to go "out of turn" and constantly interrupt other characters, makes for an absolutely terrible MMO. It's the first version of D&D that actually doesn't translate into a video game worth a damn.

Unless you happen to like turn based games I suppose.

I've often wondered when people talk about the "4e MMO" conversion, if they've actually bothered to read the rules first.

 

[Mark CMG]

I didn't say it's going away. I said it's going to be a cottage industry or one supported by significant (probably MMO) online subscription content/services.

That is to say it is not going to go away to the point where it is relegated to cottage industry status (no moreso than it is now, probably less so) nor will it require an MMO-appendage to survive as an RPG industry (though I agree that some will go in that direction rather than sticking with tabletop RPG publishing proper, as we already see happening).

 

[S'mon]

The RPG industry is pretty tiny, yes. Say 'RPG' to 90% of people these days - even nerds - and they think CRPG. It makes communication difficult. I was talking about me and my fellow 'D&D nerds' to some nice but vaguely sinister Military Intelligence type people I met over in the USA last time, and they had a lot of trouble grasping that I wasn't talking about computer gamers.