ICV2 and You (Q1 2011)

 Dungeons & Dragons: Not dead, just resting

Here are ICV2 sales figures compared to our own. ICV2 contacted us for the first time in Q1, so some of their data includes us.

Top 10 Hobby Channel Card Games – Q1 2011
	ICV2	BDG
1	Dominion	Nightfall
2	Munchkin	Death Angel
3	Thunderstone	Pirate Fluxx
4	Ascension	Seven Wonders
5	Killer Bunnies	Dominion: Intrigue
6	Bang!	Thunderstone: Dragonspire
7	Dixit	Dominion
8	Resident Evil	Dominion: Prosperity
9	Seven Wonders	Munchkin
10	Guillotine	Gloom

Nightfall hit hard in our store and became a popular game with our Tuesday night board gamers. Resident Evil hadn't quite percolated to the top yet for us, but is huge in Q2.

Top 10 Hobby Channel Collectible Games – Q1 2011
	ICV2	BDG
1	Magic: The Gathering	Magic: The Gathering
2	Yu-Gi-Oh! TCG	Yu-Gi-Oh! TCG
3	HeroClix	D&D Minis
4	World of Warcraft	Pokemon TCG
5	Pokemon TCG	Naruto CCG
6	Legend of the Five Rings CCG	World of Warcraft
7	D&D Miniatures	Axis & Allies
8	Naruto CCG	Heroclix
9	Axis & Allies	-
10	Monsterpocalypse	-

We don't even have ten collectible games, thankfully, although we'll be adding Redakai next week, which should do very well. We're also trying to sell Legend of the Five Rings CCG, but no bites.

WizKids doesn't like money. That's the only answer I have for why they sold out of their latest Heroclix on release and then announced recently that they've sold out of the next set, weeks before release! Hooray! We've limited our profits! We are awesome and in demand! A store that does that is called "out of business." Heroclix is definitely on my radar and I want to get organized play going in the store for the "current" set and even ordered an OP kit, but no, it's gone. No OP. I have to tell this story about once a week to customers who want to play in our store.

We were selling the current set (last, I guess, since it's gone) so well that it rarely lasted the day. I don't even think we opened the shrink wrap to sell boosters, as we just handed bricks over to customers. The next set? Yeah, that will sell out too. We've got a lot on order, but who knows the demand? I sure don't. Hey, haven't we seen this kind of annoying behavior before? Yeah, it was WizKids 1.0. WizKids, don't make me cry.

Oh, wait, they actually put a big smile on my face this week. See our number three? D&D Minis? Wizkids and Paizo are working on a project to create Pathfinder minis for their upcoming starter set in October. I can't imagine that this doesn't turn into something huge and resurrect pre-painted plastic miniatures for the game trade. So yeah, Wizkids, you're kinda cool. Grrr, you say, I don't play Pathfinder, I play D&D, blah blah blah. Do you think that stops Pathfinder players from buying up D&D minis by the metric buttload. Nope.

Top 5 Roleplaying Games – Q1 2011
	ICV2	BDG
1	Dungeons & Dragons	Pathfinder
2	Pathfinder	Dungeons & Dragons
3	Dark Heresy/Rogue Trader/Deathwatch	Dark Heresy/Rogue Trader/Deathwatch
4	Dragon Age	Eclipse Phase
5	Mutants and Masterminds, inc. DC	Call of Cthulhu

Q1 marked the end of D&D's lead in our store as lackluster releases were eclipsed by vibrant Pathfinder releases. That trend will only get stronger throughout the year, thanks to Pathfinder Ultimate Magic (Q2 success) and Ultimate Combat (Q3 hot release). D&D is not dead and annual sales have just tipped in favor of Pathfinder, but it tipped at a time of Pathfinder strength and D&D weakness for the foreseeable future. Unlike a lot of stores, we sell near equal amounts of both, strongly support both and generally try to fit the right game with the right customer. However, that's getting harder to do as I begin to have my doubts about the long term health of D&D.

Eclipse Phase gets pushed quite a bit at our store, thanks to our RPG Club loving this game and it being a staff favorite. Call of Cthulhu used to be this game where we stocked the core rulebook out of a sense of nostalgia. Lately it has taken off. The real news is why it hadn't done it sooner, since there are very strong CoC pockets throughout the Bay Area.

