The Board Game Market (last piece of pie)

The world of board games is exciting and dynamic, without a clear market leader. But is that really true? Read on. This chart accounts for the 800 titles in our store, but I think you can do some extrapolation to the game trade. I find this is the most interesting chart yet. We're not dealing with game systems here, we're dealing with individual games, judged on their own merits. Refreshing.

A company like Z-Man Games can come out of nowhere and start pumping out big hits. Individual games like Blokus or Apples to Apples, can be a force to be reckoned with (most of the sales for Mattel). A company can survive on a single game or game franchise. Niche players can succeed, unlike with most other game segments.

You might be tempted to divide the market thinner, in hopes of seeing a clear leader. It's what I suggested when I found that Nike had 11% of the shoe market, but 46% of the athletic shoe niche. Perhaps a Euro game and American style game chart would be more helpful. I know if I ran a board game company, I would attempt such division to get a grasp of my role in the marketplace. What can you see in the chart (besides tasty pie)?

Google of Games (More Pie)

The "unassailable position" I talked about with Google, the iPod, and Microsoft Windows belongs to Magic: The Gathering in the game world.  There is nothing quite like it, except for maybe Chessex dice. At least that's what I see with our own statistics. It's painful, and damn expensive for me, to watch company after company throw themselves against the CCG wall in vain. In the store, we have an entire sub-culture of CCG wall throwers who hope in vain to find the Next Game.  I tried to add more data to see if I could show Magic as a leader, and not an unassailable winner, but nothing changed except the names at the bottom of the heap. Magic wins.

This is why I was (eventually) happy to see the Living Card Game model from Fantasy Flight Games. Stop banging your head against the CCG wall, the Magic wall, and create good games, sensibly distributed. You don't get to swing for the fence in the LCG model, but that means you don't necessarily strike out when you lose. Road kill from a year ago for us includes: Chaotic, Dinosaur Kings, and the last six card games listed here.

More Pie for You (Miniatures)

Miniature game sales for us are down about 4% from a year ago. Again, we have a mature market with Warhammer 40K the clear leader. I would like to say there's a renaissance of new miniature games, but these are mostly curious games that play at the margins. Malifaux is sure to be a big hit (on the margins) in the next year, but for us it will probably just replace Infinity or another game. We'll also be dropping Lord of the Rings, which saw a short lived rally when the War of the Ring book was released. Firestorm Armada will likely pick up steam, only to dislodge Uncharted Seas. I don't want to play down these great games as games, they're just not terribly relevant from a sales perspective. What we need here, are new miniature players, which seem hard to come by.

New miniature players will be our focus for early 2010, as we implement a "little generals" league for kids. We'll be introducing them to the miniature gaming hobby through Warhammer 40K, and hopefully creating a time slot for them to play regularly. One of our failings as a game store is in the development of new gamers. The philosophy of "If you build it, they will come," is pretty good for a new store, but I think store owners needs to quickly find ways to engage the community.

The Living Role Playing Game

The RPG market place is changing, transitioning from a print based model and trying to survive with a dwindling customer base. Print books are easy to steal, with the perception that role-playing book piracy is rampant. Selling print books is also hit and miss because of the nature of traditional role-playing games. With three to five players for every game master, player books, on the surface, sell three to five times better, making game master books less profitable. What actually happens is more complex, as there's often one guy who buys most of the books while the group borrows them. That guy is often the game master, the person with the most invested in the game. Trying to appeal to both markets in one supplemental book just makes for a bad book, so what to do?

The Living Role-Playing Game

Fantasy Flight Games has taken good games with broken distribution models and made them successful. They created the "living card game" or LCG, for The Game of Thrones, Call of Cthulhu and, created from the ground up to be an LCG, Warhammer Invasion. The CCG model only serves a few market leaders, while other companies attempt to eek out a living and not lose their shirt. The RPG industry, some would say, is broken. It serves a handful of top tier publishers, while everyone else has to keep their day job. It struggles with relevancy, competition from a compelling online RPG experience, theft of intellectual property and the inability to attract their target audience.

