Wednesday, December 30, 2015

Why I Keep Coming Back to Play Again

Last week's article got me thinking about the people that I enjoy playing games with.   I am certainly a casual Magic player now, though entirely skilled and able to play at a high level.  I just don't keep up with the format metagames other than Commander.  I play board games, LCGs, and even some miniatures games.  I won't be painting up a 40K army any time soon, but that's due to lack of time rather than lack of interest.

The relationships that keep me in a given game are a big part of this.  For example, earlier this year I found that I was busy enough not to be able to play much, and the odd game out was one of my favorites, Android Netrunner.  I prepared to sell off my collection.  However, I changed my mind when thinking about how much I enjoy playing games with the people in my regional Netrunner player community.  I kept my cards, and I know I may not get to play very often, but I'll enjoy it on the rare occasions when I can.

Once a month, though we skipped December out of scheduling logjam, we have a paid staff team-builder for DSG where we all have dinner and play games of one sort or another.  The hard business rationale for this is to get our people knowledgeable about popular games.  But mostly we want them to have fun, which helps build friendly relationships among them and also helps add enjoyment to their job as a staff member in the company.  Sometimes I'm "game mastering" and don't get to play, while other times I get to join right in, such as for our six-player Warhammer 40K tutorial melee.  These game nights are a delight and I hope the logistics permit us to do more with them.  Our January team-builder will be RPG-centered, using Star Wars Force and Destiny.  Our RPG expert, Tanner, is going to game-master for us.  I'm excited to try that game system.

Every month or two, as children and work and schedules permit, my in-laws visit, and we play board games.  Sometimes we have friends join us, but mostly we keep it small because of the child care aspect.  We let our children play with their mutual cousins and our friends' kids and we thrown down on the game table, whatever stuff I've gotten hold of.  For New Year's Eve we have Codenames and Dead of Winter on deck.  This "game night" is competitive, it's fun, it's an open rotation where we can work in family visitors and such.  We often mix in a "foodie" dinner if the ladies have arranged for it.  I enjoy it tremendously and it's the kind of thing I wish it were feasible to do with more of my friends.  Maybe if my schedule eases up this year...

For constructed Magic, I own one Commander deck.  Just one.  Five-color Progenitus, if you're curious.  I'm in the process of blinging it out to maximum, though I'm allowing that my CE Beta dual lands are as spiff as I am going to worry about getting for those ten cards.  The collecting chase is fun.  I've managed foil Khans fetchlands, but I want the judge foils.  I have Expedition foil enemy fetches, so those are maxed.  By personal preference I want the original Ravnica block foil shocklands rather than Expeditions.  Due to my time as a Level 3 DCI Judge years ago, I am preferring judge foils over most other versions for cards that have them, such as Demonic Tutor, Force of Will, Crucible of Worlds, etc.  I enjoy occasionally joining in Commander Night at DSG, especially when guys like Patrick Hug and Dustin Chapman are there with their absurdly lethal brews to serve as a benchmark for my fine-tuning.

For that matter, I play a game every day with my business partners, in particular DSG's store manager, Patrick Hug.  That game is called Small Business Retail.  So far this session has been running for a few years and we're finally starting to put some quality points on the scoreboard.  It's an expensive game to play, though, and it's a live cash game where you can really end up losing your stack when you make a mistake.  I don't recommend it for the faint of heart.

But when it comes to Magic especially, nothing keeps bringing me back to the table quite like the Gamers Edge Draft Crew.  I have known some of these guys for literally a quarter-century, longer than Magic: the Gathering has even existed.  Others I met along the way: at Wizard's Tower, at Arizona Gamer, then at Gamer's Edge, Ray Powers' store, where the group kind of crystallized for the most part.  I wrote about that store progression in an article a few months ago.

There are something like 17 or 18 levels of erstwhile DCI Judge in that photograph.  Veteran pro players may recognize Ray and the likes of Matt Stenger and Dan Gray (yes, that Dan Gray).  The other guys are unknown to most of you but are just as important to me.  There are a few more that weren't there that day for this photo.  We are the Crew.

Since Gamer's Edge lasted from 2000 to 2005, there was a fall-off in our gameplay for a while after that.  The dominant game store in the area from then until 2012 was Gamers Inn, and though we played there at times, it just wasn't our place.  Until Shadowmoor/Eventide in 2008, Ray still ran the regional prereleases so we all got together for those.  I was rocking the eBay-and-backpack-dealer gig from 2008 to 2011, so I even sold off some of their collections on consignment.  Who knew a Magic boom would end up happening.  If we had known that, I think we all would have kept our cards.  Hindsight is 20-20.

In the years since the end of Edge, rather than playing Magic, we got together for holidays.  Sporting events.  Bachelor parties.  Weddings.  Funerals, unfortunately.  Vegas trips.  Fight nights.  Barbecues. Casino nights.  We've done things we'll never forget, and other things we'd prefer to forget.  There has been trust, and there has been friction.  At least three pairs of us in the group have had fallings out, and one of those pairs mended fences after a while.  There have been babies born, then children, and now teenagers in some cases, picking up the torch and becoming the next generation of the Edge "family."  Most of the original ownership of DSG came from this group.

The group is sufficiently close that we're careful to make sure our significant others have a chance to get along, which can be intimidating for them when one of the single guys meets someone new and brings her into a social group that has so many years of history built up.  Some of the wives are close friends now.  They even have a secret Facebook group where the Edge men aren't allowed.  I assume they're making fun of us 24/7, despite Steph's assurances that they mostly chat about other stuff.

Every few weeks, currently on Mondays, the Gamer's Edge Draft Crew convenes at Desert Sky Games and Comics for a booster draft.  Sometime another venue substitutes in a pinch.  We usually draft the newest set.  There are more than eight of us, so it's virtually assured to fill a pod and most of us don't mind sitting out to give others a turn.  We want to draft "properly" for play value, so we redraft the rares and foils at the end according to final standings.  We've had people join us when we were stuck at seven, but it's a very rare occasion.  Some of them held their own, but others found out what an absolute buzzsaw this group can be on the table.  Think about what happens when people who have been booster drafting for as long as there has been such a thing as booster drafting, play amongst one another over and over again for years on end.  That kind of practice leads to a deep proficiency, almost on the level of muscle memory.  Some of it's pretty insular, knowing tendencies of each other more than format particulars.  But mostly it's broader practiced skill.

A few of the guys draft outside the group and they keep up with archetypes, so late in an expansion's tenure they tend to dominate.  But all of us know the fundamentals of limited drafting, deckbuilding, and gameplay so well that when the set is new, anyone can win any game.  Guys who use their DCI number twice a year at most will put together shockingly effective beat stacks.  Other times one of us will experiment with a derpy strategy and fall flat with it, but it was fun to try.  Some of this group goes and cashes at limited Grand Prix events. Others content themselves to the local game.  Every one of us thinks we could sit down to draft in a Pro Tour Top 8 and put up a respectable fight.  We all have careers, families, lives outside the game, so I don't see us putting in the prep hours like a devoted player grinding the pro circuit.  But you never know.

So as 2015 draws to a close, I hope you all take a moment to think about the people who YOU enjoy your comic or game hobby with, and what keeps you coming back.  The objective with all things tabletop is ultimately to have fun.  When I get to play, really play and not be preoccupied with other things, I have an absolute blast.  This is true with the family and Game Night friends, with my Netrunner peeps, with my store staff, with the Gamer's Edge Draft Crew, and everyone else I occasionally get to game with.  As long as it's still fun, even if the trials of life send me in a different direction for a while, I won't stay away for long.

