The Alphastream Game Design Blog
Last time I wrote that no RPG company truly competes with D&D. The first reason was D&D’s incomparable scale, reach, and brand strength. Now we will look at D&D’s actual competition and what this means for us.
I appreciate the discussion on the first post on EN World and Twitter. I want to be clear that I’m a huge fan of both D&D and the amazing breadth of RPGs available to us. I want to see small and medium companies do well. It is my belief that the more accurately creators, companies, and fans understand our industry, the more our industry will prosper. In my day job I’ve seen how competition blinds companies into behavior that hurts them, rather than helps them. RPG companies prosper when they stop acting like they compete with D&D and instead focus on making better products and services, growing their audience, improving their efficiency, and recognizing the value of their employees.
I also want us, collectively, to be aware of what is taking place at this specific time so that we can look back at it later.
Okay, so… who does WotC compete with? And who competes with WotC? To uncover the answer, let’s talk about the Pokémon RPG. (Grab a snack and a beverage, because this voyage will take some time.)
According to Stan! in an interview, the highest selling RPG at WotC was the 1999 Pokémon Jr. Adventure Game. You probably never heard of it… and yet it sold an incredible 800,000 copies in a single year! According to Stan!, this is higher than any 4E core book ever sold, and he says that at the time of recording (2017), the 5E PHB total sales were at about 800k. I personally think the sales were around 1M, but either way, that’s over the course of three years… not one single year. (In case you are wondering: WotC lost the Pokémon license, which is why it only was on sale for one year.)
There is a lot we can learn from this. Our RPG hobby is limited. When you can step beyond its confines and operate in a larger space, your growth increases dramatically.
D&D has operated very independently from the rest of Hasbro or even WotC. That may be changing. During the 3E and 4E era, Magic the Gathering dwarfed D&D. Hasbro toy sales overshadowed both. D&D tried desperately to prove its value internally. Now, D&D has everyone’s attention. WotC (including D&D) has been so successful that, in February 2021, WotC was promoted to becoming one of the three Hasbro divisions.
WotC is nearly a $1B company, with the past few years bringing continued and remarkable growth. WotC is now more profitable than the rest of Hasbro, and was 75% of Hasbro profits in Q1 despite constituting only 22% of sales – this means it is incredibly profitable and efficient.
Where once the emerging digital entertainment developments would have been given to a different group, these have been given to WotC and even D&D to manage and grow. WotC is so profitable, it has been instructed to sell more and teach the rest of the company how they manage to be so efficient.
A recent example of the scale at which Hasbro operates can be seen with how it launched the revised HeroQuest boardgame (I played a small role). Hasbro didn’t sell it in stores. And it didn’t launch it on Kickstarter, which would take a large cut. Instead, they have their own Hasbro Pulse crowdfunding platform, where they raised more than $3M without dealing with platform fees. Incredible!
Pokémon isn’t just a card game, and D&D isn’t just an RPG company. As an entertainment brand, D&D is seen in many places. We see it in old classic movies such as E.T., but we also see it in the latest comedy shows such as episode 8 of Ghosts on CBS. And, of course, in Stranger Things, Big Bang Theory, and many other movies and TV shows. We see it in grocery store aisles thanks to the D&D Nerds candy promotion, with specially branded packages and a contest to win prizes and download free easy-to-learn D&D adventures.
That’s the scale at which entertainment brands can operate. D&D in the ‘80s had beach towels, action figures, and branded lunch meats. Marvel and Star Wars today enjoy that and much more. An entertainment company’s brands are ubiquitous, constantly reminding people that they exist.
All of this translates to growth for its various vehicles (games, TV shows, movies, licensed products). The number of 5E licensed products is staggering, as can be seen on the D&D Amazon storefront. D20 umbrella, D&D socks, throw pillows and coffee mug? Full-size Drizzt statue for $1,575? (If you are reading this, WizKids, I am available to review it!)
D&D 5E was designed to be an amazing game. But the RPG wasn’t originally envisioned as the main source of D&D revenue. It was supposed to help launch licensed properties, from video games to t-shirts, and to help launch larger entertainment initiatives (such as movies). 5E’s stronger-than-expected success has earned it internal respect, while supporting even stronger licensing.
Movies and TV are a big focus, and they revolve around D&D. Hasbro purchased eOne for $3.8 billion in 2019, so as to become a major media entertainment player. In the past, Hasbro licensed its properties (such as G.I. Joe or Transformers) to other companies, who reaped most of the profit. With eOne, Hasbro can do a lot of the work itself and keep more of the profit. And despite numerous large brands, the initial focus is D&D. Hasbro’s president of eOne says, “Our big focus right now is Dungeons & Dragons.” “We don’t want it to just be one show so we are building out, developing out a multi-pronged approach for television, a number of scripted shows and unscripted.”
The D&D movie wrapped up filming in August, releases March 2023, and stars Chris Pine, Michelle Rodriguez, Hugh Grant, Regé-Jean Page, Justice Smith, Sophia Lillis, and other talented actors. Directors Jonathan Goldstein and John Francis Daley were hired off the dark comedy Game Night and after scripting Spider-Man: Homecoming.
