Our new Affiliate Program

Starlit Affiliate Program DetailsWe have decided to launch an affiliate program for Starlit Citadel.   We’re letting Clixgalore run our affiliate program because really, we’re not that interested in running our own program and dealing with the necessary software that would require; so we’re letting them deal with it. Sure, they get a bit of a cut but it does mean that we can set it up and ignore it (sort of).

What’s an Affiliate Program?

Basically, it’s like a referral program that uses money instead of reward points to reward people. It’s mostly geared towards people who have a website and/or e-mail list and really isn’t meant to focus on individual referrals like our customer reward referral program.

How much do you earn?

We currently provide 5% of the product cost (i.e. sub-total) of all products for each referral item that is purchased (and confirmed shipped).  The system is set-up such that anyone who clicks through from an affiliate link you provide is cookied for 90 days – so any purchase(s) he makes during that period will be automatically designated to your account. It works really well for blogs because these blogs can continually push out new posts and thus continually ‘re-cookie’ these customers.

Why only 5%?

Due to the low margins that we have, we can’t really afford to offer more than 5% without reducing the margin that we make to unacceptable levels. It’s also the reason for a long-time we haven’t had an affiliate program.  Truthfully, we’re still not sure if it’ll work out well, but it’s worth a shot to see if we can generate further revenue this way.

5% is better than nothing

That’s what we think. So, join away!

 

Game Salute, Publishers & Online Stores

For those of you who don’t know, Game Salute is a combined publishing / fulfillment / online store in the states that has been attempting to ‘sweep up’ numerous publishers into their fold.  One of the most controversial aspects of their system is their Game Salute Exclusive program.

Game Salute Exclusive

The Game Salute Exclusive program allows publishers (at their request) to restrict their sales to B&M only stores and online through Game Salute’s webstore at full MSRP.  They thus do not sell to any online board game stores like us.  While technically this is restricted to only publishers who request to be on their Exclusive program, if you are with Game Salute you are exclusive.  Game Salute makes no attempt to differentiate between exclusive and non-exclusive partners and in-fact are incentivised to not clarify this and won’t.  This happened to Tasty Minstrel / Lions Rampant and Canadian sales as we found out a few months and numerous e-mails ago.

Why do they do this? Simply because Game Salute’s goal is to:

  • protect B&M stores (probably because one of the founders is a B&M store owner)
  • generate as much profit as possible.

Obviously, this is a rather contradictory pair of goals when you include Kickstarter support in this; but at the end of the day Game Salute is offering a service.  It’s publishers who decide to go with the program / Game Salute.

The Publisher’s View

Having read some posts / comments on this, the financial reasoning for these restrictions seem to come down to this:

  • Online stores discount games, reducing the incentive for B&M stores to carry a product
  • By selling direct at MSRP, the publisher gains the most profit possible from customers who purchase online
  • As all products are at MSRP, the incentive is higher for B&M stores to carry a game, thus increasing overall reach and thus sales for the publisher

Now, publisher’s selling direct is not new.  Neither is the attempt to restrict sales online (see Wizards of the Coast and Magic, D&D and of course Games Workshop).  What Game Salute and these publishers are doing isn’t so much new as more extensive – at least in terms of number of games if not $ of sales.

Tradeoffs & Assumptions

There are some base assumptions involved here that roll into the tradeoffs.  These assumptions include:

  • The steepness of the demand curve

As prices go up, the number of customers who will purchase a game go down.  The true question is, at what rate does this happen? Unfortunately, the data on this is either very low or non-existent

  • The Tipping Point (or lack of) for demand

In the same vein, is there a tipping point where a game demand increases exponentially? As more games reach the hands of gamers, is there a point where demand due to buzz (ratings, reviews, word of mouth, etc) reaches a point where your demand curve changes dramatically?

  • The degree of substitution between products

If your product is no longer available at online retailers; to what extent will customers then search for your product instead of substituting for another? Again, this is an interesting question and it varies I find depending on the specific game.  Some (e.g. Eclipse) are almost impossible to substitute, while other games (e.g. Cuba, Resident Evil Deck Building) are much easier.

  • The degree of substitution between retailers

To what extent are the customers at a specific retailer (online or B&M) ‘theirs’.  If a customer can’t find a game at their favorite retailer, is she going to purchase from another? Can she? How much more trouble / energy will a customer expand to find your game at another retailer, especially if it’s one he dislikes?

  • The degree of free shelf space at retailers

I’ve discussed the lie of the infinite shelf space, the conceit that every game will find itself onto the shelves of retailers.  This is, as mentioned, a lie – there’s just no way for this to happen except perhaps for the very largest retailers.  The question then is to what extent stocking decisions at a retail store are based on availability of the game in other locations.

Numbers, What Numbers?

At the end of the day, we all make assumptions because there just aren’t any numbers in this business.  We’re all guessing and hoping what we do works out right.  Sometimes those guesses are educated guesses, others we just stand around and flip a coin on.

As an online store, we don’t believe that the publishers going with Game Salute are correct.  We feel that publishers are deliberately reducing their sales to a segment of their customers, in the mistaken belief that B&M retailers will then support them in mass.  At the end of the day though, it’s all a guessing game till a publisher (or two or three) release their numbers.

A Year of Missing Deadlines

With Christmas nearly here, things are beginning to slow down (the joy of delivery times).  Sadly, while business is slowing down; our arrivals of games have not.  2012 has been the worst year for missing deadlines since 2008.   I can’t think of a single game released this year that actually hit its deadline, with most coming in 2 – 3 months late with some over a year delayed.  There seems to have been a few causes for this…

Manufacturer Closing

It started from what I can tell in 2011 when a German manufacturer closed. That wiped out quite a few games, pushing them to 2012 and concentrating the manufacture of our board games into a number of other companies.  I’m sure these other companies are throwing more production into place as it goes, but not surprisingly this takes time.

