Generally, it’s been a pretty topsy-turvy industry in the last 2-3 years. The Hasbro-Wizards of the Coast (WotC) model gave us the dominant D&D 5E system, in place since 2014. TTRPGs, and specifically the D&D Intellectual Property (IP) has become mainstream; decades ago, nobody would have ever imagined this. It should be no surprise to anyone even just glancing at the market, that their recent schemes and reactions look to have a very significant impact on the way people play TTRPGs.
This has some good and bad points, not an insignificant amount of change, and more than a few eyebrow raising questions about the ethics of game development. Most people not immersed in the TTRPG sphere will immediately associate role-playing with D&D; we can’t fault them for this. But moving forward, how does the current WotC business model impact the overall TTRPG market? How does Palladium Books fit within this new dynamic? Well, let’s have a go at that question. Allow me the luxury of putting on my MBA hat.
TTRPG MARKET ISSUES
Intellectual Property. The relative value of D&D no longer lies in the books sold. Actual revenue from book and PDFs sales (you know, the products that actually support the namesake game), are a miniscule part of the income stream. To compare, a single Magic the Gathering card release probably nets more revenue than all of D&D 5E products combined since 2014. This is a scenario where the Intellectual Property (the idea of the game, setting, classes) actually holds the actual valuation. The brand is the money maker, not the RPG in and of itself. This can make for some really unique business decisions and strategies that really are the bread and butter of a Master of Business Administration case study. As an MBA grad, I can say I’m following the developments with a keen eye.
Market Share. An elusive number to generate unless you have access to market reports and know several insiders for insight. Stephen Glicker (link to Roll For Combat YouTube channel) provides great insight on this, but he has access to industry sources. Be that as it may, publicly available data has d20 systems (e.g. D&D5E, Pathfinder II) at roughly 67% to 75% of the market. That is a lion’s share to be sure. Palladium sits in less than 1% of the market, but they still rank in some surveys. This is a far cry from the heyday of the 1990s, when Rifts was the rage, and PB held anywhere between 15% to 20% market share based on that success.
Market Capitalization. Nested with WotC, D&D is shielded by the mega-income stream from Magic: The Gathering. D&D makes more than it costs, but nothing compared to Magic. As a Hasbro division, they can now leverage Hasbro IP (e.g. some sort of d20 Monopoly RPG). We see this across other industries, such as the Disney acquisition and centralization of multiple IPs into their walled garden.
Market Homogenization. The OGL and d20 systems have a near-monopoly effect. As the saying goes, “as goes D&D, so goes the TTRPG industry.” Much of the market currently leverages the Open Gamin License to develop their products, supporting this d20 system walled garden. This has created a bit of a ‘clone’ situation, with multiple fantasy TTRPGs and little differentiation.
COVID – THE BOOM EFFECT
General. The Covid Effect galvanized the TTRPG industry as a whole. With the success of D&D 5E, the industry as a whole saw a boom effect. I’d suggest current market dynamics speak to something different happening. That said, let’s see how we got here:
Sales Spike. Initially released in 2014, D&D 5E was a hit by any metric; it solved the problems presented in D&D 4E, and related sales were strong. Covid developed a dramatic increase of interest and sales. The current move to D&D Beyond (D&D 5.5) has met with differing opinion. Hasbro insisted D&D 5.5 books were the “best-selling products D&D ever had.” These figures are not divulged, but recent Hasbro financial statements fail to mention this “groundbreaking” sales issue, and the public information is a soft indicator against the press release. The most explainable reason is they count PDF and paper book sales as separate sales. Not illegal, but is misleading, and speaks to a problem WotC isn’t keen to publicly acknowledge.
