The Future of D&D.... - Downloaded from the Wizards Community, all coding removed by Solauren

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#1 Jaden.Shadowcraft Jan 02, 2012 22:55:13	This is a copy of an essay written by Ryan Dancey. This is a very extensive and informative essay in which he talks about the state of the table top RPG system as a whole. I [Ryan Dancey] have been involved on the business side of hobby game publishing since 1993, when I operated one of the first on-line/mail order hobby game stores, RPG International. It was through my work at RPG International that I met the team at Alderac Entertainment Group with whom I co-created the Legend of the Five Rings intellectual property, eventually spinning it out into a stand-alone company called Five Rings Publishing Group which was acquired by Wizards of the Coast in 1997 as a part of the process whereby Wizards also acquired TSR. I was at Wizards, working as a brand manager on trading card games and eventually leading the brand and business unit for Dungeons & Dragons until early in 2001 when I left to found a startup providing organized play services to 3rd party game companies, wound that down in 2003 and worked as a consultant until 2007 when I became the Chief Marketing Officer of CCP. Currently I’m the CEO of Goblinworks, a startup company developing a next-generation fantasy MMO. I give that background (again for those of you who read the first column in this series; sorry for the repetition) just to establish the fact that I’ve been watching this industry closely for a very long time and feel I’ve got some insights worth sharing. The Tabletop Roleplaying Game Hobby Is Contracting Let me begin with a few simple statistics. In 1995, when I was writing the business plan for the Legend of the Five Rings CCG, I assumed, based on the conventional wisdom at the time, that there were approximately 5,000 full line hobby gaming stores in the North American market. After arriving at Wizards of the Coast in 1997, I was surprised to discover that Wizards had been able to identify (after extensive work) only about 2,500 stores. In addition, there were about 2,500-3,000 mass-market book stores that sold some hobby gaming products; mostly TRPGs, and mostly just D&D. Today, the best data I have been able to assemble leads me to believe that there are less than 1,000 full line hobby gaming stores left, and there may be as few as 500. Of those mass-market bookstores, B. Dalton is gone. Waldenbooks is gone. Borders is going. Barnes & Nobel is not healthy. Today, there are only about 1,000 mass-market bookstores left (717 are Barnes & Nobel stores). That is meaningful because historically 50% of the D&D business was sold via mass-market bookstores and the loss of those stores has directly impacted D&D (and other TRPGs) significantly. In 1994, when I attended my first GenCon, the list of exhibitors at the show included many companies that earned most (or all) of their income from selling tabletop RPGs, and who employed one or more full time TRPG designer/developers: Atlas Games, Chaosium, Dream Pod Nine, FASA, Game Designers Workshop, Heartbreaker, Hero Games, Iron Crown Enterprises, Mayfair, Palladium, R. Talsorian, Steve Jackson Games, TSR, West End Games, White Wolf, and I’m sure there’s others I’ve regretfully omitted. In addition to those companies there was another constellation of small publishers consisting of one or two people trying to make a start in the business, working part time as TRPG designer/publishers, and buzzing around all these companies were dozens (maybe as many as a hundred) freelancers who made all or a significant part of their incomes from TRPG design work. It’s notable that many in the industry saw the period from 1994-1999 as being fairly bad for TRPGs. The twin rise of collectible card games and the Games Workshop hobby appeared to be draining the TRPG segment of designers and of revenue. The most obvious sign of this problem was the failure of TSR’s business, leading to its acquisition by Wizards of the Coast in 1997. I would argue that the segment actually brought on most of its woes by simply producing too much product. The proliferation of games, game worlds, and “house systems” so fragmented the market that despite indications that overall revenue remained fairly constant for TRPGs as a segment, the income earned per product and per company became so sub-divided that many (both products & companies) became unprofitable. A second major factor at work was the consolidation of the distribution tier. When I was selling Legend of the Five Rings in 1996, we had an initial list of North American distributors of about 50. By the end of the decade, that list had shrunk to about a dozen. In fact, virtually every distributor in the market was either sold or closed between 1990 and 1999 – the people who had created the distribution network for TRPGs cashed out to the people who rebuilt it for the CCG business. This consolidation had an unexpected effect on the TRPG publishers. Every distributor prior to the late 1990s had engaged in a practice whereby they ordered product from TRPG publishers in bulk, and held the inventory in their warehouses to fulfill retailer orders as needed. The standard industry terms were for the distributors to pay the publishers 30 days after receipt of the products. This created cashflow that sustained the publishers – they did not have to wait for every book they printed to sell, they could get the money immediately and transfer the risk of slow sales to the distribution tier. And in addition, every distributor tended to order about 10% more than they could realistically sell, as a hedge against as surprise hit. When the distribution tier consolidated, the publishers suddenly lost tremendous volume in terms of sales and cash. That 10%, multiplied by 50 distributors, was a lot of books. And the distributors that were left were run with much tighter financial policies, leading many to cease pre-paying for inventory and instead asking to hold it “on consignment” – that is, they wanted to pay for the product as they sold it, transferring the risk back to the publishers. When I took control of the brand & business unit for TRPGs at Wizards of the Coast at the end of 1997, I asked Lisa Stevens to do a market research project to figure out what had really happened in the history of the industry and how we had (collectively) gotten ourselves into the deep hole we found ourselves in. There were two basic answers revealed by her research. The first was that the products the industry was producing had become too costly. The boxed set, in particular, was a huge problem. The cost of a boxed set vs. a hardcover book was often a multiple, rather than a percentage. The cost of a hardcover vs. a softcover book was also substantial. In fact, we found several high profile D&D products that were costing the company more to make than the suggested retail price of those products! This issue was endemic throughout the industry, since many publishers assumed they had to “keep up” with TSR in order to be competitive. But TSR wasn’t acting rationally, and had set its suggested retail prices based on its opinion of what the market would pay, not based on what they needed to charge in order to make a profit on the things they were publishing. In this field, we often use a shorthand pricing system called the “Rule of 5”. Under this rule, you determine the suggested price of a product by multiplying the cost of the product by 5. Factoring in the 3-tier distribution system the industry uses, the result is that the final suggested retail price produces the following divisions: • 20%: Cost of Goods (the cost of the production of the product, plus the wages paid to people who worked on it and any licenses or royalties) • 20%: Gross Profit (that is, profit before subtracting all operational costs like salaries, marketing, rent, etc.) to the Publisher • 20%: Distributor Margin (the gross profit the Distributor earns) • 40%: Retailer Margin (the gross profit the Retailer earns) This means that every $1 of cost increases the suggested retail price by $5. Some of the things TSR was doing were adding $10 to the cost of its products – which should have added $50 to the suggested retail prices – easily pushing many of those products into the $100 range. Instead, TSR was just losing money every time it sold one of these products. And the people who made those products never knew, because TSR’s dysfunctional management system hid that information from them. It was not until they got to Wizards of the Coast and had a chance to see the “real numbers” that they realized what had been happening. The second issue that Lisa’s data revealed led us to our conceptual breakthrough about the business of TRPGs that shaped every decision we made when bringing the 3rd Edition of D&D to the market. We realized that TRPGs fall into a special class of products & services that generate network effects. In our case, the effect that had the most impact was the concept of the network externality. For TRPGs, the “true value” of the product is not in the book/box that you buy. It is in the network of social connections that you share which enable you to play the game. Without that social network, the game’s value is massively reduced (it becomes literature, and there’s a small market for people who like to just read and never play TRPG content). We began to view the market not as a series of product pyramids (a core book at the top, and an ever-broadening base of support materials produced over time), but instead as a series of human webs that overlapped and interconnected. Where those webs were strong, the products flourished. Where they were weak, the products failed. The limiting factor to the growth and strength of the TRPG market was not retail stores or shelf space, it was human brains within which these games could interconnect. The more segmented those brains became, the weaker the overall social network was. Every new game system, and every new variant to those systems, subdivided that network further, making it weaker. Between 1993 and 1999, the social network of the TRPG players had become seriously frayed. Even if you just looked at the network of Dungeons & Dragons players you could see this effect: People self-segmented into groups playing Basic D&D, 1st Edition, 2nd Edition, and within 2nd Edition into various Campaign Settings that had become their own game variants. The effect on the market was that it became increasingly hard to make and sell something that had enough players in common that it would earn back its costs of development and production. We looked around the industry and saw the same problem at virtually every company that had become successful: White Wolf had 5 World of Darkness games which were all slightly different, surrounded by a more diffuse