Legal Insights

New licence spells trouble for Wizards!

By Brendan Coady & Mark Williamson

• 27 February 2023 • 10 min read
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If you roll in certain circles, your early 2023 feed was probably overtaken by fan and creator backlash to a leak of the updated Dungeons & Dragons open gaming licence (OGL). Here’s a breakdown of the key issues surrounding the OGL, why Hasbro wants to move away from open-use licencing and what that tells us about open-use intellectual property in the weird and wonderful world of table-top gaming.

The (back)story so far

Wizards of the Coast and Open-use Licence

Coming off a few ‘boom’ years following the move to digital platforms and the COVID-19 pandemic, the table-top role-playing game industry is worth about $4 billion. No longer just the traditional table-top game, role playing games (RPGs) echo throughout broader, mainstream media. Leader of the table-top RPG pack is Hasbro-subsidiary Wizards of the Coast ('Wizards') – the owners and publishers of Dungeons & Dragons.

Dungeons & Dragons (and the table-top RPG industry generally) is unique – although the intellectual property in the game is owned by Wizards, it is underpinned by a number of open gaming licences – a type of ‘open-use’ intellectual property licence. Open-use licences exist where a copyright holder grants permission to use, study, change, and distribute a piece of intellectual property to anyone and for any purpose. Open-use licences are popular where materials are developed in a collaborative, public manner - particularly in the context of software or, conveniently, table-top RPGs.

Essentially, these open-gaming licences allow anyone (including direct corporate competitors of Wizards) to use the Dungeons & Dragons (D&D) game system, rules, lore and materials to create new works. The most prominent of these licences is known by the uncharacteristically dull name of Open Gaming Licence 1.0a. (Original OGL).

The Original OGL was introduced by Wizards in 2000 – about a year after their acquisition by Hasbro, but long before the video game boom, before Stranger Things and the take-off of live-streaming real-play, and further still before the rise of the e-gaming industry.

The licence was introduced with the intention of “spurring a huge surge in independent content creation that will feed the D&D network[1] and is part of the legal framework by which creators have been able to build their table-top RPGs (and businesses) alongside Hasbro’s brand over the past 20 years. The rationale was if Wizards could get more people in the industry to use the same system, players would learn only one system and be able to migrate from product to product and game to game without learning and transaction costs. While it would reduce the number of original gaming systems in the market, the idea was to increase the audience for everybody, especially for the leader – Wizards.[2]

A figure in a hooded cloak

The Leak of OGL 1.1.

After over two decades since its launch, in November 2022, speculation arose that the Original OGL would be ‘discontinued’ for a new iteration of an open-gaming licence, with leaked documents purporting to show some tighter controls on the use of D&D intellectual property.

The leaked licence, named OGL 1.1 (the New OGL) contained more stringent controls on the use of the D&D system, such as:

  • The introduction of royalty and reporting obligations to Wizards
  • a ‘licence back’ of all intellectual property developed using Wizards-owned D&D intellectual property, and
  • the purported revocation of the Original OGL (more on this below).

In response, a Wizards spokesperson tweeted,

it is certain our Open Game License will continue to evolve, just as it has since its inception”.

Since this initial response, Wizards issued a series of apologies, promising the community that the New OGL would be reworked to ensure that “the [New] OGL exists for the benefit of the fans”, and reverted to the Original OGL.

Is it time to kill off a character?

The Original OGL made sense 20 years ago, but a New OGL makes sense today.

Wizards’ introduction of the Original OGL in 2000 might be curious. Why would Hasbro spend $325 million on the intellectual property in D&D, and then give it away for free?

The answer, at the time at least, was ‘community’ and ‘stewardship’.

The table-top RPG industry has been characterised by independent content creation and sharing in a 'hard-copy' format since the 1970s, often pointed to as a predecessor to the modern, internet-based 'sharing economy'. For Wizards this meant that without some kind of OGL, they risked leaving behind the body of customers and potential customers who saw the open license as an assumed part of the D&D experience – the ability to create their own stories and supplements and share them with the community.

The D&D system in play when Hasbro purchased Wizards in 1999 was largely 'crowd developed' following the game’s initial creation in 1974, and existed alongside some other prominent table-top systems. Any move to bring the game in-house would have been catastrophic for the brand.

For this reason, the Original OGL was marketed as Wizards exercising their stewardship, rather than ownership, of D&D.

However, in 2023, this ‘free for all’ approach doesn’t look viable to Wizards. This is primarily because, in the age of the internet (and crowdfunding and streaming and B-to-B trading), the casual ‘homebrewer’ can easily level up to a sophisticated, multinational corporate competitor to Wizards. By maintaining the Original OGL, Wizards are breeding their own 'monsters' and can’t seem to fight them.