3rd Party Injects
o Stranger Things (Netflix). The rampant success of this series and direct ties into D&D are not to be misjudged. Its record viewers are mostly never going to play TTRPGs. What it DID do was normalize the idea, make it personable. No more the nerdy hobby just for boys, it became a cool hobby.
o D&D Movie. Say what you will about the acting, quality of production, writing and script issues (all legitimate issues IMHO), it made money. It made money and succeeded in marketing the game as something more mainstream.
o Critical Roll. Opinion on the show aside, there is no way to minimize the impact this troupe of voice actors. How they developed and where they are now is a critical indicator of the influence of D&D’s relative monopoly on the TTRPG industry. Critical Roll has moved away from D&D 5E, with no intention of adopting anything related to the 5.5 system and D&D Beyond. That’s a thing.
o Baldur’s Gate (Larian Studios). The computer RPG that made the money Hasbro was hoping the IP would deliver. Development took years, but the gamble paid off in spades. I’ve never played the game, but knowing its impact on the market has zero requirement to do more than watch a few minutes of live streamed game play or some of the cut scenes.
o You Tubers. The explosion of D&D You Tubers blanketed the TTRPG sphere. Any gaming search on YouTube favored 5E content, regardless of the system you searched for. Recent developments have hampered those channels, a few notables leaving altogether. YouTube actively told them that their videos would not benefit from any help from the “algorithm.” This doesn’t bode well for new YouTubers or those from less renowned gaming companies. Of the about 20 or so major D&D5E channels, commentary typically fell into three categories:
§ TTRPG (specifically D&D 5E) gaming news;
§ Gaming Sessions and Humour; and
§ Breakdowns of D&D product releases and GM Advice.
Note: This latter and more broad-based content has been hit the hardest, as most Players and GMs have consumed enough advising content to pretty much dry up that element of the audience.
New Players! With all the previously cited injects, it was no surprise that WotC and D&D 5E were solidly the behemoths of the industry, Pathfinder a distant second, even then mostly developed within the d20 walled garden. Mass market acceptance and multi-market media support for the IP followed. Hasbro stock did well, WotC was firing on all cylinders and seemed to do no wrong. With that acceptance came a flood of new Players. With them came divergent ideas for what the game was meant to be, or how represented. The old-school gamers were about to meet new-school gamers.
WIZARD'S MAGIC FIZZLES – THE BUST EFFECT
Virtue Signalling. Not the crux of the discussion, but WotC alienated a significant portion of the player base by attacking early D&D and their creators, as well as official and non-official statements most generously described as dog-whistling and gaslighting. The crux is the manner in which they presented new gaming products. The fantasy genre evolved over the decades, some ways good, others not so much. If it was only this, I’d just handwave it away and carry on; but it’s not.
Cultural Insensitivities. For those who don’t recall, WotC released Spelljammer: Adventures in Space with the Hadozee, a species of flying monkey aliens. Not the first time introduced, the new Hadozee lore had bafflingly unprecedented parallels with real world African slavery, Tuskegee experimentation, and various tropes associated with African Americans. This rightfully fell afoul with critics and players, and WotC had to do some serious back-pedaling. For those who fail to see the connection, or the apologists out there, I’ll be at the adult table, patiently waiting for you to come back. [link to Gizmodo article]
Sensitivity Readers. Something of a controversy and the result of the Hadozee issue, there are some out there that simply will never get it. We see ‘race’ replaced with ‘species,’ which is really more a correction. Certainly, there are examples of over-reaction, such as all species and ancestries rolling the same 3D6 for all Attributes, no modifiers based on species. So basically, every species is a variation of human now. Additionally, attempts were made to completely remove topics from the game sphere (e.g. slavery, torture, mind control), which I would posit is a personal or group choice to be made (not the company), and how Players choose to invest their hobby dollars.
Safety Tools. Yet another topic most of the vehement critics are blithely ignorant to. Put simply, if you are part of a group using them and you don’t vibe with it, or hate the use of whatever tools are being implemented, simply vacate yourself. I don’t advocate for them in my group(s), but neither blithely condemn the concept. If it works for your table, go nuts; I have no problem seeing myself out if it negatively affects my experience. That’s the adult response. Screaming at the dark because another group deigns to use X-Cards, or Lines and Veils is a "kids table" response. Lines and Veils are used in everyday vernacular (even by the most vocal critics), revealing a comical ignorance by those most vehemently against them.
