Fallacy #4: I should start a game business (Part 2)

Part 1 is here. Read it first. Let’s continue with reasons you shouldn’t start a game business!

2. Making a game is pretty damned difficult, actually.

I have a relevant blog post from ADB about this, and then I’ll yell about how much he is wrong:

Most manuscripts do not arrive without our having previously worked with the author, providing him guidance, formats, and things to fix or avoid.

Upon arrival, a supposedly finished manuscript is assigned to somebody to review, usually Steve Cole (F&E, Fed Commander), or Steven Petrick (SFB), or Jean Sexton (Prime Directive).

In such a case, the reviewer conducts a review that may take an entire day or more. The point is to determine how much work it is going to take to finish the project. This partly depends on whether the decision is made to do this as a playtest pack, an e23 product, or a “real” product (which would take more work as it has to be done to a higher standard). The reviewer often comes up with more than one option.

The reviewer will then present a plan to the Board of Directors (the Steves and Leanna). The Board reviews the product to see if it is marketable (and in what format), fits into our plans for universe development, and whether the amount of time it will take to do is justified by the potential sales.

Oftentimes, this step is badly made, and we end up deciding to publish a product with nowhere near the amount of information we should have had to make a proper decision. This has resulted in some vaporware products that have never been finished (because they proved to be far more work than they appeared to take, or were thought to have a far greater market than we thought, or because we thought that the outside designer was going to do things that he did not, in fact, actually do). In the bad old days, we announced the product at this stage (often with a price that proved mistaken based on a project size that was miscalculated). In really bad cases, we actually print parts of the unfinished product (in batches with other products) and that proves to be a mistake (as we really wish the printed elements could be changed). These days, we try very hard to force ourselves not to schedule products until we know a lot more about the work it takes to finish them.

At this point, the board reviews just how many man-hours it is thought that the project will take. If that seems reasonable (compared to the sales potential) we will review the overall work schedule and determine when those hours can be found. Fewer required hours means an earlier production date. Too many hours and we may re-evaluate the project and decide not to do it at all.

Under the new “find out what this is really going to take” plan the Board will define some part of the project and some portion of the estimated time. The designer will then do that part (usually 10-20 percent of the project) and compare it to the time estimate. If the project is taking less time-per-page than expected, it moves ahead. If it’s taking more time, it may be re-evaluated and either delayed or dropped.

One we have a supposedly complete draft, there is the outside playtest and review phase. The reports of the playtesters, proofreaders, or reviewers may mean that the project requires a few hours of editing, or has to be done over or scrapped.

Then we can talk about Jean, who seems to think that the world will end if any project goes to press with a mis-conjugated verb or an unfortunately capitalized noun. (Worse, Jean has a full-time non-game job, plus she handles marketing, manages the BBS and Facebook, and runs the Prime Directive product line, so getting something proofread takes some tricky scheduling. Proofreading a 120-page Captain’s Log can easily take her three weeks, and given the chance, she’d do that twice.

Only when it is a finished document will it go onto the schedule. This is a fairly new rule designed to prevent vaporware from sneaking into the schedule. A playtest book or an e23 pack gets released pretty quickly after that point. In the case of a “real product” (say, Module R19) it goes onto the release schedule for 90 or more days down the road. (This may be even further away if it requires countersheets that have to be batched with other products.)

- from the Federation Commander Blog.

Okay, so this is a game company, that has been in business for thirty fucking years, with a workable manuscript, who can’t seem to handle actually producing the product. Let’s review their process:

1. Get manuscript, spend a day or three reading it. ($150-450)
2. Present to Board of Directors, without doing a job cost review first. ($150)
3. Subjectively review product potential. ($150-300)
4. Work on part of the job, since we can’t actually apply any industry experience and prefer to do it by trial and error. ($1000+)
5. Decide, based on this arbitrary sample, that we’ve already spent too much money and it’s not worth it. ($150).
6. Wonder where all of our money and time goes. ($0)

Those amounts in parentheses? That’s how much they are paying (based on a conservative estimate of the “Steves” and Leanne’s payroll) to review and NOT PRODUCE a product. They have spent as much as two thousand dollars in this process! This doesn’t count any other costs, just payroll. I am done wondering why nothing gets done there.

