This is something I started touching on a couple of days ago, but I decided it would be better served if left to stand on its own.
In the ’90s, the RPG industry embraced the supplement treadmill. Led by TSR, White Wolf, AEG, Pinnacle, and a host of others, publishers discovered that they could monetize their game lines by turning out a constant stream of supplements. If you’re cynical you can describe this as “greed”. If you’re realistic, you’ll realize that a lot of great games got produced and supported which would otherwise not have existed in a shrinking marketplace.
What most of these publishers realized was that player-focused content sold better than GM-focused content. (The simplistic explanation is that there are more players than GMs.) And that gives us the era of the supplement treadmill driven by splatbooks and the class books.
THE WRITING ON THE WALL
By 2000, however, there were clear signs that this supplement treadmill was a short-term solution that led to long-term burnout: Eventually you saturate your market (when your players have more options than they could play in a lifetime), and then the only solution is to burn it all down, revise your rulebooks, and start over again. After several cycles of this, for example, White Wolf eventually had to reboot the entire World of Darkness in an effort to restart their treadmill.
But, ultimately, this isn’t smart business: You’re needlessly tossing away thousands or millions of dollars in development costs every time you burn down your previous edition. And you’re risking alienating your customer base (or losing them altogether).
Right around this time, Ryan Dancey tried a radical new strategy for selling RPGs. The better known part of that strategy was the OGL, but let’s ignore that for now and focus on the other part of the strategy: Evergreen products. Dancey wanted WotC to get out of the supplement business and instead focus on the evergreen products — the products that produce significant sales for significant periods of time.
To cut a long story short, Dancey’s strategy failed: The first two evergreen products WotC launched (Psionics Handbook and Epic Level Handbook) were spectacularly poor in their design and landed with wet, dull thuds. So ’round about 2002, WotC discovered that their evergreen strategy wasn’t working and their B&W, softcover class supplements were being blown away in production value by third party developers.
So WotC did what every major RPG publisher had been doing for the last 15 years: They rebooted the rule system so that they could reboot their supplement lines. In 2003, 3.5 was released and it was followed by a line of full color, hardcover class supplements.
THE DILEMMA
Fast forward a few more years and WotC discovers that the market for 3.5 class supplements has become saturated: Their second (and third) passes through the core classes just aren’t selling as well as the first pass did. Cue the rules reboot.
And this is where WotC made several missteps which has badly fragmented their former market. I’m not going to dwell on that again, but I am going to make a couple of points here:
- As long-tail economics and the digital era lead to creative material being available in perpetuity, the viability of rebooting your rule system every couple of years in order to reset your supplement market becomes increasingly problematic. The old stuff is still available. (Even if you pull all your PDFs off the market, the used market has become global. And, of course, there’s also piracy.)
- WotC does not want to risk a repeat of 2008: I’m guessing they would like to do absolutely everything in their power to avoid a 5th Edition because it runs of the risk even further balkanizing their customer base.
I’ve seen many people describe WotC’s recent actions as “flailing”, but I don’t think that’s strictly true. I think they’re experimenting. They are trying to figure out if there’s any way to make D&D profitable in a long-term, sustainable fashion.
And that, IMO, is a good thing.
CHARTING NEW WATERS
Nor is WotC alone in this. There are a lot of publishers trying to chart a new course. Unfortunately, IMO, the solution a lot of those companies have found is settling down into a mindset of “produce little, coast on the marginal revenues from the long-tail of PDF”.
But there are other paths.
Paizo, for example, seems to be having success keeping their core system relatively contained while creating product churn through material which is inherently perishable: Not everyone needs adventure modules, but the people who do will want a new one when they finish the one they’re currently using.
Back at WotC you have the Essentials line as an effort to create a stable set of core products. You have boardgames tapping markets where long-term sales and stocking are more of the norm. You have Fortune Cards as a collectible (and as a way of monetizing organized play without, theoretically, seeming draconian).
