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275647 Posts in 27717 Topics by 4283 Members Latest Member: - otto Most online today: 57 - most online ever: 429 (November 03, 2007, 04:35:43 AM)
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TwoCrows
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Posts: 74


« Reply #30 on: September 11, 2007, 09:12:46 AM »

Oh yeah.

Brad, you wrote,

Quote
It seems to me that creator owned, and published is the core value of Indie games, and creator control of delivery channels a refinement of that value.

This sentence inspires a weird "this is where I came in" sensation for me. Because, well, it is where I came in. This is why the Forge exists, and why it was invented. Is there some question about that, or some reason why this can be seen as a conclusion of a discussion here?

Especially in this forum, this is why we came here. It's not something that needs to be discovered or teased out of a discussion.

Best, Ron
why<did<me<seen as a conclusion to not only a discussion here, as in this sub-forum, this thread, but also here, as in The Forge by virtue of the library homework I so dutifully undertook. The conclusion drawn was mine, and at least from the perspective of my aspirations Creator Control must be a member to my
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David Artman
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« Reply #31 on: September 11, 2007, 09:16:32 AM »

You have pretty effectively defined what businesses like IPR (www.indiepressrevolution.com) do.

Have I? Hmmm...

"...we selectively recruit the creator-publishers listed on our site."

That seems to indicate that it's not an aggregator but rather it actually qualifies its listings. Put another way, I can't just go there and tell it "OK, here's my sales site at Avalon Innovations--associate to it and list me here." I have to qualify.

But after that... they do not actually stock anything, right? They are mainly a "pass-through" site that submits order to the "real" fulfillment site (i.e. the POD provider, the small-run publisher's order page), yes? In that sense, yes, they provide a "one-stop shop," but not in the sense that one must qualify (i.e. I don't have to qualify to list something on eBay... and eBay is just a pass-though--they don't hold stock to fulfill for me).

Also, if their order submission is in any way "non-standard" as compares to an order the provider receives through its own system, then they also fall short of my model (i.e. their pass-thorough order should be indistinguishable from an individual going to the provider site and filling out its forms).

Am I missing something about the IPR model that is documented somewhere other than the "About" link on their site?

Thanks again;
David
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Designer - GLASS, Icehouse Games
Editor - Perfect, Passages
guildofblades
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Posts: 297


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« Reply #32 on: September 11, 2007, 09:20:17 AM »

No such service exists currently for hobby games.

You are basically suggesting a virtual distributorship, which I see used in the discount and dollar store markets and other places. Its a viable concept and one I put a group a list of publishers together to discuss a couple of years ago.

If you are serious about wanting to make the attempt, I'll be happy to assist where I can.

Here is a short list of obvious problems that a virtual distributorship needs to arrive at:

1) Consumer orders. Shipping:
Any order containing more than one publisher's products would also incur shipping charges from more than one publisher. No way around this, but one approach would be to use a portion of the virtual distributor's revenue share to give the customer a "discount" on the total shipping cost. It would be much of a discount, but would be basically "throwing them a bone", suggesting they are getting a slightly reduced shipping as opposed to order said products from the individual publishers separately and paying separate shipping.

2) Shipping rates by publisher. Publisher have a wide range of shipping policies. The Guild, for instance, charges shipping based on the dollar volume of the order. Other publishers set weights for each products and then use shipping calculations to base shipping rates for UPS or Fed Ex ground, etc.

3) If you intend to take credit and debit card payments, then the virtual distributor will needs to have a payment processor system. Ideally a merchant account as well as being set up to work with Paypal (and maybe Google check out). This means the virtual distributor will incur payment processing fees, ranging from 1.5 - 4%.

4) As you noted, there will be server fees and also, the level of sophistication involved with coding such a site and the work load will be heavy. I can't imagine a single person doing all of that without at least the prospect of some kind of reward.

5) Charge backs. It happens. Credit card fraud. Somewhere between .5% and 2% of all online sales might get charged back to the virtual distributor ad fraud based sales and the virtual distributor would have to eat those as being the seller of record.

All of these above mentioned costs would need to be covered by the virtual distributorship. Realistically speaking I would think 10% would be a razor thin margin to operate the whole affair on.