Warhammer Fantasy Roleplay 3rd edition, I think, is attempt at a living role-playing game (LRPG). Gone are the book purchases that appeal to a segment of a tiny segment. Instead we have card packs, tokens and even special dice that aren't easily replicated, yet are very easy to expand the rules of the game. Much of the content of the cards in WFRP could have been placed in a rulebook instead, but that wasn't the intention. Easy expansion means easy rules changes and, most likely, more favorable sales. Want more spells or powers, forget books, sell a small pack of cards that every group will buy.

The premise, I think, is that there is always going to be that one guy who buys the stuff. The enigma of the starter box supports this. It's a box that has limited value for a player, but the players need it to play. At $100, it's unlikely more than one person in a group will buy it. It's aimed at that one guy. This is like the trade-off with the LCG model. In the LCG model, your sales will be far lower than a CCG model, but the publishing risks are far less and the efficiency in the system is much higher for retailers and distributors. FFG is accepting that the one guy will drive the sales of this game, and everyone else is not their target audience, except in driving that one guy to make the purchase.

The other method of creating a living role-playing game is the Wizards of the Coast way. You create quality online tools that are essential to play, that may even come very close to replacing the book model entirely. It's a fine line, as game publishers desire a print channel, so you don't want to eliminate brick and mortar (or even online) sales entirely, at least until electronic commerce is at parity with brick and mortar. The online model also seems to capture a lot of players, but again, there seems to be a lot of groups with one guy using the online service for the group.

The goal here in both models is to have a steady stream of income, with less volatile sales patterns. Cash flow is king, and the living role-playing game should provide steady cash. The down side is that only big companies can play this game. It takes a lot of resources to print cards and card stock efficiently, which is why we have a more mature market in board games rather than the free for all, kitchen table publishers in the RPG trade. The same is true with online tools, which require infrastructure and expertise that are out of reach of even the second tier RPG publishers.

The New Dog Fears the Long Tail

For another day, the methods and reasons for publishers to kill off what has gone before. Why do they need to destroy, contractually limit or otherwise impede previous versions of their game? Is the player base that small? The almost irrational fear of piracy seems to indicate that. Is there no way for these games to live together? Can you force a customer to move on to a new version of an entertainment product? Not shown on my RPG chart of last week were sales of 2nd and 3rd edition used RPG products in our store. Each of these easily outsell second tier publishers.

WFRP 3rd Edition

D&D Compendium. Search online for just about anything in print. 

One of several solid online tools

Slow and Steady

November sales were shockingly good for us, 34% higher than last year. This was lead by collectible card games, board games and role-playing games. Those are the kinds of numbers you expect in year two of a store, not year six. Talking with other retailers, they also saw a big increase. The reason is clear if you experienced the economic free fall of 2008.

Last year, the nation had just witnessed the collapse of our financial system. Everyone was holding their breath in November, staying home under the covers. A 34% increase from near Armageddon level sales isn't a lot to crow about. Still, we're up about 12% from 2008, showing that perhaps game stores are counter-cyclical after all. Just don't expect to reap the rewards during boom times. I'll replace my "think inside the box" slogan with "slow and steady wins the race."

If the recession is over, small business survivors have hopefully learned some lessons from it. I've learned when to expand my business and when to hunker down. I've learned how to tighten my belt, while still investing in what's important, like staff. I've learned the value of money, and the danger of relying on banks and creditors, who don't understand the ebbs and flows of my business. Cash is king, as cheap credit will be hard to come by for some time. That bodes ill for an economy that's powered by small business.

I'm not sure how small businesses will grow in the future. Like cholesterol, there's good debt and bad debt. Bad debt is an oppressive drag created out of desperation, like financing your groceries. Good debt is an investment in the future, like a home purchase or student loans. Our business has cheap debt from our move and expansion that we're paying off, but any new debt, necessary for expansion, is far too expensive or non-existent.

That means our business and many others, will need cash to expand, which is not how it's supposed to work. That will require a much longer period before we can grow; both the pay down (which is normal) and the saving up (which is not).  This lack of credit is why you're hearing all the talk about a very slow economic recovery.  Slow and steady will have to win the race, at least until there's money to fuel the economic engine.

