Dungeons & Dragons Fifth Edition is out – and it’s pretty good! I hated Fourth Edition and, like many folks, defected to Paizo’s 3e-derived branch called Pathfinder and Paizo rose to the top of the sales charts for a long period. But now with a viable product, good community engagement, and the nostalgia factor (Drizzle the elf! Space hamsters!) WotC is back in the game. Will Paizo just fade away, only beloved by a fringe of the old guard? No, and here’s why.
Let me preface this by saying these are “big boy” reasons, not game system details – how many hit points a bard gets is very meaningful to some ultrageeks but is not relevant to market position. If you wanted to hear something about 5e gnomes vs Pathfinder gnomes, please go play and let the grownups talk for a minute. With that preamble, here are the three major edges Paizo has over WotC and why those will help them maintain their market position.
1. The subscription model. Paizo’s subscription model of selling is like printing money. You’ve heard how comics subscriptions are basically the single largest factor in keeping comics and comic stores afloat right? Well, same effect applies with Pathfinder subscriptions. The convenience wrenches the money right out of me and many other customers automatically without requiring us to re-make purchasing decisions each month (and to be at the mercy of stores just happening to stock products we want). It’s the same reason why WoW always made huge bank and that model became very compelling to video game producers. Paizo keeps quiet about how much of a big deal this is, probably deliberately so folks like WotC don’t get the memo. But from a business point of view, this is probably the single biggest innovation and leverage point they have from a revenue model perspective. And it’s a big one. I work in software, where we desperately try to get people into subscription models – maintenance, SaaS, etc. because it’s so financially productive.
2. The iconics. With their iconic characters – an idea enhanced from 3e D&D – Paizo doesn’t just have a game system, they have intellectual property. They have then used those iconics to fuel their comics, audio dramas, card games, mini-figs – and I wouldn’t be surprised to see movies or TV in the future. I thought it would be a no-brainer for WotC to have a strong stable of iconic characters in 5e but they completely didn’t for reasons that elude me. Sure, they have some older recognizable characters from their campaign settings – Elminster, Drizz’t, the Dragonlance characters – but they’re not capitalizing on them. One big reason why the D&D movies sucked was that both the good guys and the bad guys were just new made-up generic folks. “I have purple lips and am evil!” Screw you. Call me when you make Strahd or Bargle or Vecna or someone the bad guy. Hasbro is supposed to be “branding” geniuses, but even Paizo’s unique visual take on goblins generates stuffed animals and cute comic spinoffs and miniatures while with the 5e launch WotC’s critter of choice, kobolds, has pretty much zero sizzle and visual styling. [Normal] People relate to characters way more than setting way more than rules. Companies work very hard to get good commonalities to use to push customers across product boundaries inside brands, and that’s a great way to do it that WotC doesn’t seem to have an answer for, making it much harder to really capitalize on cross-media opportunities.
3. The adventures. “It’s the adventures, stupid.” Why do people have such nostalgia-love for the old days of Basic D&D/1e AD&D? Do they go back and talk about their love for weapon speed factors and to-hit tables? No, they talk about THE ADVENTURES. Temple of Elemental Evil, Ravenloft, Scourge of the Slavelords, Isle of Dread… These were the shared experiences people had and what they find compelling about the hobby. Adventuring is the entire point of all the rules and setting content, it’s the actual activity of the game. WotC gets this enough to keep revisiting those classic adventures every edition (Now – Return to the Return to the Keep of the Elemental Hill Giants!) but not enough to actually put out frequent and compelling adventure content themselves except for a smattering of mostly indifferent products. In 3e, the Open Gaming License covered this gap and new adventures are what propelled third party companies like Green Ronin and Atlas Games into the larger businesses they are today. In 4e, they kicked off with a couple and then slid into nowhere and now with 5e, they managed to get two out – but frankly, they’re not all that good, and again, it’s a matter of amount. Paizo gets out an Adventure Path chapter per month, every 6 months it’s a new one, there’s previous ones where if you want to do gothic horror or Arabian Nights or whatever there’s something to scratch that itch – WotC’s just planning to retread the same old properties, at a plodding pace. And as they are still farting around on licensing, third parties aren’t filling that gap as avidly as they could be. That is leaving player engagement on the table and providing fewer shared experiences to build the nostalgia that’d drive their sales in the future, especially in other media.
So though 5e is a fine game – I’m not sure that as part of the overall package, Paizo has a lot to worry about. Sure, Hasbro can pump in marketing dollars and get things into bookstores, but a) do they care enough about a small line to do so, as opposed to making more Iron Man doodads, and b) can they really successfully capitalize on multiple product lines and the D&D IP? You’d think that’s where they would be Vikings, but so far early results don’t show a lot of spark there. Anyone that’s listened to Paizo employees talk about behind-the-scenes stuff at Gen Con/PaizoCon seminars (all available on various podcasts) know that they are very smart, squared away professionals who tightly manage their own work, freelancers, licensed products, everything. They’re a well-tuned machine producing huge amounts of product across various channels and product types – Hasbro/WotC could probably do the same – but they don’t seem to be. So sure, brand recognition and deep pockets and being a decent game product will help push 5e into the limelight, but their execution isn’t crisp enough to push Paizo out, is my prediction.