6) Wholesale ordering. If wholesale amounts were offered to retailers some sort of process would be required for signing up retailers to with retail/wholesale ordering access (we would want to make sure to average joe wasn't ordering everything at a discount).

7) Wholesale shipping charges. Each manufacturer would have to decide if they wanted to provide free shipping to retailers or if they had a certain dollar volume worth of product they would want to be ordered before giving free shipping. Or they might never want to offer free shipping and want to base shipping amounts on some ratio of sales volume.

Cool Each manufacturer would have to be allowed to enter their own wholesale discount structures and to set minimum order amounts. The system would have to be able to keep track of these things and flag minimum order quantities, or upgraded amounts necessary to "hit" the next discount level, or next shipping discount or free shipping order level, to notify retailers of their options. This sort of information would be needed on an individual manufacturer basis and should be able to be updated by the manufacturer. As you can see, we are entering the realm of some fairly complex programming.

9) Manufacturers would all need to have their own login system in order to add and edit products, product descriptions, images, set discount rates, set wholesale minimums, free freight minimums, shipping preferences, etc. Manufacturers also need to be able to flag a product as being out of print or temporarily unavailable due to out of stock. The ability to auto link orders for select products into a POD printer would also be very cool and save the manufacturer the trouble of patching said order info in themselves on a per order basis.

10) What happens when a small manufacturer goes belly up without telling anyone and it takes time for us all to realize they aren't filling orders anymore. The virtual distributor as the entity actually doing the sale, is responsible for this. Holding no inventory means you have no actual ability to fill the order, leaving the only recourse to refund that portion. Part of this can be solved by a system that would send out sales notification e-mails to the manufacturers with sales info and order info and the system would not actually credit the manufacturer's account with their share of the order until they replied to that e-mail, with a reply being an indication they have shipped the order. A reply to an auto address that could receive the data and mark it as shipped and then update the system would work fairly well. And it is assumed that a manufacturer that is out to lunch and folded up shop and not filling orders has probably ignored such e-mails. This would leave the money in the virtual distributors hands making it accessible to handle the customer's refund.

11) Money processing. You can't realistically patch money to the manufacturers on a per order basis, but perhaps could set out an auto cash out system like OBS has where the manufacturer can chose to cash out their earnings at any stage. That leaves them in control of when to cash out as best fits their needs.

Those were the biggest issues that I can recall, but its been a couple of years now so I'm probably missing some key things yet.

Ryan S. Johnson
Guild of Blades Publishing Group
http://www.guildofblades.com
http://www.1483online.com
http://www.thermopylae-online.com
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Ryan S. Johnson
Guild of Blades Publishing Group
http://www.guildofblades.com
iago
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« Reply #33 on: September 11, 2007, 09:25:14 AM »

Am I missing something about the IPR model that is documented somewhere other than the "About" link on their site?

Ahhh, no.  I did my usual "read the first paragraph reasonably closely, with less attention paid the more text there is, since the first paragraph caused my brain to run off in a different direction" gig.  Apologies.

I can see all sorts of pitfalls, but I think other folks are detailing those well at this point.
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David Artman
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« Reply #34 on: September 11, 2007, 11:38:09 AM »

Wow, Ryan... OK, you've clearly thought longer and harder (and with more direct experience) than I have about it. No, I won't be launching this endeavor anytime soon; though you make it sound viable, yes, even as you list the pitfalls. Known hurdles don't scare me; the unknown ones do; everything else is finding the margins.

That said, you think 10% is a viable potential cut... less than an agent's cut, FWIW. I've heard worse.

The flow of money is a bit awkward--though not much different from standard distributor models, excepting the fact that the Virtual Distributor (VD) doesn't ever take ownership. You still have to compensate manufacturers (who have to flow money further down to the authors) and you have to provide all the retailer elements (wholesale, bulk, Net30, etc) with additional consumer-level burdens (MSRP sales, pass-through fulfillment of single orders as well as mix orders and even bulk-but-not-wholesale orders).

I do not think the code integration element is a difficult as you imagine, however. It's basically just a bunch of forms translations--using a "common" form to populate several other, hidden/offsite forms--and, in fact, things like ODBC are designed to handle such things easily (i.e. no need to hand code a solution).

