The End of ICE

[Goblin King]

Over on the forum RPG.NET, a writer named Shannon Appelcline has done a great series on roleplaying companies and their history.
This comes from her second article on the history of Iron Crown Enterprises and the death of the company.

The CCG Line: 1995-1998

During the last few years of the original ICE's existence, the company moved further away from RPGs. MERP sales were entirely depressed, and RMSS was not successful as a revision of their core system. The continually popular Silent Death and card games like Fluxx (1997) increasingly became their bread and butter ... as well as the inevitable CCG.

Shortly after the release of Magic: The Gathering (1993), Wizards of the Coast had started gobbling up licenses for the most notable RPG gameworlds, partially to head off competition. Jyhad (based on White Wolf's Vampire: The Masquerade) was one of these licensed CCGs that they actually published, while Middle-earth was one they sat on.

In 1994, ICE recovered the rights to a Tolkien-based CCG, and in 1995 they published it as the Middle-earth CCG (MECCG). S. Coleman Charlton, the co-designer of Rolemaster and lead designer of MERP was the creative force behind the CCG. In a 1998 interview he'd say, "Many of the dynamics of a CCG correspond to good board game design elements." And, although there's truth in that statement, it also pointed to some of the flaws in the design, because MECCG played like a board game, which meant it was complex (too complex, Charlton would later admit), and that it tried to use cards to simulate board play and even dice.

The complexity of the game definitely hurt sales, but it didn't kill the line. It was still a good game and a great license. ICE sold about $12,000,000 worth of MECCG product, a game ultimately published in 13 languages, include Basque. It was produced up through 1998, and on today's secondary market sealed MECCG boxes still seem to have 30-40% of their MSRP value, which is a lot better than most CCGs of the period.

CCG product lines are overall very hard to manage because of their explosive ups and downs. ICE would find this out, much as Wizards of the Coast had before them, when they listened too much to distributors about what to print for some of their early releases and ended up printing too much as a result. As time went on ICE tried to navigate the turbulent CCG market by changing from collectible releases to non-collectible "challenge decks" decks, but again it wasn't enough. As we'll see, those early overprinting errors would ultimately prove fatal.

Though MECCG was one of the beacons of hope (or at least profitability) in these last years, it would eventually take the company down.

The Last Years: 1994-2001

In the mid to late 1990s, ICE was beset by an ever-increasing number of problems which made the company struggle.

First up was the increasing price of paper. Paper costs had tripled in 1994 and were continuing to spiral upward, totally undercutting ICE's idea of attracting readers through massive sourcebooks & rulebooks. In 1996 they were forced to limit their book size to 250 pages, and in 1997 they dropped their upper limit down to 144 pages.

Second up was Magic: The Gathering (1993). Like computer games before it, CCGs began to gobble up some entertainment dollars, making it that much harder for RPGs to remain competitive.

Then in 1996 the initial CCG bubble burst, and it started bringing down retailers and distributors. Several distributors went out-of-business in 1997 and 1998, and this caused ICE to sign an exclusive distribution agreement with Chessex in the hope that this would allow them to remain afloat. ICE characterized it as a "novel ... direct-to-retail program ... designed around a regional sales and distribution scheme enabling them to compete with Wizards of the Coast", but the trade reacted with alarm. More quietly, White Wolf, FASA, and Heartbreaker toyed with joining the program. Unfortunately Chessex started having cashflow problems too. When Chessex merged into Alliance Distribution, ICE's exclusive was dissolved, and its other potential distrbution partners pulled out of negotiations.

1996 was ICE's best year, thanks largely to the CCG and strategy gaming market, with sales peaking at just under $6,000,000. But the company's focus seemed to be on cards and its own core lines; the Hero System wasn't getting enough attention. So, after an amicable warning, Hero Games jumped boat on August 26, 1996, when they announced that R. Talsorian Games was taking over their publishing and distribution. ICE had published and sold licensed Hero Games books for 10 years, and the line accounted for about 20% of ICE's core (non-CCG) revenue. The loss of the brand during the height of CCG sales didn't make a big difference, but after the CCG stopped production the next year, it became a third factor contributing to ICE's last round of financial difficulties, which really started gathering steam at the end of 1997.