constellation of games somewhat related to the Storyteller system but designed to be mutually incompatible. FASA had 4 games, none of which shared anything in common. Palladium & Steve Jackson Games both had “house systems” that they tried to use across their entire product lines, but they had ended up with the “Campaign Setting” issue that was bedeviling TSR; the variant rules at the edges of their games were creating independent game networks despite the shared DNA of the core. And we knew that inside every one of those companies they were seeing the same financial information we were seeing: Each new release was selling fewer and fewer copies, and in response, the companies were increasing the pace of releases trying to sustain planned revenues by volume of titles, not by volume of units. And it was killing everyone. Our analysis lead us to the conclusion that in order to escape this trap, D&D at least had to try and unify its player community around one set of universally acceptable rules. And we had to cut back drastically on the number of different books we were publishing to focus spending on individual titles to drive up profitability. It was literally better to sell 7 copies of one book vs. 5 copies of two different books due to the economies of scale involved. We hooked that train up to the engine of the Open Gaming License to help spur consolidation of game systems towards a common core, and to enable publishers who wanted to just make a great world or a cool sourcebook to do so without having to first make their own homebrew RPG (and thus fragment the market), and watched the resulting highly entertaining explosion in creativity and revenues in the market starting in 2000. If you take that list of companies that were active at GenCon in 1994, you have to add all sorts of new names by the time you get to the GenCons of 2001/2: Alderac Entertainment Group, Decipher, Eden Studios, Fantasy Flight Games, Goodman Games, Green Ronin, Guardians of Order, Holistic Design, Kenzer & Co, Malhavoc Press, Mongoose, Necromancer, Pagan Publishing, Pinnacle Entertainment Group, and a host of others that I’m certainly omitting unintentionally. Of course many of these companies were active prior to theOGL/D20 era and many never published D20 products but they all benefited from the resurgence of D&D. Add to that a number of “indie” RPG companies that were supporting one or two full time designer/publishers like Ron Edwards, Luke Crane, and Vince Baker. The indy RPG segment was getting good advice and learning how to be financially viable via the exchanges on the Forge and other sites dedicated to small press publishing – work that continues to today and has helped create a large number of independently published small TRPGs exploring niches that larger mass-market TRPGs would never have attempted. Feeding all that activity was an even larger cadre of freelancers than had been in place in the 1990s – the D20 System enabled folks who would never otherwise have tried their hand at commercial design to get paid for their ideas, who joined the pre-existing ranks of freelance creative people working with the major publishers. Let’s set the high-water mark of the TRPG industry as GenCon 2003, where Wizards released the 3.5 edition of D&D. Shortly thereafter the dominoes started to fall: Incompatibilities between 3.0 and 3.5 meant that a lot of inventory on store shelves became “obsolete” in the minds of customers, resulting in a huge drop in sales and an effort by the retailers to clear that inventory at deep discounts. With the drop in sales came a drop in orders for new products – retailers got skittish about investing more money into a market that was causing them massive headaches. It’s possible that things could have found a natural bottom at this juncture, and that the market could have rebuilt itself on the 3.5 platform. Unfortunately, it was never going to get that chance. At the end of 2004, Blizzard released World of Warcraft. The MMO market which had been considered an interesting curiosity by the tabletop RPG market suddenly exploded. Whereas the previously most successful game (EverQuest) had attracted about 400,000 concurrent paying accounts at the height of its success, World of Warcraft exceeded a million players within 12 months. By the end of 2007, it had more than 5 million players in the US and Europe. An entire new market grew up around World of Warcraft as other companies rushed into the space, quickly creating offerings outside of the basic fantasy of Warcraft, including superheroes, science fiction, cyberpunk, and military history: the very foundations of the TRPG market. Worse (for the TRPG business) the MMOs also went after young children and engaged them in ways that TRPGs weren’t. Club Penguin, in particular, was so good at getting young kids into its game that Disney bought it for $700 million, and it was reported to have more than 30 million kids playing it. Almost overnight the TRPG industry suffered two quick body-blows. A large number of people within its network externality left their TRPG groups to focus on MMOs. And instead of receiving the benefits of an acquisition engine generating new players every year, young kids got diverted into MMOs at an age earlier than any suitable TRPG offering, likely establishing a play pattern they’ll keep through to adulthood. The effects on the TRPG market are now quite visible. At GenCon 2011, the number of companies that were paying full time salaries for TRPG game designer/developers was reduced to a short list: Alderac Entertainment, Kenzer & Co., Fantasy Flight Games, Margaret Weiss Productions, Mongoose, Palladium, Paizo, Steve Jackson Games, White Wolf, Wizards of the Coast, and one or two smaller “indy” publishers. Missing from that list are many of the successful companies that were thriving in 1994 and 2001/2 – lost to the industry as well are the freelancer jobs that those companies used to sustain. Some of those companies continue to publish as secondary sources of income for their owners: Green Ronin and Pinnacle Entertainment Group are great examples of this phenomenon. But that seems to me to be a very precarious place to operate - the margin for error (or accident) is razor thin. And the contraction is continuing. Wizards of the Coast has laid off a number of designers, as has White Wolf. Hero Games announced that it is ceasing to operate with a full-time staff. Problems at Catalyst indicate that it may be a while before they’re able to sustain the TRPG businesses they inherited from FASA. So we see the causes: Rise of MMOs, collapse of retailing, and consolidation of distribution. And we see the effects – loss of jobs, shuttering of companies, and virtually no new startup publishers in the space with a mass audience. Where Does This End? My opinion is that the hobby gaming industry is going to transform into a very small niche business. It will cater primarily to an aging group of players who have made TRPGs their lifetime hobbies. As those players age, they’ll need less and less support in the form of commercially produced products. They will instead seek out community support tools to help them remain in touch with their hobby even as the social network they’re directly connected to becomes ever more frayed. In the Escapist articles I am quoted as saying that this process will be like the evolution of the model train hobby. What I could have been more clear about was that my belief in this transformation is driven not by escalating costs (as in the case with model trains) but instead by the lack of an effective acquisition engine to drive new players into the TRPG hobby, and by the continued subtraction from the TRPG social network caused by MMOs. As neither of these problems is structural to the TRPG industry, and are both driven by external factors, there’s very little that can be done to counter them directly. Future Paths Digital The first thing that a lot of folks ask for when engaged about the future of the hobby is a virtual table top. It seems kind of obvious – if MMOs are breaking the social network of TRPGs then the way to fight back is to take the TRPG to the MMO’s territory and enable distributed on-line play. The problem is that VTTs exist, and they’re not successful. If you give people the choice between a VTT and an MMO, they pick the MMO. The VTT doesn’t solve the real problem that is that the MMO experience is simply better for a significant portion of the former TRPG social network. My opinion is that a successful and widely used VTT will remain an elusive mirage despite how much effort is poured into developing them. That is not to say that there’s no role for digital in the future of the TRPG. Transforming the delivery mechanism of TRPGs into digital products is, I think, the likely evolutionary path. And I’m not talking about just PDFs of printed books – I’m talking about the idea of making a digital product that takes advantage of all that implies to deliver an improved tabletop experience using iPad-type technology. Conversion to Family Games I define a Hobby Game as one where (at least one person) spends more time preparing to play the game than actually playing it. For TRPGs that is usually the GM, but often it is players as well. This “out of game time” may be the biggest obstacle to overcome to keeping the TRPG platform competitive. I think that commercially successful TRPGs of the future will be constructed more like a family game – something that can be unpacked, learned quickly, and played with little prep work. These games will give people a lot of the same joy of “roleplaying” and narrative control that they get from today’s Hobby Game TRPGs but with a fraction of the time investment. Wizards is already experimenting with this format, as is Fantasy Flight Games. It seems like a good bet that there is a substantially profitable business down this line of evolution. Pathfinder I will end this essay by talking a bit about Pathfinder and it’s role in the market. One of the goals of the OGL and the D20 project was to ensure that no single company would ever have the ability to kill Dungeons & Dragons. TSR almost did so; near the end of its existence it had pledged the copyrights and trademarks of the D&D franchise as security against loans it could not afford to repay. Had TSR gone into bankruptcy it is likely that for at least some time, and possibly an extremely lengthy period, nobody would have had the right to publish using that IP while the bankers fought over the carcass of TSR. The OGL/D20 project also ensured that a version of D&D would exist as of the 3rd Edition version no matter what future incarnation of D&D might be developed. Future versions of D&D would be benchmarked against that milestone, and if the market decided they did not want to switch to the new version, unlike in previous iterations where