February 22, 2023 | Tome of Misunderstanding | Images from Lexica
Introduction
A few years ago, the producers of the Third Edition of D&D embarked on an ambitious and counter-intuitive strategy. They gave the game away. They gave ownership of parts of the game away (the OGL). They gave the core of their game rules away. Then, 2 months ago, they decided to decommission the OGL, undo their best customers’ brand loyalty, and reverse 20 years of successful D&D strategy. What happened?
If you are late to the party, I highly recommend Treantmonk’s summary to catch up on the drama.
Free Music!
I first became acquainted with the idea of sharing creative works for “free” when a friend at work introduced me to the music of Jonathan Coulton. Jonathan Coulton is a somewhat eccentric singer-songwriter who achieved fame via his Thing a Week project. He is also notable because he has released his music under the auspices of Creative Commons. His rationale was that the ability to share music while maintaining rights to monetize it. Sharing music allowed for broad exposure to a much greater audience. Maintaining the rights enabled him to own and sell his original material. His popularity exploded, in no small part due to how he viewed the new world of music distribution, and he lived happily ever after. Guess what? This was the model Wizards used for D&D 3.5.
Free D&D!
Dungeons and Dragons implemented two major approaches in the last 20 years to grow the brand through access. The first was the OGL, or the Open Gaming License, which enabled content creators to use elements of the System Reference Document, to make original third-party content. The money from this content would go to the creator, not Wizards/Hasbro. The second was offering materials for free. The SRD is available for free on the website, which includes almost anything you could dream of (but not the Dream spell) as a starting point to play the game: the character classes (but only 4 of them and 1 subclass each), the races (but only a handful of them), spells (but only a few per level), etc. You get the minimum of what you need, but you do get it for free.
What Is Strategy?
The effect of these two approaches informs us as to the strategy over the past 20 years. From a classic Harvard Business Review article by Michael Porter:
Strategy is the creation of a unique and valuable position, involving a different set of activities…. Strategic positioning means performing different activities from rivals’ or performing similar activities in different ways.
Michael Porter. “What Is Strategy?” Harvard Business Review, November-December 1996
Dungeons and Dragons strategic approach was (awkwardly summarized by myself):
Leveraging our unique brand strength and quality product, we will grow to become the dominant TTRPG on the market by granting the community free access to the basic game rules.
We will permit third-parties to develop monetizable content that will expand access without the need of licensure.
My Summary of What WoTC Might Have Said in a Memo
Boom! Wizards now had a stream third-party content! Instant product engagement! While they didn’t benefit from the profits of these third-party products, they did benefit from the production of content. Those approaches, combined with iconic branding, gave D&D the leverage to dominate the field for the past 50 years.
A Gateway Drug
Here’s the thing: what D&D did was provide us with a taste of the game to get us started– jusssssst enough to want to engage further. They then provided us with stepping stones to lead us down the path to high consumption (aka addiction): the Starter Set; the Player’s Handbook; the Dungeon Masters Guide; the Monster Manual; the published adventures. If you want to go all in and become a whale, there are a plethora of sourcebooks and adventures to get into. You could also engage on Dungeons and Dragons Beyond, the official online digital toolset. You could also access third-party content on Dungeon Master’s Guild, the official vehicle for distribution of this content.
And here is where the current problems for Wizards of the Coast/Hasbro started. Hasbro is a corporation, and, like any corporation who experienced a couple of years of astronomical growth, they changed the goalposts for Wizards about what profits they expected from this product. The first tolling of the bell occurred in December of 2022, when Cynthia Williams, in a fireside chat style engagement with investors, stated that Dungeons and Dragons was “under-monetized”, and that the plan was to create a “recurrent spending environment”. This signaled a shift in strategy away from the Access position I have described above.
Putting myself in the mindset of someone who might work in leadership at Wizards or Hasbro, I am guessing that the demands of demonstrating continued growth and profitability was coupled with the perspective that the brand strength and recognition of the Dungeons and Dragons property was at a point where players who engaged with D&D would be willing to spend more. There is a thriving “after market” on etsy, amazon, drivethrurpg.com, and other places where it is easy to find Dungeons and Dragons-themed merchandise and game accessories (and game content). So, the leadership determined that they would pivot to a new position where their research led them. Cynthia Williams on the call explained that hybrid players (those who engaged with Dungeons and Dragons both digitally and via the tabletop) led to greater satisfaction and engagement after the acquisition of DNDBeyond and the Magic the Gathering virtual game, Arena. The conclusion must have been that expanding the digital toolsets and harnessing the high profits from the largest third-party providers of content would help increase profitability. The subsequent conclusion also was that D&D needed to pivot away from allowing free licensure of their basic rules content, and back into a position where Wizards and Hasbro could “opt out” of such agreements at will.
