Asmodee and MAPP

 

One thing I have always found annoying s companies saying they take violations of street date and MAP violations seriously but never show any evidence of it.  Legend Story Studies publishes a list of retail stores that have been suspended, for unnamed reasons, from selling the company’s Flesh and Blood card game and participating in organized play events which indicates the company takes seriously violations of  its posted rules by  retailers selling the game. Meanwhile, companies such as Wizards of the Coast, The Pokemon Company and Konami says they take seriously and enforce their policies regarding breaking street dates and violating MAP, stores that report violations never see any apparent results from any reports made. Wizards of the Coast has stated a number of times the company welcomes reports of street date violations but does not comment on them and Asmodee NA states specifically in its MAP policy (Section 2:10) that:

“ANA refuses to engage in any communication with Resellers regarding whether a competing Reseller’s advertised pricing behavior is consistent with the ANA MAP Policy. ANA assumes sole responsibility for monitoring and enforcing the MAP Policy and will not discuss such activities with any Reseller, except for the limited purposes of discussing an individual Reseller’s own advertised pricing behavior or penalties relating to the same.”

NPR's Best Games of the Year

 NPR has a roundup of what it considers the best games of the year. Not suprisingly, Disney Lorcana tops the list but Descent and Ticket to Ride Legacy also made it. In fact, about half the games on the list come from publishers in Asmodee's umbrella.

Why the Sale of Asmodee Should not Bother Anyone

In case you missed it, private equity firm Eurozeo found another private equity firm Pai Partners, to purchase Asmodee a couple of weeks ago for $1.2 billion euros or roughly $1.4 billion dollars America. Given that Eurozeo spent about $143 million euros in 2013 to purchase the company (That’s about $167 million dollars American), Eurozeo is getting a pretty good return on its investment, quintupling the amount originally invested in the purchase.. However, I have seen some people wonder if the purchase of arguably the premier board game company in the country by a private equity firm a good thing?.  First, it would probably be helpful to define what private equity and a private equity firm are.  From Investopedia:

“The simplest definition of private equity is that it is equity – that is, shares representing ownership of or an interest in an entity – that is not publicly listed or traded. A source of investment capital, private equity actually derives from high net worth individuals and firms that purchase shares of private companies or acquire control of public companies with plans to take them private, eventually become delisting them from public stock exchanges.”

If you have set up your store or company as an LLC or a subchapter-S or any other form of corporation and all of the shares of stock in the corporation are owned by you or you and your partners, with none offered for sale to the public, either on an exchange or OTC (Over the Counter), you have private equity, that is stock in a company that is not available to the public. I cannot buy shares of stock in Asmodee NA. I can, and do, buy shares of stock in Hasbro, because I want to own part of WOTC, and, since WOTC is a wholly owned subsidiary of Hasbro, the only way to gain any ownership of WOTC is to buy Hasbro stock. Similarly, a private equity firm, such as Eurozeo, does the same thing, buying up all of the stock in a company, taking the shares off public exchanges and removing ownership of the company from the public, only doing this with multiple companies. Given that, here are three reasons why the sale of Asmodee to a private equity firm should not concern anyone in the industry.

1.    No one knew Asmodee was privately held. Until news stories started circulating about Eurozeo’s plans to sell Asmodee, people in the industry knew Asmodee was privately held, just like most other game companies (and game stores) are. It just didn’t concern anyone because Asmodee kept doing what it had done before the original purchase and after the original purpose, putting out games (and buying up or entering into partnerships with other game companies).

2.    A lot more companies are privately held than you might think. As noted above, most game companies in the industry, whether publisher, distributor or retailer, are privately held. In fact, a lot of the businesses you deal with every day are privately held companies. Here is a list of a lot of them.

