One of the Fantasy Flight Games guys was comparing their company, with a reduced discount to retailers, to Games Workshop, which has a similar reduced discount. The industry argument is this: You can reduce your discount to retailers, if you provide additional support that gives the appearance that retailers are paying extra for this added value. However, Fantasy Flight is no Games Workshop, let me tell you. You can say a lot of bad things about Games Workshop, but their support is unparalleled and probably is worth the extra lost margin:
Availability: Over the last year, I've had two items from GW unavailable, and only for a week or so, whereas FFG products are gone for very long stretches, months at a time. I can't do turn rate analysis on MANY Fantasy Flight products, because as my distributor points out, I haven't SEEN that game in months. Now when they come back in stock, I seriously question whether anyone missed it or not before re-ordering.
Discount vs. Product Support: Those who reduce their discount to offer special support tend to eliminate that support over time. It's a suspect argument. GW, however, does offer free samples, a phenomenal damaged item or parts replacement policy, a monthly magazine to support their games, and generally stellar support.
Stock Swap: I can swap out dead GW inventory, whereas I have to put dead FFG games, which are NOT all evergreen, on clearance.
Internet Sales: There is some holding the line on Internet sales of new GW product, whereas FFG sells directly from their website, often times with distributors appearing to be shorted new product so it can be held back for this purpose. The same argument holds for convention sales.
Price Increases: When was the last time the GW discount changed? Yes, they raise prices annually, but I don't lose sleep over shrinking margins. If FFG is that solid and integral to the game industry, they can afford to raise prices rather than reduce discounts.
Street Dates: Hey, where are the street dates FFG? Like clockwork, GW customers come in to buy a new item on the street date. I can put up colorful flyers that GW supplies me, with dates printed on them. They don't always keep their street dates, but they try. My hardcore FFG customers are educated that they'll get their game whenever FFG feels like shipping them. Where is the Mutant Chronicles game?
My Promotion: Unless I get a FFG demo for free, and I rarely do, I have more incentive to promote a game from another board game company because of the discount. Why promote a game with a slimmer margin, especially an American style game that takes hours to play?
Rackham: I'm sure you don't want me to rant about them in this thread, but they tied their wagon to your horses. The discount on Rackham is either unworkable or unsustainable, depending on which distributor you're using.
Disclaimer: I sell a LOT of FFG games, and it's a top 3 board game company for me. Kingdom Hearts is picking up. I love Citadels. I sell a ton of big box $80 games. Market share in this industry doesn't mean a lot to me: A tiny percent of tiny, equals tiny.
I'm a fan of Chris Petersen. I've known him since the Downtown Distribution days (Capital City Comics Dist implosion). He's a straight up guy AFAIAC.
ReplyDeleteThat said, margin is margin. It's time to do away with this discount off MSRP stuff. At least they don't print prices on their products, do they?
Yeah, I feel bad about taking someone to task who opens up like that, but I did want to get my point across.
ReplyDeleteFFG doesn't put MSRP on their product, but the argument is that by selling direct on their website, they have a de-facto MSRP. Net pricing isn't foreign to them either; Starcraft is a net priced item. However, their website has it on sale, so that becomes the MSRP.
The customer model is also very different.
ReplyDeleteWith a miniatures game, many of the customers will be returning to purchase more miniatures, paints, hobby supplies, books, magazines, and terrain. The more they enjoy the product, the more likely they are to buy much more, and to buy new releases for their armies.
With a board game, customers have the whole shebang in one box. If they really like it, they may never have to buy another game.
You sell your GW customers once, and only once, and then feed their habit.
You have to sell your FFG customers on each and every new game.
While CCGs have some similarities with the GW model, CCGs tend to start strong, and then diminish - since new players can't get in on the ground floor. GW makes it easy for new players to get into their games/hobby.
I apologized to Chris to jumping him on the board like that. Then he posted a lot of information on why things have been the way they've been. It seems like there's a lot of miscommunication or lack of communication that compounds the problems.
ReplyDeleteTheir shortages for the holidays, for example, can be attributed to the problem with toys in China. If we had known that, there would have been understanding and sympathy, rather than all the ill will related to their usual product outages and missing new products.