The Man Who Bought And Sold D&D

While a lot has been written about Dungeons & Dragons and TSR, and a lot has been said about the current management of the game under Hasbro, there’s an interstitial period that doesn’t get a lot of attention. That’s maybe for good reason. In the ‘90s, D&D wasn’t in the hegemonic position that it held in either the early 1980s or today. It was in legal and financial hell as publisher TSR struggled under debt and rights disputes. Eventually, the company had no choice but to sell everything and relinquish its place at the godhead of roleplaying as a genre. 

As the man at the helm of Wizards of the Coast (WOTC) at the time, Peter Adkison had a front row seat to everything — from raising money for the first print run of Magic: the Gathering to the sale of the company to Hasbro in 1999. Despite starting out as an RPG publisher, WOTC, under Adkison, made the call to stop publishing roleplaying games entirely in the wake of Magic’s success. In his masterful book, Designers and Dragons: The ‘90s, historian Shannon Applecline wrote, “By the end of 1995, Wizards seemed poised for continued roleplaying expansion, with four different lines — Ars Magica, SLA Industries, the (lagging) Magic RPG, and Everway. Then in December, Adkison made a very startling announcement: Wizards of the Coast was laying off 30 of its 275 employees and dropping all of its roleplaying games.” It seemed like the company was getting out of the game (sorry) all together.

But a couple years later, in 1997, Adkison led the company’s return in triumphal fashion — buying the game that started it all and catapulting WOTC to the forefront of the industry. With Magic earning ginormous profits, WOTC had the funds to write the not-quite-black checks needed for the retrieval of D&D from the tangled legal mire that it was sinking into. Applecline writes, "Wizard’s big welcome back to the industry party came August 7–10 at the 1997 Gen Con Game Fair... the con kicked off with a free concert by the Violent Femmes. It heralded the beginning of a new era for the entire RPG industry."

Since the sale to Hasbro came soon after, an independent WOTC didn’t hold onto D&D for long, but Adkison remained for two more important moments before leaving the company: the release of Third Edition and the Open Gaming License (OGL) — both of which have had long histories in their own right. And, of course, he’s now the co-owner of Gen Con. 

Rascal sat down with Adkison to learn what it was like to be in the room where history happened.

This interview has been edited for length and clarity.

Thomas Manuel: So Magic comes out, and it's successful. And then there's a moment, in 1995, where you make the call to stop publishing roleplaying games. And you reveal that you've not actually made any money off RPGs at that point in time. Can you tell me about that?

Peter Adkison: I started Wizards to make roleplaying game products — don't get me wrong, I love Magic: the Gathering, but my first love was roleplaying game products. But the RPG industry was tiny, and our share of it was tiny; a tiny piece of a tiny piece. And really most of the money was going to TSR / Dungeons and Dragons, which we did not own yet. And also White Wolf, and other products that would come along. We did not have a hit product. And it wasn't that we were losing lots of money in the beginning with roleplaying games because we were so small that our expenses weren't very significant. When you're small and you order a small print run of 500 books, you're not going to lose much money, but you're not going to make money. But then what happens is Magic comes out, and the company becomes a lot bigger. I had a great mentor in business named Vince Caluori. Vince explained to me, ‘Peter, every company has a level at which they operate efficiently. And now that Wizards has gotten up to be $100 million-a-year property, it is not efficient for us to do an RPG that makes $20,000.’ I had to concede the point.

I said, ‘Well, we're getting out of this industry, but I'd love to get back into the category if we ever have an opportunity to have one of the hits because then it could be real money’. Which, of course, was foreshadowing. I didn't realize it at the time, but it was very foreshadowing.

Manuel: Was that a tough decision?

Adkison: It was horrible. Magic money let us hire people, so we invested in our RPGs. Not only were they losing money because we weren't efficient at that level of business, we were putting too much money into it. And it was just a rookie mistake. We should have cut RPGs the second we had Magic coming out, right? We would have looked at Magic together and said, ‘hey, this is do or die.’ Either Magic's gonna work, and everything's gonna be great, or we're gonna be out of business. That’s the cold reality. We should have, at that point in 1993, stopped messing around with roleplaying games.

Manuel: Was the mistake that you made thinking that if you invested more money in the roleplaying games, they would make a return on that investment? 

Adkison: Yeah, we did have an ace — or what we thought maybe was an ace in that we had Jonathan Tweet, who's an amazing designer, one of the best designers ever in our industry. He designed a game called Everway, which also used trading cards and it had kind of a new agey sort of feel to it. And we thought, well, if this works, then, you know… It did work to an extent, but it wasn't enough.

