CHAPTER 20
“I started at Wizards, I left Hasbro.”
ALTHOUGH CREATING THE Pro Tour proved to be a strategic masterstroke for Wizards of the Coast, it was in many ways the exception that proved the rule. In the late 1990s, there were still plenty of questionable decisions being made at company headquarters. The wild Magic ride continued to toss all preconceived business notions up in the air with every new milestone passed, every new balance sheet reviewed and every new bumper payday. Although by 1995 Peter Adkison was completing his MBA and growing into the role of a reformed CEO, there was still plenty of painful spasms for the company to overcome as it transitioned from producing Magic: The Fad to Magic: The Perennial — the ongoing product the Pro Tour would allow it to become.
That period’s most emblematic change would be one many players did not notice play out. Nonetheless, it impacted a key component of the game, which many had grown to love. It was a decision that marked a definitive shift away from the rootsy start-up that had produced Magic’s first forays into the market, towards the slick, professional machine it grew into. It was, though, a decision that would end in recrimination, legal scraps and years of bitterness, as some of the figures in the game’s early development felt betrayed.
In 1996, in the build up to the forthcoming new Fifth Edition of Magic, Peter Adkison green-lighted the renegotiation of the terms on which the very first artists had been employed. Originally, those artists had worked for $50 cash and $50 stock up front, in the hope that the radical but completely untried game would become popular enough to yield them royalties. Indeed, Jesper Myrfors remembers Adkison hoping the same, such was his gratitude for the outstanding contribution the young, unknown. artists had made to the game. Says Myrfors: “I remember Peter saying time and time again, ‘I want to make sure the artists who were there for us in the beginning get royalties for life’.” But by 1996, much had changed.
Magic sales figures were off the chart and some artists had received six-figure payouts for their work. There was a business rationale for scrapping the generous royalty pool and scooping up all rights to the original illustrations so they could continue to be used without incurring a large ongoing cost to the company. While that reasoning made a degree of sense, the manner in which the process was handled would leave wounds that in some cases have still not healed today. “It was a very painful process for all concerned,” says Adkison, looking back. “I think that if I would have had then the experience I have now, I could have managed the situation much more diplomatically. But at the time I was in my early 30s and was overwhelmed with my responsibilities.” Wizards told the artists that unless they agreed to sign over the rights to their existing work, their artwork would be unceremoniously dropped from future sets and replaced with newly commissioned illustrations. When the artists engaged. lawyers to fight the process, bitter wrangling ensued, which at times got personal. The artists felt strong-armed into accepting a diminished financial packet in a move Myrfors says he believes was, “vicious and completely driven by greed.” The new breed of middle management flooding into Wizards were focused on the company’s bottom line and felt that the artists had been more than compensated for their work. Having had little experience of the fantasy gaming industry, some even felt the artwork had contributed little to the game’s success. A seething Anson Maddocks quipped in response: “Try printing rules text on a T-shirt then, and see how many you sell!”
Jesper Myrfors eventually refused to sell all his rights to the company. Others buckled under the pressure. As a sudden loss of income hit many artists — either from the dried-up royalties or because their opposition to the changes damaged their chances of working for the company – many suffered extreme financial woes and some even lost their homes, says Myrfors. Although time, as it is wont to do, has healed some rifts, it was a brutal introduction to the new corporate realities at Wizards for a wide-eyed generation of artists who had given their creative all for the game. “What’s done is done,” says Myrfors, who himself had left the company in 1995. He returned for a brief stint from 1998 to 2000 and maintains that whatever the business reasons given, the renegotiation of the artists’ contracts was propelled by baser instincts. “It was purely greed-driven, primarily by people who came late to the game and wanted a slice, like they deserved it,” he says. “I’m a non-believer, but I hope there’s a hell reserved just for those people.”
Inevitably, the paroxysms in the Wizards’ art department were the herald of greater change. The argument made against the royalties system was that it would impede the search for a buyer for the high-flying company. And the hunt for someone to snap up the industry leader was very much on – by 1997, the company had hit revenues of approximately $125 million a year and had even made a hugely symbolic acquisition with the purchase of the ailing company TSR, the publishers of Dungeons & Dragons. With the role-playing game that had inspired the generation of gamers behind Magic on life-support and rescued by the company whose new gaming form had completely outstripped it, there was simply no bigger brand than Wizards in the market. The time was ripe to cash in on the startling growth, even as Magic’s first-to-market advantage began to recede and a new wave of card games prepared to ~ if not steal – rival, its thunder.