all commercial support for the previous version would be terminated, the market would be able to keep supporting the version that they preferred. This raises a high bar to future versions of D&D – you have to be so much better than the 3e game that people will voluntarily switch platforms. Pathfinder has (obviously) become the game that represents that 3rd Edition milestone in the minds of the majority of the players, and is benefiting from the fact that it seems the number of voluntary switches to 4e was less than Wizards had hoped. Any time a market contracts, a phenomenon is observed which is called a “flight to quality”. This means that the people who remain in a contracting market tend to concentrate their business around the most successful parts of the market, hoping that they’ll be able to ride out the collapse and make it to a future expansionary period. This is what is happening right now with Pathfinder. The social network that was coalesced by the D20 System has been inherited by Pathfinder. Even as the rest of the market is getting smaller,Pathfinder is getting bigger because its attracting all the people who remain interested in the TRPG format. Paizo, for its part, is still trying to re-start the acquisition engine. The Beginner Box it released this year is the best intro product that the TRPG market has seen in well over a decade (maybe 2 decades). I’m certain that there are kids who got it for Christmas and are right now getting their first taste of the TRPG experience. Hopefully those kids will decide to spend at least a part of their gaming time around the tabletop rather than the MMO virtual worlds. Only time will tell. My instinct is that Pathfinder will be the lifeboat that the long-term hobbyists will use to keep the social network from fraying past the point of no return. There’s enough people playing it and interacting both locally and virtually that I think it has the momentum it needs to sustain itself even if a total worst case scenario would unfold (Barnes & Noble also fails, and the full line hobby game store ceases to exist). Paizo is doing the right things in making its community and its market one unified whole, which is a great insurance policy against forces beyond its control. Where Goes D&D? I’d like to expound on this topic in more detail. Unfortunately, I’m privy to confidential information that makes that impossible at this time. I see the same things you all see – Monte Cook going back to Wizards of the Coast and a general recognition in the market that 4th Edition was not commercially successful. I think that in 2012 I’ll have a lot more to say about D&D, but that will have to wait for a future column. For now I’ll just end by saying that I hope with all my heart that the folks at Wizards of the Coast figure out how to get that franchise righted and back on track, because it would be good for the hobby in general for D&D to become a strong brand again. --RSD / Atlanta, December 2011 Ok, so someone else now confirms my suspicions about big news about to be dropped on us. Does this mean 5th edition? Does this mean D&D will be radically altered (such as a card based game or a board game). I have no idea. Unfortunately, only time will tell. I can only pray that the people at Wizards of the Coast do not turn our beloved table top roleplaying game into strictly an MMO, a card based system, or simply a board game. I have been playing since 1979 and I have always loved watching my beloved characters grow from level 1. We can only hope that WotC maintains the high standard for Dungeons and Dragons that we have all come to love and expect.
#2 zeratulcraft Jan 03, 2012 1:17:07	A fascinating read, especially in regards to the OGL making 3rd Ed immortal. We've always got that to go back to, regardless of what they do to the game later. But I don't think something like this can really die properly. I'll raise my kids on DND, and hopefully others will too. Enough of them will take to it that they'll give it to their friends and then their own kids. But the idea that tabletop gaming could become something that is hereditary is more than a little concerning. I've played every edition to date, in a variety of formats. Basic when I started, ADND in Baldurs gate and Icewind Dale style games. 3rd when I met my current tabletop group. 4th when that came out. Returned to 3rd, returned to 4th... a number of times as products were released that took my fancy that I wished to use. Gotten 26 rooms into the worlds largest dungeon, one of the most amazing things ever written. I'll be very curious to see what comes out. If it takes my fancy, I'll play it. Even if it doesn't, I'll buy it and give it a good long gander and a test run. I want them to continue making games, so I will continue to support them.
#3 robertread3 Jan 03, 2012 3:35:32	i have honestly never read a forum post that long, however this is a fasinating read and i thank you for posting it. pathfinder pathfinder is a game i have had very limited interaction with, my girlfriend has a game going at her college but other then that we play 4e with the local LFR groups of maryland and virgina as well as my 2 home campagins (both 4e). i have seen enough that shows pathfinder is not going anywhere and allows some players to do things that the 4e system makes a total drag. example: summoner. in pathfinder my girlfriend plays a summoner character, she is able to create a fully customizable and functional summoned pet to fight with, (whom she named fluffy and is attempting to eventually make him look like Byakuei from Ga-rei. (a doggish looking asian style dragon) 4e has no way to accomplish such a task as the summoner wizard must sacrifice his precious daily powers to summon 3 diffrent pre made, creatures who all share his actions and limit his own effectivness by harming him in some way for not giving them commands.
#4 shard_of_suzail Jan 03, 2012 14:09:17	This was a very interesting read, my thanks for posting it. It's this sort of "behind the scenes" spotlight that i think gamers are needing at the moment, as they try to piece together what is happening in their hobby while the powers that be offer nothing but silence on the issues that matter.
#5 Fallen_Star_02 Jan 03, 2012 15:24:25	Why does everyone who claims 3rd edition was more successful that 4th (whether or not its more fun to play) now call for a 5th edition? Wouldn't it make more sense for Wizards to go back to printing 3rd edition, if they were infact admitting defeat? I also wonder why, if the industral-age distribution model of warehousing distributors acting as middlemen, is at the root of the industry's decline, why is WotC so adamatly against direct selling? When I look at Pathfinder, my perception is that they are growing because they have imbraced a direct-sales model. Their adventures and maps are sold via subscription, and everything is available as a PDF. I am convinced that the collossal misstep WotC made in the launnch of 4th edition was not in making the game more tactical-based, nor in focusing on "crunch" to the exclusion of the "fluff". Thier mistake was beliving their player base would embrace DDI as a replacement for buying books. It doesnt matter that D&D has 40 classes and 3000 feats. DDI allows you to search and filter to get the exact character you want. This backfired because it was a reversal of the TRPG's had always ran. Game setting/systems start with a universal core of rules and flavor, then gaming groups ADD IN content that interests them. DDI means you have to take everything then CUT OUT what you don't like.
#6 zeratulcraft Jan 03, 2012 16:12:44	Why does everyone who claims 3rd edition was more successful that 4th (whether or not its more fun to play) now call for a 5th edition? Wouldn't it make more sense for Wizards to go back to printing 3rd edition, if they were infact admitting defeat? They're not going to reprint 3rd. There's already loads of material, going back would give them nothing to do. But a vocal many (and probably a statistically relevant true number) of 3rd lovers don't like 4th, but are interested to see what they do with 5th, since it won't be 4th. We can play 3rd if we want, I know I've still got my books.
#7 Fallen_Star_02 Jan 03, 2012 16:42:05	Paizo, for its part, is still trying to re-start the acquisition engine. The Beginner Box it released this year is the best intro product that the TRPG market has seen in well over a decade (maybe 2 decades). I’m certain that there are kids who got it for Christmas and are right now getting their first taste of the TRPG experience. Hopefully those kids will decide to spend at least a part of their gaming time around the tabletop rather than the MMO virtual worlds. Only time will tell. I would also like to know what about paizo's beginner box makes it "best in 2 decades?" I was under the impression that the D&D Red Box has sold fairly well. My local Wal-mart had about 5 copies when the red box was first published, which it ran out of quickly and never re-stocked. Wouldn't the true test be the number of new players these boxes successfully attract to the game? How can we measure that for sure?
#8 Style75 Jan 03, 2012 22:53:16	I've got a gut feeling that WotC is cooking up something really different from anything we've seen before. This article shows us that the old way of doing business didn't work. Publishing books is a dying industry, no matter if it's fiction or biographies or TRPG's. I firmly believe that includes Paizo and Pathfinder. I know quite a few Pathfinder players and they're already starting to burnout on print products. PF is just now running into the same problem all new RPG editions face: what do you sell when you've already sold the basics? I think it's no surprise that Paizo is preparing to launch an MMO. They see the writing on the wall; PF as a TRPG has run its course and there's only so many books left to publish before the market says "enough already". WotC is not run by dummies. They know that 5e or next-gen D&D or whatever it is they're creating is going to have to blur the lines between game formats if it's going to succeed. First of all, the game won't be sold as a series of books. Those days are already gone. It'll be some combination of CCG, MMO, VTT and online only subscription based service. My guess is that all of those options will be mashed into a modular system that will let individual gaming groups buy into whatever type of game they want to play. Mike Mearls hinted at this heavily in his "Legends and Lore" articles. How they do this will be tricky because a jack of all trades is often a master of none. Whatever they come up with, it had better be extremely good to convince the already fractured gaming community to buy in. I'm guessing this will be their last shot at keeping D&D alive into the future. Inventing a new edition will be expensive and 4e is only 4 years old. Hasbro won't bankroll indefinite reboots. If 5e fails, I fear that D&D will end up being nothing more than a line of toys and board games.
