Shipyard Locked
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Because not everyone has seen this infamous document and it never fails to spark interesting discussions: Written March 16, 2000
In the winter of 1997, I traveled to Lake Geneva Wisconsin on a secret mission. In the late fall, rumors of TSR's impending bankruptcy had created an opportunity to made a bold gamble that the business could be saved by an infusion of capital or an acquisition with a larger partner. After a hasty series of phone calls and late night strategy sessions, I found myself standing in the snow outside of 201 Sheridan Springs Road staring at a building bearing a sign that said "TSR, Incorporated".
Inside the building, I found a dead company.
In the halls that had produced the stuff of my childhood fantasies, and had fired my imagination and become unalterably intertwined with my own sense of self, I found echoes, empty desks, and the terrible depression of lost purpose.
The life story of a tree can be read by a careful examination of its rings. The life story of a corporation can be read by a careful examination of its financial records and corporate minutes.
I was granted unprecedented access to those records. I read the TSR corporate log book from the first page penned in haste by Gary Gygax to the most recent terse minutes dictated to a lawyer with no connection to hobby gaming. I was able to trace the meteoric rise of D&D as a business, the terrible failure to control costs that eventually allowed a total outsider to take control away from the founders, the slow and steady progress to rebuild the financial solvency of the company, and the sudden and dramatic failure of that business model. I read the euphoric copyright filings for the books of my lost summers: "Player's Handbook", "Fiend Folio", "Oriental Adventures". I read the contract between Gary and TSR where Gary was severed from contact with the company he had founded and the business he had nurtured and grown. I saw the clause where Gary, forced to the wall by ruthless legal tactics was reduced to insisting to the right to use his own name in future publishing endeavors, and to take and keep control of his personal D&D characters. I read the smudged photocopies produced by the original Dragonlance Team, a group of people who believed in a new idea for gaming that told a story across many different types of products. I saw concept artwork evolve from lizard men with armor to unmistakable draconians. I read Tracy Hickman's one page synopsis of the Dragonlance Story. I held the contract between Tracy and Margaret for the publication of the three Chronicles novels. I read the contract between Ed Greenwood and TSR to buy his own personal game world and transform it into the most developed game setting in history - the most detailed and explored fantasy world ever created.
And I read the details of the Random House distribution agreement; an agreement that TSR had used to support a failing business and hide the fact that TSR was rotten at the core. I read the entangling bank agreements that divided the copyright interests of the company as security against default, and realized that the desperate arrangements made to shore up the company's poor financial picture had so contaminated those rights that it might not be possible to extract Dungeons & Dragons from the clutches of lawyers and bankers and courts for years upon end. I read the severance agreements between the company and departed executives which paid them extraordinary sums for their silence. I noted the clauses, provisions, amendments and agreements that were piling up more debt by the hour in the form of interest charges, fees and penalties. I realized that the money paid in good faith by publishers and attendees for GenCon booths and entrance fees had been squandered and that the show itself could not be funded. I discovered that the cost of the products that company was making in many cases exceeded the price the company was receiving for selling those products. I toured a warehouse packed from floor to 50 foot ceiling with products valued as though they would soon be sold to a distributor with production stamps stretching back to the late 1980s. I was 10 pages in to a thick green bar report of inventory, calculating the true value of the material in that warehouse when I realized that my last 100 entries had all been "$0"'s.
I met staff members who were determined to continue to work, despite the knowledge that they might not get paid, might not even be able to get in to the building each day. I saw people who were working on the same manuscripts they'd been working on six months earlier, never knowing if they'd actually be able to produce the fruits of their labor. In the eyes of those people (many of whom I have come to know as friends and co-workers), I saw defeat, desperation, and the certain knowledge that somehow, in some way, they had failed. The force of the human, personal pain in that building was nearly overwhelming - on several occasions I had to retreat to a bathroom to sit and compose myself so that my own tears would not further trouble those already tortured souls.
I ran hundreds of spreadsheets, determined to figure out what had to be done to save the company. I was convinced that if I could just move enough money from column A to column B, that everything would be ok. Surely, a company with such powerful brands and such a legacy of success could not simply cease to exist due to a few errors of judgment and a poor strategic plan?
I made several trips to TSR during the frenzied days of negotiation that resulted in the acquisition of the company by Wizards of the Coast. When I returned home from my first trip, I retreated to my home office; a place filled with bookshelves stacked with Dungeons & Dragons products. From the earliest games to the most recent campaign setting supplements - I owned, had read, and loved those products with a passion and intensity that I devoted to little else in my life. And I knew, despite my best efforts to tell myself otherwise, that the disaster I kept going back to in Wisconsin was the result of the products on those shelves.
When Peter put me in charge of the tabletop RPG business in 1998, he gave me one commission: Find out what went wrong, fix the business, save D&D. Vince also gave me a business condition that was easy to understand and quite direct. "God damnit, Dancey", he thundered at me from across the conference table: "Don't lose any more money!"
That became my core motivation. Save D&D. Don't lose money. Figure out what went wrong. Fix the problem.
