Pelgrane Press Ltd

2020-09-01 17:17:15

View from the Pelgrane’s Nest – June 2006
The following article about the state of the roleplaying industry in the mid-2000s originally appeared on DyingEarth.com in June 2006.

Is the RPG Industry Screwed?

When you depend on live game designers for sustenance, the health of the ecosystem which allows them to thrive is of paramount importance. Whilst everyone has an opinion on this subject, I asked people who make their living from the roleplaying games – publishers, distributors and retailers – how they think the RPG industry is doing. A polite-worded request is often misunderstood (many of them are brain-addled from an excess comics and food additives) so I screamed “Is the RPG Industry Screwed?” in their ear and suspended them over my squawking progeny as usual. The responses were interesting, varied, and inconclusive.

I’ll start with a successful company, running a business on a fairly traditional model, Mongoose Publishing. Without the irritating self-effacement and modesty typical of the British, co-owner Matthew Sprange said:

At Mongoose, we believe that a good RPG book still has the potential to blow through entire print runs and that sales of 10,000+ units are still achievable with the right product. Because of this, we are still expanding in terms of both sales and staff (we now employ over 20 people worldwide), and plan to support RPGs for at least the next five years. Many companies are being squeezed out of the market at the moment but we take this as an indication of a customer base that has become more refined in its choice of product, rather than one who will buy anything that has a D20 on the cover. At the end of the day, if you produce the right kind of book, people will come to you.

Hard figures, I said. Hard figures. He told me as an example that Starship Troopers blew through 6000 copies in 3 months. That’s a large number – greater than the total sales units for each of the majority of RPG companies in a year.

Aldo Ghiozzi, who represents a number of RPG publishers as a consolidator and marketing agent has been selling through distribution for a number of years. He has a lofty perch – I respect any creature with a lofty perch – above the three-tier distributor model. He said:

Technology has come around to make book publishing easier for the common writer. Between PDF purchasing and Print-On-Demand (POD), the barrier of entry has dropped considerably. One would think this would create a new Golden Age of RPGs; it has done the opposite. With the barrier of entry being so low, there are more options for consumers to spend their dollars on. The flood of the D20 market was just the beginning; now, RPGs are for every genre, system and an endless number of people creating their own systems. Imagine a consumer that spends $10 a month on RPG books. Five years ago their choices were between the 100 products on the store shelves, thus, a publisher would have a 1 in a 100 chance for that $10. Now, there are so many choices for the shelves that retailers cannot carry them all so it spills into online stores and PDF download stores. The 100 choices turn into 1000 — now that publisher has a 1 in 1000 chance for that $10. The dollars are being spread thinner; that is the reality.

Personally, I believe the best chance for publishers to survive or come into this market with a chance is with proven brands and even licenses. Licenses, like Serenity or Starship Troopers instantly breathe recognition with the consumer and influences the dollars to that product. Proven brands, like a new edition of Paranoia or the mimicking of Keep on the Borderlands through the Dungeon Crawl Classics series are great examples.

It’s all about being heard over everyone else and the only way to do that is to scream louder.

His views are supported by the Starship Troopers sales figures, although we don’t know the terms of their license (for reference, the Babylon 5 license was $65,000). I asked Mr Ghiozzi if he thought the size of the market was the same. He was sceptical.

…we are not seeing 50K unit sales as before, but there are a ton more choices now so for all we know, the same amount of dollars are being spent (proportional to the economy) but just spread thinner. I truly doubt that though.

Green Ronin have been publishing RPGs since 2000, and use a combination of traditional print and PDF publishing. Chris Pramas, the CEO said:

You have to put RPGs in their historic perspective. Really, they have been in decline since the creation of collectible games in the early 90s. It’s hard to remember now, but in the late 70s and early 80s RPGs were a good business to be in. They eclipsed wargames and dominated the market for many years. Since then we’ve seen significant events in our own industry, the two most important being ‘Magic: the Gathering’ creating a whole new category of game, and Games Workshop hitting upon a business model that redefined miniatures games. In the same period we’ve also seen computer/console games become increasingly sophisticated and immersive, and the development of MMOs. In light of these events the old RPG business model has a tough time competing. Once players have a core rulebook, they don’t need to buy anything else to enjoy the game. Contrast that with the collectible games, where not only can you sell people the same product over and over again, but also they have to keep up with each new expansion to stay competitive. Or MMOs, where players pay each month for the privilege of continuing to play.

The d20 boom made some folks think the glory days of RPGs were back. While that was indeed a good time for RPG publishers, it could never last and now the gale has blown itself out. One might even argue that it did more harm than good, since most game stores now have hundreds of d20 books that will never move and this makes selling them new RPG product even harder.

So is the RPG market screwed? Well, certainly it is harder to harder to make a living doing traditional RPG publishing. The market decline that was paused by the d20 boom came back with a vengeance in 2003. Since then the successes have been fewer and farther between and more and more RPG publishing activity has moved online. I suspect that the future has already taken shape. There will be maybe 10 RPG companies that will do well enough with traditional RPG publishing to keep forging ahead. The rest of the market will be PDFs and Print on Demand, largely sold direct to consumers. Until someone comes up with a way to radically redefine RPGs anyway. That may be a long wait though.

