We recently had the opportunity to sit down with Wizards of the Coast CEO Greg Leeds to talk about the state of the industry and what’s happening at the company. In Part 1 of this two part interview, we talk about the state of the market, the role of retailers, the new direction for Dungeons and Dragons, and what’s going on with product and media licensing of WotC brands. In Part 2, we talked about the Kaijudo launch. This is the full version of the interview; a partial transcript was published in Internal Correspondence #80.
How do you see the state of the hobby game market and Wizards of the Coast’s place in it here in the second half of 2012?
The state of the hobby gaming market is very healthy, and Wizards’ position in the market is very healthy. We have been focusing on a strategy to make sure that the hobby game stores that invest in building the industry get the financial benefits from the communities that they build. And from my vantage point that strategy is working for Wizards; it’s working for the industry. The good retailers out there are growing their business. They’re becoming more profitable, and they’re investing back into acquiring new players into the industry. So it works for the stores and it works for us.
From the outside it seems that both of your major channels (mass retail and hobby retail) are growing robustly. Has there been any change in the proportions between those channels in the last few years?
No. That is one of the things that we strive to have is growth across all channels, because we believe that the customer wants to experience our brands in a variety of different places. We think that having multiple experiences enhances the total. There’s a synergistic effect among digital, mass, hobby game. Hobby games stores will always be the core of our business (that’s where the communities get built and strengthened), but by having experiences in other channels the whole number of people, the whole size of the community, grows, and it benefits everybody.
Specifically what we’ve seen is almost exactly even growth across digital, mass and hobby. So, for example, the Magic business has doubled and it’s doubled everywhere. So far that approach is working for us and we think it’s working for retailers as well.
Over the last few years we’ve really seen the development of a new kind of brick and mortar game retailing that is more defensible against online competition. Specifically, it emphasizes community, interaction in the store and in-store events as opposed to the store being just a place to go buy stuff. Can you talk about how Wizards of the Coast is nurturing that development?
Yes, absolutely. It has been a core goal and I need to be humble on behalf of my company, but I think Wizards has been a very strong advocate for what you just described. For stores to be successful in the future working with brands like Wizards’ brands, they need to provide entertainment experiences that are at least as good, if not better, than all the things our customers can do on a Friday or Saturday night. It’s not good enough to have the best game (which we already do), we have to have experiences where customers say, “This is more fun than going to see a great movie, to a restaurant or a club, or even more fun than going out on a date.” [laughter]
Obviously you’re going through a big change with Dungeons & Dragons. What are you trying to accomplish with this new version of D&D?
D&D Next is Wizards’ opportunity to unite all the D&D players of the past, create a welcoming game for new D&D players of the future, and bring everybody together to enjoy the best of D&D: that’s the heroic adventure, the imagination and the storytelling.
Do you think the roleplaying game category can be as significant a contributor as board games or card games in terms of overall volume?
Well, I don’t know if it can be as significant a contributor in dollar terms. I think in terms of relationship with the property, it can be extremely strong, and it can be a foundation for the experience people want to have with their brands in a variety of different ways, whether it be entertainment experiences (like television or films one day); digital game experiences; or even other publishing-type experiences like comic books. I’m not sure the exact relative size of the two, but the roleplaying game is a core component of D&D and always will be.
Digital is obviously a big part of what you do. Is the relationship between digital and paper games going to change with D&D Next?
In general the relationship between the paper game and the D&D digital games will get stronger and stronger, so D&D Next will be one step forward in that evolution. Specifically what I mean by more and more integrated is that the storylines and the themes will be tied in more closely than they have been in the past. D&D is about people controlling their own adventure, using their imagination, creating their own stories, creating their own destinies, but at the same time they love to get content and materials that inspire them in those stories. So we’ll make sure that the digital and the paper side have similar content to allow people to more seamlessly move from one platform to another.
A year we asked about Avalon Hill (see “Interview with WotC CEO Greg Leeds—Part 2”) and you said at that time you were more focused on Magic and D&D. Any plans for expanding the focus on Avalon Hill?
We still support Avalon Hill pretty aggressively. We come out with new releases every year. We’re working on something that I can't specifically talk about for a 2013 launch. We’re not ready to announce it yet, but we’ll continue to focus and develop Avalon Hill to large degree.
There’s been a pretty good response to comics based on both Magic and D&D. Do you see those as a two-way street? Are you trying to bring new people to the brands or do you see more it as another way to monetize the brands for people who are already involved with them?
It’s definitely a two-way street. To some extent many of the readers of the comics are Magic and D&D players, and they love to read more stories. To another extent, by offering those comic book stories, we introduce the brands to new audiences. We know we bring in future players just through their first engagement by reading comic books because that’s their platform of choice. So it’s definitely a two-way street.
Any other licensing initiatives for any of your brands that we should know about?
There’s a couple of things going on now that I’m not ready to talk about, but we are seeing more and more interest from a variety of potential licensees to take both D&D and Magic to other merchandise areas. There’s one in particular that we‘re hoping to finish up shortly and we’ll let you know when we’re able to talk about that.
What about media licensing? We ask every year and it’s always in the works. Any change there?
Yeah, it’s always in the works and it still is. I guarantee you we have a very strong office in Los Angeles run by our Hasbro film people and I can say discussions are underway. I may have said that in past years, but I can say that they still are and we’re hoping to get news as soon as we can.
Anything else you want to communicate to our readers about what’s going on at Wizards of the Coast?
Yes. Wizards continues to be 100% committed to developing the financial health of the hobby game retailing industry. All of our policies of the past and our policies of the future are designed to bring as many new people into stores as possible. As you recall, a few years ago we changed the format of our Premier Play in Magic to move more of the play in stores. By that we allowed retailers to reap more of the financial benefits by having a good, strong Magic community. We have strong promotion policies that encourage people--drive them--into stores to create big events. We believe that we’ve just begun. We think there’s lots of opportunity for the stores that we talked about earlier to be able to provide entertainment experiences that are second to nothing else out there that’s available to our audience.

