Tactical Studies Rules (1973–1975) Tactical Studies Rules (TSR) was formed in
1973 as a partnership between
Gary Gygax and
Don Kaye, who collected together $2,400 for costs related to startup, to formally publish and sell the rules of
Dungeons & Dragons, the creation of Gygax and
Dave Arneson and the first modern
role-playing game (RPG). The first TSR release, however, was
Cavaliers and Roundheads, a
miniature game, to start generating income for TSR. The partnership was subsequently joined by
Brian Blume in December 1973. Blume was admitted to the partnership to fund further publishing of
D&D, as
Cavaliers and Roundheads was not a commercial success. In the original configuration of the partnership, Kaye served as president, Blume as vice-president, and Gygax as editor. In January 1974, TSR—with Gygax using his basement as a headquarters—produced 1,000 copies of
D&D, selling them for $10 each (and the required extra dice for another $3.50 - equivalent to about $ in ). This first print sold out in 10 months. Also in 1974, TSR published
Warriors of Mars, a miniatures rules book set in the fantasy world of
Barsoom, originally imagined by
Edgar Rice Burroughs in his series of novels about
John Carter of Mars, to which Gygax paid homage in the preface of the first edition of
D&D. However, Gygax and TSR published the
Mars book without permission from (or payment to) the Burroughs
estate.
Warriors of Mars was quietly dropped from the catalog and never reprinted. When Don Kaye died of a heart attack on January 31, 1975, his role was taken over by his wife Donna Kaye, who remained responsible for accounting, shipping, and the records of the partnership through the summer. By the summer of 1975, those duties became complex enough that Gygax himself became a full-time employee of the partnership in order to take them over from Donna Kaye. Arneson also entered the partnership in order to coordinate research and design with his circle in the Twin Cities. Brian Blume became the largest shareholder, Melvin Blume the second largest, and Gary Gygax the third largest. Gygax served as president of TSR Hobbies, and Blume as vice president and secretary. The Dungeon hobby shop would become the effective headquarters of the company, including the offices of Blume and Gygax. TSR Hobbies subcontracted the printing and assembly work in October 1975, and the third printing of 2,000 copies of
D&D sold out in five months.
D&D supplements
Eldritch Wizardry and
Gods, Demi-Gods & Heroes were released in 1976. TSR also began to branch the
Dungeons & Dragons product into two:
Dungeons & Dragons as a general audience product intended for novices, and
Advanced Dungeons & Dragons (
AD&D) for a more complicated product aimed at hardcore fans. In 1977, the
Dungeons & Dragons Basic Set was released for
D&D, and the
Monster Manual was released as the initial product for
AD&D, making TSR the first game company to publish a hardbound book. The next year, the
AD&D Players Handbook was published, followed by a series of six
adventure modules. In late 1978, TSR Hobbies and the Dungeon Hobby Shop moved from 723 Williams Street into downtown
Lake Geneva, to 772 West Main Street, with its offices once again located above the hobby shop. In 1979, the
AD&D Dungeon Masters Guide was published, and radio ads featuring "Morley the Wizard" were broadcast, All of these core books would go on to be major hits; the
D&D Basic Set sold well in 1977 and 1978, would sell over 100,000 copies in 1979, and would continue to be updated and re-released for years. In 1979, TSR signed a contract with
Random House with unusual terms. In most deals between publishers and distributors, publishers are paid directly based on books sold downstream by the distributor to bookstores. In TSR's contract, however, Random House would loan money to TSR as an advance upon shipment of product from TSR to Random House, a loan equivalent to 27.3% of the suggested retail price. The arrangement was mutually beneficial at first: TSR could acquire money up front to fund their work, and not have to worry about immediate sales. Many of TSR's products had consistent sales over time, and the loans allowed the company to recoup the investment immediately and use the funds to make more books. Returns were generally low, leading to Random House's confidence in TSR. However, the arrangement would cause trouble later in the 1990s. Gygax granted exclusive rights to
Games Workshop to distribute TSR products in the United Kingdom, after meeting with
Ian Livingstone and
Steve Jackson. Games Workshop printed some original material and also printed their own versions of various
D&D and
AD&D titles in order to avoid high import costs. TSR was unable to reach an agreement with Games Workshop regarding a possible merger, so the company created the subsidiary TSR Hobbies UK Ltd, in 1980. That same year, TSR Hobbies moved its offices again, into a former medical supply building with a warehouse attached. In 1982, TSR Hobbies broke the 20 million sales mark. In 1981, TSR Hobbies had revenues of $12.9 million and a payroll of 130. with no cash on hand, SPI was forced to hand over their operation to TSR. TSR published a few wargames created by their own in-house designers, and had a hit with
The Hunt for Red October, but ten years after the SPI takeover, TSR abandoned the wargame market.