(I also like the sarcastic commentary about product quality. That’s right, typos are totally okay. Our products are high-quality and professional! See my last big post.)

What I’m saying here is that there is, in fact, a lot that goes into a game that has nothing to do with writing it. Rules are easy, really; effective playtesting and an open and honest design process will iron out most of the issues. I have personally known someone who wanted to produce a board game, and worked on it for months and months before he realized that there was no printer that would be able to produce a board the size and shape he needed. It’s a tragedy, too; the game was a hell of a lot of fun.

3. Even if you’re good at making games, starting and running ANY business is fucking difficult.

I can tell you this from personal experience. I have started two businesses: an espresso stand and a weekly newspaper. There are lessons to be learned here, too, so read and know that anyone can make these mistakes.

The espresso stand was fantastic. We paid way too much to get it going, but it was honestly some of the best experience of my life. I had three employees, worked sixty hours and week, and enjoyed every minute of it (even the early morning alarm company calls because meth-heads wanted to break into our stand). It was by no means easy, though. It is very difficult to increase your patronage at a business like that, so you have to use other methods (primarily increasing ticket averages). It wasn’t lucrative, but I was okay with that at the time.

Unfortunately, I had to sell, and still managed to come out with a little bit of cash. I was riding high on that experience, I had several grand burning a hole in my pocket, and I had always wanted to run a weekly rag. Mistake number one: human beings are experts at raising confirmation bias to an art form. I believe it would work, even though my numbers told me otherwise. People would love this. I could get the word out.

It was a miserable, very public failure, and something I am embarrassed of to this day. What I’m not embarrassed of are the lessons I learned. I needed to get burned; success ruins a person. I’m happy I’m out of the coffee business (my old friends in it are not doing very well), and I should have know that a newspaper was an awful fucking idea. Oh well. So it goes.

The point I am making here is that about half of the things I’ve learned here are not lessons I learned in school. I’ve had them beat into me, many of them while losing big. People talk about business acumen like it’s something you’re born with, like some people are just good at it. Sure, lots of things make you good with business. A great intuitive sense for money, numbers, efficiency, and marketing helps. However, when it comes down to it, you have to actually go out there and manage a business.

Premise #1: High production values are (and should be) the most valued asset in the market.

Why is Paizo so successful? A lot of gamers issue spiteful, scathing reviews of them, their business model, and how they are building a company on reprinting the 3.5 OGL SRD with minor changes. I’ve seen it said over and over, and it’s based on one thing: the fact that Pathfinder, as a system, tends to come up lacking for a lot of people. However, I have a revelation for you anti-PF people:

NO ONE CARES.

I’m not saying that Pathfinder is a good system. I’m saying that they aren’t marketing the system, really. In a lot of ways, they are selling aethestics. They are selling the D&D you’ve always wanted, with the high production values you’d dreamed of when they released that weird art in the revised edition of AD&D 2E. It is really the finest version of D&D out there, from a production value standpoint. Let’s look at some pages:

Those books look downright beautiful. I want to read them. I was first blown away by this when I downloaded their free and awesome “We Be Goblins” adventure, which is legitimately more visually appealing than about 90% of the RPG books I have read.

This isn’t a new idea. In a blog post that I can’t find now, Steve Jackson talked about the release of GURPS 4th Edition five or so years ago. They were forsaking the idea of producing a lot of cheaper paperback, black and white supplements (as had been the primary strategy of the GURPS line for some time) and going with full-color, glossy-paged, deliciously laid out hardbacks. They were (and still are) a big hit. Those books that might have been produced for the old, cheaper lines are now ebooks – cheaper to produce, cheaper to buy, easier to handle, everything. But the core GURPS books are fucking beautiful (in my opinion) and really go a long way to sell the game to skeptical gamers.

