Wizards of the Coast singlehandedly revolutionized the gaming industry in the 1990s. The company introduced the hugely popular Magic: the Gathering collectible trading card game and, using the huge profits generated from the game, proceeded to buy up several major players in the gaming and RPG market in the late 1990s, including TSR, the makers of Dungeons & Dragons. The company was bought out by Hasbro in 1999 as Hasbro went on a similar buying spree in the gaming market.
Wizards of the Coast was formed in 1990 by Peter Adkison in the college town of Walla Walla, Washington. Peter was an engineer at Boeing at the time and was a gaming junkie. The company at first was intended to be a small producer of pen-and-paper role playing games; Peter and the friends he founded the company with were (and still are) avid players of such games. The group had a number of ideas for how to make some interesting new RPGs like the ones that they had developed in their own spare time and they believed that there was a market for such titles.
In 1991, as the company moved its headquarters to Renton, Washington and was just getting started in producing various RPG titles, Adkison was introduced to a man by the name of Richard Garfield. Richard was a mathematician who had a strong fondness for card games and board games in his spare time, and he was interested in showing Peter a board game he had developed called Robo Rally. Peter was impressed, but he felt that the challenges of producing the title were above what his company was capable of. Instead, Peter gave Richard a request for a different type of game: one that could be played with minimal equipment in a short period of time but would allow for a great deal of variety.
In late 1991, Richard returned with a prototype of a game that would become Magic: the Gathering. It borrowed some ideas from the classic board game Cosmic Encounter, but it was truly an original creation. The game revolved around the concept of a wide variety of cards, each of which had a different ability. Players would take their collection of cards and from this collection select a small subset of cards with which to play a game. Then, by playing combinations of these various cards, a winner would be determined.
The game was pure genius and Peter recognized this. He purchased publishing rights to the game from Richard Garfield (under the moniker of "Garfield Games") and Richard joined Wizards of the Coast in 1992. As the game developed for a year, the company gradually became more and more focused on the project; they believed it would be a very strong success in the already established RPG market. In fact, in 1992 through 1994, the company halted production on other titles to focus directly on Magic: the Gathering.
At the 1993 Gen Con gaming convention, Magic made its public debut. The company expected a moderate demand for the title and had stocked accordingly. On the first day, they sold briskly and the company believed the first day was thoroughly a success. As legend has it, on his way to the company booth on the second day, Peter wandered through a few gaming rooms and found virtually everyone either playing Magic or watching a game being played. When their booth opened on the second day, the entire remaining supply they had for the remainder of the convention sold out in fifteen minutes.
As the game was released publicly later in 1993, it spread like wildfire. The company started producing expansion sets for the game, starting with the literature-themed Arabian Nights and continuing with more expansions roughly every four months thereafter. Each expansion sold like wildfire until the fifth one, Fallen Empires, which was massively overproduced in late 1994. Still, with the next set, Ice Age, they switched to a smaller print run and the game kept going and going and going. It still sells amazingly well to this day.
Spurred on by this success, the company began to produce more titles, many of which were successful. Among these were the Jyhad, Netrunner, and Battletech collectible trading card games, and several RPGs, including the interesting Everway, which is played with a tarot deck. The company also began purchasing other companies in the genre, including Five Rings Publishing and, in 1997, the previous dominant company in the RPG genre, TSR, who had made the Dungeons & Dragons RPG lines since the mid-1970s.
Perhaps even more valuable is that the company obtained a patent in 1996-1997 for many of the mechanisms of a collectible trading card game, which allowed them to charge other companies for the rights to make such a game. There were loopholes in this, but this patent largely put Wizards of the Coast on top of the lucrative collectible trading card game market for good.
It was this huge success and clear demonstration of the profit that could be made in the RPG and collectible trading card game markets that made Hasbro interested in the field. In 1998, the company purchased Avalon Hill, a reknowned maker of great board games. In 1999, Hasbro topped themselves by buying Wizards of the Coast for the princely sum of more than $325 million.
The name Wizards of the Coast is still alive today as a wholly-owned subsidiary of Hasbro. Peter Adkison resigned from the company in 2001 to pursue personal interests, but he left behind as part of Hasbro the legacy of the collectible trading card game and especially its most popular example, Magic: the Gathering.