#9 Gatt Jan 03, 2012 23:18:48	What it means is this... -The future of D&D is digital, with digital books to cut costs and an Online service to connect players that would otherwise be "Lost customers". Essentially, a D&D version of Magic the Gathering Online. It lets WOTC retain lapsed players who would otherwise be lost due to not having access to a playgroup. Plus, they'll charge subscription fees, and probably offer "Campaign passes" for those who don't want a subscription but do want to play now and again. -The future of D&D is presently in a partial or full reversion to the 3.x rules system. D&D 4e has been identified as commercially unsuccessfull, 3.x has been identified as having significant strength to it. -The system will be tweaked in order to fix 3.x's shortcomings and make it more readily translatable to virtual formats. -There will be a significant push for new player aquisition, via a digital platform as that is seen as the more viable route. Primarily because gameshops are dropping, and bookstores are seen to be eclipsed by the long-tail internet retailers like amazon and e-books. I'd actually say, after reading that article, that it looks like D&D's future is very bright. I would contend that a D&D equivalent of MTGO will be far more successful than anyone has yet realized.
#10 Style75 Jan 03, 2012 23:53:42	I don't think a reversion to a modified 3.x ruleset will work. First of all, a lot of their current 4e player base will balk at going "back" and probably just keep playing 4e. Secondly, the current 3.x players have almost all switched over to PF. What can WotC do to make them switch back and reinvest in a version they've probably already paid for 3 times over? (3.0, 3.5, PF) There's only so many times you can sell the same game to same group of people. I think the only chance WotC has for 5e is to find a new rule set that will bring together the best of all editions 1 through 4 and create something new that appeals to everyone and will somehow work in the digital age and generate profit without selling paper based books. It's got to be something we havn't seen before in the RPG industry. Good luck, that's going to be tough. I wouldn't want to be in Mike Mearls' shoes, the pressure on him must be immense.
#11 shard_of_suzail Jan 04, 2012 11:48:15	Why does everyone who claims 3rd edition was more successful that 4th (whether or not its more fun to play) now call for a 5th edition? Wouldn't it make more sense for Wizards to go back to printing 3rd edition, if they were infact admitting defeat? 5th Edition supporters, or at least hopefuls, usually feel that 4th edition did some things, perhaps a lot of things right, but that it lost too much to appeal to them. I liked a lot of what 4th did, for example and tried it out fully before deciding that it wasnt for me. I recognise that the community is split and would like it back together and taking the best elements of 3rd and 4th seems a good way to do this or even taking 4th to its logical conclusion and going classless would be a possible step. The problem was both that it went too far and that it didnt go far enough.
#12 jim11735 Jan 04, 2012 13:47:45	Great article, originally on ENWorld. I think it, along with State of the Game articles, helps me understand some of the more peculiar ideas from Legends and Lore articles. The Old School Renaissance, with L&L talking about being able to play all the editions. Player acquisition, with L&L having levels of complexity which could mean an age appropriatness. And of course the return of Monte. Also that 4eE had to be radically different from 3rd, to break from it's own OGL. You can only go forward. I would welcome a departure from Powers , they can't call the version Edition 3.oops. I am guessing they drop the numeration as they did with the E books having names not numbers and come out with D&D and AD&D. Somewhere in the fine print or as table header in Wikipedia will it refer to it as 5th edition. My hope is tabletop moves away from books. VTT would have been awesome in the MUDD days, not after MMOs. I'd like to see a wireless or even Bluetooth connection where different latpops, iPads and smartphones can connect. The DM says your character loses 32 HPs and your HP total changes on your screen! You could even move away from dice and minis - a purely imaginative roleplaying game where the nutts and bolts mechanics are handled digitally. Of course, backwards compatability to dice and minis and even printed character sheets - not just printing the screen your looking at - would be encouraged. D&D is an IP. It's not a book.
#13 jim11735 Jan 04, 2012 13:49:05	And I'm hoping is 5th is more like 2nd than 3.5 or 4E.
#14 Samrin Jan 04, 2012 16:46:11	And I'm hoping is 5th is more like 2nd than 3.5 or 4E. Not me. I don't want the return of race/class restrictions, different experience paths, THAC0, linear fighters, etc.
#15 zeratulcraft Jan 04, 2012 16:59:50	And I'm hoping is 5th is more like 2nd than 3.5 or 4E. Not me. I don't want the return of race/class restrictions, different experience paths, THAC0, linear fighters, etc. On a side note, what is peoples problem with Thac0? "The number you need to hit, with their AC as your modifier." It's like, one sentence of easiness... Anyway, I'd rather 5e go forward, but I'd rather it had less... similarity between each class than what I perceive of 4e. Each defender had a "mark and slow" and a "mark and prone" and a "mark and do slightly more damage than normal" each controller had "lightning damage and daze" or "cold damage and daze" or "fire damage and daze".
#16 Jaden.Shadowcraft Jan 04, 2012 17:47:50	Jim11735: My hope is tabletop moves away from books. VTT would have been awesome in the MUDD days, not after MMOs. I'd like to see a wireless or even Bluetooth connection where different latpops, iPads and smartphones can connect. The DM says your character loses 32 HPs and your HP total changes on your screen! While I think that electronic versions of the books would be awesome, not every person can afford laptops or iPads. Personally, I think they should simply supply all DDI users with PDFs of the books that they use that have to be logged into to be usable. Piracy problem solved. You could even move away from dice and minis - a purely imaginative roleplaying game where the nutts and bolts mechanics are handled digitally. I could not disagree with you more on this point. If they take away the dice from the game, then it's not longer D&D. How on earth can you "roll a critical hit" without dice? Digital dice are not the same. They never will be.
#17 Samrin Jan 04, 2012 21:30:37	And I'm hoping is 5th is more like 2nd than 3.5 or 4E. Not me. I don't want the return of race/class restrictions, different experience paths, THAC0, linear fighters, etc. On a side note, what is peoples problem with Thac0? "The number you need to hit, with their AC as your modifier." It's like, one sentence of easiness... Anyway, I'd rather 5e go forward, but I'd rather it had less... similarity between each class than what I perceive of 4e. Each defender had a "mark and slow" and a "mark and prone" and a "mark and do slightly more damage than normal" each controller had "lightning damage and daze" or "cold damage and daze" or "fire damage and daze". Thac0 is just needless complexity and it is very counter-intuitive is all. Hated it as a system, because it made no sense to do it that way compared to what we have now.
#18 Obvious_Ninja Jan 05, 2012 12:27:02	Been away from the boards for a while. Very interesting artical. Not quite sure how I feel about it.
#19 nb_nmare Jan 06, 2012 2:30:08	While I think that electronic versions of the books would be awesome, not every person can afford laptops or iPads. You can buy a second hand netbook from eBay for less than $20.00. If you can't afford that, I really don't think you'd be able to afford any printed RPG products either.
#20 Cyber-Dave Jan 06, 2012 12:32:39	What Ryan Dancy says should be taken with a grain of salt. He doesn't have the best reputation as a reliable source...
#21 Popesixtus Jan 06, 2012 12:56:47	While I think that electronic versions of the books would be awesome, not every person can afford laptops or iPads. You can buy a second hand netbook from eBay for less than $20.00. If you can't afford that, I really don't think you'd be able to afford any printed RPG products either. Not everyone loves playing games off of electronic devices. And as a professional social worker in an urban school system, I work with plenty of kids who's tech-savviness only extends to someone creating a facebook account for them. Ask them what a netbook is, and they'll stare at you funny. And some of them love D&D - I run sessions for them all the time. One of the crucial points of the OP was that the community is divided in lots of ways. If a new edition is indeed in the offing, then it would be great if they combined the print stuff and the organic stuff more organically so that it is as inclusive as possible.
#22 Litmus Jan 06, 2012 16:38:26	Fantastic article. I do think that there is one very important trend missing from this though - from what I'm seeing there has been a surge in interest in the last ~year from people that have never played TRPGs, along with a return to D&D from players that haven't played for the last 5-10 years. Admittedly this is based purely on anecdotal evidence - observing both the increase in members in a large D&D meetup group and the type of players that are joining, but I'm pretty certain that there is something to it. A large part of the surge that I'm seeing is driven by the same MMOs that stole all of those players several years back. With WoW in decline, players are leaving and at least some of them are looking to D&D as a replacement. Video games have made fantasy more mainstream, and perhaps the net impact over the next few years might be to introduce players to D&D that might never have otherwise given it a try. We're certainly seeing a higher proportion of female players at our meetup than in previous years for example. I think there is a huge opportunity right now to grow the player base, but D&D currently lacks the product strategy to do so effectively. New edition or not, they need to do something about that asap or miss the boat. They need to aggressively target the jaded WoW player with an exciting entry level product for players - as the article mentions, it's something that's been sorely lacking for some time now.
#23 Garthanos Jan 07, 2012 5:54:29	What Ryan Dancy says should be taken with a grain of salt. He doesn't have the best reputation as a reliable source... I agree a lot of the things we find typed in this digital space needs be taken with an eye to it's motivations

