In October, a newly incorporated TSR Hobbies, with Brian full-time, and the printing and assembly subcontracted, began to get serious about business. The third printing of 3,000 copies of D&D also took only five months to sell out.In the next fiscal year, 1976, the company had $300,000 in revenues. "We knew it was good," says Gygax, "but we didn't know just how good. We decided in 1975 to compete with Milton Bradley and Parker Brothers."
Like a character in D&D, the company has ventured into new areas and gained power and ability from its experiences. From the original rules published in 1974, D&D has become a virtual industry in itself. The company began by splitting Dungeons & Dragons into two games, basic D&D and Advanced D&D. For the latter, there are five hardcover books that set out character types in more detail, a monthly magazine that keeps players up to date, numerous "modules" (specific scenarios for players), annual regional gaming conventions, and a new players' association. TSR has also licensed the game to Martel Inc. for an electronic version that was introduced last fall, to St. Regis Paper Co. for a line of notebooks and school supplies, and to one smaller company for a line of lead miniatures to represent the characters in the game. Gygax also hopes to be able to produce a full-length feature film based on the game, since negotiations with a major studio fell through last year.
The company has been expanding in other ways, too. It originally distributed D&D directly to hobby stores, but has since expanded into toy stores, drugstores, bookstores, and department stores, with a distribution network unrivaled in the game industry. It has also set up two international subsidiaries, begun publishing new role-playing games and new board games, is experimenting with software for computer games, and plans to integrate backwards first into assembly and then manufacturing of its games.
Now the company has grown into one of the major employers in Lake Geneva and has the resources to really operate in a kind of business-fantasy world. It has never had a major failure and it has no head-to-head competition (see "Why TSR Hobbies is so profitable," page 71). It can afford to treat its employees royally, and there doesn't seem to be a plateau for its growth in the near future. "We've done analyses of the market for Dungeons & Dragons," says Kevin Blume, "and we figure that the game is still well below the halfway point on its growth curve."
A company that's had it that easy could be spoiled and casually managed, but TSR is a well-run operation. Its balance sheet and its income statement are two of the prettiest business documents around. The company spends money only with the greatest of reluctance and makes a mission of finding ways to boost its operating margins, by bringing the assembly in-house, for example. And TSR has such a reputation as a well-managed company that it has persuaded a number of key people to take cuts in pay to move to the hinterlands of Wisconsin. "They've got one guy from the game industry and that's me," says Mike Gray, a professional game designer with 15 years of experience, whom TSR lured away from Milton Bradley. "At this company, I can grow into anything I want. The company doesn't know its limits, and it doesn't know my limits."
Perhaps most surprising about TSR's management team is its lack of relevant experience. The nine top managers -- three principals (Gary Gygax and brothers Brian and Kevin Blume) and six divisional vice-presidents -- represent former occupations ranging from biologist to pharmacist to plumber. Of those nine, six are currently in formal management training programs, and only in the last year has the company begun to hire people with specialized business skills.
The company's dedication to playing games as a way of life has shown its managers how to run the operation. The common bond among the managers is that they are gamers. All of the original employees and half of the current staff joined the company because they played Dungeons & Dragons, not because of their business experience. "The game to a large extent mimics life," says Brian Blume, "and you can use it for pretty much anything you want. I've built a fair amount of economics into some of the games I've run, and it taught those people very quickly about economics."
As a result of the company's combination of inexperience and real-life fantasy, the organization operates in odd ways. Despite Gary Gygax's title of president, for instance, the company has no real chief executive. Rather it operates under the direction of a "presidential office," composed of Gygax and Brian and Kevin Blume. The company will not open the door on any new venture without a unanimous decision from these three. "We have an unwritten working arrangement where we sit down and thrash out major issues," says Brian Blume. "Philosophically we run in different directions. So if the three of us reach a consensus on what to do, we can be pretty sure of being right."
And when it comes to the future of TSR these highly imaginative people really let loose. "One of the reasons my wife makes great fun of me," says Gygax, "is that my mind tends to go off; I used to get my fingers caught in the shoe-repair machinery. But there is no boundary to Dungeons & Dragons. After all, what are the limits of imagination?"
Kevin, the day-to-day manager among the three, describes how they are pushing the company toward the paternalistic model of Japanese companies. "We will evolve the management styles and techniques that best serve the needs of the company," he says. "We're looking into things like a food co-op and a baby-sitting service for the employees. Eventually, I'd like to see us have a company pound -- you know, with a company store, school, housing."
"It's kind of like we have our own little town within Lake Geneva," adds Brian Blume.
