Friday, January 13, 2012

Why WotC Shouldn’t Sell PDFs for Old Editions

And if They’re Any Good at this Game, They Won’t

I’ve seen this bandied about pretty well all week as people are talking about D&D Next on the twitter- and blogosphere: there is a set of players who would like Wizards of the Coast to release PDFs of First, Second and Third Edition material because that material is basically unavailable through any other medium. The argument goes that by putting this material on the internet, Wizards of the Coast will be making money that they would not already be making, and that it doesn’t cost the company anything to have those books available for download, so… why not?

Those players are obviously not in the games industry.

Wizards of the Coast isn’t putting out PDF versions of older modules because, as a business, they want to make money. Now, you might think that putting PDF versions of an old game wouldn’t cost them anything, and in direct costs that’s probably almost true (you still have to pay for the space to hold them, the developers to make the store, the man hours to make the file transfers, more man hours if in-house PDFs of that product don’t already exist, maintenance, quality control, customer service…). It’s not a small undertaking, for certain, but it would be worth it because of all the money they’d make, right?

Except that they’ve already got a horse in this race, and that horse ain’t First Edition.

Every dollar spent on the PDF downloads is a dollar that effectively isn’t going to the books that Wizards of the Coast is paying a lot of money to print right now. By providing that material in the form of a downloadable book, they’re competing with themselves, which is about the worst thing you can do in business, especially if you’re competing with your own flagship product. It’s the same reason that WotC could never support both D&D Fourth Edition and D&D Third. If people were contentedly buying the edition with which they were most comfortable, they would be less likely to try the new edition, the edition that had just finished costing them many, many dollars. If they decided to cater to the OSR guys and put out First Edition books online, those players would be happy with that. And having happy customers is awesome, except when it means that those players are so happy they’re not buying your other, newer, more expensive products.

Now, obviously they’re not going to get all of the OSR guys to buy into Fourth Edition D&D, but if there were a readily available source of First Edition books on the market, the number of OSR guys they managed to convert to the new system would drop dramatically, and that’s really, really bad for their hot new game. In order to ensure that the new edition is going to get as much push as it can, Wizards of the Coast needs to do it’s best to eliminate the previous edition from shelves. This usually works by taking the game out of print, reducing the quantity of new books to zero while the demand for those books eats up all of the available copies. It’s a strategy that works, because once there are no 3.5 Player’s Handbooks kicking around, when it becomes obvious that you won’t be able to find the resources you need to play the game you’re most familiar with, the chances that you will try a new game (perhaps a game with the same name?) increase in a huge way.

Pathfinder sort of gummed up the works on this, though. One of the reasons Pathfinder has done as remarkably well as it has is that it continues to put our resources for a game that people are more comfortable and familiar with. It’s a strategy that’s been used successfully by Kevin Siembieda for decades, and it seems to be doing really well by Paizo. See, when someone is looking for a 3.5 Player’s Handbook, and there’s no such thing on the market, I can say “You’re not going to find one, and if you do, you’re not going to find one cheap. Maybe you can your crew should give Fourth Edition a try.” Except that, now, if someone is looking for a 3.5 Player’s Handbook, I can point to the much more familiar system in Pathfinder.

It’s interesting to note, though, that the name still matters. I have a lot of people come in looking for 3.5 Player’s Handbooks that won’t even consider Pathfinder because “It’s not D&D.” Obviously this comes down to a lack of understanding on the part of the customer, because Pathfinder IS D&D, but without that name recognition, selling the same product in a different wrapper loses something. For those players, it is still easier to sell them on the Fourth Edition of the game.

If there were 3.5 Player’s Handbooks kicking around, I wouldn’t be able to sell Pathfinder or Fourth Edition to anyone who wanted a 3.5 Player’s Handbook. Both games would sit on my shelf for a very, very long time because people are generally hesitant to try something new without being pushed.

The same general principle applies to putting D&D First Edition books on the internet. If that material is available to you, what is going to push you to try Fifth Edition D&D? Curiosity, maybe, but if there is anything about the game that you dislike, it is much more likely you’re going to go back to downloading the version of the game you play now, and Wizards of the Coast will have just spent a lot of money printing book-shaped paperweights.

