In 1996, an unexpectedly high cost of returned (unsold) fiction books and an expensive, unsuccessful foray into the collectible card game market caused a cash flow squeeze, and Williams sold TSR to Wizards of the Coast in 1997.
[4] Gary Gygax, co-inventor of the role-playing game Dungeons & Dragons and partner in the company TSR, had been sent to Hollywood in 1982 to work on licensing the Dungeons & Dragons brand, leaving fellow board members of TSR, Kevin and Brian Blume to run the day-to-day operations of the company.
In an attempt to bring new investment money into the company, Gygax asked Flint Dille to arrange a meeting with his sister, Lorraine Williams.
[7] Gygax considered firing Williams[5] in order to replace her with his future wife, Gail Carpenter, but was advised against this.
[12] Upon leaving TSR, Gygax had founded New Infinities Productions, Inc., and subsequently developed a new fantasy role-playing game, spanning multiple genres, called Dangerous Journeys.
[5] The suit was eventually settled out of court, with TSR buying the complete rights to the Dangerous Journeys system from New Infinities and then permanently shelving the entire project.
Under Williams's direction, TSR initially maintained its leadership position in role-playing games, and expanded further into additional fields, including magazines, as well as paperback fiction, and even comic books.
[17] Sales of Dragon Dice through the games trade started strongly, so TSR quickly produced several expansion packs.
However, Dragon Dice did not catch on through the book trade, and sales of the expansion sets through traditional games stores sold poorly.
When Random House returned an unexpectedly high percentage of the year's inventory of unsold novels and Dragon Dice for a fee of several million dollars, TSR found itself in a cash crunch.
[17] Bob Abramowitz of Five Rings Publishing Group met with Williams and he was able to negotiate with her to secure an option for the purchase of TSR, using funding from Wizards of the Coast.