Wednesday, January 9, 2013

Events

A few years ago I wrote about how our Game Center was like a hotel suite. It needs to bring in $128 on weeknights and around $200 on the weekends. There are many things in business we ignore when it comes to money. The bathrooms are a good example; something you do because you care and because you wouldn't want to work in a place that demoralized you with dirty bathrooms. Small business also gives a lot to charity, usually to local community groups, something we did last year. But events are not these things.

Events are revenue producing. You can't even hide events in the mother of all business lies, the marketing expense. If you're paying for event space, and you're not making money on events, either directly (CCGs) or a very clear indirect route that you understand (RPGs and miniatures), then you're simply doing it wrong and you'll probably fail. Stores that can't find their event formula struggle. I mention this because most game manufacturers don't understand this.

A big factor in marketing games is getting them played in stores like mine. Publishers know this, but the complexity and expense of designing such a program is daunting. The project is almost always given to the marketers to create. After all, from the game companies perspective, it's a promotional issue, rather than a profit center for them.The result is many of these organized play programs aren't designed with "event as profit center" in mind.

Sometimes that's fine, if the event is casual, there's no cost, and it drives one of those game categories with indirect, rather than direct sales. Pathfinder Society Organized Play is an excellent program by Paizo that costs us nothing, engages customers and drives sales indirectly. You don't need to buy something to play, but it results in sales of that product not required for the event. Wizards of the Coast is the best at organized play and provides free materials for both Magic and D&D (alright, and Kaijudo). They're by far the most generous of all game companies in this respect, with actual print materials arriving on a regular basis.

Also, look at Star City Games as the king of organized play for profit. I pay a fee. I provide the bulk of the prize value. Customers pay cash to play. Star City promise to drive dozens of people to my store. It's clean and effective and puts a lot of pressure on us to generate buzz and maximize attendance. I lose money if I screw it up. People drive hours to play in these events.

The two problem examples in the last week come from Fantasy Flight Games and Pokemon USA. Pokemon requires a background check and hoops to jump through to run sanctioned events in the store. They're the only company to do this, which is commendable, if not annoying to get through. However, unlike other game publishers, they set the price and parameters of their events to cut out retailers from making money. The organizers, not store employees. handle event fees. No need to get your hands dirty with that filthy cash, retailer, we'll take care of things on our end. So they really don't trust us to do anything right. They don't trust us with their customers and they don't trust us with their money.

Our Saturday Pokemon City Championships saw over 80 people attending, none of whom paid us anything to use our facility, and sales showed that. We were understaffed, it turned out, but it's hard to justify why we would do anything about it, why we should care, which is a bad feeling to have. It's like saying, why should I have a clean bathroom for you, what are you doing for me? Ouch. Would you stay in a relationship like that? Of course, the big question Monday morning was "Why the hell are we doing this at all?" This is not the 90's Pokemon. There are at least three other more popular card games at the moment, although Pokemon would be ranked higher in my book if it didn't have such an anemic margin.

Fantasy Flight is doing a great job with their league kits but their new regional championship program doesn't quite grasp what we need to accomplish. A $175 kit supports 16 people. First, any event with 16 people is a failed event in my book. Events should have enough product for open ended attendance or kits broken down so I can buy more of them at a reasonable price. We try to buy five  kits from Konami for our Yugioh sneak peak events, for example, and we pay $175 for each. Even if I over order, the kit is essentially product I'm going to sell later anyway.

When it comes to attendance, motivate me to fill the store. I should get stars in my eyes and want to announce your event to my friends and relatives, not laser focus on 16 guests I would like to invite. This is a for profit event, not a dinner party.

Events need a clear revenue path. Do customers pay $20 to play? That's what I'll be charging for my Yugioh event. The FFG kit comes out to around $11 per person in kit expense, so that would be reasonable. What if we get 15 people and not 16? Perhaps I'm expected to pay $175 just to generate buzz, you know, a marketing expense. I suppose I could buy more kits, like with Yugioh, but the path to profitability hasn't been defined properly.

I don't want to pick on these guys too much  (alright, maybe Pokemon), but publishers need to understand the retail business model. Both of these companies have reduced margins on their products, Pokemon being the lowest in the entire store. Nothing makes me less money per dollar than a pack of Pokemon. In other words, if you come in looking to start playing a game, the worst thing I could do is get you started with Pokemon. Game companies often justify lower margins by claiming marketing expense for stores, yet few follow through. Step up. Use those dollars wisely. Make better events. Talk to retailers.

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