The Year Everything Changed
Thursday, July 26, 2012
This blog entry is the sixth in a series of blogs commemorating Paizo's 10th anniversary.
Click here to read the first installment.
As 2007 dawned, Paizo had a lot of work to do. The final issues of Dragon and Dungeon were coming in August, and we had already started thinking about what we were going to do once they had run their course. Wizards of the Coast wanted to make an announcement about the magazines coming to an end sooner rather than later, but we knew that this announcement was going to cause an uproar with a fury usually reserved for new editions of D&D—maybe even bigger—and when people came to us with questions, we wanted to have answers. Once again, Wizards was gracious, and allowed us to make the announcement on our own schedule.
Our customers were used to getting something from us every month and we didn't want that to end. But starting a new magazine was not the way to go. Even if we had wanted to try to replace our venerable magazines, we just didn't have the cash reserves needed to make it happen. Besides, the magazine industry isn't what it used to be, and the profit margins on magazines are razor thin; I was very tired of fighting all the inefficiences of that product format.
So we took the thing that was working the best—the Adventure Path concept—and reshaped it into a 96-page softcover book that would provide a full AP over six consecutive monthly volumes. The front half of each book would be the Adventure Path, while the back half would house support articles and a short piece of fiction. In many ways, the front was Dungeon and the back was Dragon. The new book had the same number of pages as an issue of Dungeon, but since it didn't have all the advertisements, we actually had more content to develop each month. Also, it took 12 issues of Dungeon to complete an AP, and we were now attempting to do it in half the time. This task was going to be a tough one.
After much brainstorming, we eventually gave it the name "Pathfinder." (See the sidebar below for a look at how we came up with the name.)
We also had to think long and hard about pricing. The printing quotes we'd received on 96-page full-color softcover books suggested that we needed to charge $24.99, a big jump from the advertising-subsidized $7.99 cover price of Dungeon. And in order to survive, we needed to capture as many Dragon and Dungeon subscribers as we could, and that meant we needed to make a compelling case to our subscribers.
Instead of $24.99, we set the retail price at $19.99. Then, to entice people to subscribe, we set the subscription price at $13.99 plus shipping, with the additional benefits of a free PDF and a discount on almost everything we sell at paizo.com. While it still cost more than Dragon or Dungeon did, we knew that we were providing amazing value, and we believed that once people saw the finished product, they'd understand that.
Another big problem we had to deal with was our subscriber debt. Even though we had stopped offering long-term subscription options the year before, and had recently switched entirely to month-to-month subscriptions, we had still taken a lot of money over the years for issues that would never come out. Some customers had purchased subscriptions extending for a frankly startling number of years into the future. I put together a big spreadsheet that looked at how many issues of each magazine we owed to each subscriber past the last issue, and how much the refunds we owed each of them would be. We looked at the cost for making an AP volume and shipping it to various places in the US and around the world, and then we had to make a gut-wrenching decision—how many volumes do we want to offer subscribers for the remaining value of their subscriptions? If we made an offer people couldn't refuse, not only would we not have to give a refund to that customer, but we'd get the opportunity to show them that we were making a product worth the asking price; hopefully at least some of them would keep their Pathfinder subscriptions beyond those volumes.
We ended up valuing these copies at such a low price that we actually lost money on almost all of them. That is, it cost us more to make and ship each copy than it would have cost to give refunds to the same people. But there was a benefit in addition to the chance to woo them over to Pathfinder: the cost of fulfilling those volumes to subscribers was spread over many months. If we'd had to write everyone refund checks all at once, that would have put us out of business. We also mitigated this problem by offering people the ability to fulfill their remaining issues from our stock of back issues, and by offering the option of taking a higher amount of store credit—120%—instead of cash.
My budget had around 20% of our subscribers taking the Pathfinder AP volumes instead of a refund check. I assumed about 30% would take the store credit option, with the remaining 50% asking for the refund check. I hoped we'd do better than that, that maybe closer to 50% would take the AP volumes, but I budget for what I feel is the most likely course.
We also offered a special messageboard tag for people who committed to an ongoing Pathfinder subscription before they even saw the first volume (not just transitioning issues from their Dungeon or Dragon subscription, but making an actual commitment beyond that). These early supporters received the Pathfinder Adventure Path Charter Subscriber tag, which they'll keep for as long as they keep their AP subscription going. Charter subscribers who stop their subs for even a single volume lose their charter status, so the number of charter tags slowly decreases over time; there are just 1,075 as I write this. The trust and ongoing support of our charter subscribers means a lot to us.