Geek Related 
I suspect you are correct. D&D5 is pretty good but Wizards seem to have no idea how to support it. They’ve released a beginners’ campaign — which is quite good, if a bit dull — and a “advanced” campaign — which is terrible by almost all accounts — and have announced some vague plans about a Temple of Elemental Evil reboot but aside from that, nothing.
New druid circles or cleric domains? Dunno. Any support for settings other than the Forgotten Realms? Dunno? Anything at all? Dunno.
Meanwhile Paizo are pushing stuff out month after month and — perhaps more relevant — are announcing and hyping stuff in advance. Even Pelgrane has announced a monthly magazine for their 13th Age to complement their big releases. D&D is back in the ascendant thanks to the new edition but without the kind of support Paizo are giving their game, it’s going to slip back.
I get the distinct feeling that the D&D division at Wizards is running on fumes and they scraped to get the core books out; now they’ve done that they have no resources available to do anything else.
#2 is quite true! I enjoyed this analysis!
#3 was the whole business from the beginning.
People think that D&D was the most popular because it was technically first, but that was only a small part of the reason for the large D&D market share in the late ’70s and ’80s when RPGs really broke out.
What matters is how many casual DMs can your game system support. A casual DM needs help providing adventures week after week. Even the hard core DM is going to need some help with a filler adventure every now and then. AD&D had a large number of adventure modules that were well worked out and they kept putting out more. Then, they started Dungeon Magazine in 1986 and the world was never the same.
There was no hope for any other RPG, no matter how exciting, to sustain campaigns (which are what keep players interested and buying rule books) like D&D. Many hit RPGs came out in the late ’80s and early ’90s that failed to maintain their traction, because they failed to provide the level of DM support that TSR did.
I’m rather certain that the early TSR developers didn’t fully understand what they were doing. They were just creating content for convention tournaments. They weren’t analyzing their business in any way that approaches an intelligent manner. Then, they founded a periodical to help share the best adventures written by their fans. I’m not sure that Paizo understands how profoundly important this is either, but they inherited the culture of Dragon Magazine, so it doesn’t really matter.
5e decisions are being made by marketers at Hasbro that don’t understand gaming culture and the game is developed by hard core DM types who also don’t understand the typical DM, so they put out source books first and don’t bother to put out a meaningful quantity of adventure material for the DM who has a day job to rather painlessly run a campaign for their friends on the weekend.
Until they change their products to support casual DMs, WoTC will fail to match the most valuable asset they threw away, Dungeon Magazine. My suggestion is that they should leverage their massive adventure IP and recruit all of the DMs out there to help them convert that material to 5e rules. Then they could provide those adventures in a Dungeon Magazine type format with distribution aimed at being affordable. The point is to support campaigns and sell more source books, not make every effort distinctly pay off. RPGs work like the Apple model. Sell the core system and provide the content at cost.
Yeah, I agree that even Paizo doesn’t 100% understand why… There’s a lot of call for even more short format adventures and their answer “well we have these Pathfinder Society scenarios that you have no idea what’s in them you could buy” is a bad answer, but the AP model covers over a lot of sins.
And you’re right, it’s about casuals and facilitating play. You can have a GM, and players, and a DMG and PHB – but for everyone to do something other than wank about rules on the Internet, you need adventures. And some percentage of GMs have time to do that, but most do not, and so you are creating real play experiences directly by providing adventures. People that say ‘well they don’t sell as well’ are completely missing the point – I’m not saying adventures are the key provider of revenue, they’re the key generator of play that then drives revenue from all the other products.
Thanks y’all!
I can’t agree with your first point without some data. Subscription as a convenience pulled money from me for the sake of convenience and it came with a big discount. Also, adventure path subscription got you pdf freebies which were a huge value for a gm. But I don’t know if that’s enough.
Your second and third points are spot on. WotC realizes that they screwed up and they’re working on making a superior product. Paizo is making the old Wizards mistake of flooding the market with crap. The APs are not the quality they once were and the community drinks too much of their own kool-aid to get an honest review of anything. I’m slowly drifting to the 5e stable but they have some work to do with these crapola adventures.
I assume Paizo isn’t going to share their sales information, but the subscription model is a gold mine in comics, video games, and many other fields (heck you can get BarkBoxes for your dogs as a monthy subscription…). Committed monthly recurring revenue >>> hopefully projected revenue in many ways. It’s easy enough to go Google subscription model and CMRR to find various equity investors explaining why.
I think you are spot on and though I have a deep seated love for Forgotten Realms. Paizo has won me over and continues to get my money.
I disagree with this entirely.
Their current subscription model was built more out of necessity than luxury it seems. They are doing more to compete with local game stores and less to work WITH them. I had an easier time even getting D&D stuff for our convention than PF stuff. As they move more to subscription, stores stock less and less of their products. This also means that retailers are doing fewer PF games and showing PF less to new customers.
WotC’s engagement witht he public, monthly and weekly events, and overall support for trump this for retailers. We’re well past the “new shiny” aspect of the core books for 5E and they are still nearly selling out in distribution with each shipment.
