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Tuesday, September 29, 2015

DSG Autumn 2015 Hours, Schedule, and Pricing Changes

I'll do my postmortem review on the Magic: the Gathering "Battle for Zendikar" prerelease and release weekends in next week's article, for October 6th.

Desert Sky Games and Comics is announcing some changes for the new season as a result of the growth of our business and gaining a better understanding of where organized play is headed regionally.  We hope we're keeping pace with the needs and expectations of our player community.

HOURS
We're offering extended holiday hours on Saturdays and Sundays.  If these hours work out well, they might become permanent, but they'll be in effect until the calendar reads 2016 no matter what else happens:

Monday through Saturday: 10:00 a.m. to 10:00 p.m. (Continuing late as tournaments require)
Sunday: 10:00 a.m. to 6:00 p.m.

The expansion of Sunday was actually a fairly easy decision with how many events we've had lately, including last weekend's prerelease, that had us coming in earlier than Sunday's regular noon opening anyway.  With more of the same on the horizon, it seems like lost opportunity not to be open.

Saturday evening marks a bigger change.  We used to be open late on Saturdays in the early days of the store, but our metrics told us it wasn't profitable and most of the money we were getting then, we would get at other times anyway.  We were also closed Sundays at the time so a late Saturday would be followed by a day of rest and recuperation.  However, DSG's business has grown since then.  We get a lot more customer traffic all weekend long.  We almost always see people "camping out" in front of the store before we open Sunday, waiting to shop.  And the reality is that we're out of space, so the next resource we have available is time.  Closing at 8:00 p.m. on Saturdays has proven limiting with our Warhammer and other miniatures games audiences growing quickly, and there has been great clamor in the community for a late-day Saturday constructed Magic event now that Preliminary Pro-Tour Qualifiers have captured the earlier hours in many cases.  We're also shifting Pokemon to what should be a better time and day, as explained below.

SCHEDULE
Our weekly fixed schedule is getting some adjustment:

Monday:

  • Unchanged: MTG Standard at 7:00 p.m. with Monday Night Football and pizza.
  • Moved: Star Wars X-Wing/Armada/Imperial Assault open play 5:00 p.m. through close (was Wednesday evenings).

Tuesday:

  • Unchanged: MTG Modern at 7:00 p.m.; Roleplaying open play 5:00 p.m through close.

Wednesday:

  • Unchanged: MTG Booster Draft at 5:30 p.m.; MTG Legacy at 7:00 p.m.
  • NEWLY ADDED!: Warhammer League open play, 6:00 p.m. through close.
  • Moved: Star Wars X-Wing/Armada/Imperial Assault (now on Mondays).
  • Discontinued: Force of Will TCG open play.

Thursday:

  • Unchanged: MTG Commander pods from 5:00 p.m. to close; MTG Standard Star City Game Night at 7:00 p.m.

Friday:

  • ADJUSTED FORMAT: Friday Night Magic Standard at 7:00 p.m. is changing to a fixed FIVE rounds (fewer if 16 players or less) with payouts to 5-0 and 4-1 finishers by record and no playoff.
  • Unchanged: Friday Night Magic Booster Draft 8:00 p.m.

Saturday:

  • Unchanged: Prerelease, Game Day, Championship, Pro Qualifier events as scheduled.
  • Unchanged: FFG and WizKids Events as scheduled; MTG Standard Win-a-Box at noon.
  • NEWLY ADDED!: Pathfinder Society as scheduled.
  • NEWLY ADDED!: Warhammer 40K tournament at 6:00 p.m.
  • NEWLY ADDED!: MTG Modern at 6:00 p.m. (Daily format).
  • Moved: Pokemon open play (now on Sundays).

Sunday:

  • Unchanged: MTG Booster Draft 12:30 p.m.; Weiss Schwarz TCG 1:00 p.m.; Board Games open play.
  • Moved: Pokemon open play 3:00 p.m. through close (was Saturday evenings).

There is a lot happening here, so I'll explain the reasons we went this way.

Our X-Wing etc players actually tend to come in earlier in the day and play on whichever day they want, so the move to Monday for their "reserved" time on the minis tables won't make a big difference.  It's meant to open up space on Wednesday for Warhammer League Night, which started in September and is just now getting underway.

Force of Will is not proving to be a tournament draw, but we do have some devoted player groups who play at home.  We need the reserved space on Wednesdays so we're taking it off the calendar, but open FOW play is still welcome when no conflicting event is going on.

