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 The rise and fall of TSR

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PostSubject: The rise and fall of TSR   Sat Mar 20, 2010 5:25 pm

A copy and paste post:


Lorraine Williams was described as having a sense of noblesse oblige. While she considered gamers and most of her workers her social inferiors, and held it as a point of pride that she had never played Dungeons & Dragons, she nonetheless did have a soft side that came out in various ways during her tenure as the head of TSR. One TSR worker whose wife was severely mentally ill was kept on the TSR payroll for years, despite his long absences while he cared for her. She also loved animals. TSR would occasionally hold a "Bring Your Pet to Work" day and gave a great deal of money to animal welfare charities. Unfortunately, that softer side wasn't on display all that often during her years at the company, and Lorraine Williams would enter the annals of Dungeons & Dragons history as one of the most reviled people ever associated with the hobby.


She certainly didn't start out that way, though. When she first started at the company, she made a series of announcements which, while rather impolitic, at least had the virtue of being bold. Bill Slaviscek described Williams' product strategy this way: "The company wasn't afraid to try new things, and when something was working, they jumped on it and tried to make it bigger." Under Williams' reign, the company launched dozens of new products, starting with the 2nd Edition of Advanced Dungeons & Dragons.



The 2nd Edition of AD&D was touted as the most accessible version of the game that had ever been produced. Rules were cleaned up, and bizarre inconsistencies that had plagued the game since the days of Gygax and Arneson were finally resolved, much to the satisfaction of many players who found the new rule set easier to comprehend.

Unfortunately, the 2nd Edition rules annoyed almost as many players as they pleased, mostly because the amount of revision and correction was not that extensive and might have been just as easily done in some sort of a supplement rather than re-issuing the basic game rules. For many players the 2nd Edition smacked of forcing players to pay for books they really didn't need -- especially when TSR announced that henceforth, 2nd Edition Advanced Dungeons & Dragons would be the only D&D TSR would support.


The company also began branching out into new RPG settings. Having had some success with the Greyhawk and Oriental Adventures campaign settings, the company headed full tilt into creating other realms that could be expanded into other products -- particularly novels, which had long since become a major profit center for the company.

The late '80s saw the launch of Forgotten Realms (still D&D's most popular setting), and DragonLance. The runaway success of those lines, particularly Forgotten Realms and its popular signature character Drizzt do'Urden, begat a slew of new world designs. There was the post-apocalyptic Dark Sun, the highly political Birthright, a response to White Wolf's successful Vampire: The Masquerade game called Ravenloft, and the extremely avant-garde Planescape, among others. Unfortunately for Williams and TSR, this strategy, while presenting the initial appearance of success, is actually a strategy for long-term loss. The marketing term is "Brand Extension," but Bill Slavicsekdirector of RPGs, miniatures and R&D at Wizards of the Coast, just calls it the "Many Buckets" theory.

I started doing freelance work for TSR in 1990," Slavicsek said, "and I joined full time in 1993 to work as a designer and editor in the Dark Sun/Ravenloft group. By the time I got there, TSR was a compete mess." According to Slavicsek, TSR was extremely deficient in market research, and while it was very focused on individual line sales, it never bothered to look at the big picture of what its strategy was doing to the market.

"Picture it this way," Slavicsek says, "it's raining money outside and you want to catch as much of it as you can. You can either make a really big bucket or waste your time and attention by creating a lot really small buckets -- either way, you're never going to make more rain." In plain English, TSR, by putting out a lot of product lines instead of supporting the main Dungeons & Dragons line, fragmented the marketplace. The same audience was giving the same amount of money to TSR every year, which had taken on the additional financial burden of creating, producing, and supporting hundreds of products. It needed to grow the marketplace, and these brand extensions weren't doing that.


The many settings also contributed to something called "Brand Dilution." The original Dungeons & Dragons brand stood for something. You knew essentially what you were getting when you bought a D&D product. All of these new settings began to play havoc with the rule sets and philosophy of the game. As the settings grew more popular, they began to diverge from one another, advancing along their chosen philosophical paths, essentially becoming their own separate games.

In not too many years, players had stopped identifying themselves as D&D players and were instead identifying themselves by the setting they played in. A Planescape player was very different than a Forgotten Realms player, and their rule systems were beginning to become incompatible with each other. More significant from the company's point of view, though, was that players would never buy a product set in any other setting than their own. Far from catching more money in their small buckets, TSR was actually making the audience smaller!

