Wednesday, January 14, 2015

When You Should Not Sell Your Game To Me



Followed a discussion on Facebook for the past couple of days focusing on games launched through Kickstarter and why they not only did not need retail storefronts to sell their game but actually avoid them, failing to see any value in what the retail storefront offers. By handling the shipping functions, they get to keep the part of the profit they would otherwise pay to the distributor and retailer for their services (and believe me, distributors and retailers do provide services for the share of the profits they receive, but that’s another story). For most of those small publishers, they are right. They don’t need my store to sell their game.

From discussions I have had with others in the industry, roughly we have about 1500-2000 dedicated gaming stores. This includes shops that focus on trading card games but excludes the big box stores such as TRU, Barnes and Noble and Target that carry board and card games but would view a day’s sales of them as a rounding error in the total.

For a small press game, which frankly most Kickstarted games are, unless you go the Print on Demand route, in order to keep costs as low as possible, a publisher plans for a print run of between 1000 to 5000 or so copies, with pretty poor pricing until you hit the 2000-3000 copy mark, meaning lower profit per unit.  Unless things have changed drastically in the past couple of years, a publisher can roughly expect to sell about 300 copies of a RPG and 1000 copies of a boardgame to non-crowdsourcing backers, that is into the general market, meaning that about only one out of every 5 stores will stock a publisher’s RPG and 1 out of every 2 stores will stock a publisher’s board game. Those aren’t very good odds, either for the publisher or the store. In a case like this, barring such special circumstances as a local fan base, it is probably better for the publisher to print in smaller quantities, increasing the cost but allowing them to skip the store and sell direct while making comparable levels of profit. Without pre-sales, this means a lot of copies left over from the initial sales push. However, the “long tail” of the internet makes it possible for those extra copies to sell eventually, rather than get sold as remainders.

The long tail is a marketing concept that developed to explain how companies like Amazon and Netflix can offer millions of products and still remain profitable. Essentially, it’s the 80/20 rule extended (You remember the 80/20 rule:  80% of sales come from 20% of products). The long tail says that comparatively few products account for the majority of a company’s sales and that the vast majority of them only sell a few units per month or even year.  Since the marginal cost of adding a new item listing to a website is next to nothing and the cost of storage has dropped dramatically over the past decade (Digital storage costs are minute and more companies are using Fulfillment by Amazon, piggy backing on Amazon to drastically cut their storage costs), small press companies can much more easily make a profit while conversely selling fewer copies of a game to do so, meaning, that, at this point, they don’t really need to sell to me. It’s when demand for the game outstrips the ability of the publisher to also handle sales that distributors and retailers provide the needed services