Chad Underkoffler of Atomic Sock Monkey – creator of the award-winning Dead Inside, slipped through the “makes a living filter” – he has a separate day job – but he is representative of large part of the RPG publisher market.

I wouldn’t say that the RPG Industry is “screwed” so much as “challenged.” For many small press publishers — and I mean “small” in relation to other RPG companies, because nearly all of them could be considered “small press” compared to mainstream publishers – there are difficult issues to surmount in acquiring an audience of customers. Even access to the distribution system is little help, since the number of retail outlets seems to be shrinking. So you have more companies (some with fantastic games to compete with) trying to reach fewer shelves, and therefore customers.

The costs of production are up, the discounts on MSRP for distributors and retailers are substantial, and the customers are reluctant to spend money on unknown or new products. And while PDF-published, Print on Demand (PoD), and direct sale methods help put more money in the publisher’s pocket, the overall amount of profit is low. Truth & Justice is my best selling game, at roughly 525 copies (mostly PDF, but some PoD and distro) sold in under a year. I’ve made around $4,000 profit from it, which is definitely not enough to live on in my major metropolitan area. However, it is enough money to handle a car payment, take care of the phone bill, and roll into a new product for sale.

I doubt that the game industry can support many publishers as their sole employment under the current state of the market, and the outlook isn’t much brighter for distributors and retailers unless they diversify heavily into other product lines and related-but-different types of products (books, comics, toys, etc.). However, as a second job (or a hobby that pays for itself then a little extra, or even a method of artistic expression), the game industry is an admirable fit. If you adjust your expectations of what the industry will do for you, it will not seem totally screwed, but simply a challenge.

The ubiquitous Gareth-Michael Skarka of Adamant Entertainment, and Phil Reed of Ronin Arts, both big players in the PDF market, produce ePublishing 101 e-zine for their fellow publishers. In the latest issue, they bemoan the status of traditional retail.

From approximately 2000 game stores in January 2004 to somewhere around 1200 stores in December 2005 represents an overall loss of at least 40%. Not a good outlook for retailers in this industry.

They also estimate that the total size of the RPG market is about $25 million, with PDF publishing representing between 8-14% of the market – but that proportion is growing. With the relatively low barriers to entry mentioned by Aldo Ghiozzi, and the legs that such products have, pdf publishing is a good way for publishers to connect directly with their customers without pawning the family silver.

In contrast to Aldo’s lofty view, Ben Lehman , creator of the Polaris RPG, comes at the question from down on the ground. He is a new model publish with roots in the Forge – a forum dedicated to creator-owned publishing, with lots of useful RPG game theory. Some of the best games of recent years have come out of the Forge. With typical Forgeite thoroughness, he unasks the question, one which was begging to be knocked down:

I think it’s really strange how people talk about the RPG Industry as if it, and its screwedness or unscrewedness, were somehow the most central or most important thing about role-playing. To me, that’s turning the entire world upside down. It’s such a bizarre way of thinking about it that I can’t even twist my mind into a position where I can see that as the world at all. So instead of talking about what’s actually important to role-playing – the activity itself. Let’s talk about a bunch of people getting together to imagine things together, because that’s what interests me. From my immediate perspective – which is to say my personal play-groups – role-playing has never been better. I and the people I play with are having absolutely thrilling times with basically every single game we play.

Looking out further, I can look into the play-groups that I see from the Actual Play forums on the Forge, RPGNet, ENWorld, and other community sites. Again, I think that over the last 5 years (and I think this trend extends back almost a decade, but I can only talk from my own perspective, and I started hanging out on online forums five years ago) we’re seeing an across the board increase in actual, enjoyable play. I’m seeing a lot less of “fix my broken group” and a lot more of “man, our play rocked.” Further — and more importantly I’m seeing a glacially slow but nonetheless constant movement away from the periodical/collector/fandom model of enjoyment, and more towards creative focus and real play. In this respect, and that’s what matters, I think that role-playing is at its healthiest state since the 70s.

So where does role-playing text and materials production (the ndustry) fit into this? The role-playing business – like any other hobby business – should exist as long as it can boost and support the hobby around it, and no further. Fortunately, and I think not coincidentally, given the upsurge in enjoyable play, we’re seeing a decrease in the periodical “must buy the next sourcebook” model and an increase in texts and materials focused on supporting real people and their real play. To be clear – I don’t think that this is a Forge only or Independent only phenomenon. I think it is spread wide across games like: Breaking the Ice, Nobilis, Eldritch Ass-Kicking, Dungeons and Dragons 3.0 and up, Ganakagok, Hollywood Lives! and so on.
Literally, there are too many game texts to list.