Now, this isn’t meant to convert you. It won’t. If you’re a die-hard fan of one version of D&D over all others, knowing that there’s a damned fine business reason that Wizards of the Coast doesn’t want to sell you old editions isn’t going to get you to rush out and buy the next one. But it’s important to know that what you’re asking for is the business equivalent of self cannibalism. Sure, you stop the uncomfortable feeling of hunger for a while, but only at the cost of eating your right arm…

18 comments:

Brock said...

I disagree, but I can only speak from my own viewpoint. I buy a lot of electronic stuff - it is convenient from a cost and storage and searching point of view. I'm a Pathfinder player, but most of the stuff I have collected is not for Pathfinder - I mine it for ideas for adventures and house rules.

If WotC release the entire back-catalogue in electronic format, they will start getting money from me again. It will increase the likelihood of me buying DnD Next. It will mean that I will spend more of my total income on gaming, because there are more things that I want to buy.

You presume that the available money that people have to spend on gaming is fixed. Maybe it is for younger folks. For me, and I'm in the age range where I'd be interested in older editions, I have the discretionary cash available to spend. At the moment, WotC gets nothing. If they put out something that I'm interested in getting, I'll buy it.

Kris Hansen said...

And while I respect that you're in that position, WotC can't make business strategy choices based on what a few people in the right demographic want. They need to be looking big picture and further fracturing their own market simply isn't good business.

Not everyone is in a place where they can buy PDFs and books for every game edition they like. They have to choose. And when choices need to be made, Wizards of the Coast needs for those choices to be made in the direction of the new edition, not the old.

There is a place for Old School material to be published, don't get me wrong. I love the OSR in a huge way, and I get the frustration with not being able to find the product you want. I just don't think Wizards of the Coast is ever going to be able to give you what without crippling themselves in a horrifying way.

Brock said...

I'm not convinced that it's fracturing their market. One sale of a PDF of the old immortals book does not correspond to one lost sale of DnD Next.

There's a set of folks that will never move from what they currently play. WotC currently gets nothing from them, but could.

There's a set that would move if there was a new product they wanted. WotC lost badly with that set during the move to 4ed. Pathfinder wouldn't even exist if that hadn't botched the OGL-GSL stuff. Having old stuff in print might increase their inertia, but there is no new old stuff. They are likely to fill out their collections of old stuff, but would probably try new stuff if there is a low entry cost and might move if its good.

There's incoming new gamers who will tend towards the latest version of the market leaders brand. Availability of old stuff has no effect upon them.

Then there are hardcore gamers who will just collect whatever is available.

The current wisdom is that a segment of the market didn't switch to 4ed because WotC made the mistake of not having a way to destroy 3ed. That's true, but not 100% true.

Some switched, and then went back. Some would never have switched. Some were infuriated by WotCs actions, called them a jerk and swore never to buy from them again.

So it's really not a clear call either way. My opinion is that WotC would see a net cash gain and a big gain in reputation by opening their back catalogue electronically. I only hope that they have the wisdom to conduct some actual research rather that listen to folks spar on the internet :)

Brendan said...

I wrote this on my blog regarding Type V:

Say a record company owned the rights to the back catalog of The Beatles, Elvis, and The Rolling Stones. Why would they be so stupid as to not market that back catalog? Rights to the old D&D products have the same status within the tabletop RPG community. And the content is already created; only minimal production work would need to be done. Would any record exec seriously argue that some teenager would be less likely to buy the new Gaga album because Johnny Cash material was available? What am I missing here?

Kris Hansen said...

@Brendon: What I think you're missing is the idea of genres. Lady Gaga and the Beatles don't have the same audience. There are millions of people who will listen to one or the other, and a smaller bracket of people who will listen to both. Because there is such a solid market on either side of the divide, the record execs don't need to worry as much about losing sales to competing interests in the overlap demographic.

Also, given the direction of record sales lately, I think that might be something of a poor analogy. ^_^

Dungeons & Dragons is its own genre. There are only a few million people who play Dungeons & Dragons worldwide, across all of the editions. Any fracturing of that market comes with big implications, and while you can't avoid some small division based on the introduction of a new edition, you can minimize the impact of that by making older editions difficult/impossible to come by.

