Category Archives: Fallacy

Piracy and Sales

Intellectual Property Piracy is a ridiculously divisive issue in our culture, and despite my “in your face” leanings, I’m not here to take a moral stand. Piracy is, generally, illegal in my country, and the noose is likely to get tighter before it gets looser; the looming threats of SOPA/PIPA are evidence that the money is going to try to protect the money.

What I am here to talk about, after my long absence, are the effects of piracy on the gaming industry. It’s no joke to smalls publishers; there is a distinct feeling that the proliferation of digital ‘scans’ has been a major factor in the ruining of the market. As Matthew Grau, creator of the game CthulhuTech, notes:

That doesn’t even address the issue of piracy. I remember a day when a mediocre release of a game book sold 3000-5000 copies, with healthy restock orders. Now, a successful release might sell 1000, if you are lucky, selling through the rest of your 3000 unit print run in three years – many companies print far less. Not only is the industry shrinking, but people don’t have to pay for their gaming books anymore if they don’t want to. Unfortunately, unlike the music industry, we are not made of money. It costs a surprisingly large amount of money to develop a well-written and attractive gaming book and the return is not so hot. Without those extra sales, the traditional model of core plus regular supplementation isn’t really viable.

Oh, really?

A follower of mine, Old School GM, posted an interesting article about the sales of Eclipse Phase, taken straight from the horses’ mouths: their company report. This got me thinking, much as my article and blog got him thinking. We don’t have any concrete idea just how big the industry is, but the numbers behind those links show some fantastic progress for the folks at Posthuman Studios.

What is most interesting is that Eclipse Phase is FREE. Free as in beer. You can download it, legally from torrent sites, sanctioned by the publisher. What’s more, you have free reign to remix or redo the game and publish it yourself. In the spirit of the posthuman information age, ownership is nothing. Want to pay? Sure! Thanks! Don’t want to pay? Here, you can have it, from us, for free.

Under this model, Posthuman Studios sold a tremendous 8,422 units in 2010. That’s big numbers for a small press publisher. One could crunch the numbers and reveal their probably gross, but I won’t do that to them. It’s not important. They’re moving units of a product that they’re also giving away for free. Meanwhile, the Cthulhutech guys are spending a lot of time whining about how piracy is ruining their business. A not-insignificant amount of time and effort is wasted by them (and many other small press companies) “chasing down pirates.”

So, we have two games of comparable scale. Why is one selling, when it’s available for free, and another is struggling? Well, friends and grognards, I think you already know the answer. It’s Quality.

You see, Eclipse Phase is a magnificent game. The setting is a genius take on the idea of a Posthuman world; the background and adventure work is top-notch. Players love it, because it’s an empowering, vast solar system of intrigue and information. There are nearly infinite possibilities for adventure, and new sourcebooks are being released all the time. And, despite the fact that you can have them for free, many customers are willing to pay for the books and PDFs.

Cthulhutech, on the other hand, is a mess. The system sucks, the setting is full of stereotypical, mustache-twirling demons that betray the basic principles of Lovecraft’s mythos, and the developers are fond of telling the players that they are playing the game wrong. New supplements aren’t coming out (mostly because of the aforementioned whining about sales).

It’s worse than that, though. The books and adventures are chock full of fetishistic descriptions of murder, rape, and misogynistic and/or racist portrayals of, well, just about anyone the authors can think of. If you don’t believe me, I encourage you to read Ettin’s reviews of Cthulhutech and its supplements. One of the adventures ends in a narrated rape scene. (One of the writers once claimed the game was only around 2% rape.)

Yeah, I’m really wondering why one of these games is selling, and another isn’t. If you’re not convinced, though, I encourage you to look at a big player: Paizo, who literally gives their core rules away for free. Do people pirate their PDFs? Sure, almost certainly they do. However, they’ve chosen a winning business practice out of making people desire their actual products.

We see the same themes repeated throughout the industry: if a release is good, if the art is beautiful, if the rules are laid out well, if there are useful game aids and accessories, customers will want to purchase the product.

It’s almost like I’ve said this before.

