Hehe so it's unreasonable to apply general business practices to one company. I assure you that business analysts, consultants, and investors do this all the time. I was simply speculating on what I feel the hasbro executive in charge of the WotC division would do based on some not unreasonable conjectures.
Most of the points I was making could be applied to newspapers or automotive parts etc.
When I mention losses on the sales of the core books I don't neccesarily mean the company is losing money but that the company is not meeting optimal sales and revenue figures.
Lets assume that over the course of the last year 1,000,000 Monster Manual were sold at $20 each. Assuming that most game stores are marking up the MM 100% of thier cost that means the distributor is likely selling them at $10. I don't know what the average distributor markup is but let's go conservative and say they get thier stock at $5- $7 dollars from WotC. That means that WotC has revenues of $5,000,000 - $7,000,000 on the MM ( the numbers are likely higher but that really doesn't matter). Let's assume that the cost of production, printing distribution eats up a good chunk of money from that. Pretty reasonable IMHO. If you compare that to what the revenues would be at $35 (which Ryan assures us the market would bear) you go to $17.50 cost for retailers, and between $8.75 and $12.25 for ditributors. Suddenly you sales projections go from 5-7 million to 8-12 million. The fact of the matter is that many executives might use Ryan's statements about what the market will bear to make projections and if the real numbers are much less than those projections assume that the core books are operating at a loss even if they really aren't.
In essence it gets down to perceptions rather than reality. In reality WotC might be doing very well financially but if the perception of Hasbro and the shareholders is that they are underperforming profits etc mean very little. So before you assume that people don't know what they are talking about try to think what you might do if you are a Hasbro/WotC executive.
Most of the points I was making could be applied to newspapers or automotive parts etc.
When I mention losses on the sales of the core books I don't neccesarily mean the company is losing money but that the company is not meeting optimal sales and revenue figures.
Lets assume that over the course of the last year 1,000,000 Monster Manual were sold at $20 each. Assuming that most game stores are marking up the MM 100% of thier cost that means the distributor is likely selling them at $10. I don't know what the average distributor markup is but let's go conservative and say they get thier stock at $5- $7 dollars from WotC. That means that WotC has revenues of $5,000,000 - $7,000,000 on the MM ( the numbers are likely higher but that really doesn't matter). Let's assume that the cost of production, printing distribution eats up a good chunk of money from that. Pretty reasonable IMHO. If you compare that to what the revenues would be at $35 (which Ryan assures us the market would bear) you go to $17.50 cost for retailers, and between $8.75 and $12.25 for ditributors. Suddenly you sales projections go from 5-7 million to 8-12 million. The fact of the matter is that many executives might use Ryan's statements about what the market will bear to make projections and if the real numbers are much less than those projections assume that the core books are operating at a loss even if they really aren't.
In essence it gets down to perceptions rather than reality. In reality WotC might be doing very well financially but if the perception of Hasbro and the shareholders is that they are underperforming profits etc mean very little. So before you assume that people don't know what they are talking about try to think what you might do if you are a Hasbro/WotC executive.
