The Economics of Open Gaming - An Open Letter To WotC

[mxyzplk]

Why Open Gaming Is Good For Business

The OGL was largely single-handedly responsible for reviving the RPG industry overall and it and 3e took D&D from a bankrupt and largely irrelevant position back to its current state of RPG primacy and pop-culture relevancy.

Let me note something about real world economics. A healthy market sector means more for everyone. My IRL company has been posting record revenues for many consecutive quarters. Our stock took a big hit lately. Why? Because our major competitors posted big losses. This cast the entire sector in a bad light. Doing well in a bad sector isn't any better than doing poorly in a good sector, and is arguably worse, to investors.

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Industry economics are different from "small company" economics and you have to make the adjustment. The naive businessman says "us doing well is good, our competitors going well is bad." The smart businessman knows that's not true. It's time Wizards looked at this from a big economic picture point of view. My company (a leading hardware/software manufacturer in its niche field) actively releases free standards and spends money to get the rest of the industry on board with them, because that gets more support, more product, more activity, and more customers to the standard. Wizards and D&D got that exact benefit out of 3e and the OGL.

Competition never drove anyone out of business unless they were a) a small storefront or b) sucked and deserved it. Competition is good. In fact, speaking with VCs at Web coferences, they prefer for there to be competition before they invest in a field; that way they know it's likely to be lucrative! Read a business book published in the last decade before making any more GSL/open gaming "decisions."

The best thing you could do right now is to say "Actually, we'll release 4e under the existing OGL." Then, this weekend, mail 4e galleys to all the third party publishers who have expressed interest in the GSL. (Yes, without the $5k per head fee.) Throw in some extra swag. Put an NDA in (assuming there's not already one in place with most of these guys from 3e) saying "the books are under NDA until June, do not open if you don't agree." Say "Hey, sorry, what can we do to help you get some D&D 4e product out ASAP?" That's leadership. Market leadership is the way to great success. There's only so many people you can or want to directly hire. But if your industry follows you, they may as well work for you! You get the glory, the movie licensing deals, and the profit from being the preeminent provider of the thing. Everyone else wants to contribute to your success, not sabotage you, because they share in the overall success.

 

[Oldtimer]

Well put. I agree with every word in this and hope WotC is reading it.

Nevertheless, I expect within minutes this thread will be filled with posts from nay-sayers: 'Why should they give away their precious IP', 'There wasn't an OGL before, why does it have to be one now', 'The GSL will be good enough, just wait and see', etc, etc...

 

[Ydars]

I also agree whole-heartedly with this post. It is sound business sense and I hope Scott L and Linae can get the executives at WoTC and Hasbro to look at it.

I also can't help the feeling that Old timer was thinking about my thread on OGL when he wrote the above...............

 

[The Little Raven]

The OGL was largely single-handedly responsible for reviving the RPG industry overall and it and 3e took D&D from a bankrupt and largely irrelevant position back to its current state of RPG primacy and pop-culture relevancy.

Actually, I'd say that D&D 3rd Edition was single-handedly responsible for reviving the RPG industry, since the majority of customers only buy WotC products and don't touch OGL materials. The OGL allowed new companies to form in an industry that was pretty static (all the big players had been around for almost a decade, at least), thus giving us Paizos, Necromancers, and Green Ronins, but I don't see it as the "great boon of gaming" that many people seem to.

The best thing you could do right now is to say "Actually, we'll release 4e under the existing OGL." Then, this weekend, mail 4e galleys to all the third party publishers who have expressed interest in the GSL. (Yes, without the $5k per head fee.) Throw in some extra swag. Put an NDA in (assuming there's not already one in place with most of these guys from 3e) saying "the books are under NDA until June, do not open if you don't agree." Say "Hey, sorry, what can we do to help you get some D&D 4e product out ASAP?" That's leadership.

That's giving things away for free, not leadership. It's basically taking your years of work and letting your competitors make money off of it without getting anything in return. M&M, Conan d20, and Spycraft all showed that the OGL can easily work against WotC's profitability.

