Transcript of Radio Free Decipher Interview with Warren Holland
Hello everyone. My name is Warren Holland. Thank you for
joining me on this special Radio Free Decipher. Usually, my
role as CEO of Decipher is a very pleasant experience. This
is a wonderful company, with wonderful people, and I love
what I do. However, today my job is a little bit tougher...
and it involves giving you some sad and unpleasant news about
the Star Wars license.
Lucasfilm has decided not to renew Decipher's CCG license
past the end of this year and our current manufacturing and
sell-off period is through April 30, 2002.
While we have to accept this decision by Lucasfilm, I want
to assure everyone that Decipher will not abandon our players,
retailers, or distributors. Decipher's business is quite strong
at the moment and if it were up to us, we would be making
Star Wars cards for the next twenty years.
I also want to let our customers know, that this decision
by Lucasfilm does not reflect Decipher's wishes. We understand
the depth of love that people have for these games and we
will do our part to honor and respect that.
We have some very innovative ideas to discuss with you on
how Decipher will continue to provide service and support
for these games. You all know Kyle. He has been a Star Wars
gamer for many years, and he has agreed to pose questions
to me on these issues from a consumer's perspective. I'll
give you more details about what we are going to do around
this decision as the interview progresses. So, let's get started.
All right, thank you Warren. I think the first question
that I have for you which is going to be on a lot of people's
minds is, "Why did Lucasfilm decide not to renew the Star
Wars CCG license with Decipher?"
Well... let me start by saying that rumors have been floating
around about this license for a couple of years, and I guess
everyone's going to have to draw their own conclusions on
why Lucasfilm ultimately made this decision.
But... I have to be very honest and say that I don't believe
this decision is a very wise one on the part of Lucasfilm,
and I'm not really telling you anything that I haven't already
told them. However, Lucasfilm is the owner of the Star Wars
property. And within certain limits, they can do with it as
they wish and we all have to accept that. Also, as many of
you know, Hasbro is a master toy licensee for Star Wars and
George Lucas is a 10% owner of the company. And... It's no
secret that Hasbro paid $500 million for the Star War license
and it just hasn't performed that well for them. So, I think
we had to contend with all of that.
I'm not going to pick on Lucasfilm here, but I will acknowledge
that the past few years working with them has been a very
frustrating experience for Decipher. There were many things
we wanted to do and we were simply not allowed to do them.
But through all of this time we've been very loyal to the
property even when there were reasons for us to exit. We held
the Star Wars license for more than six years, and we successfully
produced and marketed some of the most popular trading card
games of all time, and I'm very proud of that. So, Lucas was
always overjoyed with our products and not one time in six
years did I ever hear a complaint from them about the quality
of what we created.
I think that prior to the purchase of WotC by Hasbro, the
relationship between Decipher and Lucasfilm was great and
our Star Wars games had a very bright future. In fact, Lucasfilm
was going to expand our licenses. But, a lot of legal issues
were raised about the manner in which Lucasfilm handled this
license and I've just resolved those issues with them in a
settlement in the past few months and I'm not going to be
disclosing the terms of that, but it's just kind of opened
up our ability to talk about this a little bit more at this
time.
Well, then was it a question of money?
No, not really. I know I've heard in the past that there
were rumors that Decipher didn't care about the Star Wars
license any longer and I should probably put all of those
to rest because it's just not true. There were many facts
that the public didn't know. We fought very hard for these
games. We were very serious about trying to get this license,
and in fact, to tell you how dedicated we were, Decipher offered
Lucasfilm more money to continue this license than we've ever
offered for any license in our history. I'm not going to tell
you what the number was because you would fall off your chair,
but it was enormous. Let's put it this way... it was more
than George Lucas spent to make the original Star Wars movie
and it was six times what we paid for Episode I.
Wow...
So to be perfectly honest, we had valid concerns about overpaying
for the license but we loved this property; we had invested
years of our lives in it. Plus, we wanted to continue to support
the games for all of our consumers and all of our players.
Well, then why do you think that they made the switch?
Well... it seems Hasbro used Pokemon as an example and convinced
Lucasfilm that they could double the Star Wars sales and build
it into this phenomenon and address a younger audience. We
told Lucasfilm honestly that that was not going to happen.
We had already made Star Wars into one of the most successful
trading card games in history. Decipher has the best game
designers and artists in the industry and we offered to use
those talents for years to come in support of Star Wars and
our players, and simply stated, Lucasfilm didn't see the value
in that.