ICE wasn't the only company having problems in 1997. ...
Just four months later, however, things were turning pretty bad for ICE. On September 19, 1997 ICE declared a moratorium on the MERP line. They planned to support it in small ways with short supplements and crossovers with their MECCG and Rolemaster lines, but for all intents and purposes, MERP was dead. Any hope of Lord of the Rings roleplaying was instead pinned on ICE's plan to release a new roleplaying game to coincide with the new Lord of the Rings movies, even then planned for the big screen.

...
The nail in ICE's coffin was overprinting a number of early supplements for MECCG. In general CCG economics run at a level of magnitude higher than what's normal for an RPG company. (For example, ICE's revenue in 1996, supported by healthy CCG sales, was $6 million, which compared to a more average $1.5-2.5 million of later years.) When MECCG had released in 1995 it helped ICE take care of its last debts left over from its first near-bankruptcy, following the Solo Quest debacle. Now by overprinting the second MECCG Unlimited Edition (in June 1996), and the next couple of supplements, ICE had sent the pendulum swinging far back in the other direction. Even after they got the printing number right with their later supplements (the last one being entirely prepaid and presold), they never recovered.

MECCG production stopped in 1998 and ICE's debts began to pile up.

...
Reports in 1999 indicated that RPG sales were on the upswing, and this boded well for the new RM system. However ICE's troubles with paper prices, RPG sales to date, dying distributors, the loss of Hero, and the debts left behind by MECCG were too much. ICE was unable to bridge the final year or so that would have been required for Rolemaster Fantasy Roleplaying to mature ... and for the Lord of the Rings movies to be released, thus offering new opportunities for growth of the Middle-earth license.

Unfortunately one of the debts that was piling up by 1999 was royalties owed to Tolkien Enterprises. And, there can be little question that Tolkien Enterprises had a vested interest in recovering the Tolkien gaming rights before the movies released. In a 1995 interview, Laurie Battle, then the licensing director of Tolkien Enterprises, responded to a question about the direction of the MERP second edition game by saying, "To be honest, our eye is focused more on royalty income rather than on the finer details of the games themselves." With such a mercenary attitude it might have seemed to them good business sense to use entirely legal methods to force ICE into bankruptcy, so that Tolkien Enterprises could then be freed of their contract with ICE. (And other reports suggest that it wasn't the only lawsuit that Tolkien Enterprises was involved in at the time.)

In 1999 Tolkien Enterprises called in their debts and thus ICE was forced to file for chapter 11 bankruptcy protection. This is the type of bankruptcy which temporarily protects a company from debtors so that they can reorganize the company and make it profitable again. Clearly ICE intended to have another go at it once they got their house in order.

...
However, by going into bankruptcy, even temporarily, ICE gave Tolkien Enterprises the opportunity to recover the Middle-earth license, and they did. On September 21, 1999 ICE announced that they'd lost the rights to Middle-earth. They still kept publishing their other lines for another year, and put out a few last Rolemaster books and even some brand-new Spacemaster books while in chapter 11, but by now they were doomed.
...
Unfortunately, Tolkien Enterprises wasn't done with ICE yet and they stayed aggressively involved with ICE's bankruptcy proceedings. At one point they forced ICE to stop sales of past MERP modules, even though this could have raised money they needed to pay off their debt. Later Tolkien Enterprises convinced ICE's bank to freeze their funds, which has been reported as the ultimate cause of what happened next. Around October 26, 2000 Pete Fenlon announced that ICE had entered chapter 7 bankruptcy, which is the bad kind:

I regret to say that, after 20+ years and after having published hundreds of adventure game products, Iron Crown Enterprises is closing its doors. We have filed a voluntary petition in the United States Bankruptcy Court pursuant to Chapter 7 of Title 7 of the United States Code, which governs the liquidation of companies. We are converting our Chapter 11 petition to a Chapter 7. We are beginning steps toward dissolution. We enter this termination period with great sadness. At the same time, we are very proud of our work, of the people we have trained and nurtured, and of the many rich experiences and friendships we have been blessed to receive. We are especially proud of having such a great group of loyal customers. All of us have been honored to serve the adventure game market with what have usually been labors of real love. While we have often been financially poor, we have always been enriched by our trade. Thank you for letting us serve you.