Part 1: Neverhammer, or "What if DSG had never gotten into Warhammer?"
Desert Sky Games started in 2012 as a Magic: the Gathering store that also had board games, other TCGs, a smattering of video games and toys, and a small vintage arcade. In November 2013, we added comics. In July 2014, Mike Girard separated from the company and I took over main operations, promoting my then-assistant-manager to the manager spot, a move that did not really pan out as he departed a few months later anyway.
Upon my assumption of duty in 2014, the store had been posting sub-$6k weeks of sales, and we were on the brink. Our chance to exercise the kick-out clause in our lease was almost a year away, and I genuinely did not know if we could make it that long. My immediate order of business was to cut off all resources into anything I didn't think would profit out soon enough to keep DSG alive. I thought at the time that video games had too long to go to ramp up to economy of scale, and dropped the category. This was a mistake, it would have been more correct to drop comics or, alternatively, to keep comics and Magic and video games and drop the rest of tabletop. In fact, hold that thought.
Khans of Tarkir was awesome, and I ran things very closely myself from November through the crunch, so DSG survived the winter of 2014 and by spring 2015 we were starting to see signs of life. Patrick Hug wanted to leave his job and manage the store, and I wanted to get back to administrating, so the two of us attended the GAMA Trade Show in Las Vegas in March and strategized what to do about our product mix. Both of us took notice of Games Workshop's very aggressive new-account show deal, which at the topmost level got us into about $18k worth of retail product for $3k cash up front and $5k in 90 days. Even if it had been $8k up front, that's awesome margin, quite a bit better than GW's normal short discount.
I was apprehensive about miniatures for a few reasons. I knew Brock Berge had his magnificent store Empire Games only eight miles away, and I had no intention to run my head into the wall attempting to compete with him. I remembered from the Arizona Gamer era and from when my friend RJ Harris was managing Games Workshop's mall store at Arizona Mills that the miniature wargames product category, especially Warhammer as a brand, was incredibly insular. Most people who aren't in the wargames hobby already have no intention of being drawn into it. Games Workshop themselves told their stockholders that their target market was "people who buy Warhammer;" to wit, established customers. That didn't suggest that we were going to broaden our reach into the blue ocean of mainstream customers. That suggested we were going to fight over the same dudes that were currently playing at other stores.
Well, in the end the numbers won out; at $8k for $18k, even if we had to blow the bottom out on clearance we would surely make back our investment. Warhammer was coming to DSG in 2015!
(Cue warping noises, "Dark World" theme music begins, the dimensional rift opens, and I see a glimpse of... my parallel self?)
Well, in the end the numbers weren't enough; we figured the better part of ten grand would be better spent on collection buys and multiplying our way far deeper into Khans of Tarkir, Modern Masters 2015, and Zendikar Expeditions. So that's what we did.
We jumped off Light Speed and instead of bothering with RMS ComicSuite, we went straight to Crystal Commerce a year sooner, and had 18 months on the platform before Red October ruined everything, rather than only six months. Crystal Commerce's capability to push volume of Magic cards was unparalleled, at least at the time. Shifting forward the known analytics from summer 2016 through the move, and assuming they would have occurred roughly the same way starting in summer 2015 instead, and multiplying money into the engine, our Magic business became an absolute monster.
Without needing paint and tools, we never bought into any other miniatures games either. Tabletop ran reasonably well in 2015; in fact, that holiday season was the last time it posted big for DSG, but starting in 2016, with a year and a half left on our lease, we didn't see any point in continuing to chase after shrinking margins and shrinking market share. Not with Magic booming for us beyond all booms. We closed out the rest of tabletop in early 2016 and replaced it with... video games!
Yes, by then I had met people who had stayed in the video game business and made it work. I wanted to be back in the category and thought I couldn't make a go of it, but with their guidance we brought it back. But this time, I had more space to devote to it and more money to push into buys. Our video game business grew dramatically throughout 2016, rather than the more gradual ramp we experienced.
Brock still closed Empire Games, because Brock does what he wants. But rather than DSG moving into the empty space in the category, I wanted to focus on what we were doing well. Patrick Hug disagreed, so just like in the original timeline, he departed the company in mid-2016 so he could open his own store in east Mesa pushing comic art, cosplay, and Warhammer.
Prime Time still sold out to Amazing Discoveries in August, but with DSG's Magic business far more robust and closer in volume to AD Tucson's, the eventual permanent AD Gilbert location in 2017 ended up a few miles further northeast, more closely replacing Mesa Comics and completely cornering out Hug's store, Apache Comics, True Believer Comics, and San Tan Comics.
Games U opened on schedule in late 2016 and had almost zero product crossover with DSG or ADG. All three stores had ample room to capture wide swaths of their addressable markets. All three owners prospered.
By late 2016, I was ready to exit the comic business. We weren't going to be the best in the category, and the forward thinking was that we could wind them down in an orderly fashion. This positioned DSG to move into the final year of our lease as a Magic and video game store entirely. Profitable, easy to run, low labor, with more than enough room in our existing facility, we were able to hammer out a lease extension rather than moving.
The DSG Merger of 2017 never happened. Mesa Comics folded into Tempe Comics and became the largest Magic and comic business presence in Tempe and the ASU region. It finally became profitable and renewed its lease in November, and is still open to this day.
Desert Sky Games opened a satellite location in late 2018 in a small suite at McRay Plaza in Chandler, with this location focused on video games and with Magic as a sideline. The Payson satellite location is slated to open in 2019 under the same structure. I returned to my writing pursuits, as the Magic-and-video-games scope of operations proved comparatively easy for my managers and staff to handle. They work shorter hours earning more money and greater benefits.
