Get In The Game is a weekly column by Dan Yarrington, managing partner of Myriad Games in Manchester & Salem, New Hampshire, Treasurer of the Professional Game Store Association, and Editor-in-Chief of GameSalute.com. This week, Yarrington talks about the best ways to sell out.Welcome back to Get In The Game, a column that explores proactive ways we can improve the games industry. This week we discuss the best ways to sell out.
A Broken System
Here's what happens in the current product life cycle:
â— Designer designs a game.
â— Publisher does all the product development and gets it ready to print.
â— Publisher announces yet another game (claiming--along with every other publisher--that their title will be one of the best games released this _____ [quarter, month, year, decade, century, etc].
â— Stores don't preorder (For a variety of reasons including: lacking any way to filter the information about the onslaught of new titles, lacking any effective way to anticipate demand, or any significant incentive to preorder).
â— The publishers do very little in the way of promotion or test marketing before the actual print run has been ordered.
â— The publisher guesses how many to print, perhaps what they think will sell in a few months to a year.
â— The information starts flowing out from the publisher as advertising campaigns begin and limited numbers of preview copies make it out into the world.
â— The product releases and either sells according to expectations, below expectations, or above expectations.
â— The publisher decides what to do next.
It's small wonder that most games fail to sell out of even their first print run, given this dysfunctional system. The buyers and the sellers aren't talking to each other. At least not in any meaningful way. We’re all just guessing. After the product releases, there are two outcomes. Either the game sells out of its initial print run quickly or it languishes in warehouses and on store shelves.
It's A Dud
Most games fall into the category of titles that do not sell well enough to warrant being reprinted. What happens to them then? Either the company quietly discontinues them, selling out of remaining inventory over time (with cash flow tied up all that time), or they reprint and tie up even more cash flow in the hopes that eventually the product with catch on. There's no industry-wide support system for clearing old inventory. There are a ton of products that would sell at an optimal price, but publishers usually resort to selling them at a discount at conventions or through online discount sites. There's no effort from publishers to adjust the list price and push that inventory through the entire channel. Take a game that's overpriced at $85 but would sell great at $50. Or a game that's overpriced at $60 but would sell well at $40. There should be an orderly method for sending that product through the system with price adjustments and credits (additional inventory to balance stock on store shelves, bundled in with a reorder of other products from that publisher or supplier) to bring the system to equilibrium. See the video games industry for examples of how this is done successfully, though I'll grant the economics involved there are drastically different. Rather than seeing a dud show up on RandomDealofTheDay.com, it could be sold into stores all around the country at price points that would actually move. Fantasy Flight does this once a year for their holiday sale, but there's no integration with stores in advance. This should be a standard practice to move old inventory and free up cash flow. That's one way to sell out of a disappointing title and move on to the next.
It's A Hit!
But what about when you have a hit! You don’t need to worry about anything. You want to sell out as quickly as possible, right? You'd think that selling out instantly would be the optimal outcome in this scenario but it's not. Far from it. Selling out is actually stifling growth of the hobby industry and these publishers. Take a hit like Quarriors from WizKids. With a very strong promotional campaign including preview copies to stores, exclusive promo cards at launch, and a solid game, Quarriors launched on August 10th, 2011. Less than two weeks later, Quarriors sold out at all warehouse locations, right when stores needed a restock. It happened suddenly, in a matter of days. All lights show green and then a day later everything is sold out. Where's the early warning system to ensure that stores all over get a reasonable chance to restock? In reality, larger dealers that move many dozens or hundreds of units have better incentives for monitoring supply levels every day for the hottest items. This means that when stock levels get low, a handful of dealers can move in and buy up most of the inventory in one fell swoop, leaving hundreds of stores out of stock for months while major online dealers have plenty of supply.
As a publisher that's great, right? You have people clamoring for your game and the popularity of the title increases based on the scarcity. Reprint and increase the quantities! Sell through for the products on store shelves will surely follow in the interim. This would be great, except that the length of the reprint window loses most of the steam that you were building. By the time the next wave of product arrives a few months later, buyers are on to the next hot thing and a mere reprint of that once-hot title is now lost in the tide of incoming products. And all the stores that missed the product before it sold out and want to carry it in the weeks that follow the sell-out? T hey called during that window of a few months to try to get it, but they heard some combination of "it's out right now," "it's gone," or "we never had that." So now, by selling out to a limited number of outlets, you're missing the opportunity to get into hundreds of local stores. Maybe only a copy or three at a time, but each of those outlets provides exposure to hundreds of gamers in that local market.
There's a better way. Many of them in fact.
Sensible Solutions
Set a threshold level to trigger a reprint. When you reach that quantity of stock remaining, begin the reprint process (if the sales velocity was enough to warrant a reprint). At the same time, move to reserve inventory rules, and limit how many copies a given store can pick up per week, with an eye toward making your remaining inventory last at least a couple of months. This provides an opportunity to get into those new markets--those stores that call and ask for a couple of copies of YourHotGame™ that they just heard about--6 weeks after it came out. You can even provide additional support to stores that preordered or participated in promotional launch events.
Help make your educated guess on print run size more educated. Run a preorder promotion where participants get the product early--perhaps 2-3 weeks in advance of stores that did not preorder. Just send the product early to the stores that committed early. Then allow priority restocks to those same stores and then fill remaining orders. Even if you only have educated guesses and minimal participation from stores as you start this system, that participation will grow as stores start to recognize the sales benefits of being a part of supporting your sales by getting you real numbers.
As a publisher, you can help make the process of selling out a healthy part of your product cycle that works with your sales partners. The tools are already in place. They're simple and sensible. And we're already seeing major publishers taking these steps on a single product basis. They need to be integrated into the entire product life cycle as a regular part of business.
But Why?
Why should publishers make that extra effort to support product access to stores all over, rather than just selling out as quickly as possible when they have a hit? Why should they reduce their prices on products that are underperforming in a cooperative effort to make those products profitable for the whole channel? Because, in the end, as a business, you're aiming to make as much profit as you can. You don't do that through short-sighted sprints. You continually grow and build your pace and stride, step by step, mile by mile, game by game. You demonstrate your dedication and support for stores that spend their time, energy, and money buying, sharing, and selling your games. Each of those relationships builds into future opportunities. In short, you do it because in the end it makes you and your business partners better off.
Talk Back!
What's your experience with a product selling out when you least expected it? What products have you successfully prognosticated on and profited because of it? What incentive would you want to participate in a real preorder system? Share your thoughts by September 1st and you’ll be entered in a drawing to win a Free Game. Talk Back today!
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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.