A core part of the business strategy is what they're calling the "Digital Initiative". This includes things like logins to the WOTC "Gleemax" forums, the now online-only version of Dragon and Dungeon magazines, web-based character creation and dungeon-design tools, and an online game table where players can push around virtual miniatures and roll dice. All for various fees, of course: some combination of overall monthly subscription fees, subscriptions to the "magazines", more for the tools, game table, more for virtual miniatures, access to digital versions of expansion books that they sell, etc.
At the announcement event at GenCon, the presenter laid out a strategy that included 4 parts: (1) Physical Product (actual books & miniatures), (2) Organized Play (conventions & online organization tools), (3) Community (Gleemax.com, social networking tools), (4) Digital Offerings (creation tools, game table, web magazines). You can see the summary at ENWorld here, and the first of the 4 video presentations on YouTube here.
By my counting, that's 3 of the 4 parts of this strategy that are really online computer-based offerings (for a subscription). They make it sound like 75% of their business model is now dependent on the Digital Initiative.
It seems clear that WOTC is looking enviously at the advent of major MMORPG's, like World of Warcraft, that are raking in millions of dollars per month in subscription fees (orders of magnitude more than pen-and-paper RPG's ever made). They're willing to completely re-architect the game to pursue the flavor, classes, magic sensibility, and levelling experience, basically of World of Warcraft, and the consensus opinion is that they're betting -- that they need -- to attract lots of young players away from WOW to start playing D&D. Like I say, they themselves make it sound like 75% of their strategy is dependent on a massive monthly income stream from online offerings.
This has an overwhelming number of risks -- in my opinion, it's fundamentally a bad bet. First, it's not playing to D&D's core strengths; instead of emphasizing the things that can be done well in pen-and-paper, and are poorly done online, they're specifically trying to mimic popular online games in mechanics and delivery. This will only make D&D look worse in comparison (while losing chunks of the traditional 1E, 3E customer base). Ryan Dancey made a similar argument a few weeks before 4E was announced, here:
We have to avoid dead end strategies designed to make tabletop games play like MMORPG games -- the worst thing we could do is spend time & resources trying to make a digital environment to virtualize the tabletop experience, or try to find ways to let people play a tabletop game across the internet.
Second, the great majority of MMORPG-like projects are outright failures. There's an excellent book by Mulligan & Patrovsky, Developing Online Games: An Insider's Guide. In it, these consultants on several MMORPG projects paint a picture of a whole lot of game companies getting stars in their eyes over ongoing subscription-based services, diving in without realizing the risks, pumping millions and millions of dollars into development (several multiples beyond any similar project they've completed), and then having it all crash down around their ears because they don't have expertise with these kinds of complicated real-time services. (From the Foreword: "The fact of the matter is that the history of online game development is littered with very expensive carcasses.") It's almost like you just can't stop game company executives from betting the whole farm on MMORPG's, even when you present reams of evidence on how unlikely it is to succeed. I think it's likely that WOTC is now determined to stomp down this same well-worn path.
Third, WOTC has a proven track record of being totally incompetent at software projects. It's not just that it isn't their core competency as a business. It's not just that they have no software development arm whatsoever. Rather, if you go back to the commencement of 3E, there was a fairly nice demo of a character generator, on a CD in the PHB. Promises were made about a fully-fleshed out PC generator, with -- you guessed it -- mapping, dungeon creation, monster placement, etc., to come. (There was an earlier kind of shaky version for 2E.) But this project suffered all the classic problems of mismanagement and feature bloat. As I recall, it took years and years, went through several development teams, completely ditched everything in the original demo UI product, abandoned the mapping tool, and was ultimately released to very poor reviews. Third-party tools were roundly considered far superior to WOTC's "official" product. (The first review I found of this 3E product, titled "Time for a toolbox -- but not this one" from Scifi.com, you can see here.) If they failed so miserably with just a local application like this, how can we possibly expect success on a far more complicated ongoing subscription service?
Finally, WOTC's Digital Initiative does not provide a game. For all the content and myriad of services they say they'll provide (preliminary reviews of their Dragon & Dungeon magazines have been quite poor), and the emphasis on the digital game table, that game table doesn't resolve any mechanics. You can push miniatures and roll dice and that's it -- you still have to make your own adventures and have a DM manage all resolutions by hand. (Oddly enough, I was actually involved in engineering a prototype project very much like that ten years ago at another computer game company. For the life of me, I couldn't understand how that project made sense at the time, and I still can't now. Ultimately, the project I was on was turned down by the license-holder we offered it to.) If WOW players are used to getting a fully-featured 3D world, automatically run with monsters and quests, with fellow players automatically and always available, for $15 per month, then I can't see why such players would accept paying a similar amount for a sterile miniature-placement tool. It's hard to see how the market would reward a half-hearted venture like that.
WOTC made it very clear in their initial presentation that they're betting the company on the Digital Initiative. I think there's an extremely high likelihood that this venture will not be a success.