It will be extremely interesting to see what the sales curve looks like in terms of pre-orders into release day rack sales into following weeks' sales, and how that compares to a normal booster release's sales curve. Players only earn so much money and they still gots' bills tuh' pay.
Double Masters is two products of course, including a "VIP pack" targeted at high spenders that features an array of the most demanded cards in the set in each ~$125+ "booster pack." (Pricing is tentative this early on.) It's a substantial enough configuration that I believe it will behave in essence like an additional booster release, except in tightly allocated quantities. For that matter, we're only two weeks removed from Secret Lair Fetchlands, a ~$300+ box set, so we're really looking at a release slate that will feel like five major booster releases over a span of seven weeks. Firehose of product, indeed. But the sets are so loaded, I'm not sure demand will waver much.
I am more interested to see how game stores handle this overflowing chalice. Many game stores float Magic releases on terms or on credit cards. If the initial movement of a given product is slower than expected, because players have moved on mentally to the next one, that could hit their tripwire and result in a cash flow underrun. Or, worse, if a store has been floating cash from one pre-order run to the next, and distribution forces a cash call or a second shutdown cuts off the daily sales that pay their ordinary overhead, or what have you, the same cash flow underrun danger exists.
Most stores won't broadcast their cash position, so the telltale sign that they were in trouble will be an unexpected closure or broad clearance sale during or shortly after the big releases drop. In order to teach and be informative, I will now broadcast our cash position and explain what we're doing about all this.
Video games have run strong during this pandemic. We are sold out of all current-generation systems and cannot get any more until we don't know when because none are arriving from manufacturers, production runs are still in progress as east Asian factories ramp back up post-COVID. We get big shipments of controllers every week and almost immediately sell out. White-hot game titles have been landing and selling through for the most part. And the used market is on fire; we are almost out of Nintendo consoles, period, and low on games for most of them. And we've seen big sales bumps for Playstation 3, Xbox 360, and Sega Genesis, in terms of used games that people are presumably catching up on that they missed.
Meanwhile, Magic cards have sold just fine, despite the lack of in-store events or gameplay. This is surely a vote of faith on the part of our player community that we will eventually re-open the game room, and they are correct, we will. It's great to have their support now, however, because it puts us in a position to be strong in ways like we're about to be. And the flow of collections coming in on buys has been substantial, because several stores in town are not paying cash on buys, so those players are all coming to us.
Moreover, our expenses are mostly lower than usual right now, with the glaring exception that we are obligated to pay rent on square footage that includes an empty game room. Due to the lack of events, staff hour counts are down in absolute terms. Due to the product mix tilting so much toward used merch, distribution invoices are a lower percentage of the weekly nut. Payroll and cost of goods are the two largest expense buckets, so when they both run shallow, life is pretty good. And we've been fortunate to avoid any serious emergencies, like last summer's sudden air conditioner failure of one of our three roof units. I'm not driving a Lamborghini just yet, but my stress level while sitting at my desk with the checkbook open is pretty low lately.
We do have credit terms with distribution and will accept shipments on that basis, and in an ordinary time you'd typically see us tailoring the numbers so that any given shipment is the amount of restock product and a few new releases that will sell through before the invoice comes due, freeing us up to use cash on hand to buy used merch walking in the door. This is common to business. The idea is that you use "someone else's money" to generate sales with margin and then pay back what you were fronted and pocket the profit. Our cash flow is sufficient right now that we are purchasing the maximum available of each new set, and unlike many stores, we went in heavy on Jumpstart from the beginning, expecting it to be a hit and guessing correctly. We're taking amounts well above what would sell through during the invoice's terms, because we already know we can cover the invoice without having to sell all the merch first.
All Magic products are allocated on release to some degree; as Michael Caffrey of Tales of Adventure noted in a Wizards discussion group, if you ask your distributor for one million dollars worth of a new Magic set and offer to pay up front in cash, they still won't do it. Distributors are limiting all stores to purchases within their historic volume range and will surely continue to do so. In our case this means we'll be getting our biggest ever purchase invoices, plus a bit more for growth, and know in advance that with no urgency to flip the goods quickly, we will be able to keep it in stock long after some of our competitors sell out. We've been climbing into this position for a while now, and it's a far cry from 2015 when we struggled to hit invoices before they came due. Now that constraint is gone, which means we can put our attention on having the goods for as long as possible, which is ultimately one of the strongest means of drawing business.
So that's where it all sits, today, on the cusp of five weeks of plenty. I hope in week six I can look at the shelves and see a comfortable surplus of product and look in the bank and see a nice substantial balance. Given the demand levels for both the Magic sets and for video games and other things we carry, that outcome seems likely. And that's pretty great.
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