Gaming: From Play to Business

Steve "Conan" Trustrum, and other business minded Misfits:
I (and my group of Oddballs) am a recent addition to the Mutants & Masterminds RPG by Green Ronin. We have also recently decided to form a business for the express purpose of producing game books and supplements. I state these two facts together expressly because it was the realization that we could produce M&M Superlink E-book that inspired our specific business concept. I had always planned on putting together a gamebook (for the love of The Game), but always considered publishing cost prohibitive. E-books are a newly discovered market for our small group (Oddballs Anonymous), and not nearly as costly, so we figured "Let's just do it!"
What brings me to you (Steve "Conan" Trustrum), is a thread on the Atomic Think Tank entitled "Would a new line of published M&M products do well?" After reading it in full recently, I was impressed with the advise you (Steve) offered, which of course led me here. I have come to seek additional words of wisdom, if any more can be spared (please).
There are actually a number of things I would like to know, but one thing in particular concerns me most of all. I have heard a few numbers as to sales expectations of an RPG book. Most of those numbers are remarkably depressing, with an occasional so-so sales count. Another author wrote a document that basically showed how a new game book, when sent to the printer and done with professional layout, artists, and writer will yeild a negative profit, not a positive one. This is scary.
From the Atomic Think Tank thread, and other sources, I have heard that selling 100 E-books in the release month is a true accomplishment that few ever achieve. I have also heard that selling 4,000 printed copies of a RPG (specifically an M&M Superlink product) is also extraordinary. Both those sales number come to very little profit, especially if you consider time and money related. Sure the printed will generate more revenue, but that is offset by the print cost.
Bottom line is, if it there is so little revenue generated by RPGs, whether in print or E-book, then how does anyone make any money? Consider the old monolith of TSR who survived for so many years (before Wizards of the Coast), the ever-aging Palladium, the well-researched GURPS, and the phenomenal opening of White Wolf; How do they survive? Why is Wizards of the Coast a fortune 500 company? I am certain that AD&D is a part of the reason, yet nearly everyone tells me that RPGs always run in the red or barely in the black. The best number I have gotten is if the new book gets lucky in print and sells 5000 copies, the net profit comes to around $30K (and that is the most one can hope for). That is hardly enough for the minimum salary of one person. It just does not make sense to me. Can you offer some explanation for this phenomenal discrepency?
Anyway, just so you understand, I enjoy writing, but I am not yet a professional. I love to role play, and have since I was 8. It is a labor of love and a dream, to be paid for being good at what I love to do. I seek to write a high quality RPG, and to be recognized through modest popularity. I am also under the slightly idealistic notion that if a product is quality, then it will sell, assuming gamers see it in the marketplace.
I (and my group of Oddballs) am a recent addition to the Mutants & Masterminds RPG by Green Ronin. We have also recently decided to form a business for the express purpose of producing game books and supplements. I state these two facts together expressly because it was the realization that we could produce M&M Superlink E-book that inspired our specific business concept. I had always planned on putting together a gamebook (for the love of The Game), but always considered publishing cost prohibitive. E-books are a newly discovered market for our small group (Oddballs Anonymous), and not nearly as costly, so we figured "Let's just do it!"
What brings me to you (Steve "Conan" Trustrum), is a thread on the Atomic Think Tank entitled "Would a new line of published M&M products do well?" After reading it in full recently, I was impressed with the advise you (Steve) offered, which of course led me here. I have come to seek additional words of wisdom, if any more can be spared (please).
There are actually a number of things I would like to know, but one thing in particular concerns me most of all. I have heard a few numbers as to sales expectations of an RPG book. Most of those numbers are remarkably depressing, with an occasional so-so sales count. Another author wrote a document that basically showed how a new game book, when sent to the printer and done with professional layout, artists, and writer will yeild a negative profit, not a positive one. This is scary.
From the Atomic Think Tank thread, and other sources, I have heard that selling 100 E-books in the release month is a true accomplishment that few ever achieve. I have also heard that selling 4,000 printed copies of a RPG (specifically an M&M Superlink product) is also extraordinary. Both those sales number come to very little profit, especially if you consider time and money related. Sure the printed will generate more revenue, but that is offset by the print cost.
Bottom line is, if it there is so little revenue generated by RPGs, whether in print or E-book, then how does anyone make any money? Consider the old monolith of TSR who survived for so many years (before Wizards of the Coast), the ever-aging Palladium, the well-researched GURPS, and the phenomenal opening of White Wolf; How do they survive? Why is Wizards of the Coast a fortune 500 company? I am certain that AD&D is a part of the reason, yet nearly everyone tells me that RPGs always run in the red or barely in the black. The best number I have gotten is if the new book gets lucky in print and sells 5000 copies, the net profit comes to around $30K (and that is the most one can hope for). That is hardly enough for the minimum salary of one person. It just does not make sense to me. Can you offer some explanation for this phenomenal discrepency?
Anyway, just so you understand, I enjoy writing, but I am not yet a professional. I love to role play, and have since I was 8. It is a labor of love and a dream, to be paid for being good at what I love to do. I seek to write a high quality RPG, and to be recognized through modest popularity. I am also under the slightly idealistic notion that if a product is quality, then it will sell, assuming gamers see it in the marketplace.