With our plans in place, we set a date with Wizards of the Coast to announce the end of Dragon and Dungeon. April 19, 2007 was going to be a nerve-wracking day for the Paizo staff as we unveiled our new plans and then sat back to see what would happen. Would it be the end of our company, or the beginning of a whole new adventure? Would unhappy subscribers come to our offices with pitchforks and torches? As always, the power rested in the hands of our customers.
At 9:00 AM PST, the paizo.com website was taken down for the first time other than to do maintenance; you can see the page we put up here. We were down for approximately two hours while we readied all of the press releases, subscription offerings, FAQs, and such, and when the website came back up at 11 AM, in addition to the press release about the magazines there was a message from Erik and we soon added a message from me on the front page. We explained about the magazines, and we explained about Pathfinder. Then we watched, interacted with everyone posting on the messageboards, and waited. And the most remarkable thing in my history in the industry happened. People came out of the woodwork to support us and stick by us. In the end, close to 66% of all subscribers ended up taking us up on our offer to send them Pathfinder AP volumes in place of their refund, better than double my budget. (The largest number of AP volumes received in lieu of a refund: 44!)
Also on that day, we launched the Paizo blog, which has now become a daily dose of Paizo news! We introduced Varisia on day 1, and the goblins on day 2! In the days leading up to the launch of the Pathfinder AP at Gen Con, we unveiled the new iconics, talked about the non-adventure content, and basically tried to keep up everyone's interest as we headed to launch.
Postage for the first Pathfinder subscription shipment pours out of our label printer in August 2007. (Our label runs are much more organized now.) And the same shipment neatly packed up and waiting for the Post Office.
Of course, there was a still a lot of work that needed to be done. With the magazines, we simply generated an Excel spreadsheet which we then uploaded to our printer, and they took care of all of the logistics of sending issues to subscribers. Starting in August, we were going to have to do that ourselves for the first time. We weren't exactly rookies at shipping products to people; we'd been running the paizo.com store for a few years, and it had grown to a pretty decent sized business. But the sheer volume of a single subscription run dwarfed any amount we had ever shipped at one time thus far. We needed to be able to print out massive numbers of labels at one time—check out the pictures of our first label run in this blog—and then have the manpower to pack them all as quickly as possible. It was "all hands on deck," and even Jeff Alvarez and myself spent many a long hour packing and shipping Pathfinder AP volumes that year.
But the APs weren't the only new line of products. In February, we had announced our line of GameMastery Modules launching in June with Nicolas Logue's now classic Crown of the Kobold King adventure. Our first Free RPG Day product was Hollow's Last Hope, a lead-in adventure for Kobold King that we also gave away as a free PDF on our website as a way of enticing folks to try out the new line of adventures. Follow-up adventures by Jason Bulmahn and James Sutter rounded out the GameMastery Modules launch titles leading up to Gen Con.
In March, we announced the Planet Stories line. The result of Erik Mona's love of old sword-and-planet fiction, Planet Stories was all about bringing out-of-print classics to a new generation of fans. We launched with a super strong line-up of Robert E. Howard, Gary Gygax, Michael Moorcock and C.L. Moore. Our hope with this line was that we could gain a foothold into bookstores with a product type they were used to carrying, and then leverage that into our RPG products. We also wanted to establish a line of products that weren't tied to our RPG business in case that didn't work out as well as we'd hoped.
Our other GameMastery products started to really take off in 2007. We had been selling Steel Sqwire's existing Flip-Mats for a few months before we released the first of our own designs, Flip-Mat: Tavern. We've released a new Flip-Mat every other month since then. Our biggest GameMastery release for the year, though, was a product that has since become a gaming table staple—the Critical Hit Deck. Masterminded by Jason Bulmahn, the Critical Hit Deck has perhaps put more characters in the ground than any accessory in gaming history and has been a consistently great seller for Paizo.
Of course, we still had the final issues of both Dragon and Dungeon to deliver, and we planned to go out with a bang! The final issues of Dragon had a slew of Demonomicons and Core Beliefs articles, as well as the world of China Miéville, the World Serpent Inn, and a super-sized final issue returning to some of the most iconic articles in Dragon's storied history, capped off with a cover by Larry Elmore!
Dungeon finished off the Savage Tide adventure path with a return to the Isle of Dread and a faceoff with the prince of demons, Demogorgon himself! In addition, Nick Logue returned to Scuttlecove one more time and Jason Bulmahn penned his infamous "Kill Bargle" adventure in the final issue.