So what does this mean then?
Well... for one thing it means we will not be making any
new cards for these games. For another, it means that now
there will now be a fourth Star Wars trading card game to
come to market. A game that will be totally incompatible with
any of our existing games. It also comes at a very weak time
for the Star Wars license, so the logic of this move kind
of escapes me.
I know, you know, we all know our customers feel an enormous
amount of ownership for these games. And in fact, we've cherished
that loyalty for years. I have been preaching this to Lucasfilm
for years and unfortunately it's a very hard concept for them
to grasp, so all our arguments have kind of fallen on deaf
ears.
But Decipher's message to everyone in all of this is going
to be... We would have never made this decision on our own
but we are going to do everything we can to support the established
base of Star Wars players for as long at they want to play
the games.
OK, Warren. Well, as you know, rumors have been circulating
for months that Decipher was not going to be doing the Star
Wars license in the future. It's been on our bulletin boards
and all over the place and many players have contacted the
company or posted messages on our web site asking if the rumors
were true. How long have you known that Decipher would not
be granted the Star Wars license and why did we wait until
now to make the announcement?
I certainly realize that the rumors have been out there,
but quite simply I have not been in a position to address
them. As I mentioned in your first question, there were many
serious legal questions that arose from Lucasfilm's handling
of the license. The simply reality is we told Lucasfilm, and
we have repeated this mantra for two years now, that moving
this license would be disrespectful to their and our customers
who have invested one quarter of a billion dollars into our
Star Wars games.
So quite honestly, while we had indications of this for
some time, we kept thinking that Lucasfilm would come to their
senses. We had a lot of people inside Lucas tell us rumors
to that effect but they just never came about. We didn't want
to do anything during this battle that would kill the games
for our players should we prevail... even in the last minute.
Making announcements before we could solidify a plan to help
players continue the game would have just caused this premature
cardiac arrest of the games. So, I set Decipher's interest
kind of secondary to that. I admit that I had this kind of
constant precarious task of battling the objectives of players,
and our employees, and retailers, and distributors, and even
Lucasfilm... all while facing this license uncertainty. So,
at great expense we kind of cautiously continued development
on the brands that we were even uncertain about. Yet at all
times in this process we always believed that we were the
best company for this license. No question about it.
So I can assure you that our goals have always been to keep
the games alive and to provide as many cards to players as
possible given the balance of what we had to deal with at
the time. There's been a lot of hard work on the Star Wars
license in this past year by Decipherians under very tough
conditions. And frankly, the financial rewards have been zero.
We paid millions of dollars for the rights to produce these
games through 12/31/01 and yet we still have a lot of development
work that we've done that is just simply going to be trashed.
Another thing is I'm a firm believer in that it's not over
until the fat lady sings... but now it appears that the opera
has started, so now's the time. We're announcing the fate
of the game when we feel we have the best opportunity to protect
the players' and retailers' investments and give the games
life for as long as we can as best as we can.
It's not always practical in the middle of all of these
things to tell people everything. Still, I assure you that
we've always had the player's interest in mind, and we've
had contingency plans to support players and other consumers
should the worst happen and we are going to implement those
and support these games in a big way.
Well, Warren, players are no doubt going to want to know
why Decipher continued to release Star Wars expansion sets
after the company thought there was a possibility Lucasfilm
would make this decision. You know we did a lot of Star Wars
this past year in 2001. What can you say about the perception
that Decipher was trying to make as much money as possible
before the license expired?
Well... it certainly wasn't an issue of making money because
we haven't made any money on Star Wars in some time.
Did you ever see the movie Galaxy Quest? Well, there's a
line in there, y'know - "Never give up. Never surrender."
Well, that's kind of what Decipher has been doing. Not giving
up and not surrendering.
I know people have wondered about our Star Wars product
mix for the past few years, because so have we. Internally
we've struggled with those issues. But I can tell you for
the most part that what consumers have seen was not really
Decipher's first choice in what we wanted to make. I certainly
want us to sell cards, but it was very clear before we ever
entered this year that putting out a lot of different items
in a short period time was not going to maximize our sales.
It was clearly going to cannibalize our own work on expansion
sets, and each new expansion set would simply take sales away
from the previous one because all these time periods are compressed.
