Podcasts > The Game w/ Alex Hormozi > Helping A Dungeons & Dragons Publisher Grow His Business | Ep 846

Helping A Dungeons & Dragons Publisher Grow His Business | Ep 846

By Alex Hormozi

In this episode of The Game w/ Alex Hormozi, Hormozi examines Night Vision Creative, a company that publishes Dungeons & Dragons content through collaboration with its community. He delves into Night Vision Creative's customer avatars, financial performance, and challenges with crowdfunding and customer acquisition strategies.

Hormozi offers insights on optimizing the marketing and sales funnel, such as introducing a self-liquidating offer funnel and leveraging influencer content for ads. He also discusses Night Vision Creative's SaaS platform, Creed's Codex, and its potential to drive revenue through conversion tools and gameplay features, emphasizing the importance of customer lifetime value.

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Helping A Dungeons & Dragons Publisher Grow His Business | Ep 846

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Helping A Dungeons & Dragons Publisher Grow His Business | Ep 846

1-Page Summary

Ttrpg Publishing and Night Vision Creative's Model

Night Vision Creative: A Collaborative TTRPG Publisher For D&D Content

Night Vision Creative is a collaborative force in TTRPG publishing, catering to the $1.7 billion market of Dungeons & Dragons players. Their model integrates the community into content creation, and product offerings include hardcover books, PDFs, and the SaaS platform Creed's Codex.

Three Customer Avatars

The cost-conscious hobbyist buys digital PDFs, professionals choose books or PDFs based on preference, and collectors value a bookshelf of products. Hormozi notes that the caller previously made $34,000 in profit from a $5,000 investment.

Financial Performance and Key Metrics

Revenue and profit fluctuated, declining in 2024 due to crowdfunding issues, increased ad spend, and inventory costs. Meanwhile, customer acquisition cost rose from $5 to $12 and returning customer percentage dropped.

Challenges With Crowdfunding and Customer Acquisition Strategies

Switching from Kickstarter to Backerkit lowered conversion rates. Meta ads struggled to convert leads despite large audiences. The company paid influencers but hasn't used their content for ads.

Optimizing the Marketing and Sales Funnel

Hormozi suggests a self-liquidating offer funnel with a $5 intro product to upsell higher bundles, offsetting ad costs. He advises expanding from 2 to 14 emails highlighting features, and whitelisting influencers' content to improve ad performance.

Incorporating SaaS Product to Drive Revenue

Creed's Codex SaaS platform achieved a 2% monthly churn rate. While not directly revenue-focused, the platform offers conversion tools like searchable content libraries and gameplay tools. Hormozi advises focusing on conversions and customer lifetime value.

1-Page Summary

Additional Materials

Actionables

  • You can leverage your social media following by partnering with creators in your niche for content exchanges, where you share each other's content to increase reach without additional ad spend. For instance, if you're a hobbyist photographer, find a photographer with a similar style and audience size, and agree to share each other's posts once a week to tap into each other's audiences.
  • Create a low-cost digital product related to your hobby or interest that can be easily distributed online, such as an eBook or a set of printables, and use it as an entry point to upsell more comprehensive offerings. If you're into gardening, for example, you could create a downloadable guide on starting an herb garden and then offer a more detailed course on sustainable gardening practices as an upsell.
  • Optimize your personal budget by tracking your expenses in a spreadsheet and identifying areas where you can cut costs, similar to how businesses analyze financial performance. This could involve categorizing your monthly expenses, highlighting non-essential spending, and setting goals to reduce these costs over time, thereby increasing your savings rate.

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Helping A Dungeons & Dragons Publisher Grow His Business | Ep 846

Ttrpg Publishing and Night Vision Creative's Model

Night Vision Creative: A Ttrpg Publisher Collaborating With Community For D&d Content

Night Vision Creative has emerged as a collaborative force in the TTRPG publishing world, focusing on creating content that embodies the community’s influence and caters to the growing market of Dungeons and Dragons players.

Ttrpg Market Worth $1.7 Billion, Growing 12% Annually; D&d Is the Largest Ttrpg

The TTRPG market, part of the broader board game industry, boasts a valuation of $1.7 billion with a healthy growth rate of approximately 12% each year. Dungeons and Dragons (D&D) is identified as the largest TTRPG, synonymous with the genre for many enthusiasts. Alex Hormozi notes that this massive market includes 50 million participants, with millions more in lookalike audiences ripe for targeting.