One of your big launches this year is Kaijudo. Can you talk about the rationale for launching that brand the way you are?
Kaijudo is being positioned in an area in the market where we feel there’s a gap. We believe that there are a lot of 8- to 12-year-olds who want a great competitive game; they want head-to-head play; they want an epic story that they can relate to; and they love good graphics. And for us, that 8- to 12-year-old boy market is not being served, so for Kaijudo we took the best of Duel Masters, added on some global storytelling and artwork philosophies, and created the Kaijudo launch. It goes after what we see as a gap in the market.
Why the differences in how it’s marketed in Japan and here?
From a global standpoint, we think the story is stronger in terms of emphasizing the relationship, the emotional connection that boys have with their creatures in the story. That idea, we feel, is more compelling on a global basis. Some of the basic game play, art and monsters are the same because we know that the gameplay is second to none, but it’s more the superficial storytelling and artwork side. It’s got a more global side to it rather than that specific anime-only look.
You mentioned “from a global standpoint.” Is Kaijudo the brand you’re going to use everywhere except Japan?
Yes, that’s exactly the plan. We’ll keep Duel Masters going in Japan. It’s been very successful there so there’s no need to make any changes in Japan, but outside of Japan Kaijudo will be the brand we take forward.
How are you supporting the launch? Some card games in recent years have been launched and withdrawn in a short period of time, so retailers want to know how this is going to be supported and what your timeframe is for determining the success of the game.
The Kaijudo brand is going to be supported with the methods and tools that we know work in this industry. I won’t try to compare it other brands but I will say that we know boys today want to engage with brands with television—that’s a really important foundation. In addition to that they want to engage with the brand in a digital way and that’s what we’ve done with the Kaijudo brand in terms of taking it to the market.
I’ll talk about retail in a minute, but first on the digital side, we’ve got three digital expressions of the brand designed to engage the boy at different levels, and these digital expressions are available on all platforms. A boy can play at the Battle Game, which is a very simple version of Kaijudo, on his PC or he can play it as a mobile app. That introduces him to the brand.
Then you can go to Kaijudo Online, which is a more in-depth, strategic version of Kaijudo that gets the boy trained in the strategy of how to compete playing Kaijudo.
And then we have a simple app that’s based on katas, which are martial arts maneuvers that boys try to mimic using a touch screen on an iPad or on an iPhone, and that also engages him in the brand in another way.
The combination of the television and the digital marketing tools we know (in fact it’s already starting to happen) will get those boys in there and start the viral nature of a game like Kaijudo. It starts with a few and then expands and expands.
One of the things you‘ve done successfully with Magic is creating the connections between the paper game and the digital game. Is there anything you’re doing in that regard with Kaijudo?
Yes, the great thing about the digital-paper business is that they’re completely connected. Specifically with Kaijudo there are desirable codes that come with the paper product that boys will want to collect to enhance their online experience. Once they get more online experience, we know from our Magic results that we can send the kids back into the stores to play in-store events.
One thing I would emphasize to retailer on Kaijudo is that some retailers are almost waiting on the sidelines for Kaijudo to take off and then they plan to jump in and get in on the business. I would say it would be really unfortunate to take that strategy and then find out someone else in the community has created this great location and destination for Kaijudo. We have launched Kaijudo exclusively in hobby shops to give the hobby retailing industry a head start, an opportunity to establish with their fan base and young people in their local area this affiliation with the brand. I would emphasize to retailers to really get ahead of this and not wait to see what happens.
You started in the hobby and then put it into mass. Do you have a feel for how this is going to play out in terms of the roles of the two channels for this game (because it’s a significantly different target audience than Magic)?
We think it will be strong in both channels. Our experience with Magic: The Gathering tells us that the hobby stores will have vibrant communities where kids come to play, play in in-store events, have that in-store experience that our game can provide, and mass will still be strong because there will be a convenience element to picking up their Kaijudo cards while their parents are doing other types of shopping. For us, we see both channels as vital and we know that we can be successful and meet the needs of retailers in both channels.
What about the target age? Kaijudo is younger which is historically considered more of a mass audience than a hobby audience.
That’s a good point. Historically you would think that you would associate younger kids with mass market retailers, but as mentioned earlier, as stores change and become more welcoming, more clean, more inviting to a wider variety of people, I think hobby shops will be very successful attracting younger people. We see them as we travel around the country –stores that have built up very strong audiences of young players and those stores also know they can tap into their older customers’ kids. The older customers who are loyal to hobby shops are looking for wholesome, intellectually stimulating, interesting ways for their kids to spend their leisure time. I think that’s where that need comes in: there aren’t’ enough of those opportunities in our industry and Kaijudo will fill that gap.