 

[mxyzplk]

Actually, I'd say that D&D 3rd Edition was single-handedly responsible for reviving the RPG industry, since the majority of customers only buy WotC products and don't touch OGL materials. The OGL allowed new companies to form in an industry that was pretty static (all the big players had been around for almost a decade, at least), thus giving us Paizos, Necromancers, and Green Ronins, but I don't see it as the "great boon of gaming" that many people seem to.

So major new companies forming isn't a boom? Adding Mutants & Masterminds, Conan, Spycraft, etc? The boom wasn't limited to d20-based games of course; but the bigger the main games are doing, the more support there is even for indie and fringe games. Larger industry = more for everyone.

And sure, other people making D&D product is a key component of that. I'm a little confused about your point. OGL, lots of compnies make lots of money by making direct (Dragon) or indirect (M&M) products... But that's no industry revival!

That's giving things away for free, not leadership. It's basically taking your years of work and letting your competitors make money off of it without getting anything in return. M&M, Conan d20, and Spycraft all showed that the OGL can easily work against WotC's profitability.

Here's the problem - they didn't work against WotC's profitability, and I defy you to show that they did. Again, this is the "little man" view of economics, where "every copy of M&M is money I shoulda gotten!" Why, did WotC sell a supers game I missed? Would people have bought two PHBs instead of one PHB and one M&M? No. People buy more RPGs than they ever use. WotC has shown that they are not wanting to or going to ramp up to provide every product anyone wants and will pay for/make profitable. No one can.

My RL company developed a new computing bus. We could have kept it for our own products and said 'that's our years of work!' But, you see, we're not retarded. So it's open. So even though there are some companies that do things like make cheap knockoffs of our boards, there are many more that devise additional products that complement them and create a rich product ecosystem that then makes other people want ours.

The previous Conan game was GURPS Conan. If you wanted to play Conan you'd have to use that or devise it yourself. Now there's an OGL version that, even though not one physical dollar from it goes to WotC, uses the d20 rules. You're now playing D&D - not the other old school games you rightly point out as having been largely static ghettos for so long (GURPS, Hero, WoD, Palladium). This 'trains' customers on your product and reduces the mental cost of them to get into another new game along the same lines - including D&D.

Believe it or not, there are people that haven't played D&D. We'll take one of my coworkers. He's only played other stuff, most recently Savage Worlds. But recently their gaming group tried out Castles & Crusades. Now, they're going to run a Savage version of Paizo's Rise of the Runelords Adventure Path. That's attracting people into their games. It's selling direct and indirectly related products, meaning that there's more money for everyone, more skilled game designers to work for everyone, more distributors that take that niceh seriously, more bookstores (and even game stores, nowadays) bother to put any shelf space towards it....

Again, read a business book written in the last decade. Being completely closed is NOT in your best interest, despite it being "common sense" for people without real business education.

 

[Lizard]

That's giving things away for free, not leadership. It's basically taking your years of work and letting your competitors make money off of it without getting anything in return. M&M, Conan d20, and Spycraft all showed that the OGL can easily work against WotC's profitability.

Incorrect.

Which helps WOTC more -- me playing M&M or me playing Champions? Conan using D20 or Conan using BRP? Spycraft or GURPS:Espionage?

As long as I'm in the "D20 Space", I'm a likely customer of WOTC. I am more likely to buy a WOTC product to adapt, or to return to D&D once I'm done with my current game. But once I've left the D20 space, the impulse is to stay with what's familiar NOW -- with Hero, or BRP, or GURPS.

Ryan Dancey understood this. The current crop...I am not so sure.

(The argument that standalone books caused 'lost sales' of PHBs is pretty fallacious; while I'm sure a small minority started with M&M or Spycraft, for the vast bulk of customers, they already OWNED a PHB, so nothing was lost.)

 

[AZRogue]

Incorrect.