Basically, look at Google Product Search--it's merely an aggregating databases of product listings with pass-through links--and, IIRC, if you run Google Checkout, it will handle the whole transaction for you (yes, including splitting amongst different providers and handling bulk discounts, which is usually just another product item code, retailer-restricted or not). I do not know what kind of cut Google gets for this aggregation service... 10%, maybe? But it would seem they just require some kind of API to your site's catalog, so that they can "crawl" it like they would a web page--and ODBC or MySQL or any number of other transports are available to do these things for us out of the box.

Anyhow... cool to read all those additional details and, thereby, know it's a possible (if maybe not terribly viable) channel for sales. If nothing else, even if it were retailer-only (obviating a lot of the pricing and identification issues, not to mention fraud, possibly) it would solve the basic issue raised in this thread and by my suggestion: that retailers are too time-strapped to hunt down POD and COP sales channels, and that's a large part of what keeps the 3T model alive--those "evil distributors" provide a convenience and centralization (and billing) value-add to the retailer, even while their "Hot Hot Hot-Profit NOW!" focus ultimately undermines the stability of the whole "game store" retail concept.

VERY interesting thread, guys... thank you (I'll be in the thick of such decisions soon enough, with GLASS);
David
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Designer - GLASS, Icehouse Games
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guildofblades
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« Reply #35 on: September 11, 2007, 12:03:13 PM »

Hi David,

>>and you have to provide all the retailer elements (wholesale, bulk, Net30, etc) with additional consumer-level burdens (MSRP sales, pass-through fulfillment of single orders as well as mix orders and even bulk-but-not-wholesale orders).<<

Frankly, I suspect net 30 is a mistake for any sort of online ordering system for wholesale distribution. As the 3 tier model continues to become less functional for the average retailer  and big larger market manufacturers begin to invest in games and take the "high profile" toy and collectible type products through the mass markets and non core hobby channels, the less and less viable the existing brick and mortar retail store business model will become. As such, over the next five years I fully expect to see 50-75% of existing dedicated game stores to be folding up shop. If one is not extremely careful where they extend credit terms then one will lose their own shorts in extended invoices that turn into unpaid bad debt.

Frankly, if such a virtual drop ship distributor with no real financial back bone behind it was to extend dating terms down channel, I expect any "sales" I would be willing to do through it would have to be pre paid to me before I shipped. It *might* be possible for the virtual distributor to bare that credit risk, but no, I doubt it can do both that and all the other functions we listed and stay functional on a 10% cut of revenues.

Additionally, if people wanted this entity to become a well recognized distributor in the market place, I'm going to guess it should likely have a booth at GTS, Gen Con, etc, and do other sorts of direct marketing to retailers and a bit of consumer marketing via other conventions and the internet. These functions cost money also and do have that money, again we're talking about a margin cut above and beyond 10%. Perhaps 15-20%. And suddenly that begins to be enough money that this virtual distributor would either need to be run as a for-profit deal operated by a single company or it needs to be run as an association with a board and such to make decisions on how those operating revenues would get spent.

Is it doable? Sure. But I think it would be a major under taking. Who knows, 2-3 years down the road once we really have built out our online gaming network to full maturity, if no one else has tackled such a beast by then, we might. But I would be just as happy to see it come to be via someone else sooner than that.

Ryan S. Johnson
Guild of Blades Publishing Group
http://www.guildofblades.com
http://www.1483online.com
http://www.thermopylae-online.com
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Ryan S. Johnson
Guild of Blades Publishing Group
http://www.guildofblades.com
xenopulse
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Heretic Forgite


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« Reply #36 on: September 11, 2007, 12:47:20 PM »

But after that... they do not actually stock anything, right?

No, IPR warehouses physical items and keeps downloadable items on their server. The stock number you see on IPR's item listings are their actual stock. They have a person who then fulfills orders from the warehouse.
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Vulpinoid
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Kitsune Trickster


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« Reply #37 on: September 11, 2007, 01:37:42 PM »

Firstly, to everyone who has contributed to this thread, thankyou it's been an enlightening read.