Now, SJG hasn’t really jumped on the pretty website wagon yet, but they aren’t alone in that. Just look at the Federation Commander website (let’s not even mention the Star Fleet Games site or their awful Web Store). I don’t even know what the fuck is going on there. Where do I click? What if I want to buy the game? What the fuck IS all this?

Now go to Paizo’s site. I might be a little confused here, but then, right there on the left, it says BEGINNER. That’s me! I’m a beginner! What’s a Beginner Box?

It’s a box full of brilliant fucking marketing, is what it is. Just LOOK at it. It’s a month or two of fun for my friends and I. Seriously.

Fuck. Now, I want to buy it, and I fucking hate this game. It’s brilliant. I could give that for Christmas and not feel bad about it. This smacks down even Wizards’ Red Box Starter Set, in that it contains a pile of things that I’m going to keep using well past my time with the starter box.

So, if this independent publisher is producing something of that high value, what is Amarillo Design Bureau up to? Their Klingon Border page is pretty boring and poorly written, but how does it look?

I swear to God that’s the most attractive page I could find. Let me reiterate: this is their flagship product. This is what they’re trying to sell you to get you into this game, to convince you to spend hundreds of dollars more just to have all of the ships and rules you want to play with (not to mention miniatures)! Okay, one more try. Let’s try their “open the box” video:

Let’s be fair, you already knew that was going to be bad. You probably didn’t expect him to say “get it over with” in the first minute, though. I sure didn’t. He sounds like he is bored with the game already! It also leads me to a great question that I already want an answer to: why is this game $60, when the beginner box is $35?

(I’ll UPS a cookie to the first person to explain why.)

Okay, so we can see there’s a huge disparity in production value in the market. So, why is production value so important? It isn’t about aesthetics, directly. People will buy a book that doesn’t look as good, I’m sure, if it has the rules they need. However, when you’re talking about a core product, designed to get new business, it’s all about attractiveness. Have you ever asked yourself why board games generally look sharp and snazzy, while wargames all generally look like shit? It’s because board games are designed for a very specific purchasing process It goes like this:

Steve, who has never played a game like this before, walks into a nerd store with his friends. He sees walls and walls of games. Seriously, there are a metric fuck-ton of them. However, there on the endcap, he sees one that looks pretty neat. There are dudes fighting, and one of them is casting a spell or something, and that’s a metal looking monster right there! Kickass.

Steve isn’t ready to buy yet, though. That’s not the point of a cover. The purpose of a cover is to get him to pick up the product. Touch it. That’s all we want. Any good salesman will tell you that getting a customer to touch a product will get you further than just about anything else; it implies ownership. It’s theirs already, all they have to do it purchase it. Once he has it in his hands, he is going to turn it over, and read the back.

It’s the back of the product’s job to sell it. You’ll see photos of the game’s contents laid out, or other attractive art, or a photo or drawing of people playing it (and having a great time). Steve will read the blurbs on the back about the game. They will, of course, make it sound really fun and exciting. You have to get images in Steve’s mind of him playing this game with his friends, nights and nights of good times.

If it’s a book, the production value is even more important. Steve can leaf through that book, and find even more reason to be excited. Pages and pages of descriptions of how to be a hero. Awesome art. Kickass lasers or swords or mechs or whatever, all owning the fuck out of those punks. Oh! That dude on page 97 is fucked! Haha!

When you print a book without these things, none of these things happen. Maybe, just maybe, he might pick up the product, because you’ve got a franchise or cover art he enjoys. He might read the back, and see it really just seems kinda lame. Welp. Let’s keep looking.

You might find yourself wondering, how does this relate to small presses? What if I only plan to produce e-books? Well, it’s just this: gamers have come to expect this level of finished work. Without it, they aren’t going to be excited about your game.

One of my favorite small-press games, Cold City has this cover:

Very minimalist. I am sketchy about how it might stand out on a shelf, but these guys aren’t marketing to game stores, really. The page design is brilliantly laid out (like the sort of thing White Wolf was trying for):

And each chapter is led with a piece of brilliant art:

Oh, fuck. That intro makes me want to play the game, and the layout and design contributes an important element to that. It helps create the atmosphere I need to read this book (which is seriously awesome).