So Many Mistakes
This was a dismal failure. So many missteps. It failed to take into consideration the consequences of pivoting away from the strategy that had facilitated the high-level growth in D&D over the past 20 years. If the quality of the product, the finely tuned ruleset, the iconic ideas and symbols in the game, the rich lore were the cargo, the warmth and enthusiasm of the community were the vehicles. Dungeons and Dragons encouraged the development of a community who had unlimited access to game materials, and who purchased D&D core products because they enjoyed (loved) the game and all of the strategic moves since the development of the OGL (with the exception of 4th edition, but that’s a story for another day). This communicated to D&D consumers that they were valued and included. The strategic approach effectively created a layer of superusers who acted as brand ambassadors. In one stroke these people were alienated, and the OGL changes were viewed as repugnant examples of corporate greed.
If the Wizards leadership had mindfully formulated the plan to move aggressively away from the “gateway drug”/OGL model of D&D, they should have simply kept going. Yes, they should have acknowledged they were burning down that relationship in favor of striking out in a bold new direction more similar to an MMORPG with that same monetization model—the company owns everything, a monthly subscription is charged, and bells and whistles or “expansions” could be opted into with microtransactions.
This would have revealed that they had confidence in the casual user, the broad customer base who wouldn’t have cared about the OGL or third-party content or anything, and might have eagerly embraced a new virtual tabletop. Wizards and Hasbro in their haste to recant their position made multiple missteps, including giving mixed signals about what the future held for their game, making claims that “everyone won”, and canceling opportunities to clarify and communicate their outlook.
The most amusing (or sad part, depending on your perspective) was that Wizards and Hasbro, if they wanted to monetize the D&D environment, could have accomplished much more by leaning in to their existing, successful strategy, instead of making such an abrupt departure. Wizards apparently was contemplating a more aggressive move into the VTT space, and removing the OGL and controlling the VTT space were related maneuvers to monetize D&D via ownership of any profitable products within the game.
Lean Into Successful Strategy, Don’t Pivot Away
The perils of changing strategies midstream became really obvious in what should be a case study at a business school at some point. Let’s see: our strategy is to give away products for free! This permits production of content without licensure to aggressively grow our product via unparalleled access to intellectual property. We will foster a rabid community of superusers and a large body of casual users! Many of these individuals will buy into the product ecosphere where we churn out creative and high-quality product that advances gameplay.
Now, we have a new space to enter into where we are not the first, but are still well positioned to make a huge impact.
What would you do?
Hopefully not what Wizards/Hasbro did.
One option that is most clear in retrospect is you could have doubled down on the OGL.
- As One D&D gets produced, release it with an updated and similarly accessible OGL that includes VTT.
- Charge a monthly fee for the digital platform that has company produced content.
- Give away the ability under the new OGL for content creators to produce new VTT extensions.
- Foster the same customer base that gave you such brand strength
- Accept that this is not an under-monetized situation
This would have been a total win for Wizards/Hasbro, increased their revenues, and maintained their corporate relationship with their superusers.
But Wizards/Hasbro didn’t do this, and they are reaping what they sowed.
Free TTRPGs, Competitors, and Why You Should Still Play D&D
You know what another funny thing is? There are a ton of other free TTRPGs.
Any one of them basically accomplishes the tenets of role playing. The old playground game of make believe, but with rules that codify the game experience. I promise you that if you try out any of these games, you can have a great experience. Why? Because the magic happens at the table.
Another thing—there are a ton of tabletop roleplaying games period. Great, fantastically written and developed alternatives. Savage Worlds. FATE. Pathfinder. Apocalypse World. 7th Sea. Numenera. Champions. Countless others. They are each terrific in their own way. They are each high quality products. Many of them have their own quality product release cycle that rivals D&D. If you played a game a year you would die before you got 25% of the way through what is available.
But—and this is the end of the post, I promise—you want to hear another funny thing? I still love D&D. In my opinion and experience, D&D is the best game in the world—the best that was ever invented. I still plan to stick with it even with everything that has happened, and all of the other alternatives that exist. Why do I feel this way? That’s a tale for another post. Thanks for reading!
-ToMu