Back into those financials I went. I walked again the long threads of decisions made by managers long gone; there are few roadmarks to tell us what was done and why in the years TSR did things like buy a needlepoint distributorship, or establish a west coast office at King Vedor's mansion. Why had a moderate success in collectable dice triggered a million unit order? Why did I still have stacks and stacks of 1st edition rulebooks in the warehouse? Why did TSR create not once, not twice, but nearly a dozen times a variation on the same, Tolkien inspired, eurocentric fantasy theme? Why had it constantly tried to create different games, poured money into marketing those games, only to realize that nobody was buying those games? Why, when it was so desperate for cash, had it invested in a million dollar license for content used by less than 10% of the marketplace? Why had a successful game line like Dragonlance been forcibly uprooted from its natural home in the D&D game and transplanted to a foreign and untested new game system? Why had the company funded the development of a science fiction game modeled on D&D - then not used the D&D game rules?
In all my research into TSR's business, across all the ledgers, notebooks, computer files, and other sources of data, there was one thing I never found - one gaping hole in the mass of data we had available.
No customer profiling information. No feedback. No surveys. No "voice of the customer". TSR, it seems, knew nothing about the people who kept it alive. The management of the company made decisions based on instinct and gut feelings; not data. They didn't know how to listen - as an institution, listening to customers was considered something that other companies had to do - TSR lead, everyone else followed.
In today's hypercompetitive market, that's an impossible mentality. At Wizards of the Coast, we pay close attention to the voice of the customer. We ask questions. We listen. We react. So, we spent a whole lot of time and money on a variety of surveys and studies to learn about the people who play role playing games. And, at every turn, we learned things that were not only surprising, they flew in the face of all the conventional wisdom we'd absorbed through years of professional game publishing.
We heard some things that are very, very hard for a company to hear. We heard that our customers felt like we didn't trust them. We heard that we produced material they felt was substandard, irrelevant, and broken. We heard that our stories were boring or out of date, or simply uninteresting. We heard the people felt that >we< were irrelevant.
I know now what killed TSR. It wasn't trading card games. It wasn't Dragon Dice. It wasn't the success of other companies. It was a near total inability to listen to its customers, hear what they were saying, and make changes to make those customers happy. TSR died because it was deaf.
Amazingly, despite all those problems, and despite years of neglect, the D&D game itself remained, at the core, a viable business. Damaged; certainly. Ailing; certainly. But savable? Absolutely.
Our customers were telling us that 2e was too restrictive, limited their creativity, and wasn't "fun to play'? We can fix that. We can update the core rules to enable the expression of that creativity. We can demonstrate a commitment to supporting >your< stories. >Your< worlds. And we can make the game fun again.
Our customers were telling us that we produced too many products, and that the stuff we produced was of inferior quality? We can fix that. We can cut back on the number of products we release, and work hard to make sure that each and every book we publish is useful, interesting, and of high quality.
Our customers were telling us that we spent too much time on our own worlds, and not enough time on theirs? Ok - we can fix that. We can re-orient the business towards tools, towards examples, towards universal systems and rules that aren't dependent on owning a thousand dollars of unnecessary materials first.
Our customers were telling us that they prefer playing D&D nearly 2:1 over the next most popular game option? That's an important point of distinction. We can leverage that desire to help get them more people to play >with< by reducing the barriers to compatibility between the material we produce, and the material created by other companies.
Our customers told us they wanted a better support organization? We can pour money and resources into the RPGA and get it growing and supporting players like never before in the club's history. (10,000 paid members and rising, nearly 50,000 unpaid members - numbers currently skyrocketing).
Our customers were telling us that they want to create and distribute content based on our game? Fine - we can accommodate that interest and desire in a way that keeps both our customers and our lawyers happy.
Are we still listening? Yes, we absolutely are. If we hear you asking us for something we're not delivering, we'll deliver it. But we're not going to cater to the specific and unique needs of a minority if doing so will cause hardship to the majority. We're going to try and be responsible shepards of the D&D business, and that means saying "no" to things that we have shown to be damaging to the business and that aren't wanted or needed by most of our customers.
We listened when the customers told us that Alternity wasn't what they wanted in a science fiction game. We listened when customers told us that they didn't want the confusing, jargon filled world of Planescape. We listened when people told us that the Ravenloft concept was overshadowed by the products of a competitor. We listened to customers who told us that they want core materials, not world materials. That they buy DUNGEON magazine every two months at a rate twice that of our best selling stand-alone adventures.
We're not telling anyone what game to play. We are telling the market that we're going to actively encourage our players to stand up and demand that they be listened to, and that they become the center of the gaming industry - rather than the current publisher-centric model. Through the RPGA, the Open Gaming movement, the pages of Dragon Magazine, and all other venues available, we want to empower our customers to do what >they< want, to force us and our competitors to bend to >their< will, to make the products >they< want made.
I want to be judged on results, not rhetoric. I want to look back at my time at the helm of this business and feel that things got better, not worse. I want to know that my team made certain that the mistakes of the past wouldn't be the mistakes of the future. I want to know that we figured out what went wrong. That we fixed it. That we saved D&D. And that god damnit, we didn't lose money.
Thank you for listening,
Sincerely,
Ryan S. Dancey
VP, Wizards of the Coast
Brand Manager, Dungeons & Dragons
There goes the industry! 