The New Year That Doesn’t Happen

Then we had the non-regular Chinese New Year.  The New Year caught a ton of publishers by surprise and suddenly, items that were meant to be delivered in January – March were pushed back by another 2 – 3 months.  How a 2 week work-stoppage that happens once a year managed to evade so many people’s notice and mess with their plans, I don’t know.  Either way, it seemed to have a knock-on effect throughout the year, with publishers finally catching up around December, with most games only 1 – 2 months off their ‘expected release dates’.

 

Now, I’m getting into rank speculation since I’m not a publisher or manufacturer; but I think there’s a few other factors…

Kickstarter

There’s been an increase in the number of board games appearing on Kickstarter and being successfully funded.  Guess what – all those games have to be manufactured somewhere.  I would not be surprised if the manufacturers are finding themselves even further swamped with demand as more new publishers come to them.  I doubt it helps that many of these publishers are first-timers, with the ensuing lack of experience and thus requiring additional hand-holding to get the job done.

TableTop

TableTop’s the other major change this year and it’s introduction of board games to a whole new set of geeks seems to have increased demand.  Certainly certain games showcased on TableTop have gone into and out of stock faster than I’ve ever seen them do so, and this has pushed the games into a reprint mode that seems to have been choked up the supply side even more.

The Next Year?

Some of the one-off effects should be gone by next year.  Others, like Kickstarter and TableTop isn’t likely to change.  Hopefully the manufacturers are adding sufficient production to reduce this problem, but I really don’t know if are.  We have so little control over these aspects and the only real thing we can do is sit back and hope.

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.

 

What Sells a Game?

Lately, I’ve been playing a few new games (Ora & Labora, Forgotten Planet & Leviathan to be exact) and it struck me how different each of these games are in terms of prices, themes and contents.  Combined with my own research recently into what games sell,I thought I’d write a little article about what drives the sales of a game, especially on a first impression basis.

Disclaimer – the following is completely my own opinion, barely backed up with any numbers.

a) Cover Art

Cover art is important.  Art in general is important (prettier / nicer it is; the better generally) but good cover art makes people pick-up a game.  When we are at conventions, it makes a huge difference of which games we’ll display and which games a customer will pick-up, look over and consider.  Without good cover art, you never even make it to the ‘this looks interesting’ phase.

b) Pretty pieces

Leviathan does pretty pieces so well.  Yes it’s more expensive; but there are certain segments of the gaming population who’d buy a game just for the pieces.  Same with Dust Tactics or many other FFG games.

c) Box Information

One of the most frustrating things I run into all the time.  Box covers that provide no information on the game.  Minimum information required is:

  • No. of players
  • Age range
  • Game Duration
  • Photo of game-play & pieces

d) Box size / Price / Weight Ratio

We instinctively expect more pieces, more weight when a game is more expensive.  If you have few pieces, but are in a large box, we almost feel cheated especially if the price is high.  I had that with Forgotten Planet. It doesn’t matter how good the game is, I expected more considering the cover price.  On the other hand, Ora & Labora has a nice heft to it.  You ‘know’ that you’re getting a good deal, even before you play the game.

No it’s not logical, but it it does seem to play out quite a bit.

e) Themes

Themes seem to have a strange relationship to sales.  Some customers buy into products / categories based on theme – they’ll specifically ask for ‘Fantasy’ or ‘Science Fiction’ games.  On the other hand, a lot of our bestsellers are more real world or generic in themes – e.g. Dominion, Settlers of Catan, Pandemic.

I think it’s a matter of tapping into bases.  With a highly themed SciFi / Fantasy game, you get those interested in that genre but might miss out on everyone else as the theme is restrictive.  On the other hand, more ‘generic’ themes might not restrict your base but you then have to compete with a lot more games too.

f) Play Time

Looking at our sales stats, I have to say; the vast majority of our bestsellers play within 2 hours.   In fact, a good portion of them (7 Wonders, Forbidden Island, Dixit) play in less than an hour.

 

The lie of the infinite shelf space

It’s that time of year again, when stock from GenCon & Spiel starts arriving in droves and we end up wondering where we are going to keep all these games till Christmas. Right now, we’ve got a ton of games just sitting on the floor waiting to be sold; stocked up for the holiday season because we know we won’t get anymore.

It’s not just shelf-space of course, it’s also inventory capital that gets limited. We scramble to find sufficient capital to stock up for Christmas, knowing that we’ll sell through most of these in a few months and probably reduce our stock significantly afterwards.

And that’s the lie of omission right there. Not every game will hit the shelf..

Oh, everyone knows this on one level or another. However, it’s not something that’s ever said to publishers, and it’s certainly not something B&M Stores trumpet. After all, one of their major arguments is that they provide a space for customers to physically see and sometimes demo games. However, if a game doesn’t hit the shelf (i.e. is never bought); it will never be demo’ed. And B&M stores are much more limited than online stores in their ability to purchase and stock a wide variety of games.

Why? It’s actually quite simple.

Firstly, most online stores end up specialising (CCGs, Board Games, Miniatures); allowing them to go in-depth into one category. We are mostly a board games store; with a slowly expanding RPG & Miniatures section. On any given day, we have over 2,000+ board games in-stock.

Secondly, our shelf space is cheaper. Our online shelf space (a product page) is negligible in cost; while the physical space is physically cheaper to rent. So we don’t have to optimise revenue per foot as tightly as a B&M.

Thirdly, we have a wider audience base. We often end-up with the customers who no longer can find the games they want from their local B&M store. Those with exotic or disparate taste. So we can afford to take chances on less well known games, bringing in 1 or 2 copies on the off-chance that they’d sell.