Now, traditionally, RPG text publishing has used what’s been called the “three tier model” although I actually think its six-tier: Designer -> Line Editor, Publisher -> Distribution Company -> Retailer -> Game Player, where each arrow is representing “sells to.” In the 70s and 80s and even into the early 90s this was the most financially sound model of game sales, and so it prospered. But these days it isn’t doing so hot, for several reasons. The one that I have the strongest grasp on is the growth of internet forums, internet commerce (and the PDF), and digital printing technology (AKA print on demand). In the six-tier system, there is economic and creative compromises at every level. The end results is that both the game player and the designer get screwed — the designer has to make artistic compromises and gets paid no money and the game player gets a watered down product and has to pay a lot of money, because each level in between needs to take their cut. By using modern technology I as a designer (to use an example — there are dozens of other folks like me) can sell directly to the game player. The chain becomes Designer -> Game Player. This is not only massively more profitable on both ends (I make more money, the game player saves more money) but also it brings the two creative ends of the spectrum closer together, allowing for game texts and game play which contains astounding creative content.

The role-playing industry, if we evaluate its success based on how well it facilitates awesome play, is healthier than it has ever been, period. The role-playing industry, when we evaluate its success based on facilitating awesome play, is as healthy as its ever been, period. The only possible view I have of role-playing being in trouble is that certain aspects of the role-playing distribution chain are being eclipsed by an economic model that is more effective in both creative and monetary terms, and as a player and designer I just can’t see that as a bad thing.

Eric Gibson of West End Games says that the RPG-only publisher as a mainstream company is effectively dead, and that publishers must diversify.

Absolutely. Without a doubt. But, before you think I’m being a pessimist and over-dramatic, I must expound.

The RPG industry is “screwed” because the question demands it’s so. You ask in the “RPG Industry” is headed for disaster. As long as we force ourselves into the narrow classification of “RPG Industry” then we the publishers are screwed as well. The successful publisher or manufacturer will see the ever evolving tastes and desires of our customers and change with them to bring new types of products to market. We are not a part of the “RPG Industry” we are apart of the “Game Industry”, or, if you will, the “Entertainment Industry”. As long as there are firms that continue to look at the broader market, we’ll survive. If others continue fly the flag of “RPG Publisher” solely, they have a choice, embrace it as merely a cottage industry, keeping costs as low as humanly possible, but never expecting to be financially successful OR continue to pump massive-a relative term, I know-amounts of money into a behemoth that doesn’t want to come back, and die!

This certainly does not mean RPGs will cease to exist as a viable product. Not for some time anyway. What it does mean is that you must acknowledge the scale that the RPG business has taken and embrace it.

Basic economics tells us that as long as long as a product’s revenues equals ALL its costs (don’t forget all your opportunity costs, of course) then the product is making “normal profits” and should be produced. The bite is, that is growing nigh impossible in RPGs from the perspective of a normal industry.

As I tend to do, I’m going to ramble on far longer than I should to try to make my point. Let’s first start by not using the term cottage industry. We have nearly always been, by and large, a cottage industry, and with the advent of the Internet, a cottage industry does not have to equate to small, struggling, or profit-less. Instead, RPGs is becoming a purely hobby industry-pun not intended. A hobby industry is an industry where the primary source of compensation, for the proprietor, is something other than money-love of the game, I guess you’d say.

In order to make “normal profits” within any business model your revenues must equal the costs associated with the business. Again, ALL COSTS. Not simply the break even point on printing. Not just the overhead. By you must also factor in salaries for executive positions and-this is very important-you must cover the opportunity costs for the owner(s), such as the cost of not working a second, paying job, not having more time with family, and not being able to invest the money you’ve put into the business on other gainful investments. All these costs, and many, many more, must be recognized and paid for by the business’s revenues. In a normal industry, a business that fails to meet these costs must logically cease business (given the time to exit fixed cost responsibilities). The current and foreseeable state of RPG publishing means that it is almost impossible to meet these fairly valued opportunity costs and thus make “normal profits”. So, instead we have proprietors who choose to ignore these opportunity costs and often forego monetary compensation and do it instead for the “love” of the industry. I’m not suggesting this is an invalid reason to do it, but that certainly makes the RPG industry a hobby industry and not a “normal” industry.

So, the question asked, “By this, I mean the market for table-top RPGs. I’m not asking if a small cottage industry will continue to exist – just whether it’s in decline and will continue to decline.”

Sadly, the answer is, “almost certainly.” But again, that doesn’t have to be a bad thing. To know it up front, it’s actually very good. If you want to simply make RPGs and sell them as a hobby, by all means you should do so.

Likewise, if you want to run a game company as a normal industry would, you should also be aware that you’re not likely to be able to do so as a dedicated RPG publisher. Diversify. Realize that the business and the market have changed drastically since the late 90’s.

The market wants something else. Provide that “else” and you can stay in business and do just fine and may even have a good chance of making normal profits (or even super-profits).

Is the industry screwed? Only if we fail to see the writing on the wall.

Now we here from a different tier of the industry, a major retailer – Marcus King of Titan Games. He’s having to adapt, and like Eric Gibson, suggest that diversifying into entertainment is the way to go.

As a retailer in a very small town (60K population in the city, with 100K TOTAL in the county) I face some unique problems. First, Michigan has a working class slump like nowhere else – the economy is depressed, young people FLEE this town in search of jobs elsewhere. Second, I have a competitor across town who sells everything for 20% off MSRP. Third, I derive 100% of my income from this company. No outside job, no retirement supporting me, my wife works IN the store with me. I can NOT discount, and support my family.
So, we have two ebay sellers working pretty much full time, two websites (titangames.com and 3FREEgames.com), and we have a retail store, do conventions, and some “liquidation” sales.