Dispelling Some Myths About Fifth Edition (Part 2)

Unless you’ve been living in a particularly deep portion of the Underdark, you know that Wizards of the Coast announced that it is working on the Fifth Edition of D&D last week. Let’s be honest here: we know so very little about the system that any sort of useful speculation on its actual content is impossible.

However, there are several myths that are thrown around on the internet about D&D and its history that I would like to address. We covered one myth on Monday, here are two more!

Myth #2: The New Edition is Too Soon/a Money Grab

Well, let’s do some math:

First Edition (1978) to Second Edition (1989): 11 years

Second Edition (1989) to Revised Second Edition (1995)*: 6 years

Revised Second Edition (1995) to Third Edition (2000): 5 years

Third Edition (2000) to “Three Point Five” (2003): 3 years

Three Point Five (2003) to Fourth Edition (2008): 5 years

Fourth Edition (2008) to Fifth Edition (2013?): 5 years

The mean time between the release of a new Player’s Handbook is 5.8 years, and the median and mode are five years. What this tells us is that we are, based on prior performance, DUE for a new edition of D&D. There is nothing anomalous about their announcement. In fact, the anomaly here is the delay between the release of First and Second editions!

*”Wait!” you’re saying, “Revised wasn’t a new edition!” The problem with this is that there are quite a few indicators pointing the the fact that TSR wantedto release a new edition in 1995, and that they did, in a way. There were rumors of its development, so much that “This is not AD&D Third Edition” was printed in big, red letters on the first page. What’s more, the release of the Player’s Option rules really pointed to the development of a new, improved game (those books didn’t come out of nowhere). Player’s Option is, truly, a different game than core AD&D.

Myth #3: Gygax Would Hate All These New Editions

Well, this one is technically true. However, it is often rolled out in defense of Third Edition play, as if the style of play encouraged by that game is “what Gary wanted.” Nothing could be further from the truth. In his own words:

I’ve looked at them, yes, but I’m not really a fan. The new D&D is too rule intensive. It’s relegated the Dungeon Master to being an entertainer rather than master of the game. It’s done away with the archetypes, focused on nothing but combat and character power, lost the group cooperative aspect, bastardized the class-based system, and resembles a comic-book superheroes game more than a fantasy RPG where a player can play any alignment desired, not just lawful good.

As a matter of fact, Gygax disliked Second Edition.

Dispelling Some Myths About Fifth Edition (Part 1)

Unless you’ve been living in a particularly deep portion of the Underdark, you know that Wizards of the Coast announced that it is working on the Fifth Edition of D&D last week. Let’s be honest here: we know so very little about the system that any sort of useful speculation on its actual content is impossible.

However, there are several myths that are thrown around on the internet about D&D and its history that I would like to address. Quite simply, I believe D&D 5 could be an amazing move for Wizards, and gaming as a whole.

Myth #1: Rebooting D&D is Killing It

This sentiment is often followed by “X Edition is just fine!” Often, people point to the fracturing effect of edition wars as evidence to the idea that no new editions should be released. The idea that the shitty, toxic parts of the fanbase should rule the industry just baffles me.

Truth be told, this is a perfect opportunity for Wizards to do something awesome with D&D. Why? The answer is simple: DDI.

Dungeons & Dragons Interactive, a subscription-based set of web-based tools for creating characters, monsters, and scenarios, is one truly new thing in the industry. It’s a consistent, participation-based source of revenue for Wizards: basically, it allows them to monetize the fact that people are playing D&D! You don’t have to sell books, you just have to keep the players playing!

Every marker show us that DDI has been remarkably successful. A subscriber count from the WotC forums shows us that Wizards is raking in revenues of at least $400,000 a month from DDI, or $4.8 million a year. To put that in perspective, they would have to sell 342,000 more books (34.95 a book) a year – more than any edition of D&D has sold in decades, if not ever – to equal the revenues from DDI.

(Incidentally, this is the source of the “X game outselling D&D” claims. It’s true, they are being outsold on the book market; however, Wizards likely doesn’t care about anything but the bad press.)

What’s more, DDI is great for players. A new player can spend less than $40 and have access to every bit of rules content out there, fully errata’ed and revised. An existing player doesn’t have to purchase new books to keep up with everything. All you have to do is subscribe.