Night Vision Creative takes advantage of this expanding market by producing books, PDFs, and offering a unique SaaS platform, Creed's Codex. Their model involves integrating the community at various stages of content creation, such as selecting concept art, generating character names, and even featuring community members’ names within their books.

Their approach to product offerings is multifaceted: hardcover books are available for $70 (including a digital version), a digital-only version for $40, and the SaaS platform Creed'sCodex.com, a subscription service at $19.99 per four weeks that also grants credits for book purchases.

Night Vision Creative: Three Customer Avatars Based On Buying Behavior

Night Vision Creative’s customer base is segmented into three primary avatars defined by their buying behavior.

The Cost-Conscious Hobbyist Buys Digital Pdfs

The first avatar is the cost-conscious hobbyist, who typically opts for digital PDFs of TTRPG content. This savvy customer often seeks the best deal, purchasing all-digital products and frequently adding another PDF to their cart at a discounted ...

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Ttrpg Publishing and Night Vision Creative's Model

Additional Materials

Clarifications

  • A tabletop role-playing game (TTRPG) is a type of role-playing game where players describe their characters' actions verbally and make decisions based on rules and guidelines. TTRPGs like Dungeons & Dragons involve storytelling, character development, and gameplay mechanics like dice rolling. The game typically has a Game Master who oversees the game world and guides the players through the narrative. TTRPGs can be played in person or online, offering players the freedom to shape the story and outcomes through their choices.
  • Software as a Service (SaaS) is a cloud computing model where software is hosted on the provider's servers and accessed over the internet. Users typically pay a subscription fee to use the software, which is maintained and updated by the provider. SaaS allows for easy scalability, as users can access the software from any device with an internet connection. It eliminates the need for users to install and maintain the software on their own devices.
  • In marketing ...

Counterarguments

  • The valuation of the TTRPG market and its growth rate might not be sustainable long-term, as market trends can fluctuate due to various factors such as economic downturns or shifts in consumer interests.
  • Night Vision Creative's reliance on the D&D brand and its community might limit their ability to innovate or create original content that diverges from the expectations of D&D players.
  • The segmentation into three customer avatars may oversimplify the diversity of the TTRPG community, potentially overlooking other significant customer groups or preferences.
  • The pricing strategy for hardcover books and digital versions might not be accessible to all players, particularly in regions with lower average incomes or among younger audiences with limited spending power.
  • The SaaS platform, while innovative, may face competition from free or lower-cost alternatives, which could impact its adoption and success.
  • Involving the community in content creation could lead to a lack of consistency in the quality and style of the produ ...

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Helping A Dungeons & Dragons Publisher Grow His Business | Ep 846

The Company's Financial Performance and Key Metrics

Night Vision Creative, a company known for printing books, has experienced fluctuations in its financial performance, including changes in revenue and profit, as well as in essential business metrics such as customer acquisition costs and return customer percentages.

Night Vision Creative's Revenue and Profit Have Fluctuated

The financial landscape for Night Vision Creative has seen variances over the past two years, marked by both significant growth and declines in revenue and profit.

2023: $142k Revenue, $34k Profit

A caller mentions that 2023 was their biggest year, generating $142,000 in revenue with a profit of $34,000. The cost of goods sold (COGS) for printing the books is approximately $8 and, when considering additional costs such as technical editors and artists, it rounds up to about $24. However, the caller notes that these costs could decrease with economies of scale. Furthermore, Alex Hormozi points out that the caller made an impressive return from an investment of $5,000, indicating a robust financial year for the company.

2024 Revenue and Profit Decline From Crowdfunding Issues, Ad Spend, and Inventory Costs

Moving into 2024, the company faced challenges, including a decline in revenue and profit which was attributed to issues surrounding crowdfunding campaigns, increased advertising expenditures, and inventory costs. Before launching a campaign in 2024, they spent $12,000 on advertising, more than double the previous year's amount, and an additional $5,000 while the campaign was live.