Leeds wrote:the roleplaying game is a core component of D&D and always will be

ICv2 caught up with Wizards of the Coast CEO Greg Leeds for our annual interview (for last year’s, see "Greg Leeds on the Market, Retailers, 'D&D,' and Licensing"), to discuss the state of the industry and what’s happening at the company. He discussed the market and the company’s plans for Dungeons and Dragons, Kaijudo, and Magic: The Gathering.

What’s your assessment of the state of the games market and Wizards of the Coast’s place in it?
The games market is doing well from our standpoint. Our business is up significantly, particularly being driven by Magic: The Gathering. We’re seeing player growth, store growth and revenue growth across the board both here in the U.S. and on a global basis.

Is the market growing, your share, or both?
With the data we have, it appears that the market is growing. From our perspective, retailers, as is our goal, are becoming financially more successful, and with that financial success they’re investing in great play experiences and attracting more people to the industry in general and not just to our brands.

The vision for D&D which was hinted at a year ago is becoming clearer, with an ambitious transmedia narrative that all feeds back to the game but also has its own parts of the story. Can you talk about the overall strategy for what you’re doing with Dungeons & Dragons?
We are very ambitious with Dungeons & Dragons, and as you say, the strategy that we’re pursuing is starting to emerge. One of the most important things with Dungeons & Dragons is that we are able to take the same stories and themes and execute them across platforms, not just in the paper side of the business but the digital side. It’s beginning to happen now with the launch of The Sundering. It’s our opportunity to rewrite the story of the Forgotten Realms and bring the realms back together.

The first and most tangible example of that is Bob Salvatore’s book, The Companions, which is doing extremely well. We’ve got five other great authors who are working on The Sundering. Those stories will then be taken to digital and paper products.

On the digital side, we’ve got a really exciting line-up of things that will be coming out shortly. The Neverwinter launch from Perfect World came out in June and already has two million people who have downloaded the game. This brings a whole bunch of new fans to the D&D business.

Next month we’ve got a new mobile game coming out, which is a battle RPG called Arena of War. It will bring in all kinds of new players who want to have that RPG experience on a mobile device, either a phone or a tablet. On the traditional board game sides, we’re coming out with Lords of Waterdeep as a digital tablet experience sometime in early 2014.

As we bring the stories together with all of those expressions across those platforms, we think D&D is poised for a completely new generation of consumers and excitement around the brand.

Are you saying that the novels are the launch of the narratives and then they’re expressed in other media rather than it being a simultaneous thing?
Some things are done simultaneously and some things are done in sequence. In particular, one of the key characters in the novel line is Isteval, who will come in the mobile Arena of War game. In that sense, that there is sometime simultaneous and sometimes slightly delayed, but in over time they will be simultaneously experienced on different platforms.

Fiction, paper games, online games, and comics are all places where this narrative is expressed, is that everything?
If you include in paper games board games in a digital tablet format and in a paper format, yes. And we continue to work with our Los Angeles connections on the potential for a film. Unfortunately I can’t announce anything at this time but we are looking for all venues of telling our story.

Do you think a D&D movie will get made?
Yes, I do.

By whom?
(Laughter) I can’t answer that because we haven’t made enough progress to be able to guess on that.

There’s litigation surrounding the property, isn’t there?
There’s not litigation involving us directly. There are some disputes over the titles but we’re making good progress in that area and I think that will be resolved shortly. The D&D brand and the stories within the brand are just too rich and engaging to not have a film made one day.

We recently did an interview about The Sundering and how it’s going to be playable with 3.5, 4 or Next rules and your folks made the comment that they’re disengaging the narrative from the rules so you can play however you want all around the same narrative (see "Exclusive Interview on The Sundering"). Can you talk more about that interesting strategy?
The idea is that we don’t want any of our audience split based on the rules they’re familiar with and like to play. We want to offer an opportunity for whatever your rules choice is so you can enjoy the narrative that’s coming up and the characters in the story lines that will excite the fan base in the future.

