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Wooly Rupert
Master of Mischief
Moderator

USA
31632 Posts

Posted - 25 Sep 2018 :  03:39:23  Show Profile Send Wooly Rupert a Private Message  Reply with Quote
quote:
Originally posted by cpthero2


As to your point regarding Paizo, I completely agree with you there. I feel that Paizo really messed up when they didn't move in for the kill. This is a classic example of a marketing department so focused on mid-stream analysis that they didn't stop to consider reassessing the landscape and where it's competitors were with their sales. A simple and small assessment at even the store level to evaluate product interest from consumers would have shows that 4e was a disaster as a product line, and that they could have pivoted to wreck WotC on that line......as I sit here quarterbacking the day after from my chair, haha.




I don’t think WotC was ever in any danger from Paizo.

Paizo was on top for a while, and they certainly did cut into WotC’s market share.

But WotC had three things going for it, and two of them, in particular, meant that any attempt to put them under would fail.

1) Those who like 4E were very, very in favor of 4E. Watching the "Edition Wars" as they happened, there were basically two reactions to 4E: "Kill it! Kill it with fire!" and "I want to have 4E’s baby!" People either absolutely loved it or they absolutely hated it – but there was enough of the former that WotC, though I’m sure they were very concerned about how things unfolded, knew they had a solid base they could build on.

2) Name recognition. Pathfinder had a very successful launch, and it’s been a successful enough game to have a spin-off, a 2nd edition, a robust product line, novels, comics, and at least one computer game. Despite all that, they were the new kids on the block, comparatively speaking, and their game was built on the one that had been around for decades and had all the name recognition: Dungeons & Dragons. I’m a huge fan of Paizo and their stuff, and I couldn’t stand the 4E ruleset of D&D – but even I found it easier to tell people I played D&D, instead of saying I played Pathfinder.

3) Hasbro. Even when Pathfinder was outselling 4E, Paizo still didn’t have the funding and corporate support that Hasbro could potentially give WotC. Sure, Hasbro is never going to throw all of their weight behind WotC – but even a fraction of their weight would just roll right over Paizo, if that was Hasbro’s intention. Hasbro could have likely bought and shut down Paizo, if they wanted, without it being a blip on their bottom line.

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cpthero2
Senior Scribe

USA
472 Posts

Posted - 25 Sep 2018 :  19:53:43  Show Profile  Visit cpthero2's Homepage Send cpthero2 a Private Message  Reply with Quote
Good morning Master Rupert,

Since I don't have exact figures from WotC, I am just going to rely on my marketing experience and extrapolate to the best that I can, so in other words, I will be making some assumptions. I am going to lay those out, so that the discussion can be more fruitful if you decide to critique my assumptions, they'll be easily listed (I always dislike it when argumentative opponents [academically argumentative, not hateful] don't list their assumptions easily).

I assume four regions in accordance with the U.S. Census Bureau, which operates under the U.S. Department of Commerce, and produces the U.S. Economic Census.

I assume, based on my own evaluation of ENWorlds analysis, that the included references by them, are valid, and commensurate with reasonable standards to evaluate this industry, in absence of hard figures from corporations that do not share their data.

I will include sources at the end.

Economic Regions
  • West [consisting of Pacific and Mountain districts, as well as Alaska and Hawaii]
  • Mid-West [consisting of West and East North Central
  • Northeast [consisting of Middle Atlantic and New England
  • South [consisting of West and East South Central and South Atlantic]

_______________________________________
quote:
I don’t think WotC was ever in any danger from Paizo.


I respectfully disagree, with the understanding that I do not, and nor have I ever, worked in the book entertainment/distribution industry. That being said, if you reference ENWorld's excellent source of analysis at (http://www.enworld.org/forum/content.php?1984-Top-5-RPGs-Compiled-Charts-2008-Present#.WV45NMbMxBw), and scroll until you find the chart done by 'Morrus', you may take note that from approximately Q2 start 2011 through Q2 end 2014, Pathfinder had #1 marketshare. By measures in most industries that involve production with significant variable unit cost contribution to total cost, and a contribution margin that is likely high due to intensive capital inputs, the cost volume analysis is vital. With that in mind, knowing that volatility was low (you can tell by the sales for those three years in dominating WotC), their operative leverage was great. Essentially, by subtracting sales figures from variable inputs, the product line manager would have been able to demonstrate to the marketing VP, with a well articulated point, that they could add in more product lines with less risk. Now, the real question is, why did they not do so? I would gather it boils down to a simple factor: fear. Managers hate to stick their neck out, especially in high cost-volume industries where a bad line can make them look like fools. Upper management loves to Monday night quarterback back mid-management sales forecasts, even when supported by solid economic forecasts and finance figures, so that creates a risky shift response and you get......not much. hahaha So, I think while acknowledging my lack of industry specific work experience, that they could have taken a reasonably solid chance to dominate WotC. They were likely running scared though, and quite likely had unsophisticated managers (read as inexperienced in risk management, not knocking on them, but business is cold and calculating after all).
__________________
quote:
...but there was enough of the former that WotC


