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.

 

Professionalism & the Gaming Hobby

Gaming as an industry is filled with enthusiastic amateurs.  Colloquially there are quite a few different ways to define the difference between professionals and amateurs including:

  • professionals get paid
  • expert levels of specialised knowledge or skill
  • high standard of ethics, behaviour and work activities

As an industry that’s us.  Very few designers, publishers or retailers get paid.  Certainly not for the amount of work that is put in.   Yet, what I’d like to discuss in particular is the last point.  The standard of behavior and work that we see way too often in this industry makes me think of amateurs.  Some of the behavior we see include:

  • slow, sporadic or non-existent communication
  • missed deadlines
  • lack of basic planning
  • placement of personal obligations over professional

It’s frustrating because quite often, all these results in lost sales for us and the publishers.  If it takes 5 e-mails and multiple phone calls to just get 1 simple ‘is this in-stock’ query answered, we’re much less likely to do business with you the next time.  If a distributor closes during the busiest times of the year, we can’t make purchases from them; resulting in loss sales for us as we run out of stock.

Why is this so prevalent? I can make a few guesses:

  • Passion driven involvement – a lot of people get into this business because they love the games, not the business side of things.
  • Low cost of entry – when you don’t have a lot to lose, it’s not as important to do it right
  • Low potential profits – unless you have a stellar hit / grow multiple retail stores; the chances are you aren’t ever going to make a lot of money.  So what’s the difference between losing 1 sale here or there if you aren’t going to make the money anyway?
  • Status quo – everyone else is like this, so why not?

There’s not much we can do about this, beyond blog about it and ‘punish’ the publishers / distributors /etc who aren’t that professional by taking away our business.  Still, some days it drives me nuts.

Note that I don’t discuss ethics – there’s very few people we’ve run into who we’d say are ethically unsound.  Good intentions are everywhere, it just doesn’t necessarily make up for the lack of professionalism.

Z-Man Games : 2 Months After

It’s been 2 months since the biggest publisher since Days of Wonder (i.e. Z-Man Games) has gone exclusive on us.  It’s been a rough couple of months in keeping stock for the games; as I’m sure it has been for Filosofia.

The Recap

Z-Man Games announced that they were going exclusive with Alliance in America 2 months ago.  However; they were then barred from selling to Canadian retailers like us forcing us to buy from either Filosofia (Z-Man’s new owner) or a Canadian distributors.

The Effects

As many of you know, we don’t buy from Canadian distributors.  The cost is significantly higher than purchasing from the US and there’s a lot less breadth and width among the Canadian distributors.  That means quite often we’re buying direct from Filosofia.

Here’s a few things that we noticed:

  • a higher cost per game of 3 – 5% due to shipping
  • increasing our minimum stock quantities by about 30% (roughly $1,300 dollars) for Z-Man Games
  • More out-of-stocks for longer periods due to much slower ship times

The biggest issue is the increased costs and the out-of-stocks.  It’s actually hurting our sales and I don’t see this changing.  It’ll be particularly interesting when we come to the new releases for Z-Man since we aren’t likely to be able to restock those games as fast either.  And while I understand this change is probably not something that matters to the publisher since we just aren’t that large a part of the pie; it’s still frustrating for us to not have stock of board games in Canada.

 

Small World’s Tunnels – When Free Isn’t Free

We recently received our first copies of Small World : Tunnels. For those of you who do not know, it’s an expansion to Small World’s that links the Small World base game and the Small World : Underworld stand-alone expansion together into one large board. It’s actually quite a good mini-expansion, and certainly something worth putting out.  Once we got it in, we put it up for $5.00.

Then we were informed by a customer that Days of Wonder was letting customers know that they could pick up the Small World expansion for free from retailers.  Contrary to what DOW is impressing on customers; getting these expansions is not free to retailers. We are allocated copies based on purchases with our distributor. Following is the relevant text we were sent.

Game retailers who purchase products from the Small World line during the 4th quarter can get their copies as follows:

– Purchase $100 in Small World products and get 5 free copies of Tunnels

– Purchase $200 in Small World products, get 10 free copies of Tunnels

– Purchase $500 in Small World products, get 20 free copies of Tunnels

– Purchase $1000 in Small World products, get 40 free copies of Tunnels

A few things to note:

  • this is only available for retailers who purchase Small World line items in Q4
  • quantities to retailers are extremely limited
  • no consideration is provided for past purchases of Small World items throughout the year

Putting a quantity minimum to get these items isn’t free. It’s an incentive to buy more of their products and a transfer of holding cost, which is how we’re treating it.   If DOW feels that’s unfair, I’m more than happy to distribute for free any expansions they send us.

Independent Publishers : How to Get a Games Store To Stock You

Occasionally, I get e-mails from independent publishers asking me to stock their games. Many times, I’ve replied to these publishers and more often than not, the deals have fallen through.  for a number of reasons.

It’s worth noting the average number of games I sell from any independently published board game I’ve stocked is between 0 to 1.   Occasionally, these games sell between 2 to 3 copies.  A rare few have sold more than 4 copies.  I’m much more likely to stock a game if I can add it to my usual order from a distributor than if I have to buy the game myself.  The cost of shipping these games (from you to me) impacts my margin quite significantly, so if I can allay that in any way, it makes sense to do so.

With that said, here’s a list of things that will make it more likely I’ll stock your games:

  • Be polite & professional.
  • Include all the relevant information you can, in an easy to read format.  This includes:
    • Name of your game
    • Age range & no. of players
    • Theme / Setting of the game
    • Target audience (party, wargame, eurogame, etc.)
    • MSRP of the game
    • Awards won (if any) or reviews (by a notable persona; e.g. Drake Flames, Board Games with Scott, etc.)
    • BGG listing (I’m going to look it up anyway)
    • Who your distributors are (if any)
    • Images of the game itself
    • Your contact information and website
  • Provide a decent discount.  I can’t sell a game if my discount purchasing direct from you is 15%.  Industry standard discounts from MSRP are between 45-50%
  • Be willing to ship one or more copies. Especially with independent games, I am not likely to stock more than a few in my first purchase.
  • Follow up.  Sometimes, I get so busy I don’t reply because I’ve put aside your e-mail and them promptly forgot about it.  If I haven’t told you no, there’s a shot.  Just make sure to give me at least a week though.