One of the best things about publishing Dragon and Dungeon magazines was the ability to constantly try out new talent. It's really hard to try out new talent without risking the destruction of your production schedule if the new guy screws up his assignment. Matter of fact, trying out new talent was the very reason that the Class Acts section of Dragon was created. With the magazines going away, Paizo was going to need to find a new way to cultivate design talent.
I was ruminating on this problem when an idea came to me. Vic and I are fans of American Idol; I love the fact that talented unknowns can become overnight stars by winning that competition. Could we do the same thing for RPG designers? And thus was RPG Superstar born. Anybody could enter by designing a wondrous item, and our esteemed panel of judges (that season, Wolfgang Baur, Erik Mona and Clark Petersen) would hand-pick the top 32 before our community voted to winnow that number down via various design challenges until we had a winner. The prize was a paid gig to write a 32-page GameMastery Adventure. More than 1,000 people entered the contest that kicked off late that year, with the winner being crowned in early 2008.
Stonehenge game designers (from left to right) Richard Borg, Mike Selinker, Paul Peterson, Bruno Faidutti, and Richard Garfield pose with copies of the game at Essen Spiel in Germany. Mike Selinker holds a card inquiring about the missing James Ernest.
Our Titanic Games line released its most ambitious product in May. Stonehenge was not just a board game, but a flexible toolkit that could be used to create a wide variety of new board games, sold with rules for five different Stonehenge games from the world's best game designers. We published a sixth game from Paul Peterson called "Stonehenge Rocks" in the July issue of Knucklebones magazine, and launched the Stonehenge Library on paizo.com, where game designers of all stripes could easily publish rules for their own games and anyone could download them as a fully formatted PDF. To date, 42 different games have been posted there for free download!
Gen Con 2007 was one of the most memorable in Paizo's history. Not only were we sending Dragon and Dungeon off with epic final issues, but we were putting the Pathfinder Adventure Path into the hands of customers for the first time. I felt like an expectant parent waiting for the doors to open on Thursday morning. We'd decorated the booth with large banners of Karzoug, Valeros and Seoni. We were running a delve in the booth based on the Seven Swords of Sin module, crafted by the evil minds of the combined Paizo staff as we each tried to outdo each other in killing the most characters. Stats were kept throughout the convention; Phil Lacefield Jr, collected the most overall kills, while Erik Mona's vrock chamber was the single deadliest room.
Gen Con has always been a place where Paizo has made some of our biggest announcements, and this year it was the impending release of the Pathfinder Chronicles campaign setting in early 2008. With the launch of the Pathfinder AP and the GameMastery Modules, everyone was clamoring to know more about the world we were setting them in. Erik and Jason had already began throwing around ideas for filling out the world around Varisia, but that's a story for next year...
At the ENnie Awards that Gen Con, Paizo won 2 golds and a silver. The awards received were:
- Best Aid or Accessory: Silver Medal for GameMastery Combat Pad (published in conjunction with Open Mind Games)
- Best Miniature Product: Gold Medal for GameMastery Flip-Mat: Tavern
- Best Free Product: Gold Medal for Savage Tide Player's Guide
Sales during the convention were brisk, and the feedback we received from our customers was nothing short of fantastic. And we needed all that good karma, because we were dealt another blow when Wizards of the Coast announced at the show that D&D 4th Edition was coming in August 2008. We had just launched two new lines of 3.5 compatible products, and it seemed that they could already be on a deathwatch towards obscurity. Sometimes it seemed as if every time we got up, there was something to knock us down again.
However, after talks with our colleagues at Wizards of the Coast, we were cautiously optimistic. There was talk of getting together when we were back in Seattle and running through a playtest of the current rules. We were also promised that there would be a third-party license, similar to the OGL, really soon.
When we got back to Seattle, we anxiously awaited the opportunity to playtest 4th Edition, but that never materialized, and the license that eventually became the GSL was delayed month after month. Meanwhile, the more the public learned about 4th Edition, the more our community—and our gut—was telling us not to go there.
One of the largest threads on the paizo.com messageboards began in October, when Erik announced that Paizo Is Still Undecided. The lack of any information from WotC and the seemingly overwhelming support for us to stay put were making us lean towards sticking with 3.5, but it would be suicide to produce support products for a game that no longer has core rules in print. So if we wanted to stick with 3.5, we knew that we'd have to release some sort of rulebook.
As the end of 2007 neared, we still held out hope that things might work out for 4th Edition. But we were already planning the Pathfinder Adventure Path that would begin shipping the same month that Wizards was releasing 4th Edition, and the deadline for soliciting August 2008 products to our distributors was rapidly approaching, so we needed to make a decision, and fast.