Of course, you also have the DDI. Unfortunately, WotC’s execution of the DDI has also been infamously (and repeatedly) botched. The ideal would be charging a subscription fee for a set of useful evergreen tools (the most obvious of which would be the virtual table). In practice, however, it has been a digital subscription to the same burn-out content as the supplement treadmill (and may have arguably hastened the speed of that burn-out for 4th Edition). WotC’s decision to move the character builder online can be best understood as an effort to prevent saturated customers from saying “thanks, I’m good now”, canceling their subscriptions, and continuing to use the builder offline with the content they already purchased.
Personally, I suspect the most successful course would include returning to Dancey’s vision of evergreen products and studying what went wrong with those efforts. And I think a large part of that will be understanding that toolkits don’t sell unless people have projects that require those toolkits: It’s not enough, for example, to provide rules for ship-to-ship combat or mass combat… You need to offer people a mode of gaming in which ship-to-ship combat or mass combat are integral to their games.
This will also begin to tie back into open game tables. But open game tables will also be important because monetizing your existing customers won’t be enough; we also need to figure out how to grow the RPG market again. And I think a large part of the problem has been that the viral speed of the RPG meme has been reduced to molasses by the modern paradigm of gaming. Most games appear to get sold because of actual play experiences: You buy Monopoly or Arkham Horror because you played it with somebody else and enjoyed it. If Monopoly or Arkham Horror had an expected play mode where you got together with the same group of 6 people for 6-18 months before starting a new game to which you might invite new people to join you, then Monopoly and Arkham Horror would not be as popular as they are. Notably, D&D exploded during a time period when this wasn’t the expected mode of play.
While this might be a bit of a tangent, your article made me think about the model Games Workshop uses for Warhammer. While it is (typically) a miniatures game rather than a roleplaying game, you need a Codex for your chosen army that tells you the statistics and special rules for the units you are using. The thing that I think is interesting is that all material is created with backwards compatibility in mind above all else. The core game is currently in its 5th edition, however, several rulebooks for armies are in their 4th and even 3rd editions. While some older units can become suboptimal due to rules revisions, the fact that material from two editions ago is still viable and highly used sounds very interesting. Because the miniatures always stay the same, they are able to incrementally update older Codexes when they get around to it.
I’m not entirely sure how something like this could be applied to D&D/Pathfinder or any other traditional RPG, but the idea seems to have been working for Warhammer for a very long time.
I think I would have liked this article more if I understood what you meant by “evergreen” products. As it is, not understanding that term left me confused. Not a bad article, but it’s missing a key point of accessibility.
I presume, that by evergreen products, Justin meant to say that those products would be viable even after years of the same system being used, and would still bring revenue to the developers.
Also, the term balkanization is a pejorative term…being from the balkans, i don’t feel particularly happy that you put it there.
The advent of the internet has made the proliferation of splatbooks/supplements/sourcebooks/etc. a liability far more than an advantage, especially if you intend to charge high prices for the materials. Back in the 1990s, TSR was churning out source material left-and-right, much of it pretty good stuff, some of it garbage. Overall, though, I felt that there was an overall standard of quality present in TSR’s material that was missing from WotC’s. The 3.0 black-and-white class books felt lazy and uninspired. They had a “thrown-together-overnight” feel to them. The Psionics Handbook was absolutely pathetic, and I ended up using the 2nd edition Psionics in 3.0 with a bit of home-brew conversions of my own. There was a very rushed feeling to everything, as if they felt that they just needed to get the stuff out there and that fans would be pleased by flashy art and tons of new gimmicky toys.
If you look at what TSR produced the most, it wasn’t really mechanical materials. There was a lot of it, yes, but most of what was churned out was actually setting material and a lot of it was actually good. WotC couldn’t even pull that off–most of the setting books that they produced were very light on the setting detail and very heavy on feats, prestige classes, spells, and items.
Meanwhile third party companies were putting out some interesting and imaginative stuff, but much of it only appealed to a small audience (for example The Mother of All Treasure Tables and the guide to alchemy and herbalism). With this huge glut of materials, and much of it low quality, I was predicting a crash in the market, much like the video games crash of 1983. Instead, WotC rebooted everything, which actually probably saved their bacon.
There are companies that keep shoving out splatbooks without really seeming to hurt for it. Palladium keeps churning out supplements for RIFTS, for example, but I think the pace is a bit slower than WotC’s, and RIFTS has a pretty solid fanbase that isn’t going anywhere because Palladium’s system is 100% perfectly constant and unchanging.