Cultural Consultants. Something most people once again fail to understand. Changes to satisfy a cultural group’s umbrage over misrepresentation should not be a controversy. Where game elements are proxied from Earth cultures (e.g. Japanese samurai, ancient China, Norse Viking), ultimately it should build on the immersive elements of the game. Having these folks to more accurately reflect an era/setting should be privileged, so long as it supports good adventures and is something the GM can leverage for the group’s enjoyment. Again, your hobby dollars speak.
OGL Scandal. As previously discussed in this post [link to The Bazaar #39], this issue made a splash for all the wrong reasons. An evident money- and power-grab by WotC, the push-back and legal implications folded WotC like a cheap suit. Do most D&D Players know about or care about this? Likely not enough to stop playing.
Pinkertons. Summarized in this post a while back [link to The Bazaar #41], they sent the Pinkertons to harass a Magic Youtuber, guilty only of mistakenly receiving a yet-to-be released box of Magic cards. Product mismanagement issues were massively made worse in the fallout. Add to the OGL Scandal, shareholders were none too impressed.
NEW WotC BUSINESS MODEL
Walled Garden. For those not in the know, the D&D Beyond virtual tabletop (VTT) experience is leveraging a lot of online video-game and gambling concepts. Resources like books and adventures are going to be in a monthly subscription model; those characters and likely the book PDFs will be locked away, only accessible with your monthly fee payments.
Virtual Tabletop (VTT). The WotC executives have moved “all in” with this concept. Writers have been replaced with software engineers to create an interface functionality that turns the game, virtually (pun intended) into a video game. It leans in hard with the grid-mechanics of the core game. Those 5x5 ft squares and how characters manipulate them will be limited by the framework of the VTT system.
Micro-Transactions. Micro-transactions (upgrades for a few bucks) are the way forward, meaning Players can “pay-to-play” with the best weapons and armor, purchase different “skins,” or any number of additional options. Loot boxes look like a definite possibility; buy a box and hope for the best. This draws on much of the success from video games, where the secondary micro-transaction market greatly outweighs revenue of the game itself.
Licensing. As indicated above, the IP is the money maker, and Hasbro is looking to cash in on it. Whether it be modules for the VTT, or something else supporting the use of micro-transaction, they are looking to dovetail things into the brand of D&D. More recently, Hasbro announced the deal with Global Games to license D&D for online slot machines and gambling. Take that for what you will. [link to iGamingBusiness article]
Exodus from D&D. Taking aside any personal issue Players may have with Virtue Signaling defined above, the relative zenith of D&D 5E in the market seems to have peaked. I don’t have the figures to back it up, but anecdotally, WotC seems to be going out of their way to make mistake, market forces are driving against Third Party platforms, and they started pulling their products from Barnes & Nobles and other brick-and-mortar stores. This reminds me of the disdain many Players had from D&D 3.5E to 4E – that transition effectively fueled the rise of Paizo and Pathfinder (which essentially is just 3.5 cleaned up). What could Palladium Books do in such a vacuum?
FOLLOW-THROUGH FOR PALLADIUM BOOKS
General. There are a great number of things that Palladium Books can learn from the mistakes made by WotC, particularly in terms of handling communications, marketing, and strategic planning for the D&D properties.
5-Year Plan. I know such a plan exists, they’ve said as much. No, I don't have visibility on it. Would I love the chance to peak at it and spend a day strategizing with Kevin and Sean about the way forward? As an “outside looking in” from an MBA perspective? Absolutely! I somehow doubt I will get the chance, LOL. I’m sure a more robust marketing plan would also be a real winner with the fans. I imagine the following has to be included (or should be):
TMNT. This project has taken up a lot of bandwidth, more so than I would wager is warranted. I would also wager this is mostly an issue from the IP holder’s side of the equation. This has, apparently, also deterred other projects. While I’m very much looking forward to the TMNT books I ordered, I’d love to get a sense of where they are with the remainder of their projects. And get this off the books in terms of effort impeding other product development and sales.