Thank you for visiting my business blog and I hope you have a safe, healthy, and prosperous 2016!

Tuesday, December 29, 2015

Casual Players Are Not Necessarily Newbies Or Bad Players

A few weeks ago I wrote an article about why it was both unwise and wrong to pay grinders to play Magic -- that is, to pay more than 100% of admission fees for tournaments out into a prize pool, placing the prize pool into negative escrow so that the average player EV is a profit and the average store EV is a loss.

I termed this practice "social OP prizing" because it comes from an illusory promise on the part of the grinders that if a store will, in effect, pay them to play cards, the store will more than make it up in other spending, on sleeves, snacks, sodas, etc.

This promise is illusory because the player community can enforce the store's payout via social means (hence "social OP prizing") but the store can never really enforce the player's spending.  Many of the grinders making that promise have no intention whatever of spending one cent more than they absolutely have to spend, and fully expect to profit from the negative escrow.  They expect to be paid to play cards.

Some store owners are socially adept enough to manage some modicum of enforcement, and good for them.  It's an extremely fine line to walk.  But that management doesn't scale well, and you can't get blood from a stone.  So the store has to make up the difference somewhere.  And that's going to come from the customers who do spend, which my article termed "angel customers" (as is one of the common monikers used within the trade).  And the second half of my article's argument rests upon that: it is unfair and wrong to expect angel customers to subsidize the grinders through ongoing negative escrow.

The above four paragraphs set forth my argument from that article, leaving out all the explanation and groundwork by which I built the case for it.  As sometimes happens, the underlying argument kind of got lost in the volume of explanation, and that's bad writing and editing on my part.  I'm sorry about that.

OK, so I posted the article on December 15th.  I shared it around the retailer groups on Facebook, and we had some neat business discussions on it.   A day or two later, individuals wanting to stir the pot posted a copypaste of the article (unlinked, improperly attributed) to my regional grinder Facebook group.  The admins kindly deleted the infringement and I posted a genuine link, rather than having an endless litany of bootleg ones pop up.  The discussion that ensued had a few people who got the point, and a few who missed it.  Mainly a lot of grinders got caught up in assuming my objective was to encourage stores to eliminate or curtail competitive play.  Overwhelmingly that was the take-home from the negative reactions.

Almost a week later, someone posted the article to the Magic subreddit.  Eerily the same discussion ensued.  Some folks got the point of the article, others, mostly grinders, took the article as an indictment of competitive play in a broader sense.   Again, my explanation overwhelmed the reader, leaving no room to appreciate the money shot.  And today's article is largely in answer to those grievances.

You'll note that somebody else, not me, initiated both postings of that article to player-focused forums.  I had no intention of posting that article to such audiences.  The internet is public and I don't have any objection to people reading these articles -- in fact, I know many local players enjoy the "peek behind the scenes" this blog provides -- but this is a business blog written primarily for an audience of those interested in the comic and hobby game trade.  Everyone is welcome to read, just understand that the context is going to be business-oriented so that's the perspective you're going to be shown.  At no point was this written as a troll or ploy for attention.  I almost wish it was, I got more page views from reddit than I had gotten in the past three months of articles combined.  Apparently I need to get into the clickbait business.  That's where the money at.

I think the best approach I can take here is to address the major complaints in turn, because that will lead us to the underlying misunderstanding, as you'll see.  So, in Q&A format, here we go.

Q: Why are you so upset about stores that run social OP prizing?  Is your business failing?

A: Well, 2015 was our best year ever, in gross and net, by a lot.  So we're okay.  And this is business, there is no emotional dimension to this.  I'm not "upset" at anything.  This is a Millennials thing I believe, projecting emotion onto everything they see, hear, and read.  I'm Gen X.  Born in 1974.  We can't afford feelings; the baby boomers spent all our money.  And yours too, as it turns out.  See?  We have more in common than you thought.

Q: How is social OP prizing any different from just spending promotional dollars / advertising?

A: Different mechanic, different time-frame, different objective.  First of all, an advert is store-initated from its very core.  There is no exchange of promises; the store gratuitously offers deal X and all comers may partake of it as they wish.  Second of all, adverts can be one-off things.  And in fact I completely support the idea of a store having special tournaments that go over 100% in prizing -- big events, that sort of thing.  Memorial Day Legacy tourney, 1st prize Black Lotus.  Maybe the store profits, maybe it loses money.  It's not social OP prizing because there's no ongoing component and thus no contiguous escrow.  Finally, the purpose of advertising and promotion is to generate arrivals -- that is, to gain customers first and foremost, by acquisition and retention.  Organized play can and does fulfill both halves of that function at times, but OP that is focused on grinders only serves the retention part of that objective.  A grinder is already a player, and already has his or her game, and already plays it, and already knows where there are events for it, and where the highest EV is.  Accordingly, the promotional dollar spent to attract that grinder's business doesn't have the same ROI as a promotional dollar spent toward the wider audience of non-grinders.  Orienting tournaments toward grinders, if you think of it as an advertising expense, is buying a six-pack and pouring three cans out on the curb.  You paid for all six, but you end up only getting to drink half.

Q: What about the argument that grinders are good for your store because they bring in more players for tournaments?

A: So I should lose money on OP and... make it up in OP volume?  That's a bold plan, Cotton.  Rather than losing money at all on OP, it is healthier and more sustainable to grow sales organically, which is what I do, by offering competitive prices and selection.  It turns out that attracts a crowd too, filling the seats in my game room, and I am content to let organized play run at break-even.

Q: But you aren't at break-even!  You're paying out in store credit so you get full profit!

A: Not really.  The margin on redeemed credit from events helps to offset the cost of the thousand square feet of space with tables and chairs and no product in it.  Those sales of snacks and sodas?  Those also help offset the cost of that space.  There's an equilibrium most stores reach.  The cheaper the location, the more likely the store can run negative escrow and survive -- setting aside whether they should, and looking at only whether they could.  In the end, a store can't take losses in all these different places and expect to make it all up with Dr Pepper.  It just doesn't happen.

Q: You're wrong about whether Magic is a competitive game.  WOTC spends a lot of effort and money on making Magic competitive first and foremost, with the Pro Tour and so on.

A: Here we come to the crux of the issue.  Grinders think they are most of the Magic-playing market, and almost the complete opposite is true.  Wizards of the Coast has spent untold blood and treasure to attract new and casual players and that is almost entirely where their business focus is.  The Pro Tour costs what, a few million dollars a year to stage?  Magic grossed $330 million in 2014.  The marketing toward competitive players is chump change compared to what Hasbro puts towards acquisition -- the strategy they embarked upon in 2009 starting with the Magic 2010 Core Set and the original Zendikar, and which resulted in the Magic boom that continues to this day.

At the Atlanta GTS Distribution trade show, WOTC floated a figure that something like 85% of all DCI numbers have never been used outside of a prerelease.  Never!  Mark Rosewater is frequently commenting on figures like how 38% of Magic players are female but only 5% of players who play in sanctioned events frequently are female.  WOTC's own marketing materials that come with intro decks and prerelease packs tell players to start with Intro Decks and Deck Builder's Toolkits, move from there to Fat Packs, and lastly on to straight booster packs.  If you are a grinder and hang out with grinders and visit grinder internet sites and post on grinder Facebook groups, it is very easy to think the entire Magic player base is grinders, and a few noobs who haven't learned to grind yet.  From my perspective here in the trade, other store owners and I see very different numbers in very different ledgers.  We see our lifeblood being provided by a vast ocean of players who play for fun.

