View from the Pelgrane's Nest

Is the RPG Industry Screwed?

When you depend on live game designers for sustenance, the health of the ecosystem which allows them to thrive is of paramount importance. Whilst everyone has an opinion on this subject, I asked people who make their living from the roleplaying games - publishers, distributors and retailers - how they think the RPG industry is doing. A polite-worded request is often misunderstood (many of them are brain-addled from an excess comics and food additives) so I screamed "Is the RPG Industry Screwed?" in their ear and suspended them over my squawking progeny as usual. The responses were interesting, varied, and inconclusive.

I'll start with a successful company, running a business on a fairly traditional model, Mongoose Publishing. Without the irritating self-effacement and modesty typical of the British, co-owner Matthew Sprange said:

At Mongoose, we believe that a good RPG book still has the potential to blow through entire print runs and that sales of 10,000+ units are still achievable with the right product. Because of this, we are still expanding in terms of both sales and staff (we now employ over 20 people worldwide), and plan to support RPGs for at least the next five years. Many companies are being squeezed out of the market at the moment but we take this as an indication of a customer base that has become more refined in its choice of product, rather than one who will buy anything that has a D20 on the cover. At the end of the day, if you produce the right kind of book, people will come to you.

Hard figures, I said. Hard figures. He told me as an example that Starship Troopers blew through 6000 copies in 3 months. That's a large number - greater than the total sales units for each of the majority of RPG companies in a year.

Aldo Ghiozzi, who represents a number of RPG publishers as a consolidator and marketing agent has been selling through distribution for a number of years. He has a lofty perch - I respect any creature with a lofty perch - above the three-tier distributor model. He said:

Technology has come around to make book publishing easier for the common writer. Between PDF purchasing and Print-On-Demand (POD), the barrier of entry has dropped considerably. One would think this would create a new Golden Age of RPGs; it has done the opposite. With the barrier of entry being so low, there are more options for consumers to spend their dollars on. The flood of the D20 market was just the beginning; now, RPGs are for every genre, system and an endless number of people creating their own systems. Imagine a consumer that spends $10 a month on RPG books. Five years ago their choices were between the 100 products on the store shelves, thus, a publisher would have a 1 in a 100 chance for that $10. Now, there are so many choices for the shelves that retailers cannot carry them all so it spills into online stores and PDF download stores. The 100 choices turn into 1000 --- now that publisher has a 1 in 1000 chance for that $10. The dollars are being spread thinner; that is the reality.
Personally, I believe the best chance for publishers to survive or come into this market with a chance is with proven brands and even licenses. Licenses, like Serenity or Starship Troopers instantly breathe recognition with the consumer and influences the dollars to that product. Proven brands, like a new edition of Paranoia or the mimicking of Keep on the Borderlands through the Dungeon Crawl Classics series are great examples.
It's all about being heard over everyone else and the only way to do that is to scream louder.

...we are not seeing 50K unit sales as before, but there are a ton more choices now so for all we know, the same amount of dollars are being spent (proportional to the economy) but just spread thinner. I truly doubt that though.

You have to put RPGs in their historic perspective. Really, they have been in decline since the creation of collectible games in the early 90s. It's hard to remember now, but in the late 70s and early 80s RPGs were a good business to be in. They eclipsed wargames and dominated the market for many years. Since then we've seen significant events in our own industry, the two most important being 'Magic: the Gathering' creating a whole new category of game, and Games Workshop hitting upon a business model that redefined miniatures games. In the same period we've also seen computer/console games become increasingly sophisticated and immersive, and the development of MMOs. In light of these events the old RPG business model has a tough time competing. Once players have a core rulebook, they don't need to buy anything else to enjoy the game. Contrast that with the collectible games, where not only can you sell people the same product over and over again, but also they have to keep up with each new expansion to stay competitive. Or MMOs, where players pay each month for the privilege of continuing to play.
The d20 boom made some folks think the glory days of RPGs were back. While that was indeed a good time for RPG publishers, it could never last and now the gale has blown itself out. One might even argue that it did more harm than good, since most game stores now have hundreds of d20 books that will never move and this makes selling them new RPG product even harder.