Acquisition Cost Up, Return Rate Down

Several key metrics critical to the business's health have shifted in recent years, particularly around customer acquisition and retention.

CAC Rose From $5 in 2022 To $12 In 2023 Due to Increased Advertising Spend

The company's customer acquisition cost (CAC) substantially rose from $5 in 2022 to $12 in 2023 due to increased spending on advertising. The caller indicates that although the ads led to leads, they did not efficiently convert into cus ...

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The Company's Financial Performance and Key Metrics

Additional Materials

Actionables

  • You can analyze your own spending habits to identify areas where costs have increased, similar to how a business would assess rising advertising expenses. Start by tracking your monthly expenses in a spreadsheet or budgeting app, categorizing them to see where you're spending more compared to previous months. For example, if you notice your grocery bills have gone up, consider shopping at discount stores or buying in bulk to reduce costs.
  • Improve customer retention by personalizing your interactions with services you frequently use. Take the initiative to provide feedback, ask for customized options, or engage in loyalty programs. For instance, if you're a regular at a local coffee shop, join their loyalty program and build a rapport with the staff, which could lead to perks or discounts that make you more likely to return.
  • Experiment with reducing unnecessary expenditures by simulating a decrease in personal re ...

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Helping A Dungeons & Dragons Publisher Grow His Business | Ep 846

Challenges With Crowdfunding and Customer Acquisition Strategies

Company Used Kickstarter and Backerkit For Product Launches

Anecdotal evidence and lower traffic rates point to conversion issues after the company moved away from Kickstarter to Backerkit for their product launches. The third project they launched on Backerkit only saw a conversion rate of about 1.5%, a drop from the previous 12% on Kickstarter. The platform change seems to be a significant factor in this decline.

Switching From Kickstarter To Backerkit Lowered Conversion Rates and Customer Acquisition

The caller illustrates that the switch from Kickstarter to Backerkit resulted in a disconnect with customers leading to decreased conversions and lower traffic. Additionally, the use of a Late Pledge store typically increased profits by about 5-10% from the campaign, however, adding a SaaS product to Kickstarter raised questions about pricing and value addition as it was uncommon in the crowdfunding scene.

The platforms themselves presented challenges. For instance, Backerkit's conversion rates paled in comparison to Kickstarter, and running simultaneous campaigns on multiple platforms often isn't allowed or successful. The caller also considered using GameFound as an alternative or returning to Kickstarter due to these issues. Alex Hormozi later notes that Kickstarter provided 30% of the customers, underlining the loss incurred from platform switching.

Company's Meta Ads Less Effective Than Expected

Ad Strategies Struggle to Convert Leads

Meta ads have been a leading driver in customer acquisition, accounting for 50% of the influx. However, despite strong lead magnets and visually appealing ads, the expected conversion rates were not met. Surprisingly, purely aesthetic images didn't perform as anticipated, and videos consistently underperformed. The target audiences' size varied widely, w ...

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Challenges With Crowdfunding and Customer Acquisition Strategies

Additional Materials

Counterarguments

  • The lower conversion rates after switching from Kickstarter to Backerkit could be due to factors other than the platform change, such as market saturation, changes in consumer behavior, or the nature of the products launched.
  • The Late Pledge store's profit increase might not solely be attributed to the platform but could also be influenced by the type of backers or the marketing strategies employed during the crowdfunding campaign.
  • Adding a SaaS product to Kickstarter might have been innovative and could potentially attract a new segment of backers interested in software products, despite it being uncommon.
  • Backerkit's lower conversion rates compared to Kickstarter might be offset by other benefits such as better backer management, upselling opportunities, or a more dedicated niche community.
  • Running simultaneous campaigns on multiple platforms could be successful if the campaigns are differentiated enough and target different audiences, although it is generally not recommended.
  • Considering GameFound as an alternative or returning to Kickstarter should involve a thorough analysis of the target audience and the specific features of each platform that could benefit the company's unique needs.
  • The 30% customer acquisition from Kickstarter might not be a loss if the overall customer lifetime value or profit margins are higher on Backerkit or another platform.
  • Meta ads not meeting expected conversion rates could be due to a variety of factors, such as ad fatigue, poor targeting, or changes in the platform's algorithm, rather than the ads themselves.
  • Aes ...

