Sunday, April 5, 2009

RPG Industry

Lately there's been this kind of odd animosity from game publishers towards brick and mortar stores. Meanwhile, brick and mortar stores are cutting back on edgier RPG content, mostly for economic reasons but also because they're unhappy with the sales channels that bypass them. I think there is a misunderstanding among game store owners about how the game industry works, which leads to some bad feelings. The big problem, I think, is that store owners get most of their information from distributors, and distributors are fairly tight lipped about the details of their business arrangements, especially when they're having a negative impact on the industry. They're not exactly great educators when it comes to the industry.

Game stores are mostly in the dark about things like profit margins among the tiers, the true availability of product in the distribution channel, and the steep slide towards direct and Internet sales. In fact, I think it's this increasing percentage of online sales that have the game store owners angry and the publishers questioning the value of brick and mortar. When 10% of a publishers books are sold on the Internet, they might quietly grumble about the distribution system and those lazy store owners. When their direct sales hit 50%, they can shout their complaints from the roof tops! Store owners are not exactly helpful, and many don't understand the role of the Internet as a support vehicle for print product, while small publishers are frustrated because only their highest margin products are viable through the industry tiers, due to the tiny margins. Everyone has a hand in their pocket, something store owners are intimately familiar with. Neither side fully understands the plight of the other and there are bad apples on both sides that tend to make matters worse.

The solution to a lot of this is education, but the medium is lacking. Our trade organization, the Game Manufacturers Association, is in transition after atrophying for many years; not that it was very useful before, from what I've been told. Their trade show has always provided helpful seminars, but they're aimed at new stores, while this issue is fairly sophisticated and not exactly what a new store should be focusing on. Distributor shows obviously have little incentive to air grievances or disclose internal workings, so they're not much help either.

Whatever the solution, I think it behooves the publishers to educate the retailers about their plight, their margin, their troubles with distribution that's hidden from the retailers. For example, every point of margin erosion is always the fault of the publisher. Who knows what's really going on? Only on rare occasions are we allowed behind the curtain. All this assumes publishers still believe brick and mortar stores are relevant. If sales is the primary driver, increasingly brick and mortar stores are far less relevant (store owners will likely tell you RPGs as segment are less relevant). Retailers need to show more curiosity about the inner workings of the industry, or else risk the middle tier inadvertently diverting an entire segment of the industry to direct sales to customers. Both groups need each other, but they haven't figured out how to talk. I'm hoping this happens before they go their separate ways.

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