If DDI is so successful, though, then why a new edition? Well, Wizards isn’t perfect. Fourth Edition has succumbed to the same heat death that killed Third:bloat. There are thousands of powers, over five thousand feats, dozens of classes and builds. Quite a bit of those are useless from a player standpoint, and just clog up the character builder. Monsters are wildly variable in power and staying ability. Skill challenges still suck as written.

They tried the halfway-reboot strategy with Essentials. The best option is to tear down the system, and build a new one out of what worked in previous editions. They have the opportunity to build Fifth Edition around the DDI platform, instead of adding DDI as an afterthought. This is a real opportunity for success.

We’ll see how they handle it.

Toxic Geeks: The Outspoken Customer is Always Wrong

Or Fallacy #5: You should listen to the naysayers.

I want to go back in time and fucking murder Harry Gordon Selfridge. Not only was he a pioneer of holiday deadline shopping (Only 40 days until Christmas!), he invented the worst phrase to grace any customer service counter in the last century. Fuck “The Customer is Always Right.”

Let me clarify here: I’ve spent a lot of time in customer service. I’m not that jaded guy who posts in the retail thread in GBS. I fucking love customers; they are amazing, and all 99% of them want is to be treated like people and have someone help them get what they desire at this moment. Most of the greatest moments in my past employment have involved helping really “difficult” people get what they need done. With a lot of motivation, a great attitude, and a dash of competence, you can make almost anyone happy that they stopped by your business today.

I further believe that customer service should absolutely be the center of any business that wants to be successful. If you can identify what your customers want, and give it to them, you will make it happen. What someone calls a “problem customer” is just an opportunity to create a loyal patron; that may sound corny, but I have found it to be universally true.

No, you can’t make everyone happy, but you shouldn’t want to. I’ve discovered this blog, which really echoes a lot of the points I’ve been making in this thread. Allow me to quote from a particularly fantastic article:

One of the first things you learn in any marketing program is that you not only don’t have to cater to everybody, but that you shouldn’t. There are customers out there who can faithfully buy from you and still run your company into the ground. Effective marketing includes making these people go away with a minimum of fuss. Smart folks avoid the temptation to poach from toxic segments.

Yes, that’s right: smart business practices involve saying no to customer segments. You’re going to hear a lot of shit about your business if it gets to any reasonable size; just look at the Paizochat above. Should you listen to these people? I mean, they’re your customers, right? You should be responsive to customers, right?

Wrong. Absolutely, completely wrong. Especially in the gaming business, you are going to find a direct correlation between how much a person protests things and how disconnected they are from your primary customer base. That’s right: you shouldn’t listen to the people who rant and rave. It seems contradictory to a customer service mindset, yes; but it’s good business sense. Here’s why:

Toxic customers drive away business.

This happens most visibly in game stores, where a single arduous “customer” can drive away dozens of potential paying patrons. They can do this in a lot of ways: cheating at tournaments, running abusive or arduous ‘events,’ shit-talking and edition warring, or just plain being creepy. It spreads across the hobby (and across all customer bases, really). That guy who trolls the newbie who asks a question on your message boards is literally ruining new business.

Toxic customers are not interested in buying what you’re selling.

Let’s laugh at Gau’s experience as he tells an anecdote from fast food management! I worked for Carl’s Jr. for some time, and if you’ve ever been in a Carl’s Jr., you know that they don’t have much for a dollar menu. This seems stupid at first; every damned fast food place has a dollar menu, why don’t they? Why am I paying $1.40 for a basic hamburger? That’s bad business! I’ll just go to McDonald’s!

You know what? I hate to say it, but we didn’t (and they don’t) want you. Carl’s Jr. has made an intelligent decision by not having a dollar menu. They’ve designed their business model around the image of everything on the menu being huge, delicious, and satisfying. Having a tiny burger for a buck would undermine that. On the other hand, you can get a quarter-pound charbroiled hamburger for $1.40, and it’s fucking delicious. If that’s too much for you, you are welcome to go to McDonald’s and get a 10:1 patty on a piece of cardboard.

