The Many Deaths of Dungeons & Dragons | A Kingdom Reborn | 2

0:09It's August 1996, and in Milwaukee, Gen Con is underway. It's been nearly 30 years since Dungeons & Dragons co-creator Gary Gygax started this annual gaming convention. Since then, TSR, the publisher behind D &D, has belted into North America's biggest gaming expo, with 30 ,000 attendees expected this year. At the center of the exhibition floor is TSR's domineering stand, featuring a huge replica castle, complete with 20-foot-tall turrets. Within its walls, gamers can discover, play, and buy the D &D publisher's latest offerings. And the queen of this castle is TSR's owner, Lorraine Williams. As she walks through the stand, she tries to project calm and confidence.

0:59But the truth is, her kingdom is crumbling. TSR owes its main distributor, Random House, millions of dollars. and last December it missed a deadline to repay a large chunk of that debt. TSR took desperate measures to avoid being sued into bankruptcy like halting royalty payments to many authors of Dungeons & Dragons novels. This saved enough cash to keep Random House at bay, but now TSR owes its printer J.B. Kenahan more than$6 million. So to stop the printer from demanding payment, TSR gave it ownership of its corporate headquarters and signed a contract prohibiting it from moving its business elsewhere.

1:42All of which makes it harder for Williams to pretend that everything's okay. And what's making it even harder is that she's about to have a one-to-one meeting with Peter Atkinson, and she doesn't know what's on the agenda. Atkinson is the founder of Wizards of the Coast, the Renton, Washington company behind Magic, The Gathering, the hugely successful collectible card game. Williams isn't happy about this meeting. She doesn't like Atkison or his game. Magic is crushing sails of Dungeons and Dragons and pushing TSR closer to the abyss. Williams arrives at TSR's private meeting room, where Atkison is already waiting.

2:25After handshakes, they move to sit down. But before Williams can do so, Atkison blurts out why he's asked to meet. So yeah, thanks for making time to talk. Look, here's the situation. I'm under pressure from my board and investors. They want me to look for opportunities to grow through acquisition. Williams stops moving to sit and glares at Atkinson, but he keeps talking. Long story short, if you ever wanted to sell TSR, I'd be interested. We got the money. Williams squallows her irritation. TSR's in trouble, but she can't bear the idea of selling to Atkinson. She steps away from the chair she was about to sit in.

3:06Thank you for your interest, but we're not looking for a buyer. Atkinson looks surprised. The entire tabletop gaming industry knows TSR's in deep trouble. He thought she'd at least hear him out. Instead, Williams glances at the door. Is there anything else you'd like to discuss? No, not really. Great. Well, nice to see you, Peter. Atkinson didn't even get to sit, let alone start buyout talks. But TSR is in critical condition. And if Williams doesn't find a solution soon, both her company and Dungeons & Dragons will be finished.

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5:30From Wondery, I'm David Brown, and this is Business Horse.

5:58In the last episode, Dungeons & Dragons co-creator Gary Gygax formed publisher TSR and turned the game into a household name. But when out-of-control spending pushed TSR to the brink, his deputy Lorraine Williams staged a coup and bought the company from under him. But now, history is repeating itself. TSR faces ruin again. Sales of the game are slipping. Debt is piling up. And if the company can't break the cycle, it won't survive. This is Episode 2, A Kingdom Reborn.

6:39In June 1996, struggling with its debts, TSR uses its copyrights to its books and games as loan collateral. It's a dangerous move. If TSR goes bust now, the Dungeons & Dragons brand will be auctioned off in pieces and potentially end up in the hands of multiple owners. D &D could wind up like King Kong, a famous brand weakened by confusing ownership rights. But even this move is just a band-aid. That fall, six trucks from Random House roll up to TSR's warehouse, loaded with millions of dollars' worth of unsold products and a demand for the cost of returning them. With cash running out again, Williams orders layoffs, slimming the business down to a skeleton crew of demoralized survivors surrounded by vacant cubicles.