The first D&D TV series is being written by Derek Kolstad, writer for the first three John Wick movies, as well as The Falcon and the Winter Soldier Marvel series.
These are not some side project as in the terrible D&D movies of the past. These are focus areas, around which growth will be built. Renowned actors and directors reflect the high stakes. Hasbro wants to have 2-3 movies every year and 3-4 streamed shows sometime between 2022 and 2023.
Video games offer so much promise that WotC’s division is called Wizards of the Coast and Digital Gaming, with one video game released and at least two in development. Some will be partnerships, but WotC now has its own digital business and has been hiring dozens of people, from software engineers to producers to artists. These jobs are across all areas and seniority levels, as WotC builds a true video game design studio.
To truly compete with D&D, you have to compete on D&D’s level. That means far more than existing on the RPG space and creating a popular RPG. You have to be an entertainment company and compete in that larger space.
Big entertainment brands can do this, if they should want to. For example, consider Marvel, by which I mean… Disney. If Marvel/Disney wants to bring its legions of fans to the RPG space, they could likely do so by leveraging their nearly endless resources. Their capactiy may be unparalleled for things such as marketing, international reach, and even creating compelling narratives.
But… would Marvel want to be in the RPG space? Why? For a large entertainment firm, they are already in the most lucrative space possible. They are where D&D wants to be. Marvel and Disney negotiate enormous movie deals at enormous profit margins, leveraging unimaginable licensing benefits across all kinds of product lines. Walk into a mall and try not to see a Disney property! The RPG industry doesn’t have such a high profit.
While Marvel is launching a new RPG in 2022, dominating RPGs is unlikely to be a priority for a company like Disney. It is likely just one of their many spaces where they will maintain a presence, so as to bring fans of all kinds into their fold.
So… if big entertainment isn’t the competition, who within our industry can compete? There is currently just one likely candidate.
Critical Role is a D&D livestream started in 2012, with a team of voice actors that combine an unusual combination of true friendship, voice acting, gaming talent, and business savvy. This is a livestream show so compelling that hundreds of thousands of fans made it through season one’s 115 episodes and 373 hours of play time. The second series had 141 episodes and 483 hours of game time. The third series started recently and is more popular than ever.
Viewership over the last three months shows a peak of 212k viewers and an average of 67k viewers each week. All-time? 28.7M views, 993k followers, 31.1M hours watched. And the show’s popularity shows amazing growth trends.
The show is also available as a podcast, and they create one-shots and mini-series.
CR is also a company. And while it is hard to fully assess their potential, every indication is promising. The recent Twitch hack revealed that CR was the highest-earning Twitch channel. Between August 2019 and October 2021, the show earned more than $9.6M… about $3.2M per year!
As impressive as that is, it isn’t WotC-level income. But it is very strong. And it doesn’t count all of their other revenue sources. For example, the company has advertising spots on its stream (and podcast). The cost is not publicly shared… but it is a significant revenue source. You can even hire them to play a specific game… though I doubt many RPG companies can afford that. One company to do so was a fast food company (and because Wendy’s has terrible corporate and human rights practices, fans objected and CR ended up deleting the episode and donating the fee to Farm Worker Justice).
Livestreams and livestream advertising are a strong core. But they are just the beginning of where Critical Role is headed.
Critical Role launched a Kickstarter, which became the highest-funded Kickstarter in all of the film or animated categories, at $11.38M raised. 88,887 people backed this! Their goal had been to produce a 20-minute special for $750k. The end result was a 10-episode series, The Legend of Vox Machina, which now will come out on Amazon Prime in February, 2022. What will that show earn them? Depends on many factors, but it will be significant.
Critical Role has graphic novels, partnering with Dark Horse Comics. They have Funko Pop! and McFarlane figures, t-shirts at Hot Topic, miniatures from WizKids, and drinkware at Spencer’s. There are books, such as The World of Critical Role, published by Random House. They just launched the first young adult novel, published by Del Rey Books. This translates to having their products at Walmart, Target, and Best Buy… sometimes just on their online store… but often physically in stores too. There are audio books as well.
CR has also launched Darrington Press, a game company. They have released their first board game and announced three future games: an upcoming legacy game, a non-CR RPG, and a cooperative card game. They also announced they are updating their Tal’Dorei Campaign Setting, previously published with Green Ronin, to be a self-published 5E book called Tal’Dorei Campaign Setting Reborn. One can only wonder if we will eventually see a CR RPG, which they could use and promote on the livestream.
CR also partnered with D&D to create official hardcovers. The first was The Explorer’s Guide to Wildemount (hard to fully assess its growth due to coming out just as covid hit, but it has done well) and Call of the Netherdeep releases in March 2022. For now, the companies are working together. But WotC can be hard to partner with. It will be interesting to see whether the partnership endures (I hope it does).
