The Event Problem

There are two problems hitting game stores: rising costs and failing events. Costs are easy to understand. I'm keeping my store open longer hours, dedicating space to events, paying staff to supervise and hopefully sell product, and and running precious air conditioning to make the space habitable. These costs have skyrocketed. Failing events include a few issues, such as Magic standard (FNM), the cash cow of weeknight events, losing its mojo, Pokemon flailing, the long tail of Dungeons & Dragons reducing interest in new product, and the shortage of alternative options. Finally, we have social change, in which young people are reluctant to get together in person. These are just my observations and some stores are able to overcome these headwinds better than others (I'm thinking out loud, not looking for advice).

Let's take a look at costs, my costs in particular. I will be your model today. Despite the ever present predictions of the death of retail, and rising inflation, retail rental rates since COVID have only gone up 3-4% annually.  Rent for our 1,000 foot game space costs $3,000 a month, 8% higher than 2021. It doesn't include our second floor mezzanine, another 1,000 square feet of game space, which we don't pay rent on (why we built it).

Labor rates have increased an average of 17% across the US since 2021, but the bottom of the labor market has seen the largest rise. We tend to pay towards the bottom, which in California is 45% higher than most of the US. We've seen a 40% increase in labor since 2021, partly because no events during this period meant fewer employees. In the case of evening events, I am paying two staff members $20/hour, including all the businesses labor costs, to maintain the store while events are in session, for four hours. That's $160 in labor. We'll only look at weeknight events, since our weekends are clearly profitable. I want to say we make money on weekends and lose money on weekdays, but it's more complicated than that.

I won't include all the utilities in calculating that four hours of week night events, but it's pretty easy to figure electricity. Electricity has skyrocketed in cost. We have a unique situation in that 2021 was the only year we had no evening events since 2007. We can easily compare 2024 electricity costs to an event free 2021. Our electricity is up 58% from no event 2021, costing an additional $366/month.

Overall for event space, each month we spend $3,000 on rent, $3,200 on weeknight labor, and $366 on electricity, which we'll round up to $400/month when you consider additional supplies like toilet paper and the like. The toilet paper and other bathroom expenses, when we resumed events, caught us by surprise. Week night events therefore cost a total of $6,600/month, or $220/night. This is not news to me, and I've often considered our events space similar to a (once luxury, now standard) hotel room. It needs to be rented out every evening in some way that makes up for that $220. That's $220 of profit, not gross sales or store credit.

What's going on with events? The event "anchor" each week, for as long as I've owned a store, was Friday Night Magic. FNM is a "standard" card event involving purchasing and opening product to play in the event. Product is built into the event fee, so it's a forced purchase. Stores will move boxes of booster packs throughout the month, if they can get reasonable attendance. 

Unfortunately, standard events like FNM have become unpopular because of WOTC changes. Attempts by WOTC to fix standard have not been successful. We went from packing the house during FNM to getting perhaps a dozen people on a Friday night. Our event calendar is blocked off for FNM, but it shouldn't be. Instead we've needed to shift events to make room for an overflowing Commander night, a pre-constructed format in which we don't sell product (not even Commander decks, ironically). Therefore, Commander makes us little money and it cannibalized a profitable FNM.

The other event, which draws so many people we've had to limit it, is Dungeons & Dragons. D&D is an event where, without monetization, you expect players (mostly DMs) to buy game books from you. D&D has been flagging in its tenth year, with plans to only refresh the edition over the coming two years. The idea here is the IP is more valuable as a potential digital placeholder than an actual role playing game in book form. Corporations be like that.

This leads to very little incentive for most players to buy more, although the refreshed core books should sell very well.  The hope that D&D players will somehow maybe, possibly, buy a book from you after those core book sales is pretty slim. Plus we've established in other posts DMs buy most of the books and players don't cover their ratio. D&D groups are generally 4:1 players to DM, but sales tend to be 2:1; for every book a DM buys, four players buy two books. Oof. If you want to talk about freeloading and event space, start with that ratio. If we could have a D&D event that only included DMs, that would be a great thing. You could charge them to sit around and argue about what they wanted to run.

There is a lot of flailing when it comes to other games. We've gone full line on Warhammer 40K this year, but energetically, that game does not bring in a lot of new players. You can debate why 40K doesn't innovate with rules, but generally see WOTC: the product is the models, not the game play. Pokemon has struggled this year with lackluster releases, the community we built during COVID has dwindled, and the income statement warping, stratospheric, high margin sales, have slowed tremendously (but not back to pre COVID levels). My CCG concerns as we pivoted to One Piece and Star Wars was we would be overstocked and potentially sunk by debt, but instead we saw enough shortages this summer to see our fledgling indie CCG community dry up and blow away in the wind. It's Grapes of Wrath over here in CCG land.

We struggle to get young people re-engaged in society. This was a problem pre COVID and now it's a bit of a known crisis. It's not some kids, it's most kids. A lot of people have returned to in store play, but growing that is much harder. My own kid (and some friends) don't see the value of going out with people, when you can hang out virtually. I don't think it's healthy, and from the owner of a Third Place, it may one day re-define how we allocate resources. 

These are all headwinds and known problems, and it has to be said, there are stores overcoming all these challenges, innovating, finding other products and interests to engage people, and of course, better monetizing events and de-linking events with product sales. My store is profitable. It is struggling financially, due to higher costs and lower sales, but we will grow through this tedious problem. Part of growing through this is event monetization.

Event monetization is a topic I've touched on before. But look at it this way, how do I net $220 each week night through events? I if can't incentive people to spend thousands of dollars on product, which is what it takes with such a nut to crack, how do I instead monetize that space to earn back my costs? Assuming a 10% net margin, I need to sell $2,200 of product during an event to break even. Our plan to charge a small $5 fee to use the 100 seat space will cover costs, even if we only manage to fill our space half way.  Also worth noting to those who ask what more do they get in return, $10 would be the cost to actually "professionalize" events with paid coordinators. We're far from that.