@Brock: One sale of the old Immortals book doesn't correlate directly, no. But thousands would. The set of people who might buy something from WotC if WotC gives them this-thing-they-want is small enough to ignore, but the implications of giving them this-thing-they-want are potentially very bad for the company. Those are the people you lose in edition transitions anyway, and you hope to make up for them by attracting new players to the game. If they had launched digital copies of their back list prior to the launch of Fourth Edition, I don't think you could honestly say that you'd have stuck around to play Fourth Edition D&D, and that's where the biggest problem lives. And even if YOU claim that you would have, there is a very large group of people who would have happily continued to play their own edition without regard for the new. To say that you would certainly buy Fifth Edition if they open their back list is a ludicrous claim, and even if it's true you don't speak for the entirety of the OSR.

The only possible way for them to consider opening their back list is if D&DV runs on a system entirely compatible with D&DI. That way, at least, the product they're releasing online actually directly supports the product they're putting on store shelves, giving people a good reason to go out and buy Fifth Edition. If that's not the case, there is absolutely no good reason for them to sell Old School PDFs.

Finally, let's speak to WotC's villainous business practices. When they released the OGL, there was a goal with that. They made a license that required you to have a copy of a book they sold for the licensed books to work. And that was fantastic for WotC, because people bought the necessary books in droves. When folks found a way around those rules, though, when people found a way to not need the PHB at all, Wizards of the Coast saw a sudden and very sharp decline in sales. Why on the gods' green earth would they continue to support something that has resulted in them not making money? When building their next edition, why WOULDN'T they protect their interests by requiring WotC approval of all third party material? There is no good reason for Wizards of the Coast to continue to support the OGL, and the GSl, while deeply flawed, is a workable answer to that problem.

And where online sales are a boon to smaller companies who can't manage the same sorts of print runs that Wizards of the Coast does for each of their books, making their books available as a PDF for cheaper than the cost of their printed book hurts WotC. Keeping old edition books available through PDFs HURTS WotC's bottom line, so no, of course they're going to avoid it.

You're upset with them for doing what is best for their business' future, and I find that incredibly silly.

Rob McDougall said...

Congratulations! You manage to both state your case and refute it in the same article.

Cannibalizing your own sales is not the worst thing you can do - allowing *someone else* to erode your sales is. That's exactly what WotC has done.

If there's a market for something and that market is large enough someone will attempt to address the market. There's a demonstrable market for older D&D editions. Why shouldn't WotC provide products for that market. If they don't someone else will.

Kris Hansen said...

Because if they don't, someone else will. And they will do it under a brand that isn't yours. And they won't split your market nearly as badly as you would split your market doing it yourself.

Wizards of the Coasts Paizo Problem is only a drop in the bucket compared to the shitstorm that would have come from them trying to support both Fourth Edition and Third at the same time.

Brendan said...

Okay, how about The Rolling Stones and Coldplay? Those are the same genres. I don't want to push this analogy too far, but my example was actually carefully chosen: other than Elvis, I have actually recently purchased music by all the other artists listed.

Look at all the authors published by Tor Fantasy. All those compete with each other in the same way core AD&D might compete with 4E or 5E. Yet fiction publishers seem to do okay. Also, I don't think anyone is suggesting that WotC should "support" older editions; people just want the back catalog. They could be plastered with retro covers or something to make it clear that they are a collectible item, not the shiny new thing.

One good reason to release the old material would be tremendous community goodwill. Many print publishers put out classics side by side with new offerings.

Older editions are never going to be difficult or impossible to come by again. Pathfinder, Swords & Wizardry, Labyrinth Lord, OSRIC, etc. That ship has sailed. Industry reports I have read show Pathfinder outselling the D&D brand in print for a while now (this does ignore revenue from D&D insider), so the lack of the D&D brand is not enough to plunge a competitor into obscurity.

I just don't see anybody saying, wow I could buy a first edition PDF, I'm not going to buy 5E. They serve different markets, in the same way that the Taurus sedan and the Ranger F-150 truck serve different markets. Yet Ford sells both of them.

Brendan said...

That previous post should read the ranger OR F-150 truck (but I'm sure that was clear from the context).

Kris Hansen said...

They don't continue to make 1982 F-150s, though. That's more my point. In this analogy, imagine each vehicle is a different game, with each model of that vehicle being an edition of that game. So the Ford Focus would be Magic: The Gathering, the F-150 would be Dungeons & Dragons and the EVOS would be the Ravenloft board game.

If they make a new F-150, continuing to make older F-150s at a huge discount is obviously a poor business choice. So too in the world of gaming. You leave that stuff to the secondary market.