Is that the strategy going forward?
Yes, absolutely. That’ll be a strategy you’ll see for years to come.

Maybe take some share back from Paizo?
We’re not in a share game; we never have been. I’ve been with Wizards of the Coast for five years and we’ve always talked about how our role is to build the hobby gaming industry. We’ve said that from the beginning; we stick by that now. I wish the best of luck to all hobby game manufacturers. All of them.

We’re now about a year into the Kaijudo launch (see "Exclusive Interview: 'Kaijudo' Update" for recent events). Is Kaijudo meeting expectations for you?
Kaijudo is having great pockets of success with particular retailers, but we believe the opportunity is to expand that success to many, many more retailers. There are stores around the country that have participated in our Kaijudo Master Challenge series--24 specific stores with averages of 40 to 50 people participating. Those events culminated in a World Championship that happened in Seattle a few weeks ago. I was able to attend that and the vibe in the room was infectious. There’s excitement and energy among the people that have had that opportunity to play, experience and know the stories of Kaijudo.

Our role now is to take that to many more stores. We’ve got plans in place to do that. We’re using the full power of the creativity and the innovation of Wizards of the Coast to take our events in-store and show a whole new group of consumers how to have fun playing TCGs with the Kaijudo brand.

One of the things you did that helped build confidence with retailers at launch was to announce that you’d be supporting the game for at least two years (there had been a lot of games launched over the last 10 or 15 years that didn’t get that much runway). 2014 is the end of that two-year period. What’s going to happen after that?
We’re in it for the long run. We’ve already announced our 2014 plans in terms of the next season’s worth of Kaijudo Master Challenges. We’ve already committed for the foreseeable future; there’s no endpoint in sight. For us it’s just a question for how big Kaijudo can be. We know it’ll be a successful brand and we’re going to stick with it.

One of the surprises to us is that the market seems to have been able to absorb two new successful CCG launches, but in recent years there were a lot of CCGs launches that crashed and burned in a year or less. What does that tell you about the market?
What it tells me is what I’ve believed, which is that the hobby gaming industry competes in the general entertainment industry. When you think of that, it means that we are only capturing a small percentage of the total entertainment leisure time and money that our potential consumers have. So our opportunity in the industry is to build way beyond where we are today.

It’s not about trading share among the industry players or how many TCGs can exist. We think more and more TCGs can exist because there is so much time and money being spent on things outside of our industry that could be moved over if the fans get the experiences they deserve. That’s what we’re doing at Wizards of the Coast; that’s what other companies are doing; so I think there’s lots of room in the market for more TCGs and other hobby game experiences.

If you look at markets such as Japan, there are far more TCGs played there very successfully over decades, so we know the consumer’s appetite is there for great experiences. We just have to provide them and more will come to hobby retail stores to enjoy those brands.

That brings us back to Magic. You’ve had three or four years of spectacular growth--how do you keep that going?
Doing the same things we have been doing but doing them better. Our primary strategy on Magic: The Gathering, like the rest of our business, is to create great in-store experiences that rival any other type of entertainment our fans could have outside of the store. We’ve done well and we’re getting better and better. In the future we’re actually going to increase the level of excitement and engagement and experience that players have when they come to the store and play Magic: The Gathering.

We’ve launched Theros based on Greek mythology. It’s a fantastic story. There’s some exciting things players get to do when they come to our pre-release events and then continue in their Friday Night Magic events. As you can imagine, we have such a deep pipeline of new innovations that will be coming to Magic over the next few years. I couldn’t be more optimistic about the growth potential. We’ve had growth, but we’re nowhere near the end of the end of the Magic road.

What’s going on with Avalon Hill?
Avalon Hill is a really valued part of our vault of I.P. that we have at Wizards of the Coast. I can’t give you specifics now, but certainly in the future you’ll be hearing some things on Avalon Hill.

What are you most excited about coming from Wizards of the Coast in the next six to twelve months?
The most exciting things for Wizards of the Coast are the stories in Magic: The Gathering that are evolving with the Planeswalkers new game play, in-store entertainment starting with Theros, finishing through that block, and coming in future years.

The second thing I’m excited about is the rejuvenation of Dungeons & Dragons with the digital games that we have coming out and the new philosophy we have on our RPG rule sets which I think will pay huge dividends for Wizards of the Coast and for the industry, but most importantly for all those current and future D&D fans.

Last, I just can’t wait for Kaijudo to take off as it has in some of those stores that have got behind it, gone out and found new people to bring into stores, teach them Kaijudo, what the story’s about, how to play the game. I can’t wait until that starts to happen in more and more stores.