Friday Night Magic's change to Standard was very carefully considered.  More and more we've seen players turned off to the prospect of playing out a playoff cut until 2:00 a.m. or later.  When competitive events were harder to come by, these late nights served an important purpose.  Now that most Saturdays host a PPTQ somewhere, competitive players are quenching their thirst in those events, and in fact they need to get home and rack out in time to get a good night's sleep and play sharp the next day.  In order to maintain FNM's higher general payout level, we think five rounds is appropriate, rather than our Daily Format of four fixed rounds.

Our Pokemon players are extremely loyal and passionate about playing at DSG, and we felt bad about how often we keep having to cancel Pokemon open play because of scheduled events.  We think that moving Pokemon open play to Sunday will finally let us avoid canceling it for the most part.  Only the Magic prereleases look likely to interfere, and that's only four times per year.  Also, ending it at 6:00 p.m. instead of 8:00 p.m. seems like a healthier change for younger players not to be out as late.  Scheduled events like our Breakthrough XY prerelease and costume party on October 31st (Saturday) will still take place as planned.

PRICING

There was going to be some adjustment to tournament pricing and payouts (formats, not value level) based on our migration to a new point-of-sale system, Microsoft RMS.  However, our move has been delayed until our banks actually release an EMV chip-and-signature credit card processor that's RMS-compatible.  Can't very well move on without having a way to accept money!  Light Speed Retail had a solution already in place from Cayan, so we're bringing that in and will use it until RMS is updated.  As such, no changes to tournament pricing or prize payouts at this time.

We are, however, making changes to how we price Magic: the Gathering singles.

Many players prefer that stores use an internet price index that is constantly updated from aggregated data.  The most popular index, however, TCGPlayer's pricing, is too easily subject to manipulation for us to trust it.  The second-most-popular index, Star City Games, has good validity but tends to run prices too high for our competitive market.  Given those options, we have instead been pricing based on an internal system that adjusts down from Star City's index.  This mostly works, but has caused some bad experiences where a card that isn't moving with frequency for Star City is being sold to us or bought from us, and the customer feels that the SCG price is stale, among other issues.

We've been experimenting with the MTGPrice.com Fair Trade Price sell value and Best Buylist Price buy value.  It hasn't been perfect, but we think it's going to be the best index for us to use.  Prices are scraped from a group of large web stores, as well as Amazon and eBay.  This reduces the impact of price volatility and market interference, while still accounting for some influence from the TCGPlayer index.  Sometimes highly volatile cards won't poll on MTGPrice, and we'll default to adjusting off Star City for those.  If the card's price is just so far out of whack we can't get a realistic number on it, then the TCGPlayer index price is likely to be dangerously wrong and/or shenanigans anyway, and we want to protect our customers and ourselves from problematic transactions.

So here are our new pricing methods:

Sell (market-value cards in the case): MTGPrice.com Fair Trade Price for case cards, rounded down at least 10%, stopping at the next price tier.  (since we price in "retail" amounts such as $4.99 and $12.99, etc.)

Sell (base-value cards in binders or racks)Commons $0.25, Uncommons $0.50, Rares $0.99, Mythic Rares $1.99, Foil Commons and Foil Basic Lands $0.50, Foil Uncommons $0.75, Foil Rares $1.99, Foil Mythic Rares $2.99.  This is unchanged from before.

Buy: For cards on our buylist, which is now really just a "want list," reflecting what's in the highest demand, we will pay the MTGPrice.com Best Buylist price in CASH for up to a playset (and possibly more) at a time.  Store credit will offer more.  For cards not on the buylist, each purchase is evaluated on a case-by-case basis as a percentage of MTGPrice's Fair Trade Price.

Fallback: Star City's index as used before, adjusted down 5%-15% for our competitive market.

We actually rolled out the buylist change a few weeks ago and it looked moderately good in the early going, and then I think our player base kind of figured it out and the buys have come flooding in ever since.  Knowing that if you have a card on the want list you will get the highest legit published buy price anywhere, in cash, is a strong incentive to sell to DSG.  Why would you ship to ABU, Strike Zone, or Channel Fireball when DSG will pay you that money on the spot and require no postage or packing.  And because the want list are the most demanded cards, they sell quickly for us even at a discount off the Fair Trade Price -- and as I've taught here on this business blog and elsewhere, turn rate speed is just as important as margin.