I've been apart of the Australian Roleplaying community for over 15 years now, and have been a part of a fairly large consumer electronics distributor/retailer (with over 350 stores, and sitributing to a hundred more). So I've seen the 3 tier model in action, I've also seen the "rise and fall" of roleplaying through a number of waves. I'd never really thought to put a lot of this stuff together, so this thread has been a true thought catalyst for me and things make a lot more sense.

So a few points...

1. Now I understand why a few game publishers didn't want to touch my work in the early 90's when I had a good idea for a one-off product that didn't "NEED" supplements. At the time I thought that supplements would just dilute the ideas that I had.

2. I had always considered selling a product into a distributor as a method to keep the industry growing while expanding the market range of my eventual product. I figured that it was the distributors who kept the lifeblood of the economics flowing, while the retailers were the front line who needed the support of the distributors whom I was in turn supporting. It was always the 5000 print run that stopped me from ever getting serious about the project. I've realised in more recent years that this was no longer a reality, but thankyou for dispelling this illusiory barrier for me.

3. As a follow on to point 2, I had always been told that 10% was a decent expected return on sales for the author of the work. And I remember a few friends who were published by "major companies" during the early to mid 90's who didn't even recieve that much on their first book because this was considered their test run. It's good to see that this is no longer considered the case.

4. I guess it's time to get back to writing and illustrating if I hope to have a polished game out by next year.

V
A.K.A Michael Wenman
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A.K.A. Michael Wenman
Vulpinoid Studios The Eighth Sea now available for as a pdf for $1.
Ron Edwards
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« Reply #38 on: September 12, 2007, 05:11:59 AM »

Hello,

Threads about this stuff often get people talking "saving the industry." David, your posts are goin' in that direction this time, and I understand the concern and the reasons for what you're saying.

However, it's not necessary. Nothing needs fixing. No one has to make sure that retailers can do X, Y, or Z. No one has to save stores. We don't have to make the three-tier viable in some way. Right now, an independent role-playing publisher can see his or her game enter the market, and for whatever reason, it may or may not do well for that publisher. The good, even great news is that the game will not be stillborn or arbitrarily strangled because someone who was neither publisher or customer didn't get their needs met by it. That is, in a commercial context, pretty much all that one can ask for: the opportunity for the product to be bought and and used,

Adding the lion's share of the profits, and control over how much one wants to invest in it at any point, well, that's the independent side. But the wonderful thing, I claim, is that this is the industry: people writing games, people buying games, people playing games, and for all these things to be directly connected. Retail stores are an add-on which are, no punches pulled, a risk assumed by a person who hopes it will pay off for him. It may or it may not. But if that store fails, then the real industry remains. The stores, and any system of stocking those stores, is not, itself, the industry.

If someone wants his store to be viable, then it needs to be effectively founded on the real industry. That's where the stores and the three-tier system as a whole fell down. They didn't connect player enjoyment of games to sales-policy about games, and in fact, removed any such connection. They therefore removed actual customer demand from the entire process. A fake kind of policy-making or arrival at "what's popular" came into existence among publishers, distributors, and retailers. A fake kind of demand among gamers came into existence based on what retailers and industry magazines told customers, and a fake kind of fun came into existence among them too, primarily based on brand loyalty and sunk cost, as well as on a culture of silence about actual play.

There is no reason to help or save any of this. The issue is not the retailer's lack of time to find POD companies or to hunt down promising titles. This is not a mere logistic thing. The issue is that the retailer, with some exceptions, has no idea which customers are actually enjoying the games they buy, and which ones. Most retailers cannot even think in this direction; they are so addled by debt-stress, their culture of lies and rumor, and dreams of Magic Again (and the energy of denying how that worked out for them last time), that they cannot think at all. The exceptions have found that the independent games are readily and easily accessible, and that people like Jason Valore and Brennan Taylor do not lie to them. They don't lie about the books' availability, they ship on time and without hassle, and they don't pretend that the books will make anyone rich, either.

Ryan wrote that he expects 50-75% of existing games stores (of the kind we're talking about, RPGs and related) to close soon. I agree with that, but will also point out that over the last five years, a comparable percent of existing game stores before that closed. In other words, we are not talking about Doom Soon for the three-tier system. We are talking about Doom Arrived And Almost Over.