By mid-2018 there were enough safe havens in general tabletop for me to add board games back to the two existing locations. That just about completed the product mix, and left me with one primary task on my desk, which was templating operations for an eventual sale to a national chain entity. When the offer came in just north of seven figures, I pulled the trigger and left the game industry to go build cabinets and enjoy spending time with my wife and kids.
(The warp rift opens. A haggard, bleeding version of me leaps out and grabs me by the collar. "That's not how it went! You assumed everything would work out logically! People are illogical!")
As I was saying, in the end the numbers weren't enough; we figured the better part of ten grand would be better spent on collection buys and multiplying our way far deeper into Khans of Tarkir, Modern Masters 2015, and Zendikar Expeditions. So that's what we did.
Our Magic business grew as we moved to Crystal Commerce and started pushing volume singles. We did well, but others noticed. And anyone who knew enough to watch what we were doing, or who was already doing it, took the easy route and said "Me too!" Mesa Comics still added Tempe Comics. Prime Time never sold out -- they were ready to, but nobody walks away from a heater. Amazing Discoveries still had designs on the Valley, so they just opened where they wanted, in a plaza that was easy to reach from the I-10 for those drives from Tucson and Casa Grande. Two more card-focused stores opened south of US-60 and east of I-10.
The saturation of card stores was a plague on the east Valley. Tournaments almost never fired. Margins shrunk. To get any kind of buys, we had to pay ridiculous percentages, to the point where TCGPlayer Direct sales would be losing us money. To get any kind of sales, we had to be on the low side of Market, and Mid was a silly dream. The only stores in town able to do proper business were clear on the other side of the valley: Manawerx and Play or Draw got very healthy.
Tabletop entered a trough cycle. Asmodee had not yet consolidated, nobody was protecting their brand, and anything you wanted was available on Amazon for a nickel over wholesale. After a reasonable 2015 holiday season, I closed out the category just to make enough cash to buy into video games. My initial forays were highly resource-limited, and the category didn't see much movement. Early 2016 had me skip the GAMA Trade Show entirely. What was the point? The only thing that sold dependably for us was a commodity now.
Brock still closed Empire Games, because Brock does what he wants. Patrick Hug wanted to move into Warhammer or else close. We looked at the trend lines with all our business converging on a saturated Magic market, and decided it made more sense to wind up operations and walk away. Our lease gave us the option to do so after a certain number of rolling months under a given revenue level. In order to avoid losing the kick-out clause, we couldn't make too much money in a closeout sale, so we had to bleed down the asset base gradually, over an excruciating summer. By the time Red October rolled around and Crystal Commerce stopped working, we barely even cared.
Our extended liquidation sale stepped on the east side's air hose, though. Mesa Comics and Tempe Comics both closed, as well as several of the smaller outfits on our side of town. Obviously, the merger never took place. Griffin got back into software, Girard returned to game design, and Erik Miller consolidated his resources out in Apache Junction and survived the famine unscathed. Play or Draw ended up opening a massive branch facility in late 2017 near Southern and the 101, and rumors swirl that they have a lease offer on deck that would achieve the impossible, a sustainable store in northern Scottsdale. Investors from Las Vegas have contacted them about expanding into Nevada in 2019. Joe Weber drives a Lamborghini now.
Desert Sky Games concluded operations on Black Friday weekend, closing to the public for the last time on Sunday, November 27, 2016. The building was empty 48 hours later, and we turned in our keys on Wednesday the 30th. Joe picked up the rest of the Magic stock from my garage, paying for it with a briefcase full of blue Benjamins and carting it up the freeway to POD Tempe. The five DSG owners walked away with a disappointingly modest profit over our original investments, which did not account for the lost opportunity cost of investing that money someplace better for four years. But at least we had enough scratch not to have to work for a few months, and we enjoyed a great Christmas with our families. One of the other owners and I decided to pool our proceeds and rent a dirt-cheap commercial front and open up an arcade and pinball restoration business. This occupied our attention as soon as New Year's festivities wound down.
Mike's Arcade and Pinball opened to the public March 30, 2017. I administer the store part-time while serving as an adjunct professor at a nearby community college. The other Mike is the primary technician, and we brought back a couple of DSG staffers to operate the storefront. We broke into the black in late 2017 after a series of great container pin flips.
(The warp rift opens. It's the original timeline. I leap through.)
Of course, I can never know exactly how things would have played out, I can only speculate. And yes, I took some deliberate artistic license with this article, and I'm about to do it several more times. But DSG not only did get into Warhammer in 2015, we stayed in the category despite three near-misses that could have taken us out of it.
Once, a few months after Hug left, I fired our main miniatures employee for unrelated reasons and had a sharply reduced expertise base. I contemplated cutting bait, but the game was posting decent numbers at the time and I didn't want to forfeit that. A second time when Games U was preparing to open, we contemplated a buyout deal that took DSG out of Warhammer, a deal that just never came together. And then one final time in early 2018, I was ready to kill the category on metrics. Sales had fallen off catastrophically since the move to Chandler, and I figured the players had spoken. As it turns out, they had a little more still to say, and with a substantial amount of effort from staff members championing the category, Warhammer stuck around and started working its way back up the scoreboard again.
In an oblique way, taking the two sides of the hypothetical as being at least plausible, DSG staying in Warhammer was responsible for DSG Chandler existing at all. For better or for worse, whatever happens from here on out, Warhammer made the Valley's largest game store possible. Not bad.
It is also not lost on me that both versions of the hypothetical have me out of the hobby game industry entirely when those timelines reach the present day.
That would have been pretty cool.
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