From: "Ryan S. Dancey" <[d--nc--y] at [isomedia.com]>
Newsgroups: rec.games.frp.misc
Subject: Re: Dune Dead ?
Date: Sun, 14 Jan 2001 13:44:52 -0800
Message-ID: <[t 647 ela 8673 a 7 c] at [corp.supernews.com]>

>  I'm inclined to doubt this.  Simply because this scenario requires
> WotC to present itself publicly as bungling the whole purchase from
> start to finish.

We bought LUG for three reasons:

1)  We wanted to expand the staff resources available to work on licensed
d20 RPGs, and the existing staff was maxed out in terms of avaialble
resources.  LUG offered a self-contained unit of people who had already
demonstrated that they could work with licensors effectively, and had in
house staff doing "the Big Three": Line development/writing, art
direction/illustration, and editing/proofreading.

2)  We wanted to get into the disk game category, and LUG had a disk game
product ready to go with a very low-cost license from Fantasy Flight.

3)  We wanted to be in the Star Trek business in general.  Had we kept the
Star Trek rights LUG had, I am certain that our recent fan club purchase
would have included the Star Trek half as well as the Star Wars half.

In the interest of not getting sued, I'll just say that our relationship
with the Star Trek licensor represented the worst treatment I have ever
personally observed in a commercial transaction of this nature.  I will also
say that the failure to negotiate and extended term with Paramount had
nothing to do with Wizards of the Coast or Star Wars.  In fact, we made them
an offer of one of the largest up-front guarantees I have ever seen from a
hobby gaming company in our renewal offer.  Paramount had already secretly
made committments to Decipher long before we bought LUG, which we were not
told about until after the acqusition of LUG had closed, even though
Paramount knew we were valuing the company primarily on the basis of its
Star Trek lines.  Once that portion of the deal started to unravel, the
problems spread to the rest of the structure quickly and brought the whole
thing down in the end.  Having been on both the buying and the selling end
of transactions of this nature, my opinion is that we had no reason to
suspect that Paramount did not intend to renew the LUG Star Trek license
with us.  Their silence in regards to their secret deal with Decipher was in
my experience, a stunning and incomprehensible decision.  Their failure to
negotiate with us in good faith came as a complete shock to everyone
involved, including the team at LUG.

In fact, LUG was struggling to remain an independent company and required a
substantial cash infusion to survive when we acquired them.  The bulk of the
purchase price for LUG was used to retire LUG debts and other obligations.
If Wizards had not acquired them, it is doubtful that LUG would have
released any further new products (including Dune or Red Alert), and might
not have survived the summer anyway.  The annoucement of Decipher's Star
Trek deal would have only hastened the end.

If the ST rights had remained at Wizards and we had been able to continue to
produce the Red Alert disk game, I believe that most of our original plans
for LUG would have been able to continue.  The game did quite well,
considering, and showed an immense amount of promise.  However, I also think
that we would have been doing fewer licensed d20 RPGs anyway, to reduce the
overhead load on other parts of the company so it is possible that some LUG
staff members would have been terminated, or that the LA office would have
been closed and relocated to Seattle in any event.

Dune did not factor into our purchase decision.  I was pleased that we had
the chance to satisify the LUG team's promises to their fans by publishing
the ICON Dune book, and that a product they worked on for quite a long time
was produced and brought to market.  I am very sorry that we didn't have the
chance to publish the d20 version of the game as well.  I am personally a
big Dune fan myself (I worked the FRPG side of the Dune TCG for nearly three
years...)  However, the estimated revenue and profit from the line was so
small that it had no factor, positive or negative, on the decision to
acquire the company.

Most, if not all, of the employees of LUG were offered jobs in the recent
restructuring; contingent on their relocating (at our expense) to the
Seattle area so we could close the LUG office and stop incurring the expense
of having a separate facility.  All but one person elected not to take that
offer.

I think that if you speak privately to any of the owners of LUG, you will
hear that they felt that there was a tremendous opportunity lost at Wizards,
and that they never had a chance to try to change the system or to prove
themselves, but that they were treated honorably and fairly.  I suspect that
they feel their situation was frustrating for what might have been (and for
some of what was) but that they don't regret deciding to sell the company to
Wizards.

Ryan