So is the RPG market screwed? Well, certainly it is harder to harder to make a living doing traditional RPG publishing. The market decline that was paused by the d20 boom came back with a vengeance in 2003. Since then the successes have been fewer and farther between and more and more RPG publishing activity has moved online. I suspect that the future has already taken shape. There will be maybe 10 RPG companies that will do well enough with traditional RPG publishing to keep forging ahead. The rest of the market will be PDFs and Print on Demand, largely sold direct to consumers. Until someone comes up with a way to radically redefine RPGs anyway. That may be a long wait though.

Chad Underkoffler of Atomic Sock Monkey - creator of the award-winning Dead Inside, slipped through the "makes a living filter" - he has a separate day job - but he is representative of large part of the RPG publisher market.

I wouldn't say that the RPG Industry is "screwed" so much as "challenged." For many small press publishers -- and I mean "small" in relation to other RPG companies, because nearly all of them could be considered "small press" compared to mainstream publishers - there are difficult issues to surmount in acquiring an audience of customers. Even access to the distribution system is little help, since the number of retail outlets seems to be shrinking. So you have more companies (some with fantastic games to compete with) trying to reach fewer shelves, and therefore customers.

The costs of production are up, the discounts on MSRP for distributors and retailers are substantial, and the customers are reluctant to spend money on unknown or new products. And while PDF-published, Print on Demand (PoD), and direct sale methods help put more money in the publisher's pocket, the overall amount of profit is low. Truth & Justice is my best selling game, at roughly 525 copies (mostly PDF, but some PoD and distro) sold in under a year. I've made around $4,000 profit from it, which is definitely not enough to live on in my major metropolitan area. However, it is enough money to handle a car payment, take care of the phone bill, and roll into a new product for sale.
I doubt that the game industry can support many publishers as their sole employment under the current state of the market, and the outlook isn't much brighter for distributors and retailers unless they diversify heavily into other product lines and related-but-different types of products (books, comics, toys, etc.). However, as a second job (or a hobby that pays for itself then a little extra, or even a method of artistic expression), the game industry is an admirable fit. If you adjust your expectations of what the industry will do for you, it will not seem totally screwed, but simply a challenge.

The ubiquitous Gareth-Michael Skarka of Adamant Entertainment, and Phil Reed of Ronin Arts, both big players in the PDF market produce ePublising 101 e-zine for their fellow publishers. In the latest issue, they bemoan the status of traditional retail.

From approximately 2000 game stores in January 2004 to somewhere around 1200 stores in December 2005 represents an overall loss of at least 40%. Not a good outlook for retailers in this industry.

In contrast to Aldo's lofty view, Ben Lehman , creator of the Polaris RPG, comes at the question from down on the ground. He is a new model publish with roots in the Forge - a forum dedicated to creator-owned publishing, with lots of useful RPG game theory. Some of the best games of recent years have come out of the Forge. With typical Forgeite thoroughness, he unasks the question, one which was begging to be knocked down:

I think it's really strange how people talk about the RPG Industry as if it, and its screwedness or unscrewedness, were somehow the most central or most important thing about role-playing. To me, that's turning the entire world upside down. It's such a bizarre way of thinking about it that I can't even twist my mind into a position where I can see that as the world at all. So instead of talking about what's actually important to role-playing - the activity itself. Let's talk about a bunch of people getting together to imagine things together, because that's what interests me. From my immediate perspective - which is to say my personal play-groups - role-playing has never been better. I and the people I play with are having absolutely thrilling times with basically every single game we play.

Looking out further, I can look into the play-groups that I see from the Actual Play forums on the Forge, RPGNet, ENWorld, and other community sites. Again, I think that over the last 5 years (and I think this trend extends back almost a decade, but I can only talk from my own perspective, and I started hanging out on online forums five years ago) we're seeing an across the board increase in actual, enjoyable play. I'm seeing a lot less of "fix my broken group" and a lot more of "man, our play rocked." Further -- and more importantly I'm seeing a glacially slow but nonetheless constant movement away from the periodical/collector/fandom model of enjoyment, and more towards creative focus and real play. In this respect, and that's what matters, I think that role-playing is at its healthiest state since the 70s.

