The Problem of DDI...Solved! (Well, not really)

[Balesir]

This is where your point breaks down. It isn't a "get whatever you can from whomever you can", that's not an optimal profit structure. In fact, that's a bleeding profit structure as users who have/had paid more suddenly stop paying your price and the business loses out on both ends.

So you offer more than the basic product to those prepared to pay more. I subscribed full-time to DDI previously because (a) I could afford it and (b) it was convenient to have access to all the stuff all the time. That's how differential pricing works; the basic model is cheap, the frills and extras are, well, extra.

The goal is to MAXIMIZE profit from a good or service, and maintain or increase that profit. Profit is needed for many things, including R&D for the next product or service. This is especially true with luxury items. Cheap/poor people aren't a good target market for luxury items if a company wants to stay in business, let alone grow.

Cheap and poor people want luxury, too. If it costs you little to make the luxuries, they are an excellent market provided you can tap the more well-off market at the same time. You don't maximise profit by making a less flexible, less convenient, less useful product and selling it at a higher price. At that point, it's not the rich/dedicated you're selling to - it's the gullible. The gullible are a good market, but they are part of most markets, so you normally get them by default.

The minimum operating profit per unit needed from any product is the total fixed costs (including overheads) divided by the lesser of production capacity and demand at the price offered. If production capacity is not noticeably limited, this drives the optimum business towards low price and high demand. Whether the product is a luxury has a slight effect on that via the price elasticity of demand (which actually argues more for a lower/flexible price, not less), but that is somewhat limited in the case of something like D&D, because the market is limited to those who actually like D&D, from the get-go.

 

[Herschel]

Minimum operating profit has nothing to do with anything except finding the point where it doesn't lose money. Not losing money isn't the goal, the goal is maximizing profit. That means selling a unit/service at the maximum price to the most people, period. Finding that point is the key. That generally means some would pay more and some still can't afford it but you can't feasibly structure it to include all the outliers.

Cheap and poor people may want luxuries, but that doesn't mean you are obligated to cater to them at the expense of your bottom line. The credit crisis hit because too many people who really couldn't afford things got iladvised credit and used it.

 

[ki11erDM]

See if you can grasp this: supplying the product to one more user costs WotC close to nothing. Zero. Zip.

This is where you just don’t get it, and you probably never will.

We do not live in a Post Scarcity world like you seem to think. Mearls is not Capt Pacard, no matter how much he might want to be. He cannot just walk over to a matter replicator and create food from stardust to give to his employees.

Until that time you, and people of your ilk, need to understand that creative people want to be paid for being creative and letting you use their creations because they want to buy food.

 

[Scribble]

You are referring to the loss of book sales due to folks just using the CB, I assume? I agree - I see their problem. I just think the solution chosen was the wrong one.

I think we're going to have to just disagree on the online vrs offline point, otherwise we can probably go back and forth forever.

This point though I wanted to address: this is PART of it, but there was more.

As you mention yeah, the digital tools seemed to be cutting into the physical product, but I think there were other things doing that as well (piracy for one... which is why I think most of the new stuff comes with other not as easily pirated stuff like cards and tokens...)

But on top of that you also had the semi monthly subscription service that ended up being financially smarter then a yearly subscription.

Instead of just being that extra revenue from the people that couldn't afford otherwise it became more and more attractive to their primary clients.

Now you have not only the digital tools sucking revenue away from your physical products, but also the digital tools funneling money away from themselves.

If I remember correctly in the beginning they talked about only giving access to the months you paid for, which I think accounted for what they thought would prompt people to pay for a yearly subscription over a monthly one.

This changed before it even started charging though... I don't know if either because of customer backlash, or because of technical difficulties, but in either case, I can see where the problem first developed.

 

[eamon]

This is where you just don’t get it, and you probably never will.

We do not live in a Post Scarcity world like you seem to think. Mearls is not Capt Pacard, no matter how much he might want to be. He cannot just walk over to a matter replicator and create food from stardust to give to his employees.

Until that time you, and people of your ilk, need to understand that creative people want to be paid for being creative and letting you use their creations because they want to buy food.