Go buy it if you like.

Fallacy #3: Entrepreneurial advice is worth anything, ever.

Let’s see how Steve Cole scores!

1. The biggest killer of a small business is debt. Making debt payments can be a huge hurdle for monthly revenue to overcome. Many people who start a business just assume that they have to borrow a few hundred thousand dollars to do so, and that’s not only not true, it’s very risky to do.

FALSE. The biggest killer of small business in the U.S. is not debt service, it is undercapitalization: too little operating money to keep going until you make a profit. #2 is too little or too much gross revenue. Yes, too much revenue will kill you just as surely as too little. Growth is difficult. Cost control is #3.

2. Something over 2/3 of new small businesses are started with less than $5000 and no borrowed money. To be sure, these are not the kind of business that is going to employ a dozen people on the first day, but if you plan well and pay attention you can make a living for yourself and grow a small business steadily.

MISLEADING. I loath these sorts of attempts at inspiration. Five grand won’t give you anything but an etsy shop and maybe, just maybe, a three-person business in five years that will barely make your expenses. You’re much more likely to go broke from lack of capital. You will notice he doesn’t mention how many of these business fail.

3. It may be annoying to pay $450 every time you need to rent a backhoe for one day, but that’s better than making debt payments on a $50,000 backhoe, pulled on a $10,000 trailer by a $30,000 truck and covered by an insurance policy. Borrowed money increases risk and magnifies mistakes.

FALSE. Equipment rental isn’t “annoying,” it’s “cost of doing business.” Borrowing money to expand your business isn’t just a good idea, it should be necessary at some point, otherwise you are utterly hamstringing your growth. Hrm. I wonder why ADB can’t grow…

4. The definition of entrepreneur is risk-taker, but that must be tempered by research and knowledge. Taking stupid risks or doing anything that bets the whole business on one deal is a bad plan.

HALF-TRUTH. Being an entrepreneuer means betting your business. That’s the definition of a start-up. He’s right that research is important, but at some point, you have to decide whether the risk is worth it.

5. None of your employees are going to be motivated to work as hard as you work if you don’t do anything to motivate them. To them, it’s just a job. You have to make them feel like a family and reward them with performance bonuses.

FALSE. No one should be working as hard as you are. It’s your ass on the line, in some sense, and if you feel like making people family will make them feel better, do it. A lot of great businesses run that way.

6. If you have idiot employees, it’s your own fault. You hired them without enough of an interview process, and you did not fire them when you figured out they were idiots.

FALSE. In a perfect world, we’d have infinite time, money, and applications to find the perfect fit for each job. In the real world, you hire people you think will work well, and when they don’t, you might have to keep them around until you can find someone better or afford to lose them. It’s a lot cheaper to train and coach them, though!

7. A dream is just a wish. If you can define it, it’s a vision. If you have a plan to accomplish it, it’s a goal.

MEANINGLESS TRIPE.

8. If you don’t balance your business and family time and take care of your health and social life and spirit, you’ll fail.

FALSE. Eventually, yes, you’re going to want to balance your life with your work. For the first year or three, though, this is going to be your life. I’ve watched a lot of good businesses fail because the owners thought they could check out after the first three months.

9. Delegate things that are urgent but not important and ignore things that are neither urgent nor important.

FALSE. This is literally the worst advice. If something needs to get done, it should be on your time budget. More importantly, if you can’t delegate important things, you are hiring the wrong people. This is the way to finding things on the action list from ten years ago.

10. You need to have your accounting up to date. You need to know things like how much business you do a month, what the average turnover in your inventory is, what profit you are or are not making on any given job or product.

TRUE! Good job! See above! Try it sometime!

That’s…1.5 out of 10, or a 15%. F-

Fallacy #2: Gamers should run companies, marketing campaigns, or do fucking anything related to operating a business, ever.

