Written by: Jesse Bergman
If you've spent any time lurking the Facebook design and publishing groups, then you know there is a lot of information out there on how to be a great publisher, and how to grow you Kickstarter, etc.… While much of this information is really relevant it can't prepare you for the next phase of your growth. What happens after your Kickstarter? What about Distribution? How do retailers perceive your product when it ends up at a discount retailer?
In this article, I will write about all of these things, from the perspective of our experience. I don't believe our experience is unique, in fact, I think the results you mostly read about are the anomalies of success and not the standard outcome. When you have success, there is a sudden shift in how your relationship works within the channel and how much pull you have as an organization.
WHAT IS A HIT GAME?
Interesting question, and one that isn't really described by gaming professionals too often, and the posts regarding them are pushed down the algorithms pretty quickly because the responses show a less positive side of the industry. I want to be clear that I love board games, I love the industry, and I think there is an immense amount of room for companies to exist.
In the Boardgame industry, approximately 80% (Source) of all published games will not sell beyond 2000 copies. To put that in perspective about 38% (Source) of games will actually get enough funding to be made, via Kickstarter, an even smaller amount will get Publisher support, and forego the Kickstarter route. So you have a slight chance of actually getting to make the thing you've poured your heart and soul into for several years.
Let us say you make it over that initial hump! Time to celebrate, right? We've now made it into the Board Game industry as a legitimate Publisher? Or have we? What are the next steps for your game after that?
The most common answers you'll get from the "groups" will be, go to conventions, sell your extra games, get your game on Amazon, get your game into the channel.
This all sounds like excellent advice, and it was all advice we took except for Amazon.
You may be asking why we chose to forgo the largest e-commerce seller on the planet? It is an excellent question and one that takes a more in-depth insight into Battle for Sularia: The Card Game. You see, as avid card game players, we knew that any sort of TCG/ECG style game would only survive with the strength of an organized play program and local retail communities. This was something that Amazon couldn't supply, but the distribution channel could.
Distribution? Yes? No? Maybe?
So we quickly took action to establish a contract with a consolidator. Now you may be asking what a consolidator is? A consolidator is a company that focuses on gathering up games from small or new organizations and getting them in front of distributors on behalf of the publisher. They have the contacts and the relationships with key distribution people that help you sell games. Why did we choose this route? Because even after attending GAMA and trying to establish meetings and contacts at Distribution levels, we were quite frankly ignored. I've been in professionals sales and business development for almost 20 years now and have never seen the level of gatekeeping that I saw at that convention. What options did we have? We needed our product in the channel. So consolidator it was.
We get to our release date, and we ship our consolidator a large order of a product. By large we moved nearly 1500 games through them in the first 60 days of our release schedule. We had only printed 2000 copies in total! So our first printing was sold out in 60 days, minus 200 games we kept on hand for Origins Game Fair.
We had the start of a successful brand, but quickly fell victim to obscurity and cult of the new, when it took us 6 months to get our second printing in stock. After we received our new inventory the orders were all but gone, Our consolidator was on to the latest games, and our channel sales were mostly dead.
I started going mostly door to door to game stores within driving distance of our home base, to promote demo events and help grow communities, and we began to find a resounding problem. Many retailers were not interested in supporting the game because our game was listed on online discount retailers. I won't name any names as to which organizations had our product but they did. We started inquiring and quickly realized that our product in the channel was just as open to those retailers as local FLGS stores.
While for many games this isn't a problem, simply because local communities are not imperative to the success of the game. For a strategy card game, it was nearly our death bell. FLGS retailers had boycotted us because online sources were selling it far below MSRP. They had no interest in competing with that, and if they were going to compete by building communities, why not create groups for the lowest hanging fruit. At that time, it was X-Wing, MTG, Pokemon, and Yui-Gi-Oh.
So the FLGS was ignoring us now, and to make matters worse, the online discount retailers started closing out our product. Their websites showed the product as "Clearance." If there is ever a more resounding call that your product is dead its that dreaded word. The worst of it was that we had absolutely zero control over it.
I called the online retailers and spoke to some representatives and inquired as to why they were marking active SKUs as clearance when we still had an active product and had just released an expansion less the 60 days prior. Their response was simple, we have to make room for new games, and your game is not gathering enough interest. In October of 2018, BGG users said: "can often be difficult to find outside of the manufacturer's home page." They were correct, and the channel has no interest in supporting us. In fact, we don't blame them at all, they have businesses and bottom lines, just like the rest of us. Battle for Sularia still sells well at conventions, but most conventions end up being a break-even process when you factor all the costs in to attend them.
So what can you do as a new developer/Publisher? This is the key take away and one of the things that we will remain focused on as we move forward with unique designs. Will we ever enter back into the channel? Possibly, but only when it seems right for our growth. Last year we launched two expansions to Battle for Sularia, because we wanted to complete the game as it was intended. We did this, and our audience is simply not large enough to continue the development of the game.
When we come back to the market with a new game, I will be less inclined to work with the channel directly. Instead, I will work with direct e-commerce where we have control of the product, partners in specific markets (AKA Canada, EU, GB) that want to sell our titles, and yes Amazon, if they will let us.
I will also happily work direct with FLGS partners that want to work with us and understand that this move is not to keep our games out of their stores but to ensure that our games in their stores are sold for a fair margin and that online retailers will not be hurting their customers. You see as a new publisher, you have to realize you have zero power in the channel game, and because of that, you are just another number/SKU. So unless you are the 1% of the 1%, you have zero hope of controlling how your inventory functions.
The next question you may bring to mind most likely should be, won't this be suicide for my sunk costs and making a game? The short answer is yes, all businesses have risks, the long answer is a bit more complicated. The point of this article is not to build your business case only you can do that. I would encourage you to do a break-even analysis of understanding your sunk costs. And in the process figure out how many copies of your game need to be sold to pay yourself and fund development of your next project.
It's far too often that I've had a conversation with another indie publisher that has made a game, and not sold enough to compensate themselves for that game. I have worked up a business model that allows for this in the planning and that commission is part of our variable costs in our break evens. First, I will pay our Game Designer/s at maximum 8% of the gross receipt of sales. So if a game makes $10,000, then the designer/s will get $800 for it. Second, I will pay the developer a maximum of 4% of the gross receipts as well. This means for every dollar we sell up to $.12 goes to the developer/designer. This even includes in house games. If there are two designers on a project, then I leave the designers to determine how they distribute the funds from the game amongst themselves.
While this will not make anyone rich in the indie board game space, it does help the designers get their projects out to the wild. The remaining cash from each sale is then put into our publishing account as reserves for the sunk costs of the next project. We here at Punch-It pay our royalties out quarterly, and I would encourage this unless the games sell rate is above a specific rate.
Hopefully, this article can help potential would be publishers, and a few new designers understand the perils of the game industry post Kickstarter and why doing business analysis and understanding some of the potential pitfalls can help circumvent cash decisions that could be truly devastating to their bottom lines.
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