3.    Debacles like Toys R Us are very rare.  Bain Capital, KKR and Vornado used a leveraged buyout to take TRU private, borrowing lots of money to buy TRU, with the expectation that TRU would generate enough profits to repay the debt. They figured wrongly and destroyed the company. Pai Partners’ willingness to pay 5 times Asmodee’s 2013 purchase price indicates the company sees significant value in the company. Pai will likely use debt to finance part of the purchase, since the company’s website says it likes to take an equity state in a company, meaning money invested, of between 100 and 400 million euros, leaving the rest of the Asmodee purchase to be funded through debt. However, Asmodee has a much stronger market position than did TRU.

So, I figure, unless PAI uncovers something really bad in Asmodee’s financial statements, the sale will go through and the company will keep making great games, just as it did under Eurozeo’s ownership

Asmodee for Sale

This week's Rolling for Initiative column looks at who I think are the most likely purchasers of Asmodee, given that the owners, a private equity form, have announced the are looking at selling the company

Mayfair Games Sells to Asmodee NA

Just got the following press release from Mayfair Games. What does it mean to customers? Nothing really. The games will still be available, just with the Asmodee brand on them. I have expected something like this ever since Catan separated from Mayfair a year or so ago, although from what I understand, Mayfair is still doing well financially:

As of today, the management team at Mayfair Games, Inc. announces we will wind down game publishing. After 36 years, this was not an easy decision or one we took lightly, but it was necessary. Once we had come to this conclusion, we knew we had to find a good home for our games which is when we reached out to Asmodee.

We are pleased to announce that we have sold our games to Asmodee North America, who have acquired all the assets of Mayfair Games, Inc. This acquisition includes the product line for both Mayfair Games, Inc and Lookout Games, GmbH.

Moving forward, Mayfair product will continue to be available through previously established distribution channels including Alliance Game Distributors for all sales in the USA to the hobby market and with Esdevium Games now Asmodee UK for the UK market.

Force Friday Followup

This week's Rolling for Initiative column recaps my conversation with Brendan Bell of Asmodee NA over Force Friday

Asmodee and Alliance

This week's ICV2 column looks at possible effects of the recently announced deal between Asmodee NA and Alliance. For the consumer, it shouldn't have any effect. For other members of the channel, the effects could be more pronounced.

Asmodee Acquiring F2Z Entertainment

ICV2 announced today that Asmodee NA will acquire F2Z Entertainment which consists of the gaming studios Z-Man Games, Plaid Hat Games, and Filosofia, which in turn publish the games Pandemic and Dead of Winter, among others. What does this mean to you, the game player? Not much really. However, in the overall gaming industry, it means that every major board game publisher, with the exceptions of WOTC and Iello, is now owned by Asmodee NA. Consider that Asmodee now owns Days of Wonder, which publishes Ticket to Ride and Small World, Fantasy Flight Games, Spot It and Catan Studios, not to mention the games it produces under its own brand.

There are still lots of small game studios out there but this consolidation is typical of a maturing industry. As companies get large, they are unable to grow their sales significantly by selling more product and they find it easier to do so by acquiring other companies, as happened here.

More Thoughts on Catan

Scott's weekly column on ICV2, this week looking further at the creation of Catan Studios

Mayfair Loses Catan

The Catan line of games, which has been licensed and produced by Mayfair Games since time immoral here in the states, or at least since the early 1990s, will move to the newly formed Catan Studios, part of Asmodee NA. What does this mean?

For customers, probably very little, though you might see more discounting of Catan products in the future.  Mayfar Games has a pretty strong MAP program and enforced it pretty consistently, meaning you wouldn't find Catan discounted often below Mayfair's 20% allowed MAP.  The games published by the companies making up Asmodee NA, Days of Wonder, Asmodee and Fantasy Flight, were much less concerned about the discounting of their products to the ultimate consumer. There is no indication yet as to whether this situation will continue under the newly formed Asmodee NA. Customers may see much deeper discount prices on Catan or a tightening up on discounting across all of the lines.