As the year ended, our new product lines were well-received, and the new Paizo was looking healthier than ever. But the decision about 4th Edition was now reaching a critical stage and the new year would again test our mettle. Fortunately, Jason Bulmahn had started tinkering on his own time with some ideas he had for a 3.5 revision, a project he had dubbed "Mon Mothma..."
Employees who started in 2007 (in order of hiring date):
Corey Young, Customer Service Representative
James Davis, Art Director
Keely Dolan, PDF Technician
Chris Sanders, Warehouse Personnel
Chris Self, AP/AR Coordinator
Carolyn Mull, Sales and Marketing Assistant
Employees who left in 2007 (in order of their end date):
Phil Lacefield, Jr.
A scan from Wes Schneider's notebook shows some of the brainstorming for the Adventure Path line. We mixed and matched words to create potential names. In the lower left-hand corner, "Path" and "Finder" are conveniently near each other. Coincidence?
With the name Pathfinder so prevalent in everything we make nowadays, it's almost hard to believe that six years ago, we were struggling with what we were going to call our new line. If you've ever been involved in a brainstorm for naming something, you'll know that it's an agonizing process. We gathered the Paizo creative staff into the conference room and started to brainstorm words that we associate with adventures. Here we see the notes Wes Schneider took from our brainstorm. Once we had a list of words, we started combining some of them to make potential names, so if we had the words crypt, morning, crawl, star, and sword, we'd try names like like Starsword, Morningstar, Cryptcrawl... After three long meetings, nobody was entirely happy with what we'd come up with. The leading candidate for quite a while was actually "Kobold," because we like the little buggers, and because we thought it would be a neat homage to Dragon Magazine (it turns out that Wolfgang Baur had a similar thought process when he named his new magazine). Pathfinder was one of the names that made the finalist list, but it took us a while (and a successful trademark search) to convince us that we'd found the path we were seeking.
Chris Self: His Account of Things
In summer 2007, Paizo wasn't even on my radar. I had looked at the website once or twice, mostly looking for dice, but I didn't have any ties to the company at the time. I wasn't a fan of the magazines, all of my adventures were homebrew, and I didn't have enough money to buy much of anything, let alone do it through an online store I'd never heard of anyone else using.
Earlier that year, I had packed up my books and my cats in an old station wagon, given away all of my furniture, quit my job, and moved to Seattle. I had always promised myself that I would get out of Albuquerque, and now that I had finished my degree and had a few years of work under my belt, I'd decided it was time to make good on that promise.
Once I arrived in Seattle, I threw around some applications and resumes, found a place to live, all the normal things you do when you move to a new city on a whim.
When I got the email from Lisa that she wanted me to come in for an interview, I was surprised. I had sent in my resume weeks earlier and had, in fact, accepted and been working another job for several weeks. But I was not about to turn down a chance to interview for a game company. So, in for the interview I went.
The offices were a surprise. I don't know what I was expecting, but it wasn't boxes of magazines scattered about, product stacked on shelves in offices, and an office open but mostly deserted after 6 pm. Once I finally tracked down Lisa and started my interview with her and Paizo's corporate accountant, Dave Erickson... that's when the magic of Paizo struck me for the first time.
The vision that Lisa laid out for the company was... enticing. A magazine publisher for D&D who was also rolling out a series of science-fiction classics and expanding their gaming product lines sounded like exactly the type of company I wanted to work for. When Lisa offered me the job, there was no hesitation, despite the hefty cut in pay I was taking to take the job.
My first day in the office is also my most memorable. I had been set up in a desk in a cul-de-sac in the hallway, straddling the area between sales, accounting, Lisa's office, and the editorial pit, and with a view straight down the hallway to see all of the offices that it wasn't adjacent to. This gave me an excellent view of a certain PMG putting an Amazon package on the desk of a certain other employee (who will remain nameless). This also gave me an excellent view of said employee opening this box. This box contained a spider. An electronic spider. A remote controlled electronic jumping spider. And a certain PMG held the remote. The best view, though, was of a large man screaming like a little girl and running, cussing, from his office.
Yeah, that first day let me know that I had really made the right choice in choosing to work at Paizo.
That decision has proven a wise one over the last five years. Paizo has been the first job that I've looked forward to coming to every morning. The people I work with are remarkable, every single one of them; the company is amazing; I believe in the product; and I feel valued every day.
Since this is my moment in the spotlight on the blog, I would like to close with one note: Dave Erickson, the accountant whom I initially worked under at Paizo, was an excellent accountant, and one of the most scrupulously ethical people I've ever met. I learned a great deal from him, and learned even more from him once I shouldered his duties after his passing. You are missed, Dave.