"Magic: The Gathering"

Magic: The Gathering


It didn't help that the marketplace itself had changed from the Gygax/Blume days. When Dungeons & Dragons launched, it literally created a market where none had existed before, and for many years had that market all to itself. While quick knockoff and imitator games such as Tunnels & Trolls and Traveller tried to take pieces of the market away, no-one was ever able to knock Dungeons & Dragons from its throne.


That situation couldn't possibly last forever, and it didn't. Serious challengers began to rise, such as West End Games and White Wolf publishing, who were producing fun and successful RPGs that started to bite into the D&D pie. The rise of video games, particularly popular CRPGs (including the D&D licensed "Gold Box" games), was also siphoning off the core market for D&D. The biggest threat, though, came from a small, upstart company in Seattle called Wizards of the Coast.

Spellfire

The early history of Wizards of the Coast is, in many ways a mirror of TSR. The company was founded in 1990 by a Boeing employee named Peter Adkison who started the company with six friends to market and design original RPGs. The company chugged along for several years until 1993 when Adkison met Richard Garfield, a mathematician and avid gamer. Garfield had invented a new card game called Magic: The Gathering. Adkison and the company liked what it saw and ended up publishing it.

The result was a meteoric rise that filled Lorraine Williams and TSR with alarm. The company responded the way it always did to such threats, by attempting to crush it. Its first effort was its own collectible card game, called Spellfire, which started off fairly well but ended up crashing and burning through lack of support and market saturation. Its second attempt, a collectible dice game called "Dragon Dice," was an even more spectacular disaster.

With Wizards of the Coast growing at an explosive rate and beginning to nip at its heels, Williams and TSR began to squeeze the life out of the very market that had supported it. Rather than attempt to grow the marketplace and win in competition, Williams instead tried to banish everybody else from what she apparently viewed as her private domain. Under her management the company began to ruthlessly enforce its own copyrights along with a few it didn't even have (such as a claim that nobody else could use the word "dragon").

It also became incredibly hostile to everyone, especially its fans. As the Internet exploded onto the public consciousness in the early- to mid-90's, Dungeons & Dragons players naturally brought their chosen hobby online. TSR followed them, issuing dozens of cease and desist orders that shut down fan sites. The company even tried to prevent D&D fans from discussing the game in chat rooms and on message boards, earning the derisive nickname: "They Sue Regularly."


The company was hostile to its fans, business partners, and even former associates that didn't have much clout with the company. TSR became infamous for micromanaging its licensing partners, with draconian licensing managers that dictated everything that a licensor could do, from the color of a box to exactly which piece of licensed D&D artwork the licensee would be forced to use. Even Gary Gygax himself wasn't immune. When Gygax created a new RPG system with Game Designer's Workshop called Dangerous Journeys, TSR sued him for copyright infringement. The case was eventually settled when TSR agreed to purchase all rights to the game for a considerable sum of money -- a pyrrhic victory for TSR, as the case cost the company far more than it could afford.



Despite all this, Dungeons & Dragons products continued to sell well, and affection for the game even grew in stature among fans. That was primarily due to the influence of SSI, which had acquired a seven-year license from TSR in 1987, and a host of other hot computer RPGs that "borrowed" elements from D&D. Despite TSR's micromanaging style and legendary contentiousness, SSI proceeded to put out a brilliant series of games starting with 1988's Pool of Radiance. This fruitful collaboration continued through a series of classic "Gold Box" games culminating in 1995's Ravenloft II, and (the not-so-classic) Deathkeep for the 3DO and PC. That didn't come as any comfort to Lorraine Williams, however. By 1995 the buzzards were circling TSR.

"The death of TSR"

SSI's exclusive arrangement with TSR for the Dungeons & Dragons license ran out in 1995. At that point the company had run up over $20 million dollars in secured debt and many millions more unsecured. Desperate for cash and being assailed on all sides by hungry competitors who smelled blood, the company was casting about, looking for a way to survive. Indeed, it may have been that very situation that caused SSI to bail on the D&D license when the contract ran out (or was lost, depending on who you speak with). TSR may have tried to jack up its licensing fee to the point where SSI realized that it was no longer worth the money, or they may have gotten wind of an even dirtier trick the company was about to pull.



