The GAMA Trade Show '99
At first, I was going to write an orthodox coverage of the recent GTS'99 (March 23-25 in Las Vegas). Then I realized the entire convention encapsulates the industry, from its dips last year to the shining new stars of tomorrow... err, rather, from its dips in sales, to the rise of shining new products.
We'll have a later column this month highlighting some of the releases. And we'll reel off interesting stats... who was there, who wasn't, how the hotel had 1030 room nights booked, how the owner of Guardians of Order was $1K ahead in gambling by day 3, etc.
In particular, we got a peek at one of the first products from Lightning Print (Swords of the Middle Kingdom, from EHP). The B&W work came out nicely; photo and other more detailed work were a bit dicey. Overall the quality was as high as the better books out there, and certainly ahead of cheaper printing houses. The format sizing is nice and easy to get used to. John of EHP's tip for those interested in using it is to go to Kinkos and use their docutech to print a single copy of your book. That's a good proof, since it's essentially what LP will use for the full run.
But for now we'll step aside from the products and take a look at the people and trends. We'll start small and end with the fate of the show for next year. For example, from our own point of view, we found out that Jim Crocker of the Underworld should be writing a column for us-- if only for constantly badgering Steve Jackson Games about "GURPS: Russia" over a year ago. Though the SJG party line on this does make sense, as to why they bypassed retailers to sell via the internet, direct only. Their take is that, having the book ready, they could either kill it or sell it only direct, but couldn't afford to push it through the conventional outlets.
Which, if you think about it, pretty much encapsulates the industry of a year ago. Even with a product ready to go, it simply cost too much to try and sell the darn thing. Even today that's the stumbling block that most startup publishers run into unacceptably. It may seem foreign that simply producing a game is only 1/3rd of the process.
After all, isn't the gaming industry like Field of Dreams: if you write it, they will come? Alas, no. There's that aspect of distribution and sales. And, there's the third part of the triangle-- internal business dealings. Technically, that's probably the base.
$$ Pr S od A uc L ti E on S Well-run Office
After all, if SJG (which can amortize the cost of staff over several books) couldn't afford to push "GURPS: Russia" through the chain, a startup publisher with only one title has to work that much harder.
Of course, if one could outsource the sales aspect and have someone else handle things like distribution and shipping... well, suffice to say there are two outfits doing that already, thank goodness. Tundra Sales (Woody) and Wizard's Attic (Eric) both are cautiously building sales-only organizations.
Imagine that-- someone who only sells games, and isn't publishing their own pet line! Some with (*gasp*) business acumen handling the business aspect, leaving those writer types to actually make the product! Can you sense the joy I had seeing two well-managed, thriving concerns? While not a cure-all (by definition, they have to be judicious in their growth), it's a good professional trend.
Professionalism being one of the concerns at GTS'99, or rather, the lack thereof. Most telling was at Punchline (the GTS panel). One 'hypothetical' question raised was how the companies deal with retailers who call them direct about their newest, bravest release, with the news "My distributor said Book X is out of print". How should one deal with that?
Surprisingly, none of the 3 companies represented (TSR, SJG, FASA) took the post-Soviet line ("Hmmm... it'd cost $2K to sue them, but I can hire a hit man for $500..."). But all agreed this wasn't hypothetical, but all too frequent, and reflects in part the lack of communication within the industry and the strong nature of hearsay and gossip.
Not to digress, but a good example of such gossip is the April Fools email misreporting on Last Unicorn Games. Said company, having just released four books, all of which are doing quite well, was a bit miffed to see a prank that stated LUG was declaring bankruptcy. The problem being that too many companies have done so, making it less a prank and more a peril. Even a healthy company like LUG can suffer from bad rumors. Which in itself suggests a terrorist weapon for the oughts... namely, that Internet rumors (if done on April 1, to give deniability) can indeed sink businesses.
Another issue of professionalism split along party lines (manufacturers and distributors) on the issue of 'micro-distributors', which is to say, distributors that don't carry "everything". Now, given that even the biggest distributors don't carry everything that's out there, one might suspect there's a niche to exploit here.
The question comes again to professionalism. A good microdist is one that carries the lines that aren't being carried by the majors. For example, "Ars Magica" has a core audience but many retailers find it hard to get, despite the fact it sells. So a microdist could snag that line, and make retailers and manufacturers happy.
Indeed, the presence of such micros, in the words of Lion Rampant, minimizes manufacturer risk. In the end, manufacturers need avenues for their products, and a steady line helps.
The 'bad' microdist, though, simply carries the top sellers only, cannibalizing the core sales from the major while not providing the breadth that a major might. This is a valid complaint against speculators-- those that only carry the latest hot trend (say, CCGs at their peak). Unable to use the sales of core product to subsidize their breadth of lines, the majors are forced to cut back on their lines in general.