There are ancillary benefits, as well. By not having a lot of super-cheap items on the menu, you are saying no to the stoners (mostly), but saying yes to people who will pay a decent price for something that tastes a cut above Burger King. Sure, we didn’t get as many of the dudes who are counting change to pay for their tacos, but we get a lot more of the soccer moms who don’t even listen to the total and just hand you their credit card. (It was pretty routine to get forty or fifty dollar cars during dinner rush.)

Toxic Customers are, often, not even customers

Let’s get back to gaming, now. For Magic 2010, Wizards announced a sweeping list of rules changes, most commonly remembered as “the day damage stopped going on the stack.” If you read the article, they make the goal of this clear:

As we set out to create the forthcoming Magic 2010 core set—which is a completely new approach to the core set ideal, as announced earlier this year—we opened up everything about how we make Magic cards to scrutiny in an attempt to make that set, and the game as a whole, more accessible.

Wizards is the king of customer feedback in this industry. They spend a metric fuckton of money to determine what their customers, the average, normal customers at the core of their base, are saying about them. In 2008-2009, a choir of players, new and old, sang a simple message: “This game has become too complex.”

This couldn’t have been easy for R&D to handle. Complexity is a double-edged sword: too much, and you can’t teach it to new people, and some people stop having fun (and hence stop playing). Too little, and the game can seem simplistic, boring, and unappealing. They did a brilliant job of balancing this in the 2010 changes.

What happened, though, of course? Thousand of voices rose from the hellish parts of the internet, decrying the changes as “ruining Magic.” The backlash was, to be honest, impressive in its scale. A smaller publisher, or one with less direction, might have gone back on their announcement. Wizards didn’t, because they knew what I could have told them, too: most of these “players” aren’t customers. They aren’t the ones shredding packs of new sets. They aren’t showing up to FNM or Pro Tour qualifiers. They’re embittered, old-school players who wouldn’t buy new sets anyways (since “new cards suck”).

Magic 2010 made Magic an objectively better game. More new players are picking up the game than ever before, and these changes are directly related to that fact.

So, what do you do about a toxic customer?

Spokane is really blessed to have an awesome and successful local bookstore. They root out a lot of their “bad” customers through simple marketing. They don’t do the big events with the huge, doorbusting authors that Barnes & Noble might; instead, their authors and events cater pretty specifically to their target demographic. It is really shitty to be a locally-owned bookstore in the twenty-first century, and they have only survived by literally building an identity around it.

In the case of a game store, I once had a conversation with the owner of Merlyn’s. John is an awesome guy, and he has a simple strategy: they run positive, inclusive events, like D&D Encounters, FNM, open Warhammer, and Clix. Sometimes the grognards come in droves, but the easiest way to keep a bad player out is (in his words) “to fill the store with dozens of good players.”

All of the good publishers are moving in this direction, too: actively pushing products out the door that “good” customers want and “bad” customers will hate. The previously discussed Beginner Box, the Dungeon Fantasy and Action modulesOpen Fire!, all of these are made to bring new, good customers in. The different companies have various strategies for how to “support” (read: ghetto-ize) the negative, toxic customers, but this is certain:

If you’re not interested in moving forward, you are going to be left behind.

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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.

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Fallacy #4: I should start a game business (Part 1)

It is the dream of many a prospective gamer to make money doing what they love, and rightfully so. Game designers are the rock stars of our business, and everybody wants to be rock star! Well, maybe not Meatloaf, but definitely Slash. The most common question I get as a business major is “should I start X business?” Should I open a game store? Should I start writing RPGs and publishing them myself?

No, no you should not. You also shouldn’t open an espresso bar, a restaurant, advertising agency, business consultancy, or a head shop. These are saturated markets with a high probability of failure and that require a lot of industry-specific, hard-earned knowledge to be successful in. Essentially, it’s a question of “if you have to ask, the answer is no.”

This isn’t an elitist thing, and I don’t mean to crush your dreams. It is a gatekeeper rule, and it’s also based on a lot of analysis of the market and the industry. Here are some reasons you should be apprehensive about getting into the game industry.

1. You need a killer business model. Wait, wait, you say, I’ve got this great game, it will totally sell, and I’m going to do some interesting trickery to get people to buy it (like give the core rules away for free or make a blog or something). The only problem is that is not a business model. That is (probably) a marketing plan, which is part of a business model, sort of.