Post/Author/DateTime

Post

Jaden.Shadowcraft

Jan 02, 2012 22:55:13

This is a copy of an essay written by Ryan Dancey. This is a very extensive and informative essay in which he talks about the state of the table top RPG system as a whole.

I [Ryan Dancey] have been involved on the business side of hobby game publishing since 1993, when I operated one of the first on-line/mail order hobby game stores, RPG International. It was through my work at RPG International that I met the team at Alderac Entertainment Group with whom I co-created the Legend of the Five Rings intellectual property, eventually spinning it out into a stand-alone company called Five Rings Publishing Group which was acquired by Wizards of the Coast in 1997 as a part of the process whereby Wizards also acquired TSR. I was at Wizards, working as a brand manager on trading card games and eventually leading the brand and business unit for Dungeons & Dragons until early in 2001 when I left to found a startup providing organized play services to 3rd party game companies, wound that down in 2003 and worked as a consultant until 2007 when I became the Chief Marketing Officer of CCP. Currently I’m the CEO of Goblinworks, a startup company developing a next-generation fantasy MMO.

I give that background (again for those of you who read the first column in this series; sorry for the repetition) just to establish the fact that I’ve been watching this industry closely for a very long time and feel I’ve got some insights worth sharing.

The Tabletop Roleplaying Game Hobby Is Contracting

Let me begin with a few simple statistics.

In 1995, when I was writing the business plan for the Legend of the Five Rings CCG, I assumed, based on the conventional wisdom at the time, that there were approximately 5,000 full line hobby gaming stores in the North American market. After arriving at Wizards of the Coast in 1997, I was surprised to discover that Wizards had been able to identify (after extensive work) only about 2,500 stores. In addition, there were about 2,500-3,000 mass-market book stores that sold some hobby gaming products; mostly TRPGs, and mostly just D&D.

Today, the best data I have been able to assemble leads me to believe that there are less than 1,000 full line hobby gaming stores left, and there may be as few as 500.

Of those mass-market bookstores, B. Dalton is gone. Waldenbooks is gone. Borders is going. Barnes & Nobel is not healthy. Today, there are only about 1,000 mass-market bookstores left (717 are Barnes & Nobel stores). That is meaningful because historically 50% of the D&D business was sold via mass-market bookstores and the loss of those stores has directly impacted D&D (and other TRPGs) significantly.

In 1994, when I attended my first GenCon, the list of exhibitors at the show included many companies that earned most (or all) of their income from selling tabletop RPGs, and who employed one or more full time TRPG designer/developers: Atlas Games, Chaosium, Dream Pod Nine, FASA, Game Designers Workshop, Heartbreaker, Hero Games, Iron Crown Enterprises, Mayfair, Palladium, R. Talsorian, Steve Jackson Games, TSR, West End Games, White Wolf, and I’m sure there’s others I’ve regretfully omitted.

In addition to those companies there was another constellation of small publishers consisting of one or two people trying to make a start in the business, working part time as TRPG designer/publishers, and buzzing around all these companies were dozens (maybe as many as a hundred) freelancers who made all or a significant part of their incomes from TRPG design work.

It’s notable that many in the industry saw the period from 1994-1999 as being fairly bad for TRPGs. The twin rise of collectible card games and the Games Workshop hobby appeared to be draining the TRPG segment of designers and of revenue. The most obvious sign of this problem was the failure of TSR’s business, leading to its acquisition by Wizards of the Coast in 1997.

I would argue that the segment actually brought on most of its woes by simply producing too much product. The proliferation of games, game worlds, and “house systems” so fragmented the market that despite indications that overall revenue remained fairly constant for TRPGs as a segment, the income earned per product and per company became so sub-divided that many (both products & companies) became unprofitable.

A second major factor at work was the consolidation of the distribution tier. When I was selling Legend of the Five Rings in 1996, we had an initial list of North American distributors of about 50. By the end of the decade, that list had shrunk to about a dozen. In fact, virtually every distributor in the market was either sold or closed between 1990 and 1999 – the people who had created the distribution network for TRPGs cashed out to the people who rebuilt it for the CCG business.

This consolidation had an unexpected effect on the TRPG publishers. Every distributor prior to the late 1990s had engaged in a practice whereby they ordered product from TRPG publishers in bulk, and held the inventory in their warehouses to fulfill retailer orders as needed. The standard industry terms were for the distributors to pay the publishers 30 days after receipt of the products. This created cashflow that sustained the publishers – they did not have to wait for every book they printed to sell, they could get the money immediately and transfer the risk of slow sales to the distribution tier. And in addition, every distributor tended to order about 10% more than they could realistically sell, as a hedge against as surprise hit. When the distribution tier consolidated, the publishers suddenly lost tremendous volume in terms of sales and cash. That 10%, multiplied by 50 distributors, was a lot of books. And the distributors that were left were run with much tighter financial policies, leading many to cease pre-paying for inventory and instead asking to hold it “on consignment” – that is, they wanted to pay for the product as they sold it, transferring the risk back to the publishers.

When I took control of the brand & business unit for TRPGs at Wizards of the Coast at the end of 1997, I asked Lisa Stevens to do a market research project to figure out what had really happened in the history of the industry and how we had (collectively) gotten ourselves into the deep hole we found ourselves in.

There were two basic answers revealed by her research.

The first was that the products the industry was producing had become too costly. The boxed set, in particular, was a huge problem. The cost of a boxed set vs. a hardcover book was often a multiple, rather than a percentage. The cost of a hardcover vs. a softcover book was also substantial. In fact, we found several high profile D&D products that were costing the company more to make than the suggested retail price of those products! This issue was endemic throughout the industry, since many publishers assumed they had to “keep up” with TSR in order to be competitive. But TSR wasn’t acting rationally, and had set its suggested retail prices based on its opinion of what the market would pay, not based on what they needed to charge in order to make a profit on the things they were publishing.

In this field, we often use a shorthand pricing system called the “Rule of 5”. Under this rule, you determine the suggested price of a product by multiplying the cost of the product by 5. Factoring in the 3-tier distribution system the industry uses, the result is that the final suggested retail price produces the following divisions:

• 20%: Cost of Goods (the cost of the production of the product, plus the wages paid to people who worked on it and any licenses or royalties)
• 20%: Gross Profit (that is, profit before subtracting all operational costs like salaries, marketing, rent, etc.) to the Publisher
• 20%: Distributor Margin (the gross profit the Distributor earns)
• 40%: Retailer Margin (the gross profit the Retailer earns)

This means that every $1 of cost increases the suggested retail price by $5. Some of the things TSR was doing were adding $10 to the cost of its products – which should have added $50 to the suggested retail prices – easily pushing many of those products into the $100 range. Instead, TSR was just losing money every time it sold one of these products. And the people who made those products never knew, because TSR’s dysfunctional management system hid that information from them. It was not until they got to Wizards of the Coast and had a chance to see the “real numbers” that they realized what had been happening.

The second issue that Lisa’s data revealed led us to our conceptual breakthrough about the business of TRPGs that shaped every decision we made when bringing the 3rd Edition of D&D to the market.

We realized that TRPGs fall into a special class of products & services that generate network effects. In our case, the effect that had the most impact was the concept of the network externality. For TRPGs, the “true value” of the product is not in the book/box that you buy. It is in the network of social connections that you share which enable you to play the game. Without that social network, the game’s value is massively reduced (it becomes literature, and there’s a small market for people who like to just read and never play TRPG content).

We began to view the market not as a series of product pyramids (a core book at the top, and an ever-broadening base of support materials produced over time), but instead as a series of human webs that overlapped and interconnected. Where those webs were strong, the products flourished. Where they were weak, the products failed. The limiting factor to the growth and strength of the TRPG market was not retail stores or shelf space, it was human brains within which these games could interconnect.

The more segmented those brains became, the weaker the overall social network was. Every new game system, and every new variant to those systems, subdivided that network further, making it weaker. Between 1993 and 1999, the social network of the TRPG players had become seriously frayed. Even if you just looked at the network of Dungeons & Dragons players you could see this effect: People self-segmented into groups playing Basic D&D, 1st Edition, 2nd Edition, and within 2nd Edition into various Campaign Settings that had become their own game variants. The effect on the market was that it became increasingly hard to make and sell something that had enough players in common that it would earn back its costs of development and production.

We looked around the industry and saw the same problem at virtually every company that had become successful: White Wolf had 5 World of Darkness games which were all slightly different, surrounded by a more diffuse constellation of games somewhat related to the Storyteller system but designed to be mutually incompatible. FASA had 4 games, none of which shared anything in common. Palladium & Steve Jackson Games both had “house systems” that they tried to use across their entire product lines, but they had ended up with the “Campaign Setting” issue that was bedeviling TSR; the variant rules at the edges of their games were creating independent game networks despite the shared DNA of the core. And we knew that inside every one of those companies they were seeing the same financial information we were seeing: Each new release was selling fewer and fewer copies, and in response, the companies were increasing the pace of releases trying to sustain planned revenues by volume of titles, not by volume of units. And it was killing everyone.