7:30And still, the death spiral continues. Returns in collateral look harmless. Until they don't. If your distributor can send you back truckloads of product at will, you don't have revenue. you have consignment with paperwork. Rule of thumb, tighten returns up front even if it does cost you sales. And never, never put your core IP or some other must-have asset on the table unless you can really live with losing it. As 1997 begins, TSR's printer, J.B. Kenahan, delivers another blow. It tells Williams it will cease printing TSR's products until TSR repays the millions it owes. TSR now owes around$30 million and can only earn money from selling its existing inventory.

8:22Williams halts almost all spending just to keep making payroll. The cutbacks are so severe that employees now have to bring their own toilet paper to work. It seems inevitable that TSR will go bust and take Dungeons & Dragons down with it. In February 1997, Williams attends Toy Fair in New York City, where she's cornered by Bob Abramowitz. Abramowitz is the CEO of tabletop game publisher Five Rings. It's a small Seattle outfit that's had some success with games based on Star Trek and Dune. And he's got an offer for Williams. He tells her he knows TSR is nearly bankrupt, and he wants to explore buying it.

9:05He shares how he worked at TSR back in the early 1980s. and says he understands the brand and company culture. He also tells Williams that Five Rings is backed by investors with access to plenty of capital. Williams listens with interest. This just might be the lifeline TSR needs. But what she doesn't know is that Abramowitz isn't being fully candid. Five Rings doesn't have enough money to buy TSR. In fact, it's also nearly bankrupt. The company's bank credit is maxed out. And if it doesn't get a new investment of capital soon, it's finished. An agreement with TSR might help Five Rings secure a new investment.

9:51Or maybe even convince someone to buy the company. To his relief, Williams doesn't press him on his ability to finance a deal. Instead, she invites him to come to TSR headquarters in Lake Geneva, Wisconsin, to look over TSR's books.

10:12A few days later, Abramowitz and his team arrive in Wisconsin and discover that TSR's finances are even more of a horror show than they imagined. But this doesn't deter him. TSR might be a dumpster fire of a business, but Dungeons & Dragons is still a famous brand with seemingly untapped potential. Abramowitz offers to pay$25 million for TSR and take on its debts. Williams accepts and signs a letter of intent to sell. Stage one of his master plan is complete. Now Abramowitz just needs to find the money he promised to pay her.

10:55It's spring 1997, and in a diner in Seattle, Abramowitz rises from his chair. He greets the man he's invited for breakfast, Peter Adkisson, the founder of Wizards of the Coast, the company behind Magic the Gathering. After ordering, Abramowitz gets down to business. Peter, I know there's a company you've always wanted to buy and can't seem to get. Well, I'm buying that company. Bob, it's early. Help me out here. What are you talking about? TSR. Atkinson's eyes widen. He's long dreamed of owning Dungeons & Dragons. In the 80s, at the height of the Satanic Panic, his seventh-day Adventist college almost kicked him out for being the ringleader of D &D activity on campus.

11:40Buying this game would be like buying a piece of his childhood. But Williams has rebuffed every approach he's made. Abramowitz slides a manila folder across the table to Atkinson. What's this? It's a letter of intent, signed by Lorraine Williams. Atkinson opens the folder. It's there, in black and white. Williams is ready to sell TSR to Five Rings. Okay, Bob, how do I get involved in this? Well, you'll write a check for one million dollars, a loan. If we don't complete the deal, we pay you back. If we do complete it and you still want TSR, you buy five rings. That'll cost you six to eight million dollars.

12:23Well, you know, I could just wait for TSR to go bankrupt and buy it then. That'd be a mistake, Peter. They've used their copyrights to guarantee loans. If you let them go under, there's a strong chance that ownership of Dungeons & Dragons will be auctioned off to multiple buyers. Be like Humpty Dumpty. They'll never be able to put all those pieces back together again. Hmm. Okay, I'll think it over. Yeah, you do that. But if you want in, don't think for too long. Less than 15 minutes after leaving the diner, Abramowitz is back in his office when the phone rings. It's Atkinson. Okay, who do I make the check out to?

13:03Abramowitz grins. Stage two of his master plan is complete. The million-dollar check from Wizards of the Coast will keep five rings alive long enough to finalize the acquisition of TSR. But now, he has to break the news to Williams that she's about to sell her business to the one man she's long refused to deal with.

