The Alphastream Game Design Blog
We may at times feel that what we see and experience in the hobby as individuals is the truth for the larger player base and industry. This is, however, often not the case. Let’s take a look at the history of D&D’s brightest moments and discuss what it may look like if and when 5E’s golden age ends.
Here’s something I was sure of when I first started playing D&D. D&D was doing amazingly well.
I rolled dice in my first game of D&D in 1983. This is the year the D&D cartoon was on TV, which I managed to see on VHS tapes in Colombia. I moved from Colombia to the US in 1987. The biggest bookstores at the mall had a large dedicated D&D section. There were D&D birthday plate sets, beach towels, and all kinds of media were inspired by D&D. It was 100% obvious to me that D&D was growing by leaps and bounds. I felt that way all through most of the ‘90s. It was obviously true.
Except… it wasn’t.
TSR’s best year with D&D was 1982, the year before I began playing! Jon Peterson’s numbers tell us it was the last year both revenue ($20.8M) and profit ($1.8M) grew. After that, TSR was losing money each year, losing $3.8M in 1985.
It wasn’t until ’96 or ’97 that I had my first suspicion that something was amiss, when my Dragon magazine stopped showing up. When I called, they unconvincingly said there had been a problem with mailing, they ran out, and offered to send a back issue. It was a decade before I learned the real reason was TSR was going bankrupt, firing employees and struggling to publish. It was acquired by WotC in 1997. Even many of TSR’s employees were unaware of the extent of the company’s financial struggles until the very end.
D&D’s first golden age seemed to last decades. And for fans, it did. Most fan-favorite campaign settings were published between 1983 (Ravenloft) and 1994 (Planescape). All while struggling. Golden ages are tricky.
History has slowly provided a picture of what happened back then. Maybe someday we will have an accurate picture of today, or at least accurate enough. Until then, we would do well to recall how easy it is that what we feel, what we believe, may be wrong. In the ‘80s, being wrong meant little. In this era, the pursuit of clicks can actually entice us to push anger and emotion instead of accuracy and it can have wide reach and harmful consequences. We are all worse off for that.
The best companies are lucky to last long enough to see multiple upswings and downswings. Many companies see a single downswing… their last. It’s true of many small companies in the RPG space. D&D, however, had the success of the ‘80s and then has shone even more brightly with 5E.
There are many reasons why 5E has fostered a second golden age. In analyzing the reasons, none seems solely responsible, so I personally think they overlap and help each other. It’s not just 5E being a really good system created by a highly skilled team that fought good fights until the ink was dry. It’s not just the slow initial release schedule creating classics and strong community from a single strongly marketed adventure. It’s not just Acquisitions Incorporated and Critical Role. It’s not just Stranger Things and it’s not just the sum of all these parts. Each one lifted and multiplied the effects of the other.
How good is 5E? It’s the first edition ever to keep selling for more than a few years without declining. If we look at historical TSR data, every product release starts strong and then drops. 5E instead saw larger growth over time, a historical anomaly. The number of superlatives is so large I can’t list them all, from bestseller book and Amazon lists to record growth and profit. On Mastering Dungeons, we noted the words “DUNGEONS & DRAGONS” mentioned as a growth area in a Q3 2014 Hasbro stock call. D&D had I think only been mentioned once previously. Shawn and I continued to marvel as most quarterly calls after 2017 mentioned D&D, with increasing emphasis. In 2020, WotC saw a 46% operating profit margin, and WotC’s profit was $112M higher than the profit for the entire Hasbro consumer products segment (despite those having much higher revenue). In 2021, the CEO notes that D&D has had 9 consecutive years of growth. 35% for that year alone. The operating profit is 72% of all of Hasbro’s profit.
That’s the last time the calls mention D&D growing. D&D Beyond is purchased in April 2022, and subscriptions are said to grow from 12 to 13M, but overall revenue and profit growth for D&D is not mentioned at all until 2023, when a lot of numbers are mixed together, obfuscating how Baldur’s Gate 3 is doing vs how D&D is doing.
Both fans and companies should understand that decline is inevitable. And we may look for signs of that decline. I certainly have, researching BookScan data to see if that decline is visible. I think, but don’t know, that sales of D&D have slowed starting somewhere around 2021. But, I am not alarmed and I am not crying doom. Why?
4E was a fantastic edition, with excellent sales any RPG company would have liked to have. Even Paizo. The only company not happy was D&D itself, and by extension WotC and Hasbro. D&D’s leadership had long wanted to be one of the core brands of Hasbro (making more than $50M and with a path to $100M). With that would come many benefits and protections, including avoiding the brunt of the then annual December layoffs. Big promises had been made for 4E, with big visions around a VTT and online tools. So, while revenue was very strong, it was not a golden era for D&D’s business.