I can certainly appreciate the point being made here, Master Rupert. I feel though that I need to diverge from your outlook in this matter, when evaluating the excellent work done from ENWorld. To boil it down to what amounts to a false choice dichotomy (the love it or hate it part, and please understand, I only argue this from an androgogical point, not an insulting point), very few markets respond with that level of product hatred. In this case, when referencing the chart that 'Morrus' created, you can see that GURPS rebounded and Star Wars had a powerful response as well. It seems that market forces provided economic opportunity costs that were viable options to the scrutiny of consumers and they went for it. It seems that the brand, likely, of D&D is all that managed to keep it at 2nd place for that entire three year period, but that last point is only conjecture on my part, and not a necessary part of the analysis done by 'Morrus.'
_______________________________________
quote:
I found it easier to tell people I played D&D, instead of saying I played Pathfinder.


I certainly get your point there. At the end of my last point above, I referenced the branding. I agree with you in terms of the strength of the brand. I mean, it is so strong that people (myself included) do still refer to playing Pathfinder as playing D&D. Name recognition there is so strong, that I do think it is what kept them going there.
_______________________________________
quote:
Hasbro


I very much appreciate the economic might of Hasbro. Though, if you look at the discounted free cash flow of Hasbro during the period in question (cited: https://seekingalpha.com/article/4001403-hasbro-earnings-growth-impressive-can-free-cash-flow-rise-tandem), it was very volatile. That kind of peek and trough of DFCF is a marker to investment and they were not looking good in that regard at that time, though they were looking good at price, and their financials, overall, were acceptable for the going price. I just don't see though, to your point, that Hasbro would have been putting money into a subsidiary with the volatility they were facing at the time. I mean, I could be wrong, but that is how I am seeing it based on the facts presented.
_______________________________________

I really appreciate the discussion thus far, and I hope to continue it. I rarely get this kind of opportunity to discuss. Also, I want to ensure that I express my tone and interest are focused on academic argument than insults, or other inappropriate forms of discourse, and thus, I hope that nothing I said came across as rude, etc.

Thank you Master Rupert!

Best regards,



Works Cited:
https://seekingalpha.com/article/4001403-hasbro-earnings-growth-impressive-can-free-cash-flow-rise-tandem
http://www.enworld.org/forum/content.php?1984-Top-5-RPGs-Compiled-Charts-2008-Present#.WV45NMbMxBw
http://www.enworld.org/forum/content.php?4258-How-big-s-the-RPG-market
https://www2.census.gov/geo/pdfs/maps-data/maps/reference/us_regdiv.pdf

quote:
Originally posted by Wooly Rupert

quote:
Originally posted by cpthero2


As to your point regarding Paizo, I completely agree with you there. I feel that Paizo really messed up when they didn't move in for the kill. This is a classic example of a marketing department so focused on mid-stream analysis that they didn't stop to consider reassessing the landscape and where it's competitors were with their sales. A simple and small assessment at even the store level to evaluate product interest from consumers would have shows that 4e was a disaster as a product line, and that they could have pivoted to wreck WotC on that line......as I sit here quarterbacking the day after from my chair, haha.




I don’t think WotC was ever in any danger from Paizo.

Paizo was on top for a while, and they certainly did cut into WotC’s market share.

But WotC had three things going for it, and two of them, in particular, meant that any attempt to put them under would fail.

1) Those who like 4E were very, very in favor of 4E. Watching the "Edition Wars" as they happened, there were basically two reactions to 4E: "Kill it! Kill it with fire!" and "I want to have 4E’s baby!" People either absolutely loved it or they absolutely hated it – but there was enough of the former that WotC, though I’m sure they were very concerned about how things unfolded, knew they had a solid base they could build on.

2) Name recognition. Pathfinder had a very successful launch, and it’s been a successful enough game to have a spin-off, a 2nd edition, a robust product line, novels, comics, and at least one computer game. Despite all that, they were the new kids on the block, comparatively speaking, and their game was built on the one that had been around for decades and had all the name recognition: Dungeons & Dragons. I’m a huge fan of Paizo and their stuff, and I couldn’t stand the 4E ruleset of D&D – but even I found it easier to tell people I played D&D, instead of saying I played Pathfinder.

3) Hasbro. Even when Pathfinder was outselling 4E, Paizo still didn’t have the funding and corporate support that Hasbro could potentially give WotC. Sure, Hasbro is never going to throw all of their weight behind WotC – but even a fraction of their weight would just roll right over Paizo, if that was Hasbro’s intention. Hasbro could have likely bought and shut down Paizo, if they wanted, without it being a blip on their bottom line.