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14:51Meanwhile, a darker market is emerging. Shady online sellers are offering cheap, unregulated knockoffs. Now millions are injecting mystery vials with no FDA oversight. I'm David Brown, host of Business Wars. In our latest season, we're diving into the race to Ozempic and the billion-dollar showdown between Big Pharma's biggest players. Can they close the supply gap before one bad vial destroys everything? Make sure to follow Business Wars on the Wondery app or wherever you get your podcasts. You can binge all episodes of Business Wars early and ad-free right now on Wondery+.

15:40It's spring 1997, and Five Rings boss Bob Abramowitz is back at TSR headquarters in Lake Geneva, Wisconsin. He's meeting TSR owner Lorraine Williams and hoping he's not about to blow up the deal to buy Dungeons & Dragons. Lorraine, I wanted to live up to the promise I made to buy TSR, but I have to tell you something's changed. And you're not going to like it. But hear me out, because it's the best solution for all three of us. Hang on. The three of us? Wizards of the Coast is going to buy us, so we can buy you. William's expression turns frosty. I don't like Peter Adkisson, and I don't like what he's done to this industry.

16:26Abramowitz doesn't know exactly why Williams is so hostile towards Adkisson, but he knows if he doesn't overcome it, both of their companies will die. This shouldn't be personal, Lorraine. Peter built a fine company in Wizards of the Coast. He has the business savvy and the passion to make Dungeons and Dragons grow again. Come on, think about your staff. If TSR dies, what happens to them and to their families? Wizards has the money to keep them on. Lorraine. Lorraine, you saved TSR. You saved Dungeons and Dragons. It would have died in 1985 without you. You've kept it alive for another 12 years.

17:07But TSR is bleeding out. And this deal, well, it's the blood transfusion it needs.

17:16Okay, but only if the deal is done within 50 days. Lorraine, if your lawyers move as fast as ours, we'll have it done in 30. A few weeks later, Five Rings buys TSR. Wizards of the Coast then pays$25 million to buy Five Rings and acquire TSR. After collecting the keys to TSR's headquarters, Peter Atkinson finds himself unable to walk through the doors to meet his newest employees Instead, the multi-millionaire game tycoon retreats to his car and bursts into tears He now owns the game that set him on the path to founding Wizards of the Coast The game that made him who he is today He feels like a sports fan who's just bought their home team.

18:11And now, the main thought swirling through his head is, I better not mess this up. Let's pause for just a moment and take this all in. You know, buying your childhood dream is romantic, but now comes the hard work, integrating it. The smartest move we just heard wasn't the price. It was the pause. A little humility on day one beats a hundred memos later. When you acquire a beloved brand, think like a caretaker, not a conqueror. Keep what the fans love, fix what they'll forgive, and don't try to optimize the soul out of it. You just might find that little touch of humility will pay dividends in the long haul.

19:01Having bought Dungeons & Dragons, Wizards of the Coast sets to work on a plan to revive the game's fortunes. First, it starts by cleaning up the intellectual property ownership issues. The game's creators, Dave Arneson and Gary Gygax, plus Gygax's ex-wife, all have royalty interests in the game, which could complicate attempts to update or change it. So Wizards of the Coast buys them out and gets full control. Then it rehires many of the key creatives who were fired during the recent layoffs and relocates the Dungeons & Dragons team to its offices in Washington State. Wizards also drops TSR's fish bait strategy, which had subdivided the D &D fan base into smaller and smaller pieces in a misguided attempt to compete with every other role-playing game on the market.

19:53Now the goal is to bring the game's fans back together, even if it does mean scaling back releases and losing sales in the short term. Of course, TSR couldn't afford to do this. At TSR, Dungeons & Dragons was the breadwinner, but at Wizards of the Coast, there the job falls to Magic the Gathering. By 1997, the game has sold more than 2 billion cards, meaning that Wizards of the Coast can afford to take a hit on Dungeons & Dragons as it course-corrects the brand. Think of it this way. A cash cow buys you time, so use it to simplify. Prune the product trees so the sunlight reaches the roots, you know, the hits.

20:34Fewer, better releases builds trust and makes each launch feel like a bona fide event. But the pruned product line is just the warm-up. The core of Wizards of the Coast's turnaround plan is releasing a revised third edition of D &D. The gameplay hasn't changed significantly since the 1970s, and Atkison felt it was now showing its age. The hope is that an overhaul will make the game more appealing, and put it back on the map. The old hands who joined from TSR warned that this could be a risky move. The second edition, released in 1989, split the fan base, and it only refined the rules. Who knows what will happen if the rules are more thoroughly overhauled?