JRutterbush said...
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Enochscion said...

I understand where you're coming from, and it's similar to the idea of piracy of "abandonware" cutting into profits of current titles.

To some degree that is true. If I can find something old for free, or $5, that can entertain me for 6 months, I’m less likely to buy something new for $45 to entertain me for that same 6 months.

I think when it comes to actual figures though, it won't hold up, based on the different demographics.

1. Some people will pirate their materials no matter what. They won't buy the new, they won't buy the old.

2. Some people will only buy the new. Doesn't matter how cheap the old is, they want the newest thing on the shelf. Includes most who start with a new version of the game.

3. Some people will get a combination of both, based on personal tastes. They'll have some of each.

You don't have to worry about demographic 1 or 2 - availability of old products won't affect their purchasing of your current products.

So all you have to worry about is demographic 3. Let me clarify: the only demographic you have to worry about is the demographic of people who want a combination of old and new material and are willing to pay for it.

I could stop right there, but let's develop the subdemographics of 3 a bit.

Angry 3. These guys are pissed that you won't make the old stuff available. They'll buy only as much of the new stuff as they can't resist buying, and they'll pirate all the old stuff they can.

Disappointed 3. These guys will buy as much of the new stuff as they like, and will wistfully wish it didn't cost $2,999 on Amazon.com (as of today) to buy a copy of the 2e Planescape Campaign Setting. You've lost goodwill with them (an important business consideration).

Conflicted 3. These guys want to try the new stuff - they even hope they'll like it. They'll at least look into it. However, they always want access to certain old things, and if they aren't able to find them legally for a reasonable rate ($3K for a boxed set - are you kidding? It's 30 seconds for a pirated download!), they're going to be strongly tempted to download them illegally.

I see those as the main subdivisions.

With Angry 3, making old stuff available probably makes you money. They pay for old stuff they aren’t currently, and are more likely to buy new stuff too (since they aren’t pissed off). You benefit here.

With, Disappointed 3, making the old stuff available might cut down on the profit you're getting from them. Might. They'll buy more of the old stuff, which, on a limited budget, means they may not buy as much of the new stuff. However, since you've already lost goodwill with them, they probably aren't buying as much of the new stuff as they would anyway. Making the old stuff available will help with the goodwill here. This is the only category where you may not benefit, and might lose money. But that might not even happen.

With Conflicted 3, you are more likely to, not only win goodwill, but make money you otherwise wouldn't. Offering the old stuff for reasonable prices means they aren't fighting a battle with their conscience over whether some higher ethical law against injustice demands pirating that $3K Planescape product - they are just buying it from you. You benefit here.

So what you have to ask yourself (Wizard of the Coast), is how prevalent is each demographic? It seems like they are placing all of their business model into getting the most cash out of Disappointed 3, and pretty much just feeling indignant at Angry and Conflicted 3.

Is the Disappointed 3 demographic really that dominant? Because that's what you're, literally, banking on. Better make sure.

Enochscion said...
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Kris Hansen said...

I appreciate the points your making, but there is a pretty significant demographic you're missing, and it's really the one that is going to decide this sort of thing for a company: the new player.

New players are going to play the thing they find the cheapest. They want to make the smallest investment possible to try a new game out. I've seen this anecdotally at my store, and both Wizards and Paizo have accommodated the trend with their beginner's boxes. If the initial buy-in to a game is typically $120, giving the New Player a chance to try the game out for $30 is solid business. It takes a smaller investment to get them in, but market research shows that a rather disproportionate number of people who sit down to play convert to regular players, and they'll make a greater investment in the future.

We also know that people tend to play what they started with unless they have a good reason to change. Obviously this doesn't include everyone (I myself will play damned near anything), but the largest swath of role-playing gamers will play - and buy - the game they know. It's comfortable, and people tend to do the comfortable when given a choice. Seriously, how many grognards started playing with 1st or 2nd? How many of the people who will only play 3.5 started with that system?

So getting people to buy the game you're producing right now - for the most money possible - is generally a good idea, because they're very likely to continue supporting that product in the future. And that's where the growth happens. I mean, you get people like me who will buy D&D from edition to edition, but if you want to make the real money, you need to expand out and get as many new players as you can. Those players don't own any books yet, newly converted players tend to buy more product for the hobby than people who've been around the block a few times.