For retailers, it means easier access to the Catan line. For a number of years, Alliance Distribution had an exclusive agreement with Mayfair Games, meaning if a store wanted to carry Catan, it had to have an account with Alliance Distribution.  Now, companies wanting to carry Catan will be able to purchase it from one of 5 distributors, meaning if one has run out of stock, a store can turn to another.

For the five distributors carrying the Asmodee NA lines, it is also good news as Catan is still a very strong game brand. It was out second best selling line in terms of number sold, only bested by Cards Against Humanity. Distributors having access to Catan, as well as the other Asmodee NA games, should see an increase in their bottom lines.

Changes Coming to Asmodee, Days of Wonder and Fantasy Flight Games

The big news that hit the game industry last week was the announcement by Asmodee that the company will become Asmodee North America and will offer Asmodee, Days of Wonder and Fantasy Flight Games products under the new structure. The reason for the change as given by new CEO Christian Peterson:

“The marketplace has long been distorted by providing one-size-fits-all sales terms to every retail account, regardless of its channel of sale. The growth in demand for games over the last decade, in our view, has been fueled not only by fantastic product, but by the support of specialty retailers who incubate personal connections between players, facilitate tournaments and leagues, provide instant product availability, and increasingly provide a ‘third place’ that is instrumental for so many gamers to enjoy and discover our products. The retailer cost of providing such channel services is significant, and so we’re now making policy changes to ensure that the sales terms provided to those retailers, relative to other channels, are positively reflective of the value they add to our distribution chain.”

If everything goes according to Asmodee NA’s expectations , all of the changes planned by the “new” company  should go into effect by April 1^st and there are some fairly major ones, most of which will affect the channels of distribution. However, one will have significant impact on the consumer

Changes affecting the channel—The three companies will remain independent in terms of product, however distribution will consolidate, starting January 1^st .  This means that Alliance will no longer have exclusive distribution rights to the Days of Wonder line of products, which include Ticket to Ride and Small World. At the same time, Asmodee NA will reduce its distribution partners to 5:  Alliance Distribution, ACD, PHD, GTS and Southern Hobby. This means that distributors such as Aladdin, E-figures and Mad Al’s, among others, will no longer stock the Asmodee NA product lines and retailers wanting to carry them will have to have an account with one of the five authorized distributors.

A second major change affecting the channel is, instead of raising the price on the combined company’s products, discounts on products across the line will drop to 45%, reducing the margin of gross profit anywhere from 3 to 5 %. Much as with WOTC’s reduction in margin earlier this year, this reduction comes straight out of the gross margin of distributors and retailers. It remains to be seen what Asmodee NA does with the extra percentage.

Changes affecting the consumer—One major change in Asmodee NA’s operations that will directly affect the consumer is a new requirement that any retailer wanting to sell Asmodee NA’s products must sign an independent retailer agreement before the retailer can purchase any Asmodee NA products. There are several items in this agreement but the main one that appears to affect consumers is that retailers, unless they have a separate agreement with Asmodee NA, can no longer sell any Asmodee NA products online. Only retailers that have an agreement with Asmodee NA to sell online will be able to do so and I would imagine this agreement will have some restrictions on MAP (minimum advertised pricing). This means, for example, a lot fewer online sources selling FFG’s Star Wars Imperial Assault for $65, 35% off the MSRP.

These are the major changes planned by Asmodee NA. What actually happens we will know after April 1^st. 

AsmoPlay

Another promotional program rolling out this week is the AsmoPlay program, which I discussed a few weeks ago. Very nice idea but stores are committed to buying all three of the kits which contain two of each of the games in the program:  Splendor, Cash ‘n  Guns and 7 Wonders, along with assorted promo items. The problem is, and why we decided to pass on it, most stores don’t need two copies of a game in their game demo library. Multiple copies are useful if you want to run a tournament, which Asmodee encourages stores to do with the kits, but honestly, more stores would make use of a single copy for demos rather than finding storage space for 6 games that we cannot sell.