I’m not saying that there are no dual-class Gamer/Entrepreneur characters out there. They exist. I even think I’m one of them, but that’s because I am a gamer and have run my own business, separately, without combining the two. (Well, we did discuss playing Axis and Allies at my espresso stand.) I still have a lot to learn, which is why I’m in college right now.

As a whole, the gaming industry is fucking awful at marketing. From TSR’s failure to appeal to gamers that were loyally buying their products to White Wolf failing to run what is essentially a LARP event in a bar, there are quite a few stories and examples of this. ADB is no exception. Just watch this engaging and exciting video, designed to get stores interested in their products:

You don’t have to watch more than thirty seconds of that to get the idea. (I really like the bits where he drops the boxes all over, and the fact that he is so obviously reading from cue cards.) These guys are terrible at marketing their games. They hit up the blog’s readers at least twice a month for “marketing ideas,” as if adding MORE gamers to the mix is the solution.

Say what you want about Wizards of the Coast, they are fucking awesome at marketing their products. The rollout for 4th edition was masterful, and the way they have chosen to incorporate changes in Magic to make it more accessible and sell more product have made them an example to be followed. Why can they do this? It’s simple, and you’ve probably already guessed: the gamers don’t go anywhere near this shit. They have marketing people, who are good at marketing, and pass directives down to R&D, design, and development to make the games marketable.

This is how a good business runs. There’s a saying: “Cooks make the worst restaurant owners.” It’s true. A cook can’t run a restaurant any more than a pilot can run an airline. You need someone who is good at running a business, not making a game.

The President of ADB, Steve Cole, exhibits a lot of self-awareness here at how awful he is at running his company:

I think my greatest failure in running ADB, Inc., is in failing to account for things that obviously need to be done (and done early in the priority list) but which are not on the “time budget” for work to be done. Now, there will always be things one cannot predict (say the warehouse burns down and we have to spend a lot of time with insurance claims and figuring out what to replace) but that’s normal and you cannot plan for it. The big issue right now is that the Mongoose Joint Venture is eating up 80% of my design time. (Checking ships is taking a lot longer than it we calculated to take. Reviewing their rulebooks was thought to be a matter of a couple of hours a week but I’ve spent about six hours this week and that only caught up to the third draft; I haven’t read the fourth. While it makes perfect sense that I will spend less time writing the 40 pages of background their rulebook needs than I would have spent fixing something they wrote, there were no hours in the budget for me to do that. (It will take only about 10 hours since I just have to string together and write-through existing background from SFB and the RPG books. Even so, this obviously represents poor planning on my part.) There is also the issue that I keep scheduling unfinished projects based on a guess of the work it will take to finish them. If it’s a project that Steven Petrick and/or I are doing, we can get a pretty good guess. If it’s a project someone else is doing, we have a tendency not to guess very well. (That, and sometimes we don’t get documents from the outside designer as fast or in the form that we expect to get them.)

- from the Federation Commander Blog

For fuck’s sake, if you can’t spec a job, you should not be in charge of costing that job. The second-largest problem ADB has is this sort of failure of time management. From what I can tell, they don’t even properly cost out their jobs – Cole is an engineer, not an accountant or manager. Oh, look, another quote:

What we do is figure the cost of printing and paper (we print our own books), multiply by a secret number, then compare that to other books.

What. The. Fuck. This is literally pricing juju. To clarify, let’s review how this should work. Let’s say Badwrongfun, Inc is thinking about producing the Ultimate Guide to the Austrian Maritime Authority. If I’m in charge of speccing this job, I’d make a list of all the expected costs for the product. It might look like this:

Now I know the expected cost per unit. While the ACTUAL cost may be far off of this, I can figure out how much I should charge for this book based on how much profit I want/need to make. Let’s say I want to make ~$4 a book (100% profit over cost), and the online vendor I use takes 20%. I would price this at $9.95.

There’s no voodoo there. It’s just math, and it’s how any good business should be run.

Fallacy #1: Your market is small/shrinking/difficult to reach.