RPG Market Share

Dungeons & Dragons still dominates role-playing sales in our store, but there has been a mini revival over the last year, with renewed interest in older games and some great new games, such as Rogue Trader, Warhammer Fantasy Roleplay, and Hero 6. Pathfinder has found its legs too. This has dropped D&D from its startling 75% market share in our store to its less alarming 3.5 levels of around 55%. You lose Mayan calendar!

If this chart looks familiar, it's probably because it's similar to many business charts for mature marketplaces. Mature markets eventually have a leader that takes the kind of unassailable position we see with Dungeons & Dragons. You'll find products like the iPhone, Hewlett Packard printers, Internet Explorer, and Coca Cola with similar positions. They're household names like Dungeons & Dragons. It's a kind of economic natural selection. Celebrate diversity, but accept reality.

What Publishers Should Know

Since someone asked me this and I spent too much time responding in an email, I'll share my thoughts here:

What publishers should know about retailing:

The product. They should know how their product is likely to be displayed. This includes things like artwork and facing. How will it look on a magazine rack? Can you see the title or is it too low on the cover? How about on a bookshelf with the spine out? Does it have a spine or does it disappear? They should know how their product holds up on the shelf. How long before the cover begins to warp and bend? If it's less than 6 months, you're sunk. Is there room for a price tag? Did you print your MSRP on the book? Did you reduce the retailer margin AND print the MSRP on the book? Prices are set by retailers; that's our job.

• Very bad example: Traveler books
• Very good examples: The new Hero system books. 

Direct vs. In Store. Do you see the retailer as an impediment or a partner?  Selling direct to the consumer is fine, but do you play favorites? Do you sell your product early online? Do you sell it early at conventions? Do you discount online or hold sales leaving out the retailer? Is Amazon deep discounting your product? Do you openly encourage customers to buy directly from you instead of the retailer? Do you have a subscription service that does not include the retailer? Is the retailer given a margin that's less than the full 50%?

• Very bad examples: Paizo, Hero, White Wolf.  
• Very good example: Goodman Games, WOTC.

Marketing. What have you done to let the retailer know about your product? Do you encourage the end customer to interact with the retailer? Do you pay for any marketing to the retail tier? Do you show up at trade shows (not just conventions)? What do you do to encourage the retailer to stock all of your products and avoid the dreaded "periodical model?" What sort of organized play or volunteer program do you use? Consider quickstart rules. The goal is to get the retailer to buy the product, and more importantly, consider that product "evergreen" to keep it in stock.

• Very bad example: Mongoose (churn, churn churn)
• Very good example: Wizards of the Coast, Paizo. 

Some basic concepts:

Inventory is a zero-sum game. In order for me to stock your product, I must drop another product. When a new product is released, you will have to have a compelling argument for me to re-order your product. How will you compete against the new and shiny?

Retailers don't market games. We can briefly explain your product. We can make a general suggestion to a customer. You should not expect that we've played your game or will ever have time to do more than browse the back cover. That was never our jobs. Product knowledge is about 20% of what we do. Caveat: if you DO get retailers to play your game, you've got a powerful evangelist. Consider how you can make that happen. Consider demo copies for staff or potential evangelist customers.

Customers only buy what they'll play. It used to be customers would buy interesting books from systems they don't plan to play, just  to read for fun or to find new ideas. Recession purchasing found customers abandoning this practice. Books are bought for direct play. Books that will not be used in this manner, will not be bought. This was a big eye opener. If you've found your sales have dried up, consider whether you were in this category.

Know your pipeline. You tell customers your book "is out." What does that mean? Does it mean you shipped it to distributors? Does it mean you have a street date and that date is today? Know where your product is in the pipeline. Know when it will hit the street. Communicate information about the street. Nobody cares that you put it in a brown box and shipped it to a warehouse. Strongly consider street dates for your products to level the playing field. Nobody likes to hear the store across town or across the country already has their copy.

Manage your information. This is hard, but make sure it's clear to everyone that your product is a) available, b) temporarily out of stock, or c) discontinued. Use your website, the game industry network, and your social networking tools to keep everyone up to date. Relying on distributors will cause you sorrow. Consider planned obsolescence, limited editions, or a pre-determined number of source books.

Please add your own thoughts.