There are minor caveats that are just reasonable precautions.  For example, we may need to make an arrangement for extremely large or expensive collections.  Also, we limit the want-list buy to a playset in case of some market failure where we will honor our offer to the customer who brings the issue to our attention, but we really need to stop buying the card after that (for example to strike it from the want list).  People should be rewarded for being honest and this policy achieves that.  If Expensive Card X just got banned and it's in the midst of plummeting 75% in value, we're willing to make good for the person who warns us before the chaos ensues.  Most players are honest but we had multiple people bring in stacks of Birthing Pods first thing in the morning when it was banned in Modern, hoping to cash out quick before we got wise.  (We knew.)

WRAP-UP

There we have it!  A nice rich batch of changes that we hope will improve the DSG experience for everyone.  If you have questions or concerns, our door is of course wide open and we're eager to listen.  Thank you for all your support and have a great week!

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 15, 2015

The Darren Threshold

August was a slower month than July for DSG, as we knew it would be, and there was really never any notion that it might turn out otherwise.  But something very interesting happened in August 2015 that has amazing long-term implications for the business.

The month featured sort of two new Magic: the Gathering releases: From the Vault: Angels and Duel Decks Zendikar vs. Eldrazi.  Neither of those moved enough units to make the album rock charts; Angels because we weren't given that option, thanks to a fixed allotment of 30 copies, and ZvE because the late-year Thing vs Thing deck release generally meets moderate demand at most.  We moved plenty of Magic Origins, of course, and our usual constant flow of singles provided ongoing revenue.

So it's safe to say DSG made some money selling MTG in August.  The interesting thing was what happened elsewhere, and what it meant.  We reached the Darren Threshold.

Stay with me here.  Telling you what happened won't make sense until I tell you how it happened.

Comics continued to grow for us, with our boxholder count approaching 100, and it's a tight hundred: our Comics and Media Specialist actively curates the boxes and has very, very few of them in a no-show status.  His communication is systematic and effective, and even without taking credit card auto-taps, the consequence of potentially missing out on great books has been enough to keep our subscribers eager to come in and pick up.  In the cases where he has had to close boxes, he has invariably found high-demand books that he could easily reallocate to the waiting lists of other boxholders. (Secret Wars #2, anyone?  or early Darth Vader issues?  Yeah.)  When you have almost 100 people and most of them come in and spend every week on their hobby, that creates a modest but respectable bread-and-butter revenue stream.

Role-playing games also continued to grow for us, in particular the tabletop experience product lines, such as dungeon tiles, flip-mats, miniatures, and so on.  Dice are off the charts: the more dice we add to the floor, the more dice sell in a virtuous cycle.  The board games based on RPG systems turned.  And we're finally seeing our RPG night attract multiple groups, and the Pathfinder Society carved out some Saturday time.  There were multiple new X-Wing releases, a new wave for Imperial Assault, steady releases for the Living Card Games, and some action in the worlds of Dice Masters, HeroClix, and Pokemon.  We successfully ran organized play for all of these games and saw a lot of smiling faces.

We visited two local pop culture conventions, one somewhat underattended and one very well attended.  In both cases we got some exposure and made a few bucks to frost the cake.  In both cases we saw new arrivals at the store as a result.  New faces, new blood.  Across every category this causes an increase in sales velocity.

All of this got us to the Darren Threshold.  We're coining that phrase to indicate the point at which a game store earns enough money to stay in business without having to sell any Magic: the Gathering.

That was not a typographical error.  That is what DSG did in August.  Oh, we have to make a few assumptions, such as that we wouldn't have needed double staff coverage on weeknights if there weren't MTG events underway; one employee on duty would suffice.  And the store credit mix and COGS would be a bit different from what it was with MTG sales taking place.  But if it came down to it, if DSG never sold another Magic card, DSG would live on regardless.  And for a store that had approaching 90% revenue dependence on MTG in the early going, that's a sea change.

So, who is Darren anyway?  Darren Johnson is the owner and proprietor of Imperial Outpost Games (IOG) in Glendale.

I mentioned IOG a few weeks ago in my article about competing stores.  I absolutely meant it when I said IOG is probably Arizona's best overall game store.  And as I remarked in that article, IOG outearns DSG even though Darren doesn't carry Magic: the Gathering.