Now [our stock depth], was designed to make us a destination store. But, that just does not work. Destination stores no longer compete with everyone within driving range, they compete with everyone within clicking range. Every single thing we sell is available on eBay and/or Amazon, for less. So, though we do well online, our main in store categories are used DVDs, CDs with games come in a distant 4th or 5th

We are going to start stocking fewer RPGs in the store – moving from 1400 or so books today, to perhaps 50 titles, and perhaps 200 books total. I am going to stop buying one or two of everything, and start selecting what we carry in the retail store more based on the idea that 80% of our sales come from 20% of our stock, so stock that 20%, and eliminate about 75% of the rest of it.

What will that leave? D&D, True20, Conan, Traveller, Serenity, Star Wars (if it is ever available), Babylon 5, most supplements by Troll Lord Games, and Goodman Games, some stuff by Mongoose and Green Ronin, and everything White Wolf makes. L5R and Spycraft, and a few others. My store is literally morphing OUT of being a game store, and becoming more and more an entertainment store – with books, movies, music, comics, games and some collectible stuff.

However, I could likely fire my retail staff, shrink my store by 70% floor space, eliminate 90% of my games inventory, just carry the DVDs, CDs, Video Games, and keep one rack of Graphic Novels, one rack of Comics, and one rack of games, and run the retail counter with one person, and never miss a beat as far as sales go.

As a business person first, and gamer ninth or tenth, I look at ALL the options for my business – and it may indeed come to the point where I completely redefine my store around a smaller selection, smaller square footage, and smaller staff on the retail floor – and just carry games as a sideline. Then what do we call the store? Titan Games sure won’t fit.

Jeff Tidball, a long-time award-winning RPG freelancer gives a straightforward answer:

Yes, the RPG industry is more-or-less screwed. You can divide roleplayers into two general camps based on style of play, with smash-and-grab-and-level-uppers on one side, and everyone else (storytellers, world-builders, wanna-be novelists, etc.) on the other. The first, much larger, group is now — with current network and console technology — much better served by computer RPGs than tabletop RPGs. The computers are just plain better and faster at the game experience they want. As those customers stop buying tabletop RPGs, it stops being economically viable to produce them professionally for the second group. Tabletop RPGs won’t go away, but yes, the “industry” that produces them is screwed.

So the D&D crowd will moving over to MMORPGs and the rest will be indulging in a little bit of narrativist theatre? Perhaps.

Mark Simmons, founder of National Games week and publisher of Games Quarterly Catalog & Games Quarterly Magazine thinks that the industry is still suffering from the d20 glut:

RPGs got seriously glutted. Worse than the glut of ’79-81. Worse than the small glut of early ’90s. The d20 boom ran it course with so much product that gamers got enough resource materials to last years. It eclipsed nearly every non-d20 title, killing many good games. It will take time for these circumstances to be overcome. It will take getting RPGs back into stores. R Talsorian is doing decently with Cyberpunk’s new edition, FanPro is doing well with Shadowrun and BattleTech. It’s going to be grim for a while though.
The specialty game stores won’t be stocking and selling enough, so book stores and other types of stores must be courted.

Matt Goodman of Heliograph says:

Table-top role playing is a niche hobby, and like many other niche hobbies (wargaming, pulps, r/c planes, model railroading) over the long haul it is only sustainable as a cottage industry. Die-hards may pass along the bug to their kids–a friend’s 7 and 9 year olds are really enjoying their Star Wars game, and the very best player I had at my Zeppelin Age games at Gen Con last year was in high school–but that isn’t enough to sustain the hobby in the mass market.

So, is there anything coherent to be gathered from these disparate views?

The game store is facing hard times, and none can rely on RPGs alone. An online mail order presence which is able to compete on price is pretty much essential. Leisure Games in the UK is an example of this model. The three-tier system is on shaky ground when it comes to RPGs. Some publishers with well established brands and main stream licenses can still shift sufficient books to make the margins needed to keep going. I think this will continue, but such publishers are not solely producing RPGs – Mongoose Publishing for example relies on RPGs for only 40% of its sales. So what stops new publishers from getting to market? I call it the litho barrier. Unless you have the up-front costs for litho (standard) printing, and the certainty of selling through the print run, you can’t do a litho print run, and your per-unit cost for low-run printing means you will make low or even zero margins through the usual channels. The typical volume of sales of an individual title has declined below the litho barrier following the recent glut of d20 titles an explosion in the number of publishers, and a reduction in the number of players due to improvements in the computer moderated online roleplaying experience.

Hybrid publishing, offering PDF and print-on-demand roleplaying games offer a scaleable model for getting RPGs to their customers without the high risks of attempting the litho barrier. They can sell directly, at conventions, and through specialist online mail order retailers. Forge publishers typically follow this model, and make a very big internet footprint, interacting directly with their customers. Such publishers are actively seeking out players to “tell them about their characters” through Actual Play postings. The idea of signing an NDA when doing a play test is an anathema – they are more likely to publish the beta version of their rules online for anyone to try. PDF-only publishers are on the increase, with rpgnow.com, drivethrurpg.com, enworld.org, e23 and paizo.com all channels to market. Their products have low overheads, can be small, and have decent legs. Still, few people other the etailers are making a living out of this so far.