Previously Funded Projects. A number of projects were crowd funded, yet mysteriously remain under wraps (e.g. Bestiary 2, Lazlo). I’m not sure if this is an issue with the writing, the art, or both, but a report to fans, more specifically those that supported the projects, would be one of my strongest suggestions. Like, ASAP. This is literally an anchor, a debt of both time and commitment that needs to be cleared.
Upstaffing., Even in its heyday, Palladium Books was a small company. Perhaps 20 employees total? This includes some of the more prominent writers, I don’t count myself or any other freelancers. The website currently listing 4 Staff; they recently hired someone to run the warehouse, and announced they are looking to hire an Operations Manager. Their website lists an obviously out-of-date list of some 11 Artists and 13 Writers. I think the staffing recipe is getting closer to ready, but is likely far from ideal.
Continued Successes. The buzz that the Xmas package generates each year is a great thing; likely the only company that does this. I get at least one each year, and this last year was no different. Hopefully the trade tussle caused by the U.S. Administration will work itself out before next cycle….
Making a Splash. While not something you can put as a Strategic Plan entry, I’m watching and waiting for the next big splash – the product that has an impact similar to the original Rifts RPG. There are certain projects in the pipe I am aware of, others I am privy to that are not yet formulated – not my place to discuss those. But I’m watching and I’m waiting for the next big thing. I think a couple of the following need to be considered:
Leverage the IP. Like it or not, Rifts is the “cash cow” for Palladium. WotC has D&D; PB has Rifts. Whatever the major move, Palladium needs to leverage this game to do it. Ignore the movie license, continue supporting Savage Rifts, but get back to books and products that directly tie-in to the TTRPG experience. TMNT’s Kickstarter rendered over $1.2 million; I’m betting a Rifts relaunch would easily outpace it.
Reboot the Megaversal System. There needs to be a Core Rules System Redux, one that can be applied across the entirety of their IPs. Make it backward compatible and go from there. There, I said it, and it can be done. I’m in the “Proof of Concept” phase with my Core Rules System Project. The following would come out of it:
o Megaversal Core Rule System (CRS) Book. The reboot. Call it Megaversal System 2.0 if you must, but the system I propose still supports viability of characters created from books 30 years ago.
o Megaversal GM Field Manual. A series GM articles for new GMs and Players on how to navigate the CRS, Adventure Design, and topical articles that apply across each game system.
o Game Baseline Books. For games that need it, a relaunch of the main book. Given 100+ pages of rules now removed, more world building and adventure material can be included. The only thing remaining would be specific new Classes for each game; character creation, combat, skills would be found in the CRS. Or hey, if you don’t want that, get the following.
o Megaversal Conversion Book. How to apply the new CRS to your previous library of books, with system-specific conversions. One book covering ALL games, reinforcing the ability to traverse from one game to another.
Theatre of the Mind. I’ve nothing against VTTs, but they support a rules structure built for a grid-map. The Megaversal System is a Theatre-of-the-Mind framework, and should be celebrated/reinforced. WotC is so far ahead, and funded, to allow First Mover Advantage, and to an extent perhaps monopolize that realm. But it can backfire, just like D&D 4E. Allow WotC and the d20 walled garden to figure it out. Let the Megaversal System run wild and free. It works, with just a little nudge to help the GM along (hint: like a GM Field Manual).
Reinforce PDF Sales. Purchase of PDF versions is a valid choice for the modern gaming community. For the ‘collector’ buying the physical books, give a code to get the PDF download directly from Palladium. Don’t fall into the WotC trap of double-accounting sales. The price point for Palladium is at a premium. Further build value with the Players and GMs, and it will generate that buzz, especially by comparison to d20 competitors.
o Purchased PDF = a sale.
o Purchased Physical Book = a sale (give code)
o Physical Book Downloaded PDF = a gift (everyone loves a gift?)
