RPG Industry Economics Thread

[soldersbushwack]

I accidentally hit enter before properly editing and finishing this post. I was going to ask some questions about the RPG industry economics and maybe source some ideas on how to monetize RPGs.

It seems to me that the only way to really make a lot of cash would be to make a soulless subscription based game masterable MMO RPG with stuff like sponsored McDonalds adventure sidequests that gives out skins for your wizard familiar.

[Aedilred]

I don't have any particular insight into the economics of specific RPGs, which are probably worth researching.

But from what I've witnessed from the consumer side of things it seems that all RPG companies have a constant struggle to make a profit. The reasons for this are probably fairly obvious: to create an attractive product requires investment, in playtesting, editing, artwork and so on. You need to advertise it. But one such product will serve multiple customers, and the very nature of the product encourages if not requires customers to band together and share them. The product also implicitly encourages your customers to substitute their own imagination and thus make itself redundant. They are principally marketed to a group with a relatively limited level of disposable income. In the pre-internet age you also had the problem of needing your product to justify shelf space (or expensive direct marketing) too.

It's a hard business model to sustain.

The internet perhaps makes things slightly easier, as some of the costs are removed from the process, but in removing overheads it also opens up the market to a much greater level of competition, which makes it harder for any particular product to stand out.

How to address these issues? Difficult. One way is by paring everything down to the bare minimum to cut overheads. But do this too much and you end up one-man-banding it out of your bedroom and have a product with a market in the dozens, rather than thousands. Success that way is possible, but in a relatively saturated market you need to stand out significantly from the crowd to gain the attention necessary, and it's always going to be hard to compete with the glossier big boys.

The most successful RPG, D&D, is instructive. During the 20th century its parent companies struggled to hold themselves together. Partly due to incompetent management, admittedly, but also because the business model was inherently suicidal, but intentionally or not some of the elements of success were there. Firstly, they did their best to stunt the outgrowth of players' imaginations by producing ever-more-exhaustive books replete with information and options, until players were trained to expect the game to give them options rather than come up with those options themselves. They encouraged players to buy unnecessary miniatures and physical products where they could turn more of a profit. They produced new editions of the game, requiring players to buy new products to update their collections. Some could even argue that many of the balance issues in the game were part of the same strategy, so that they released a product known to be "broken" and then could sell additional products to repair it. They licensed their IP, which helped to open up more markets and produce additional revenue.

But of course D&D got there first, more or less, and thus had a position of market dominance from which to expand: it was also a process which ultimately took decades to reach its zenith, or nadir, with 4th edition, which proved in many respects to be a disaster anyway. It's worth asking when the last time a genuinely new RPG burst into the market and achieved any level of success was: it's probably been nearly twenty years. Everything else, even the stuff that looks new, has grown out of an existing system one way or another, has a substantial existing IP behind it, is a successor to an existing system, or all of the above.

[Stan]

Pen and Paper rpgs are a tough market. At any given time, there are ~3 games making real money. One of those games is always D&D. Right now, other than D&D and Pathfinder (which is a D&D spinoff), Star Wars seems to be doing ok but that's all I can think of. Independent games that sound like they're doing well to insiders generally sell <10,000 copies; most games probably sell <1,000. After printing, art, and retail cut, it's only a couple of bucks a unit. Licensed brands, like Star Wars and LoTR can have larger sales due to a built in audience but royalties cut into the profit margin and things don't always turn out well.

Creating professionally is hard in general. Very few self published books and music really break through. RPGs have it harder as sales are still largely in a ghetto, with specialized stores and website; only Hasbro really has the clout to get into places like Target, with Paizo and FFG also able to get their toe in. Amazon and other online sources have helped some but it's there is some barrier for a nongamer to become a gamer. In the few dedicated game stores I see, rpgs and old school wargames are in a dark corner - their money comes from card games, minis, and boardgames. Card games and minis can extract a great deal of money per player but they're risky as you have to have a large line to choose from.

[Flickerdart]

The funny thing is that D&D, despite being the most successful product in its class, is considered a failure by Hasbro. The entire revenue of Wizards of the Coast is a small sliver of Hasbro's Games division (itself the smaller half of Games and Toys), and the lion's share of WotC's money comes from Magic: the Gathering.

It simply doesn't make enough money for the giant Hasbro to devote attention to, which is why all the good designers go to Magic instead. Read this article (http://magic.wizards.com/en/articles/archive/making-magic/lenticular-design-2014-12-15) by Mark Rosewater about Magic's design principle of "lenticular design" and compare it to Monte Cook's Ivory Tower article (http://www.minmaxboards.com/index.php?topic=13812.0). The comparison is especially apt because Cook makes numerous references to Magic's design, but if you read the first article it's clear that he misses the point entirely.

If you want a good new game, don't look at pen and paper RPGs. The money and the talent are elsewhere.

[Tyndmyr]

MtG is utterly huge compared to pen and paper.

MtG is much smaller than Play-dough.

I bet play-dough requires less R&D to keep cranking out money.