Macic was A global game by 1997, reaching ever further afield thanks to the internet and Wizards’ organised play programme. While 40 per cent of cards were being sold within the US, and another 30 per cent in Europe, an impressive 30 per cent were also being sold in Japan. At the time, that meant that the Japanese were buying more Magic cards per capita than any other nation — making them a market the Wizards chiefs paid special attention to.
However, on one visit to the Asian Magic hotbed, Peter Adkison and John Jordan, Wizards’ head of international, were left flabbergasted by a meeting with their publishing partner Hobby Japan. “Magic,” warned the company president Mr Sato, “is no longer the number one trading card game in Japan.” Adkison was shocked — Magic seemed to have cemented its place as the world’s primary card game, even at the expense of Wizards’ own attempts to create follow-ups like Jyhad (later Vampire: The Eternal Struggle), Battletech and Netrunner. What game could possibly be outstripping them in their hungriest market? The answer was a franchise invented the previous year by Satoshi Tajiri for Nintendo – a video game turned paper game called Pokémon.
“Oh this is horrible!” thought Adkison upon seeing the game. “We hate this game. It’s mass-market. It’s dumbed down. It’s got ugly anime artwork. And there are cartoons! This is not a serious game like Magic is.” Ultimately, though, the Wizards CEO was embarrassed to be beaten by the upstart game. A few months later, he was wise enough to swallow his pride: Pokémon’s producers contacted Wizards of the Coast and asked if the Seattle company would be their partner in producing a licensed version of the trading card game for the American market. Sensing a stellar business opportunity, Adkison performed a rapid about-face and heartily agreed. Wizards – having worked so hard to elevate Magic beyond juvenile status to be a professional intellectual sport — would in December 1998 unleash a card game aimed squarely at kids. And boy did they love it.
John Jackson Miller, who was at the time editing Comics Retailer magazine, describes Pokémon as, “the second wave of collectible card game hysteria.” And, although American audiences initially struggled to get their heads around the all- encompassing property with its idiosyncratic Japanese cartoon, video games and card game, when they did, Pokémon hit the playground like cardboard crack-lite: a furiously consumed product and gateway to Magic. In fact, it was around this time that any Magic player trying to explain his or her hobby to friends would inevitably be asked (much to their chagrin), “Oh – so is it like Pokémon?” By the summer of 1999, kids were playing the game on every flat surface available and, says Jackson Miller, “World War Three was breaking out in my magazine’s pages between retailers who couldn’t get the product and Wizards, who were at the time talking about opening their own stores.” Jackson Miller himself would soon be editing Scrye magazine, whose pages filled with translations of Japanese Pokémon cards yet to be released in America. These were now widely available on a red-hot eBay-fuelled secondary market. It was like 1994 all over again. And, as the joke went in Seattle, Wizards were back in the business of printing money.
ON 9 SEPTEMBER 1999, toy giant Hasbro announced the news: it had acquired Wizards of the Coast in a deal worth $325 million. Incredibly, some news outlets including the CNN Money webpage didn’t even mention Magic when covering the story, instead referring to Wizards as the makers of Pokémon and Dungeons & Dragons. But Hasbro were no fools — and although they saw Pokémon as an extremely enticing cherry atop Wizards, they recognised the strength of its most established, core brand. By 1999, Magic had been on the market for six years and shown steady performance, now underpinned by the Pro Tour and the organised play pyramid as an evergreen game, rather than a disposable fad. While Hasbro were at the time better known for toy lines like Mr Potato Head, GI Joe, Transformers and My Little Pony, they had dipped their toes in the hobby game market a year previously with the acquisition of famous American war-gaming brand Avalon Hill for $6 million. Hasbro’s president Alan Hassenfeld even identified games as “the cornerstone of our growth strategy for the new millennium.” In Magic, says Peter Adkison, they recognised a game that had the potential to last generations. And thus a deal was thrashed out with Richard Garfield’s hugely influential game at the centre of it. “Hasbro ended up paying us a flat fee for the company exclusive of Pokémon,” says Adkison. “They clearly recognised that Magic and Dungeons & Dragons were our core business, with plenty of history behind them and based the value of the company on those. Pokémon had the potential to be huge but no-one knew how long it would last, as it was being produced as a licensed product. We structured an earn-out for that part of the business and ended up effectively getting royalties for the shareholders on Pokémon sales for several years, which amounted to a very healthy amount of money.” Garfield meanwhile, whose card game had transformed the lives of gamers everywhere, pocketed a cool $100 million from the deal.