1. We wargamers (and I include RPG players in that honored group even if they reject the name) are a unique bunch, and a tiny, tiny, tiny fraction of the human genome. We’re people who get our fun by making our own decisions, and taking responsibility for those decisions. We’re risk takers. Most humans want to sit on the sofa, watch a TV show or read a novel or comic book, and be scared out of their minds that the hero is going to be killed (or sent to prison or kicked off the police force or reassigned to Toledo). But there is always the secret and secure knowledge that at the end of the adventure, everything will be right back where it was, with the hero in the same job he was in when the season or series started. Wargamers are perfectly willing to risk the starship captain’s life and career, and accept that we’ll be starting over as an ensign in the next game if we got it wrong. This has many implications, the worst of which is that the wargame industry is very small with very few customers. If a higher percentage of the human race were instinctive wargamers, the wargame industry would be as big as the comic book industry, and even small game companies like ADB, Inc. would have 20 or 30 employees and annual sales in the tens of millions of dollars.

- from the Federation Commander Blog

This is the most popular, fervently defended, and absolutely false truism of the tabletop gaming industry. It is often founded on the ideals that are seen above: that we gamers are a special breed, that it takes a special sort of person (a “nerd”) to enjoy our games, and this means that we’ll always be relegated to stinky stores and small-press publishing.

A corrolary that is often presented is that the gaming industry is shrinking in some way. This may be true (it would be difficult to collect data to disprove it without a lot of effort), but if it is, it’s not due to computer gaming, CCGs, or anything like that. Most market changes are cyclical or structural; I believe the current one affecting ADB is a little of both.

These claims are FALSE. Even a cursory glance at the gaming industry today will tell you that, if anything, we are living in the silver age of RPGs! There are more games, available to do more things, for more playstyles, than there ever have been in history. From Fiasco to Warhammer, from FATE to Magic: The Gathering, there is SO MUCH gaming to choose from, you can feel a bit inundated at times.

What’s more, there are a lot of game companies that are doing remarkably well: Paizo, Steve Jackson Games, and of course, Wizards of the Coast come to mind. Even smaller shops do well; this is the age of the one-man company, working for PDF sales and producing what may be some of the best (and worst) game work out there. These aren’t the signs of a failing industry.

As an aside, I love that he compares the gaming industry to the comic book industry, which is facing almost exactly the same issues as ours: an aging core fanbase which they feel the need to appeal to, which tends to alienate them from their new fans, and a definite sense that the loonies are running the asylum now. Sure, there’s more gross revenue in comics, but that means pretty much nothing to a small, indie publisher trying to get out there.

What are the issues for our industry? I can identify three, immediately, that work together to create a lot of the problems we see today.

1. Market Saturation. Seriously, there are a lot of games. A fucking lot of games, many without any real distinction between them, and marketed to increasingly small and alienated groups: hardcore miniature wargamers, old school revival fanboys, compulsive CCG purchasers. This is the observed effect: itlooks like there is very little market for your games, because it’s easy to get lost in a sea of contenders.

2. Single Dominant Brands. Despite the hand-wringing that occurs in this area, it’s true: Dungeons and Dragons is Roleplaying Games. No one even comes close. D&D had a brief retreat from its position of Level 20 Shit of Dragon-Turd hill in the nineties, but it’s back and here to stay for now. It’s hard to explain a roleplaying game without someone asking if it’s “like D&D.”

In other areas, it is much the same: Games Workshop (Warhams 4eva). Magic is TCGs. There’s no Pepsi to the Coke here. Every game looms under the shadow of its progenitor, and that leads me to the third point.

3. Reactionary Attitudes. It is often said that the last revolution in gaming was in 1993: Richard Garfield inventing Magic: The Gathering. It’s certainly the last time someone opened up a new market sector. That was TWENTY YEARS AGO. Of course the industry appears shrinking an cannibalistic; it would be like if automakers produced the same things for two decades and expected people to be amazed and motivated to purchase new cars.

Oh, wait, they did that.