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Zero To $50 Million: Now That's Magic


Special Report--ENTERPRISE: Companies: Adventure Games

ZERO TO $50 MILLION: NOW THAT'S MAGIC

It's a typical summer afternoon at Gary's Games, a small hobby store in Seattle. Outside, bikes are parked in a rack, while inside a mob of boys crowd around tables, dealing cards illustrated with mystical paintings. They have little interest in the traditional board games and puzzles that surround them. Instead, their minds are on mana, moxes, and a quirky place known as Dominia.

Sound bizarre? Not to the legions of 12-to-18-year-old boys who are as familiar with the terminology as past generations were with Boardwalk and Park Place. Mana is land, moxes are artifacts, and Dominia is an imaginary dimension where wizards cast spells and strange creatures roam. Together, they make up the fantasy world portrayed in one of the nation's hottest-selling games, Magic: The Gathering.

Thanks largely to informal tournaments like the one held at Gary's Games and the buzz that they've created, this deck of fantasy cards has become the top-selling adventure game, besting longtime favorite Dungeons & Dragons. Along the way, the owners of Wizards of the Coast, the tiny Renton (Wash.) company that invented and markets Magic, have felt some entrepreneurial enchantment of their own. Wizards won't discuss its finances, but industry insiders estimate that the company's sales totaled $50 million in 1994, the first full year Magic was available. This year, sales could top $100 million, figures the Games Manufacturers Assn. Not bad, considering that GAMA estimates sales of adventure games in 1995 could total $750 million, roughly 60% of total game and puzzle sales.

Peter Adkison, Wizards' 33-year-old founder and chief executive, hopes to do even better, thanks to an arsenal of new products that capitalize on Magic's appeal. Already, the company publishes The Duelist, a bimonthly magazine chock-full of tips on game strategy.

Through joint ventures and licensing agreements, Wizards also sells paperbacks and comics based on Magic characters. Next year, a CD-ROM version of the game will be available from software maker MicroProse Software Inc. "The goal is to make games as big an entertainment as the movies," says Adkison.

While kids may be absorbed in Magic mania, some of their parents are fed up with the money they're spending on cards. A standard deck of 60 cards goes for $8.95. But some are as rare as a Mickey Mantle rookie card. A Black Lotus card, for example, fetches as much as $300 on the black market. That's because only 1,100 were printed out of more than a billion Magic cards sold so far. Wizards says limiting the number of some cards encourages trading and enhances the game's appeal. But the company says that it never intended to turn Magic cards into just collectibles. To curb the fad, many school districts have put controls on playing Magic. In Bedford, N.Y., north of New York City, students can play only if they have parental permission.

GOING BOARDLESS. The uproar has done little to dampen Adkison's glee over Magic's success. A former computer analyst at Boeing Co., he has been a fan of fantasy games since childhood. He founded Wizards in 1990 and moonlighted as a game developer. But nothing seemed to work until he met Richard Garfield, 31, another part-time game theorist, on an Internet game forum. At the time, Garfield was working toward his PhD in mathematics at the University of Pennsylvania. Adkison outlined his idea for a game using playing cards instead of a cumbersome game board.

Drawing on elements from previous card games he had designed, Garfield needed just a week to come up with the concept for Magic. The theory was simple: Players, or wizards, draw seven cards after shuffling their decks. Each bears a mystical image and instructions on its powers. Artifact cards, for example, can depict weapons or spells to attack or defend. The goal: to eliminate your opponent's 20 life points and drive your adversary from Dominia.

The would-be game impresarios spent much of the next year in Adkison's basement testing Magic with friends and relatives. They sketched their own trolls on index cards and pressed their faces against copying machines to come up with contorted images to paste on cards. Once the bugs were worked out, they hired professional artists to draw cards, exchanging stock options in Wizards for their talents. Then the pair, along with friends and relatives, pooled their savings to make prototypes that they exhibited at game fairs nationwide.

