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D&D 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.
 
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Ryan S. Dancey

Ryan S. Dancey

OGL Architect

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smiteworks

Explorer
But they'd dropped double digit millions and didn't have anything to show for it close to launch.

SmiteWorks has a fully working VTT and a proven ability to faithfully convert over 200 RPG products into fully functioning add-ons, adventures, core rulebooks, etc. This is even easier when the products are all from the same company and you don't have to figure out a bunch of different styles and formats. We would love to do this for Wizards of the Coast or Paizo for absolutely $0 up front and only a share of future sales (much like any distributor or retailer.)

Heck, we'd do that for the entire 3.5 and 4E product libraries as well as supporting 5E just to let the fan base choose whatever version they prefer. It may not be a subscription model like DDI, but from surveying our current user base of 23K+ users we've determined that our customers primarily want to buy a product once and never have to pay for using it again.

We have a number of these conversions already complete as a proof of concept. (Images and text in the screenshots are the property of Wizards of the Coast and are used to show compatibility only. No ownership or right to distribute by SmiteWorks is implied.)
 
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ShinHakkaider

Adventurer
SmiteWorks has a fully working VTT and a proven ability to faithfully convert over 200 RPG products into fully functioning add-ons, adventures, core rulebooks, etc. This is even easier when the products are all from the same company and you don't have to figure out a bunch of different styles and formats. We would love to do this for Wizards of the Coast or Paizo for absolutely $0 up front and only a share of future sales (much like any distributor or retailer.)

Heck, we'd do that for the entire 3.5 and 4E product libraries as well as supporting 5E just to let the fan base choose whatever version they prefer. It may not be a subscription model like DDI, but from surveying our current user base of 23K+ users we've determined that our customers primarily want to buy a product once and never have to pay for using it again.

We have a number of these conversions already complete as a proof of concept. (Images and text in the screenshots are the property of Wizards of the Coast and are used to show compatibility only. No ownership or right to distribute by SmiteWorks is implied.)

If only you had a native version that worked on OSX...
 

smiteworks

Explorer
If only you had a native version that worked on OSX...

Not a native version, but I run it on my iMac using WineBottler and it runs as well as on any of my PCs. Thankfully, Wine allows us to provide it for play on both Mac and Linux in a very stable environment without requiring a complete re-write of our core engine.

Many other FG users run on Mac using Crossover, plain Wine or Parallels. I personally liked WineBottler the best because it was free and is very easy to use once you get set up. It's great for running a large number of PC applications and games that were not designed for the Mac originally.

Here's a link. I highly recommend it, even if you don't decide to use it for FG.
WineBottler - Run Windows Programs directly on OS X

This is the environment I used at Gen Con 2011 on the iMac in our booth.
 

wedgeski

First Post
These remind me of building contractors. Any estimate a contractor gives you, you double the time and money and then you get nearer to the actual end result.
Building contractors face only a tiny fraction of the uncertainties faced by software engineers. The problem is that the average layman simply doesn't see the difference.

Try building a house in a world where not only the size of the extension required by the client changes on a daily basis, but so does: the size of your client's house, your access to that house, the materials they want you to use, the materials you're allowed to use by code, the code, the language the code is written in, and on a really bad day, the force of gravity itself.
 

Otakkun

Explorer
I had always wondered just what could've happened to WotC for all the promised digital content on 4E to dissapear like that. Thanks for clearing that up.
 



Oofta

Title? I don't need no stinkin' title.
Interesting to read this in 2020
I was going to say something about an award for thread necromancy, but yes it was an interesting article.

Some of the thread comments like "I don't think they're going to announce a 5E any time soon" a few months before they announced 5E just goes to show how good random internet folks are at prognostication.
 

I was going to say something about an award for thread necromancy, but yes it was an interesting article.

Some of the thread comments like "I don't think they're going to announce a 5E any time soon" a few months before they announced 5E just goes to show how good random internet folks are at prognostication.
Well, if you have 1000 people prognosticating, then every single silly idea will surface someplace. Doesn't mean that we as a whole community are bad at it. Most of us who were 4e fans kinda figured at the point where Essentials sank with barely a trace (horrible product idea TBH) that something was going to happen.
 

Oofta

Title? I don't need no stinkin' title.
I think there will always be a certain amount of "what-if" speculation surrounding 4E. What if the VTT had actually worked? What if they had chucked that idea and spent the money on further development? What if Hasbro had included the money D&D generated from game sales and they had pushed the value of the IP instead? What if I had purchased the first edition Teenage Mutant Ninja Turtle comic book I saw in the store and thought to myself "That looks fun, I bet it will be worth something someday."

Okay, maybe that last one was a bit off topic. ;)
 
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Mirtek

Adventurer
Double tragic is that the VTT that was finally made available as BETA during the last few month of DDI/4e was actually pretty good.
 

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