Top 10 Hobby Channel Board Games – Q1 2011
	ICV2	BDG
1	Settlers of Catan	Mansions of Madness
2	Ticket to Ride	Wrath of Ashardalon
3	Carcassonne	Settlers of Catan
4	Cargo Noir	Settlers of Catan 15th Anniv
5	Mansions of Madness	Betrayal a/t House on the Hill
6	Small World	Pandemic
7	Survive: Escape from Atlantis	Carcassonne
8	Forbidden Island	Battlestar Galactica
9	Wrath of Ashardalon	Small World
10	Arkham Horror	Castle Ravenloft

The board game news for us is the slowing of Euro board game sales. There is a general fatigue with the prolific release schedule of games that are inevitably rated a 7 or 8 out of 10. In our local market, there are just so many people who can buy those games, even if they are great. It's an embarrassment of riches, in which very good games are regularly clearanced out to make room for the next crop of very good games. It's a great time to be a board gamer.

My initial post, before Blogger ate it, showed some different top picks, likely due to errors on my part. The $80 Ameritrash games were hot in Q1, but there is fatigue there too. Distributors expected more from them as well, and some, like Mansions of Madness, are on sale there. My 45 day supply of that game lasted for months, so it caught me by surprise as well.  Kind of like the Euro games, there are just too many of them at the same time to gain a lot of traction.

Top 5 Non-Collectible Miniature Lines – Q1 2011
	ICV2	BDG
1	Warhammer 40k	Warhammer 40K
2	Warmachine	Warhammer Fantasy
3	Warhammer Fantasy	Warmachine
4	Hordes	Malifaux
5	Malifaux	Hordes

This is much as it was last quarter.

The big news in Q3 is the abandonment of tin by Games Workshop. The Finecast resin model release was yesterday and it had mixed greetings, which tended to skew by experience and age. Younger customers were excited, saw this as a genuine new release and were happy with the product, which has richer detail and advantages in modeling. Older gamers were more skeptical, myself included, and generally railed against the miscasts, higher prices, and general cheese moving. I admit to being skeptical at first, but I'm happy enough with the product to bring all the 40K Finecast models into the store, even if a metal version is on the shelf. The Finecast enthusiasts are happy enough with the new models to want to seek them out. I personally wouldn't paint a metal model again if a Finecast equivalent was available. I dislike metal that much and appreciate the improvements.

Also, if you happen to get a miscast Finecast model, GW is the best in the industry in just giving you another one on the spot and dealing with it on the back end. We have that same offer, although you'll likely have to wait for a restock. Carrying Finecast is essentially a duplication of a very expensive segment of our inventory, so we mostly have single packs of each.

Making a Bug a Feature (40K)

No, this isn't about Tyranids, it's about the launch of Finecast models from Games Workshop this week. As you probably know by now, there will be no more metal miniatures from GW. Instead, some metal models, likely based on the best sales, are being released in resin. There will be several hundred 40K and Fantasy models in total, with the first hundred released on Saturday with a hard street date, something reserved for special launches.

The fact that tin has doubled in price in a year and they can't really afford to make metal anymore is the bug here, with the alternative, a more expensive resin product being the feature. Making a bug into a feature is a software term in which we try to turn a negative into a positive. The higher resin price is somewhat hidden in the fact that GW is doing their annual price increase on the release date as well. You can see that on our website.

On the feature side, the resin will undoubtedly be of higher quality. Resin is good. It's potentially toxic and harder to safely work with (I haven't seen assurances otherwise), but I prefer it to metal for its higher detail. The packaging is improved with a clamshell design and a color photo of the model to help identify it. Current blister packs are atrocious and if you haven't read all the codices, you won't be able to properly shelve the products as a store employee (or find it as a customer).

The clamshelled models will be sold in singles of specific figures, not the random dual sleeved style of their tin predecessors. Space Marine Diaper Pail Apothecary with Heavy Flamer will be packaged individually, rather than in a two-pack with the Diaper Pail Apothecary with Heavy Bolter. For stores it means we can order one item at a time rather than pairs and know what we're getting. It also means those slow selling models don't sell out twice as slowly (blisters are by design, slower sellers). So there are features, I suppose.

As a store owner, I see these as a simple replacement for metal, with a different SKU and packaging and not much more. I can't even pretend to hype it. There will be no cake. So on release, we hope to get about 30 Finecast models, just the ones we need for 40K to replace what we can't get in metal. Lots of metal remain on the shelves and we're in no hurry to do anything special with it.

Those 30 models and box sets would retail for about $750, so it's no small chunk of change. As with other Fantasy models, if it's new, we'll pick it up, but not this stuff. When I warned about those inventory dollars sloshing around into other product, this is what worried me. If this doesn't have the enthusiasm of a new release week, it certainly has the invoice. We'll attempt to fill in holes with other Finecast models as the need arises, but they'll be in short supply for a while.