I do not hate grinders.  I even like having grinders in the store in some respects.  They help set the expectations and the etiquette for competitive play, especially when they're personable and friendly.  And because so many grinders live from deck to deck (losing them more EV than they ever gain grinding, paradoxically) they keep my singles case nice and full with their trade-ins.

I could write an entire article about how grinders give up all their gains when they fly to a Grand Prix or something and cash for $200, or don't finish in the money at all.  Yes, yes, I know, it's a long game, lifetime winnings are what counts, not just short-term gains and losses.  But seriously, and be honest now, how many of you are net-positive lifetime?  Millions of Magic players, and only seventy-six of them (as of this writing) have cashed to six figures total after how many years of buying, collecting, playing, failing, learning, testing, playing again, all those hours, all those dollars.  On that same list, only 179 people total have earned more money playing Magic in their lifetimes than a kindergarten teacher earns in one year of salary and benefits.  You guys are bending over a dollar to pick up a dime over and over again, but you assail the store owner who won't pay three packs per player into your five-dollar buy-in.

So, then.  No, I don't hate grinders.  You guys exasperate me sometimes.  I wish you had the perspective that comes from years of been-there-done-that.  One day you will.

From a business perspective, the numbers don't lie, and the numbers say that casual players far outnumber the grinders, and that's where a store should focus its promotional efforts.

Importantly, the grinder community is not the only place where competitive, high-level Magic play will occur.

A casual player is not necessarily a newbie or a bad player.  This is the fundamental misunderstanding that grinders have about casuals.  Don't pretend otherwise, I read your subreddit threads, I read your Facebook groups.  To a grinder, "casual" is a synonym for "Noob with Craw Wurms."  You know it's true.  And that's part of how you misapprehend how crucial casual players are to the ecosystem.  You figure if they can't get good, they'll quit, and if they do get good, they'll turn grinder, and that's who is out there, so what else matters?  Turns out that's not the case.

Here is what casual players are in my store's events:

  • Pro-tour players who just want to play and sharpen their game, and don't care about EV as long as it's not atrocious.
  • Drafters who gave up the Standard treadmill years ago, but still love Magic, who are practiced and expert and tend to go 4-0 at prereleases, and sometimes cash at sealed Grand Prix, but may not keep up with archetypes.
  • Commander players who have heavy "Johnny" player profile tendencies and would rather invent something than merely pilot a deck.  And they're not just durdlers; some of these players' Commander decks are downright lethal, rivaling anything I see in the online decklists.
  • Experienced players who simply don't like playing against opponents other than their friends.
  • Adult players who prefer not to play against teens or younger adults because they have more fun against their peers.
  • Teens and younger players who prefer to play against one another because they find older adults too intimidating.
  • Women who like to play in a better-adjusted player group and didn't like the time she visited that one store and the repressed 19-year-olds kept staring at her chest.
  • Competitive players who go full-blast at Grand Prix and PPTQ events but don't like spending their Tuesday evening matches against a guy blasting EDM into his earbuds rather than interacting in the game on the table.
  • Yes, some number of new players.
  • And yes, some bad players.  But practice makes the difference.  I would go so far as to say no player is truly bad if that player is attempting to improve his or her game.

That's a lot of players.  And the Magic player experience is fluid -- a grinder may drift in and out of some of those archetypes over time.  It might even be more accurate to say a casual player drifts in and out of grinderhood once in a while.  Maybe funds get tight but they don't want to stop playing, so they have to hunker down.  Whatever.

Competitive play is good.  High-level play is good.  Substantial stakes and prizes can be good.  There is room in the Magic universe for a wide spectrum of players and experiences.  But stores need to keep in perspective that the most vocal contingent of players does not represent the true customer landscape, and it is unwise and wrong to tailor the entire organized play economy based on an incorrect premise.

I don't really want to end the year's posts on that note, but I don't know what kind of time I'm going to have to write again this week as business has kept me insanely busy since mid-month.  If I don't manage to put up some sort of Retrospecticus in the next 48 hours, cheers to you all, and have a wonderful 2016!

Tuesday, December 22, 2015

Pray I Don't Alter the Deal Any Further

This week's article was going to be a reflection on the holiday season at the store.  But then some tremendous discussions came up, so I'm going to pivot to those.

One thing that happened was that many days after after last week's article went live, the greater Magic competitive player community noticed it and has had some discussion, at times heated, both on Facebook and on Reddit.  Some players took the article pretty hard in some cases, even though the main body of the post was directed at store owners, not players.   Though everybody is welcome to read these articles, this is a business blog first and foremost.   However, in respect to some genuine perspectives I have heard from players on the topic, I will revisit that in next week's post and perhaps improve on some areas where my message fell short because of poor execution on my part.

But this week I've written about the other big deal that came up in the meanwhile: The Asmodee Group, owners of subsidiaries Days of Wonder and Fantasy Flight Games, dropped a pretty big news bomb on the hobby game trade with an announcement late Thursday, just as most store owners were sitting down for vigil showings of Star Wars: The Force Awakens.  I'll get to the particulars in a moment.

The board game player community pretty much worldwide rose up in furious rancor over the implications of the big news.  I was ready to look at that perspective, addressing why it is going to be better for the players in the long run that Asmodee ripped the band-aid now and fixed the online market.  But then Monday afternoon Asmodee issued a "clarification" that was anything but, that seemed to backpedal on some of the original announcement, and left all parties shaking our heads.

So now for this week's article, I'm just going to try to untangle the mess a bit.

The announcement, first and foremost.  Here is a link to the letter Asmodee sent to distributors and stores (this one linked from GTS Distribution).  Asmodee Group, a subsidiary of Eurazeo (basically the European analogue of Hasbro), is merging its domestic operations with those of subsidiaries Days of Wonder and Fantasy Flight Games, into a new entity called Asmodee North America (ANA).  ANA will headquarter in Minnesota at Fantasy Flight's office, uff da.  And with that consolidation there are some changes coming to the product market:
  • As of 1/1/2016, only five of the thirteen U.S. distributors will be able to resell ANA product;
  • As of 1/1/2016, the Fab Five can only resell ANA product to ANA-authorized retailers;
  • As of 4/1/2016, ANA-authorized retailers cannot sell ANA product online;
  • As of 4/1/2016, ANA will authorize a separate class of authorized online resellers; and
  • The mass-market channel gets handled differently.
Significant changes right there.  A side-effect of the first bullet point is that Days of Wonder will no longer be Alliance-exclusive.  I have a great working relationship with Alliance, but I know some retailers are not fond of them, and they will doubtless cheer this news, where I am largely indifferent to it.

Let's also dispose of one thing right away: It's completely legal for ANA to impose these restrictions, and they could have gone much further, up to and including price-fixing, had they wanted.  This was made possible by the 2006 Supreme Court holding in Leegin v. PSKS, which established that the rule of reason could permit extensive contractual controls in a vertical distribution agreement.  It's not an accident that you pay the same price for an iPhone or a set of PING blue dots regardless of where or how you buy them.  Hadn't you noticed everyone charges the same price for a Playstation/4?  So yes, they can do this.

