Tuesday, October 16, 2007


You may begin to wonder where all the game stores have gone. It's estimated that 40% have closed over the last couple of years. The bloodshed has ended, and I'll be the first to say that many of those stores should never have existed, but there are fewer new stores entering the market.

The problem is not that game stores are impossible to run, it's that running one, or any small specialty store, is so financially un-rewarding that few people smart enough to do it are willing. If you do the math and figure out the investment, it gets all wonky. Like many wonky professions, it's only when you can't imagine yourself doing anything else that you should really move forward.

This post is about macro game store economics, the big money needed to make it work. It's a post I posted on the GIN recently. At the time I was exasperated with the numbers game, but the post doesn't seem to reflect my frustration. I've edited it for clarity. It started with a quote from a game store owner who was throwing in the towel:

"The retail model is inherently unsustainable."

Getting beyond this has been my focus lately. I've been working for the past three years in an attempt to obtain a salary that allows for a sustainable life in the SF Bay Area. Let's call that $65,000 [the average salary of people living in Oakland]. That's coincidentally the amount I was making in the year 2000 when I qualified to buy the house I currently live in. The buy in would probably be higher now. If say, I have a $30k game store manager salary, that means I need to make $35k in profit to continue to own my modest home.

If successful stores supposedly make around 8% profit, that means my store must have annual sales of $440,000. This assumes I don't have investors that take a cut (I do). How many stores do you know like that? What percentile would that store be in? Probably the top 5%. Who has the $110,000 plus furniture, fixtures and equipment expenses to build such a monster?

Because of this, I see three types of game store owners in my area:
  • Gamer monastics: They work long hours, make below minimum wage, do it out of devotion, and if they're lucky they've got a wife with the real income and benefits.
  • Hobbyists: Their daily break-even is $300. Their store is three miles north of nowhere. They do it because they need a place to play. They would be insulted if they could afford an Internet connection and read this. Windex is a capital expense.
  • Enterprises: Those who have been doing this long enough or those who can come up with the cash are running large, long-term stores, almost always diversified into toys or related items. These people are long-term because back in the day it made sense. Now the proposition is not nearly as rosy. Many are leaving. Many will close when they retire. Those in my area are dropping like flies.

My best hope is to turn myself from a gamer monastic to the owner of an enterprise.


  1. I've seen one more type, although I don't know how many are still around: the opportunist. This is someone who started in something else (usually another niche market) and expanded into gaming at some point. I supposed this could be considered a sub-class of the enterprise, but it's the reverse of what you described with someone starting in another niche and expanding into games rather than the other way around.

    The most successful opportunist I've seen started in sports cards, expanded into CCGs then went into RPGs, wargames and board games to the point where the sports cards became only a small part of his overall business.

    I've also seen comic stores expand into gaming.

    These stores would probably be just as fast to drop gaming as they were to add it if the market changed, which is why I suspect there aren't too many around right now.

  2. When you said opportunist, it reminded me of why a lot of people started game stores: quick money based on a fad. I read somewhere this really pessimistic quote: "Start your first business like your first marriage - for the money with a clear exit strategy."

    Selling Pokemon back in the day was like printing money. The same could be said of early Yu-Gi-Oh. Some of the stores that we see failing now are essentially card shops that couldn't hold out any longer.

    With the Internet it's been argued that there can be no more big money fads for specialty shops. Ebay and online retailers act as a safety valve to relieve demand and price pressures. So the clear message to card shops is the party is over; there will be no more parties. Plan accordingly.

    The other model that a lot of stores push today is tactical miniature games. How many game stores are entirely dependent on Games Workshop? How many could survive without them? I could in the last shop, but probably not now. If there were to be a falling out in miniature games, like a tactical miniature video game with the same appeal WoW had for RPG players, I wonder if we would see another type of store disappear.

    I've always believed in diversification, but you can't deny the current intense demand for miniature games. They're dominating our sales now that we have game space to play them.

  3. Miniatures games are a mid to long term inome source. Unlike board games, or RPGs, where you sell one copy of the game to someone, and their friends get to play using their copy, miniatures games require customers to each buy their own share of stuff.

    Also, miniatures games require lots and lots of extras. Another advantage is that when a minis gamer finishes one army, they are likely to brranch out into a second, third, or even fourth army for that game system.

    One nice thing, from a merchant's perspective, is that miniatures games are no longer simply an "either-or" choice between "obscure companies with a xeroxed rules-set and impossible to restock miniatures" on the one hand, and GW on the other.
    Companies like Rackham, Privateer, Battlefront, and even WOTC/Hasbro are making attractive and marketable games and miniatures. This means that while losing miniatures games as a genre might really hurt the store, losing a single manufacturer or line would no longer be crippling (as was the fear of every store owner who invested heavily into GW product and then worried about a GW store opening up right across town - as happened to one of my former employers in NC).