Given that the only assets that TSR had in 1995 that were worth anything was its intellectual properties, breaking up the Dungeons & Dragons license was a brilliant, if desperate, move. Now, rather than granting an exclusive license to one company, the company could essentially sell the same license to many different companies. One company could purchase Dark Sun, another could buy Forgotten Realms, and so on. The problem, though, is that it's only brilliant in the short term -- and then only if the separate worlds are actually worth something, and if you don't end up in court over the matter as Wizards of the Coast did when it tried to sell the Magic: The Gathering license to both Acclaim and MicroProse.

Sure enough, the strategy did work in the short term. After SSI, Interplay emerged as the holder of the Forgotten Realms and Planescape licenses, Sierra picked up Birthright, and even Acclaim got into the act, acquiring the rights to Ravenloft. The results of all these licensing arrangements were abysmal. Acclaim tried to attach a license about gothic horror to, of all things, a fighting game for the PlayStation called Iron & Blood. Sierra's 1997 strategy/RPG hybrid, Gorgon's Alliance, is now justly forgotten, and even Interplay didn't distinguish itself out of the gate with the awful Blood & Magic and Descent to Undermountain. If the company was counting on royalties from these games to save itself, that would have made them the final nail in the coffin.

So true. So true...

Bill Slaviscek remembers those final days. "Things got really bad at the end of 1996 when we stopped publishing completely. We went through a couple of rounds of layoffs and morale was really terrible. I had inherited the Alternity group at that point, and we at least had something to work on. There were a lot of groups that just sat around wondering every day if Lorraine was going to be able to find the backing to keep the company going." It was a question many people were asking themselves, but not many people could have guessed what the answer was going to be. The salvation of the Dungeons & Dragons came about at the hands of its biggest competitor, Wizards of the Coast.

"A Wizard or a White Knight?"

Lorraine Williams may have hated Wizards of the Coast, seeing them as interlopers in TSR's territory, but the feeling was never returned. Peter Adkison, the founder, and at that time, head of Wizards, was a huge Dungeons & Dragons fan. He had enormous respect for the creative minds who were churning out good products in trying circumstances and hated watching a great game and a great brand get flushed down the toilet through poor management practices. Adkison was no wide-eyed fanboy, though. While Wizards of the Coast and Magic: The Gathering had grown up to become TSR's one serious competitor, Dungeons & Dragons and TSR itself had the kind of brand equity and customer mindshare that Wizards could only dream about -- and Adkison knew it.


The death spiral of TSR, therefore, presented Wizards with an enormous opportunity. Despite its success and its attempt to introduce new games, Wizards of the Coast in 1996 was still a one-product company (the Pokemon license was still two years away). Wary of being too dependent on Magic: The Gathering as a cash cow, acquiring TSR and Dungeons & Dragons was the chance to solve many of the problems the company faced at the time. In one fell swoop Adkison could eliminate his company's greatest rival, become the dominant player in the market, and assuming that the Dungeons & Dragons line could be rehabilitated, add a second and third (book publishing) revenue stream to his company. That he would be able to rescue a game he loved from oblivion was just the icing on the cake.

After going through the proposal process and getting approval from WotC's Board of Directors, he delivered his offer to TSR. By April of 1997 a letter of intent was signed, and by May it was complete. The terms of sale were quite clear; Wizards had complete control over who would (and who would not) be offered a position within the new, combined companies. Once the staff was made aware of the sale, however, Adkison tried to reassure the rank-and-file employees that there would be no major shakeups, at least at the beginning. For management, however, especially those who had been close to Williams, there would be no place for them in the combined companies. TSR, who had once ruled over the paper and pencil RPG world like the tyrannical despot of one of its fantasy kingdoms, was no more. Wizards of the Coast, once an upstart pretender to the throne, had finally ascended to dominate its little world.



Lorraine Williams left the industry and the country soon after the sale. TSR was going to remain in Lake Geneva through the end of the 1997 GenCon. After that, though, it was anybody's guess what would happen. Wizards had acquired an incredibly powerful brand, but it was one that had been dragged through the mud by 10 years of mismanagement. Wizards also had a talented but dispirited workforce in Wisconsin with no guarantee that anybody --much less the "movers and shakers" of the company, that would be needed to resuscitate the game -- would be willing or able to make the move to Seattle. It had a confusing series of video-game licensees that were pumping out poor products, further degrading the name. Finally, it had inherited the D&D fan base, loyal to a fault, but a group of people badly burned by hostility from the company, years of indifferent products, and susceptible to the temptations of other gaming systems.

TSR was dead.
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