[Grinner]

Old joke: "How do you make a small fortune making RPGs? You start with a large one!"

[Knaight]

If you want a good new game, don't look at pen and paper RPGs. The money and the talent are elsewhere.

The money is elsewhere. There are some extremely talented people working in RPGs because it's their passion; they just generally don't make a great deal of money doing so.

[Stan]

It simply doesn't make enough money for the giant Hasbro to devote attention to

That's not entirely true. I think they're trying to build a solid line at a pace slow enough to not have hire and fire large numbers of people, while also taking advantage of freelancers and partnerships to keep costs low. They have tested the waters by putting the beginner box at places like Walmart and Target. D&D Fiction has also done reasonably well. They taken advantage of the brand to adapt the concepts to board games. D&D is more in the public consciousness that it's ever been. Rather than constantly spend on ads, I think they are waiting on a big push timed with a movie.

This has been delayed as they were tied up in a court battle over movie rights for a couple of years (they wouldn't be doing this if they didn't think it was worth it. WOTC has never had the rights and had no control over the movies that came out in early 3e (TSR had sold the rights and they didn't revert with the sale). A moderate budget movie should come out in ~2 years. Expect a new beginner box, a bunch of fiction, and all kinds of tie ins are the same time. I bet they were hoping to launch 5e around the time of a movie but the court case drug on so they tried a low cost launch to give them time to create a clean product line.

[Erloas]

I think the biggest problem with making games, and it goes for a lot of other creative endeavors as well, is how you define success. Because "success" is what determines what stays around and what disappears, not just sales numbers or gross profit.

To take a quick MMORPG set of examples. Start with EVE online and WoW. EVE came out before WoW by about a year, I think, it had pretty modest subscription numbers. Maybe 100k early on, I think maybe 500k now. It also had a very specific design idea and they stayed pretty closely with that. WoW of course exploded, eventually getting somewhere around 12M subs. Even though the number of subs are not even close, both games were highly successful. Sure EVE didn't make it's developers the money WoW did, but it keep them all employed, it keep them adding new members to their dev team, it allowed them to build new games. The game is still alive and well, they are still regularly releasing expansions, and as far as I know, they are still growing in sub numbers, even 12ish years later. That is success. And while WoW might still have millions of players, it has been loosing numbers rather than gaining them. It also doesn't release anywhere near the expansions and new content that EVE does. Not that that means WoW isn't a success, but it seems pretty clear that WoW has lost a lot of Blizzard's focus while CCP is still highly dedicated to EVE.

Since then many other MMOs have came out, Warhammer, EQ2, LOTRO, DDO, Conan, City of Heroes and so many more. Almost every one of those games had more subs at release than EVE, most had more in the first month than EVE had after several years. Many of those have shut down completely, many were considered failures.


On the table top wargaming side of things lets take Warhammer Fantasy (WHFB) and Battletech (BT). Both came out around the same time. WHFB was "the" game for a long time and only gave that title up to its sibling 40k. While 40k overshadowed it for a long time it was still usually the 2nd or 3rd best selling table top game. BT on the other hand was always around, it had some great games based off of it in other mediums, but it was never all that big. It had a presence but was never a powerhouse. Now WHFB has been killed off, they decided it was "dying" and couldn't be saved without something drastic, so they killed the existing IP and changed the game so completely it isn't even recognizable as the old game. Battletech on the other hand has had a decent resurgence lately. They aren't doing anything huge but they are still releasing products, still advancing their timeline, and it is still around. Now it is no longer owned by the same company, been sold and moved around a few times, but Catalyst Game Labs is in charge (under license from Topps).

To me at least, it feels like CGL has found a solid ground for Battletech and Shadowrun (their other main product). They keep them alive, they keep things going on with them, but they aren't expecting to grow them to the biggest games ever. They are growing them at a sustainable pace and not betting the company on big changes.


We've also seen kickstarter projects that are so successful they destroy the company. It gets too big too fast and some small problems become so big they can't handle them. The best kickstarters seem to keep things fairly modest. They keep things realistic. What established and practices companies can do tend to be more than smaller companies, but the trick it keeping things realistic for the people working on it.

It is kind of its own thing, but really ties back to the rest, is so many good game developers have poor business sense. Without both sides it is really hard to find that balance, to figure out how much can be done with the resources you have and how to keep things growing and moving forward. Of course I've also seen where they let the business take over and they drive their players away because they don't get that side of things.


The short version is that you have to make something good and fun, something that people want to play. Then you have to get it in front of some of them. And build from there. There are a lot more ways of getting people to know about your game than there used to be. Which means more opportunities but more competition at the same time. So the goal should be to make enough money to keep making more products.

I think trying to set out to make a monitization scheme is bound to fail. Which can be seen very clearly in the mobile game sector. There are generally only a few types of monitization schemes there and there are many games that use the same ones. The difference between the games that make piles of money and the ones that don't make any isn't the monitization scheme, it is the quality of the game, if the game is fun enough that someone is willing to spend more on the game.