21:20But sales of Dungeons and Dragons are drying up, so if the game is going to attract new fans, it has to do something big. Grand Chief Ryan Dancy and his team reworked the rules so that most of the outcomes in the game are now determined by the role of a single 20-sided die. The change makes the game simpler and more accessible. But Dancy also has another big idea for the third edition. Dancy got his inspiration from the buzz among Seattle tech workers about the computer operating system Linux. Linux is what's called open-source software, meaning its code is open to anyone to modify, share, or sell as long as they follow certain rules.

22:01It's the exact opposite of Microsoft Windows, which only Microsoft can modify or sell. Dancy's big idea is to make the rules of Dungeons & Dragons third edition open-sourced. He calls it OGL, Open Gaming License. Under the OGL, players and rival game publishers can use the D &D rules to create their own games, ones they can share and even sell without asking for permission or paying Wizards of the Coast any royalties. All they have to do is follow the terms set out in OGL. Wizards of the Coast will keep control of the Dungeons & Dragons brand, stories, and world. but the rules can be used by anyone.

22:47The initial reaction inside Wizards of the Coast is pure horror. Too many D &D's rules are the game, and Dancy wants to give them away. It seems like business insanity, a sure-fire way to destroy the brand for good. But Dancy's convinced it will do the opposite. He believes the OGL will inspire rival publishers to release add-ons to Dungeons & Dragons, rather than competing against it. It would also allow Wizards of the Coast to dial back from the low-margin business of publishing D &D campaign books, because now the community can start doing this themselves. Alarmed colleagues hope the Wizards of the Coast legal team will veto the idea.

23:32But instead, they back it. They point out that legal protections for game rules are largely theoretical and hard to defend in court. The OGL isn't about surrendering rights. It's about making Dungeons & Dragons the default role-playing game engine. And getting the community to create a lot of cool stuff for fans in return. In the end, it comes down to Atkinson. Dancy gives him the pitch. And he doesn't even hesitate. He sees the idea from the perspective of a Dungeons & Dragons fan. And in his gut, it feels right. He gives the OGL his blessing and rejects all attempts to change his mind. Now here's the counterintuitive play.

24:18Give away the engine to sell the car. Open rules invite a thousand creators to build on your platform, and every add-on points back to you. You keep the name, the stories, and the world. They expand the universe for free. Openness isn't charity. It's distribution you don't have to pay for. If the tide rises, your flagship floats the highest. In summer 2000, Dungeons & Dragons 3rd Edition debuts. The world's number one role-playing game where you get to interact with your friends as never before. The only limitation is your imagination. Find out what the rest of the world is talking about. Dungeons & Dragons, the adventure starts here.

25:07The initial sales are strong. The new edition sells almost 400 ,000 copies in its first year. That's more than three times as many copies as the second edition managed in its first year. But the reaction to the OGL itself is muted. By the time the third edition arrives, Wizards of the Coast has been bought by toy giant Hasbro, the owner of Monopoly and Transformers. Rival publishers view the OGL with suspicion. They suspect that once they've invested in making games using Dungeons & Dragons rules, Hasbro will snatch away their permission to do so. So, Wizards of the Coast employees hit the road, meeting the player community and other role-playing game publishers to reassure them that the OGL isn't some trick.

25:57Slowly, companies start releasing games based on D &D's rules. And as the number of community creations grows, so does interest in the third edition rules, fueling more sales. Dungeons & Dragons sales are climbing again, after years of decline. The game is still niche and still struggling to break beyond its core fanbase. But it's progress. But just as it gets back on its feet, a new threat emerges. Chuck Norris is a hunter. But Chuck Norris does not hunt. Hunting would imply the possibility of failure.

26:40There are 10 million people in the World of Warcraft because Chuck Norris allows them to live. I'm Chuck Norris, and I approve this game. In November 2004, World of Warcraft, the D &D-inspired online video game juggernaut launches. And now, Dungeons & Dragons must fight to prove that its tabletop adventures still matter in an online world.

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