Set of pen, notebook and dices for role playing game like dungeons and dragons. Purple bag for storing dice. In Barcelona, Connecticut, Spain
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Dungeons & Dragons fans were ready to step up against them Hasbro After the company tried to rewrite the two-decade-old open game license in order to increase revenue.
On Friday, though, the Rhode Island-based game maker delayed updating its licensing terms in order to address growing concerns from the D&D community, which largely saw the proposed changes as overblown and unfair to third-party content creators.
Hasbro said it still intends to create a new open game license, or OGL, but it won’t include an ownership structure or give itself access to intellectual property made by third-party content creators.
CNBC has obtained copies of Hasbro’s revised licensing agreements – OGL 1.1 and an FAQ section for OGL 2.0. According to the documents, Hasbro sought to require independent publishers and content creators to report financial statements directly to the company’s Wizards of the Coast division, which includes D&D. At a certain point, the amended agreement would have forced independent creators to pay large fees.
The first agreement, OGL 1.1, contained a clause that would have given Wizards access to new and original content created by third-party publishers. However, this has been reverted in OGL 2.0.
D&D fans rallied around a petition called #OpenDND, signed by nearly 67,000 people, and began canceling their subscriptions to the online Wizard toolkit, D&DBeyond, in order to protest changes to the license.
Hasbro said that the two OGL documents were drafts and that the company always plans to make changes to the text. In a statement on Friday, Hasbro said it still plans to revisit OGL but that the final version won’t contain an ownership structure or re-licensing requirement.
The third-party publishers told CNBC that Hasbro representatives reached out to high-profile independent creators late last year to offer them a “sweetheart deal” if they signed it before the new licensing agreement was released to the public. A document reviewed by CNBC showed a lower royalty rate than what was included in the proposed OGL 1.1. Hasbro representatives did not immediately respond to CNBC’s request for comment on this point.
Leaders in the Dungeons & Dragons community greeted news of the delay with cautious optimism.
“At first glance, it looks like we’ve won,” said Mike Holick, editor-in-chief of Mage Hand Press. However, until we can confirm the terms of the license, specifically as it relates to software such as [virtual table tops]It is not clear if this is a smokescreen or a genuine commitment to the community and its creators.”
The attempt to create a new game license comes as Wizards of the Coast looks to capitalize on the rise in popularity of Dungeons & Dragons. The nearly 50-year-old game has seen a renaissance over the past decade, the result of a combination of a new version of its rules, which made it easier to play and more accessible to new players, and an increase in livestreaming campaigns on Twitch and YouTube. It is also a major component of Netflix The blockbuster series Stranger Things.
In addition, there is a rise in video conferencing platforms, such as Zoom inAnd Microsoft Teams and Discord allowed players to gather virtually without the need for an actual meeting.
“I think D&D is approaching a very important inflection point in its life cycle,” said Eric Handler, media and entertainment analyst at MKM Partners.
D&D monetization
The licensing changes come ahead of the release of “Dungeons & Dragons: Honor Among Thieves,” a movie starring Chris Pine, as well as a recent deal with Paramount+ to stream a D&D TV show. In addition, “True Blood” actor Joe Manganiello is set to direct a documentary about the game with Kyle Newman that is set to be released in 2024 to celebrate the game’s 50th anniversary.
“D&D has never been more popular, and we have really amazing fans and participants,” Cynthia Williams, president of Wizards of the Coast, told investors in December during a virtual chat with UBS. “But the brand doesn’t really generate income.”
Wizards, which also owns the fantasy card game Magic: The Gathering, had revenues of more than $1.2 billion in 2021, about 20% of Hasbro’s total net revenue for the year. Hasbro reported that the division generated about $986 million during the first nine months of 2022. The company is expected to report fourth-quarter results next month.
A classic Dungeons & Dragons dragon hand drawn by Alan Cooley, 27, of Huntington Station, New York, at the Main Street Game Cafe in Huntington on November 26, 2019.
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Williams noted that the vast majority of D&D-related purchases come from dungeon masters—the game’s organizers who create the environment and challenges players face—despite the fact that dungeon masters only account for 20% of the game’s overall user base. Many of these purchases come in the form of source books and campaign modules used to run or complement long-running campaigns.
Wizards hopes to use its recently acquired D&D Beyond — a digital toolkit and companion game for the fifth edition of Dungeons & Dragons that Hasbro acquired last year for $146.3 million — to generate more cash. It also plans to launch an online tabletop space for players to use in virtual games and is in the process of updating and expanding the rules of the game.
This investment in digital is a strategy that Williams says will allow Wizards of the Coast to “unlock the kind of recurring spending that you see in digital games.”
Your natural jaw
MKM’s Handler said Hasbro’s OGL reformulation isn’t an unexpected business move.
“They don’t do anything that other big companies don’t do to protect their intellectual property,” he said.