Point two is moderately relevant. But any game can have and create iconic characters. Drizz’t was mostly born out of novels and people still have great feels about the character to date. Part of my rebuttal though ties into your third point as well.
Players aren’t really that into the adventures. Most store owners I speak to will tell you that they sold lots of the hardcovers and core book but hardly any of the adventures. People aren’t picking these up and playing them as much as D&D adventures. The new DD5E adventures have already been selling significantly better than most of the top PF adventure models/series. I can’t personally tell you why though. One would think the strong branding would matter. But part of it, I guess, is that people want to play D&D, not just “some fantasy game” which PF will always be to the average customer.
Honestly, having crossover media is OK to a point, but as it is, most people don’t care about it. PF, D&D, hell, even the MTG comics don’t do all that will with an extra promo card in each issue. Part of the reason is that people that enjoy RPGs want more RPG stuff. Make dice bags with the game logos and characters. Dice cups would work too. Even special dice sets themed per class might be attractive. Comics…they don’t really care for those.
Do I think either is going away any time soon? No, not at all. But I do think D&D 5E will likely have the position back as the top fantasy RPG by Christmas 2015. And this is just by judging players and customers in stores and conventions as well as sales reports from stores and distributors.
The origin of the subscription model doesn’t make it less effective. Similarly, they really just blundered into the iconics approach (they’ve said as such on podcasts/at conventions) – but again, that doesn’t affect their results.
Stores are – well, less important. We like to rant about FLGS’es in the gaming world but there’s a reason Amazon is shutting down all the bookstores, and it’s the same reason that gaming stores are finding difficulty staying open. (In fact, comic subscriptions are the backbone of most of their revenue nowadays.)
As for Organized Play – first, Pathfinder Society is running as many if not more tables at the Dragon’s Lair here in Austin as D&D Encounters is. Second, I am not a believer in OP being the core driver behind gaming sales, any more than other organized tournaments drive sales of chess or Scrabble or Starcraft. They do, but they’re thing #10 on the list of important marketing activities. In high tech we go to conventions and user groups to spread the word on our products, but it’s not the highest ROI use of our marketing dollars by a long shot. So it’s a “nice to have.”
Crossover media is only important if you want lots of money. Toys, movies, etc. all make orders of magnitude more money than RPGs do. RPGs are probably the worst way to make money ever devised. But if a company can smartly make money off of related things, they can invest that money in RPGs as well (as say every game company from Steve Jackson on up as discovered).
You’re seeing a very short term spike in sales from the new release of a new edition. As of next Christmas they’ll be lucky to still be in #1 and #2 is more likely. Whoever’s #1 or #2, they’re going to be a really larger operation splitting a lot of market share with smaller operations, which is never a good place to be ROI wise.
1> Paizo is the group of freelancers that did for WotC what they now do for Paizo. WotC has never brought in sufficient replacement talent and kept them.
2> WotC has a longstanding tradition of pink slips as Christmas gifts. Their long game has sucked for twenty years.
3> Basically from the beginning, Paizo was the magazine publishing house spinout of WotC. Of course they are focused on the Adventure Path Premium Magazine Subscription model. (In my opinion, they continue having growing pains because a lot of their business still seems to be structured around being a webstore with a magazine to publish…)
The existence of PFRPG owes itself to Hasbro and WotC screwing up with licensing on 4E. They literally wrote out their own demise by failing to have a good licensing story for 4E and engaging the hordes of fans in creating content for their universe, and they’re now 6 months into 5E with no licensing story equivalent to the OGL.
Well at least they waited till after Xmas this year. http://www.enworld.org/forum/content.php?2299-On-Chris-Sims-and-Jennifer-Clarke-Wilkes-Layoffs
smartly written
dont forget paizo has shown a great deal of love for their 3rd party publishers(of which more than a few members freelance and or work for paizo) which actually is a powerful incentive to stay with the game. No matter what you want SOMEONE did a pathfinder compatible take.
This is true and I believe the third party support for Pathfinder is an asset. But it’s not mandatory (I say this as a big OGL lover and third party booster). Clearly TSR was able to excel in Basic and 1e without third party support – they could do it first party (or second party, which Paizo does a lot of and WotC did with the Rise of Tiamat adventures). But yeah, if for some reason you’re not prepared to do it yourself, open or very wide licensing and lots of second or third party support are a big #4 leverage point. WotC is still saying they’ll have a license out “sometime” (next summer is the last date I heard), so I guess we’ll see how well they deliver there.
Another ‘edge’ is the legions of fans whom they’ve convinced it’s some kind of competition.
Paizo is incredibly good at what they specialize in: Milking every penny from the installed fan base they inherited from WotC. WotC is incredibly good at what they do: creating new gamers to extend their brand. There’s plenty of room for both, because there really isn’t all that much crossover.
Hm, I don’t seem to be the only one noticing Hasbro/WotC’s haplessness when it comes to licensing deals – even an Obsidian exec is speaking out about it. http://www.enworld.org/forum/content.php?2337-Tabletop-D-D-Has-Lost-Its-Way-Says-Pathfinder-Video-Game-Exec