Our analysis lead us to the conclusion that in order to escape this trap, D&D at least had to try and unify its player community around one set of universally acceptable rules. And we had to cut back drastically on the number of different books we were publishing to focus spending on individual titles to drive up profitability. It was literally better to sell 7 copies of one book vs. 5 copies of two different books due to the economies of scale involved.

We hooked that train up to the engine of the Open Gaming License to help spur consolidation of game systems towards a common core, and to enable publishers who wanted to just make a great world or a cool sourcebook to do so without having to first make their own homebrew RPG (and thus fragment the market), and watched the resulting highly entertaining explosion in creativity and revenues in the market starting in 2000.

If you take that list of companies that were active at GenCon in 1994, you have to add all sorts of new names by the time you get to the GenCons of 2001/2: Alderac Entertainment Group, Decipher, Eden Studios, Fantasy Flight Games, Goodman Games, Green Ronin, Guardians of Order, Holistic Design, Kenzer & Co, Malhavoc Press, Mongoose, Necromancer, Pagan Publishing, Pinnacle Entertainment Group, and a host of others that I’m certainly omitting unintentionally. Of course many of these companies were active prior to theOGL/D20 era and many never published D20 products but they all benefited from the resurgence of D&D.

Add to that a number of “indie” RPG companies that were supporting one or two full time designer/publishers like Ron Edwards, Luke Crane, and Vince Baker. The indy RPG segment was getting good advice and learning how to be financially viable via the exchanges on the Forge and other sites dedicated to small press publishing – work that continues to today and has helped create a large number of independently published small TRPGs exploring niches that larger mass-market TRPGs would never have attempted.

Feeding all that activity was an even larger cadre of freelancers than had been in place in the 1990s – the D20 System enabled folks who would never otherwise have tried their hand at commercial design to get paid for their ideas, who joined the pre-existing ranks of freelance creative people working with the major publishers.

Let’s set the high-water mark of the TRPG industry as GenCon 2003, where Wizards released the 3.5 edition of D&D. Shortly thereafter the dominoes started to fall: Incompatibilities between 3.0 and 3.5 meant that a lot of inventory on store shelves became “obsolete” in the minds of customers, resulting in a huge drop in sales and an effort by the retailers to clear that inventory at deep discounts. With the drop in sales came a drop in orders for new products – retailers got skittish about investing more money into a market that was causing them massive headaches.

It’s possible that things could have found a natural bottom at this juncture, and that the market could have rebuilt itself on the 3.5 platform.

Unfortunately, it was never going to get that chance.

At the end of 2004, Blizzard released World of Warcraft. The MMO market which had been considered an interesting curiosity by the tabletop RPG market suddenly exploded. Whereas the previously most successful game (EverQuest) had attracted about 400,000 concurrent paying accounts at the height of its success, World of Warcraft exceeded a million players within 12 months. By the end of 2007, it had more than 5 million players in the US and Europe. An entire new market grew up around World of Warcraft as other companies rushed into the space, quickly creating offerings outside of the basic fantasy of Warcraft, including superheroes, science fiction, cyberpunk, and military history: the very foundations of the TRPG market.

Worse (for the TRPG business) the MMOs also went after young children and engaged them in ways that TRPGs weren’t. Club Penguin, in particular, was so good at getting young kids into its game that Disney bought it for $700 million, and it was reported to have more than 30 million kids playing it.

Almost overnight the TRPG industry suffered two quick body-blows. A large number of people within its network externality left their TRPG groups to focus on MMOs. And instead of receiving the benefits of an acquisition engine generating new players every year, young kids got diverted into MMOs at an age earlier than any suitable TRPG offering, likely establishing a play pattern they’ll keep through to adulthood.

The effects on the TRPG market are now quite visible. At GenCon 2011, the number of companies that were paying full time salaries for TRPG game designer/developers was reduced to a short list: Alderac Entertainment, Kenzer & Co., Fantasy Flight Games, Margaret Weiss Productions, Mongoose, Palladium, Paizo, Steve Jackson Games, White Wolf, Wizards of the Coast, and one or two smaller “indy” publishers. Missing from that list are many of the successful companies that were thriving in 1994 and 2001/2 – lost to the industry as well are the freelancer jobs that those companies used to sustain.

Some of those companies continue to publish as secondary sources of income for their owners: Green Ronin and Pinnacle Entertainment Group are great examples of this phenomenon. But that seems to me to be a very precarious place to operate - the margin for error (or accident) is razor thin.

And the contraction is continuing. Wizards of the Coast has laid off a number of designers, as has White Wolf. Hero Games announced that it is ceasing to operate with a full-time staff. Problems at Catalyst indicate that it may be a while before they’re able to sustain the TRPG businesses they inherited from FASA.

So we see the causes: Rise of MMOs, collapse of retailing, and consolidation of distribution. And we see the effects – loss of jobs, shuttering of companies, and virtually no new startup publishers in the space with a mass audience.

Where Does This End?

My opinion is that the hobby gaming industry is going to transform into a very small niche business. It will cater primarily to an aging group of players who have made TRPGs their lifetime hobbies. As those players age, they’ll need less and less support in the form of commercially produced products. They will instead seek out community support tools to help them remain in touch with their hobby even as the social network they’re directly connected to becomes ever more frayed.

In the Escapist articles I am quoted as saying that this process will be like the evolution of the model train hobby. What I could have been more clear about was that my belief in this transformation is driven not by escalating costs (as in the case with model trains) but instead by the lack of an effective acquisition engine to drive new players into the TRPG hobby, and by the continued subtraction from the TRPG social network caused by MMOs.

As neither of these problems is structural to the TRPG industry, and are both driven by external factors, there’s very little that can be done to counter them directly.

Future Paths

Digital

The first thing that a lot of folks ask for when engaged about the future of the hobby is a virtual table top. It seems kind of obvious – if MMOs are breaking the social network of TRPGs then the way to fight back is to take the TRPG to the MMO’s territory and enable distributed on-line play.

The problem is that VTTs exist, and they’re not successful. If you give people the choice between a VTT and an MMO, they pick the MMO. The VTT doesn’t solve the real problem that is that the MMO experience is simply better for a significant portion of the former TRPG social network. My opinion is that a successful and widely used VTT will remain an elusive mirage despite how much effort is poured into developing them.

That is not to say that there’s no role for digital in the future of the TRPG. Transforming the delivery mechanism of TRPGs into digital products is, I think, the likely evolutionary path. And I’m not talking about just PDFs of printed books – I’m talking about the idea of making a digital product that takes advantage of all that implies to deliver an improved tabletop experience using iPad-type technology.

Conversion to Family Games

I define a Hobby Game as one where (at least one person) spends more time preparing to play the game than actually playing it. For TRPGs that is usually the GM, but often it is players as well. This “out of game time” may be the biggest obstacle to overcome to keeping the TRPG platform competitive.

I think that commercially successful TRPGs of the future will be constructed more like a family game – something that can be unpacked, learned quickly, and played with little prep work. These games will give people a lot of the same joy of “roleplaying” and narrative control that they get from today’s Hobby Game TRPGs but with a fraction of the time investment. Wizards is already experimenting with this format, as is Fantasy Flight Games. It seems like a good bet that there is a substantially profitable business down this line of evolution.

Pathfinder

I will end this essay by talking a bit about Pathfinder and it’s role in the market.

One of the goals of the OGL and the D20 project was to ensure that no single company would ever have the ability to kill Dungeons & Dragons. TSR almost did so; near the end of its existence it had pledged the copyrights and trademarks of the D&D franchise as security against loans it could not afford to repay. Had TSR gone into bankruptcy it is likely that for at least some time, and possibly an extremely lengthy period, nobody would have had the right to publish using that IP while the bankers fought over the carcass of TSR.

The OGL/D20 project also ensured that a version of D&D would exist as of the 3rd Edition version no matter what future incarnation of D&D might be developed. Future versions of D&D would be benchmarked against that milestone, and if the market decided they did not want to switch to the new version, unlike in previous iterations where all commercial support for the previous version would be terminated, the market would be able to keep supporting the version that they preferred. This raises a high bar to future versions of D&D – you have to be so much better than the 3e game that people will voluntarily switch platforms.

Pathfinder has (obviously) become the game that represents that 3rd Edition milestone in the minds of the majority of the players, and is benefiting from the fact that it seems the number of voluntary switches to 4e was less than Wizards had hoped.