Paradoxically, it’s never been easier to get an RPG published, but never harder for a new RPG company to support full-time endeavour. The scalability of the new publishing model means that although it is very hard to make money, you are much, much less likely to lose it through an expensive litho print run. If you read that someone you haven’t heard of is about to print 3000 copies of a new RPG, by all that’s holy, stop them.

Chuck Dee

2020-06-06 16:11:07

Buy the bundle, get good games, support the NAACP Legal Defense and Educational Fund and Community Bail Fund

Bundle for Racial Justice and Equality by itch.io and 564 others

Bundle for Racial Justice and Equality: 742 items for $5.00

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Deadly Fredly

2020-04-20 23:24:20

Where does your money go when you buy a game?



Over the years I’ve been asked a bunch of times questions like “What’s the best way to make sure you get the most money when I buy your stuff?” And, y’know, I’m me, so I tend to answer it at length.

There always seems to be one detail or another about my (usually very similar) responses that surprises the querent, which is a good reminder to me that despite my own increased understanding of how things work in tabletop games publishing, for many customers and fans it remains a smooth opaque surface with few windows in it.

So today I want to dig into the territory I typically cover when answering this type of question.

To me, it feels pretty relevant during the global quarantine. A lot of creators, publishers, and supporting businesses are struggling during the economic impacts of this, and that has prompted some folks to think a bit more about where their money goes.

So wash your hands and take a seat.

Direct Sales

I could end my answer to the question right here (but I won’t), because this is very often the way to make sure your intended recipient gets the most money from the transaction.

So, buying directly from the publisher or creator themselves (from their own website, in person, etc) very often is the way to go when you’re most concerned about making sure they get the majority of each dollar you spend on their stuff.

Generally the only thing cutting into the transaction itself is the payment processor fee (credit card, paypal, etc). These usually manifest as a small flat fee plus a small percentage (3–5%) cut of the overall total per transaction. The flat fee is the main snag here. It tends to mean that making series of small-dollar purchases of single items leaves the recipient with less money than if you’d put all of those items into your cart and buy them all at once, but once you get past a few dollars as the pricetag on each item, the flat fee isn’t that big of a percentage of the overall total.

After the transaction’s done, there are fulfillment costs. These are the costs of actually delivering the goods purchased to you.

If you buy digital stuff, the fulfillment costs are incredibly low; however much it costs to run the website for your specific interaction with it and push the modest amount of bandwidth needed so you can download the items. (Please make local, backed-up-to-the-cloud copies when you can; each time you re-download increases that bandwidth variable just a little.)

If you buy physical stuff, there are a few more variables, most of which have a pricetag. Key considerations are * How much of the actual shipping costs are you picking up, and how much is the seller subsidizing that shipping cost so you don’t have to (free shipping isn’t free, it’s just free to you)? * Are they doing the shipping themselves (spending more time on fulfillment) or are they paying a third party to ship to you (spending more money on fulfillment)? * What’s the cost to the seller of maintaining the inventory so you can buy it? (Storage fees here, plus some tax considerations around held inventory; plus, they have to spend to manufacture the physical units in the first place.)

Even with those slices into the costs, it’s often true that physical products remain king. They usually have a higher pricetag, so direct-sales revenue of physical items tends to be pretty great, which is one reason why Evil Hat sells its physical books with the electronic versions included for free; it produces a greater incentive for folks to buy the physical item.

Recipients: Creators and Publishers

As I talk about the receipients of your expenditures, I should ask you: who do you think the recipient is?

If the creator of the thing you want is not the same as the publisher you want, and your agenda is solely about making sure the creator gets the most possible money… you shouldn’t really stop at buying the thing they made, even if it’s direct. That creator was either paid a fee for the creative work up front (or upon publication, which is not as good), before it got turned by a publisher into an actual product, or will get a royalty percentage which is near always less than (likely far less than) half of what you paid for the thing.

If the publisher is doing work you want to see continue, great, buying direct from them when possible is a good strategy. Hopefully they’ll continue to hire the designers you like for future projects, thanks to your money. Publishing isn’t a low-cost endeavor by any means. One way or another, Evil Hat spends the majority of every dollar it gets on being able to continue to function, launch new projects, pay more creative folk.

If the creator is a big concern for you (and I’d argue they should be), look for ways that get them money more directly (their patreon, their publicized paypal donation link, etc). Creative work is a tough way to go. It’s a buyer’s market, and within gaming the margins and total sales dollars are low enough that that means it’s hard to muster the economic capacity to increase what the designers end up with. At Evil Hat we still try to make those increases when we can, while acknowledging that the costs of taking a design into product form (artwork, manufacture, fulfillment, maintenance, et al) tend to significantly exceed the costs of making that design in the first place.

Plus a lot of design work is not salaried, it’s freelanced project-by-project, which means that unless the designer keeps a constantly full plate with paychecks resulting at regular intervals from those projects in aggregate… the income’s just not regular or reliable. Income from other sources – whether that’s a day job (reducing the time to design) or some flavor of crowdfunding/donation support – is key for keeping the creatives in gaming afloat. So if you’re able to be one of those other sources, it can have a big impact for them.

