Retail--A good thing?

[gandrews]

While the general thoughts here seem to run to self-publishing, print on demand, and PDF solutions, I'd like to discuss the traditional retail possibilities for independent game designers for a bit.

I'm opening a retail shop in California. It's a bad time for retail, but--at my age--it's better than waiting. I visited the Forge booth at GenCon last summer and met several of the authors represented here. I also spent some time at the IPR booth. I went away with the impression that some of the most interesting ideas and exciting products were coming from this segment of the industry, and I was convinced that I'd need to include independent games in my business plan. About a quarter of the titles I plan on stocking are independent games. I plan on supporting this portion of my business with demonstrations and regular promotions, as well.

As such, I've purchased a significant cross-section of independent games from IPR as opening stock. Unfortunately, not all of the titles I'd like to see on my shelves are available there.

Some are only available as POD, in single quantities with no discounts, and some titles are only available as PDFs. Effectively, this cuts out the retailer ("disintermediation" is the buzzword), which some authors may see as the whole point, but it also cuts overall opportunity. Without incentive, retailers don't warm up to the independent market and don't introduce others to your games. The bottom line is that you're cheating some folks out of experiencing what you have to offer and you're leaving money on the table.

It doesn't have to be that way. I'm retiring to open my shop after over 30 years in Information Technology. I've committed the crimes of software development, technical training, documentation, and I've even managed a few sizable computer networks. Secure and reliable solutions exist, with a little innovation. We can discuss those solutions, but first we should agree on why it's desirable to go that route.

I'd be willing to bet that--if you are a competent game designer--you are gamer yourself. I'd also wager that you have had positive experiences in the past in retail game stores. A shop brings gamers together, often provides demonstrations, accessories, and even space for gamers to hold their own sessions. The most important thing a retail shop provides, however, is training. It is the function of a game shop to steer shoppers toward games and products that match their interests and maturity--whether or not they may have come in looking for that particular title.

The Forge booth at this summer's GenCon was pretty active when I visited it. Designers were talking with fans, sharing thoughts about mechanics and story concepts, and even playing each other's games, as I recall. That sort of interaction is what a local retail shop is best at providing: face-to-face contact between avid gamers. Isn't that a good thing?

"Disintermediation," or cutting out the "middle-man" isn't always best. Clearly, independent games seldom become mass-market sensations, but serving the so-called "long tail" market isn't bad. Certainly, the cost of production is an issue. Fulfilling an order with a PDF is better and cheaper than having a garage full of "product" at a substantial investment that isn't moving. My suggestion isn't that we return to that model, but that we work together to find a new paradigm that both fits the long-tail appeal of your products and includes the benefits of the retail market.

It won't be particularly easy, but it will happen. Eventually.

Your thoughts?

--George Andrews
The Gamer's Torch
San Diego

[guildofblades]

Hi George,

Much luck on the opening of the new store. I know it can be a lot of work.

I have been a small press game publisher since the mid to late 90's. Did the whole 3 tier distribution thing at first and sold most of my titles through distributors and retailers. Over the years, that proved itself an unstable channel of distribution upon which to build a stable business upon, so we attempted to enforce a distribution contract, which none of our distributors opted to work under. So we went Internet and retail direct effectively back in 2004.

The good thing for our company is, that moved worked out well. We really began to grow. We had spent a decade branding ourselves and our game lines, expanding our catalog of games and generating interest that the 3 tier system was doing an absolute horrible job of fulfilling. So when we refocused to internet direct sales and only promoting stores that joinned our "retail program" and commited to stocking a large selection of our line, it ended the confusion of how and where to buy our products and sales climbed steadily. Further, an Internet direct sales for an item, on average, is 4 times as profitable for us as the same unit sold to a distributor through the 3 tier system.

So with that tale, in searching for a new model in which to engage the small press and indie publishers of the industry, keep in mind that all the smaller companies need stability in their distribution channels in order to have a chance to grow. Very often, many small companies can only find that stability through their web sales. Unfortunately, its also true that for most, web sales alone do not make their product very accessible to the public.

A couple years ago I branched off opening a POD company and a year ago, we opened a retail store for that POD company. As a part of our model, we set up a program to retail many of the games for which we do the POD printing for. Under the program we pay the cost to POD print our store's inventory for a title, then when it sells we pay the publisher/creator 35% of the MSRP. When you factor in the printing costs, this works out to be about a 50% discount offered to the retail store. But for the publisher, they themselves don't have the POD printing cost (which with POD, 15% of MSRP as a printing price would be cheap anyways), they have nothing invested up front and also no shipping expenses. Its effectively a no risk retail option that doesn't impact their limited capital reserves and lets them focus on selling their titles in the other ways they would have without our store being here.