In case anyone doesn't immediately associate publishers with products, the ANA portfolio is worth about a third of the board game category in the hobby trade.  It includes all games with the Star Wars license, for starters.  It also includes all the Living Card Games such as Android Netrunner and A Game of Thrones.  Fantasy Flight publishes under license all Warhammer products other than the Games Workshop miniatures, from board games to role-playing material.  Days of Wonder is responsible for megahits Ticket to Ride, Five Tribes, and Small World.  Asmodee proper owns a smattering of game studios and has a pretty great signal-to-noise ratio, counting among their offerings the 7 Wonders series, Splendor, Formula D, Mille Bornes, Timeline, and so on.

Some of you may recall in this space not long ago how I stridently called out Fantasy Flight for failing to manage their distribution in order to prevent the gross devaluation of their product.  I am not so arrogant as to think their move was in response to my blandishments, particularly given that this was clearly in the works for much longer and was essentially already done and preparing to launch by the time my article went up.  But it happened, and depending how it is executed, it may have happened just the way I clamored for.  So I am pretty delighted about that possibility.

One of the points I made was that Games Workshop, for example, protects the value of its products by highly restricting online sales.  You can find Warhammer 40K miniatures online any day of the week, including straight from the manufacturer.  But GW sells online at MSRP (and, I'm discovering, offers downright legendary customer service as their value-add to that).  The smattering of small retailers who sell GW product via Amazon and eBay are typically getting it via third-party arrangements and thus can't profit on deep-discounting it.  This keeps the average discount percentage somewhere in the teens, depending when you look and at what product.   That's manageable.  That's parity with small brick-and-mortar retail.  Yeah, everyone knows it's a little cheaper online, but if it's not a big deal, a lot of people will shop local.  Beyond getting the item immediately, there's still a general market preference toward shopping in person; as of 2014, despite the online juggernaut, brick-and-mortar still accounts for more than 90% of all retail sales.  There are the social factors also, which as I've said before is a lever I do not like to tug because I think the value proposition doesn't improve enough from it.  But for some consumers those factors do matter a lot, and I'll gladly deliver on them as best I may.

Contrast the Games Workshop status quo with Fantasy Flight products regularly being chopped 40% or more every day online, from small stores dumping overstock to Amazon all the way up to behemoths like Cool Stuff Inc and Miniature Market running on a razor margin.  Amazon itself doesn't crank the price down until third-party merchants do so first; usually it is content to be the lowest price by mere pennies.

The question, of course, is whether the new ANA policy is going to allow the Cool Stuffs and the Miniature Markets of the trade to continue what they are doing.  It's the whole ballgame, really.  Most of the retailers I've discussed it with aren't confident at all.  And ANA released a clarification email on Monday reassuring players that they'd still be able to buy online, but being vague beyond that.  Great, so are the deep-discounters being cut out of the action or not?  We don't get to know yet.

I give the ANA top brass a little more credit than that, some benefit of the doubt.  It is literally their job to think about these things and figure out the best approach.  If I take them at their word, they intend that small retailers who create community should be able to resell ANA products in-store at list price.  That cannot occur if Star Wars Rebellion debuts in the spring at $99 list and appears online for $54.

As I said before in articles right here, I completely respect that a majority of players shop primarily on price, secondarily on selection, and only after that do other factors come into play.  I'm a married father of three, you gotta I know I grocery shop at Costco and Fry's/Kroger, not Whole Foods.  Price is an extremely strong argument.  Price is often the final word for a commodity item.

So are ANA games commodity items?  A game you take home and play with your family, and never again interact with the greater public or your vendor of choice, certainly behaves in a commodity fashion to some extent.  A miniatures game or living card game (or trading card game, of course) is a different animal.  If there is no playing community, the game sputters out.

I want to emphasize that last point because it has been consistently missed throughout all the gnashing of teeth over the ANA announcement:

If there is no playing community for a miniatures game, LCG, or TCG, the game sputters out.

It doesn't matter how cheaply you got it at that point.  It is now worth zero.  Just ask anyone who owns a bunch of Spellfire cards or Dot Hack Enemy cards or Rivet Wars minis.  Nice bargain.  By the way, CSI gets to keep your money.  Enjoy your worthless stuff.

Wizards of the Coast faced this problem in the late 1990s and early 2000s with Magic.  With game stores struggling to keep up the pace against online deep-discounters, WOTC saw attendance drop, and engagement drop, and sales overall, in the aggregate, decreased.  The gradual implementation and strengthening of the Wizards Play Network system limiting access to product to brick-and-mortar stores and requiring event participation to secure allocations helped address this.  There are many parties gaming this system today, running bare-bones storefronts just sufficient to get product and doing most of their business online in a race to the bottom for razor-thin margins.  Magic runs on pure adrenaline right now, it's so hot... give it a downturn, which by regression to the mean must inevitably occur, and you'll see the Gaming Goats of the world run out of room for error.  Some may survive, others won't.  But the plan to implement controls so that online deep discounting didn't dump the entire value out of a Magic card has largely worked, despite the best efforts of an entire industry to ruin it for ourselves.

A game that requires community to play, needs to be profitable to some extent for retailers to carry, or they just won't carry it.  Where Magic is concerned, players rightly scoff at such an empty threat.  Stores will at least carry Magic for the foreseeable, it just sells too well not to carry.  But with ANA's games, it's another story.  Prominent retailers around the trade were starting to make noise about dropping support for those lines, with players lining up to play X-Wing in the store with ships they all bought online.  Games that had huge money put behind them for store-sale initiatives, like Elysium, stumbled out of the gate and appeared at 45% off list online.  Fantasy Flight's lines in particular were failing to meet minimum turn until we price-matched Amazon starting in November, and only now are they moving at an acceptable rate -- and if our metrics show the net isn't good enough because of the discount, we were prepared to move on to other products.  But now we'll wait and see how this new arrangement works out.

The big complaint on the player side, of course, is that they're angry they won't get product at 47% off anymore.  It's just about money.  Most of the rest of what's being written in those Board Game Geek threads and Reddit comments is just window dressing; it's about money, it's always about money.  And like I said, I understand price-sensitivity.  So I fully respect that a player's concerns may start and end there.

But here's the thing: The 47% off was never the right price.  It was never sustainable, it was never part of the manufacturer's plans for the product or the commercial channels' expectations for the product.  That discount level put that company on a trajectory to come and go and not become evergreen long-term in the hobby.  A lesser discount online, on the other hand, is okay.  It is possible for a healthy ecosystem to exist.  Stores still provide a value proposition that measures up against that for a segment of the player base.  Immediacy, community, tactile value, and so on.  Heck, I'm price-matching larger discounts now, I'd obviously price-match a lesser discount if it made sense for the product line.

Those players who bought online discount every time still aren't going to pay list price.  They never did before, they aren't about to start now.  Store owners must recognize and accept this.  What will happen is going to depend a lot on what ANA does and how they clarify which outlets may sell online.  However, if the net result is that this ends up like the Games Workshop online restrictions, ANA games online will have that average discount percentage somewhere in the teens.  Let's even be generous and say it will be about 20%.

A discount of 20% is not a discount of 40%+ and the customers for that channel are going to be unhappy and vocal about it.  But, and this is a big if... if ANA is right, just like with Games Workshop, they are not going to lose much in the way of sales, and the smaller, sustainable discount will become the "new normal."