I’ll continue to talk about recipients and publishers below, meaning both creator-publishers and other publishers in aggregate. Just remember to filter that word through this understanding. Not all recipients are the same, and if you’re interested in understanding where your money goes, it’s worth taking the time to figure out who the actual receiving party is.

Kickstarter

Kickstarter lives pretty close to direct sales. Kickstarter itself just adds another 5% cut on top of the payment processing fee, so aside from 8–10% of your payment going to the payment processor and KS, the rest will get routed to whoever’s running the project.

That said a lot of folks who run a Kickstarter don’t have a lot of experience on the manufacture and fulfillment side of things. Experience and (sometimes for a fee) experience surrogates are more available these days than ever, but I still see project runners getting goosed by unexpected cost factors in these two categories.

The more complicated your manufacture is, or the less established your relationship is with your manufacturer, the more there’s a chance that there’s a cost factor in there you didn’t expect, especially if there are multiple refinement rounds. The cost of getting the product delivered to your fulfillment center(s) can vary quite a bit. And in total, shipping to your backers is way expensive and many backers have been trained not to expect to have to pay much for it.

If a projectrunner has a good grip on all of that stuff, then backing for a physical goodie works plenty well; like I said above, physical games are still king. And with the higher pricepoints, your backing is a more significant step towards the project’s funding goal. But given all the potential gotchas, I will often back at a digital-only level, because the manufacture and fulfillment process and costs are much less fraught, especially for a first-timer. And as someone interested in the health of the project-runner, I’m very interested in producing the highest value for the lowest cost to them.

Pledge Managers

Pledge managers have really caught on, largely because Kickstarter continues to lag behind what pledge managers can do to provide robust tools for handling what goes on after a project funds and the campaign phase concludes.

I’ve personally only used Backerkit, but many other options abound. They have a few packages you can buy into (which have changed over the years), which essentially amount to: the bigger of a cut they get of any post-campaign money spent, the less of a percentage of your campaign’s take they’ll ask for as an up-front flat fee. Regardless, the cut they take is only a few percentage points of the campaign’s funding level, plus maybe a few percentage points of whatever you spend after the campaign in the pledge manager itself.

Patreon

Patreon warrants a specific note due to its subscription-style crowdfunding model, as opposed to Kickstarter’s fixed-length campaign model. That said, their fees aren’t that far off the norm, taking around 5% for the site plus whatever the payment processor costs were (sometimes baked into a somewhat larger cut, sometimes externalized in addition to the cut). What Patreon really brings to the mix is the potential for ongoing, semi-predictable (whether upon post/release, or on a monthly ongoing basis) income for the recipient. Ongoing income is really a different beast than “burst/event-based” income like Kickstarter, in terms of its effects for the recipient, but the net dollar amounts are usually quite small.

Itch.io

Itch has emerged recently, particularly in “indie” and creator-centric digital RPG sales, as a potentially interesting marketplace (I still find it difficult to use the site itself for discovery of games, preferring to visit itch when I’m directed to a specific publisher or creator’s branded sub-site, e.g., https://evilhat.itch.io/).

If I’m spending money on a PDF and want to be sure the most money makes it to the intended recipient as possible, itch is a great way to go, because itch lets each publisher set what percentage they get of sales (I believe there’s a minimum amount itch needs to get, but a publisher can always let them have more if there’s a solid reason for that).

In practice this means most publishers are getting a good 90% of sales money from itch, which is in nearly the same space as a direct sale via a Kickstarter or similar.

Beyond that I find that the site is fairly features-light, but as a fast and easy way for a creator to spin up a storefront for their digital wares, getting revenue nearly the same as spinning up their own with no added costs, itch is hard to beat…

DriveThruRPG

… but DriveThruRPG remains the big beast on the block in RPG PDF sales. And by big beast, I mean that they easily represent a good 80–90% of the market for gaming PDFs, if not more. The volume of sales you can do on DriveThru has trounced pretty much any other PDF sales venue (some of which have come and gone) that I’ve seen over the past 15 years.

DriveThru cements its position two big ways.

One is simply due to inertia and momentum: because they’re biggest, they’re good at staying biggest, because being the biggest means that most popular publishers and many others besides sell their stuff there. It’s about as close as you can get to a one-stop shop for gaming PDFs.

The other is the toolsets they offer. As a publisher you can also offer print-on-demand (POD) versions of your books (more about that below), and even POD cards and cardstock items like battlemaps (great for prototyping even if you don’t sell the items publicly). They’ve got some decent sales reporting and promotional tools too.

Both factors come together for their customers, because a) they have the large majority of all RPG publishers on the site, and b) all your past purchases go into a virtual bookshelf, allowing you to recover from, say, a drive failure without losing all your digital gamebooks for good, as well as allowing folks to just download books when they need them without much thought put towards local storage. (I still prefer local + cloud backup to the DriveThru bookshelf, but from listening to my own customers over the years there are plenty of folks who don’t.)

All of which adds up to DriveThru having quite a lock on the PDF segment of the market. Which is why they charge a lot more than, for example, Itch.