To OP or Not to OP

Asmodee rolled out its AsmoPlay Organized Play program this week, along with accompanying solicitations from several distributors, all wanting the store to order its AsmoPlay OP kit from them. Some just announced the kit, letting me know Asmodee only produced a limited number of kits and that I best snag one while I had the opportunity, whilst other sweetened the deal, offering limited edition playmats or extra discounts on the games promoted. In case you did not see the write up elsewhere, each kit consists of two copies of the featured game and assorted promotional items, for a cost of $40 for the Cash n’ Guns Kit and $50 for the Splendor or7 Wonders assortments. The nice thing about the kit is that it is designed to let stores use it for a demo session with giveaways for demo players, or for a tournament or league, with the same promo items as prizes (though I can’t say I would be too comfortable with the idea of running a tournament in the store with all the participants pointing pistols, even foam ones at each other).

However, there are a couple of things, well one really, that a store has to take into consideration before buying into a program like this. Will it make the store money? That means we weigh (almost) everything we do in terms of  “Will this make a profit for the store?” either over the short term or the long term. When deciding to invest in one of this, or another companies’ OP kit, we look at it in terms of dollars and cents from either a short term or a long term viewpoint:

Short term—Will buying an OP kit for Spelndor or one of Asmodee’s other games generate enough sales of the game over the next 30/60/90 days (or whatever time period I choose)for the store to make a profit over and above the cost of the kit? The store does have costs over and above those of the kit, primarily payroll for the wages of the staff member assigned to oversee the event.  To cover the costs of the AsmoPlay kits, I would need to trace sales of at least three copies of the game directly to the event.  Other OP event kits, such as those from Fantasy Flight Games, run less, so the breakeven point for running FFG OP events runs correspondingly lower.

Long Term— Will buying an OP kit for Spelndor or one of Asmodee’s other gamesbring customers into the store, allow customers who have purchased one of the games already the opportunity to play or otherwise create customer goodwill over the next 30/60/90 days (or whatever time period I choose) for the store to make a profit over and above the cost of the kit? While valuable, goodwill is a much harder asset to which to assign a value. In general, stores run OP events targeting customers who have already purchased that game or similar games in the store. I can look at is as a “thank you” to the customer, an event to add to the schedule or something we might promote to the local community (The King of Tokyo National Championship Qualifier generated a few lines of press in the local paper).

Much like everything else in the game industry, the decision about investing in OP comes down to profits.

AsmoPlay OP

Following Monday's post about the spate of Organized Play programs getting launched, Asmodee gave us more details about their entry into the field. The company will put out 3 OP kits this year, each with two copies of the promoted game and a raft of promotional items. The catch is that each kit costs over $50 which is quite an investment on the part of the store for items to promote the company's products.

Too Much of A Good Thing?

Quite a hectic weekend so far with both Dragons of Tarkir and Star Wars Armada releasing on the same day and I have heard tales of stores blowing through their initial orders of each. Well done, WOTC and FFG, though we do need to discuss increasing MSRP on both products rather than making your Local Game Store absorb the extra reduction in margin. Work on that, would you? 

Meanwhile, last week I mentioned one trend I saw at the GAMA trade show that rather concerned me and that trend is the growth in the number of companies promoting events, typically some form of what the industry has come to call Organized Play. Although I agree that better events and Organized Play has had nothing but positive effects on the industry, the number of companies I saw at the GTS announcing they would launch an OP program or expand on an already existing one blew me away. Among the ones that I remember, Japaneme, Iello and Asmodee all discussed how they were expanding their OP programs, White Wizard Games promoted the tournament program for Star Realms, even Slugfist Games offered retailers the opportunity to purchase an event kit for Red Dragon Inn, while Catalyst promoted the OP program for their Shadowrun: Crossfire deckbuilding game. The most ambitious program I saw was from Upper Deck, which announced $10,000 championships for both their Legendary deckbuilding game as well as the relaunch of their Vs. card game. Couple this with already existing strong OP programs from WOTC, Konami, Bushiroad, Fantasy Flight, Pazio and AEG, plus probably 2 or 12 I have overlooked and what we have is an embarrassment of Organized Play riches, all focused on the Local Game Store (You will noticed I did not say Friendly. I take the Friendly in FLGS as a given. Very few game stores I have visited have proven unfriendly). This leads to a bit of a problem. Who will run all of these events?

