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4E WotC, DDI, 4E, and Hasbro: Some History

After Vince Calouri was pushed out of Wizards of the Coast he was replaced by Chuck Heubner. Chuck basically had to manage Wizards on the downslope from the Pokemon salad days. Hasbro has been through many boom & bust cycles in the toy business and they have a standard response when it happens: cut headcount and reduce overhead. Since Wizards was de facto the only part of the business that had not been rolled up into Hasbro proper it was not insulated by the successes of other things at Hasbro like GI Joe or Transformers.

While this was happening there was a big internal fight for control over the CCG business within Hasbro. Brian Goldner who was at the time the head of the Boys Toys (i.e. half the company) division of Hasbro thought that the company was missing a huge window of opportunity to follow up Pokemon with a series of mass-market CCGs linked to Hasbro's core brands GI Joe and Transformers. These battles resulted in things being escalated all the way to the C-Suite and the Hasbro Board, where Brian lost the fight and Wizards retained the exclusive ability within Hasbro to make CCGs. The downside for Wizards is that they were forced to do things with the Duelmaster brand that they did not want to do, and it never got the traction in the US that Wizards thought it could achieve. (In Japan, by contrast, it became a huge best-seller).

Chuck left after two years and Loren Greenwood, who had been the long time VP of Sales, replaced him in 2004. He was also a visible proponent of the idea that Wizards, and not Boys Toys, should set Hasbro's CCG strategy. Thus when Brian was named COO of the whole company in 2006 and CEO in 2008, Loren had a big problem on his hands. Loren guided the company through the post 3.5e crash of the TRPG market, the loss of the Pokemon franchise, and the unwinding of the Wizards retail strategy. All of this was pretty bitter fruit for hm since he'd been instrumental in building up much of what had to then be torn down. The combination of all these things led to Loren's exit and his replacement by Greg Leeds, who is the current CEO of Wizards.

Sometime around 2005ish, Hasbro made an internal decision to divide its businesses into two categories. Core brands, which had more than $50 million in annual sales, and had a growth path towards $100 million annual sales, and Non-Core brands, which didn't.

Under Goldner, the Core Brands would be the tentpoles of the company. They would be exploited across a range of media with an eye towards major motion pictures, following the path Transformers had blazed. Goldner saw what happened to Marvel when they re-oriented their company from a publisher of comic books to a brand building factory (their market capitalization increased by something like 2 billion dollars). He wanted to replicate that at Hasbro.

Core Brands would get the financing they requested for development of their businesses (within reason). Non-Core brands would not. They would be allowed to rise & fall with the overall toy market on their own merits without a lot of marketing or development support. In fact, many Non-Core brands would simply be mothballed - allowed to go dormant for some number of years until the company was ready to take them down off the shelf and try to revive them for a new generation of kids.

At the point of the original Hasbro/Wizards merger a fateful decision was made that laid the groundwork for what happened once Greg took over. Instead of focusing Hasbro on the idea that Wizards of the Coast was a single brand, each of the lines of business in Wizards got broken out and reported to Hasbro as a separate entity. This was driven in large part by the fact that the acquisition agreement specified a substantial post-acquisition purchase price adjustment for Wizards' shareholders on the basis of the sales of non-Magic CCGs (i.e. Pokemon).

This came back to haunt Wizards when Hasbro's new Core/Non-Core strategy came into focus. Instead of being able to say "We're a $100+ million brand, keep funding us as we desire", each of the business units inside Wizards had to make that case separately. So the first thing that happened was the contraction you saw when Wizards dropped new game development and became the "D&D and Magic" company. Magic has no problem hitting the "Core" brand bar, but D&D does. It's really a $25-30 million business, especially since Wizards isn't given credit for the licensing revenue of the D&D computer games.

It would have been very easy for Goldner et al to tell Wizards "you're done with D&D, put it on a shelf and we'll bring it back 10 years from now as a multi-media property managed from Rhode Island". There's no way that the D&D business circa 2006 could have supported the kind of staff and overhead that it was used to. Best case would have been a very small staff dedicated to just managing the brand and maybe handling some freelance pool doing minimal adventure content. So this was an existential issue (like "do we exist or not") for the part of Wizards that was connected to D&D. That's something between 50 and 75 people.

Sometime around 2006, the D&D team made a big presentation to the Hasbro senior management on how they could take D&D up to the $50 million level and potentially keep growing it. The core of that plan was a synergistic relationship between the tabletop game and what came to be known as DDI. At the time Hasbro didn't have the rights to do an MMO for D&D, so DDI was the next best thing. The Wizards team produced figures showing that there were millions of people playing D&D and that if they could move a moderate fraction of those people to DDI, they would achieve their revenue goals. Then DDI could be expanded over time and if/when Hasbro recovered the video gaming rights, it could be used as a platform to launch a true D&D MMO, which could take them over $100 million/year.