The irony of this complaint is that such a trade war ends up making the majors resemble the micros, i.e. only focusing on core product and not carrying full lines or specific niches in interest of holding the greatest market share. The fallacy of this is that such a strategy is ultimately bad for the market as a whole. Only by expanding the market (either by finding new customers or by introducing existing customers to additional products) can a major distributor ultimately sustain themselves.
(Isn't it amazing what one can learn at a trade show?)
The ultimate irony was WotC reporting that, while all this is going on, that they hope to have more retailers outside the hobby chain than in it. Which isn't the negative bit it sounds like. Take Walmart sales of Pokemon, for example. WotC's avowed strategy (sez Peter Adkison, more on him in a minute) is to push items through the mass market chains and make almost no money. That last part isn't really their wish, rather, just the admission that the mass market has razor thin margins and are difficult to make large profits in.
However, by getting things through the chains, they can introduce more people to gaming. People who will then have to hunt up a hobby shop to find more gaming stuff-- and the hobby shops are where WotC can them make significant profits (since their profit margin is higher).
Magazines actually do this already, so it's a viable theory. A magazine may blow 20-50% of their print run in the 'strips', i.e. the book chains and such. They're called the 'strips' because they place large orders, then whatever they can't sell, they strip the covers off (to prove they were unsold) and demand a refund.
This plays havoc with cash flow and makes the ultimate profitability low (because you still had to pay printing for all that), but... every actual sale is a possible subscriber, and subscribers are almost pure profit (since you get to keep all their money, without giving up the majority to distributors or other middlemen).
So if you ever place an ad in a magazine, don't just ask what their "circulation" is... find out what the print run was, how many issues were actually sold, how many they gave away as promos, and many issues go to subscribers. Tip o' the month. For example, Comics Retailer ships out 5K copies, and gets around 100 survey forms returned each month. Clearly 100 is way low for the number of people they reach, and 5K is an upper limit. Who you reach is in the middle. Though with CR, it's so highly targeted that increases the value over, say, "InQuest", which is more broad spectrum and also is affected by the strips.
So, the WotC model could help the industry. Which leads to questioning Peter Adkison's motives. There's really two perspectives on this. One is that he expects to make millions in the gaming scene. The other, well, the other has to first realize a fact. He's probably already made millions, personally, in the Magic: The Gathering craze. He owned the company and Garfield owned the game, and the two of them invented the CCG craze and capitalized on it.
So given that, in terms of the roleplaying industry, the two of them are already about as rich as Vegas odds would allow, why would Adkison still remain in this industry? Either it's foolish avarice (hey, I made millions once, I bet I can do it again!), or he actually likes this sort of thing.
Or perhaps being in business is just like a very complex game, and is a pleasurable pursuit in its own rank. In any case, I find the wealth of conspiracy theories rather humorous given that Adkison could have retired a while back, but chooses to keep plugging along and doing wacky things like buying TSR. Still, don't let me get in the way of a good conspiracy theory.
Meanwhile, in the words of Paul of "The Sparetime Shop", "have patience". This from the retailers meeting, where some retailers were up in arms about being stifled in the show, sort of. MSM (who ran the show) had made some early stipulations on what was and was not allowed, in order to build the show and avoid last year's shortfalls.
The basic contention was that retailers wanted more events during the exhibition hall hours, and MSM wanted those hours to be kept sacred so manufacturers would come (being guaranteed an audience).
The specific retailer demands included: invite Pacer (comic people), have more open game demo hours (a general "Yes!" from retailers; manufacturers were more cautious because that requires staff), to repeat seminars during exhibit hall hours (in my opinion, not a good idea; seminars take a lot of energy), and that there was too little time for each seminar (which I agree with).
The biggest request was one manufacturers in general seemed very enthusiastic about-- to, next year, have more beta releases and test leads, a sort of pre-Origins reward for retailers who show. They'd get to have some items in their shops a week or so before it hit distributors, giving more value for retailers who attend. Since this year's focus was that it was an order-taking show (i.e. retailers could actually place orders, instead of merely looking), these seem like likely steps for the future.
As Dave (retailer head) put, "This was a great show-- and here's how to make next year even better." (A better quote by someone else was "You [retailers] are the most organized of the divisions-- go kick their butts!").
One interesting issue was whether to let manufacturers into the dinners. They were excluded this year. The sticky issue is for next year, for the dinner where specific manufacturers are actually picking up the tab. What then? Do you let the other manufacturers eat free at what is basically an advertising blurb for the sponsors? Or do you exclude them?
I think the best answer is to provide an independent analyst with a large sum of money to better research these issues. And I happen to have a week free in my schedule next month...
Until next month,