If your new player has a choice between a $36 beginner box and a $5 pdf, which is he or she going to choose? For some, the box, but that's mostly because people like having a thing in their hands. Most are going to go for the lower investment, and once they have, if they choose to buy more, they have access to a whole bunch of books that support the game they now know. And rather than pay off the costly new edition, they sell a bunch of undercosted pdfs. That's a problem.

The only argument I've heard that I think makes any sense at all in this debate is that Wizards of the Coast would likely prefer to split the market on their own, rather than have another company - Paizo - eat their lunch with a product WotC invented. I can't really say which would be more effective at protecting Wizards' bottom line.

Enochscion said...

I do agree with a lot of what you said: some very good points.

I was including the new player in category 2, although I see that I haven't explained part of my assumptions.

My assumption is that the old edition downloads aren't going to be advertised.

There's really no need for them to be advertised. Those of us who want them will hear about them lightning fast through word of mouth, go buy what we want, and come back when we want more.

But new players are going to buy what is sitting on the shelves at the stores, or splashed across the screen with a big banner. They aren't going to root around in some tiny "Old Editions" link on the products page when there is a nice shiny beginner's set out there for $20-$40.

So if they advertised the old editions, I'd agree with you - it might grab some of the new players. But as long as they aren't actively advertising, just sticking them up there in a corner, there will be very little sales redirection from the new players.

Besides, I anticipate D&D Next being very good and very popular (and I tend to be pretty accurate about that; I called the response to 4e way back when it was in the works). This in itself will cut down on the old edition redirection.

At this point, I'm still left sitting somewhere between Disappointed 3 and Conflicted 3. My Lawful half isn't comfortable pirating copies, but my Chaotic half is incensed that quality role-playing game art that costs them virtually nothing to sell is being intentionally withheld by those who control it. I scour the web for physical copies in New or Like New condition, which I'd rather own anyway, but exist only in limited quantities, while I try to find a way to justify just downloading it.

Kris Hansen said...

Speaking of quality game art, one of the of the other issues I've heard regarding the possibility of releasing old game product is that there are some rather indomitable rights issues. When WotC bought TSR, that's pretty much all they got: TSR. And TSR's contracts are still binding, and that means that there are a lot of people who will need to get paid if they decide to release the product again. I mean, if you were to re-release something by Gygax and Arneson, no big. But what about all of the guys that submitted an article or two? A single piece of art? Those people need to get paid, too, and that means WotC will need to devote energy and resources into finding them, if they're still alive thirty years after the product was published.


To be fair, though, that's only something I've heard. I have no idea what the status of TSR's contracts look like. I'm not a lawyer.

The type of advertising that is done more often in role-playing games than any other is word-of-mouth. If there's a little link up in the top of their webpage for a $5 copy of the First Edition boxed set, and someone decides they're going to GM it for their friends, everyone in that player group is going to be playing First Edition D&D now, and that's what they're going to be looking to buy. Or their buddy will tell them that's the way to get it because it's cheaper and better. WotC's advertising hits us because we're its target audience. New players start playing because people they know are playing (which is why the Penny Arcade campaign has been such a big deal to them; people feel like they know Jerry and Mike, so that works to provide them a level of word-of-mouth advertising that is unlike anything they've ever had before), or people they know have played and are looking to play again. To simply say "Don't take out ad space," isn't going to solve the problem of a fractured market, because the ad space is at your table, and you're already advertising for the D&D they're not selling.

Chris said...

Well one can talk about the business end if the hobby or the design end of the hobby. Hate to say this, but people want PDFs of old games because they like those games. If people aren't buying their current flagship game, or would prefer to buy old out of print games, then wotc should take a look at what they are doing.

Yeah one might say if we compete with ourselves then we are losing business to old games when the real money is in writing a bunch of books for the new game. Poppycock I say. That shows such blatant disregard for the base of the hobby I'm insulted just saying it.

But that seems to be the operating policy of lots of corporate entities. Now good games are another matter entirely.

Aaron E. Steele said...

I can only speak for myself, but the fact that WOTC is re-releasing the 1st Edition PH, MM, and DMG makes me more interested in giving 5E a look.

And that, in addition to buying those three releases.

While pdfs might cannibalize sales, they also create goodwill, and positive word-of-mouth.

If I were WOTC, i'd call the OSR's bluff, and reprint more material during the 5E development period.