Phone/Tablet Application Design. Get an app developed to support character creations and character sheets, by system, automatically updating as the character advances and gains new skills. I have zero play on this, but I’m sure there are people/companies that could be outsourced. Supported by the Megaversal Reboot.
Note: To do this, a reduced and rationalized Class list per game is required. This only impacts Rifts (500+ O.C.C.s); other games are good/manageable (e.g. looking at you Nightbane Morphus tables).
New Books for Old Games. Sure, there are regions of Rifts Earth not yet ‘explored.’ I would hazard that limiting the Rifts IP to completing a review of the Atlas is a mistake. We have the Minion Wars to complete. What do things look like after? How long after? That could spawn additional regional World Books, with new enemies, new alliances, new monsters, and most importantly, new adventures.
Fiction/Novels. A humungous part of the success for IP like D&D and Warhammer 40k rests on the release of novels. Distributed through brick-and-mortar stores, these absolutely drive readers to become Players, and galvanizes the current base. PB needs to figure out how to license with authors through conventional means to ensure success – that means letting authors get Literary Agents to springboard into the mass market.
Multi-Tier Distribution. The WotC model is a direct-to-consumer model, with little support to the FLGS. Most FLGS don’t have VTT set-ups either. I think this is a major distribution net begging for a new series of books to plug onto their shelves. But the increasing majority of product sales are direct from the website to consumers (PDF and/or physical copies). I'm not sure when the new PB website is in development, but needs to be up pronto.
Get in the Ring. Kevin has said on a number of occasions, reinforced by Sean, that they don’t want to disparage the competition. I’m 100% behind that. Without knowing the full of it from Palladium’s fiscal health and viability, it’s easy for me to say they need to start scrapping and make a name for themselves again. Despite this, they gotta’ get in there and challenge for market space.
CONCLUSION
If you’ve made it this far, my apologies for the wall of text. Sometimes the MBA in me gets away with itself, LOL.
I’ve had conversations with Kevin and Sean about possible products in the near future, and really hope these things come to pass. After TMNT is out the door, I think there is potential for an even grander response from the market. It has me excited enough to write/contribute manuscripts, while I leave any webpage and app development to better hands. This, however, is my project list:
Megaversal CRS Redux (Proof of Concept). An updated rules system that still looks and feels like Palladium. Out now in limited Alpha Reading and Play Testing.
Megaversal GM Field Manual. I’ve a number of articles on this website I will collate and refresh.
Megaversal Conversion Book. Notes and ideas from the CRS Proof of Concept. I’m out to challenge the concept it is too difficult to accomplish.
Rifts. What amounts to Free Quebec 2 and associated Adventure Book (Maritime Magic Zone).
Beyond the Supernatural. Concepts for several Adventure Books (with new monsters) with adventure modules/HL&S. These have immediate cross-over potential with HU2, Nightbane, Ninjas & Superspies, heck even Rifts Chaos Earth.
Novel (Beyond the Supernatural). Completely mapped, characters fleshed out, sites and events researched. Chapters are being typed. It also has legs for follow-on books. With a twist, can be tied into Rifts; could be a movie script if need be. If PB doesn’t allow for Literary Agencies to play in this space, I’d simply strip the very limited IP references and go solo.
It’s always a challenge to compete in the shadow of the dominant player in the field; D&D and d20 casts a long shadow. Palladium Books is a gaming company where they still play their own game; trust me, WotC business decisions are not done with a Player/GM mindset. TMNT Kickstarter seems like it will pay off, and I hope it provides them enough profit to springboard into new projects and products. Most of the recent TTRPG players entered via the d20 walled garden. It’s time to break down those walls. Palladium Books has a dearth of IP to leverage; Rifts is an IP begging to be exploited. I’m looking to do my part, how about you? Is this a brand you’d buy, a brand you’d be willing to help sell?
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