Manuel: Okay, let's get to the thing that you foreshadowed, which is the purchase of TSR, right? I read that during the deal for TSR, the fact that Wizards wanted to buy it had to be kept out of the initial negotiation, and that it was being done by Bob Abramowitz and Ryan Dancey of Five Rings Publishing Group. Why would they have needed to do that? 

Adkison: I'm only speculating… It's certainly what Ryan has said, but you know that Lorraine [Williams, who ran TSR from 1986 to 1997] didn't want to sell to me. I don't know why, but I think sometimes people have an emotional, negatively emotional reaction to somebody who starts a company in their segment and then passes them up. And, you know, I was young, I was in my thirties. I could see why maybe Lorraine didn't want that. But they couldn't get the money anywhere else. And so they convinced Lorraine to let me in on the deal.

Manuel: Shannon Applecline’s book mentions the number $30 million, but was the deal expensive? Was it considered a big risk at the time?

Adkison: Well, it certainly wasn't cheap for an RPG line, even the best RPG line at that time. D&D was not as dominant in the RPG sector in the ‘90s as it is now. And the fact that it was off the market for a while didn't help. The fact that they were estranged from their New York Times bestselling authors — Margaret Weiss, Tracy Hickman, Bob Salvatore. The brand had some damage to it. So $30 million was not cheap, but I didn't think it was a high risk. And I was very confident that we could turn the company around, make it profitable almost immediately, simply by printing stuff, just putting the Player's Handbook and Dungeon Master's Guide back on the market would do a lot. 

And the $30 million, I'm not gonna vouch for what the sale price is, but I will say that that's about how much debt TSR had at the time.

I also knew that it desperately needed a third edition, and that we could make the game mechanically a lot more elegant because, I mean, I love AD&D. I love Gary Gygax. I will bow down to the Gygax family. I owe them a lot because they not only started D&D, they started Gen Con, which is my other thing. So, I have a lot of respect for the Gygaxes, but that game was long in the tooth. By 1997, it was long in the tooth. I was confident that with, again, Jonathan Tweet, and also pulling from what would eventually be superstars in our category, like Monte Cook, Bill Slavicsek and Skip Williams, that we could do a really good version of D&D. And we did. Third Edition turned out to be magical… and Fifth Edition's even better.

Manuel: Did you have to convince anybody or was this your decision?

Adkison: I had to convince my board of directors, of course. I only had a small percentage of Wizard of the Coast. There were other shareholders. The largest shareholder, of course, was Richard Garfield. So yeah, I didn't do fuck until I went and talked to Richard and said, ‘Hey, you agree with me, right? We could take D&D and really do a lot with it. It'd be great for us. I'd love to do this. You too, right?’ And Richard was like, ‘Yeah, let's do it.’ We’d got a lot of money in the bank and we also had a situation by 1997 where it was like we either had to find somebody to buy, like a company, or or we had to issue dividends. And again, I was in my 30s. I was way too young and excited and energetic and ambitious to give money to shareholders. It was like, ‘No, we're gonna invest this money. We're gonna buy somebody, and we're going to keep growing.’ With Richard being the largest shareholder and with me being very confident that we could do something, the board was convinced. 

The board asked me tough questions, and probably the most powerful counterpoint from the board perspective was, ‘Why not just let this thing go into bankruptcy, and we can buy it for cheaper?’ I said, then you lose all the staff. There's so many bad things that can happen. A bankruptcy court could end up parceling it out. We might not get all of it. Somebody else, maybe Random House — a lot of the debt was to Random House, almost a third of that number. So I said, ‘We got the money. Let's just buy the thing, make it clean, make it sooner. The longer this thing drags out, the more damaged the company is gonna be.’

Manuel: I want to ask about this thing about changing the name from — or rather that there was a legal rights question about going from — AD&D back to D&D, right? That was something that you had to navigate and facilitate?

Adkison: In buying TSR, we ended up with all the rights TSR had. We owned everything that TSR owned. But there were some disputes. Some disagreements, especially between Dave Arneson and Gary Gygax about what TSR owned and what rights that Dave might have outside of that. And less well known is there were some complexities in that Gary had gone through a divorce and was very much in debt to his first wife. It is relevant because any money that he would get would go to her. And so, he wasn't very inclined to do a deal to get money because he wouldn't actually get the money unless we could do a deal with his ex-wife.