And the result is that retailers are simply going to order
less product, and we knew that. However, one of the shining
benefits of this path is that we have a lot of cards that
we produced that are now on the marketplace for players to
enjoy for years to come instead of all of that sitting on
the development shelf.
Also, the threat from Lucasfilm that the license may go
to Hasbro meant that we had millions of dollars in inventory
at risk. So, we chose to continue development and add as many
new cards into the environment as we possibly could, and to
keep in mind, always to keep in mind that the rug might be
pulled out from under us.
I mentioned a moment ago that what people saw from Decipher
in the past year was not really our first choice for products.
And I kind of think I owe it to everyone to let you know really
what our first choices were. So again, this is not to pick
on Lucasfilm, but they simply didn't understand this industry
and there were hidden realities that our customers never knew
that we struggled with at the time.
So, on the web page with this Radio Free Decipher interview,
I'm going to post some direct
quotes from one of the many presentations that I made
personally to Lucasfilm executives 18 months to two years
ago. I think when people see this information, at least you
will get a sense of where Decipher's heart was; what we wanted
to do for customers in the areas of marketing and public relations,
and digital cards, and Star Wars CCG 2nd Edition and more.
So, if it were up to us, Star Wars digital cards would have
launched, Star Wars 2nd Edition would have launched in 2001,
and a lot of very interesting marketing programs would have
been implemented. The truth is, Lucas simply didn't approve
these programs and there was nothing we could do about it.
I don't think Lucas Licensing is evil (well, although sometimes
in my dreams I kind of think that they're evil), but that's
beside the point. I don't really think they're evil, I just
think they've made some bad business decisions and I've been
very open with them about that.
Some players may wonder, Warren, if Decipher lost interest
in producing the Star Wars games. Did Decipher ever stop actively
pursuing the license renewal even after the poor reviews of
the Episode I, or was it The Lord of the Rings license,
the fact that we acquired that?
No. Actually we never lost interest in the license at all.
Our dedication was certainly tested at times when the Episode
I reviews came out and from an inside perspective, in the
business environment, the Star Wars brand was damaged a little
bit through all of that. But we were very loyal to Lucasfilm
and to our customers. During all this time Lucas and Episode
I kind of had a lot of licensees that were put out of business
because of Star Wars, and Decipher never stopped supporting
these games even in any of those bad times. In fact, even
during that time we almost purchased the Star Wars fan club
at one point.
So, Star Wars has been a very great success for us and there
was a tremendous community who supported these games and we
valued that. And that reason alone was enough for us to fight
for this license.
So, I have to admit that we're very, very openly excited
about what's happening with Lord of the Rings, but
the truth is we would be thrilled to be working on both of
these properties right now (along with Star Trek and other
things that we have coming). Y'know, licenses have ups and
downs, and we have been very dedicated to following this license
through all of those times. So this is really, totally a Lucasfilm
decision. It's not Decipher's decision.
Well, some players have speculated that Decipher cancelled
DecipherCon because of the Star Wars license or for financial
reasons. Can you address that?
Oh sure, that's actually a pretty easy thing for me to address.
It certainly wasn't financial, because when I made the decision,
I expected that we would lose money, and we did. So that kind
of came about. But I certainly understand the question and
the emotions, but... no. My DecipherCon decision was exactly
as advertised. The Star Wars license was never a factor. And
in fact, DecipherCon was this opportunity to celebrate Star
Wars and more and I didn't really relish losing that opportunity.
I know some people didn't agree with the decision, but the
bottom line is it just came from my heart. It's as simple
as that.
Warren, can you tell us whether or not doing the Star
Wars license will drastically affect Decipher's future stability?
Well... keep in mind that this is a battle that started
two years ago for us, so we've had a lot of time, we took
a lot of steps to maintain Decipher's place in this industry.
So, while it's a very sad thing for us emotionally, financially
we've prepared and we were prepared for the license to go
either way. For example, in January we purchased Fantastic
Media and moved into the fan club business with Star Trek
and Lord of the Rings. Last March we hired the staff of Last
Unicorn Games and added roleplaying games for both Star Trek
and Lord of the Rings. We've added digital cards. We now publish
three magazines. We have a growing online store business with
the Fan Club operations, and that part of the business will
grow even more in the next year or so. And we also have unannounced
projects that are in the works.
So, we've more than made up for the Star Wars business financially.