Which helps WOTC more -- me playing M&M or me playing Champions? Conan using D20 or Conan using BRP? Spycraft or GURPS:Espionage?

As long as I'm in the "D20 Space", I'm a likely customer of WOTC. I am more likely to buy a WOTC product to adapt, or to return to D&D once I'm done with my current game. But once I've left the D20 space, the impulse is to stay with what's familiar NOW -- with Hero, or BRP, or GURPS.

Ryan Dancey understood this. The current crop...I am not so sure.

(The argument that standalone books caused 'lost sales' of PHBs is pretty fallacious; while I'm sure a small minority started with M&M or Spycraft, for the vast bulk of customers, they already OWNED a PHB, so nothing was lost.)

This is absolutely correct. The positive effects from the OGL were amazing and few people understand them. Most people just don't understand how much they can gain from its existence. Not only was it win-win for WotC, it was a huge boon to DnD players, even if the NEVER bought a 3rd party product, because it increased the number of people out there using the d20 system, thus increasing the pool of potential DnD players. It is, IMO, Ryan Dancey's one great achievement.

And I hate 3E and love what I'm seeing from 4E, before someone accuses me of being pro-3E because I love the OGL.

 

[Dark Mistress]

Incorrect.

Which helps WOTC more -- me playing M&M or me playing Champions? Conan using D20 or Conan using BRP? Spycraft or GURPS:Espionage?

As long as I'm in the "D20 Space", I'm a likely customer of WOTC. I am more likely to buy a WOTC product to adapt, or to return to D&D once I'm done with my current game. But once I've left the D20 space, the impulse is to stay with what's familiar NOW -- with Hero, or BRP, or GURPS.

Ryan Dancey understood this. The current crop...I am not so sure.

(The argument that standalone books caused 'lost sales' of PHBs is pretty fallacious; while I'm sure a small minority started with M&M or Spycraft, for the vast bulk of customers, they already OWNED a PHB, so nothing was lost.)

I agree with you and find it surprising other people don't seem to see it that way as well. I have meet a lot of players that once they are playing a system they tend to play other games of the same or similar system. Like Storyteller by WW, playing Exalter instead of learning D20 or Rolemaster or GURPs for fantasy.

I do think Ryan Dancey understood this far better than I think anyone else did way back then when he came up with the OGL.

 

[Delta]

I think there's a cohort of hardcare gamer hobbyists who want to test, play, and explore a new rule system every few weekends. (Something like dining afficionados who search out a new restaurant every week.) These folks are more prominent online and don't realize how rare they are. I have just one or two acquaintances who are outright stunned that I don't want to learn new game systems.

For these friends of ours, the OGL doesn't make sense on at least two levels. (1) They personally don't stick with one system and can't see any attraction or how that would serve as an enticement to anyone. (2) Business-wise the OGL actually pushed a pile of alternative systems out of the market, and they actively resent it for that.

 

[Scholar & Brutalman]

Which helps WOTC more -- me playing M&M or me playing Champions? Conan using D20 or Conan using BRP? Spycraft or GURPS:Espionage?

I can't speak for you, but for me the answer would be "none of them are any better." I don't buy products to adapt to another system. When I'm playing another system, I'll buy products designed for it.

If there are a lot of buyers like me, then all the OGL does is make it easier for customers to move from playing D&D - and buying products from WotC - to playing an OGL game - and spending their money on another companies products.

I doubt that the OGL helps get people into the RPG hobby. D&D is the market leader: the vast majority of players I've met started with D&D. The OGL may be a good way for people to move away from D&D. This is good for the customers and good for the 3rd party developers, but not for Wizards.

And that's my problem with this open letter and other comments like it. Posters take it as self-evident that the OGL has been wonderful for WotC. I'd like to see some evidence, in the form of sales analysis that removes the effect of the new edition release that occurred at the same time. The OGL has certainly been wonderful for RPG customers and for the developers at other companies, but the people who have the sales data to judge whether it's been good for WotC are pretty much all at WotC.