The DDI pitch was that the 4th Edition would be designed so that it would work best when played with DDI. DDI had a big VTT component of its design that would be the driver of this move to get folks to hybridize their tabletop game with digital tools. Unfortunately, a tragedy struck the DDI team and it never really recovered. The VTT wasn't ready when 4e launched, and the explicit link between 4e and DDI that had been proposed to Hasbro's execs never materialized. The team did a yoeman's effort to make 4e work anyway while the VTT evolved, but they simply couldn't hit the numbers they'd promised selling books alone. The marketplace backlash to 4e didn't help either.

Greg wasn't in the hot seat long enough to really take the blame for the 4e/DDI plan, and Wizards just hired a new exec to be in charge of Sales & Marketing, and Bill Slavicsek who headed RPG R&D left last summer, so the team that committed those numbers to Hasbro are gone. The team that's there now probably doesn't have a blank sheet of paper and an open checkbook, but they also don't have to answer to Hasbro for the promises of the prior regime.

As to their next move? Only time will tell.
 
Last edited by a moderator:
Ryan S. Dancey

Comments

GreyLord

Adventurer
Good of Mr. Dancey to write it up. Hopefully this will quell some murmurings people have had against WotC and other items as they see that's it's not always roses and parades.
 

Therise

First Post
Yikes, a murder-suicide was at the crux of this? How incredibly horrible and sad.

I appreciate finally knowing the details, may those poor people rest in peace.
 

Wow. This is fascinating. The context helps make a lot of the past few years make more sense. I can only wonder what would be different if 4e had been more of a success.

Also, does this mean Hasbro's considering a Magic: the Gathering movie? WotC sure seems to be working a lot on having recognizable characters with an ongoing storyline.
 

Shemeska

Adventurer
Yikes, a murder-suicide was at the crux of this? How incredibly horrible and sad.
That was a horrible thing to happen. Outside and on top of that tragedy, the DDI/Gleemax outsourcing all collapsed and was brought back in house with pretty much nothing to show that was ready for release, like 6 months before the planned launch. They were caught having to play catchup to have anything ready for launch after they'd already promised a ton of stuff.
 


Johnny3D3D

Adventurer
"The <acronym title="Dungeons & Dragons Insider">DDI</acronym> pitch was that the 4th Edition would be designed so that it would work best when played with <acronym title="Dungeons & Dragons Insider">DDI</acronym>."


This seems to imply that 4th Edition was designed in such a way that it expected DDI to be a normal part of the tabletop experience, and that playing without DDI was expected to be an experience which did not work as well as playing with the digital tools. That certainly makes a lot more decisions about the game have a better context.

I still question the Harold Camping scenario which Ryan Dancey seems to be pushing for rpgs though. A lot of what he says paints a bleak picture for D&D, but I do not believe it can be (or should be) applied to rpgs in general. Where he sees a downward spiral, I see opportunity for growth.
 


Dragonblade

Adventurer
D&D is a treasure trove of IP, that can be leveraged in a lot of ways. But even though the TRPG side is not as profitable, it is the core of what makes the brand, so it shouldn't be marginalized.

Here is what I think WotC needs to do to really build up D&D:

For the TRPG side:

-Make the website a hub for gamers of all editions by providing content for all prior editions in separate sections, obviously with 4e (and later 5e) being the prominent focus, but have self-contained sub-sites so there is a clear demarcation of content to avoid confusion.

-Provide all the old edition content for free in a hyper-linked cross referencable format ala d20pfsrd.com. Host some unobtrusive ads to generate revenue. Have the tools and the builders be subscription based. You don't necessarily have to OGL everything. Just make it an easy to use repository of D&D for all editions and millions of gamers will come and use it as a resource even if they don't buy new products. At least you'll get ad revenue and probably a signicant amount of it. Though you could do this in different ways. Make all the core books free for each edition, but all the add-on content is subscriber based. Just make it available.

-Convert the builder and other DDI tools to HTML5 so they are fully accessible on the iPad and non-MS browsers.

-Make a VTT that can also be downloaded and run across XBox Live Arcade/PS3 with full headset support and can import PCs stored online in the builder.

-Give 5e a default ruleset, but make 5e modular with the ability add or subtract the features that people like from each edition (which adds some synergy with the prior edition content being available).

To grow the brand outside the TRPG business:

-Create an MMO and/or console games - I STILL play D&D Heroes and Baldur's Gate Dark Alliance. And I would pay big money for a 4e based FF Tactics style game that let me use my 4e PCs. Especially, if it was co-op and could also act as a surrogate VTT by turning off some of the AI, and letting a DM build encounters, set terrain and monsters.

-And here is the big one: partner with Cartoon Network or Nickelodeon and make an Avatar TLA style kids show set in Eberron or the Realms. Lots of exploration of lost ruins, action, derring-do, and cool colorful characters and modern high quality animation ala Young Justice, or Avatar. Give a deep story so it can appeal to adults too. This could do huge things for the brand.
 

GMforPowergamers

First Post
That's all pretty terrifying. If that $50M figure is accurate, I really don't see how WotC can hit it.
I know someone had some base number of subscribers for DDI, how close are they? I imagin board games and the Scyfy movie will help... but I wonder if ANY RPG company makes more then 30 mill...
 