Actionables

  • You can test different crowdfunding platforms with small, low-risk projects to determine which yields better conversion rates for your specific audience. Start with a simple product or idea that doesn't require a large investment, and launch it on various platforms like Indiegogo, GoFundMe, or niche sites related to your project's theme. Track the conversion rates and customer feedback to identify which platform aligns best with your target demographic.
  • Experiment with creating a post-campaign sales page on your website to capture late pledges and compare the results with a Late Pledge store. Use a simple e-commerce plugin or a dedicated landing page to offer your product after the crowdfunding campaign ends. Monitor the sales and profit margins to evaluate if this method is more effective for your business than using a third-party Late Pledge service.
  • Develop a clear, concise content strategy for social media ad ...

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Helping A Dungeons & Dragons Publisher Grow His Business | Ep 846

Opportunities to Optimize the Marketing and Sales Funnel

The conversation with Alex Hormozi and a caller reveals strategies for improving the marketing and sales funnel, focusing on self-liquidating offers for customer acquisition and cash flow, boosting conversion through effective email marketing, and leveraging customer base and influencer relations to improve advertisement performance.

Self-Liquidating Offer Funnel For Acquisition & Cash Flow

Alex Hormozi introduces a self-liquidating offer funnel, which serves as a strategy to incentivize customers to make an introductory purchase and then entice them to buy higher-value bundles.

$5 Intro Product: Upsell to Higher-Value Bundles

The $5 intro product is a discounted offer designed to entice customers to enter the sales funnel. This initial purchase is heavily discounted, with a supplemental PDF normally priced at $25 offered for $5. This discount serves as a powerful selling conversion piece and acts as a "tripwire" for upselling customers to higher-value bundles. The upsell strategy discussed suggests that following the $5 introductory offer, customers are presented with the opportunity to purchase a book plus its PDF for a total of $75 plus shipping.

Funnel Offsets Ad Costs, Boosts Cash Flow

Hormozi underscores the importance of this type of funnel in offsetting advertising costs and boosting cash flow. The self-liquidating offer allows businesses to allocate significant amounts to advertising, knowing that these costs will be recouped through the offer. The funnel aims for a 30-50% recovery rate of the capital spent on advertisements, with a focus on scaling by maximizing the take rate for the upsell. Even if the funnel does not recover 100% of the ad spend initially, achieving even 50% to 70% back can dramatically increase the advertising budget.

Improving Email Marketing Boosts Conversion and Revenue

Expanding the email follow-up strategy from two to a 14 email sequence is advised to increase conversion rates.

Expanding From 2 to 14 Emails Boosts Conversions

The caller’s initial strategy included an email with a PDF followed by a survey for additional free PDFs. Hormozi suggests increasing this sequence to 14 emails to encourage reconsideration and reinforce the benefits of the product.

Emails Should Highlight Features and Benefits to Drive Sales

Hormozi also recommends using descriptive emails to focus on specific product features, such as a spell from a book, to entice the customer. This technique leverages the appeal of the product's features and bene ...

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Opportunities to Optimize the Marketing and Sales Funnel

Additional Materials

Counterarguments

  • Self-liquidating offers may not work for all business models or customer segments, as some customers might be resistant to upsells or may not perceive the initial low-cost item as valuable.
  • A $5 intro product could potentially devalue the perceived worth of the higher-value bundles, leading customers to expect discounts consistently.
  • Relying on a funnel to offset ad costs assumes a consistent conversion rate, which may not account for market fluctuations or changes in consumer behavior.
  • Expanding an email sequence to 14 emails could increase the risk of unsubscribes due to email fatigue if the content is not highly engaging or relevant to the recipient.
  • Highlighting product features and benefits in emails is a common practice, but it may not be sufficient to drive sales without a clear understanding of the customer's needs and pain points.
  • Whitelisting in ...

Actionables

  • You can create a customer feedback loop to refine your introductory offer by sending a short survey to buyers asking what almost stopped them from purchasing and what convinced them to upgrade. This direct insight allows you to tweak your $5 product and the subsequent upsell process to better meet customer expectations and increase the perceived value of your bundles.
  • Develop a referral program that rewards customers for sharing your product with friends after their purchase, incentivizing word-of-mouth marketing which can further offset advertising costs. By offering a discount or bonus to customers who successfully refer new buyers, you're leveraging your existing customer base to attract new leads without additional ad spend.
  • Partner with a local business or online community t ...