Essentially, we weren't in position to evaluate how strong Dave Arneson's claims were. But we certainly wanted everything to be clean and tidy and to kind of heal some wounds. Because this was a sour point in the history of the industry. We had our own interest:  we wanted to have a clean title to all the property in case we would want to sell the company later, or go public or take on big investors or any sort of strategic opportunity that might present itself. It's very, very important that companies whose business relies on intellectual property, that they have a really clean ownership of that intellectual property. So, we basically did a deal with each of them individually where we wrote them a check, and they signed over their rights.

Manuel: So even after buying the rights, you had to buy the rights again?

Adkison: Well, I wouldn't say that. I would say it's more like compensating someone for claims that they believe are legitimate. And we, of course, are not weighing in on whether they were legitimate or not. We acknowledge that you have these claims and we would really like to pay you some money so you feel good about saying, ‘No, I don't have these claims anymore.’ And they were really happy for us to do that. We made a rule that we would always describe D&D as co-designed by Gary Gygax and Dave Arneson. For a long time, Dave Arneson had not been getting credit. It was all Gary Gygax, Gary Gygax, Gary Gygax, everywhere. And I love Gary Gygax, but still, you know, come on, Gary. 

Manuel: Can you tell me a little bit about how the sale of Wizards of the Coast happened? Were you actively looking to sell?

Adkison: Because of the success of Magic, and also D&D was helping, there was a sense that the company had a really high value, that the company was worth hundreds of millions of dollars. But Wizards was not founded by two or three entrepreneurs with a lot of money. It was founded by a couple of engineers that had a little bit of money. The amount of cash that was invested into the company, not just for Magic, but for Primal Order and Talislanta and everything like that, was like $300,000 total for a company that eventually sells for half a billion dollars. And so who deserves to get the reward for that? Well, it was built as much by the employees and the game designers as investors. We gave substantial amounts of sweat equity to everybody that worked at Wizards of the Coast at all levels in the ‘90s.

When it got really valuable, people were getting out their calculator and doing the math and going, ‘Hey, I'm worth $1.2 million, I'm gonna go buy a nice house’ and then they find out that they can't. This wealth that they have because it's a private company and it's not liquid, is worthless. So there were a lot of people who were wealthy on paper, but with no way of leveraging that wealth to do anything. There was a lot of pressure to do what we called a big equity event — there could be a leveraged buyout (LBO), there could be a sale to the company, there could be an IPO. And so we did start pursuing all of these options, looking at them. I put the kibosh on the LBO scenario very early on because, well, that's totally another discussion, but it would have been great for everybody else. It wouldn't necessarily have been great for me to put it bluntly. So, we started looking for potential suitors to buy us. And it just so happened that I knew a guy at Hasbro who for several years kept teasing me about, ‘Hey, when are you going to sell your company?’ 

And so finally, I guess it was late ‘98, I gave him a call and said, ‘Hey, if you're still interested, if you're serious, then let's start dating.’ He handed it off to the right guy at Hasbro and eventually the CEO, Alan Hassenfeld — who I really liked, by the way. I really enjoyed working for Alan Hassenfeld, doing the whole deal, getting bought, and then working there for a couple years afterwards. He was one of the original Hassenfeld brothers that started Hasbro. Hasbro is short for Hassenfeld Brothers.

Manuel: I didn’t know that! At this point of time, the dot com boom was going on. Did the hype around that play any kind of role?

Adkison: It's funny. We did a side by side comparison of the Wizards of the Coast website and web store to… I think it was like pets.com or some .com company, and we were better in every single metric than this other company, which had valued at that time on the public market at like two and a half billion dollars. And so I mentioned that to Alan Hassenfeld and he says, you know, ‘that's bullshit. We like Magic and D&D, we don't care about that shit, but I would love for you to tell that to my board of directors.’ And so I did. I did pitch that to the Hasbro board of directors. I did show a slide of what a great deal they were getting… after they'd already bought the company. 

I'll tell you a short story. There were two shareholders, and I don't remember their name because they weren't people I sold stock to. They bought the stock through a private transaction from somebody else. There were two shareholders who were mad at us because of those numbers. They sued saying that we had sold the company too cheap, even half a billion dollars is ridiculous. Anyway, by the time it got to court, the dot com boom had collapsed. And it kind of pulled the rug out from under their case.

Manuel: With the third edition comes this idea of the OGL, right? Can you tell me a little bit about what was the goal there?