Within months, they snagged a big order from War Games West, a fantasy-game distributor in Albuquerque. The initial printing of 10 million cards in the summer of 1993 sold out in six weeks. Before long, Adkison had quit his day job. Today, Wizards has 260 employees, from artists to game designers, spread through two buildings in Renton. By cranking out a steady stream of new cards and powers, Wizards ensures that the games constantly change. And the need to develop a strategy and play the odds has made the game a particular favorite of mathematically oriented, computer-savvy youngsters.

ECCENTRIC ENERGY. Like many small companies, Wizards has had its share of growing pains. Even though it has doubled its card output in the past year, Wizards admits that it can't catch up to this year's surging demand. Adkison recently hired Joiner Associates, a management consultant based in Madison, Wis., to advise him on better production procedures. Meanwhile, David Lewis was named Wizards' first chief financial officer last year. A 20-year business veteran who has worked at several Seattle-area companies, Lewis says the biggest challenge ahead is sorting out which opportunities to focus on. "We are in the middle of completing our first strategic plan," says Lewis.

Despite Wizards' growth, Adkison is determined to maintain its entrepreneurial spirit. He encourages a corporate culture that combines the intellectual nerdiness of a Microsoft Corp. with the uninhibited antics of a nursery school. Nerf wars occur daily. And it's not unusual to see staffers sporting costumes of Magic creatures, such as the goat-like Hurloon Minotaur.

Tapping that eccentric energy is crucial if Adkison hopes to sustain Wizards' growth. Wizards' youthful audience isn't exactly known for its long attention span. Young boys are always looking for the latest fad--and they don't have to look far. Wizards' success has spawned over a dozen competing card games. TSR, the company that makes Dungeons & Dragons, makes two. Its most popular: Spellfire, another fantasy game that is as yet far less popular than Magic.

To help sustain Magic's momentum, Adkison is taking the game global. It's now available in seven languages, from Japanese to Italian. Wizards also entered into a joint venture with Nightfall Games, a Glasgow-based game developer, to extend Magic's appeal in Europe. And Adkison is counting on tournaments. In August, Wizards sponsored its second annual world championship in Renton, which attracted players from 19 countries.

Adkison is expanding Wizards' bag of tricks, too. Besides Magic, the company markets three other card games. And it has started selling board games, such as RoboRally, in which robots race along an obstacle course.

The new games are selling well, but none have cast the same spell on youngsters that Magic has. And that has stirred speculation within the game industry that Adkison may be tempted to sell out to a manufacturer with the resources to finance a broader marketing push. Without naming any potential suitors, Adkison says he has been approached. But he insists he's not ready to sell. "I think we are just at the beginning of what we could do with this product," he declares.

Wizards could also raise capital by going public. Adkison says that's possible down the road. But, he says, Magic has a strong enough cash flow to expand at a comfortable pace. He notes that Magic is now sold by major retailers, such as Toys `R' Us Inc. and software stores. That's a far cry from hobby stores such as Gary's Games. If he can find even more outlets, Adkison may yet hold off the day that Wizards' magic wanes.

Wizards' Growing Kingdom

GAMES In addition to Magic, the company markets three other card games. Soon to be released: NetRunner, where hackers and corporations vie for computer data. Has also begun selling traditional board games, such as RoboRally, in which robots race through an ever-changing obstacle course.

BOOKS Through a joint venture with HarperCollins, it sells a line of paperbacks based on Magic. Six have been published so far; three more are scheduled for release by February. The top-seller: Forgotten Realms, set in the multidimensional universe of Dominia.

MERCHANDISE Calendars, posters, pins, and T-shirts depicting scenes from its various fantasy games have been a big hit.

OTHER Publishes The Duelist, a bimonthly magazine that offers tips on game strategy. Acclaim Comics publishes a series based on Magic that offers background on popular card characters. This fall, software maker MicroProse will start marketing a CD-ROM version of Magic. A video-game version based on the characters is also in the works.By Seanna Browder in Renton, Wash.


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