An overheard comment about the introduction of yet another
deck building game to the market set me to thinking about the number of
deckbuilding games, the product life cycle and what the PLC means for this
particular segment of the market.
The product life cycle consists of four stages: introduction, growth, maturity and
decline. All products go through all
four of these stages, some at a faster rate than others (roughly 50,000 new
products come onto the market every year, only about 10% of them stay in production
for more than five years).
The introductory stage of the PLC is always the most
exciting part of a product’s life. The
manufacturer has this cool new idea for a great new product(Dominion) or an interesting take on an
already existing one (Ascension). The manufacturer has (hopefully) playtested
it extensively, made mockups or prototypes, lined up a production option,
either in-house or outsourced and lined up financing, again either through theirself
or, quite commonly today, through an exterior source such as Kickstarter or
Indiegogo. The manufacturer is also all over Twitter, Facebook, TheyTube and
any other media source to which they can
get access, talking about this cool new product and trying to get others to do
the same. During this stage, while their sales increases
hit double or triple percentages, their expenses far exceed their
revenues. In short, they are losing
money on the product until they hit the breakeven point, at which their
revenues cover their expenses.
Now, they move into the growth stage of the product life
cycle. During this stage their
promotional efforts slack off as others have, hopefully, picked up on the buzz their
original efforts generated for their products.
This means less expenditure on promotion, allowing they to divert more
of the gross profits to cover fixed costs.
If they allocated revenues well, they start making a net profit during
this stage. As their product gets wider
notice in the market though, sales start to slacken from the triple or high double
digit growth they posted after the launch.
They should still see growth in the low double digits though.
The characteristic of the growth stage that makes me think
the deckbuilding category is exiting the growth stage and entering the maturity
stage of the PLC is that, towards the end of the growth stage, competition
products start to enter the market.
Competitors see how well this product has done satisfying consumers and
want a piece of the action, so they enter the market with similar products, planning
to capture a share. Currently, I count a
minimum of ten deckbuilding games on the market, with more on the way. Nothing says more clearly that the market for
deckbuilding games has matured than the number of companies announcing their
entry into the market.
What happens during this stage? Profits for early entrants into the market
continue to increase as their expenses likewise continue to drop. However, sales increases drop to single
digits and start to decline towards the end of the cycle, as the product moves
from maturity to decline. One sure sign
that the market has moved from maturity to the decline stage of the PLC is
competitors pulling the plug on their products and announced product launches
never making it to market.
