Tuesday, September 22, 2015

True Publisher Support for Local Game Stores

Most publishers give lip service at least to the idea that they want people to buy their games or products at a (Friendly) Local Game Store, or (F)LGS.  Though this is an age of Amazon Prime and Same Day Delivery, even the densest publishers have a notion that if the LGS scene disappears, the aggregate demand for their wares will plummet, and fewer overall copies will be sold, even if those copies do sell at a direct margin via Amazon or other means.

Wizards of the Coast was the first major publisher to walk the talk of supporting LGS sales by deliberately limiting the reach and access of online resellers to parts of the product line.  As one can see, there are still box flippers content to grind up a few dollars a throw on eBay and Amazon, but it's nowhere near the utter wasteland of the late 1990s where bottom-dollar resellers threatened the very existence of the LGS.  And products like prerelease tournaments, Friday Night Magic, and From the Vaults are allocated based on tracked in-store player activity.  Wizards' WPN Retailer rules and requirements aren't onerous, but they are enforced diligently, reining in the worst excesses that a box-flipping clubhouse store might indulge.

An excellent example of a publisher implementing new and active policies today to drive traffic directly to the LGS is WizKids, manufacturers of Dice Masters, HeroClix, and Attack Wing, among others.  WizKids provides promotional product exclusively to brick-and-mortar LGS that are not permitted for resale, and actively polices the community to maintain that.  Retailers generally dislike distributor exclusives, but in this case WizKids's exclusivity with Alliance gives their enforcement real teeth: a store selling the promo product can be cut off from further access to it.

Importantly, the WizKids promotional cards and figures are very good and highly demanded by players.  Here is an article discussing one of the promotional releases for Dice Masters, the upcoming Rainbow Draft Weekend.  DSG is participating in this in October.



The addressable audience for the WizKids game lines is not as great as Magic or D&D or the Fantasy Flight titles, but it is still substantial.  It is also worth a retailer's time to nurture those games because this structure is already in place.  I know this article might be starting to read like an advert for WizKids, which is not my intention, but isn't this exactly what LGS owners ask for?  Products that players want, that players have to visit the store and participate in order to get?  When we demand support and are given it, the ball is kind of in our court now.

Direct-selling publishers run the gamut, but Games Workshop is good in that their web sales are at full MSRP, and they actively police their direct accounts from reselling online at all.  (It's part of the direct sales agreement.)  LGS can still get Warhammer products from Alliance or ACD Distribution et al, but at a discount level so minimal that online sales aren't very sustainable.  Games Workshop does plenty of things that frustrate retailers, but to their credit, they do their utmost to avoid devaluing their product.  They do not facilitate dumping.

The above are the positive examples.  Contrast this with the seemingly endless cavalcade of mostly board game publishers who talk about supporting the LGS but then push their product out the back door to Amazon at virtually no margin, and sometimes below retailer cost.  It is very difficult to put a lot of labor and attention behind a $50 board game SKU that might cost the retailer $28 and is available online for ~$31.99 with free shipping.  When I speak of "lip service" and not much more than that, these are the publishers to which I refer.  Even the "good guys" at Wizards of the Coast have fallen into temptation: Walmart.com briefly offered the D&D board games (Lords of Waterdeep, Castle Ravenloft, etc) earlier this summer for less than the WPN Retailer Direct price.  The public could literally buy the game for less than my lowest distributor cost.  I actually used Walmart.com to restock some titles.  If you can't beat 'em...

In such instances of ultra-deep online discounting, news of the low price propagates across social media like a nasty rash.  Many loyal customers will clamor for shoppers to support the LGS anyway, and that's awfully nice of them to go to bat for us like that.  However, I am very accepting and libertarian about the reality of the situation: I know people will often seek a good price and I don't blame them for wanting to do so.  What I hope is that there's at least some parity so I can offer a value proposition.  I know online product will be discounted somewhat.  Everyone knows that.  But if the publisher isn't backdooring it, and most online sources are just stores fulfilling, it's more likely that $49.99 game is ~$37.99 plus shipping online.  I'm offering to put it into the customer's hands now for maybe only a few dollars more than their final internet price would be.  A lot of times I'll get that sale.  When I'm the customer, I enjoy the immediacy, so I buy local too rather than saving a pittance going online.