Perception goes a long way.  There are typically small or no discounts on toys and games by the likes of LEGO and American Girl.  It's just an accepted part of what those product brands are about.  And that's something ANA wants people to perceive about Asmodee, Days of Wonder, and Fantasy Flight.  ANA doesn't want people thinking their product is worth cost and not a dime more.  They want people thinking their product is of tremendous worth, because of the high production value and the great amount of entertainment it can deliver.  Time will tell if they succeed in this effort.

Well, I guess next week may still not be my holiday retrospective, but wherever you go or whomever you visit this weekend, have a safe and joyous time and be healthy and prosperous.

Tuesday, December 15, 2015

Why Paying Grinders to Play Magic is Both Unwise and Wrong

Virtually every game store of consequence sells Magic: the Gathering right now, and this article is most topical for that game, though the principles in theory carry over to any other game that is supported by organized play (OP).  A substantial number of game stores today, in particular Magic-centric stores, are engaging in a toxic practice: awarding more money in tournament prizes (or store credit or product equivalent) than the store collects for the event in admission fees.  (This creates negative escrow, essentially a rebate with recipient to be determined.)  Since most tournaments are won by competitive players, or "grinders," this practice results in the store "paying grinders to play Magic."  This practice is both unwise and wrong, and today's article is going to demonstrate why.

Once upon a time, as recently as 2008 or thereabouts, OP was economically healthy across the industry.  I regularly played in events in the 2006-2008 period where most stores charged $5-$10 for constructed-deck events and added one to three booster packs into the prize pool per player.  Even after offsetting some of the staff and facility costs that OP incurs, those stores made a little bit of money on OP, even if the players didn't buy anything else.  The store did much better if the players did buy things, of course.  Not enough to pay for the owner's next ivory back-scratcher, but bread-and-butter staying-in-business revenue at least.

By today's standards, that cost and payout would seem terribly shallow.  But it was the standard at the time, and we were playing for entertainment anyway, not in a misguided effort to grind for EV (expected value).  Don't mistake this for casual play -- I was entirely a competitive player back then, and twice I reached the finals of a Pro-Tour Qualifier and scooped to the other player rather than traveling, which I abhor -- but I knew what I was doing with my time and money, and that was entertaining myself.  Magic was recreation, not work.  Importantly, the majority of other competitive players at the time treated the game the same way, even the pros and pro hopefuls.  Jonny Magic Finkel himself, literally one of a tiny number of people skilled enough to make grinding for EV a realistic plan, worked in financial management as his day job.

In that time, there were already Magic-centric stores willing to flip boxes for a buck over cost, and these typically sported the most aggressive tournament payout structures, yet they rarely ran negative escrow, and even if they did, who cared, those usually failed and healthier stores chugged along.  Then in 2009 the Magic 2010 Core Set and the first Zendikar expansion ignited a boom market that has lasted to this day, and brought with it an explosion in the number of game stores, especially those focused on Magic.  Now, of course, we're in year, oh, five or six of that boom, and Magic-centric stores continue to sprout up all over.  With that has come a saturation level: there are only so many players needing a store where they can play, even with the market in a peak cycle.

As you might guess, with supply outgrowing demand, prices must fall, and where OP is concerned that meant some combination of lower admission fees and/or higher prize payouts.  As of this writing, the end of 2015, the competitive standard in most regions I've kept tabs on has been a 100% prize payout.  In other words, the store breaks even on organized play, with no extra earnings to offset the added costs of conducting events.  Fortunately, stores have become somewhat more efficient in the singles trade and adept at monetizing concessions and the like, but still, a revenue stream has dried up.  Yet Magic has been so hot that the stores running negative escrow remain alive on pure adrenaline.

Desert Sky Games and Comics is at the standard par, paying out 100% of admission fees collected for OP.  That is to say, each player buys in for $5, we add $5 in store credit to the prize pool.  I charge sales tax separately, which one of my competitors enjoys pointing out, but that cancels out because sales tax is included in the credit prize payout and thus is not charged again when the player makes a purchase redeeming that credit.

By and large, my customer base is cool with this.  The majority of my customers don't participate in organized play at all, of course, which is how a retail store is meant to operate.  I don't have to conduct a tournament for the guy who just wants to read Batman or the girl who wants to bring Dead of Winter to game night with her friends.  But from among my customers who do enjoy OP, mostly Magic or Fantasy Flight players, the substantial majority of them are happy with the 100% or 1:1 prize payout.  Many have told me as much.  They are aware it's not the most any store in town pays out, but they think it's fair, they understand it's sustainable, it is more than some stores pay out, and it comes bundled with a great environment, a friendly staff, a good selection, competitive pricing on merchandise, and so on.

The problem, of course, is the same as when you feed the squirrels at the Grand Canyon.  They come to demand more.  And in a market where new stores continue to proliferate, and supply continues to outstrip demand even despite the ongoing growth in demand, that meant that comic and hobby game stores, especially Magic-centric stores, have had to pay more and more generously to attract more players.  And attracting players has serious rewards: a store's OP numbers directly impact the amount of premium product that store will be allocated by Wizards of the Coast.  Beyond Magic there are also rewards for attracting high OP attendance from Fantasy Flight (Regionals event hosting) and WizKids (product allocations) and others.  Stores are told by publishers that they need to run themselves as cozy ultra-boutiques, but all the economics are geared to reward the store that leases a former Elk Moose Lodge Hall and sets up seating for 350-player mega-tournaments, regardless of what they do on the retail side of the equation.

Thus it is that the Magic-centric stores in my region, as elsewhere, have begun offering tournament payouts of more than 100% of admissions collected.  Some of them fudge it on a pack payout, some of them do credit, whatever.  They use this as an opportunity to hide or bury that sales tax charge, and if there's some loose math in there, what's the big deal?  Point being, now the competitive or "grinder" players in my area, a vocal minority of my customer base, inform me with regularity that DSG is unacceptably stingy with prize payout.  They tell me I am offering subpar EV to compensate them for their time and effort.  As though people were supposed to get paid to engage in recreation.  Remind me to have a frank discussion with the people at Harkins Theaters and Golfland Arcades, who apparently owe me decades of back pay.

The grinders tell me that I'm missing the boat on how this is supposed to work.  I'm supposed to pay out more generously on tournaments, and in return they'll be my regular customers, shopping with me, buying singles, sleeves, sodas, and snacks.  Organized play is promotional, you see.  You use it like advertising.  To bring people into the store.  And then they'll buy things.

That's the agreement, the contract if you will (in the looser, social sense of the word "contract").  I pay them more, running my events with negative escrow, and they'll spend money in my store.  I refer to this, for lack of a better term, as "social OP prizing."

Unfortunately, social OP prizing is a terrible deal for a store, making it unwise, and what's more, it cheats a store's best customers, the ones who spend the most, making it wrong.

Can you see the glaring defect in social OP prizing?

It's unilaterally unenforceable, and thus fatally one-sided.

Here's the thing.  Players can enforce the payout the store promises.  A store has a reputation to maintain, and is generally expected to keep its word.  In this modern age of social media especially, any store that welched on a payout would be castigated on regional Magic player Facebook groups and competitive player message boards and the like.  Every community has a player or players who "do the math" on every prize payout and publish their findings, deciding whether or how much the store might be making or losing running the event.  If they decide the store isn't walking the talk, it will go viral and Friday Night Magic at that store will have Crickets vs. Tumbleweeds at the feature table every round.