The downside is, we are presently just one store (but give us another year and we'll be planning the opening of #2) and a small web presence. So at the moment its just a small additional retail footprint for their product, not an entirely new distribution model for getting their product to market market wide. Maybe a decade from now, when we have a whole chain of stores, the impact could be a great deal stronger, but that is obvioully a ways off.

Going into next year, we do hope to offer a distribution plan based off our POD service, working off a similar model as our retail program, only with wholesale based revenue shares. This will enable a small publisher to get distribution on items without investing in inventory in advance and expand their retail footprint across more stores risk free. The problem currently is simply that our POD business grew quickly enough that we're simply too busy to take on this would-be extra work load. We are in the process of investing in various equipment upgrades and looking to expand into an industrial space to expand our POD manufacturing (we currently run it from our retail store) in order to get set up to tackle the greater workload.

In any case, as a small game publisher, retailer, game printer, we are always looking for new business models that would enable new modes of distribution and cooperation between small press/indie game publishers and the retail tier. We see a great deal of untapped potential there yet. Would love to listen to any proposals you have in this area.

Thanks,
Ryan S. Johnson
Guild of Blades Retail Group - http://www.gobretail.com
Guild of Blades Publishing Group - http://www.guildofblades.com
1483 Online - http://www.1483online.com

[Eero Tuovinen]

Most independent publishers I know are not so much retail-hostile as retail-indifferent. I do a bit of web retail alongside my own projects here in Finland, and folks have usually been happy to sell their games to me. Of course it's unfeasible for a real retail business to do the individual negotiations title-by-title with publishers, at least the way retail is usually ran.

Were I to start a brick-and-mortar store myself, I'd watch what Guild of Blades is doing very carefully. Insofar as I see, digitalization of content distribution is going to be driving traditional stores to despair during the coming decade, and not only in roleplaying (although we might be in the vanguard in this). It's not at all a bad idea for a retail store to think ahead to the functions they might be able to provide in the new digital world. POD printing of that digital content and sales of other gaming equipment, as well as some sort of business model based on leasing out gaming room seem like good bets to me; just like you wrote, George, the game store is important in allowing people to meet and learn more about games. All of that can't be moved into the Internet.

Looking at the present moment, however... it's not a bad idea for a retailer to retail independent small-press games, but it does require a hands-on approach and deep knowledge of the product and the cultural field. I've myself pretty much stopped pushing my product at retailers here in Finland, at least conventional hobby store retail - the stuff simply doesn't sell very well if your business is just stocking shelves and letting the customers pick through them blindly. Speaking again as a sort of semi-retailer myself, it seems to me that disparate stuff like independent games have to be sold in active dialogue with the customer to get the best results. Game stores that stock independent games do get a trickle of customers who committed to finding out more in the Internet, but they are a trickle, no more - most people that can be reached through the Internet are also likely to order their stuff direct.

Right at this moment some of the most popular independent titles are not available for retail through the conventional channels. This makes it difficult if not impossible for a non-specialized retailer to get a hold of games like Sorcerer, Dogs in the Vineyard and My Life with Master, to pick a few examples. This is traditionally considered a failure of the distribution in that most of the designers who've failed to provide a distribution outlet have not done so out of misplaced hostility for retailers, but simply because they have not found the distribution options available to them to be worthwhile. Some reasons for this include an unwillingness to invest the money and effort to operating on a scale necessary for serious distribution; failure of potential distributors to demonstrate trustworthiness; operating on a level where direct sales are much more profitable than retail sales.

Indie Press Revolution, which you mentioned, has had some success in offering independent small-press games to game stores. It's not as successful and comprehensive as it could be in this, perhaps due to its high expenses compared to direct sales and relative passivity in looking for new clients among both publishers and retailers. Still, IPR does at the moment have a pretty good selection of independent games in various styles, including my own. I wouldn't mind seeing more competition in the field, of course.

[guildofblades]

Hi Euro,

Presently we are only able to print soft cover and saddlestitch game books and select kinds of card games. Its just a toe in the water on the theoretical potential of on-retail-site production of games. The equipment needed to do this work is not overly large and fits into a 12' x 22' copy & print production area within the store. Though that area also includes our checkout area, an extra computer station (for dual checkout, and for programming...we have lots of IT initiatives going on behind the scenes presently). Ringing around that area all the counters and counter tops are loaded up with product...counter tops with board games facing out, the rest of it behind the board games work space for print projects.

