Rolling for Initiative is a weekly column by Scott Thorne, PhD, owner of Castle Perilous Games & Books in Carbondale, Illinois and instructor in marketing at Southeast Missouri State University.  This week, Thorne looks at the effect of Diamond Comic Distributors' bankruptcy on the games industry.

It is not just the comic industry getting hurt by the Diamond bankruptcy, although comic publishers are taking the brunt of it (see "Hostage Inventory and the Diamond Mess").  Games publishers are getting hit as well, though apparently those selling though Diamond's Alliance Game Distributors subsidiary are not having problems getting paid.  But a number of game publishers also sold directly to Diamond.  Stephen Glicker, publisher at Roll for Combat, posted a video last week discussing the Diamond bankruptcy and its effect on his business and others in the industry.

Under the agreement Diamond signs with many of its suppliers, the company acts as a sales agent, rather than as a merchant wholesaler.  The difference is important since a merchant wholesaler takes ownership of the products it distributes while the agent performs most of the distribution functions for its clients but does not take ownership of the products, only paying the publisher when the product sells.

Why do game publishers use Diamond as a distributor, rather than one of the distributors dedicated to servicing the game industry?  Well, Diamond gave them access to Barnes & Noble and Books-a-Million as well as public libraries across the country, which distributors like Alliance, ACD and Magazine Exchange do not.  Getting the opportunity to sell to those nationwide accounts and the potential to move thousands of copies of their books proved irresistible and Diamond has been in business for over 40 years with little indication there were any problems with the company until the last few years (see "Origins, Dominance and Now a Gut Punch").

Even though books from over 180 publishers are held by Diamond on consignment (meaning the publisher does not get paid until Diamond sells the product), Diamond is arguing that under bankruptcy law, they can liquidate them to pay off creditors (see "Diamond Seeks to Take and Sell Consignment Inventory").  Publishers will have to jump through assorted legal hoops in the unlikely hope of getting their products returned to them.

It is not likely that these liquidated products will be offered to retailers in the hobby game channel.  More likely, they will go to mass market liquidators such as Ollie's, Direct Liquidators, BULQ and BlueLots.  Ergo, if you happen to see comic or RPG merchandise offered at one of those over the next several months, it is a good bet it came from Diamond.

Glicker says Roll for Combat will make it through, though it will be rough; and I have seen posts from a few other affected game companies saying that while the loss of product hurts dramatically, they should be able to weather it.

Comments?  Send them to castleperilousgames@gmail.com.

The opinions expressed in this column are solely those of the writer, and do not necessarily reflect the views of the editorial staff of ICv2.com.