Impossible to say - the real value of a $300 idea

Turning a Twitter thread into a post about the value of an idea

This post is adapted from a Twitter thread I published a few weeks ago. This is the Curious Realizer post for this week.

Photo by Emilio Takas on Unsplash

I want to talk to you about the value of an idea for a moment and how hard it is to adequately predict how successful something may be. 

Back in the early 70s there was a group of US game players who created and tested game ideas.  They contemplated a game that was something novel:  instead of a board game with pieces or a combat game based on miniature figures, they wanted to sell a set of game rules. It was very much a game of the imagination.  But because certain game mechanics relied on chance, dice were added. Dice and paper: that was the product.

The players did business planning to develop and market the game. One of the key movers and shakers figured that the game was worth $300 US.  In today’s dollars that’s approximately $2,000 US.  Neither $300 or $2,000 is a large value in 2022.  You’d probably spend far more than $2,000 today to bring something substantial to market. 

Much to everyone’s surprise, the game turned out to be a big hit, one that had lasting cultural impact. All from a book of paper rules and dice.

Some of you have probably guessed it:  this game is called Dungeons & Dragons, or D&D.  I fell in love with the game as a teen, played all through high school. I sure wasn’t the only one.

Per Wikipedia:

Between the mid 1970s and 2004, roughly thirty years, consumers had spent more than $1 billion on Dungeons & Dragons products and the game had been played by more than 20 million people.

But the growth of D&D wasn’t a smooth journey - D&D had a tumultuous history. Its parent company, TSR, went through a remarkable boom and bust cycle. At its peak in the early 80s the company employed hundreds of people and grossed tens of millions of dollars in a single year with a healthy 7 figure profit.  All that money for boxes filled with written instructions and a set of six polyhedral dice.  A game whose creators thought would be worth $300. 

Then, mainly due to inadequate management and poor financial decisions, TSR started losing millions of dollars of year in the mid 1980s, even while sales increased. The person who was the public face of TSR and D&D, Gary Gygax, lost control, as did the other original shareholders.

After languishing for years, D&D was acquired in 1997 by another little company called Wizards of the Coast.  They published another little game idea that hit it big:  Magic The Gathering or Magic. Magic, a collectible card game, helped build the market for games like Pokemon.  Even if you haven’t heard of Magic, you’ve doubtlessly heard of Pokemon.  Very similar concept. 

Wizards of the Coast itself was purchased in 1999 by Hasbro, a company known for marketing board games.  As of today, Hasbro has a market capitalization of $11 billion, grossing $5 billion in sales each year.  Magic and D&D remain key products for Hasbro.

D&D has had a significant impact on gaming and popular culture.  Without D&D, you’d have no World of Warcraft or other similar games.  Probably no Magic the Gathering.  D&D has been referenced in TV shows like Community, The Big Bang Theory and now Stranger Things.  There was a D&D cartoon in the 1980s. There’s even another attempt at a motion picture version of the game, planned for release in 2023.

Anytime someone talks about failing a saving throw, fireballing something, levelling up or getting a natural 20, you see the lasting cultural impact of D&D.  All of this creative output and cultural impact for a game originally valued at $300.  There was a lot of hard work, and a lot of luck, involved in turning this concept into a multi-million dollar property.  But no one in the early 1970s could have predicted how successful it would become.

Is there anything we can learn from the story of D&D?  There are lots of little nuggets of information that could be harvested from a detailed investigation into the history of TSR and D&D.  Much of D&D’s success was due to some unusual events that raised awareness of the game outside of the wargaming community into the mainstream. Controversy led to fame.

Most ideas wind up have a negative financial value because their costs are never recouped, preventing them from growing.  And, to be honest, an overwhelmingly large number of ideas are either weak concepts, poorly executed or the victims of cruel fate.  Clearly, D&D bucked the trend and was important enough to enough people to survive for 50 years.  Same with Magic, now into its fourth decade. 

If there is one thing that we would safely take from this thread, it’s this:  human beings can be very bad at knowing the future value of a thing, mainly because we don’t know what the future holds and we don’t know what will be a hit. 

Maybe you have your own creative idea.  You may well fail at it.  Or not.  There are plenty of other odd or unexpected success stories out there.  You’re probably using one of those technologies or products as you are reading this.

You can’t predict the future.  But if there’s something that you’re passionate about and you have at least a few other supporters, why not try rolling the dice a few times, with a series of managed risks, and see what happens. 

You might roll a 1, of course, and fail miserably.  You might roll just high enough to get past the challenge at hand.  Or, it’s possible you might get a natural 20.  Who can say?  Risk never disappears, it’s simply mitigated. And things can recover from disaster.

In the end, to paraphrase Michael Jordan, you lose 100% of the dice rolls you never throw.  You might lose time and money or barely break even.  The prize might be $300 or $300 million.  It’s almost impossible to say. But hopefully you will have fun and learn something in the process. 

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Sources:

Wikipedia.org entries

Game Wizards (2021) Jon Peterson.