This is part of my RPG series of entries here at SOB. See the inaugural entry in the series for more details.
In What if 4E was open?, I discussed the business possibilities available to Wizards of the Coast and Hasbro via opening up the licensing for Dungeons & Dragons, 4th Edition. It was an idea that basically picked up where 6D6 Fireball's own What if 4e was free? left off.
The core premise of What if 4e was free? was essentially that, if you were in charge of 4E business strategy:
The best possible thing that you can do is give away ALL the 4e books as free, black & white only, PDFs.
The point of this would be that the availability of core books as free PDFs would serve as part of a loss leader marketing strategy. Loss leaders are things that are given away for free, or at least sold for below cost, because the losses can be made up via some related revenue stream that gains extra customers thanks to the loss leader. In short, a loss leader is what you get when you turn something that is traditionally a product into a marketing tool.
It may seem like a counterintuitive move for a for-profit business to make, but it actually makes perfect sense when you break everything down to a comparison of costs vs. revenue. Television commercials, booths at conventions, and advertising brochures all typically end up costing any but the very largest company a noticeable chunk of its marketing budget, and giving away a product as a loss leader is no different in this respect. Television commercials, booths at conventions, and advertising brochures all help to build awareness of, and interest in, revenue generating products and services; loss leaders are no different in this respect, either.
Calculating the relative value of the costs for marketing efforts (including loss leaders), lost revenues for loss leaders that could otherwise have generated their own profits, and the long-term profit boosts for other revenue streams that are gained through those marketing efforts is what makes the difference between one marketing strategy and another. Any time a potential marketing strategy yields benefits that exceed its costs significantly, it's worth considering, and there's a decent chance that in the long run the loss leader strategy proposed by 6D6 Fireball would meet those criteria, especially when WotC/Hasbro has already done so much to damage its image in the RPG industry in the last year or so.
In What if 4E was open? I discussed the idea of making 4E open, rather than free; of opening up the licensing, as an alternative to giving the core game away for free. Overall, I think this would generate a greater quantity of goodwill and word of mouth marketing amongst players. Even if, in direct consequence of such a strategy, it only matched the goodwill and popularity that could be generated by free distribution without open licensing, it would generate far greater marketing benefits by way of ensuring that third-party publishers had a way to generate their own profits by effectively marketing D&D for WotC/Hasbro, free of charge.
WotC/Hasbro has decided to take a different approach, however. Instead of building further goodwill with both players and third-party publishers, it has continued its current trend of pissing off everyone it possibly can. As if the obviously punitive, anticompetitive intent of the 4E GSL were not off-putting enough, WotC has demanded that all third-party distributors of WotC PDFs cease selling them.
The first I heard of it was when my SigO told me this morning she had gotten an email from Paizo (publishers of the upcoming Pathfinder RPG, already available as a free beta test PDF) announcing the cessation of WotC PDF sales in the company's online store. Of course, I got the same email, so when I checked my email this morning I got the following message from Paizo myself:
Wizards of the Coast has notified us that we may no longer sell or distribute their PDF products. Accordingly, after April 6 at 11:59 PM Pacific time, Wizards of the Coast PDFs will no longer be available for purchase on paizo.com; after noon on April 7, you will no longer be able to download Wizards of the Coast PDFs that you have already purchased, so please make sure you have downloaded all purchased PDFs by that time.
We thank you for your patronage of paizo.com. Please check out our other downloads at paizo.com/store/downloads.
The Paizo Customer Service Team
(Meanwhile, Paizo will continue offering free PDF downloads of the beta test version of Pathfinder RPG, at least until the final release version becomes available this August — and after that point, it'll still be licensed under the terms of the OGL, and they've stated they'll offer an SRD containing all OGL materials from the core game for free, too. It's paying off for Paizo, which has seen sales rate increases and huge increases in goodwill amongst gamers, building a loyal community of fans.)
This is a very puzzling move by the purveyors of the D&D brand, from the perspective of someone looking for the good business sense in it. WotC/Hasbro derived nontrivial profits from PDF sales through third party distributors, and because of the lower price to players for PDFs as opposed to hardcopy books, at least some minimal part of the sort of benefit proposed at 6D6 Fireball could be had.
James Mishler at Adventures in Gaming addressed this move by WotC in Wizards cuts OBS Loose?!?. In comments, someone named Scott reveals that "A WotC rep has posted on their forum that the change is a response to illegal file sharing." In another comment, Jeff Rients (yes, that Jeff Rients, of the much ballyhooed Threefold Model of gaming) succinctly summed up the stupidity of such a move in two sentences:
So in response to piracy they're going to make sure the only way I can get a PDF copy is by piracy? That's pure fucking genius, right there.
In fact, the comments are the best part of the Adventures in Gaming posting, and worth reading, because of the demonstration of the effect WotC/Hasbro's actions are having on its popularity amongst gamers and game developers among other reasons.
Jeff Rients has his own Weblog post about this move by WotC/Hasbro and its "piracy" reasoning, titled It's a visceral reaction. It's short and sweet — and I'm coincidentally wearing a t-shirt with that picture on it right now. It's a very appropriate picture, considering Johnny Cash (the angry gentleman in the photo) used it as a billboard ad campaign for his independent label, and the gesture was aimed at the major players in the record industry who (like WotC/Hasbro) set out to punish all customers for supposed transgressions by a few, to screw over symbiotic businesses, and to really hose its content producers.
I'll close this with a quote from Bandit Country's Who Owns?, yet another reaction to WotC/Hasbro's latest antisocial move:
A number of connected issues have come to the fore. At what point does the game you play become your own? Where is the transition from purchased (or pirated) product to private play? Who Owns?
Game on, friends. Don't let "the man" keep you down.