Is this an interim step? Some think so, a place holder while more models get made into plastic kits. Finecast is no better than metal from a store perspective. They're still small and stealable, fitting on the same blister racks as metal. They're very expensive too, about 20% higher than metal. Not having to order two is good. Getting exactly what you want is good. But that just makes them a normal rather than onerous product. So anyway, I greet Finecast like I would greet a restock of tin. Good, but no party.

Quieting Down

I blog a lot less lately. However, that decline comes from a ridiculous high of more than one post a day in 2008. Posts have steadily dropped in half each year since then. In the beginning, it was about the excitement of the move to our bigger location, along with thoughts on the game trade that nobody seemed to be expressing. It was also a place to show whatever gaming project I was working on, usually to a few friends who read the blog. Now the blog is tied into Facebook and Twitter and heaven forbid, people I really respect pay attention to it. There's also a tremendous amount of content that just goes direct to those social mediums, voracious monsters that require constant feeding.  In other words, both the medium and the audience have begun to conspire to change the message.

This is fine and probably for the best. I have no plans to stop blogging or even editing myself for content to any great extent. I do feel more of a  responsibility to write better, more concisely and more consistently. You could do a lot worse than trying to emulate a five paragraph high school essay. It's now in the back of my mind when I post. Before, when I didn't think anyone was reading, I felt like I was blathering on to myself, like a journal or diary.

Those are my thoughts on how I see the blog going forward: much like it did, less often, better and more concise. And now some miniatures I've painted lately for my Pathfinder Legacy of Fire campaign. My painting skills are best described as "improving." Did you think all I did was complain and talk about the game trade?

Reaper Chronoscope "Moroccan Merchant." This is actually my Kelish PC (inquisitor of Abadar) for Serpent Skull, but will get double duty in LoF.

LoF PC wizard with his servant. Model comes from the Saracen starter set for Hell Dorado. This is a fantastic model.

Ranger PC for LoF. Model comes from the Saracen starter set for Hell Dorado

Witch PC for LoF. Seoni from the Reaper Pathfinder line. Possibly the hardest miniature I've painted.

 

Pugwampi! A Reaper model. 

Paizo downloadable PDF of the LoF merchant caravan.

Games Workshop Dilemma

 

 “It’s not like we can be clever and somehow work around the price increase of silver and these other materials, we have to pass it on to our customer, or go out of business.” Source

Metal miniatures are made primarily of tin and as you can see from the chart above, the price of tin has skyrocketed. Tin has doubled in the last year alone. Worse, it's expected to continue to rise for the rest of the year as Indonesia tweaks supply and China and other manufacturing countries suck up demand for use in electronics. This has really put the squeeze on miniature companies. Some have steadily raised their prices over the years. Others, like Reaper, have started doing some miniatures in lead again, like in the old days. The modern alternative to tin has often been plastic, but the cost of oil has also skyrocketed, so there's no refuge there.

Games Workshop has decided that tin is not in their future. Yet, plastic has a very expensive start-up cost for a model, along with that increase in oil, so the metal miniatures, which almost by definition of their being cast in metal, sell less than plastic, are not good candidates for true plastic sets. They want to instead do something else, some sort of resin or cheaper plastic, or hybrid. It's all rumor, because they haven't communicated their strategy. Instead, metal models have simply begun to disappear.

That means those racks of blisters we sell are going away, along with many of the box sets. For now, those models are just not available. We can order them, but they don't come. Almost everything metal that's not a recent release seems to have been sent to the direct side. Worse, the supply of those metal models is dwindling, and according to my sales rep, there are no more coming beyond whatever is on the high seas. A shipment or two may be on a boat somewhere, but if I'm told a model is not available today, it's probably not going to be available anytime soon.

The dilemma for me involves a couple issues. The first is the natural instinct to horde stuff that sells well. I don't sell metal models out of a sense of loyalty, I actually make money on the vast majority of the 40K metal. We stock every 40K item in production, and that includes a ton of metal models. I very much want them in some form or another. However, I was told it was not in my best interest to horde and that something else would be along soon. But when?  So for now, I'm letting my racks go bare. It's also becoming clear that the opportunity for hording is probably over.

The second part of that dilemma is very retailer centric. As existing metal models sell and there are no replacements, the inventory dollars naturally shift to other areas of the store. If I was Wal-Mart with a sophisticated open-to-buy program, I could horde that GW cash for when the tin replacement arrives. However, being a small time operator, that money goes towards other things, the flavor of the day, like new CCGs. When those non-metallic replacements finally arrive, I won't have the resources to suddenly bring them all back in, although it's unlikely they would arrive in such a fashion.