This scrutiny is a good thing to some extent.*  It prevents the shadier stores operating at the margins from claiming Big Money! Big Prizes! Big Winnahs! to draw in business and then skimming off the escrow.  The bad side of the prizing scrutiny is that it only goes one way.  The community will hold the store accountable for social OP prizing.  Nobody holds the grinders accountable for whether or how much they spend in return.  It's not even realistically possible to do so.  As a result, the store pays out all this money, fronting it in fact, and might get nothing out of it from a significant portion of participants.

Okay, so what?  There are surely some deep-pocketed spenders who will make up for that, right?

That line of thought is the reason paying grinders to play Magic is not just unwise, but wrong.

Let me put it a simpler way: It is cheating the big spenders to force them to subsidize the players who don't spend.

Is that clear enough?

Those big spenders, angel customers, whatever you want to name them, are purchasing recreational entertainment for some amount of money dollars.  They are entitled to personally consume and enjoy every bit of the value they are paying for.   After all, they paid for it!  While many of these individuals are sufficiently generous that they might allow a poorer player to bum an event entry off them once in a while, if you asked them if they were willing to cover a portion of nut for everybody every day, I'm sure their charitable inclinations would diminish quickly.

But a store that uses social OP prizing does cheat those players, and may not even realize it.  Somebody is paying to cover the cost side of that equation, and if the store is paying out more than 1:1, by definition somebody is subsidizing somebody else, unless every participant is spending in precisely equal amounts on singles, sleeves, sodas, and snacks, which we know doesn't ever happen.

This is why many competitive/grinder players love social OP prizing so much.  They will never admit this out loud, but they know full well they can spend little or nothing and the store will have no recourse, and the big spenders who are supporting their EV grinding by proxy will also have no recourse.  But if the store doesn't pay out in full, it's straight to Facebook or Reddit with an angry screed, and a giant splash of mud all over the store's Sunday shirt.  Either way, the grinder wins.  Why wouldn't a grinder push for such a prizing policy?  The grinder just wants money.

If there's no recourse, the contract really isn't a contract at all.  There's no mutual exchange of value.  There are some parties paying in and not getting full value out, and there are other parties taking value out that they didn't pay for.  Free-riders.  And an ecosystem cannot sustain the presence of free-riders indefinitely.  Once the providers decide to withdraw their contributions, or are incapable of continuing to provide them (such as for a store that goes out of business because it allowed social OP prizing to bleed dry its cash flow), the party's over.

Some store owners who are socially adept can extract payment from underspending or non-spending players more effectively than others.  There are stores in my area whose owners are exceptionally talented at this.  Good for them.  To the extent that they do that, it reduces the costs wrongfully incurred by the big spenders under the social OP prizing scheme.  Doubtful it eliminates the subsidy entirely, as that's just not realistically possible, but it softens the blow.  They're still cheating their angel customers, just not as much as they otherwise would be.

But that skill doesn't scale.  That socially talented owner can never truly step away from the wheel sustainably.  If he or she did, things would seem normal at first, but the more often that owner was absent, the more the social compliance would taper off.  A grinder who does not have to spend money, usually won't, in the end.  A store that plans to be around for a while with an owner who plans to have a life outside of work needs to have a sustainable, delegable workflow, which is where social OP prizing is a non-starter.

The wrongness of social OP prizing becomes even clearer as soon as you reverse the filter and look at the image from the other side.  If a store is not running social OP prizing, we're at a default, no-strings-attached status quo.  Every player is responsible only for the cost of his or her own entertainment.  That's all.  The store gets paid when it provides mutually agreeable value in exchange -- when it offers something the customer wants and is willing to purchase, full stop.  In regular OP with positive or no escrow, some of that money gets shuffled around in accordance with the final standings, but everybody bought in fairly and everybody has the same skin in the game.

Under normal OP prizing, the customer doesn't owe me anything.  And let me tell you, I find it very easy to enforce when someone owes me nothing.  See?  I've collected it already.  I'm collecting it right now.  Check out all that nothing I'm collecting.  It's sparkly.

Seriously though, under normal OP prizing, the store has not fronted social money to the players above and beyond 1:1, so there is no nebulous social requirement that the player spend... some amount.  That he or she must spend it at... some time.  And some frequency.  Nope; the player is free to spend or not spend as he or she wishes, and the store may sustainably offer anything within its arsenal, from products to services and all in between.  It's fair and it's legitimate and there are no strings attached.

I'll close with a few thoughts addressed toward each party involved.

Store Owner Paying Grinders to Play Magic -- Look, I'm not your mother, you own your business and you can do whatever you want.   It probably feels like you're doing everything right, especially if you're the "cool" store to be at.  You're paying players generously and man, they love you!  The hardest-bitten grinder speaks of you in glowing tones.  It can be a really addicting thrill rush to be so popular so fast and seemingly so easily.  But that fame is mercenary, fleeting and fickle.

You can't let yourself be drawn into a race to the bottom, especially this way.   If your area is really competitive, I get that.  Man, do I ever get that.   But you're cutting your own throat and screwing your angel customers, and that won't last.  Magic won't be red hot forever, and the day you close, all those grinders who loved you will rattle your door handle for thirty seconds, shrug, and move on to another store.

Angel Customer -- Now you know the truth.  If you're playing at a store that pays out more than 100%, I hope you win a lot, because the store is underwriting that prize structure out of your wallet.  They may not realize how unfair it is for them to do this, or else they know full well and they're playing you for a sucker, hoping you won't notice.  The store will make you feel like a celebrity, just like the grinders make the store feel like the cool place to be, but it's illusory.  They hope you don't take your money somewhere else, where you and only you get the full EV of it, whether you win or lose.  If their respect for you was real, they wouldn't be the middleman conveying your money to the grinders.

I regret and hereby apologize unconditionally for every single tournament where my store paid negative escrow, especially now that I realize how unfair it was to you.  When I came to the understanding of how toxic the practice was, I ended it in my business forever.  I've lost a lot of angel customers over the years and I realize now some of them probably got tired of being the main contributors to the grinder economy.  If so, I deserved to lose them.  If I ever earn them back, they will be doing me a kindness.  I strive to treat my present-day angel customers right.

Grinder -- This article hasn't been kind to you, and that's a little bit unfair too.  I've said before that a customer's preferences are neither right nor wrong, but just a pattern of behavior, and it's up to store owners to adapt to it.  The difficulty level comes in because grinding for EV is a level of action that it is not beneficial for a store to service.  You can hardly be blamed for making hay where you can: you know you have store owners eating out of your hand and willing to pay you money.  Maybe they're in distress, maybe they don't realize what they're doing to themselves, maybe they even think they're in on the deal with you -- an illusion they'll be broken of when the next new shiny store opens up five miles away and promises you the moon in order to get their numbers for Advanced Plus.  Whatever the reason, you are justified in accepting money freely offered to you.

But stay with me just a little bit longer here.  Look: I don't have a problem with you being competitive.  I dig that all the way, that's the side of the game I came from, I used to be a DCI Level 3 Judge, been there done that.  I do have a problem when your desire to make money playing Magic has a negative impact on the player community.  I rejoice for the day when you discover that doing almost any other labor with your time will pay you considerably more in virtually all cases.  Look at the top pros, and notice how most of them finished school and got decent jobs and earn more in an hour at work than they could grind in a month going 4-0 at a local Friday Night Magic.  When they play, it's a pure game, and the stakes don't figure in until they're on a greater stage.  You say you want to be like them, and that's great!  Go with good fortune.  Finish school, get that job, and become a player who focuses on superior play, not on the fingernail of local-level EV.  You'll be a lot happier, and so will everybody else.