You state this as fact - it's not. That may be your interpretation, but I doubt it's anywhere near the truth. In fact, were D&D public domain and entirely unprofitable, I don't doubt for a second that it would live on. Some of the best content for WotC-branded stuff was free community-developed extra's, alternatives, fixes, art, etc. That doesn't mean they don't want to make money - it just means the scarcity is artificially enforced to make money.

So he's probably entirely right that WotC could run a looser ship and perhaps even provide a better experience, but it's not in their best interest to do so. So rather than get annoyed at Balesir and "people of his ilk" for pointing out that WotC is looking after their interests rather than those of their customers, why not accept that you want their content even if they drive a hard bargain in terms of price?

Flexibility and ease of exchange are valuable traits (to me anyhow) in an RPG. The business model WotC has chosen destroys a lot of value there. I'm not saying it's easy to find an alternative, but neither am I going to applaud their decision to make it hard for me to combine and remix their stuff as I see fit.

 

[Herschel]

Actually, it is fact, whether you choose to see that or not.

Why would WotC do something that's not in their best interest? They're a business. This entitlement complex of numerous narcissistic gamers is really pathetic. Any for-profit business only looks out for their customers' experience so long as it aligns with their interests. Otherwise they won't stay in business.

 

[Balesir]

This is where you just don’t get it, and you probably never will.

We do not live in a Post Scarcity world like you seem to think. Mearls is not Capt Pacard, no matter how much he might want to be. He cannot just walk over to a matter replicator and create food from stardust to give to his employees.

Until that time you, and people of your ilk, need to understand that creative people want to be paid for being creative and letting you use their creations because they want to buy food.

Try reading what I actually wrote, instead of assuming based on your tribal assumptions. Of course the development team should be (and, naturally, want to be) paid for what they do. I have not suggested that WotC should give this stuff away free at any point - nor will I. All products need to be sold for more than their marginal cost, even if the margianl cost is zero, for the business of creating them to succeed. That is why information piracy is destructive and wrong. But creative businesses indulging in a self-destructive orgy of wrecking their own products' value in some vain attempt to "beat piracy" is not going to solve the piracy problem - it's going to exacerbate it by making pirated product not just cheaper than legitimate product, but better than it as well.

As you mention yeah, the digital tools seemed to be cutting into the physical product, but I think there were other things doing that as well (piracy for one... which is why I think most of the new stuff comes with other not as easily pirated stuff like cards and tokens...)

But on top of that you also had the semi monthly subscription service that ended up being financially smarter then a yearly subscription.

Instead of just being that extra revenue from the people that couldn't afford otherwise it became more and more attractive to their primary clients.

Now you have not only the digital tools sucking revenue away from your physical products, but also the digital tools funneling money away from themselves.

OK, but that's just a miscalculated pricing policy. Make the monthly sub more than twice the yearly rate and it's better to pay yearly. I was happy paying yearly, anyway, because of the Compendium access. Even better would be an up-front charge, IMO, since it makes registeded licensing cleaner to set up.

If I remember correctly in the beginning they talked about only giving access to the months you paid for, which I think accounted for what they thought would prompt people to pay for a yearly subscription over a monthly one.

This changed before it even started charging though... I don't know if either because of customer backlash, or because of technical difficulties, but in either case, I can see where the problem first developed.

I have no idea why it was changed - I don't remember much "backlash", and it would seem only reasonable to me to allow charging for 'packets' of content. Actually, there may well be an issue with people wanting to buy "back issues", which might have been more complex than they wanted to get.

Any way about, I see lots of options - of which they picked one I'm not interested in buying, is all.

Why would WotC do something that's not in their best interest? They're a business.

Because they are in an area of business they are not experienced at and they don't understand fully how their interests would be best served.

This entitlement complex of numerous narcissistic gamers is really pathetic.

And your assumptions concerning the motivations of other people is rather sad.

Any for-profit business only looks out for their customers' experience so long as it aligns with their interests. Otherwise they won't stay in business.

Businesses aim to maximise their profit, but it is only required that they make some profit to stay in business. A consequence of this is that some irritatingly suboptimal businesses fail to go bust...