This also means that our number two game, 40K, is going to naturally see sales flag, as there is simply less product to sell.

As a store owner, I hate blisters. They're expensive, small and easy to steal. Plastic is clearly superior to metal for assembly and modifications. I welcome the move away from metal, but I was hoping for a more orderly transition. I'm sure the sales reps at GW had also hoped for something more orderly, as they're likely tired of giving excuses as to why Games Workshop hasn't communicated their strategy. And now you know everything I know.

Inflection Point

This week marked an inflection point for D&D in my store. It was the predicted point in which Pathfinder finally overtook it and will undoubtedly continue its lead for the foreseeable future. I ran the numbers on this because of another phenomena out there, the disappearance of Dungeons & Dragons 4th Edition books, of which some are fairly new. Titles like the Dark Sun Campaign Setting, released less than a year ago, are just done, their existence removed from our distributors system. They are unobtainable it seems. Other books are being clearanced out, as distributors failed to realize predicted strong sales. I picked up a few Player's Handbook 2 as they were being dumped.

I'm not a hater, really, and for the most part, I use these opportunities to stock up on D&D books. Also, that Dark Sun Campaign Setting book will be hunted to the ends of the earth to keep it in stock. My store does very well with D&D and I'm not done yet. Sales of these books may have slowed, but slow D&D still sells vastly better than game number three, whatever that is. To be fair, a lot of this is likely due to the print and forget strategy of Wizards of the Coast. A big hullabaloo occurred last year when they announced they wouldn't be reprinting the core rulebooks. The reasoning, it turned out, was that they printed a gazillion of them and wouldn't be running out in the foreseeable future, so there's no need to print more. Unfortunately, that's not true for some of the other books.

This is only shocking because we have special expectations of Dungeons & Dragons and I can't recall any third edition product that went out of print during that near decade of strong sales. Other publishers let product go all the time. Paizo has a long list of out-of-print product and product they regularly announce is running low in their warehouse. Nobody predicts the demise of Pathfinder because of this. D&D is just held to a higher standard and when it goes out of print, it reminds us (me really) of the dark days of 2nd Edition, when TSR was gone and we had to hunt down books across long distances. I recall driving 90 minutes to Santa Cruz just to pick up a Planescape box set they had left on the shelf. The Internet was just a baby back then.

Because of its past, D&D books out of print has the odor of death about it. With sales flagging, the line in disarray, this inflection point reached, and no real strategy for the future of the game proposed by Wizards of the Coast, it all begins to add up to a preponderance of suck. Dead Dungeons & Dragons is really bad for everyone, regardless of your preferred system. It's a gateway to role-playing, an iconic thread that holds together the hobby world, and for us, a good chunk of sales. Don't get me wrong, game stores can exist without D&D, and RPGs in general, but the loss of such an icon would be a tragic end of an era. Lets hope D&D has a future, a plan, and doesn't get mothballed by Hasbro.

Drove 90 miles for this guy to finish up my Planescape collection

Quest for Fixtures

You would think a visit to buy used fixtures at Borders would be an almost gleeful experience, just as you might think I did the happy dance when our latest competitor closed a few months ago. I talked about the happy dance for months, really wanted to do the happy dance, worried about my dance steps, and contemplated a Youtube video, but when the time came, there was no joy. Actually, it's quite sad. I know what it's like to throw yourself into your business and I know from working at failed companies the pain the staff goes through as they wind down, tearing apart what they've built. At one dot-com start-up, I took a boot camp and got Cisco certified, installed an amazing OC3 connection between cities, and as I was finishing up, got a call to shove everything in my car and bring it on home. The bubble had burst.

At the Borders, customers circle like vultures. Signs, usually sparse and subtle, are gigantic, bright, and ubiquitous. Everything must go. This is not retail, this is an autopsy. Order and propriety break down and kids run screaming down the aisles. No deal is good enough for the customers and they complain bitterly. The staff are shell shocked and resigned. I want to say something, but what? Customers shop as usual, looking for bargains of top quality merchandise. Recession spending has permanently changed their patterns. There's still a lot on the shelves and I wonder a little selfishly how long before they'll clear them off.  I just bought them, after all. I am a vulture now as well.

