D&D specifically (split from Supplement Treadmill)

[Bankuei]

Hi Ryan,

Any idea how much having a pre-established marketing machine (Dungeon, Dragon Magazine, the website, etc.) helped lower those costs?  I suspect setting up the initial infrastructure was probably high cost, how much did 3.5 benefit later down the line by this?

Thanks,

Chris

[ryand]

I suspect setting up the initial infrastructure was probably high cost, how much did 3.5 benefit later down the line by this?

WotC has always had a weird cost dichotomy.

It pays more (sometimes much more) for certain parts of a product's cost.  All the "professional" costs (design, art, layout, etc.) are proabably 150-200% of industry "standard" (standard being "the average salaries of people at the top 10 game publishers").  Some internal costs are high too, like accounting, legal, etc.

On the other hand, WotC gets great pricing on actual production because its volumes are so high.  It probably pays 50-75% on a per unit basis what most other publishers pay to actually make something because of those volumes.

It also has the advantage, as you note, of a marketing program that self-finances itself (the magazines).  To what extent those magazines sell product has been debated by D&D business managers for 30 years (and counting).  Clearly, neither magazine has the impact that White Dwarf has on the GW business, for example - but on the other hand, they must have a bigger impact than InQuest or Scrye.  I've always felt that the value was higher than could be quantified when the magazines are doing well.  When they're in a down-cycle, their impact becomes muted.  I've no data, and no wish to speculate, what part of the cycle the magazines were in when 3.5 was being marketed.

Summary:  When something WotC publishes sells well (I'll define "well" as 20,000 units or more), the total cost per unit is often lower than the total cost per unit that a smaller publisher would incur, and it continues to drop with additional volume.  But when something doesn't sell well, the cost per unit skyrockets, making products swiftly unprofitable.

So a big project, like 3.5, with big volumes, is right in WotC's sweet spot, where everything clicks and maximum profit can be extracted.  I have no doubt that all costs, from all departments, were more than amply covered by profit when those books shipped.

[xiombarg]

Of course, all this underlines the difficulty of using D&D as an example for selling anything other than D&D...