Any time a market contracts, a phenomenon is observed which is called a “flight to quality”. This means that the people who remain in a contracting market tend to concentrate their business around the most successful parts of the market, hoping that they’ll be able to ride out the collapse and make it to a future expansionary period. This is what is happening right now with Pathfinder. The social network that was coalesced by the D20 System has been inherited by Pathfinder. Even as the rest of the market is getting smaller,Pathfinder is getting bigger because its attracting all the people who remain interested in the TRPG format.

Paizo, for its part, is still trying to re-start the acquisition engine. The Beginner Box it released this year is the best intro product that the TRPG market has seen in well over a decade (maybe 2 decades). I’m certain that there are kids who got it for Christmas and are right now getting their first taste of the TRPG experience. Hopefully those kids will decide to spend at least a part of their gaming time around the tabletop rather than the MMO virtual worlds. Only time will tell.

My instinct is that Pathfinder will be the lifeboat that the long-term hobbyists will use to keep the social network from fraying past the point of no return. There’s enough people playing it and interacting both locally and virtually that I think it has the momentum it needs to sustain itself even if a total worst case scenario would unfold (Barnes & Noble also fails, and the full line hobby game store ceases to exist). Paizo is doing the right things in making its community and its market one unified whole, which is a great insurance policy against forces beyond its control.

Where Goes D&D?

I’d like to expound on this topic in more detail. Unfortunately, I’m privy to confidential information that makes that impossible at this time. I see the same things you all see – Monte Cook going back to Wizards of the Coast and a general recognition in the market that 4th Edition was not commercially successful. I think that in 2012 I’ll have a lot more to say about D&D, but that will have to wait for a future column. For now I’ll just end by saying that I hope with all my heart that the folks at Wizards of the Coast figure out how to get that franchise righted and back on track, because it would be good for the hobby in general for D&D to become a strong brand again.

--RSD / Atlanta, December 2011

Ok, so someone else now confirms my suspicions about big news about to be dropped on us. Does this mean 5th edition? Does this mean D&D will be radically altered (such as a card based game or a board game). I have no idea. Unfortunately, only time will tell.

I can only pray that the people at Wizards of the Coast do not turn our beloved table top roleplaying game into strictly an MMO, a card based system, or simply a board game. I have been playing since 1979 and I have always loved watching my beloved characters grow from level 1. We can only hope that WotC maintains the high standard for Dungeons and Dragons that we have all come to love and expect.

zeratulcraft

Jan 03, 2012 1:17:07

A fascinating read, especially in regards to the OGL making 3rd Ed immortal. We've always got that to go back to, regardless of what they do to the game later. But I don't think something like this can really die properly. I'll raise my kids on DND, and hopefully others will too. Enough of them will take to it that they'll give it to their friends and then their own kids. But the idea that tabletop gaming could become something that is hereditary is more than a little concerning.

I've played every edition to date, in a variety of formats. Basic when I started, ADND in Baldurs gate and Icewind Dale style games. 3rd when I met my current tabletop group. 4th when that came out. Returned to 3rd, returned to 4th... a number of times as products were released that took my fancy that I wished to use. Gotten 26 rooms into the worlds largest dungeon, one of the most amazing things ever written.

I'll be very curious to see what comes out. If it takes my fancy, I'll play it. Even if it doesn't, I'll buy it and give it a good long gander and a test run. I want them to continue making games, so I will continue to support them.

robertread3

Jan 03, 2012 3:35:32

i have honestly never read a forum post that long, however this is a fasinating read and i thank you for posting it.

pathfinder

pathfinder is a game i have had very limited interaction with, my girlfriend has a game going at her college but other then that we play 4e with the local LFR groups of maryland and virgina as well as my 2 home campagins (both 4e). i have seen enough that shows pathfinder is not going anywhere and allows some players to do things that the 4e system makes a total drag.

example: summoner.

in pathfinder my girlfriend plays a summoner character, she is able to create a fully customizable and functional summoned pet to fight with, (whom she named fluffy and is attempting to eventually make him look like Byakuei from Ga-rei. (a doggish looking asian style dragon) 4e has no way to accomplish such a task as the summoner wizard must sacrifice his precious daily powers to summon 3 diffrent pre made, creatures who all share his actions and limit his own effectivness by harming him in some way for not giving them commands.

shard_of_suzail

Jan 03, 2012 14:09:17

This was a very interesting read, my thanks for posting it.

It's this sort of "behind the scenes" spotlight that i think gamers are needing at the moment, as they try to piece together what is happening in their hobby while the powers that be offer nothing but silence on the issues that matter.

Fallen_Star_02

Jan 03, 2012 15:24:25

Why does everyone who claims 3rd edition was more successful that 4th (whether or not its more fun to play) now call for a 5th edition? Wouldn't it make more sense for Wizards to go back to printing 3rd edition, if they were infact admitting defeat?

I also wonder why, if the industral-age distribution model of warehousing distributors acting as middlemen, is at the root of the industry's decline, why is WotC so adamatly against direct selling? When I look at Pathfinder, my perception is that they are growing because they have imbraced a direct-sales model. Their adventures and maps are sold via subscription, and everything is available as a PDF.

I am convinced that the collossal misstep WotC made in the launnch of 4th edition was not in making the game more tactical-based, nor in focusing on "crunch" to the exclusion of the "fluff". Thier mistake was beliving their player base would embrace DDI as a replacement for buying books.

It doesnt matter that D&D has 40 classes and 3000 feats. DDI allows you to search and filter to get the exact character you want. This backfired because it was a reversal of the TRPG's had always ran. Game setting/systems start with a universal core of rules and flavor, then gaming groups ADD IN content that interests them. DDI means you have to take everything then CUT OUT what you don't like.

zeratulcraft

Jan 03, 2012 16:12:44

Why does everyone who claims 3rd edition was more successful that 4th (whether or not its more fun to play) now call for a 5th edition? Wouldn't it make more sense for Wizards to go back to printing 3rd edition, if they were infact admitting defeat?

They're not going to reprint 3rd. There's already loads of material, going back would give them nothing to do. But a vocal many (and probably a statistically relevant true number) of 3rd lovers don't like 4th, but are interested to see what they do with 5th, since it won't be 4th. We can play 3rd if we want, I know I've still got my books.

Fallen_Star_02

Jan 03, 2012 16:42:05

Paizo, for its part, is still trying to re-start the acquisition engine. The Beginner Box it released this year is the best intro product that the TRPG market has seen in well over a decade (maybe 2 decades). I’m certain that there are kids who got it for Christmas and are right now getting their first taste of the TRPG experience. Hopefully those kids will decide to spend at least a part of their gaming time around the tabletop rather than the MMO virtual worlds. Only time will tell.

I would also like to know what about paizo's beginner box makes it "best in 2 decades?" I was under the impression that the D&D Red Box has sold fairly well. My local Wal-mart had about 5 copies when the red box was first published, which it ran out of quickly and never re-stocked.

Wouldn't the true test be the number of new players these boxes successfully attract to the game? How can we measure that for sure?

Style75

Jan 03, 2012 22:53:16

I've got a gut feeling that WotC is cooking up something really different from anything we've seen before. This article shows us that the old way of doing business didn't work. Publishing books is a dying industry, no matter if it's fiction or biographies or TRPG's. I firmly believe that includes Paizo and Pathfinder. I know quite a few Pathfinder players and they're already starting to burnout on print products. PF is just now running into the same problem all new RPG editions face: what do you sell when you've already sold the basics? I think it's no surprise that Paizo is preparing to launch an MMO. They see the writing on the wall; PF as a TRPG has run its course and there's only so many books left to publish before the market says "enough already".

WotC is not run by dummies. They know that 5e or next-gen D&D or whatever it is they're creating is going to have to blur the lines between game formats if it's going to succeed. First of all, the game won't be sold as a series of books. Those days are already gone. It'll be some combination of CCG, MMO, VTT and online only subscription based service. My guess is that all of those options will be mashed into a modular system that will let individual gaming groups buy into whatever type of game they want to play. Mike Mearls hinted at this heavily in his "Legends and Lore" articles. How they do this will be tricky because a jack of all trades is often a master of none.

Whatever they come up with, it had better be extremely good to convince the already fractured gaming community to buy in. I'm guessing this will be their last shot at keeping D&D alive into the future. Inventing a new edition will be expensive and 4e is only 4 years old. Hasbro won't bankroll indefinite reboots. If 5e fails, I fear that D&D will end up being nothing more than a line of toys and board games.

Gatt

Jan 03, 2012 23:18:48

What it means is this...

-The future of D&D is digital, with digital books to cut costs and an Online service to connect players that would otherwise be "Lost customers". Essentially, a D&D version of Magic the Gathering Online. It lets WOTC retain lapsed players who would otherwise be lost due to not having access to a playgroup. Plus, they'll charge subscription fees, and probably offer "Campaign passes" for those who don't want a subscription but do want to play now and again.