As a store owner, there is little solace in being the last man standing. I really don't believe brick and mortar is dead, but it's constant pummeling, dismemberment and general apathy in its pounding from the public has me worried. Everyone is a free market capitalist until your job is on the chopping block. You have to wonder sometimes if survival of the fittest is the best way, especially when the invisible hand beating your face in is a publicly traded company that has lost over a billion dollars (a billion with a "B")  in their pursuit of modest profits. Meanwhile, local governments are horribly screwed as their sales tax base evaporates and their down towns are hollowed out. They pass on bogus fees to small businesses, hold votes to raise sales tax for survivors and cut local services to get by. Beatings will continue until morale improves.

Then again, what we're seeing is also opportunity. It's opportunity for me to get four new book cases and a new board game display table. It's an opportunity to sell role-playing books a little more exclusively, or possibly fan fiction for games like 40K. More importantly though, it's an opportunity for independent book stores to make a return. Independent book store numbers have stabilized recently, hovering around 1,500. They know their customers, stock what sells and work with ebooks and online sales. They are creatures of the current economic climate as well as survivors of it. They are a niche trade, destination stores, knowing they have no business as anchor stores in shopping malls. I love my local fantasy book store, Dark Carnival, and try to make all my purchases there. Where there is crisis, there is opportunity, as they say.

It's still hard not to get demoralized. I try to focus on my current situation. It's like being unemployed. You only need one job, you don't need to psyche yourself out with statistics of how the overall economy is doing. The game trade ecosystem seems strong and I've seen a number of really good stores open up over the last year or so, run by people who have hit the ground running, who seem to be avoiding the big mistakes. I don't know why I have a sense of pride in that, but I do.

Miniature Games

For the last few years I've looked at the "market share" of our miniature games, which is generally an indication of what people are playing. Here's a look at what we've got:

 

 2009

The big news between last year and this year is how we dropped, after much painful deliberation, Flames of War. You can see the tail end of our clearancing out FoW in the top chart. So how are we doing overall with miniature games after that painful decision?  Our profits are up 5% in the department. We were just too weighed down with a lot of dead lead, both with Flames of War and a lot of little "throw it against the wall and see if it sticks" miniature games. 

For the most part we paired down our miniature games to what was getting played in store, much like we do for CCGs (with an exception or two). For 2011, after the top 5 games, the bottom 6 games are practically invisible. When looking at a pie chart, this would mean that the established games grow in their percentages, which can be deceiving, since it doesn't necessarily mean they sold more, only that there's more pie. 

You would think that as our store grew larger, our selection of games would expand, but strangely that's not true. Part of this is because inventory becomes less manageable, cash flow is hampered by useless stuff that nobody wants and inventory mistakes become more painful and downright dangerous. We're a business, not a museum or an art studio. So we tend to take fewer risks, which is good and bad. It's good because we focus on efficiency and profit, which keeps the store alive and the stuff that everyone wants on the shelves. Do you really want us to run out of a top game so we can carry some resin junk that nobody buys? It may be pretty, but it's no way to run a business. It's bad for obvious reasons because we hesitate to try innovative new things. Innovative new things means pain of some sort. I can't promise you we'll be more innovative, but at least I'm aware of the tension. I aspire towards innovation.

At this point in discussions internally, we usually start talking about Privateer Press. Privateer Press, since they never get rid of anything, suffers from similar problems we had with Flames of War. The inventory is inefficient. There are too many SKUs for too few players.  This is what everyone warned me about with Games Workshop, but they're actually ruthless with their inventory control. I understand Games Workshop. When it comes to Privateer Press inventory creep, it means we pare back our offerings, which reduces sales and drives customers away, probably online, which results in paring back our offerings in a vicious circle. It's what happened with Flames of War as well. On top of that, SKUs are often gone for long periods of time at all the distributors, making carrying the line a rather haphazard endeavor, again, sounding a bit like Flames of War. I really hate this about Privateer Press. Their numbers look very much like Flames of War, both in sales and inventory efficiencies (or lack thereof). So are we going to drop them? No. 

Here's why: Unlike Flames of War players, Privateer Press players are cross-genre gamers that buy regularly from other departments and other miniature games. Carrying Privateer Press is a service to our customers who buy other things that make us money. It's kind of a loss leader of sorts. Come in and buy some cheap tires and we'll sell you some profitable wheels while we're at it. We could painfully jettison our PIP customers if all they bought was PIP, but they buy lots of other stuff, so we compromise. We also have a minimal level of organized play for Privateer Press (Sunday mornings) and although it's rather sad and sorry, it exists and does drive some sales.  If you buy Warmachine or Hordes in our store, you will get to play. We couldn't say that about Flames of War.