Fantasy Flight Publishing is a little of both good and bad.  Their direct web sales to the public are at MSRP and their addressable audience is large.  But, they push a portion of their print runs directly to Barnes & Noble and Amazon, they gave Target the X-Wing Episode VII timed exclusive to appease the House of Mouse, and online discounting has become the norm with their games.  They offer in-store only Game Night Kits that players love and that aren't supposed to be resold, but there's no enforcement.  This is probably the one company that could benefit the most from adopting the methods of Wizards of the Coast, WizKids, or Games Workshop and finding some way to impose consequences on the vendors who break the rules.  Beyond that it's up to them whether they want to keep their mass-market dreams alive but devalue their products in so doing.

Then there's the dumpster fire known as Kickstarter.  When product is actually delivered, Kickstarter has a tendency to saturate the market for the alpha gamers who will actually try big new games and systems.  Companies that keep going back to the Kickstarter well are inhibiting their own reach in the hobby game trade at retail.  I don't even bother carrying otherwise good games from companies like Cool Mini Or Not and Tasty Minstrel Games because they don't sell; everyone who really wanted that SKU already got it by backing the Kickstarter.  By the time I have it, nobody is looking for it anymore.  The absolute biggest hits from Kickstarters that are oriented toward our trade and not the mainstream, such as the Zombicide core game, Arcadia Quest, and Dungeon Fighter, turn at a rate of around two for me.  Four is where a game or line has to be to hold its own.  Many people cite Cards Against Humanity as an example that Kickstarter works, but it's by far the exception.  Exploding Kittens was a huge Kickstarter success and has sputtered out after being hot off the grill at first.

Publishers want to make money.  I don't think any of us harbor illusions about that.  Local Game Stores are part of the equation, but are not the entire equation and shouldn't expect to be.  I don't think any of us are misled on that point either.  I think we're seeing a trend where some publishers have found ways to reinforce the value of the products using the LGS deployment channel.  I hope that trend continues, because the late 1990s were a bad time to be in the game trade, with online commerce as wild-west as you can possibly imagine, and I don't think any publisher or retailer wants to go back to that sorry state of affairs.  I hope that when we see publishers talk about supporting the hobby game trade as a market conduit, that talk increasingly turns into action and results, not just aspirational promises.

Tuesday, September 8, 2015

The Dangling Carrot of Zendikar Expeditions

Welcome back!  I enjoyed the slow week and of course there was big news in the meanwhile that I just now get to address.

Here is what kicked off the past ten or so days of mayhem:



These gorgeous semi-full-art foil cards are part of "Zendikar Expeditions," a 45-card subset within the forthcoming Magic: the Gathering expansions Battle for Zendikar and Oath of the Gatewatch.  (I guess we're going to have to wait a little longer for the Eldrazi to meet their Fall.)  BFZ will contain the first 25 of these cards, which are going to be the ten "fetchlands," the ten "shocklands," and the first five allied-color "Zuals," or Zendikar dual lands that have both basic types and enter play tapped if the controller does not have at least two basic lands in play.

These special foils will occur "slightly less rarely than mythic rare foils," which occur about once every 200 boosters, so we can guesstimate a 160-180 pack frequency per hit.  The commercial effect of this announcement has been overwhelmingly good, and I'll reach that issue again in a moment.

I posted before about MTG Head Designer Mark Rosewater revealing that the enemy fetchlands (Arid Mesa, et al) were not being reprinted in BFZ.  This was misdirection, a lie of omission.  I am disappointed that increasingly MaRo has turned to dishonesty in his publicity for the game, but that's his decision to make.  MTG is a staggeringly healthy game and it seems wholly unnecessary to be even the slightest bit dishonest in promoting it.

True, MaRo, the enemy fetches are not in the BFZ expansion proper, as they are in a subset.  Yet to the salient question, "Can we get enemy fetchlands in BFZ booster packs?" the answer is clearly yes, and ultimately the players just want to know whether they can have the pieces to play their game.  Your misleading blog post about the reprint also set off chaos in the secondary market, which you knew it would.  This chaos also made it harder for players to get the pieces to play their game.