Adkison: We had an amazing business team running D&D — Ryan Dancy, Lisa Stevens, Cindi Rice, and Keith Strom, which was a nice mixture. Lisa was, you know, an old-school WOTC person by this time. Ryan Dancy was kind of a newcomer, he's the guy that had brokered the deal from Five Rings Publishing, and Keith and Cindy were TSR folk. Out of this team came the idea of doing the OGL, the D20, the license, and stuff like that. And I know Lisa was going to get her MBA, so the idea of network externalities [might’ve come up]. I was not involved that much other than they came to me and I'd just gone to [business] school. So, when they come to me and say, ‘Hey, this is like network externalities, we could make D&D the default game engine.” I don't remember the Hasbro people saying much about it. Because when you add Pokémon to what Wizards was at the time, Pokémon was so big that Magic was small. And then D&D was so small compared to Magic. 

Manuel: What was your comparison when doing this? What was your model? 

Adkison: I think the biggest example was Microsoft Windows. I mean, if you make your operating system compatible with everybody's and make it easy for everybody's software to be compatible with your operating system, that's how you're the market leader. This is how Microsoft became the market leader.

Rules are not easy to protect with intellectual property. Why not just make it legal? It's better that people are acknowledging that they're using your intellectual property, then if people are just using it and you're not giving them permission, right? There are risks to owning intellectual property if you don't enforce the rights you have with that intellectual property. The business case was really strong, and history proves we were right. And we also thought [there was some] legal risk of not doing something like this.

Manuel: What did you think of the backlash when they tried to change the OGL?

Adkison: I think a lot of people thought it was really dumb because the OGL had been such a great strategy for Wizards. But I also understand that as companies grow, what's a good idea now may not be a good idea 20 years later, right? And I'm not on the inside. I can't really evaluate that. I do think that Wizards didn't appreciate how much ill will it would generate for them to try and get out of it. And that our industry is such that ill will festers, you know, like when you piss people off. We're a community: we go to the same conventions, we play the same games, we play lots of games, we're all on social media. It's not like selling Monopoly in the mass market.

In our industry, there's a lot of people that do care about how the publishers of the games they love behave. And so I think there is a higher standard that tabletop game companies need to hold themselves to in our industry than some other industries.

Manuel: So you leave the company, you buy GenCon when they're ready to sell it. What was that next chapter like?

Adkison: I was obviously in a very important position in the ‘90s as the CEO of Wizard of the Coast. I was in the thick of it, you know? And so to go from that to unemployed… I did take advantage of the situation for a while. I went and lived like a rock star for a couple of years, doing all the things that rock stars do except for making music. I didn't do that part of it, but I did all the other things.

I love life, Thomas. I have a lot of fun. I still have a lot of fun, but I was having a more extreme version of fun in those days. And that was fun for like a year or two, you know, and then you just sober up and go, ‘I want to go back to work.’  I’m too young to be retired and living a life of pleasure, and I do everything kind of to the extreme. I go all in. So I said, I need to go all in on something a little healthier and maybe not be burning through so much money at the same time. 

I had told Vince Caluori — I mentioned his name earlier, an important mentor for me. I hired him when he retired from Boeing — I used to work for him at Boeing. Anyway, he succeeded me at WOTC. But I told Vince when I was leaving that at some point Hasbro is gonna realize that there are pieces to this Wizard of the Coast business that they don't want. “Off strategy” is what they'll say. And when that happens, give me a call. I might be interested in buying some piece because I love the whole company, right? And a year later I got the call. He's like, ‘okay, we're selling this, this, this’. The first three things he said, I wasn't interested, but then he said Gen Con. I've always been a huge fan of Gen Con. I mean, we bought TSR for D&D, but inside my brain, I always thought GenCon was absolutely the icing on the cake with the TSR deal. I like being number one in the category and Gen Con is the number one game convention in the North America market. Everybody in the industry was now my customer. Every game company is my customer. Every gamer is my customer. And I loved that. I loved being in that position. And yeah, it's been a hell of a ride.

Manuel: What's your relationship with it now? 

Adkison: I'm a very proud owner, but I'm not involved in the day to day. Gen Con is an amazing event. It's an amazing company to own. It was a great business opportunity. I had a lot of fun growing it, but the actual day-to-day running is very operations oriented. It's not creative. In fact, if you're too creative, it's probably bad. It's about space planning and technology registration systems and hotel contracts and doing deals with the city. It took me a while to figure out that it wasn't really what I wanted to do, myself, personally on a day-to-day basis.

Manuel: Okay, okay, you're back to the life of leisure. 

Adkison: Yeah, yeah, I decided to take a gap year. I'm not doing anything professionally. I said I'm not going to start any companies in 2025.