The dysfunctional retailers and their commitment to the three-tier system cannot be saved: it's like jolting a corpse with electricity to make its walking reflexes kick in, briefly. Whereas the functional retailers and their commitment to their customers, and their recognition of quality products and services, have no problem that needs saving in the first place. And whatever system they might come up with to facilitate their stores' success is on them to conceive and to implement. Not on us.

The foundation is the hobby-activity itself, based on actual play and on dialogue about actual play. A subset of the hobby is design, and a subset of that is the industry: commerce based on design and presentation. As long as this industry remains fully embedded in the culture of real play, then it has a chance to be viable. As long as money can be made, relative to money and effort invested, then that industry remains viable. No one knows how much money can be made; that's an empirical thing which plays out over time, and must be treated as a constraint (i.e., no speculation based on false promises, no expectations of living wages until they actually appear, and similar).

OK, so with that said, the potential store-owner has to say, "How do I hop onto this?" The first thing to do is to forget all talk of the industry as he has been hearing all his life.

It was all back to front, before. Role-playing's existence depended on sales at the stores, we were told. Stores' existence depended on the distributors' economic well-being, we were told. Publishers' existence depended on distributors' economic well-being, we were told. No distributors? Oh, well then, there'd be no stores and no publishers, so look, there'd be no role-playing. All of this was and is a sickening, stupid lie. Michael, this is what you encountered and why your desire to publish was aborted - literally, killed by people who were committed to this lie.

Now, the reality is naked and obvious for anyone who cares to look. If Bob wants to run a store which sells these sorts of games, he must keep the store policy (all of it, but particularly atmosphere and particularly ordering policy) close to actual play and actual publishing. But Bob needs to realize the truth in its entirety: that his store is an added feature to an existing, viable, small-scale but consistently successful industry. If he wants to make it work, and if he wants to find a way to make it more successful for him, then more power to him ... but the industry  doesn't need Bob and his store.

Best, Ron
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guildofblades
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Posts: 297


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« Reply #39 on: September 12, 2007, 09:15:29 AM »

Hi Ron,

This is an interesting topic and its always difficult to predict the role and the shape of future markets.

The way i see it, distribution is becoming obsolete for a couple of reasons. While they have offered consolidated warehousing and shipping, the even bigger role they have traditionally offered was consolidated information flow down channel. The value of that information flow has come into direct conflict with distribution's desire to for JIT inventory practices and gate keeping traditional hobby lines while focusing on high turn speculation based purchases. With the rise of the internet enabling more information flow and easy to access information via web pages and e-mail, the value of distributor consolidated information flow has radically decreased and its has also shown the end consumer how their buying options have been being filtered out by the system. This had led to rapidly growing dissatisfaction by portions of the consumer base with the role the retailer is playing in the market. No distributors are offering product based on a specialization of a particular product field (ala, specializing in a niche such as stocking all CCGs, all Board games, All RPGs, All OGL, All Indie RPGs, all War games, All Miniature games, etc), so regardless of the number of distributors to chose from, essentially even if ordering from all of them the retailer can not thusly specialize themselves. This means they are unable to satisfy, adequately, even one segment of the overall buying audience and instead are providing half hearted service to all segments.

Coupled with this situation you have seen the various categories of games grow massively in popularity and consumer awareness over the last decade and a half. D&D, War Hammer, Magic, Pokemon, Yugio and Clix have had long term presence in the mass market and been the primary focus of games stores for so long, that most any kind in America will know of their existence, weather they play them or not. Manufacturers in generally have grown, especially among the big market leaders with the multi millions of dollars of capital and a diversification of retail outlets, leading to a proliferation of the total number of games available. but smaller companies have grown as well, also in part due to a proliferation of titles available, made possible in part due to better education for small press start ups and the availability of POD and In house production options and electronic distribution. I see a much healthier selection of small publishers in not just the small press/indie RPG category, but also in war games, board games and PDFs. Back in the day a company such a Tri Tac was considered a prolific and successful "small press" and in that role was lucky to gross near $50K in a year and pocket 5% of that in profits. These days a number of small press companies blow that $50K number out of the water and a great many smaller companies can at least equal or get near that $2,500 profit zone due to more efficient inventory and distribution sales practices.