As the old saying goes, "customers want better product for free". Giving them one of these is good business - giving them both is dumb, but letting a competitor give them more than you do is just fatal.

 

[Henry]

If WotC can get people to pay for their DDI right now, I'm happy for them. They haven't gotten a dime from me since November, either for printed product or digital offering, and unless their site or product line starts offering something valuable again, they won't, either. I'll just keep playing 4E with the stuff I already have, using a PDF character sheet and a card-making program for keeping track of powers, and keep buying new stuff for Pathfinder and Savage Worlds, where they aren't so afraid of piracy that it stops them from making money off of me with PDF purchases, (in Paizo's case) releasing rules as all OGL so I can use it in various free digital content, are only too happy to interact directly with the fans, and keep coming up with product ideas for stuff that makes me go "Wow! Gotta get that one when it's released!"

If WotC is so skittish in digital content distribution it keeps driving fans like me away, I wish them luck in gaining new ones.

 

[Herschel]

1. Because they are in an area of business they are not experienced at and they don't understand fully how their interests would be best served.

2. And your assumptions concerning the motivations of other people is rather sad.

3. Businesses aim to maximise their profit, but it is only required that they make some profit to stay in business. A consequence of this is that some irritatingly suboptimal businesses fail to go bust...

1. This is your opinion and has no basis in fact. You want something that is not in their best interests, which is not realistic.

2. No assumptions, posters make it pretty clear what they think they're entitled to.

3. Again you show you have no understanding of the way real businesses work. Just making a profit isn't enough. A business unit has to make a certain amount as assigned by business leadership or they're gone. You may claim a business is suboptimal, but if it's still in business they must be doing something right (or operating as a write-off).

Look at it from a personal standpoint: If you're a trust fund baby or win the lottery, you can do whatever you want and take a job/open a shop for $10,000/year or volunteer. If you have a family and a home, that's not going to cut it. That job/shop needs to go and you have to get a real job/source of income.

Business is the same way. If a business or business unit doesn't make enough to be considered viable by leadership, it's gone, even if it was making a profit. The resources can and will be used in a more lucrative way.

 

[Balesir]

1. This is your opinion and has no basis in fact. You want something that is not in their best interests, which is not realistic.

No, it's not my opinion, it's my speculation about one possible answer to the question asked. The point being that the question has several possible answers - it's no deep mystery.

2. No assumptions, posters make it pretty clear what they think they're entitled to.

In your opinion. You are welcome to your opinions - just don't assume they are "correct" or universal.

3. Again you show you have no understanding of the way real businesses work.

So you claim repeatedly, but I seem able to explain my position where you do not, except in the most general, sweeping terms. How, exactly, does nerfing the product and deliberately restricting the flexibility of it serve WotC's interests as far as profit is concerned?

Just making a profit isn't enough. A business unit has to make a certain amount as assigned by business leadership or they're gone.

Read what I have written. I understand this very well - I just think the policies they have chosen restrict their profit rather than maximise it.

You may claim a business is suboptimal, but if it's still in business they must be doing something right (or operating as a write-off).

A sub-optimal business can make a profit, that should be obvious. There is a good deal of headroom between unprofitability and optimality.

Look at it from a personal standpoint: If you're a trust fund baby or win the lottery, you can do whatever you want and take a job/open a shop for $10,000/year or volunteer. If you have a family and a home, that's not going to cut it. That job/shop needs to go and you have to get a real job/source of income.

You really haven't read a word I wrote, have you? Development costs = living wages for developers. Minimum profit per unit sold to survive as a business = development and other fixed costs divided by the lesser of production capacity and demand (at the selected price). This was in my previous posting.

Business is the same way. If a business or business unit doesn't make enough to be considered viable by leadership, it's gone, even if it was making a profit. The resources can and will be used in a more lucrative way.

Absolutely - a scenario I recognize well. But that doesn't mean the "leadership" is right about how that profit might be made. My experience is that their judgements are frequently at least debatable, sometimes demonstrably wrong. They are, after all, only human.