So where does role-playing text and materials production (the ndustry) fit into this? The role-playing business - like any other hobby business - should exist as long as it can boost and support the hobby around it, and no further. Fortunately, and I think not coincidentally, given the upsurge in enjoyable play, we're seeing a decrease in the periodical "must buy the next sourcebook" model and an increase in texts and materials focused on supporting real people and their real play. To be clear - I don't think that this is a Forge only or Independent only phenomenon. I think it is spread wide across games like: Breaking the Ice, Nobilis, Eldritch Ass-Kicking, Dungeons and Dragons 3.0 and up, Ganakagok, Hollywood Lives! and so on.
Literally, there are too many game texts to list.

Now, traditionally, RPG text publishing has used what's been called the "three tier model" although I actually think its six-tier: Designer -> Line Editor, Publisher -> Distribution Company -> Retailer -> Game Player, where each arrow is representing "sells to." In the 70s and 80s and even into the early 90s this was the most financially sound model of game sales, and so it prospered. But these days it isn't doing so hot, for several reasons. The one that I have the strongest grasp on is the growth of internet forums, internet commerce (and the PDF), and digital printing technology (AKA print on demand). In the six-tier system, there is economic and creative compromises at every level. The end results is that both the game player and the designer get screwed -- the designer has to make artistic compromises and gets paid no money and the game player gets a watered down product and has to pay a lot of money, because each level in between needs to take their cut. By using modern technology I as a designer (to use an example -- there are dozens of other folks like me) can sell directly to the game player. The chain becomes Designer -> Game Player. This is not only massively more profitable on both ends (I make more money, the game player saves more money) but also it brings the two creative ends of the spectrum closer together, allowing for game texts and game play which contains astounding creative content.

The role-playing industry, if we evaluate its success based on how well it facilitates awesome play, is healthier than it has ever been, period. The role-playing industry, when we evaluate its success based on facilitating awesome play, is as healthy as its ever been, period. The only possible view I have of role-playing being in trouble is that certain aspects of the role-playing distribution chain are being eclipsed by an economic model that is more effective in both creative and monetary terms, and as a player and designer I just can't see that as a bad thing.

Eric Gibson of West End Games says that the RPG-only publisher as a mainstream company is effectively dead, and that publishers must diversify.

Absolutely. Without a doubt. But, before you think I'm being a pessimist and over-dramatic, I must expound.
The RPG industry is "screwed" because the question demands it's so. You ask in the "RPG Industry" is headed for disaster. As long as we force ourselves into the narrow classification of "RPG Industry" then we the publishers are screwed as well. The successful publisher or manufacturer will see the ever evolving tastes and desires of our customers and change with them to bring new types of products to market. We are not a part of the "RPG Industry" we are apart of the "Game Industry", or, if you will, the "Entertainment Industry". As long as there are firms that continue to look at the broader market, we'll survive. If others continue fly the flag of "RPG Publisher" solely, they have a choice, embrace it as merely a cottage industry, keeping costs as low as humanly possible, but never expecting to be financially successful OR continue to pump massive-a relative term, I know-amounts of money into a behemoth that doesn't want to come back, and die!
This certainly does not mean RPGs will cease to exist as a viable product. Not for some time anyway. What it does mean is that you must acknowledge the scale that the RPG business has taken and embrace it.
Basic economics tells us that as long as long as a product's revenues equals ALL its costs (don't forget all your opportunity costs, of course) then the product is making "normal profits" and should be produced. The bite is, that is growing nigh impossible in RPGs from the perspective of a normal industry.

As I tend to do, I'm going to ramble on far longer than I should to try to make my point. Let's first start by not using the term cottage industry. We have nearly always been, by and large, a cottage industry, and with the advent of the Internet, a cottage industry does not have to equate to small, struggling, or profit-less. Instead, RPGs is becoming a purely hobby industry-pun not intended. A hobby industry is an industry where the primary source of compensation, for the proprietor, is something other than money-love of the game, I guess you'd say.