What does all this mean for the future. I believe the major distributors will ultimately collapse. A number of very small regional distributors will survive and they'll do so by eventually learning they can't base their business on the product flowing around them to the mass and will return to offering backlist support for the hobby or at least targeted product segments thereof. I believe upwards of 75% of the current crop of retailers will fold because they no longer ave a viable competitive position in the market with their current product focus. It will simply be a race to see which of them die before the product flow from distribution dies and which of them get killed of by the fall of the distributors. Back in the day many hobby retailers ordered games direct from manufacturers and in todays indie family board games arena, that is still how it is. I know a couple mall based game stores which order direct from well over 100 vendors per year. But after being spoon fed by distributors for a decade and a half, 95%+ of game stores cite they just can't handle the world load of ordering direct. Obviously we have stores that prove it can be done, so what they are really saying is they refuse to do the extra work that entails, even if it can be healthier for their business. And it is an attitude like that which will lead the retail collapse more than anything else.

However, post collapse, the survivors will have been those who learned how to specialize in hobby gaming products once more and will have learned to go through whatever product sourcing efforts necessary to provide strong service to their local customers. I do agree with you that there are, these days, many viable ways for a manufacturer to sell its products and it doesn't actually need retailers. Our own rapid rise in sales and profits the last three years is proof of that, as we went from one part time staffer to four full times and a couple part timers, while reducing down from distribution based sales to about 150 stores to direct distribution to less than 3 dozen and focusing on internet sales. But I do believe stores that survive the crash and learn to shed themselves of the current B&M retailing model will still be a valuable part of a manufacturers overall distribution strategy. Such stores will retain the ability to engage with younger consumers, introduce our games to them and win them over to our brand and style of games opposed to the collectibles that will surely still be flowing through the mass. There will remain a handful of regional distributors to service these stores and these stores will have to be much more willing to order direct what their distributors can't fiscally carry (for lack of capitalization or for products falling outside of the product categories focused on by particular distributors).

I believe store presence come that time will allow some small businesses a greater opportunity at growth than a comparable store presence today allows. I believe manufacturers will have a closer relationship with the stores they sell through and there will be a greater air of cooperation between the two with said efforts. The ability to "survive" without these stores will continue to rise for energetic small press who pursue direct and other sales channels, but after the "flush" out of the current mess, the market that reforms will be much more akin to what existed 15-20 years ago, pre Magic, only driven by the sorts of vital data that today's technology can enable.

I think working with a second or 3rd tier is not necessarily bad, but I think it has to give the manufacturer much better control of where and how their product is sold and how it is displayed and promoted at the retail level. Data has to flow back up channel to allow for better business decisions and the middle tier has to act like the partners to manufacturers rather than exploiters of such. With the wide range of alternative means to sell our products and the impending departure of the mass market game leaders from the product mix, distributors will have to facilitate product flow on those terms or they will fail to provide the sole function in which they have value.

Small manufacturers will still be at a disadvantage to handle direct to retail sales as we enter that market for lack of cost effective shipping options and due to a small number of titles offered for sale. IPR and Key20 could handle those direct sales, to a degree, but they still act as gate keepers in the same fashion that the current distributors do (albeit with a different set of criteria), so it would be nice if something like the virtual distributor concept could eventually develop to allow all small press potential access. Really, such a venture would still only provide centralized ordering and information flow, but no real marketing, so the marketing aspect and mertis and flaws therein would still have to be borne by the individual manufacturers, which they should be.

Of course, all this becomes moot if they can ever develop a Star Trek like transporter and we can "distribute" our products at the press of a button. Eagerly waiting for that day. Smiley

Ryan S. Johnson
Guild of Blades Publishing Group
http://www.guildofblades.com
http://www.1483online.com
http://www.thermopylae-online.com
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Ryan S. Johnson
Guild of Blades Publishing Group
http://www.guildofblades.com
MatrixGamer
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« Reply #40 on: October 09, 2007, 10:43:40 AM »

I'm still a little fuzzy on the actual distribution of game products pre D&D.


Ramadan is nearly over so my brain is beginning to work. Great thread!

My understanding is that in the 60's games started off being distributed through the Gift distribution system. This system still exists but we game makers don't seem to be involved with it as much.

