Wednesday, February 7, 2018

Eat What You Kill (tradecraft)

We screw up everything.

That's the premise for the changes in the game trade, specifically brand value protection. I'm referring to retailer bad actors who are the problem with product dumping and brand devaluation.

This week we have an offer on the table from Fantasy Flight Games. Simply put, buy ten of their $90 Star Wars Legion board game and you can have a free demo copy. You also get a listing on their website and some minor perks that honestly have Games Workshop's fingerprints all over them. This whole campaign is a page from the Games Workshop play book, which is terrible when the product sucks but can be amazing when it's excellent. This product looks pretty excellent, for the right store.

There is hemming and hawing about this deal, mostly in how ten copies is well beyond the capabilities of small stores to sell. This brings us back to brand value protection. In the old days, stores would have quietly bought the ten copies, sold the two they should have ordered, and exhaust ported the other eight at cost online, incentivized by that free demo game.

My store would have ordered ten, hoping to sell ten, but would instead see the bottom fall out of the market with hundreds of online copies sold at cost. I would cry in the corner about how Games Workshop played on my hopes and hoodwinked me once again, but the problem lay with us, the retailers.  However, now, the exhaust port is closed. You can't just dump those copies online.  The result is real discussion about fairness and what it means to participate in such a program. I think that's the unstated core of this argument. You now eat what you kill.

Let's do some math. My premise is a demo copy is only good to you if you plan to sell ten copies. If it's a free demo copy, then it's great for everybody, right? But lets pretend you had to pay for it, such as offering it as an add on purchase. A $90 demo board game would be roughly $50 cost that you're now declaring as a marketing expense (where profit goes to die). We need to make up that $50 cost with our sales. How do we do that?

Let's assume you're making 5% net profit on each $90 game, which assumes you're profitable, a rare thing in the game trade, that you can calculate your profitability (even more rare), and assumes you're at the low end a reasonable range of retail profitability (a conservative estimate). Your net profit at 5% is $4.50 per $90 Star Wars Legion sold. So how many copies of that $90 Star Wars Legion would you need to sell to make up for that $50 demo game cost? Eleven is the answer we're looking for. If you can't envision selling ten copies of a board game, you don't need a demo copy and you certainly shouldn't expect someone else to provide one for free. Again, now that the exhaust port is shut, we're being asked to think a little deeper about this stuff.

What's fair is everyone has the opportunity to participate. I have three pre orders right now for this game and I'll be ordering the offer at ten copies, assuming I don't have a huge influx between now and then. I have been given the opportunity to play. I know some store owners ordering 40 and getting even more benefit. That's not me. That's fine. They're taking the risk at 40 and I'm not.

I can decide if this is right for my store. My store is not a miniatures centric store and this is really Star Wars 40K, the miniatures game, not some casual X-Wing thing played by the average muggle. Every opportunity doesn't need to apply to every store, either the product itself or the offer on the table.

Fair is being offered the opportunity, unlike say not being allowed to run Magic pre-releases because there's a backroom deal. You have the opportunity, so it's fair. By the way, fair is overrated. Fair doesn't reward those who hustle to find new opportunities, who corner new markets through initiative. My store has several advantages others don't because I made opportunities where there weren't any, and I made them when I was small. Is that fair? Is it fair the lion eats the gazelle? Fair's got nothing to do with it. But since it was brought up in this particular instance, this deal is definitely fair.

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