If a publisher agrees to be exclusive with DriveThru, listing PDF products nowhere else (I think there may be an exception for the publisher’s own website, if applicable), DriveThru gets a 30% cut. If it’s not exclusive, DriveThru gets a 35% cut. This can be blunted, slightly, if the publisher is good about providing a referral code in any links around the internet to their stuff on DriveThru; there’s a 5% kickback on “referred” purchases. But regardless, it’s a big cut.

In my opinion, you shouldn’t feel bad about this. If DriveThru’s tools are useful to you, it follows that it’s okay (even good) to pay them for developing and maintaining those tools as well as a site that’s available to you and able to push the bandwidth needed for all those downloads. The bigger a company is, the more robust the service offered, the higher the costs of just existing. It’s okay to pay both them and the publisher for the game you just bought — just don’t tell yourself that the publisher is getting more than 65–75% of what you’re spending.

Print on Demand at DriveThru (and elsewhere)

A quick note about print-on-demand stuff. When you’re buying POD, by and large you’re paying the folks manufacturing the physical product. The only way a publisher makes money on POD is through the mark-up on top of the (high, in a per-unit sense) manufacturing cost. So while POD can look like a direct sale, it’s really not.

On DriveThru, it’s only the mark-up that gets divvied up via the percentage agreement. So if I, a non-exclusive publisher, sold you a $20 POD item there that behind-the-scenes cost $10 to print a single unit, then the remaining $10 would be $6.50 to me and $3.50 to DriveThru. The POD printer would get $10 (plus what you paid for shipping) to go towards their actual costs of manufacture and getting the item shipped to you.

Distribution, the Funnel into Retail

Distribution is the term for the middle-men in game sales, situated between publishers and retailers. Their job is to provide a single source for the games of many publishers, so a retailer can place a single order to get most of the stuff they need from their store, rather than buying publisher-by-publisher, and saving on shipping fees.

Publishers sell their stuff to distributors for typically 40% of the cover price of a book. Distributors sell to retailers what they get from publishers at a price that’s between 50% and 60% of the cover price.

So, the distributors are making between 10–20% of the cover price, the retailer is making 40–50% of the cover price (less discounts offered to secure your purchase), and the publisher is making 40% of the cover price regardless of how discounted your purchase is. In fact, it’s largely the case that the publisher already made that 40% some time before you make your decision to buy their item from a retailer, the way things work.

It can be tempting to look at that and think, hell, why ever do anything other than buy direct? But a publisher is “buying” a lot of reach and, potentially, support with that 60% they’re not getting. For Evil Hat, a large majority of our income is from distribution sales, even if we’re only getting 40% of the cover price on each sale. And if we lost this sales channel (which, during COVID shutdowns, we nearly have), other sales sources (especially digital, which can continue to operate with little trouble) simply don’t make up for what we’d lose. Our stuff would be in front of fewer customers, and would sell less, which would lead to us making less stuff. Bit of a snowball there.

More to come on this piece of the puzzle in the next several sections.

Consolidators

I don’t have any personal experience with consolidators, but here’s the gist.

As a publisher selling to retailers, I take purchase orders from each distributor that wants to sell our stuff, make sure the folks handling our warehoused inventory for us (Alliance, as it happens) ship them what they ordered, and invoice them so we can get paid within a couple months (and chase them down when they don’t pay on time).

I don’t mind this work. Some publishers do.

For those publishers, a consolidator condenses the whole distro-retail pipeline to a single party (and cynically, to a single potential point of failure).

In essence, consolidators act as middle-men to the middle-men. Where distributors sell to individual retailers (so a publisher doesn’t have to make each of those connections and hope there’s enough interest to make a shipment worth it with each of them), consolidators sell to individual distributors, handle storing product and shipping it out to distributors as orders come in.

As I understand it, for this service consolidators generally charge about 10% of cover, so a publisher’s cut drops from 40% to 30% when using a consolidator. Those prices may have shifted around since I last learned of them, so if you’re a publisher reading this and you want this, do your research.

For my math, losing a quarter of my distribution revenue in order to not have to deal directly with each distributor is not good math. But each publisher’s capacity varies in flavor and magnitude, so that’s far from universal.

IPR (Indie Press Revolution)

IPR is a wonderful and weird hybrid. For its publisher clients, IPR is a distributor, a direct sales site, and a route for convention presence. They operate on a consignment basis, which is to say that publishers own the inventory that’s stored with them, and IPR pays when it sells one of those copies.

As a distributor and convention presence, IPR offers slightly better terms, paying publishers 44% of cover when they sell a game in either of those contexts. IPR retains 11%; their retailer clients buy the game at 55% of cover price.

As a direct-to-customer sales website, IPR pays publishers 80% of the list price for PDF sales, and 70% of cover price for physical sales. These percentages being as high as they are have made them a viable option for small publishers who don’t have the time or resources to commit to running and maintaining a website store of their own.

Outside of the numbers themselves, IPR is useful to small-scale indie publishers with physical products, because IPR is oriented on exactly those sorts of publishers, whereas a number of large distributors won’t have any interest in doing so. As a result, IPR is sometimes the only opportunity an indie has for getting their games onto gamestore shelves. Evil Hat started with IPR, and they’ve done right by us for over a decade.