Chris Engle
Hamster Press
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Chris Engle
Hamster Press = Engle Matrix Games
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Ron Edwards
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« Reply #41 on: October 09, 2007, 01:32:26 PM »

Hi Chris,

I'd like to know what that distribution system is. Start from the ground up, because I have no idea.

Best, Ron
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ryand
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Posts: 22


« Reply #42 on: October 09, 2007, 09:25:45 PM »

guildofblades
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« Reply #43 on: October 10, 2007, 01:28:02 PM »

>>The "traditional publishing model" assumes that there is a mass audience of consumers who are actively shopping for a new TRPG to play, and that providing those games via a wide retail footprint is the best way to generate a return on resource investment.  The "price" a publisher pays for access to the retailer footprint has become so large, as a percentage of the real return, that it has become too expensive to use except for a small number of TRPGs.<<

Hi Ryan,

Would you say the same holds true for most other games segments as well. Such as board games, standard alone or expandable card games, miniatures games, etc? That is if you aren't already one of the top couple of brands tat the structure of the distribution system and a publisher's ability utilize is for broader distribution is inherently too inefficient for the costs involved?

Thats been my experience. The Guild got into the gaming business small scale in 1996 and distribution sort of worked for us, on a small scale, the first few years. If you disregard the disruptions of steady service due to all the closures and consolidations, that is. But post 2001 or so I would say the cost to benefit ratio of using that system began a dramatic slide downwards. In 2004 we gave up the effort entirely and began focusing our efforts purely on direct distribution methods instead. Direct to the consumer and direct to a hand picked group of retailers that held the sorts of stores we felt would justify the expense of marketing and distributing to them. The result was like suddenly removing a damn holding back an entire lack and a massively and steady trending upwards in both sales and profitability.

I've begun, myself, to assume that the 3 tier system is only remotely economical for the top tier companies and in fact the "mid tier" that everyone cites as being the group dependent on it are actually just being hindered by it due to their willing reliance on it. If those companies began developing more direct distribution methods they would actually have an easier time expanding their reach. Smaller companies can only succeed by circumventing the system. Attempting to rely on the 3 tier system for them will lead to short burn out.

Ryan S. Johnson
Guild of Blades Publishing Group
http://www.guildofblades.com
http://www.1483online.com
http://www.thermopylae-online.com
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Ryan S. Johnson
Guild of Blades Publishing Group
http://www.guildofblades.com
ryand
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Posts: 22


« Reply #44 on: October 10, 2007, 03:09:39 PM »


Would you say the same holds true for most other games segments as well. Such as board games, standard alone or expandable card games, miniatures games, etc? That is if you aren't already one of the top couple of brands tat the structure of the distribution system and a publisher's ability utilize is for broader distribution is inherently too inefficient for the costs involved?


No.  Especially not for a TCG.  If I wanted to publish a TCG, I'd do it with the 3-T system in mind. I'd just be sure to raise the $500K required to print & distribute using that system and the attendant marketing costs before starting the business.

Boardgames I think are actually the place where the 3-T system works best.  Boardgame publishers invest relatively little in channel marketing, and rely on the attraction of the boxes to sell the games (this is essentially what most books do; the "marketing" is the money they spend on the cover images & design).

Everything else I think is on a case-by-case basis, depending on your goal.

Essentially, if you think your sales will be <$100K in 2 years, you self-distribute.  If you think sales will be >$100K in 2 years, you use the 3-T system.  There are exceptions (on the upside); there are some games likely doing a lot more than $100K revenue rates that are being self-distributed.  There are also certainly A LOT of games doing less than $100K revenue rates that are in the 3-T system; however, those games are just mistakes, not indicators of a viable business.

Quote
The result was like suddenly removing a damn holding back an entire lack and a massively and steady trending upwards in both sales and profitability.

Would you mind quantifying that?  Are we talking millions of dollars of revenue, with hundreds of thousands of dollars of profit, or hundreds of thousands of dollars of revenue and thousands of dollars of profit?

Ryan
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Ryan S. Dancey
CEO, OrganizedPlay
(for information on Open Gaming, please link to www.opengamingfoundation.org)
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