I know someone had some base number of subscribers for DDI, how close are they? I imagin board games and the Scyfy movie will help... but I wonder if ANY RPG company makes more then 30 mill...
The verified minimum number of subscribers is just over 66k. To hit $50M, the thinking is they'd need 250k subscribers. (Obviously, there's also some revenue from book sales, the board games, the few minis that are out, and so on...)

What we don't know is the number of 'hidden' subscribers. But it looks very much like they're a long way off. :(
 

Erdrick Dragin

First Post
So we come down to the fact that 4E was never necessary to begin with, it was only made to appeal to Hasbro...as I expected since the beginning all along anyway. Should've stuck with DDI but kept the edition the same, would've killed not two, but 3 birds with one stone.

Can a small company gain back the D&D brand once again? It got horribly screwed once it went corporate.
 

Kzach

First Post
Wow. Sounds like the team that had to justify 4e's existence was in a desperate situation to keep the company alive and was grasping at straws to manufacture a solution out of the limited tools they had available; unfortunately none of them were McGuyver.

And now the current team has to pull a solution out of even more dire circumstance. Hasbro buying D&D was the worst thing that could ever happen to it, IMO.
 

OpsKT

First Post
Also, does this mean Hasbro's considering a Magic: the Gathering movie? WotC sure seems to be working a lot on having recognizable characters with an ongoing storyline.
Considering the way that the 4e Manual of the Planes was formatted, I always kind figured that the eventual goal (maybe the 2010 setting if it hadn't gotten bumped for Neverwinter) was a Magic + Plansescape setting for D&D to synergize the two brands.

Might be they were planning that and it got shelved, might be that it's still coming but a ways off, might be that the stuff in the MotP that made me and other think that was just Easter eggs for the fans.

I got a feeling that with their current problems, that we'll never know. Which makes my feelings on the edition wars against 4e all the more relevant.
 

Kzach

First Post
So we come down to the fact that 4E was never necessary to begin with, it was only made to appeal to Hasbro...as I expected since the beginning all along anyway. Should've stuck with DDI but kept the edition the same, would've killed not two, but 3 birds with one stone.

Can a small company gain back the D&D brand once again? It got horribly screwed once it went corporate.
Sigh.

Do you not understand that 3.5 wasn't making enough money to sustain the company? Ie. it was a dead edition. Like or loathe it, WotC wouldn't exist at all without 4e.

The fact remains also that neither 3ed, 2ed, 1ed or even Basic were "necessary". They were ALL made to increase revenue and drive profit for a games COMPANY. If you believe that they made those editions out of the kindness of their hearts just to satisfy you, the gamer, who probably spends on average about $100 per edition on the edition, then you're living in a fantasy land full of elves and magic and fairy dust.
 

Roland55

First Post
The verified minimum number of subscribers is just over 66k. To hit $50M, the thinking is they'd need 250k subscribers. (Obviously, there's also some revenue from book sales, the board games, the few minis that are out, and so on...)

What we don't know is the number of 'hidden' subscribers. But it looks very much like they're a long way off. :(
Sigh.

Makes me wonder if I should "man up" and subscribe. BUT ... I don't even play 4e anymore.:(
 

Mark CMG

Creative Mountain Games
So we come down to the fact that 4E was never necessary to begin with, it was only made to appeal to Hasbro...as I expected since the beginning all along anyway. Should've stuck with DDI but kept the edition the same, would've killed not two, but 3 birds with one stone.

While 3.XE was moving toward more unified mechanics than previous editions, I think 4E took it even more so in that direct. I don't know if 3.XE was quite unified enough to translate to the eventual MMO switchover or crossover WotC seemed to have planned with their longterm proposal. I'd imagine 4E was meant to help bridge that gap, and therefore was probably a necessary step toward DDI and eventual MMO aspirations. Plus, the new naming conventions, along with the mechanics, of 4E seemed to be divised to wrest IP back from OGL era thinking for D&D.
 

Ulrick

First Post
Sigh.

Maybe its time we should just except that D&D, in order to survive, must evolve into a different format or vanish in the next few years.
 

Kzach

First Post
Sigh.

Maybe its time we should just except that D&D, in order to survive, must evolve into a different format or vanish in the next few years.
I accepted that when I figured out that 1e & 2e were actually different games, after starting in the hobby when 2e had just come out and being naive enough to buy up all the cheap 1e material because I thought, "Ooh, cheap AD&D stuff!"

Turns out, it wasn't AD&D at all! It was AD&D FIRST EDITION! Imagine my disappointment when I saw all those 1e books lying around with their useworn pages now useless and redundant. And thus began the vicious cycle of being forced to 'upgrade' every 5 to 10 years...
 

Evenglare

Adventurer
Well from this article, I'm fairly convinced a 5th edition will not be announced soon. It just seems like too big of a risk. They need to get the VTT up and running and then start marketing D&D to large chains such as Walmart , Target ... etc etc. Splitting the fan base once more with a 5th edition seems like certain suicide expecially only 4 years after launch of 4th edition. They also need to start reselling PDFs or whatever, taking them down did NOT slow piracy, people just scan the books now anyway. It doesnt really matter. Eh.. just my 2 cents.
 

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