In fact, to kind of give you a brief example of that, our
first expansion set for Lord of the Rings (which has now been
out for a little less that two months) has already passed
the sales levels of any of the Star Wars CCG expansion sets
we've done in the past four years. So I assure you we're here
to stay in a very, very big way.
Warren, I know that you've addressed this briefly earlier
in the interview, but I'm going to state the question anyway.
Will any new Star Wars trading card game product produced
by any other companies be compatible with Decipher's Star
Wars game?
No, unfortunately they won't. All of the Decipher game mechanics
and innovations are the property of Decipher, and any new
Star Wars trading card games produced by Hasbro will not be
compatible with any of our previous product. Lucasfilm did
have a contractual right in our license agreement to license
that gameplay from us by paying royalties to Decipher, but
they chose not to do that.
Warren, you've mentioned a few times in the interview
already that we have a lot of plans in the future of Star
Wars. Can you tell us what our plans are for the continuation
of the Star Wars CCG communities?
Oh, absolutely. If there's a bright moment to this interview,
this is kind of the bright moment to the interview. We are
very dedicated to our players, and retailers and the distributors.
And after April 30th, Decipher will be a private citizen in
the Star Wars community. As such, we'll do everything we can
to continue these games for as long as the community wants
to play them.
There are three primary external groups that we plan to
support, all of which have supported Star Wars games, y'know,
with their hearts and their wallets for years. Those would
be players/collectors (as a group), retailers (as a group),
and distributors. We plan to honor and assist all of these
groups free of charge. So, for example, some of the things
that we're going to do is that we're going to continue our
tournament prize support system. We're going to continue the
player ranking systems. We're going to continue the message
boards and other selected web services that we provide. We're
going to hold unofficial world championships for Star Wars
CCG and YJ and Jedi Knights at DecipherCon in the future.
We're going to try to keep all the volunteer corps for these
games and more. And in fact, to tell you one of the most innovative
things that we plan to do, I kind of need to tell you a story
of something that we were not allowed to do first to kind
of lay the groundwork for that.
Recently we had this wonderful concept for a last product
that we were internally calling Reflections: Virtual Gold,
and Lucasfilm had approved us doing this last product. It
was to be a celebration of Star Wars and it contained new
gameplay, and many gifts for players and collectors. For example,
the set contained about 300 new cards yet it was designed
to be very easy to collect. And each booster pack contained
a couple of foil cards, one of which was, in celebration,
featured the signatures of key Decipher team members over
the years who brought you this wonderful product. However,
the most exciting feature of Reflections Gold was a new concept
called virtual cards. That was the controversial part of this
for Lucas. About a third of the cards in the game were of
this type and our art department had already completed work
on them. Basically virtual cards work like this: Each card
was numbered and named, and it had all of the relevant statistics
that you would expect on a card, except for one thing. The
gametext area was blank, except for a movie logo. There were
logo cards for each of the four existing Star Wars films and
they were packed in these unique displays so that if you wanted
the Star Wars cards, you could buy the Star Wars display.
And if you wanted the Empire Strikes Back cards, you could
buy that display. It was very consumer friendly and very easy
to collect, and all those displays were all self contained.
The concept was however, that the game text on these cards
didn't go on the cards at all. It went on a web page that
was to be totally administered by a players' committee. So
in effect, every four to six months the players' committee
could change the gametext on these virtual cards. Thereby
providing the equivalent of a new virtual expansion set. And
we had proposed that all of these virtual cards be tournament
legal.
I repeatedly pitched this concept to Lucasfilm, and unfortunately
they turned it down – both the virtual cards and some
of the other interesting things we wanted to do in terms of
gifts for the players. So while Decipher can't do this last
product in the way that we really wanted to do it, we will
nonetheless support these games as a private citizen going
forward in a lot of ways.
So, for example Decipher will be announcing the formation
of a non-profit players' group called, "The Players' Committee
for Star Wars CCGs." This committee will just be a small body
of fans consisting of some of the best players and playtesters
in the world. The player's committee will be totally made
up of volunteers. However, Decipher will provide the committee
with a lot of support: email services, some office space,
computer facilities, listserv facilities, web support, technical
assistance, and things like that. And we'll do all of this
free of charge.