Wizards held a shareholders meeting to approve the Hasbro deal and once it had been rubber-stamped the investors who had rustled up the initial $100,000 it cost to get Magic to market celebrated with a well-deserved party. As the champagne flowed, one woman, dressed in an impeccable designer outfit, strode over to Peter Adkison and his former boss at Boeing, Vince Caluori. Caluori, having given Adkison his blessing to leave Boeing after the heady madness of Gencon 1993, had later followed him out of the door to take up the role of chief operating officer at Wizards. But at the shareholders meeting, he was reminded of his previous life at the aerospace giant: “You don’t remember me, do you?” asked the neatly turned-out woman. “You do look familiar,” said Caluori. “Well,” she replied, “I am the woman who used to clean your office every night and, when Boeing banned smoking, empty the ash tray you had hidden in your desk.” It was Marilyn, the Boeing janitor who had invested her life savings in Magic and the hard-working Peter Adkison she saw staying late every night. With Hasbro buying the company at $2,000 a share, the crazy investment that had infuriated her family, had made her a millionaire. Despite the luxurious clothes she had on, she was, says Adkison fondly, the same old Marilyn. And she delighted in finally admonishing her former boss, the recalcitrant smoker.
WHILE MANY Macic players greeted news of the Hasbro deal with outright horror, it confirmed in part the tangible effect they had helped have on the society around them. For a company like Hasbro – used to making mainstream toys derided by Magic players – to buy up the hobby games giant did not simply mean Magic had become a toy. Rather that in its short lifetime, the game’s impact had been so great, that even the smartest money-making brains could see that the role of games, their visibility and their acceptability in society was growing. Certainly, the brilliance of Richard Garfield’s creation was at the heart of that phenomenon, but both the internet and the Pro Tour had helped to thrust Magic players themselves into a new realm and elevate their role in society. Hasbro’s purchase – while motivated by profit – was nonetheless a sign that the 21st century was shaping up to be very different indeed. That the smart kids might not simply be left to fend for themselves against the schoolyard bullies, but could make good – like Garfield, like Adkison, like Finkel – in a world of new possibilities. While in the short term, that meant they were seen as a lucrative market to tap, it also meant they had acquired an unforeseen degree of leverage in a society increasingly being shaped by knowledge, technical know-how and the flow of information via internet platforms which themselves had been. influenced by Magic chatter. There would, in the long-term, be new opportunities for them to seize.
In the short to medium term, there would be casualties at Wizards. Peter Adkison and Lisa Stevens, in particular, felt the company they had created slip gradually out of their hands. Having established Magic and set it up for anew millennium, Adkison had rediscovered his thirst for innovation. His goal was to launch a massive multiplayer online game (MMO) using the Dungeons & Dragons brand. But the atmosphere at the company had changed. And, say both Stevens and Adkison, Hasbro had no appetite for risk — at least, not on the scale that a group of friends working out of a basement do. Although Adkison’s D&D MMO would have beaten World of Warcraft – today’s biggest MMO – to market, Hasbro pulled the plug on the project. “That was the final straw,” says Adkison. “I knew that strategically, this was the right thing to do with this brand, but if Hasbro didn’t believe me, I didn’t know how to help them.” Some 18 months after the Hasbro takeover both Stevens and Adkison left the company – Stevens a day before Adkison – and moved on, leaving the business adventure of a lifetime behind them. “I started at Wizards,” say Adkison. “But I left Hasbro.” He can be vastly proud of the legacy he left behind him.
While the media spotlight tends to shine most brightly on internet start-ups done good, the story of the company started in Adkison’s basement is no less remarkable. Adkison’s Wizards took risks (not least publishing Magic in the first place), made mistakes along the way (particularly in a certain ski lodge after Gencon 1994), but presaged Silicon Valley culture with their early attempts to nurture a thriving, open, creative company. They placed R&D at the heart of the business. They recognised how to turn a possible fad into a game that has gone on to last over 20 years, they created employment, wealth and changed the way a generation of young gamers felt about themselves. Via the Pro Tour, they even helped demonstrate the worth of games to corporate America and the society in its thrall, establishing a model that the booming ‘eSports’ video-gaming circuit would later borrow. By any measure, Adkison’s company was an incredible success —- one recognised with a giant cheque from Hasbro. Marketing consultant Seth Matlins, who since helping establish the Pro Tour has worked at some of the world’s biggest brands, says the company deserves far greater recognition: “The guys at Wizards were so smart, so strategic and so focused,” he says. “I don’t know what the odds were for this to not succeed, but they were much higher than it succeeding. A good game comes along rarely. A good game that succeeds and sustains at this level? Even more so. What they achieved is remarkable – and for that, they truly deserve credit.” Seattle might be better known for its hotshot companies Microsoft and Amazon, but Wizards earned its place alongside them. The street-smart card-gamers had come very good indeed.