I mentioned this earlier, but a lot of the models for releasing RPGs, and most of them suck. I think it can be summed up nicely by defining a spectrum between the TSR model and the GURPS model. (Note that these are my own designations.)

As many of you may be familiar, TSR owned D&D for most of its lifetime. In the late eighties and early nineties, they literally ran D&D into the ground by adopting a publishing model that has, against all reason, been copied by most small press games! The basic idea is this: you release a core game, and then you release a followup supplements for that game, expanding existing material and introducing more of it. Maybe, if your system is big enough, you release a setting or two, and then some splatbooks and adventures for that setting.

The problem with this is one of diminishing returns, essentially. The tenth splatbook for Professor Cirno’s Wild and Crazy Penguinland is going to sell a LOT less than the core book did, because a certain (likely large) percentage of people are going to be happy with just supplements 1-9 or fewer. You also run in to issues with segmentation of your customer base and decreasing quality, as TSR did. The common solution is to either a) release new games and stop supporting the old ones or b) release a new version of the game and only partially support old ones.

On the other end of the supplement-based model is GURPS. GURPS releases its core rules, which cover damned near everything (there are GURPS rules for how much damage you would roll for a nuclear explosion). Then, they release setting and themed books, like China, Steampunk, Magic, Mysteries, or Discworld. The huge difference here is that very few of these are dependent; the entire line is modular. You can run GURPS China with out GURPS Martial Arts (although the latter book may enhance your experience). Discworld doesn’t really require Magic. Now, the really good part is that you CAN combine stuff from all of these together and run GURPS Magic Steampunk China Mysteries (drawing things from all of those books, if you have them).

Additionally, the books are fucking good. I would hand GURPS China to someone who just wanted a good background on Chinese history and culture. The High-Tech book has a lot of great information about modern technology and weapons. Mysteries includes a lot of great information that can be useful in just writing a mystery story. Some of the settings are just brilliant (Transhuman Space, I’m looking at you).

You should not follow either of these. While it’s obvious that the GURPS model has enjoyed more general success, it’s important to note that it is not newer, or really, more sophisticated. These models are mostly bunk. Even SJG is finding that for the money it puts into a GURPS supplement is probably better spent making more Munchkin cards.

These models aren’t unique to RPGs either. Games Workshop essentially just uses TSR’s model: New edition, new codexes, more supplements, more models for those codexes! Oh, wait, we’ve done everything, time to revise it again!

One of the things that makes board games (even really geeky ones) more successful is that the expansions are fully modular. I can play Catan with any, all, or none of the expansions. When I pick up a wargame, I am automatically curious as to what core books and models I need if I wanted play Imperial Guard or Germans or Kzinti. What’s worse, most games are fucking awful at enumerating this on the cover, so I get to dive through the game and try to figure it out. Or, even better, put it back on the shelf.

Mind you, I am not discussing the behind-the-scenes parts of a business model, like whether or not you outsource any of your production process, how customer support is handled, or who owns your business. These are things that I don’t think are wrong with the industry.

What new models are there? Well, not many.

There’s Dungeons and Dragons Interactive (DDI), which is a set of online tools that Wizards has developed to bring D&D into the 21st century. It’s a brilliant idea, really: for $5-10 a month, you get access to every single rule, power, item, class, race, and whatall they’ve released. Additionally, you can use the online character generator to make and print off all of your characters, and the monster and adventure tools! As a bonus, you get all of the Dungeon and Dragon magazine you can download.

So, now you can get into D&D for $20 the first month (DDI doesn’t include the actual game rules, so you need to buy a Rules Compendium for the DM), and a lot less in subsequent months. While that may add up to $60-140 a year, that’s about what you’d spend on books (if not less). What’s more, you get all the convenience of an online tool, and you don’t have to buy 12-15 books just to get caught up with the line. It’s all right there, ready for adventure!

I don’t know if this is a workable model for a smaller-press publisher, but I do think this is the future (or one of the futures) of gaming. Trying to release books subsequently is a failing notion. Don’t do it. Find something better. If you can’t, don’t bother.

Okay, that’s enough for today. Part two will happen on Monday.

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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-

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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.

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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.

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