TSR (1983–1985) In 1983, the company was split into four companies: TSR, Inc. (the primary successor), TSR International, TSR Ventures, and TSR Entertainment, Inc. This series was the lead program in its time slot for two years. In 1984, TSR was able to make licensing agreements that allowed the company to publish the
Marvel Super Heroes,
Indiana Jones, and
Conan role-playing games. In 1985, Gen Con moved out of Lake Geneva which had given it its name, and relocated to
Milwaukee, Wisconsin where the game convention would have more badly needed additional space. The
Oriental Adventures hardback for
AD&D was released that same year, becoming the biggest seller for 1985. TSR published a game based on the
All My Children daytime drama on
ABC, with over 150,000 copies sold. In 1986, TSR began publishing the bi-monthly
Dungeon Adventures magazine, featuring only adventure scenarios for
D&D. The struggle for financing led to board room shake-ups at the top level. TSR's line of credit was stopped by its bank, and the company was in debt to over . Gygax would later say that he was in the dark as to the extent of the financial difficulties due to being in Hollywood; Ben Riggs, an author who studied TSR's history, is skeptical Gygax was truly unaware, however. Gygax now controlled TSR. Financial difficulties continued, however.
Lorraine Williams era (1985–1997) Williams saw potential for rebuilding the debt-plagued company into a highly profitable one. However, she also acquired a reputation as a non-gamer who played the "villain" in retrospectives of TSR. Gary Gygax grew particularly disdainful of her; Williams' habit of threatening lawsuits and legal action against perceived foes was criticized as unwise and turning potential allies into enemies. However, her tenure has also been defended.
John D. Rateliff said that "Every single person I talked to who worked under Gary [Gygax] and the Blumes and then worked under Lorraine preferred working under Lorraine... I never met a single person who was under both who didn't prefer being under her." TSR also released
Karameikos: Kingdom of Adventure in 1994, which detailed one of the kingdoms in the setting of
Mystara. As an innovation, it included an audio CD with tracks of dialogue and sound effects. In 1995, TSR released
Birthright, a campaign setting that mixed
D&D with strategy games. The intent was for players to play noble characters empowered by divine blood which gave them the power to rule domains; players could expand their domains and divine powers with a mixture of war and diplomacy. TSR eventually moved into publishing hardcover novels as well with Salvatore's
The Legacy, published in 1992. It made the top of
The New York Times Best Seller list weeks after its release. In the late 1980s, TSR opened a new West Coast division in Southern California to develop various projects in the entertainment industry, similar to how Gygax had sought deals in Hollywood in the early 1980s. However, the efforts of the division would come to "less than nothing" according to TSR historian Ben Riggs, despite initial promise. TSR had an arrangement with
DC Comics to produce the comics
Advanced Dungeons & Dragons and
Forgotten Realms, which sold well and were profitable for both DC and TSR. Sensing an opportunity, TSR decided to produce comics themselves as a stepping stool to television and film, as comics were cheaper to produce and start with. However, they had already sold the rights to their own A-list product in
AD&D. TSR attempted to not enrage DC Comics by calling their new product "comics modules" and including game-related material at the end of each issue; additionally, TSR largely sold the comics modules through bookshops rather than comic shops. The compromise failed in both directions: DC, feeling betrayed that their partner was moving to become a competitor, immediately stopped production of both the
AD&D and
Forgotten Realms comics, and canceled an in-production
Ravenloft series to have been scripted by
Knight of the Black Rose author
James Lowder. However, the changes to present the product as not a comic book caused the potential audience to either not know of its existence at all, or to be confused as to its nature. TSR West eventually published four comics modules: a Buck Rogers comic, a sci-fi comic
Intruder, a time travel comic
Warhawks, and a horror comic called
R.I.P. They were not commercially successful. TSR continued to own and operate the
Gen Con role-playing game convention. Gen Con grew beyond its initial focus on
D&D and wargames to role-playing fans in general. Gen Con was a growing and successful convention; in 1992, it broke every previous record for attendance to game conventions in the United States, with over 18,000 attendees. Another collectible competitor to Wizards of the Coast that TSR produced was
Dragon Dice, which was released in 1995.
