Gygax had been unable to find a publisher for D&D, a new type of game he and Dave Arneson were co-developing, so he founded the new company with Kaye to self-publish their products.
When Kaye died suddenly in 1975, the Tactical Studies Rules partnership restructured into TSR Hobbies, Inc. and accepted investment from Blume's father Melvin.
After losing their executive positions, the Blume brothers subsequently sold their shares to TSR Vice President Lorraine Williams, who in turn engineered Gygax's ouster from the company in October 1985.
Brian's father, Melvin Blume, invested $20,000 in the nascent company which enabled it to buy out Donna Kaye's share of the original TSR partnership.
[10] Due to the inclusion of the word "Advanced" in the title, TSR did not pay Dave Arneson any royalties on AD&D products, saying his co-creation rights extended to the base D&D name only.
Many of TSR's products had consistent sales over time, and the loans allowed the company to recoup the investment immediately and use the funds to make more books.
[18] Gygax granted exclusive rights to Games Workshop to distribute TSR products in the United Kingdom, after meeting with Ian Livingstone and Steve Jackson.
[11] TSR Hobbies diversified by purchasing or starting new commercial ventures such as producing miniatures, expanding into toys and gifts, and adding an entertainment division to explore getting into films and television.
[10] Believing the wargame market to be a lucrative opportunity, TSR immediately released several SPI titles that were ready for publication but had been stranded by a lack of money for printing, such as Battle Over Britain and A Gleam of Bayonets.
[10][25] In 1984, TSR was able to make licensing agreements that allowed the company to publish the Marvel Super Heroes, Indiana Jones, and Conan role-playing games.
In 1985, Gen Con moved out of Lake Geneva which had given it its name, and relocated to Milwaukee, Wisconsin where the game convention would have more badly needed additional space.
Flint Dille, one of his contacts he made in his time in Hollywood, suggested his sister Lorraine Williams might be interested in investing money into TSR.
On TSR's side, they would pepper Gygax with legal threats long after he left in an attempt to deter him from competing with his old company in the area of role-playing games.
Gary Gygax grew particularly disdainful of her; Williams' habit of threatening lawsuits and legal action against perceived foes was criticized as unwise and turning potential allies into enemies.
In 1992, TSR released the Al-Qadim setting with a Middle Eastern flavor similar to a fantasy version of the Arabian Nights, although its world was also connected to the Forgotten Realms.
[10] Under Williams' direction, TSR solidified its expansion into other fields, such as magazines, paperback fiction, comic books, and collectible games.
[36] In the late 1980s, TSR opened a new West Coast division in Southern California to develop various projects in the entertainment industry, similar to how Gygax had sought deals in Hollywood in the early 1980s.
The compromise failed in both directions: DC, feeling betrayed that their partner was moving to become a competitor, immediately stopped production of both the AD&D and Forgotten Realms comics, and canceled an in-production Ravenloft work.
[45] TSR suffered "the effects of overexpansion" in 1996 with an "expanded number of hardcover novels and a wide array of gaming accessories such as its Dragon Dice".
"[49] Ben Riggs agreed that TSR was factionalizing the AD&D audience by continually releasing competing new settings (Forgotten Realms, Al-Qadim, Dragonlance, Planescape, Dark Sun, Birthright, Karameikos, etc.
This financial innovation allowed TSR to be essentially "paid in advance", less fees from the banks and from discounts given to suppliers, which worked out to keeping about 82% of the revenue.
Getting all of the money in January allowed TSR to budget with more certainty and potentially fund projects with a long lead time immediately, rather than waiting on sales.
Other than the direct cost of losing 18 pennies on every dollar of revenue, factoring had the other downside of not being flexible to changing market conditions, as TSR was essentially locked into its budgeting from January.
Random House eventually noticed something was amiss, and began demanding TSR shrink its debt load with them—around $11.8 million in June 1995.
[49] With no viable financial plan for TSR's survival, Lorraine Williams sold the company to Wizards of the Coast in 1997 in a deal brokered by Five Rings Publishing Group (FRPG).
Some TSR employees accepted the offer of transferring to Wizards of the Coast's offices in Washington, and a few others continued to work remotely from Wisconsin.
[62][66] In June 2021, a new, separate TSR company was launched by a group including Ernie Gygax, Justin LaNasa and Stephen Dinehart.
[62][66][67][68] The company is based out of Lake Geneva, Wisconsin; they announced plans to release tabletop games and operate the Dungeon Hobby Shop Museum, which is located in the first office building of the original TSR.
[68] LaNasa's TSR Games then launched a crowdfunding campaign in December 2021 to raise money to sue Wizards of the Coast for "Trademark Declaratory Judgement of Ownership"; the company then filed and voluntarily dismissed the complaint that month.
Wizards admitted that it failed to file paperwork for the registration of TSR, Star Frontiers, and other related marks in a timely fashion as required under federal law.