Robert McDonell
Higher Atlar
Spirit Soaring
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cpthero2
Senior Scribe

USA
472 Posts

Posted - 25 Sep 2018 :  19:57:24  Show Profile  Visit cpthero2's Homepage Send cpthero2 a Private Message  Reply with Quote
Master Rupert,

I think I added something that might add to creating confusion. I stated that the volatility was low in the first part, and I was referring to market conditions in terms of sales. When I referred to volatility later on, it was regarding discounted cash flow, which is a marker for investment, and that was what I thought might end up creating some confusion. They are for two different things.

Best regards,



Robert McDonell
Higher Atlar
Spirit Soaring
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Wooly Rupert
Master of Mischief
Moderator

USA
31632 Posts

Posted - 26 Sep 2018 :  03:29:30  Show Profile Send Wooly Rupert a Private Message  Reply with Quote
Just because someone is trailing a competitor, it doesn't mean they're in any danger of going out of business. Look at Burger King and McDonald's, Pepsi and Coke, Apple and Microsoft, Dominos and Pizza Hut, etc -- the list goes on. Heck, look at Weird Al Yankovic: he's never been as big or as popular as any of the acts he's parodied -- but how many of those acts are still around?

Success is measured by a lot more than just who is on top at any one moment.

And as for Hasbro's cash flow -- even if their cash flow was volatile at the time, they still had more than enough money to crush Paizo. RPG companies are nothing compared to major corporations like Hasbro. Remember, Hasbro didn't buy WotC for D&D -- they wanted Magic.

Candlekeep Forums Moderator

Candlekeep - The Library of Forgotten Realms Lore
http://www.candlekeep.com
-- Candlekeep Forum Code of Conduct

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I am the Giant Space Hamster of Ill Omen!

Edited by - Wooly Rupert on 26 Sep 2018 03:32:29
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TBeholder
Master of Realmslore

1747 Posts

Posted - 26 Sep 2018 :  07:19:52  Show Profile Send TBeholder a Private Message  Reply with Quote
quote:
Originally posted by cpthero2

I will be making some assumptions. I am going to lay those out, so that the discussion can be more fruitful if you decide to critique my assumptions, they'll be easily listed (I always dislike it when argumentative opponents [academically argumentative, not hateful] don't list their assumptions easily).
[...]
you may take note that from approximately Q2 start 2011 through Q2 end 2014, Pathfinder had #1 marketshare. By measures in most industries that involve production with significant variable unit cost contribution to total cost, and a contribution margin that is likely high due to intensive capital inputs, the cost volume analysis is vital. With that in mind, knowing that volatility was low (you can tell by the sales for those three years in dominating WotC), their operative leverage was great. Essentially, by subtracting sales figures from variable inputs, the product line manager would have been able to demonstrate to the marketing VP, with a well articulated point, that they could add in more product lines with less risk. Now, the real question is, why did they not do so? I would gather it boils down to a simple factor: fear. Managers hate to stick their neck out, especially in high cost-volume industries where a bad line can make them look like fools. Upper management loves to Monday night quarterback back mid-management sales forecasts, even when supported by solid economic forecasts and finance figures, so that creates a risky shift response and you get......not much. hahaha So, I think while acknowledging my lack of industry specific work experience, that they could have taken a reasonably solid chance to dominate WotC. They were likely running scared though, and quite likely had unsophisticated managers (read as inexperienced in risk management,

The last point is very good. However, it should have more implications without the assumptions you made, but did not list:
1. The way business decisions are made is self-contained and straightforward.
2. There are no bad actors, they really try to do their jobs to the best of their ability. No corruption by factors external to the business.

#1 is at best dubious. There's at very least matter of internal corporate politics. Between unrelated vassals (in Hasbro), licensing matters, marketroids and lawyers pushing developers here and there, etc.
There's also corporate bureaucracy, naturally subject to Parkinson's Law, Conquest’s 3rd Law, etc at all times.
#2 is obviously (by now) false. For one, Conquest’s 2nd Law means this state of affair is an unstable equilibrium.
See also: the misadventures of Disney Star Wars for a "loud" example of direct (product is degraded on purpose) and indirect (extreme incompetence degrades product further) effects deep corruption causes in a related business.
Which affects D&D and PF, since both Paizo vs. Hasbro are noticeably rotten. For obvious signs, look up for how much Pathfinder is called "pozzfinder" and "Mike Mearls" +"virtue signaling" respectively.
There's much more, of course.
So it's not necessarily a honest horse-racing, and or even "fixed" racing. It may be more of a competition between two beasts with visible symptoms of a highly lethal disease in who gets to the cliff first.

People never wonder How the world goes round -Helloween
And even I make no pretense Of having more than common sense -R.W.Wood
It's not good, Eric. It's a gazebo. -Ed Whitchurch

Edited by - TBeholder on 26 Sep 2018 07:21:17
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