Dragon Dice was a collectible dice game where each player started with a random assortment of basic dice, and could improve their assortment by purchasing booster packs of more powerful dice. The first sets of
Dragon Dice sold well at games stores, and TSR produced several expansion sets. However, interest in
Dragon Dice was waning. TSR suffered "the effects of overexpansion" in 1996 with an "expanded number of hardcover novels and a wide array of gaming accessories such as its
Dragon Dice". Shannon Appelcline, in
Designers & Dragons: The 90s, commented that the books were sold at a loss and the "TSR warehouse" was "truckloads" full of
Dragon Dice.
Final years: Financial trouble and sale (1995–1997) By 1996, TSR was experiencing numerous problems, as outlined by various historians of the company. Shannon Appelcline wrote: "Distributors were going out of business. TSR had unbalanced their
AD&D game through a series of lucrative supplements that ultimately hurt the long-time viability of the game. Meanwhile, they had developed so many settings—many of them popular and well received—that they were both cannibalizing their only sales and discouraging players from picking up settings that might be gone in a few years. They may have been cannibalizing their own sales through excessive production of books or supplements too." Ben Riggs agreed that TSR was factionalizing the AD&D audience by continually releasing competing new settings (Forgotten Realms, Al-Qadim, Dragonlance, Planescape, Dark Sun, Birthright, Karameikos, etc.), a strategy intended to lure in new customers, but that actually divided its own core customers. TSR's products essentially competed with themselves, requiring more development effort to reach the same number of total customers.
Ryan Dancey and
Lisa Stevens, who examined TSR's finances for Wizards of the Coast, found that many of the AD&D settings products were never profitable, and more worryingly never
could have been profitable—the cost of production was simply too high compared to the price they sold for. Another factor that hobbled TSR in the long-term was a financial arrangement known as "factoring". Factoring worked like this: TSR first arranged contracts with retailers in the
hobby trade (gaming stores, comics stores, and so on) to preorder their products and offered a discounted rate for contracts signed in January. TSR then took these contracts to investment banks, and was advanced money immediately by the banks, with the banks to be paid off from the eventual sales of the product. This financial innovation allowed TSR to be essentially "paid in advance", less fees from the banks and from discounts given to suppliers, which worked out to keeping about 82% of the revenue. Getting all of the money in January allowed TSR to budget with more certainty and potentially fund projects with a long lead time immediately, rather than waiting on sales. Other than the direct cost of losing 18 pennies on every dollar of revenue, factoring had the other downside of not being flexible to changing market conditions, as TSR was essentially locked into its budgeting from January. It was partially why
Spellfire was made on a tiny budget, as TSR was attempting to take on a new initiative in the middle of the year, and led to a fiasco with its
Advanced Dungeons & Dragons CD-ROM Core Rules product where a preorder arrangement with
Babbage's was continued despite Babbage's becoming financially insolvent. TSR's old deal with Random House, which had been mutually beneficial in the 1980s, began to be used by TSR in ways that would paper over short-term financial problems. Since TSR was paid up front on the assumption that shipped goods would ultimately sell, TSR began shipping overstock to Random House to generate loans on demand. This caused people in the know at TSR to call it the "Banco de Random House". Despite total sales of around $40 million in 1995, Since the logistics company had the production plates for key products such as core
D&D books, there was no means of printing or shipping core products to generate income or secure short-term financing. The company laid off thirty staff members in December 1996, and other employees including
Jim Ward quit over disagreements about how the company managed the crisis. Wizards eventually closed the TSR corporate offices in Lake Geneva. Some TSR employees accepted the offer of transferring to Wizards of the Coast's offices in Washington, and a few others continued to work remotely from Wisconsin. Wizards of the Coast continued to use the TSR name for
D&D products for three years. Wizards also set about the creation of the
third edition of Dungeons & Dragons. It was released in 2000 under the Wizards of the Coast brand only. In 1999, Wizards of the Coast was itself purchased by
Hasbro, Inc. In 2002, the Gen Con convention was sold to
Peter Adkison, the founder and CEO of Wizards of the Coast. ==Business disputes==