And if it really is just about the money and nothing else and you are absolutely determined to play cards to grind for that money, go play casino poker or blackjack and become an expert at it.  That's what casinos are for, and you wouldn't be the first Magic player to strike gold at poker.  Why waste your time here, in an industry that is going to resist your preferences at every turn, except where it facilitates your needs and then falls on its own sword in doing so.  Just step up to the big leagues.  Nobody plays poker for love of the game theory.  They play for money.  If you want money, get good at playing casino card games.  The casino is where your heart already is anyway, whether you ever reflected on it or not.  That guidance is my gift to you.

That's it for this week!  Next week I'll put a holiday spin on my observations from within the comic and hobby game trade, and I welcome you here Tuesday morning for your Backstage Pass to the festivities!

* In fact, I welcome scrutiny, provided it's fair and even-handed, and everyone incurs it.  I'm one of the more transparent store operators I know -- witness this blog, for example -- mainly because I've learned that in order to grow to a healthy long-term size and scope, you need to have defined processes, delegation, and workflows that scale, and you just can't do that and be keeping secrets.  Too many people need to be taught how things work.  If you're burying bodies out behind the dumpster, the employees with the shovels are gonna figure out that it's not just rolls of carpet they're carrying.  So you run a clean store with clean books and clean money protocols and fair policies and rules, and you don't apologize for making a living off the single-digit-percentage profits from that.  There are things I keep confidential, but operational methods have to stand up in the light.

Tuesday, December 8, 2015

Being In Two Places at the Same Time

This past weekend brought with it the second year of the Phoenix Comicon Fan Fest out in Glendale at the Cardinals' Stadium, and Desert Sky Games and Comics was there with our most elaborate booth thus far with the most merchandise we've featured to date -- all while running a full itinerary of events at the store in Gilbert.

Weekends like this are when a store gets to enjoy some of the payoff for the expense and effort of scaling up.  At the same time, it became painfully clear that there is still a much higher ceiling we could reach in scale, and there is much more efficiency we could get out of our current scale by optimizing our convention/festival/carnival booth deployment framework.

Thursday morning, my two main business partners and I drove the 50+ miles to the stadium for load-in.  Thanks to an early arrival, we were allowed down the ramp into the parking area behind the field tray and were free to disembark all our gear right away.  We drove back up and parked in the main lot to make room for other vendors, and Patrick, the other Mike, and I spent a fairly busy few hours rigging up a gridwall fixture structure and deploying all our merchandise.

We've done this a few times already so a lot of the learned-my-lesson stuff was routine by now, including our technology and our sundries.  The big leap for Fan Fest 2015 for us was no longer being bound to the booth table, plastic garage racks, and hanging things solely from the pipe-and-drape.  Building a gridwall fortress would be utter overkill at the local church carnival, and we'll gladly run a smaller booth at such an event and break out the plastics, but for Comicon, even the little stepchild of Comicon, elaborate booths make an impression.  And next year for PCC Prime in June, we'll be even bigger and further-reaching.

Once the setup was done, I still had a day's work to do at the store!  I was there until almost ten in the evening, which does happen sometimes.  The midnight oil hasn't been necessary for the most part since Patrick and I got into the grooves of our respective roles.  I'll be pulling plenty of late shifts this month as I ready our Microsoft RMS point-of-sale changeover, but that's a one-off project.

Friday, we had Patrick with two staff members at Fan Fest, while I worked the main store along with fulfillment and the front-of-house staff.  The early December frame is notoriously slow in our trade, with students studying for final exams and the working world alternately finishing year-end deliverables and attending weekend holiday office parties.  Patrick gambled that we'd only need two staff for Friday Night Magic, and we almost got there.  It was a busier night than expected because attendance hit the marks we forecast but walk-in sales in general exceeded par.  It would have been really great to have another fully trained staff member available, and we're very lucky there were no illnesses.

We've been on the verge of another hire for a while now, but we know the belt tightens substantially just after the beginning of January, so we're reluctant to pull the trigger with all of our current crew performing solidly.  As I write this article, I think we may just move ahead with interviews and get the hire done.  DSG's business is growing and we're diving into some new categories in early 2016 and returning to an old one we never wanted to leave (console video games).  We need more human beings and we need them to get their sea legs sooner rather than later.

Saturday served ample notice of where scaling up still had work to do.  Patrick's convention crew operated as scheduled, but I had a morning of multiple family and friends events taking place and we had forgotten to start our opening staffer a half-hour ahead of time so the Imperial Assault tournament could get set up.  It ran strong and the day continued into Netrunner, MTG Standard, D&D Attack Wing, and Warhammer 40K.  In fact, our day's sales had a huge spike right at the end from Warhammer sales.  I was especially pleased with that because those were hours we weren't open a few months ago.  Gambling that holiday business would be solid and that our metrics would reflect growth, we returned to being open later on Saturdays and Sundays.  Thus far that bet has paid off.  But during the time I was on campus, I frequently had to set aside my administrative work to help coordinate events and work on sales exceptions, much like a manager on duty.  Usually Patrick would be doing this on a Saturday, the store's biggest mainstream business day.  But he was across town making us as many new friends as possible, so "janitorial duties" fell to me.  We've got an up-and-coming staff member learning his way into management, and he's going to have a very lively December with us once the holiday shopping switch flips "on" around the tenth or eleventh of the month.

Sunday was busier than expected at Fan Fest, which had been mediocre up until then, and far busier than usual (though we expected this) at the store, with the Pokemon City Championships underway.  An onslaught of nearly a hundred Poke-players basically blew the rest of the day's gameplay right off the map, and for hours we ran umpteen microtransactions for concessions.  I bolted mid-afternoon for more family time before heading back to Glendale for load-out, and discovered that no sooner was I out the door than the sales truck rolled in, with our daily take tripling between 2:30pm and close of business at dinnertime.  Sweet!

Unfortunately, as is typical for Phoenix Comicon, load-out was something of a fiasco, with long waits to bring vehicles down the ramp even though I arrived there ahead of the show closure.  The staff and I ended up just hoofing it up the ramp multiple times with our utility cart -- a tool we could probably stand to own another of -- and we allowed ourselves an exhausted dinner and debriefing before dumping the entire rig at the store for Monday morning clean-up.

Proving we have the workflows to have, essentially, two stores for the weekend, optimization to be desired of course, now how do we get more efficiency out of this scale?

An obvious answer might be "Just open another location so you'll have two stores all the time."  Down the road that's likely to happen, but the reality is that a second store when you haven't scaled up sufficiently just ends up being twice the risk exposure and little of the benefit beyond maybe somewhat better branding reach.  You take all the problems and challenges of a store and then double that, and since you're almost always going to cannibalize from your own clientele at the new location, it takes time and expense to grow to where you're actually ahead of your previous performance pound-for-pound.  It's tempting in a world with "just good enough" turn-key solutions like Crystal Commerce to multiply a game store and chain up with a flourish.  I think you end up putting too much stress on an inadequate backbone structure, and eventually something's gonna give.  To chain up sustainably, you need to start doing things like the professionals do, and that means a far vaster framework of scale than most comic or hobby game trade stores can even sniff at.  Do it right, and the growth potential is sky-high.  Just look at GameStop, or even Starbucks.  Do it wrong, and you pour a lot of money down a rat hole.  A friend of mine owns and administers two, just two, large sporting goods stores.  He has shown me how the great mechanism works from behind the scenes, and his level of scale dwarfs anything I've encountered in our trade, period.  If I'm going to multiply my everyday retail footprint, I'm following his playbook.

