ROI in the RPG Business...

[Celtavian]

particularly the D20 RPG business.


I have been seriously contemplating starting an RPG business. I enjoy the creative aspect of game design. I feel I have some ideas that have universal appeal.

I am hesitant though, because there is very little published information about the financial reward of starting an RPG business.

What kind of ROI can I expect if my product is successful?

Is the RPG business financially lucrative?

Are RPG companies growing? Do most have clearly defined business plans incorporating a growth strategy?

Also, are there any financial numbers on the RPG industry? In total dollars, how much money is spent on RPG's per year? What kind of pie is everyone dividing up basically?

Would really love to hear some financial information on expected ROI even if it is only for a single-successful module.

I understand that unit costs decrease for bigger print runs, and the majority of your fixed costs would be tied up in administration and production expenses.

Financial information on the RPG industry is incredibly difficult to find. I hope some of the publishers on this forum can give somewhat of an idea of the profitability of a successful RPG product.

 

[Tyrant]

Obviously the reason very little information is available is that most if not all the company's are privately held OR part of a much larger company so that specific information cannot be extracted easily.

Are RPG companies growing? Do most have clearly defined business plans incorporating a growth strategy?

Clearly some are growing. Mongoose came out at the beginning very strong and has continued to grow every month, both in the number of people on staff and in the number of products released. They're in the minority though. I suspect most (like mine) are no bigger than the group that started them and I doubt many have a defined business plan.

Is the RPG business financially lucrative?

I think it can be if you're frugal. A mistake that my company made was going to Gencon last year. In my opinion (and my partners may disagree) we spent too much money to go (~$2000 for the booth (which we shared with another company), for travel expenses and tickets into the show, etc). Argue what you will, we got half as many sales in our online store the week we were at Gencon than we did at Gencon itself, and it cost us no more money than if we hadnt gone to Gencon at all.

Also, are there any financial numbers on the RPG industry?

I believe Mr Valerra or perhaps maybe his predecessor, Mr Dancey quoted a number like $200 million for the entire industry. Unfortunately for WotC, thats not all d20 products...

As for the other information you are asking for, it shouldnt be too hard to determine for yourself. There are several articles out that discuss what one can expect to earn out of every dollar of a products MSRP. 40% is a good ballpark from what I gather (ours are higher). Of course, then you have to pay for everything (artists, writers, layout & editing, website hosting and other admin expenses). Look at what you're planning to release, make a forecast, get some job #s, and then start pulling away your overhead to figure out what your ROI will be. Im guessing unless you do a lot of the work yourself you're ROI will be 10% or thereabouts.

Eric

 

[d20Dwarf]

Remember to take anything you hear on a message board with a grain of salt.

Not directed at anyone in particular.

 

[Cergorach]

Remember to take anything you hear on a message board with a grain of salt.

Not directed at anyone in particular.

Now that was rather useful... And to be more exact, take everything with a grain of salt, because nothing is really that black or white...

@Celtavian
It kind of depends on how you want to do business, want to go in pdf publishing (not much money there), or in print publishing? Use the search engine of this BB and look for names such as Orcus (big helpful fellow) and Pramas (also lot of others but my memory is lousy). A lot of this has already been covered in past discussions, you could also ask the guys over at Mystic Eye Games, they have a publishing service.

Good luck!

 

[annadobritt]

Don't quit your day job, if you have one. Particularly if it has health insurance!!!

However, if you win a big lottery jackpot, then it's ok to quit the day job.

 

[Mystic Eye]

I hate to discourage anyone who wants to make RPGs but I would have to say, and I bet other publishers will back me up here, this is not the time to start-up a brand new d20 company. Margins and ROI are mediocre in the best of circumstances but to start now, as Anna said, don't quit the day job. In fact, be prepared for your day job to help pay for your hobby business.

If I were to start today I would probably test the water with my products in an electronic format such as PDFs at RPGNow.

One of the reasons we started our Cover to Cover program is so that new guys with great ideas who want to essentially be their own publisher can imprint under us, retain all their rights to the product and at least get to take advantage of our established name to some degree. Of course, this is only a small protion of C2C but you get the idea.

Again though, with what I know about the market currently, there is already to many SKUs and new ones will either not get picked up or get lost in the shuffle.

Just my 2 cents.

 

[Celtavian]

Re

Thank you for the information. That at least gives me some leads.

It doesn't sound very promising. 200 million is a very small pie.

I guess most are doing it because they love it, though I am sure some are making a good deal of money.

It does seem like a bad time to start a D20 business. There seems like a glut of product with only a few taking the lion's share of the revenue.

 

[FFG_Brian]

I believe Mr Valerra or perhaps maybe his predecessor, Mr Dancey quoted a number like $200 million for the entire industry. Unfortunately for WotC, thats not all d20 products...

I'm fairly confident neither gentleman offered any such number for annual RPG sales. Assuming you're talking about actual manufacturer revenues, which seems to be what the poster wanted, you're likely high by about an order of magnitude.

RPG revenues in a typical year are probably around $20 million, with Wizards representing about half of that (~$40 million retail).

Greg
FFG

 

[kingpaul]

I'm fairly confident neither gentleman offered any such number for annual RPG sales. Assuming you're talking about actual manufacturer revenues, which seems to be what the poster wanted, you're likely high by about an order of magnitude.

Well, there were some budgetary numbers discussed here, but they included RPGs and CCGs

 

[FFG Greg]

Well, there were some budgetary numbers discussed here, but they included RPGs and CCGs

The link doesn't seem to work for me. In any case, manufacturer revenues from CCGs are more than $200 million, but that's not particularly relevant to the RPG market (except to put things in perspective, of course ).

Greg
FFG