Many game stores operate with a paper thin staff, often the owner and a few part time employees. Though nowise as bad as we used to see, most stores still see payroll as their second biggest expense, after rent and adding another employee seriously affects their bottom line. Most stores also run a full slate of OP events already (as I have mentioned before, most game stores have shifted to an OP driven model over the past decade), so the question becomes, where does the staff come from to run all of these new events and when does the LGS run them. Currently we have events already running every night of the week and multiple events on the weekend and we are not an atypical store. In economic terms, we have scarce resources and an allocation problem. 

When I tell companies about the staff shortage problem, quite often the tell me: “Find one of your customers who plays our game and we’ll make them a (whatever the name of the company’s demo team is).” That’s well and good, save for two things. 

#1 As a store recommended demo person, they quasi-represent the store, without any of the control the store could exercise over a staff member.

#2 The company eventually wants them to demo the game at other places, cutting into their ability to run events at my store.

That’s why the Envoy program announced at the GTS attracted my attention. If it works as described, it could help tremendously with the resource program and, provided the Heralds do get extensive training, assuage my concerns about problem number one as well.

Fantasy Flight Merging

Fantasy Flight Games just announced a merger with the Asmodee Group. According to the press release, the main purpose of the merger is to enhance Asmodee's reach in the US and give FFG greater access to the European market:

The Asmodee Group of game companies will gain access to Fantasy Flight Games’ strong sales, operational and marketing infrastructure in North America, as well as Fantasy Flight Games’ almost-20 years of expertise in game development and multi-language game manufacturing.
Fantasy Flight Games will benefit from Asmodee’s impressive distribution and marketing reach in Europe, greatly improving its product placement and organized play initiatives across the continent.

Given both companies' problems with out of stocks , I can see this making the problem worse as neither company indicates any plants to increase production runs to complement the increased access to the respective market.

Asmodee Release Dates

For those who are fans of Asmodee products, here are release and restock dates:

HyperBorea			Distribution Release  (Wed, November 5th ,2014)		$99.99		6		HYB01US
7 Wonders Babel Expansion			Distribution Release  (Wed, November 12th ,2014)		$42.99		6		SEV-EN05
Claustrophobia- Furor Sanguinis			Distribution Release  (Wed, November 19th ,2014)		$34.99		6		CLAU03
Cyclades  Titans			Distribution Release  (Wed, November 19th ,2014)		$59.99		6		CYC03US
SunTzu			Distribution Release  (Wed, November 26th ,2014)		$39.99		6		SUNT-002
Colt Express			Distribution Release  (Wed, November 26th ,2014)		$49.99		6		COLT01
Choson			Distribution Release  (Wed, November 26th ,2014)		$24.99		6		MOOCHO
Artificium			Dec-14		$34.99		6		LSART01EN
Korrigans			Dec-14		$49.99		6		SKOR-001
Werewolves- Le Pacte			January,2015		$49.99		12		LG03US
Deus			January,2015		$59.99		6		DEUS01
Witness			February,2015		$39.99		6		BEM01

Key Restocks This Month:

Description	Comments *	MSRP	Case Pack	Item
Formula D	Restock November 1st	$59.99	5	FD01US
Splendor	Restock November 1st	$39.99	6	SPL01
Sherlock Holmes	Restock November 10th	$39.99	6	SHEH01