Critical Role is the closest thing to a WotC competitor. Then again, I don’t think this should matter to either CR or WotC. There is plenty of space for both D&D and CR to both grow tremendously. The two working together is likely the best outcome for them, for the hobby, and for fans. They make each other stronger. Their collective growth could help usher even more growth into the RPG hobby, bringing even greater audience diversity and extending the reach. That, in turn, could create more opportunities for RPG companies.
In fact, this has been quietly happening already. For example, the 2017 Blades in the Dark RPG is being developed for TV. Cyberpunk 2077 the video game rests on the Cyberpunk RPG. Netflix will have a Magic the Gathering animated series, and Warhammer 40k will have a live-action series. Perhaps the RPG hobby as a whole can rise with new opportunities to extend its reach and draw in fans.
The 1980s provide a cautionary tale for D&D. Under the ownership of TSR, D&D grew to desire growth so badly that its executives ignored multiple warning signs while undertaking foolish initiatives. It collapsed like a house of cards and had to be sold to WotC. As described in Game Wizards by Jon Peterson, D&D’s impending demise was obvious earlier than many previously realized. TSR kept making bad financial moves until the end.
TSR and even WotC have had fantastic employees, yet often battled across departments, particularly management and advertising. Big personalities have at times been given great power, even when it is detrimental to the overall team.
It is always possible that WotC will undo its own success. There are always executives who will look at wonderful financial results and demand more. More releases, more often. Tweak the releases to be more profitable. Do more with the same or fewer resources. Success can be the driver of failure, when managers don’t properly work with their teams to understand what is possible and what is not. Managing success can be incredibly difficult.
While this is a concern, and a possibility for any company, I believe WotC and its talented staff will manage to avert this scenario. One reason is that TSR and WotC have historically hired individuals who deeply care about the game. They love D&D as deeply as any fan, and will work to protect it at any cost – even if speaking up will hurt their own careers. The easiest measure of how this is going is to watch D&D team staff changes. Are many good people leaving or do they stay? (Some good hires have left recently, unfortunately.) Is the team excited, or do they seem overworked? Are all members showcased, and can they speak freely, or are only a few granted that luxury? Initiatives in Dragon+ and on YouTube to showcase team members and give them a voice give me hope for the future of the team. Seeing talented hires rise in seniority within the D&D Studio also gives me hope.
Companies seldom grow forever. As ThinkDM mentioned on Twitter, look at giants like the department store Sears – from humble beginnings to massive growth to a brand name that my kids don’t recognize. Change can always come, and what seems unassailable one year can be gone the next. I don’t think D&D or WotC are in danger of disappearing. But how companies handle the inevitable downturns says as much of them as how they handle the good years. Perhaps more.
At various points in WotC’s history, there has been the potential for WotC to vastly change the fundamental nature of the D&D RPG. For example, the very initial 3E OGL concept of only creating the three core books and letting other companies create everything else… it would have profoundly changed the company and the game. It thankfully did not happen.
4E could have embraced ditching the RPG in pursuit of their larger digital plans, but they thankfully tried both (and failed digitally). 5E again placed the RPG front and center and has reaped the rewards. So far, WotC and D&D teams have managed to always place the RPG first and foremost, and to collaborate with a wide variety of companies. Examples include D&D Beyond, Roll20, Fantasy Grounds, and others. This has been good for all of us.
I was asked how I see the situation at the close of 2023. This is a year that began with the Open Gaming License debacle and ended with layoffs. Does the above still hold true? I think it does.
Critical Role continues to be a force. It is releasing several RPGs and extending its Amazon media relationship with a movie and more animated show seasons. But we also see that its board games have only had moderate success, and it appears from BookScan data that its RPG books are not runaway hits as some might have expected. Because the key to big revenue is not necessarily RPG books (in fact, often the opposite), CR is doing just fine and remains one of the most notable and capable companies in the industry. They don’t appear to be challenging WotC, but are the closest to being in a position to do so.
When I first wrote this article in 2021, I said the biggest competitor might be WotC itself. I didn’t happen to guess this. It’s what history has shown time and time again, including in 2023. BookScan and other data shows that WotC sells books in huge numbers, dwarfing even the most successful 2023 crowdfunders from great RPG companies. WotC doesn’t struggle or compete with other industry members. Instead, it struggles with itself and the industry’s confines. Hasbro as a parent company can do fantastic things, enabling the D&D movie (which should have been the big story of 2023, instead of the OGL and layoffs) and enabling the April 2022 acquisition of D&D Beyond. But ownership by Hasbro also means layoffs in the same way that the largest board game companies (Asmodee and its ownership by Embracer, for example) or video game companies (some also owned by Embracer) faced this year.
2024 will be an interesting year. We will have to wait half of the year before we can see the first of the 2024 core rulebooks. It may take months or even a couple of years to fully understand how well this goes. If history holds true, D&D as an RPG will remain incredibly popular. But the harder question is whether D&D as a source of entertainment revenue can find its path. Do we get a movie sequel? Does the TV show become a reality and succeed? Does a VTT raise the desired revenue? Does D&D Beyond grow? And, how do these changes impact the larger hobby? Does it thrive because of this, as it historically has? We shall see!