In order to make "normal profits" within any business model your revenues must equal the costs associated with the business. Again, ALL COSTS. Not simply the break even point on printing. Not just the overhead. By you must also factor in salaries for executive positions and-this is very important-you must cover the opportunity costs for the owner(s), such as the cost of not working a second, paying job, not having more time with family, and not being able to invest the money you've put into the business on other gainful investments. All these costs, and many, many more, must be recognized and paid for by the business's revenues. In a normal industry, a business that fails to meet these costs must logically cease business (given the time to exit fixed cost responsibilities). The current and foreseeable state of RPG publishing means that it is almost impossible to meet these fairly valued opportunity costs and thus make "normal profits". So, instead we have proprietors who choose to ignore these opportunity costs and often forego monetary compensation and do it instead for the "love" of the industry. I'm not suggesting this is an invalid reason to do it, but that certainly makes the RPG industry a hobby industry and not a "normal" industry.

So, the question asked, "By this, I mean the market for table-top RPGs. I'm not asking if a small cottage industry will continue to exist - just whether it's in decline and will continue to decline."
Sadly, the answer is, "almost certainly." But again, that doesn't have to be a bad thing. To know it up front, it's actually very good. If you want to simply make RPGs and sell them as a hobby, by all means you should do so.

Likewise, if you want to run a game company as a normal industry would, you should also be aware that you're not likely to be able to do so as a dedicated RPG publisher. Diversify. Realize that the business and the market have changed drastically since the late 90's.
The market wants something else. Provide that "else" and you can stay in business and do just fine and may even have a good chance of making normal profits (or even super-profits).
Is the industry screwed? Only if we fail to see the writing on the wall.

Now we here from a different tier of the industry, a major retailer - Marcus King of Titan Games. He's having to adapt, and like Eric Gibson, suggest that diversifying into entertainment is the way to go.

As a retailer in a very small town (60K population in the city, with 100K TOTAL in the county) I face some unique problems. First, Michigan has a working class slump like nowhere else - the economy is depressed, young people FLEE this town in search of jobs elsewhere. Second, I have a competitor across town who sells everything for 20% off MSRP. Third, I derive 100% of my income from this company. No outside job, no retirement supporting me, my wife works IN the store with me. I can NOT discount, and support my family.
So, we have two ebay sellers working pretty much full time, two websites (titangames.com and 3FREEgames.com), and we have a retail store, do conventions, and some "liquidation" sales.

Now [our stock depth], was designed to make us a destination store. But, that just does not work. Destination stores no longer compete with everyone within driving range, they compete with everyone within clicking range. Every single thing we sell is available on eBay and/or Amazon, for less. So, though we do well online, our main in store categories are used DVDs, CDs with games come in a distant 4th or 5th
We are going to start stocking fewer RPGs in the store - moving from 1400 or so books today, to perhaps 50 titles, and perhaps 200 books total. I am going to stop buying one or two of everything, and start selecting what we carry in the retail store more based on the idea that 80% of our sales come from 20% of our stock, so stock that 20%, and eliminate about 75% of the rest of it.

What will that leave? D&D, True20, Conan, Traveller, Serenity, Star Wars (if it is ever available), Babylon 5, most supplements by Troll Lord Games, and Goodman Games, some stuff by Mongoose and Green Ronin, and everything White Wolf makes. L5R and Spycraft, and a few others. My store is literally morphing OUT of being a game store, and becoming more and more an entertainment store - with books, movies, music, comics, games and some collectible stuff.

However, I could likely fire my retail staff, shrink my store by 70% floor space, eliminate 90% of my games inventory, just carry the DVDs, CDs, Video Games, and keep one rack of Graphic Novels, one rack of Comics, and one rack of games, and run the retail counter with one person, and never miss a beat as far as sales go.
As a business person first, and gamer ninth or tenth, I look at ALL the options for my business - and it may indeed come to the point where I completely redefine my store around a smaller selection, smaller square footage, and smaller staff on the retail floor - and just carry games as a sideline. Then what do we call the store? Titan Games sure won't fit.