Based on emphasizing our strengths and using our resources at hand, I believe expanding our convention presence and operation is the winning agenda for DSG right now.  Even small festivals and carnivals tend to have far greater customer traffic than an average retail day at the shop, and the cost of entry can be as cheap as zero and is usually only a hefty sum when the event is very hobby-focused and very large.  The risk exposure is orders of magnitude less than opening another full store location.  The deployment process can be mastered; the deployment kit can be improved and refined. The merchandise mix can be gloriously modular and can be quickly and easily fine-tuned for any expected audience.  And the best thing about the remote operations option is that with enough attention and labor to allocate to it, we can run it with incredibly high frequency -- which then increases visits to the main store, allowing us to grow into the larger staff roster organically.

I don't know that the Booth Barker plan is for everyone, or even most stores, but in our trade it should be something every retailer at least explores.  The Jedi Master of doing this is probably Pat Fuge of Gnome Games, a triad of stores in eastern Wisconsin.  Fuge has his finger on the pulse of virtually every community activity of consequence.  If a public event is happening, Gnome Games is there.  Every municipal office knows who he is, every merchant association around has him in their iCloud Contacts.  As soon as you finish paying for that funnel cake, there's a friendly face asking if you want to learn how to play Splendor.  It's not a bad circuit to traverse.

Now if you'll pardon me, I think I need to be touching base with the Amazing Arizona Comic Con organizers about some booth space.

Tuesday, December 1, 2015

So This Is What Retail Looks Like

It's easy in the comic and hobby game trade to feel like your business is the exception to every rule, the outlier on every metric.  Last weekend was a rare chance for us to experience the opposite.

The misfit feeling was pronounced for us on previous Black Friday weekends.  While our store had reasonable business just by dint of it being a weekend as always, there was never that explosion of dollars and doorbuster mayhem like you see at the big box stores.  We tried to run special events and it never mattered.  Got a bit of attendance but nothing like other holiday tournaments, got a bit of revenue but nothing like December 26th or a typical weekend around tax refund time or goodness, a Magic: the Gathering release weekend.

In 2012, our store was new, and our November sucked rags.  A steep drop from a golden October fueled by Return to Ravnica, Magic's State Championship tournament, and the delightful corona of being the new hotness in town.  Fortunately, we weren't paying any rent yet, so grinding up enough eBay sales to pay the bills was a perfunctory exercise.

In 2013, Theros drove a reasonable November, but the Black Friday weekend did nothing for us.  DSG was still a Magic: the Gathering store first, foremost, and almost entirely.  We had just received our first shipments of graphic novels, and December would be the beginning of comics, which by mid-2015 had become our second-biggest category.  Our special Black Friday booster draft marathon was stillborn.  Friday Night Magic revenue salvaged the day.

In 2014, I had taken over main operations in July, and my store manager turned in his notice the week before Thanksgiving.  My staff didn't have a ton of confidence in me yet.  I had spent four months trying to rebuild the tatters of my inventory resulting from the departure of the previous manager and ex-business-partner.  We didn't have a lot, but we had a decent amount of Funko POPs, we had comics, and board games were only a mild embarrassment.  And we had a ton of Cards Against Humanity.  I botched the execution a bit with an overcomplicated rack of special offers for Black Friday, but it was still a solid sales day, as was Small Business Saturday.  Not holiday-shopping good, though.  Not like late December got to be.

This year, November was pretty slow for about half the month.  You've already read here about my travails at trying to jump-start sales in a board game category for which I have a respectable amount of coverage on the shelves finally.  Magic has been in a lull due to Battle for Zendikar underperforming.  Comics and miniatures have been strong and are a huge part of what is making the month work.  With Black Friday weekend on the horizon, I hoped against hope that a year and a half of building my store up into a "real retail" operation would finally pay off.

Execution this time was easier; I was informed by the previous year's trial and error.  Other in-town stores brought in restaurant menus full of complex sale conditions, and I hit the advertising blitz with the simplest, easiest, most attractive offer I could imagine.  "As easy as 1-2-3 at DSG."  1. Amazon Prime price-matching on board games and miniatures for any purchase totaling $35 or more.  2. All graphic novels 40% off.  And 3. Buy $100 worth of Magic or Pokemon cards and get a free playmat.

Black Friday 2015 was bigger than our the three previous Black Fridays combined.

It was even better than that, actually, because almost no store credit was used.  Only about 4% of payments taken were in Itchy & Scratchy Money.  Store credit redemption varies, on heavy tournament days it can be as much as 25%-30% of all payments taken.  Not the greatest for cash flow, but it means we got the value ahead of time so I'm okay with it.  However, as this year as churned on, we've seen the store credit percentage steadily decay, and our outstanding store credit pool steadily empty, while buys have remained frequent.  Too damned frequent in some cases.  What this tells me is that we've hit a sweet spot for offer amounts.  High enough to attract sellers, but low enough to be advantageous to the store.  If we don't overpay on store credit, it doesn't build up.  Now I'm free to reexplore the tournament payout math to optimize further.

While we did see traffic in normal goods, the sales were spectacular hits by any measurement.  We rejoiced at the amount of deep stock board games and trade paperbacks we saw being bought.  By late Friday afternoon we had run out of empty boxes to give people to help them carry out their giant stacks of board games.  Comics moved.  Toys moved.  Youth products moved.  About a dozen people took the playmat deal, in most cases bumping up a $70-$80 singles buy to reach the century mark and earn multiball, which is exactly what offer #3 was intended to do.

In short, it was like we had hoped to be all along -- our store, once little more than a TCG bowling alley, was performing like a bona-fide genuine authentic fair-and-square retail establishment.  And for once, Patrick and I were able to stand back and survey the commerce with satisfied nods, reveling in the beauty of it all.

Note that I offered no discounts on Magic: the Gathering cards.  Just because it's Black Friday doesn't mean the bank is selling $20 bills for $10, as another store owner wisely observed.  I don't criticize the stores that did some stock thinning and cashing in some chips by offering singles specials and booster box incentives on the less-valuable expansions.  It's a holiday weekend and people want to spend; you have to sell what you've got.  Some of the MTG sales I saw around social media, though, were sheer lunacy.  Boxes of any in-print product at $75?  Clearly distress selling, a Hail Mary to meet rent by Tuesday.  I don't know if the Great Magic Shakeout of 2016 is going to start early, but the canary in our particular coal mine ain't breathing so smoothly right now, I'll put it that way.  There are an awful lot of stores opening lately with three cases full of singles and thirty banquet tables, and little else of consequence on the premises.  They had better hope Oath of the Gatewatch is better than its predecessor.

Small Business Saturday didn't set any records, but was on par with solid Saturdays not coinciding with a new Magic release.  Plenty of American Express cards came out of wallets to do their thing, and that's what the promotion is all about so I accept that with aplomb.  Sunday pulled its weight and kept the stock thinning going, which is all I needed it to do.  Despite stocking moderately heavy compared to recent sales, we almost ran out of Cards Against Humanity.

Later this week DSG will be appearing at the Phoenix Comicon Fan Fest at the Cardinals Stadium in Glendale.  I'm definitely looking forward to having two stores for a weekend, especially with early December being the single deepest trough in annual sales on a consistent basis.  Then around the ninth or tenth of the month, the switch flips "on" and shopping season begins in earnest.  Nothing would delight me more than to take part in that merriment... as a retailer.