But it was for other companies and for fans. Especially in the later years, just before 5E, we see many innovative RPGs launched. This is fueled by the advent of crowdfunding, providing explosive growth for companies new and old and severing the dependence on old and costly distribution models. We might argue this was the start of the second golden age for the industry as a whole. Companies regained their footing. They stopped chasing the 3E OGL and creating endless D20 versions and rediscovered the joy (and now success via Kickstarter) of innovative RPGs. And in many ways, 4E set the stage for WotC to create an incredible 5E, free of much of the oversight and expectations that had sunk 4E internally.
This golden age for RPGs accelerated with 5E’s growth. “A rising tide lifts all boats” continued to seem true for RPGs, whether licensed properties like the Avatar RPG ($9.5M Kickstarter) or an original RPG like Mothership ($1.4M). Once the 5E SRD was released in 2016, we also saw a vibrant 5E ecosystem develop, something that wasn’t around for 4E. The 5E SRD allowed many creators to publish products and many of the most successful had crowdfunding campaigns in excess of $1M. Companies like Fria Ligan (Free League) thrived, creating both 5E products, licensed RPGs, and their own creations. MCDM, Ghostfire Gaming, Kobold Press, and many others had and have hit after hit.
It’s also an incredible golden age for fans. The success of 5E, particularly during the years with a slower release schedule and before the OGL debacle, has created an incredibly strong community. Online communities exploded, as did conventions and many other forms of play. D&D has amazing official books and awesome third-party offerings, creating a robust ecosystem. And all the other strong companies have had opportunities to see their communities grow as well.
When it comes to RPGs, D&D is leagues ahead of any other company. Based on the BookScan data, the 5E PH might have 6 million PHs sold in print alone. Maybe more. In comparison, MCDM (a company whose personnel and products I highly respect) just had an incredibly successful BackerKit crowdfunding for their upcoming RPG. It’s the third-largest RPG crowdfunder, with an amazing 30,000 backers. And yet, there is a big difference between 6 million and 30k. When I worked on the Acquisitions Incorporated hardcover, we had deadlines based on D&D’s European distribution. Yearly revenue for D&D was estimated by Forbes a few years ago at $100-150M. A very small number of non-D&D RPG companies are fortunate enough to have the bulk of their yearly revenue come from $1-2M in crowdfunding.
D&D operates at a completely different scale and always has. It’s the only game that has a widely recognizable name. This has, over the years, allowed it to operate at incredible scale. It also helps that WotC and later Hasbro have deep pockets to invest in D&D. They can cover the slow years, allowing for long playtests and vast marketing. They provide access to Hasbro printers and countless advantages. You know, like a movie that spent practically all of 2023 in the top 10 most-streamed movies or a licensed video game, Baldur’s Gate 3, with multiple awards including game of the year. BG3 has been in the top 3 most-played games basically since release and is estimated to have more than 6 million copies sold and maybe twice that or more. D&D is a company that does not compete with other RPG companies. It competes with entertainment.
I could easily be wrong, but as I said above, I suspect 2014’s 5E sales have slowed. That’s not a surprise. All golden ages end! The surprise is that 5E could have this long a run! And, look, all kinds of factors are in play, from how audiences have changed since the pandemic began and heavy isolation ended to the larger economy and inflation.
Later this year, sometime around late summer, we will see the release of the 2024 edition of the 5E Player’s Handbook. WotC staff, including designer Dan Dillon in an interview after being laid off, are promising it will be a great game. While I personally have not been blown away by the playtest previews, it probably will be a great game and sell very well. I wasn’t blown away by the changes in D&D 3.5 and I played that game enough to wear down dice.
Historically, when an edition has received an update that was a variant, such as 3.5 or D&D Essentials, sales have shot up for a couple of years and then returned to the previous spot in the sales curve. It would be absolutely shocking if 2024 did not result in big sales for at least a couple of years.
Here’s the thing about D&D. Think about all the gamers you know. Maybe you attend conventions. Maybe you are on some social media platform. You may feel you know a lot of people and have your finger on the pulse of D&D fandom. But none of us know the 6 million or so people who purchased a 2014 PH. We see a tiny fraction of D&D fandom. I’ve been fortunate to get small tastes of the variety of D&D fandom. I’ve played D&D heavily on both coasts. I’ve attended lots of conventions all over the US. During work trips I’ve visited a few dozen stores all over the US. I’ve run D&D Encounters at several stores. I’ve administered conventions. I’ve played D&D in at least six countries. And I don’t have a good picture of gamers other than to say there is huge variation and the majority I’ve met are not at all like the people I hear from online.
So, even though people at work might ask us about that “OGL thing” they heard about, none of us have a great view into what will shape D&D doing well. That’s where the myriad of factors kick in, from Stranger Things, to BG3, to the movie, to CR, and beyond.
A lot of online fans want to know whether the OGL debacle will have lasting effects. It was absolutely a terrible moment for our hobby, but no financial data, neither BookScan nor stock prices nor store reports, are showing impacts. It certainly was impactful to most of us heavily involved in the industry, but again, the fandom is huge and diverse.
