Kickstarter & Demand

Gary Ray of Black Diamond Games in California has an interesting post on Kickstarter.  To sum it up, he is pulling back from stocking Kickstarted products as he has found he can no longer sell a Kickstarted game.  It’s become such an established distribution system that all his customers who might be interested in a particular item have already purchased it at the Kickstarter level.

As always, he’s probably ahead of the curve in speaking up about a potential problem and it’s quite clear that this has become a problem for brick & mortar stores.

Our Perspective

Truthfully, we don’t have the same level of problem as he does. There are a few reasons for this:

  • Game Salute – many of the Kickstarted games out there have gone through GS as their distribution partner.  Whether they end up in the main distribution channel or not, we can’t get those games.  So we’ve been ‘shielded’ to some extent from bad or small runs.
  • Wider customer base – our customer base is wider.  We reach right across the country and by nature of the internet draw more customers from the fringes
  • Lower Prices – obviously a number of customers are individuals who’d rather buy a game discounted rather than at full price.
  • Canada – or specifically, shipping costs to Canada for Kickstarter games can make it more less cost efficient to back a project than for US customers

That being said, we have seen this issue as well.  There are a few publishers that we purchase games from but there a lot fewer Kickstarted games that we’re willing to take a chance on.  Some of it is the quality control issue – there seems to be a higher percentage of games that aren’t that good that get Kickstarted compared to traditionally published.  In addition, we have seen reduced demand for a Kickstarted game – games that we could (probably) have sold 3 to 4 copies before they were Kickstarted have dropped to 0 to 1 copies.  So we aren’t immune, just sheltered.

On the Industry

Kickstarter is a major game changer.  It’s a disruptive technology that has allowed publishers to generate more profits and shift risk by contacting and selling games direct to the public before the game is made, often with perks that are not offered to retailers.  It’s gone from a fringe system among board game publishers to a relatively main stream option.

There’s a lot of parallels that can be drawn from the publishing industry (see Kristine Kathryn Rusch’s blog for a more thorough discussion of the publishing industry and the changes it’s caused there) and how independent writers can actually make more money selling fewer books online direct than selling through the ‘traditional’ sales channel.  This encourages more writers, each selling fewer books but also more books in total.

We aren’t there yet and there’s obvious differences such as the added complexity of board game production, the higher cost of production and the more complex distribution model but it’s an interesting parallel. There will obviously be designers who will want to publish through traditional game publishing channels and others who Kickstart their games and take on the added responsibilities.  The question is, what will the percentages be between the two and more importantly, where the next ‘big’ hit is coming from?

Worst, what if all or most traditional publishers start selling direct to the public through Kickstarter?  If publishers are taking all the ‘easy’ sales, then retailers have to work even harder for smaller profits.  This could kill the retailer / distribution model if a large enough percentage of publishers go this route.

Possible Solutions?

Well, the obvious answer for publishers is ‘don’t do it’.  At least for traditional publishers, they should stick to their current model.  Of course, this isn’t likely to happen – businesses are in business to generate the most profits possible, and direct sales for publishers are the most profitable solution (at least in the short-term; potentially long-term).

Some publishers have seen this problem and the harm it’s done (or doing) to stores and have attempted to include them.  Here’s what I’ve seen tried:

  • Retailer support levels.  They don’t work.
  • Local (free) pickups at a retail store. Varies but doesn’t seem to do much in terms of generating new profits
  • Non-versioned games (i.e. no perks for customers so same game as the retail model).  Most such campaigns don’t get funded thus far.

Here’s a few ideas that might help:

  • Retailer-only versions of games.  Take some of those additional profits, put them into new production f a version of the game that is sold only with retailers.  The trick is to make this version good.
  • Consignment sales.  Instead of selling us games, send them to us as a consignment.  We’ll pay you what we sell and return what we don’t.  That takes out the capital risk and allows us the option (and time) to potentially push the game. Of course, you then hit the problem of limited shelf space.
  • Better discounts. The old 50% split was based on the distribution model where the publisher generated his revenue  from about 35-40% of MSRP.  With Kickstarter games, he generates 93% of the revenue (after Kickstarter fees I believe this is correct) in the beginning.  As such, when selling ‘remainder’ copies to the retailer, he

At the end of the day, the idea behind each of the above options is to provide a greater incentive to retailers to stock a Kickstarter game.  The first creates demand or at least splits the demand, the other two can increae the ‘length’ of time a game can stay / is pushed on a retailer’s shelves.

Side Note:  There’s a tacit admission in Gary’s blog about demand creation.  Retailers like us can create new gamers (increase overall demand), but we have only limited influence on which games are actually purchased especially when dealing with ‘alpha’ gamers.  With new gamers, we can influence their decisions but alpha or long-term gamers often have their own opinions and needs and are only marginally influenced by the retailer themselves.

 

2 thoughts on “Kickstarter & Demand”

  1. I think the shiny appeal of Kickstarter is wearing off, because I’m seeing more posts from friends mentioning delays/set-backs/no-ships from projects they’ve backed. I’d like to see a timeline added to Kickstarter so we can see project milestones and expected delivery dates for projects I’ve backed.

    http://www.tenkarstavern.com/ has example posts of the sentiment I’m seeing re: cooling towards Kickstarter and trying to increase the transparency of project progress.

    I’ll continue to back projects from people I know, but otherwise if they’ve met their target, then I’m willing to wait until the final product is shipping.

  2. For me the appeal of Kickstarter has worn off. At the beginning I was enticed by the kickstarter exclusives and the idea of helping a project that might not normally happen. I have now realized that as a Canadian, we pay an unfair cost for shipping and, in all projects I’ve examined, it is cheaper to wait until it comes to retail. For example, to buy two expansions of a game on kickstarter with shipping to Canada is $65. If you buy it retail it is $55.26 which includes shipping and tax. So why would I buy it on kickstarter? Furthermore, in many cases, you are only helping a board game company publish a project faster not helping a small company get its project started. In other cases kickstarter is being used as a preorder system. Which again is not a huge deal if they weren’t charging Canada’s a premium price. Until this problem is fixed I won’t back another kickstarter project.

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