(At the time of this writing, IPR also remains open and operational during the global quarantine. They’re located in the middle of a desert in Nevada; really isolated, and as a shipping company, designated essential by the state.)

So IPR getting a smallish chunk of your money (11–30% depending on the who, what, and where) as part of a purchase through them, whatever the context? Yeah, worth it. You’re supporting a business that’s truly valuable to a bunch of publishers at the smaller end of things.

Friendly Local Game Stores (Brick & Mortar Retailers)

As noted above, game stores are typically buying items from distributors at between 50% and 60% of the cover price. These sorts of seemingly big discounts are necessary for retailers to do business.

The margin retailers can make as profit on a sale goes towards to be able to pay rents and salaries, and to take the occasional risk on new games, re-buy games that do sell, and offer modest-sized discounts to their customers.

That margin also shores up those gambles that don’t pay off. By the time a game is on a shelf at a book-store, the publisher who produced that game has already been paid for it. But if a retailer buys a copy of a game and it doesn’t sell, they have to rely on the sale of other items to absorb that sunk cost. If they buy a copy of a game and it does sell, that’s also where they get the money to buy it again.

As a publisher, initial orders are great, but repeat orders are superb. And remember, for Evil Hat, distribution (which relies on retailers to buy publishers’ stuff) is the majority of our company’s income.

So, yeah. Buying a game from a retailer is mainly about supporting that retailer; they’re getting about half of the money you’ve spent for themselves, while the other half goes towards covering the expense they’ve already paid to have what you’re buying in stock. A healthy, supported retailer in turn extends the reach of publishers to customers who might not otherwise know about them, and that’s what drives future and ongoing sales, keeping many a game company afloat.

So especially in times of economic crisis, support your local game store! Your money goes towards preventing the collapse of the ecosystem that allows our hobby to thrive.

Amazon (and other online-only retailers, to an extent)

Amazon and other online-only deep discounters leverage their lower-than-a-physical-store’s running costs by selling games (and other things) at discounts that put the sale price much closer to what they paid for it, themselves. This can and often does undermine brick and mortar retailers, who can’t afford to give up that much margin if they want to survive. They can also afford to do things which would, in terms of subsidized expense, kill smaller businesses (and they often end up doing exactly that), and they can also afford to treat their workers poorly.

But hey, free shipping, am I right?

Evil Hat’s stuff on Amazon gets there via a single Amazon-focused distributor called Flat River. Flat River buys our stuff at the distribution rate, like all our other distributor clients do. They just sell to a different kind of retailer.

And, really, I can’t ignore the revenue benefits of getting our stuff onto Amazon: fairly consistently, Flat River is our largest single source of revenue each year, beating out the largest national games distributor, Alliance by at least a little. Add up all the distributors selling to brick & mortar retailers, and the brick & mortars are in aggregate still doing better for us overall.

When we added Amazon as a customer of ours through Flat River, our revenue from the other distributors didn’t drop that much at all. That’s a strong indicator that Amazon is also reaching customers that won’t buy from a local game store, or can’t because there simply isn’t one near at all, or at least one that carries what they’re actually interested in. Which… makes them even less ignorable.

So while their discounts and free shipping inject a certain amount of poison into the overall picture of gaming retail, Amazon is also getting games where they can’t otherwise go, and serving customers who might not be able to buy games otherwise, for whatever reason.

Still, in terms of putting the most good into the world with your dollars, they should be the last option you consider. Money that’s needed to maintain the health of the hobby’s industry (see all of the above) ends up staying in your pocket instead.

And, hey, if that’s the way you need to go, I get it. Being able to pay more than you strictly have to for games is a privilege that many simply don’t have.

4000 Words And You Still Haven’t Given Me a Quick Reference, Fred

Well, that’s true. Thing is, I really, really like to make sure that when I’m sharing facts that I’m also covering the context in which those facts operate. So, I made you read or at least scroll through all of that valuable context crap first. Sorry not sorry.

Still, here’s your quick reference.

I’m buyingFromSo the publisher gets
PDF or Physical The Publisher 95-97%
PDF or Physical Kickstarter 90-92%
PDF or Physical A Pledge Manager 90-92%
PDF or Physical Patreon 90-92%
PDF Publisher’s itch.io 90%
PDF DriveThruRPG 65-70%
Print on Demand DriveThruRPG 65-70% of what remains after deducting the cost of manufacture.
PDF IPR Website 80%
Physical IPR Website 70%
Physical IPR at a game convention 44%, plus making sure the publisher’s stuff continues to show up at conventions
Physical Local game store or online retailer 40% (or 44% if supplied by IPR) or 30% if sold into distribution through a consolidator; supported stores help in other ways long term.
Physical Amazon 40% in the least best way, but hey, free shipping!

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http://www.deadlyfredly.com/2020/04/where-does-your-money-go-when-you-buy-a-game/

Chuck Dee

2020-03-17 18:29:38

#Tabletop #RPGs

https://www.drivethrurpg.com/product/25121/Teenagers-from-Outerspace

Chuck Dee

2020-03-17 18:29:38

#Tabletop #RPGs

https://www.drivethrurpg.com/product/25121/Teenagers-from-Outerspace