In this regard, WotC’s conversion to a 4th edition simply split the fanbase along every seam that existed. There are people who liked the 3.5 ruleset, people who went to Pathfinder, people who went with WotC, and people who dropped everything ever published after 1981. They have no constant system that is backwards compatible or unchanging. Hence, every time they go back to the drawing board, they are cutting themselves off from chunks of their support network. By making their game appeal to the WoW crowd (which it honestly does, I’ve seen those types playing it more often than not), WotC basically traded adherents.
@Predrag — I never heard the term “balkanization” in a pejorative sense. This is news to me. It is a descriptive term signifying the separation of something into smaller groups, and is pretty much an accepted term used by the academia. I understand your sensitivity, but personally, I see nothing wrong with his use of the term–indeed, I feel it describes the rifts that have developed in the D&D community with perfect accuracy.
First, great post.
“They are trying to figure out if there’s any way to make D&D profitable in a long-term, sustainable fashion.”
That is a frightening statement in terms of, if they can’t make it profitable, they’ll dump D&D as an RPG. I remember reading that Marvel Comics didn’t consider themselves a publisher, as much as a character licensing company. I suspect the D&D brand is worth much more than the RPG game actually is. The novels in particular are probably the true bulk of their publishing. (Paizo has also stepped into this realm.)
Fortune Cards are not D&D’s salvation. It’s not a true card game, so there’s limited appeal to those fans. Then given all of the books (Essentials or Core), the minis, and now the cards, the barrier of entry to newbies just gets higher and higher. One has the impression of WOTC’s D&D division desperately trying to stay relevant.
Old School games are available for free over the Internet. Published games are so costly or complex that they only really appeal to hobbyists. I would like to see somebody think outside the box and develop an RPG that plays like Monopoly. Something that can be learned quickly and not take over your life and wallet. Rules that are rock solid and don’t need constant revisions and updates. The Core is evergreen. Packaged adventures can be sold as continuing income, but also there should be an easy means of generating on-the-fly adventures included with the Core. If somebody wants to develop a game world and campaign, they can. If somebody only wants to play one shots on rainy afternoons, the game can handle that too.
@David, re: 2003. You speak of the reboot as avoiding the market crash, but the truth is that WotC’s handling of that reboot helped to trigger the D20 market crash and also screwed a lot of third party producers. WotC spent the six months leading up to the release of 3.5 telling publishers and local store owners that 3.5 would be completely compatible with 3.0 and that it would not make older material obsolete.
With that reassurance, publishers continued developing and local stores continued investing in inventory. When it turned out 3.5 wasn’t as compatible as WotC had claimed (an impression that WotC encouraged in order to sell their rebooted supplement line), local stores and D20 publishers got screwed.
While WotC isn’t responsible for the fact that local game stores often had nothing even remotely resembling responsible inventory management (which resulted in them indiscriminately stocking craptacular D20 products in a completely irresponsible manner), the market was well on its way to a slower and more natural adjustment before WotC dropped the 3.5 bomb.
This was the second major market collapse WotC has instigated in the hobby market. (The first came when they changed the way they were fulfilling Magic the Gathering orders in the mid-’90s without telling the local stores they were doing it, resulting in flooding the market and sucking the local stores dry.)
Re: Evergreen products. I defined the term in the same sentence where I used it for the first time: The products that produce significant sales for significant periods of time.
Re: Balkanize. Poking around the ‘net reveals the Serbian word for “balkanize” is apparently considered a pejorative in Serbia. Outside of Wikipedia (which is currently citing a Serbian source), the English word doesn’t appear to be widely recognized as pejorative. In any case, I apologize for the difference in cultural context here.
@jdh417. Fortune Cards don’t need to appeal to CCG fans. They need to appeal to a sufficient number of D&D fans that they can keep selling them a new set of cards every 6 or 12 months. The question will be whether or not they can make the new boosters appealing, or if people will saturate on their Fortune Card options the same way they saturate on splatbooks and miniatures.