Matt Colville isn’t creating his Running the Game series on YouTube. And Critical Role might change to Daggerheart from D&D. But Colville has said he simply ran out of things he wanted to say on how to DM. And CR hasn’t had runaway success with its latest season. All their videos out there promoting D&D will remain there. And there is no shortage at all of new YT videos talking about D&D.
It’s also been pointed out that MCDM is pursuing its own RPG instead of creating 5E content. Kobold Press is publishing its own 5E variant. Both of these companies had planned to do so well before the OGL debacle. If anything, their ability to create their own games or variants is enabled by all of the success they had with 5E. They can afford to try a new approach. Will it have an impact? Sure! But it isn’t at all clear that this will fracture the market any more than similar variants and RPGs have since even before 2014. ENWorld’s A5E is well-rated, but has not disrupted 5E’s growth. There are lots of OSR type games and yet 5E continues with high sales. And it isn’t clear that companies won’t also provide 5E support. Free League and Monte Cook Games both started with their own highly successful RPGs and still went back and provided 5E variants. Even Paizo did.
But let’s say D&D will decline from its lofty heights. Because, yes, nothing goes up for ever. How far will D&D decline? And since it seems that a strong D&D lifts other RPGs, how will it hurt non-D&D RPGs or even 3rd party D&D creators? None of us know.
A possible answer can be gleaned by how Kickstarter is “slowing.” There are parallels here, because I hear a lot of conversation about how it feels like crowdfunding has slowed down. It feels harder to attract audiences and get noticed. It feels like decline. Is it?
Fortunately, someone has done more than go with feelings. They analyzed Kickstarter trends across the years and can now tell us what this slow 2023 looks like. It contradicts a lot of what we might be feeling.
When we look at the data, we see a peak in 2021. For 2021, here are the Number of Projects, Total Funded Value, and Percent of Projects that Funded. And let’s add 2022 and 2023 as well.
So, yeah, Kickstarter has slowed since the pandemic’s isolation peak. But… how bad is 2023? Let’s add in 2020:
So, while 2022 and 2023 slowed, they are still substantially above the revenue in 2020. 2023 is $29.5M higher than 2020, and 2020 was at the time seen as an incredible year!
When we look at the graph below for all the years, what really is revealed is an anomalous year in 2021 from the pandemic isolation. The graph seems to otherwise be continuing a fantastic trend of growth.
Past performance doesn’t guarantee future results and so on, but the above is encouraging. And something to note: the above is just Kickstarter. The last two years have also seen Backerkit growing (MCDM and MCG have recently had huge campaigns on BackerKit) and many companies like Ghostfire are exploring BackerKit. That means the recent numbers are even better than we see above.
But what about companies turning away from 5E, either due to the OGL or perceiving that it is better to publish something else? In the graph below we can see that the total number of D&D 5E projects grows each year, including in 2023.
We might ask if perhaps the companies above made a mistake and are losing money due to deciding to crowdfund 5E projects? In this last graph we see the % of the total raised that comes from D&D 5E. Even in 2023, the amount raised that comes from 5E projects is growing. It’s another indication that 5E appeal remains far stronger than we may think if we look at YouTube thumbnails.
The author of the graphs notes, “5E related projects made more money this year (~US$29M) than any other year except 2021, and took up a larger share of the total value (~51%) than any previous year. Projects funded at a reasonably high rate historically (87%). In case it isn’t obvious, all of this money is being made by non-WotC publishers/designers; WotC doesn’t release anything on Kickstarter. Without any statistical analysis, simply “eyeballing” the data, 2023 looks to me like a continuation of historic trends that were disrupted by the pandemic in 2021. The number of projects increased, the level of funding increased, the proportion of projects that were 5E increase, etc., all in a way that seems to continue on from the previous years, with 2021 being an obvious outlier.”
Take a moment and think… if the golden age ends… how far would it drop? To 2020 levels? That was an amazing year! 2016? 2013? Even 3E and 4E editions were seen as strong eras for the industry. The golden age ending or slowing need not be doom and gloom for D&D, third parties, or fans.
None of us know what 2024, 2025, or the years beyond will look like. Not WotC, not me, not anyone.
What I would like to suggest is that we, individually and collectively, make a resolution in 2024 to try to be less reactionary. Let’s spend less time rewarding folks who try to spin us up with outrage, doom, and thumbnails with bewildered faces.
Let’s spend more time gathering data. Even when we aren’t journalists, let’s try to gather our sources and practice journalistic principles. Let’s explain ourselves fully, even in the era where no one reads this far. Let’s work to have a more informed industry. Golden ages will always come to an end. But the decline can still have many positives and be the foundation for amazing changes. I’ve enjoyed every year in this surprising and challenging industry. Let’s make it as healthy as we can.