-The future of D&D is presently in a partial or full reversion to the 3.x rules system. D&D 4e has been identified as commercially unsuccessfull, 3.x has been identified as having significant strength to it.

-The system will be tweaked in order to fix 3.x's shortcomings and make it more readily translatable to virtual formats.

-There will be a significant push for new player aquisition, via a digital platform as that is seen as the more viable route. Primarily because gameshops are dropping, and bookstores are seen to be eclipsed by the long-tail internet retailers like amazon and e-books.

I'd actually say, after reading that article, that it looks like D&D's future is very bright. I would contend that a D&D equivalent of MTGO will be far more successful than anyone has yet realized.

#10

Style75

Jan 03, 2012 23:53:42

I don't think a reversion to a modified 3.x ruleset will work. First of all, a lot of their current 4e player base will balk at going "back" and probably just keep playing 4e. Secondly, the current 3.x players have almost all switched over to PF. What can WotC do to make them switch back and reinvest in a version they've probably already paid for 3 times over? (3.0, 3.5, PF) There's only so many times you can sell the same game to same group of people.

I think the only chance WotC has for 5e is to find a new rule set that will bring together the best of all editions 1 through 4 and create something new that appeals to everyone and will somehow work in the digital age and generate profit without selling paper based books. It's got to be something we havn't seen before in the RPG industry. Good luck, that's going to be tough. I wouldn't want to be in Mike Mearls' shoes, the pressure on him must be immense.

#11

shard_of_suzail

Jan 04, 2012 11:48:15

Why does everyone who claims 3rd edition was more successful that 4th (whether or not its more fun to play) now call for a 5th edition? Wouldn't it make more sense for Wizards to go back to printing 3rd edition, if they were infact admitting defeat?

5th Edition supporters, or at least hopefuls, usually feel that 4th edition did some things, perhaps a lot of things right, but that it lost too much to appeal to them. I liked a lot of what 4th did, for example and tried it out fully before deciding that it wasnt for me. I recognise that the community is split and would like it back together and taking the best elements of 3rd and 4th seems a good way to do this or even taking 4th to its logical conclusion and going classless would be a possible step.

The problem was both that it went too far and that it didnt go far enough.

#12

jim11735

Jan 04, 2012 13:47:45

Great article, originally on ENWorld. I think it, along with State of the Game articles, helps me understand some of the more peculiar ideas from Legends and Lore articles. The Old School Renaissance, with L&L talking about being able to play all the editions. Player acquisition, with L&L having levels of complexity which could mean an age appropriatness. And of course the return of Monte. Also that 4eE had to be radically different from 3rd, to break from it's own OGL.

You can only go forward. I would welcome a departure from Powers , they can't call the version Edition 3.oops. I am guessing they drop the numeration as they did with the E books having names not numbers and come out with D&D and AD&D. Somewhere in the fine print or as table header in Wikipedia will it refer to it as 5th edition.

My hope is tabletop moves away from books. VTT would have been awesome in the MUDD days, not after MMOs. I'd like to see a wireless or even Bluetooth connection where different latpops, iPads and smartphones can connect. The DM says your character loses 32 HPs and your HP total changes on your screen! You could even move away from dice and minis - a purely imaginative roleplaying game where the nutts and bolts mechanics are handled digitally.

Of course, backwards compatability to dice and minis and even printed character sheets - not just printing the screen your looking at - would be encouraged. D&D is an IP. It's not a book.

#13

jim11735

Jan 04, 2012 13:49:05

And I'm hoping is 5th is more like 2nd than 3.5 or 4E.

#14

Samrin

Jan 04, 2012 16:46:11

And I'm hoping is 5th is more like 2nd than 3.5 or 4E.

Not me. I don't want the return of race/class restrictions, different experience paths, THAC0, linear fighters, etc.

#15

zeratulcraft

Jan 04, 2012 16:59:50

And I'm hoping is 5th is more like 2nd than 3.5 or 4E.

Not me. I don't want the return of race/class restrictions, different experience paths, THAC0, linear fighters, etc.

On a side note, what is peoples problem with Thac0? "The number you need to hit, with their AC as your modifier." It's like, one sentence of easiness...

Anyway, I'd rather 5e go forward, but I'd rather it had less... similarity between each class than what I perceive of 4e. Each defender had a "mark and slow" and a "mark and prone" and a "mark and do slightly more damage than normal" each controller had "lightning damage and daze" or "cold damage and daze" or "fire damage and daze".

#16

Jaden.Shadowcraft

Jan 04, 2012 17:47:50

Jim11735:

My hope is tabletop moves away from books. VTT would have been awesome in the MUDD days, not after MMOs. I'd like to see a wireless or even Bluetooth connection where different latpops, iPads and smartphones can connect. The DM says your character loses 32 HPs and your HP total changes on your screen!

While I think that electronic versions of the books would be awesome, not every person can afford laptops or iPads. Personally, I think they should simply supply all DDI users with PDFs of the books that they use that have to be logged into to be usable. Piracy problem solved.

You could even move away from dice and minis - a purely imaginative roleplaying game where the nutts and bolts mechanics are handled digitally.

I could not disagree with you more on this point. If they take away the dice from the game, then it's not longer D&D. How on earth can you "roll a critical hit" without dice? Digital dice are not the same. They never will be.

#17

Samrin

Jan 04, 2012 21:30:37

And I'm hoping is 5th is more like 2nd than 3.5 or 4E.

Not me. I don't want the return of race/class restrictions, different experience paths, THAC0, linear fighters, etc.

On a side note, what is peoples problem with Thac0? "The number you need to hit, with their AC as your modifier." It's like, one sentence of easiness...

Anyway, I'd rather 5e go forward, but I'd rather it had less... similarity between each class than what I perceive of 4e. Each defender had a "mark and slow" and a "mark and prone" and a "mark and do slightly more damage than normal" each controller had "lightning damage and daze" or "cold damage and daze" or "fire damage and daze".

Thac0 is just needless complexity and it is very counter-intuitive is all. Hated it as a system, because it made no sense to do it that way compared to what we have now.

#18

Obvious_Ninja

Jan 05, 2012 12:27:02

Been away from the boards for a while. Very interesting artical. Not quite sure how I feel about it.

#19

nb_nmare

Jan 06, 2012 2:30:08

While I think that electronic versions of the books would be awesome, not every person can afford laptops or iPads.

You can buy a second hand netbook from eBay for less than $20.00. If you can't afford that, I really don't think you'd be able to afford any printed RPG products either.

#20

Cyber-Dave

Jan 06, 2012 12:32:39

What Ryan Dancy says should be taken with a grain of salt. He doesn't have the best reputation as a reliable source...

#21

Popesixtus

Jan 06, 2012 12:56:47

While I think that electronic versions of the books would be awesome, not every person can afford laptops or iPads.

You can buy a second hand netbook from eBay for less than $20.00. If you can't afford that, I really don't think you'd be able to afford any printed RPG products either.

Not everyone loves playing games off of electronic devices. And as a professional social worker in an urban school system, I work with plenty of kids who's tech-savviness only extends to someone creating a facebook account for them. Ask them what a netbook is, and they'll stare at you funny. And some of them love D&D - I run sessions for them all the time.

One of the crucial points of the OP was that the community is divided in lots of ways. If a new edition is indeed in the offing, then it would be great if they combined the print stuff and the organic stuff more organically so that it is as inclusive as possible.

#22

Litmus

Jan 06, 2012 16:38:26

Fantastic article. I do think that there is one very important trend missing from this though - from what I'm seeing there has been a surge in interest in the last ~year from people that have never played TRPGs, along with a return to D&D from players that haven't played for the last 5-10 years. Admittedly this is based purely on anecdotal evidence - observing both the increase in members in a large D&D meetup group and the type of players that are joining, but I'm pretty certain that there is something to it.

A large part of the surge that I'm seeing is driven by the same MMOs that stole all of those players several years back. With WoW in decline, players are leaving and at least some of them are looking to D&D as a replacement. Video games have made fantasy more mainstream, and perhaps the net impact over the next few years might be to introduce players to D&D that might never have otherwise given it a try. We're certainly seeing a higher proportion of female players at our meetup than in previous years for example.

I think there is a huge opportunity right now to grow the player base, but D&D currently lacks the product strategy to do so effectively. New edition or not, they need to do something about that asap or miss the boat. They need to aggressively target the jaded WoW player with an exciting entry level product for players - as the article mentions, it's something that's been sorely lacking for some time now.

#23

Garthanos

Jan 07, 2012 5:54:29

What Ryan Dancy says should be taken with a grain of salt. He doesn't have the best reputation as a reliable source...

I agree a lot of the things we find typed in this digital space needs be taken with an eye to it's motivations