Fortunately, with that bit of unpleasantness out of the way, the existence of these chase cards will and should make it much easier for players to get the pieces to play their game.  The actual product will undo some of the damage MaRo did in promoting it.  As noted in various articles in the misguided world of "MTG Finance,"  expansions containing the fetchlands are generally opened in such huge quantities that the prices of other cards are depressed in those sets.  This has been true of every such expansion thus far:

  • Quick, what are the three most expensive cards other than the fetchlands in Onslaught right now?  Goblin Piledriver, which just got reprinted and is in Standard; followed by two Commander essentials never thus-far reprinted: Patriarch's Bidding and Mana Echoes.  
  • In the original Zendikar, it's even more stratified: only Goblin Guide is within $20 of any fetchland at mid value, and if the Guide is reprinted in BFZ or OGW, batten down the hatches.  
  • Khans of Tarkir landed last fall and, below all five fetches in the value chart, there sits a jumble of speculative cards like See the Unwritten and Dig Through Time rubbing borders with the set's two planeswalkers.  

Late in 2014 we saw the most affordable Standard format possibly in history.  We may see that happen again, and if the enemy fetchlands appear in Commander 2015, the value of the rest of that release will be deeply suppressed in a similar fashion.  I've said at length that the key to making Magic: the Gathering a truly eternal game is for people to be able to get the pieces without jumping too many hoops.  Premium foils and "bling" are optional; merely to play the game should be a perfunctory exercise in purchasing.  Increasingly it is becoming that.  This also strengthens diverse stores in the hobby trade while discouraging Magic-focused "clubhouse" stores that are little more than semi-fraudulent storefronts that exist so a cadre of players can have wholesale access to product.  The more that access to MTG can be normalized, the less the impact of "MTG Finance" activities, which in turn weakens the backbone of the clubhouse stores' revenue-driving transactions.

Purchasing, meanwhile, appears to be something the player base is more than happy to do, provided they believe they're being offered a good value proposition.  Battle for Zendikar is already the most pre-ordered product in DSG's history.  It is not close.

Pre-orders opened on September 2nd, thirty days before the set's release.  By September 4th, our entire pre-order allotment of product was sold out.  Total pre-orders exceeded those for Fate Reforged, Dragons of Tarkir, and Magic Origins combined.  And this wasn't at fire-sale pricing either.  We ran the same $99.99 per box pre-order we always do.  We did a somewhat aggressive bundle on fat packs, pairing one with a box for $129.99.  This promotion was designed to make an impression and get players to visit and see the new and improved store after a summer of inventory growth, fixture additions, and configuration refinement.

Fortunately, we only allot a portion of each set's allocation to pre-order specials.  Our regular shelf stock for release day still consists of a substantial number of boxes and cases, so we've opened that up for pre-orders at our normal off-the-shelf price of $114.99 per box and MSRP for fat packs.  But to be eating into that already at this early stage is unprecedented.  Even eagerly awaited and positively received sets like Theros and Khans did not have this effect.  I've got my final numbers from several of my sources; I have one more distributor total to lock down from among those I buy a lot from, and that will determine how soon I have to cut off shelf-stock presales and how much or how little I will be able to open for singles.  I'm also reaching out to distributors I don't often use to see if I can get a case here or there, but none of those will move the needle on the overall supply whether they say yes or no.

This release should serve as a good test of Wizards of the Coast's strong post-release fulfillment from the past few sets.  If, as has been the case all year long, I can restock cases of BFZ the Monday morning after release in quantity, I think that will end up being the elbow-drop win for everybody.  I would be absolutely delighted to spend the entire autumn selling huge quantities of this set.

From September 2nd through 6th, DSG saw gross sales comparable to an entire month of revenue in its early days.  We're giddy at the prospect of getting to decide how far forward to zero out our costs in addition to covering the product order itself.  This will help tremendously in the drive to gather capital for our eventual new location, and in the more immediate term, for our migration to the Microsoft RMS point-of-sale framework.

The cause-and-effect of the Zendikar Expeditions announcement and the firestorm of pre-orders is so proximate as to be impossible to ignore.  The thrill of the chase beckons.  That carrot, dangling with promise right before our eyes, was absolutely enough to spur us to pony up for the goods.  If Wizards had any uncertainty in their minds before as to precisely what it might take to cause twitch-speed sales to occur, well, that uncertainty should be gone now.

We have over 400 player packs for the BFZ prerelease on September 26th-27th.  I'm excited.