IOG has carried MTG in the past, when the business situation warranted it.  But now there's a store next door, Manawerx/Rookies to Legends, that began as a sports memorabilia dealer and morphed from there into a MTG-centered store, so IOG just skips the entire product line.  Booster packs, singles, accessories... nothing.  Darren contents himself with carrying the vast expanse of tabletop games otherwise, from every other line and series, and well-maintained, and with a friendly staff gatekeeping it all.  At the end of the day, it proves that a store in the hobby game trade does not need to wear the golden handcuffs from Renton.

Now that DSG has snapped off those golden handcuffs, it's a heady and liberating feeling.  Don't worry, we're not going to be dropping MTG anytime soon.  Magic was the reason the store opened to begin with, and it is still our single biggest product.  The owners love and play Magic, the staff loves and plays Magic.  And just because we're not tied at the throat to Magic anymore, that doesn't mean we stopped wanting to be involved in that market.

We're actually not even sure yet how much change we will make as a result of reaching the Darren Threshold.  What we know is that the entire feeling, the entire tenor of the relationship between our store and the game has changed.  Instead of depending on Magic, we become a partner with it, benefiting in positive resonance.  As Vin Diesel's stockbroker said in Boiler Room, "I don't need your business; I value your business."  We actually get to have Magic at the keg party because we invited him, not just because he's the landlord's nephew and we can't really say no.

We can kind of do whatever we want with Magic now.  We can try new and interesting things without worrying about tampering with the life support system mid-orbit.  And wow, is that awesome.

Some thoughts that come right to mind.

Promoting the brand in the form of higher buylist prices.  We actually went ahead and did this over the weekend.  It's too soon to know if it is working, but all signs point to "yes."  Previously, our staff priced cards for buys on a case-by-case basis only loosely from Star City's prices, which have strong validity but we had to adjust every time because their averages run a bit too high for our market on both buys and sells.  We've been away from TCGPlayer pricing because of how easily manipulated it is, making it an unreliable value index.  The most valid and reliable index we've found right now is MTGPrice, because it aggregates from a group of megastores, from Amazon, and from eBay.  This does introduce some of TCGPlayer's price influence, but it's not enough for manipulation to have a pronounced effect.  MTGPrice publishes a "Fair Trade Price" that runs 6% to 8% higher than TCG Mid in most cases.  We're working on a simple adjustment from that so we can move sell prices to that index but still be at or below TCG Mid in essentially all cases.  And, we'll have the bonus of being immune to the sweep of MTGFinance(Tm)-driven spike scams.  But in the meantime MTGPrice also publishes a "Best Buylist Price," as well as a buylist spread, for every card.  Given that we can control through our own buylist which cards we want the most to meet demand, we felt comfortable offering the Best Buylist Price on mint condition cards thus designated.  If it's on the list, we're offering the highest legit published buy prices anywhere.  Even the grinders realize the implications of that, and our buying activity surged in the aftermath of the announcement.

Democratizing access to organized play.  This is probably the way we'll move, though it will require us to have more physical space, so this plan can't be implemented in full as of yet.  Some of the most successful Friday Night Magic events on the continent are held at stores where the admission fee is free, or is free with purchase of N booster packs, and then prizing is nominal.  Attendance figures grow huge, and the resulting player community tends to become more inclusive for competitive and casual players alike.  With so little at stake but fun, and the bulk of the EV already won, even the hardcorest grinder can take the time to step a developing player through the subtleties of a critical end-of-turn permission war or a dicey limited combat.  No more of the wannabe-pros barely acknowledging their opponent, pressing 2-0 without ever removing their earbuds.  Everyone tries to get better and have a good time, and they save the cutthroat for Saturday's PPTQ.

Pushing premium on organized play.  The inverse of the above, if by some misfortune we end up utterly hidebound to our current building for the duration and can't open, move, or expand until 2017.  Since we're not really a grinder store anymore, this would probably involve putting some money into creature comforts in the facility and then making adjustments to tournament pricing and payouts to cater to casual "steak dining."  A business can make money targeting an upscale clientele, but everybody knows there's more money overall selling Corollas than Ferraris, so if you're going to sell Ferraris, you had better have a damned nice dealership.  Selling Corollas is more what I'm suited to do, but one must adapt to the landscape as needed.