Jeff Tidball, a long-time award-winning RPG freelancer gives a straightforward answer:

Yes, the RPG industry is more-or-less screwed. You can divide roleplayers into two general camps based on style of play, with smash-and-grab-and-level-uppers on one side, and everyone else (storytellers, world-builders, wanna-be novelists, etc.) on the other. The first, much larger, group is now -- with current network and console technology -- much better served by computer RPGs than tabletop RPGs. The computers are just plain better and faster at the game experience they want. As those customers stop buying tabletop RPGs, it stops being economically viable to produce them professionally for the second group. Tabletop RPGs won't go away, but yes, the "industry" that produces them is screwed.

Mark Simmons, founder of National Games week and publisher of Games Quarterly Catalog & Games Quarterly Magazine thinks that the industry is still suffering from the d20 glut:

RPGs got seriously glutted. Worse than the glut of '79-81. Worse than the small glut of early '90s. The d20 boom ran it course with so much product that gamers got enough resource materials to last years. It eclipsed nearly every non-d20 title, killing many good games. It will take time for these circumstances to be overcome. It will take getting RPGs back into stores. R Talsorian is doing decently with Cyberpunk's new edition, FanPro is doing well with Shadowrun and BattleTech. It's going to be grim for a while though.
The specialty game stores won't be stocking and selling enough, so book stores and other types of stores must be courted.

Matt Goodman of Heliograph says:

Table-top role playing is a niche hobby, and like many other niche hobbies (wargaming, pulps, r/c planes, model railroading) over the long haul it is only sustainable as a cottage industry. Die-hards may pass along the bug to their kids--a friend's 7 and 9 year olds are really enjoying their Star Wars game, and the very best player I had at my Zeppelin Age games at Gen Con last year was in high school--but that isn't enough to sustain the hobby in the mass market.

So, is there anything coherent to be gathered from these disparate views?

The game store is facing hard times, and none can rely on RPGs alone. An online mail order presence which is able to compete on price is pretty much essential. Leisure Games in the UK is an example of this model. The three-tier system is on shaky ground when it comes to RPGs. Some publishers with well established brands and main stream licenses can still shift sufficient books to make the margins needed to keep going. I think this will continue, but such publishers are not solely producing RPGs - Mongoose Publishing for example relies on RPGs for only 40% of its sales. So what stops new publishers from getting to market? I call it the litho barrier. Unless you have the up-front costs for litho (standard) printing, and the certainty of selling through the print run, you can't do a litho print run, and your per-unit cost for low-run printing means you will make low or even zero margins through the usual channels. The typical volume of sales of an individual title has declined below the litho barrier following the recent glut of d20 titles an explosion in the number of publishers, and a reduction in the number of players due to improvements in the computer moderated online roleplaying experience.

Hybrid publishing, offering PDF and print-on-demand roleplaying games offer a scaleable model for getting RPGs to their customers without the high risks of attempting the litho barrier. They can sell directly, at conventions, and through specialist online mail order retailers. Forge publishers typically follow this model, and make a very big internet footprint, interacting directly with their customers. Such publishers are actively seeking out players to "tell them about their characters" through Actual Play postings. The idea of signing an NDA when doing a play test is an anathema - they are more likely to publish the beta version of their rules online for anyone to try. PDF-only publishers are on the increase, with rpgnow.com, drivethrurpg.com, enworld.org, e23 and paizo.com all channels to market. Their products have low overheads, can be small, and have decent legs. Still, few people other the etailers are making a living out of this so far.

Paradoxically, it's never been easier to get an RPG published, but never harder for a new RPG company to support full-time endeavour. The scalability of the new publishing model means that although it is very hard to make money, you are much, much less likely to lose it through an expensive litho print run. If you read that someone you haven't heard of is about to print 3000 copies of a new RPG, by all that's holy, stop them.

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