The terms of the New OGL give us an insight into these exact troubles and suggests that Hasbro is facing difficulty in monetising the IP they spent $325 million on in 1999. Requiring reporting, back-licencing content and charging royalties all point to Wizard’s losing its position as the big fish in the pond and losing the ability to maximise a return on that investment.

This concern comes through in Wizards’ statement:

we wanted to ensure that the OGL is for the content creator, the homebrewer, the aspiring designer, our players, and the community — not major corporations to use for their own commercial and promotional purpose

On 27 January 2023, when Wizards announced that it had scrapped its plans to transition to the New OGL and would continue to rely on the Original OGL for the foreseeable future, the creator community rejoiced, and Wizards themselves touted the decision as a victory for both parties.

If this were any other business, the New OGL would make sense. IfWizards want to invest further in D&D – larger media projects, a cinematic release plan, integrated online tools like One D&D VTT – aNew OGL may have reduced this risk of investment returns ending in the pockets of competitors.

It appears that competitors can still rely on the Original OGL, and will be able to do so on a perpetual basis.

In consideration for agreeing to use this Licence, [Wizards] grant you a perpetual, worldwide, royalty-free, non-exclusive licence to use the open game content.

As this applies to the core rules of D&D and the key narrative features of the game, to avoid the Original OGL Wizards would need to move D&D away from the defined ‘open game content’ – the system, rules and stories covered by the Original OGL. However, this would likely require a significant departure from the existing D&D system.

A dagger in the side of commercialisation

What does this debacle tell us about open-use licenses?

Wizards’ troubles read more broadly as a warning on using open-licenced intellectual property. In particular, it highlights the inherent risk in building a business on a few key pieces of open-use intellectual property – your foundation will always be exposed because the key ideas, concepts and structures that would otherwise be proprietary are available to, quite literally, anyone.

We often advise our clients to conduct an in-depth analysis of a target business’s reliance on open-use intellectual property. If the target’s commercial activities relate more to repackaging and reframing open-use IP rather than building on that IP and commercialising their developments, it can represent a significant red flag.

The OGL debacle is a cautionary tale about granting open-use licences to your pre-existing IP. Principally, as Wizards have recently learned, it is incredibly difficult to 'claw back' intellectual property that has been openly distributed on an open-use licence, particularly if that intellectual property is widely used and reasonably popular.

If a business chooses to grant open-use licences like Wizards, it may be best to limit the scope of such a licence to ultimately replaceable intellectual property. At the very least, an open-use licence should grant you the right to reel it back in if you decide to head off on a different adventure sometime in the future.

A long and winding road ahead

Where to next for Wizards and the Creator Community?

While the New OGL is formally on hold, and the text of any new licence remains to be confirmed, what is certain is that if the Original OGL ends, many licensed publishers will have to completely overhaul their products and distribution to comply with the updated rules. Large publishers who focus almost exclusively on products based on the Original OGL, including Paizo, Kobold Press and GhostFire Games, will be under pressure to update their business model fast.[3]

For Wizards, however, this is a useful reminder that table-top RPG products aren’t 'end-use' products like video games, tv shows or books – they quite literally require the imaginative and creative input of a customer and a community, as they have done for the better part of 60 years. Naturally, this results in the creation of intellectual property that Wizards cannot control.

The New OGL, in whatever form it takes, will need to strike that elusive balance between intellectual property protection and community co-creation.

Arguably, neither the Original OGL nor the New OGL accomplished this delicate state. In a market where the “content creator, the homebrewer, the aspiring designer, our players, and the community” that Wizards want to foster may very well be the 'major corporations' from which they want to insulate D&D, this is easier said than done.

For now, Wizards will fight the suspicion they’ve started among their otherwise loyal supporters. For creators, big and small, they can toast an important victory against the New OGL. They would be foolish, however, to ignore the rumblings of another battle that hides just beyond the horizon.

[1] Dancey, Ryan (February 28, 2002). "The Most Dangerous Column in Gaming". Interview with Ryan Dancey. Wizards of the Coast. Archived from the original (Interview) on April 4, 2002. Retrieved February 26, 2008.

[2] "Open Game License: Frequently Asked Questions (Version 2.0)". The d20 System. Wizards of the Coast. January 26, 2004. Archived from the original on March 7, 2004. Retrieved December 21, 2022.

[3] Dungeons & Dragons' New License Tightens Its Grip on Competition". Gizmodo. January 5, 2023. Retrieved January 5, 2023.

By Brendan Coady & Mark Williamson

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