Letting the singles stock accumulate.  Usually when high-end cards show up, we've had them in the case for maybe a week and then what doesn't sell is off to eBay.  The same for format staples where we already had more than two playsets in stock.  When DSG has depended on MTG revenue to survive, that meant maintaining a constant churn.  Cash out, cash in.  Not running a museum here.  Now that we're unlikely to feel a pinch if things sit a little longer, we can let the selection get a little deeper and the coverage a bit more comprehensive.  If I only had room for a couple more showcases so we could merchandise the singles better, let more people see more of them at a time.

Supporting more older sealed product.  DSG carries all Magic boosters back to Innistrad and the 2012 Core Set.  The need for turn rate that affects our singles depth is the same limiting factor preventing us from having booster boxes of e.g. Tempest, Urza's Destiny, Darksteel, or what have you, on the shelves. (Moving as far back as the translucent-booster era, such as Legends and Arabian Nights, seems inadvisable for all but the most gargantuan of MTG retailers.)  DSG can easily afford to bring in a booster box of Tempest; we spend far more every week on new releases of games you probably never heard of and might not even sell until the clearance rack, though I do try to avoid whiffing that badly on pre-orders.  The reason DSG doesn't bring in that Tempest box is because it would take many months to sell through it.  The average player doesn't surf packs of expensive boosters, especially when the EV differential is enough to make it a gamble.  But if Magic revenue isn't make-or-break for DSG, we have the luxury of carrying such indulgences.  We can run the "antiquarian bookstore" model, like The Sentry Box does.

On the flip side, there are things we don't have to do moving forward.

We don't have to tolerate unsociable hypercompetitive players.  The guys that make things less fun for our customer community.  There is overlap from there into the more parsimonious of EV grinders.  If you're the guy who everyone hates to play, and who has nothing to offer the staff but a litany of complaints, we probably weren't your store anyway (anymore, if we ever were in the past).  But we're most definitely not your store now.  I'm sure you've found or will find a store that is more willing to facilitate the MTG experience you seek.  Our door is always open to concerns and issues brought to us in good faith, of course, but that isn't what I'm talking about here.  Due to our code of conduct, we've already handed out a number of store bans to such people, but now we can do it without ever having to speculate on whether the problem player was worth more in revenue than the hypothetical players that individual might have been driving away.  The grace period is shorter and the benefit of the doubt narrower.  Our friendlier player cohort benefits.

We don't have to dump product.  We've fallen into temptation too; we've used eBay as a cash-flow tool in the run-up to big releases when pre-orders have come in more shallow than expected.  In-store as well, there have been times in DSG's history when we didn't have the liberty to let nature take its course, and had to sell a thing now.  But there are an entire category of stores that just keep doing this, in many cases intentionally.  It will have to be a very special situation before DSG will flip boxes for a pittance, ever again.  In fact, the most plausible reason we'd do it again would be a positive reason: we're into the new set in pallet quantity.  If that set is shaping up to underwhelm, rather than cutting orders back, we'd hedge.

We don't have to be yanked around by internet price aggregators.  There is irony in this as our forthcoming move to the Microsoft RMS point-of-sale system is expected to be our jumping-on point to pegging our singles sell prices to an online average, likely some adjustment from MTGPrice, as mentioned above.  We've been actively working to shed an image DSG built up over time as an expensive store.  In fact, if you look at DSG's singles pricing these days, it's pretty much at TCG Mid anyway on any cards where the price isn't influenced by MTGFinance(Tm) monkey business.  We've simplified the pricing tiers for bulk cards, but aside from that, you'd pay us the same $27 today for an Ugin, the Spirit Dragon that you'd spend on TCG.  Once we're attached to an index we're comfortable with and have RMS pulling the data right and proper, and players see the price levels we'll be offering, we're confident they will want to be dealing with us for the lion's share of their singles needs.  And now we can do it without hitching our wagon to bad exposure to speculative spikes and stock-shorting dumps.

So many possibilities, and so much frustration we get to cast aside.  Truly, this state of affairs is a welcome gift, worthy of the Darren name.  Now that we've climbed to the Darren Threshold, it's up to us to ascend further.  It's up to us to find ways to make DSG better still, so that this newfound influx of non-MTG collectors and players feel fully welcome and adopt our humble store as their Third Place, their fun destination, their hobby home.  And if we could continue to grow a heathy and happy Magic community at the same time, so much the better.

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.

Tuesday, September 1, 2015

Summer Vacation

I'm taking a week off after last week's double-plus-length article.  Stay tuned for a new article on Tuesday, September 8th!  Enjoy the rest of your summer!