The problem seems to be that the average player buys a handful of splatbooks… and then stops buying. They’ve got a few hundred different character options and they don’t really need any more than that. By the time they get done playing all the options that look interesting to them, they’ll be ready to swing ’round for another pass through the ones they played before.
Similarly, DMs seem to buy miniatures… until they have all the miniatures they need to run 80-90% of their encounters. And then they stop.
This wouldn’t be a problem if the D&D market was growing (or at least churning) at a pace that kept bringing new players in who could start buying stuff with fresh eyes. (Although even then, it wouldn’t solve the problem of WotC trying to justify maintaining a significant staff of developers.) But the D&D market isn’t growing/churning at that pace.
So you have to find something that the market doesn’t burn out on.
Theoretically, of course, you could just lay off those designers and keep the product line in print. But that doesn’t seem to work either: Too many roleplayers don’t want to support a “dead game”, despite the fact that they don’t actually seem to spend enough to keep the game alive beyond a certain point.
@Justin: I was originally referring to the 3.5 to 4E reboot avoiding a crash, but your response brings up some interesting points.
From where I was standing in 2003/4 there didn’t seem to be much of a crash. Just a slump. I didn’t see any business go under during this time period, but the area in which I lived didn’t have a high density of hobby-shop competition, despite a high density of hobbyists, which may have helped them coast through.
So when I was predicting a crash like the video game one of ’83, I was expecting total gaming disaster with a majority of companies drying up, stores closing everywhere, and the very existence of tabletop gaming as a hobby in jeopardy. I was being awfully pessimistic, but the massive amounts of rubbish that I saw at the stores was phenomenal, and I knew the center couldn’t hold.
I always thought that these stores made much more money on M:tG than on RPGs. To hear that a shift in the business ended up screwing business in the 1990s is news to me. I guess I was too young to remember it.
If WOTC wants to add a collectible card element to the game (emphasis on collectible), then they’re going to have to change the game. I don’t see how to avoid a 5th edition in short order.
I’ll help out though. Change D&D Encounters to a gladiator style weekly tournement. Each week, WOTC will send out venue specs, conditions, rules, and monsters for the matches. Players buy the cards to play. Is this still D&D? No, but will let them keep selling rule books, cards, and minis, evergreen. That sort of game would actually have quite a bit of appeal to some gamers.
I think it’s far from fair to say that the evergreen strategy “failed”.
When we looked at sales of 2E books we found that 50 products accounted for 80% of all sales of the line. And of those 50, 20 had been released within 3 years of the 2nd edition PHB. You can probably guess what those were: The PHBR series, the Monstrous Manuals, and a couple of adventures.
Revising an “evergreen” product would certainly have been a part of the plan. The difference between a “revision” and the supplement treadmill is that the treadmill is fractal and constantly expands the ruleset. A revision of an evergreen product is different – since there are supposed to be a limited number of them, it’s not onerous to ask players to update, and it keeps the scope of the rules from expanding uncontrollably.
If you look at the 3.0 product line, it’s very evergreen. It consists of core books. a line of expanded player options, an Adventure Path, and materials for psionics, planar adventures, materials for dealing with gods, and taking the game beyond 20th level. (There’s a handful of other products too but they’re semi-evergreen like Return to the Temple of Elemental Evil). Dungeons & Dragons doesn’t need much more than that – everything else can (and should) be supplied by 3rd parties.
Had the company chosen to just revise that line in 2005 (rather than 2003), incorporating the best of the OGL work produced by 3rd parties, and focused on quality rather than quantity they would have been following the 10 year plan the business team developed prior to the launch of 3.0.
RyanD
Ryan’s comment makes the good point that my five paragraph summary of WotC’s Business Strategy 2000-2011 is obviously brief and generalized.
I am also of the opinion that WotC would have been generally better off pursuing the business plan laid out in 2000, and that their abandonment of that business plan has more to do with a shift in corporate culture and methodology rather than any reasoned reaction to shifting market conditions.
At the end of my post, when I talk about a way forward which includes an improved understanding of what makes evergreen products tick and organized play structured around open gaming tables (among other things), I’m largely speaking from a POV that was massively shaped by Ryan’s philosophy.