The players' committee will be the community's voice in
determining the future of the game, proposing ways that players
can get the most out of their investment. They'll also serve
as overseers of the future rules support and the FAQs for
the game. So, at the end of April we'll turn over all the
functions and support materials to this group including tournament
prize support, and the web pages, and the world championship
duties, etc. We'll also donate cards to this group so that
they can carry out these duties. They'll always have all of
the reference material that they need. And then part of the
responsibilities of the members of this players' committee
will be to oversee a kind of different implementation of the
virtual cards concept that I talked about. So, instead of
cards that Decipher envisioned for this last product, the
committee could select a group of cards from the existing
universe of Star Wars cards and post replacement text on the
web for those. These cards would then become tournament legal
and at some point soon, Decipher will announce the details
regarding the member selection for the "players' committee".
As well as the details of which cards are selected to be included
in the "virtual card" pool after the committee is
selected some time in January. At that point, the committee
will become self-governing by the players. So the game really
will be in the hands of the players.
Giving the game back to the players. That's great.
So to speak, yes. Also I mentioned that Decipher had about
200 cards developed, actually 300 cards - about 100 of those
were the virtual cards that we're not going to be releasing
now. And although Lucasfilm will have to approve this, it's
our desire to provide these cards to our players free on the
web in a PDF document so that players can print them out at
their leisure and actually even use them in tournaments. Certainly
we think it's better that these cards kind of get out in that
form instead of just kind of rotting on the development shelf.
If any of the people listening want to volunteer to be a
part of this "Players' Committee," you'll find an email address
to do so on the same pages where you find this Radio Free
Decipher interview.
That's not, y'know a lot of those things are player focused,
but we also have a lot of programs that are directed towards
retailers and distributors so that they can actively keep
their communities alive.
Dean from our Sales group and Monica from our Marketing
group will be working on a lot of programs right after the
holidays, but for example, one of the things that we're going
to do with retailers and distributors is offer a sales incentive
program for end-customers. The way that'll work is that we
will distribute certificates to all these retailers or any
retailer that wants them. And any customer who buys a box
of Star Wars product will get a free box directly from Decipher
just for the shipping and handling charges. So this provides
an opportunity for the retailers to support the game but not
also be in a place where they have to discount a lot of their
margins.
Also, we are going to continue the tournament support for
retailers. It's not just a consumer thing, it also impacts
the retailers. And in some cases we'll be increasing our prize
support to help the retailers keep their player communities
alive. We're even discussing a program of some limited stock
balancing within the Star Wars line to distributors and the
possibility of offering some extended terms to help distributors
and retailers carry this product and to keep their Star Wars
customers happy.
So, y'know, over the past six years we've been gratified
and humbled by the popularity of these games and the overwhelming
commitment of the players to Decipher. While we'll no longer
be able to produce new cards, we intend to do the best we
can to enable the Star Wars CCG community to continue playing
these games for as long as they're interested in playing them.
Warren, my last question really isn't a question. It's
more of how has this impacted you, and what are your personal
feelings over this announcement?
Well, as you can imagine, the announcement is quite sad
and disappointing, and I think especially this is going to
be a sad thing for our players and that's something we have
to contend with. A lot of us have given six years of our life
to Star Wars. However, I'm a firm believer that the universe
has a way of unfolding as it should. Who knows, if Lucasfilm
hadn't started this path, y'know, with us a couple of years
ago, we might not have gone after the Lord of the Rings license,
so things have a way of working out. But I can tell you that
without a doubt we will miss making these cards for our players.
It's been a labor of love for a very, very, very long time.
Absolutely.
And, y'know, I think Lucas made what we think is a very
poor decision, but we are all grownups here. We can take it.
I know people will be very sad, and we'll be right there with
them. But, as I've mentioned we have plans to vigorously support
Star Wars as a private citizen in the future and we will not
abandon our players or other supporters.
So, over the next four months we will continue to ship Star
Wars CCG, Young Jedi, and Jedi Knights into the marketplace.
So get out there, it could be your last chance to get these
games that you love sooooooo much. By the end of April, we
intend to turn almost everything over to the players' committee,
as I mentioned. And we'll support their activities as best
we can. Decipher will offer resources and technical support
free of charge to continue the game playing experience for
everyone who has invested in these games.
So, I guess I want to close by saying I'd like to thank
all of our players, collectors, retailers, distributors all
over the world. I know this is sad news for many of you. Still,
we very much enjoy having you in the Decipher family and we're
here for you.
All right, thank you, Warren.
Thank you, Kyle.
December 28, 2001
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