We are, at present, working with some machine shops to tiny up concept designs for a number of custom pieces of equipment. A couple of those will be small enough to be worked inside our store. Others will be quite large and are going to require us to open up a warehouse space for warehousing products and supplies and have an abundance of room to operate these large machines. When we are all done with all of that (its a laundry list of machines, a good dozen of them, so its going to take time and will be done a bit at a time) we'll have the capacity to POD print:

1) Playing Cards (and in mid ranges, cheaper than we can presently. With about 10 times our current capacity)
2) POD Boxes. Nice 2 piece boxes with mounted art. Ranging from small card boxes all the way up to Axis & Allies sized boxes.
3) POD game boards. Fully professional ones. Half and tri fold (maybe quad, but not sure yet) with mounted artwork and a nice quality under side wrapper. We'll be able to make them small to fit smaller boxes and up to 40 inches long or so. These will be on quality 60-80 pt chipboards.
4) POD hard cover books
5) Mounted game counters, square tiles, hex tiles, etc.

Eventually we will look into short run options at plastic ejection molded figures. But thats only after all the rest is in place.

Since most of this equipment won't fit into a retail space, the evolving plan here is to establish a chain of retail stores around a large metro area. Stock leading games from the main distributors (or buy them as a distributor ourselves if needed) and stock a nice selection of indepedent stuff (RPG, Card games, Board games, etc) that we print for folks. Since there are many thousands of game titles and we expect even more if we can evolve our POD operation the way we plan, it will be impossible to inventory and display everything in each store. So leading games will get shelf space and strong performing indie stuff wil get shelf space too, with a rotating range of other indie stuff getting shelf space sometimes. But for each game category, we will have browsable catalogs of games that may be bought locally, printed on demand from the local production center hub, delivered to the stores, and then made available for pick up by the customer. So the shelf space will become something of a display, showing just a sample of what is actually available, with the remainder orderable and available in 1-2 days.

Even better will be if we can automate the alteration of print ready PDF documents so that a customer might be able to apply small customizations to their games as they are ordered. Things like swapping out an image on the box for one of their own, putting their name directly printed on the box, a space on the back of boxes or books for custom texts written by the customer. Lots of possibilities there. Tough to do it right and it would be something that would have to be worked out in advance with each publisher, so areas that could be customized would not otherwise alter their product in unwelcome ways. The technology is technically there to manage this sort of thing now, but structuring the system will take a LOT of work. It all has to be automated or the labor involved in making it available will make it unfeasible. Likely we would have to sell a game to a customer and along with their reciept would come a login code to our sites, where they could "login" to their order, upload custom texts, images, that would be programmed to be inserted onto the print ready PDFs when those PDFs were batched into the daily print queu.

BTW, I don't mean to type all of this to say that this is "The Way" to tackle game retail in the future. This is merely the way we're starting to go about it. I am quite sure there are a goodly number of viable models that people will find and use to retail games in the future, most not yet having been discovered and employed yet.

Ryan S. Johnson
Guild of Blades Retail Group - http://www.gobretail.com
Guild of Blades Publishing Group - http://www.guildofblades.com
1483 Online - http://www.1483online.com

[gandrews]

Wow! Some detailed and thoughtful responses in very short order. I'm impressed.

Eero: "retail-indifferent" is a great expression, and likely very accurate. I'm afraid that the observation works both ways; may retailers want to take the easy way out and just stock the stuff they can get from the big distributors. Since my shop is billed as a "gamer's boutique, and not a gaming department store," I've always had the desire to focus on making room for the special products rather than just the same old stuff everyone else is trying to sell.

Indie games fit that bill by being small, niche-market gems. That doesn't mean I won't stock Fantasy Flight or WotC, but it does mean that indie games will not get pushed aside by those big guys in my store. Plus, as I mentioned, demos and live play will include indie games to a large degree, if I can foster it. Demonstration sessions--and especially live play sessions--generate interest. People naturally want to see what all the fuss is about. That results in traffic, and traffic means sales--ultimately. I want people coming in to see "what's new," and not poking through the same old stock. Even a little indie tournament action might be nice.

I'd love to host groups that want to do multi-session games of Polaris or In a Wicked Age, for example. Or perhaps a Colonial Gothic campaign. All those games will get some push in my shop, because they are all great games by any standard. Unfortunately, Baker's game falls into your category of very hard to get. I'm determined to sell it even if I have to do so at a loss, however, because I believe in its value.

Ryan: POD is something I'm still trying to understand--not the concept, but the implementation. If an author has an arrangement to publish and deliver one copy, wouldn't that translate favorable into a retail supply chain where a shop might order a dozen or two copies at a time? Of course, everyone's margins would be squeezed a bit, but if it makes sense to sell one copy at a time, why not a dozen and provide a reasonable margin?