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Helping A Dungeons & Dragons Publisher Grow His Business | Ep 846

Incorporating SaaS Product to Drive Revenue

As businesses look for innovative ways to drive revenue, Software as a Service (SaaS) platforms like Creed's Codex provide excellent examples of how digital products can create sustainable income with low churn rates and strong customer value.

Creed's Codex SaaS Platform Achieves Early Success With 2% Monthly Churn Rate

Creed's Codex, a recently launched SaaS application, has achieved noteworthy early success reflected by a low 2% monthly churn rate. The platform appeals to users with a searchable TTRPG content library and gameplay tools, becoming a go-to repository for these particular digital needs.

The company made a significant capital expenditure to develop this system, which allows for the incorporation of content easily by the team and offers a stable, recurring revenue model.

SaaS Platform Offers a Searchable TTRPG Content Library and Gameplay Tools

Within two months of its launch, Creed’s Codex has implemented pricing strategies that supercharge its offers, granting years of access as part of bundle deals. Their pricing points are attractively hit with a founder tier at $9.99, a general offering at $19.99 every four weeks, and a premium tier at $1,000 a month featuring custom illustrations. Additionally, they offer an annual option available at a 20% discount.

SaaS Platform Has Potential for Stable, Recurring Revenue

The low churn rate of 2% monthly indicates that customers tend to stay with the service for an average of four years. This longevity suggests a substantial Lifetime Value (LTV) of customers, calculated to be approximately $500.

Despite most users initially only expected to use free credits, the platform surprisingly generated tangible revenue. Creed's Codex also experienced success with its cost structure. For just around $100 a month and an annual larger payment, the platform's maintenance is relatively low considering its revenue potential.

Boost Customer Lifetime Value & Retention With SaaS

The platform gives immediate access to digital tools that help customers search and filter content, along with work-in-progress manuscripts. This approach to content availability contrasts with services like those provided by Wizards of the Coast, which give access to digital books without ownership. Creed’s Codex intends to provide temporary but complete access to content through this SaaS platform, including both hardcovers and digital items.

The speaker's goal is to expand fro ...

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Incorporating SaaS Product to Drive Revenue

Additional Materials

Counterarguments

  • The low 2% monthly churn rate is promising, but it may not be sustainable as the user base grows and the novelty of the service wears off.
  • While the platform offers a searchable TTRPG content library and gameplay tools, it may face competition from other platforms that could offer similar or better features.
  • The pricing strategy, although varied, might not appeal to all segments of the target market, potentially limiting the platform's reach.
  • The estimated average customer lifespan of four years and LTV of $500 are based on early data and may not accurately predict long-term trends.
  • Generating tangible revenue from users initially expected to use free credits is positive, but the platform must ensure that the value provided justifies the transition to paid tiers.
  • Low maintenance costs are beneficial, but they must be weighed against the potential need for ongoing investment in technology, security, and content updates to remain competitive.
  • Immediate access to digital tools is a strong selling point, but the platform must maintain a high level of quality and user experience to retain customers.
  • The goal of expanding from 69 to 6,900 users is ambitious and may require significant marketing and user acquisition costs.
  • While earning free credits can enhance engagement, the platform must balance this with the need to convert users to paying customers to ensure profitability.
  • The fact that most users have not ...

Actionables

  • You can analyze your own subscription services to identify which ones you've kept the longest and why, mirroring the podcast's mention of a four-year average customer retention. Look at the services you subscribe to and note down the ones you've had for several years. Consider what keeps you loyal: Is it the cost, the content, the convenience, or something else? Use this insight to make more informed decisions about future subscriptions or to negotiate better terms with the services you use.
  • Create a personal reward system to incentivize your own engagement with products or services, inspired by the platform's use of free credits for participation. For example, set a goal to read a certain number of books each month, and if you achieve it, reward yourself with a small purchase or a special activity. This can help you stay motivated and engaged with your personal goals, much like the credit system encourages user participation.
  • Experiment with a tiered value assessment of your expenses, similar to the ...

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