Under its existing open license, Hasbro allows outside creators to use the game’s mechanics, dice-rolling system, and framework for combat, and to develop their own settings, monsters, and magical items at no cost. Companies such as Paizo, Kobold Press, Hit Point Press, and The Griffon’s Saddlebag, among others, have carved out a niche in the market selling companion books for D&D players.
These creators could not use the Wizard’s intellectual property—characters, settings, or plots—but could publish new material that used the same mechanics without paying the company for the right to use it. This was a boon for these companies because they did not have to develop a new set of rules and were not likely to get into copyright battles with Hasbro.
With its OGL update, Hasbro initially sought to charge these sellers a fee if they made a lot of money from their products in a calendar year.
Those who generated more than $50,000 in revenue would need to report their earnings and products, and would have been required to earn a creator product badge for their work. Those over $750,000 would have incurred a 20% fee on every dollar over that amount, according to OGL 2.0. In OGL 1.1, this fee is set to be 25%.
“Now, what strikes me as unusual about this agreement is that the numbers we talked about are revenue, which means gross revenue, not net revenue,” said Noah Downs, partner at Primack Rogers Law Firm and an intellectual property attorney. This means that creators would have been charged based on the amount of revenue they generated, not their earnings.
The D&D community rejected this because most third party content creators in the space use crowdfunding sites to drum up support for their projects and raise capital for their production. These sites have fees — about 7% for Kickstarter, 8% for Patreon and 20% for Roll20 — that must be paid in addition to the Wizards of the Coast licensing fee if the crowdfunding project exceeds $750,000.
“It turns every Kickstarter campaign into a metal flick,” Holick said. “If you do too well, everything around you will collapse.”
Bonus action
Holik started #OpenDnD, a website to rally D&D fans and oppose Hasbro’s modification of the open license. Downes is Holick’s attorney and also serves as the campaign’s legal and media representative.
The petition aims to get Hasbro to completely retract its proposed new open license and to educate the larger Dungeons & Dragons community about what the new OGL might mean not just for third-party publishers but for fans of the game.
Before Hasbro’s OGL was delayed, Downs and Holik told CNBC that by taxing third-party content creators and taking away their intellectual property, Hasbro and Wizards would destroy the D&D community.
“It’s weird what Wizards do,” Holick said. “Either they don’t understand the market they’re dealing with, which is kind of terrifying in and of itself, or they’re deliberately trying to smear the ground and take away the third-party space.”
There have been growing concerns that the community will be fractured if publishers are forced to move away from Dungeons & Dragons game mechanics to develop their own game systems.
Robert Swift from Bedford, Massachusetts. He holds a blossom while working as a dungeon master for a Dungeons and Dragons game at Adventure Pub in Arlington, Massachusetts. on Saturday december. 28, 2019. In a world of increasing use of technology, board games are gaining a new audience: people who are eager to unplug and connect with friends.
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Holik also feared that licensing restrictions would negatively impact the type of content available to the D&D community, including products from the LGBTQ community and people of color. Much of the content produced through these third-party publishers is often more diverse and less likely to focus on a gender-congruent white male lead.
In 2020, Wizards of the Coast addressed some of these concerns by changing outdated definitions of certain races, including orcs and drow, which were previously reminiscent of real-world ethnic groups and portrayed negatively in D&D literature.
The company revamped these collections in two campaigns in order to make them more ethically and culturally sophisticated. In addition, the processors have updated outdated modules.
“One of the explicit design goals for D&D Fifth Edition is to depict humanity in all its beautiful diversity by portraying characters that represent a range of races, gender identities, sexual orientations and beliefs,” the company said at the time. “We want everyone to feel at home around the game table and see positive reflections of themselves within our products.”
Hasbro said it still intends to create a new OGL in order to prevent D&D content from being used in “hateful and discriminatory products” and to prevent people from using D&D in blockchain games and NFTs.
“The licensing back-end language was intended to protect us and our partner creators from incorrectly claiming that we plagiarize their work simply because of incidental similarities,” Hasbro wrote in a statement on the D&DBeyyond website. “As we continue to invest in the game we love and move forward with partnerships in film, television and digital games, this risk is too great to ignore.”
The company said its new OGL will contain provisions to address these risks, but will do so without a relicensing requirement.
“Your ideas and imagination are what make this game special, and that’s yours,” Hasbro writes.
While the retraction may assuage immediate concerns about the D&D licensing, Holik notes that fans have been so put off by the company’s actions that there is now a wedge in the relationship between Wizards and its community.
“The Wizards of the Coast disintegrated decades of trust in a matter of days, and society will treat their every move with skepticism from now on,” he said Friday.
Additionally, he notes, the company’s attempts to change the OGL show that it doesn’t realize that the actual product in D&D is the story.
He previously said: “And if you try to take someone’s story from them, they will fight you tooth and nail.” “And that’s what Wizards find out.”