However, I feel PDFs (or some equivalent eBook format) is really where things are headed. The Kindle has made a big difference, but a true PDF appliance (with color and proper formatting) such as the tablet Apple is supposedly building will perhaps be the key. Assuming this comes about, the question again is one of disintermediation. Can a retailer facilitate the process without compromising the intellectual property or unacceptably reducing the publisher's margins? My contention would be that any PDF sold through retail channels is found money to the publisher. If the buyer would have bought without the retailer's persuasion, that would have happened already. Even if a publisher chooses to dispute that contention, the value of the retailer's mediation is obvious.

But what of the publisher's intellectual property?

I agree that IP is of significant concern currently, perhaps a bit more than necessary. The music industry seems to feel all of its customers are thieves, at least potentially. The film industry is even worse, and DRM is rampant everywhere.

Copiers have been around for decades. If people want to compromise intellectual property, a printed book is NOT a failsafe medium. The simple fact is that most people are honest, and most people will support value when they perceive it. Thieves, inarguably, will always remain thieves. Perhaps I'm preaching to the choir, because most independent publishers who produce both printed material and PDFs are quite liberal with their PDF policies. Some, like DriveThruRPG, watermark the PDFs, but most just release the files to buyers without restrictions. The question here is, how can a retailer participate in this dialog without compromising the publisher's property? What are the incentives?

If a publisher simply wants to "cut out the middle man," that's what can be done. Today's technologies allow for direct links between a publisher and an audience. That's a good thing, generally. But it overlooks the real value of a point-of-sale advocate. What's needed, I suggest, is a real partnership, where retailers can sell to customers who trust them for their advice, and game authors and publishers can enjoy the benefits of added success without additional heartache.

Publishers need assurance that their property is secure, to the extent that they are comfortable with the idea of downloadable property. Currently, security software techniques offer a chain of custody approach that will satisfy the most paranoid by issuing unique and secure software tokens that identify individual transactions. A buyer can purchase a token and present it to the publisher for fulfillment. The token will convey both the retailer and the property purchased. Retailers, on the other hand, need a better understanding of indie properties. I'm sure you've heard the grousing about the need for offering a demo suite to show off your game and its nuances. A little training goes a long way. We all need a little help once in a while.

"What's in it for me?" Isn't it better to ask, "What's in it for us?"

--George Andrews
San Diego

[guildofblades]

>>Ryan: POD is something I'm still trying to understand--not the concept, but the implementation. If an author has an arrangement to publish and deliver one copy, wouldn't that translate favorable into a retail supply chain where a shop might order a dozen or two copies at a time? Of course, everyone's margins would be squeezed a bit, but if it makes sense to sell one copy at a time, why not a dozen and provide a reasonable margin? <<

Hi George,

For us POD fits in because we are the POD printer. We print the books and card games right here in our store. In the future when all of our new machinery is in place, we'll be printing out of an industrial building likely to be within 2-3 miles of this store's location.

Most stores do not stock a dozen of anything at one time. My deepest inventory on any D&D 4th edition book is about 4 copies. Why should I stock more when I can re-order it steadily from our distributors? Capital that would be sunk into inventorying copies 5-12 is better spent inventory some 6-8 other books so we offer our local customers a wider variety of inventory choices.

For a time I believed it was in a small publisher's bes interest to largely sell direct, both for the higher profit margin per sale and for a better connection to their audience. And that 3 tier system only really worked for the larger publishers, who got good enough service through that system to generate wide accessibility for their product on the market.

Now that we've run GOB Retail for a year, I have seen the direct impact of our store's ability to promote select smaller publishers' products. In pushing and expanding those sales we've diversified our inventory, made our store more unique, generated sales for games that I am very doubtful would have happened otherwise and I believe we sold overall more material as the small press purchases were "bonus" purchases by the consumers, not taking away from them buying the latest and greatest goodies from their existant favorite games from those larger publishers.

So yeah, so far on our end the evidence suggests that as a store, if we can offer a greater variety of games and products from the hobby game industry, customers will dive in and partake in a much broader range of what the industry has to offer. It is simply as retailers, we have to recognize that the small press stuff doesn't come backed with huge marketing budgets to drive interest, so we must devise our own techniques for bringing those quality products to the attention of our customers. Figuring out how to do so brings its own rewards (diversity, stability, greater overall sales).

The challenge largely lies in the supply side. Its difficult to order direct from many companies as they have just one or two titles and ordering deep is not necessarily a great option. IPR makes it more feasible, but as you say, some aren't set up on IPR.

Its our hope that once our POD is fully estabished with the capacity we want, we'll be able to launch our wholesale program and distribute, maintaining inventory on a near POD basis. We would keep inventory on hand, but it would be just several copies of most things which would be reprinted as they sold.

Ryan S. Johnson
Guild of Blades Retail Group - http://www.gobretail.com
Guild of Blades Publishing Group - http://www.guildofblades.com
1483 Online - http://www.1483online.com