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It’s Business: So You Want to Publish Games?

posted Aug 6, 2012, 1:54 AM by Douglas Sun
Originally posted: March 15, 2009

Even though I have never actually worked in the business side of a game company, my perspective on the industry is so much different now than it was before I started binding my professional fate to this publisher or that. When I was a consumer only, I would see publishers put on their best face at conventions, or go into a game store, and take what I saw pretty much as it seemed. I knew that game companies were born, lived for varying lengths of time, and then sometimes died; but I never thought much about how and why. But getting to know some of the people who do make the business decisions in the game industry gave me a closer look at how the sausage is made and changed all of that.  

In particular, this experience has granted me one fundamental insight: Sustained success publishing games is damned hard to achieve, and for reasons that are inherent in the nature of the product itself. It’s not that games are a recreation and therefore a luxury, so I won’t make the argument that you can’t eat a D&D Player’s Handbook or put it in your gas tank so people aren’t forced to buy it. It’s that games are durable goods, and unlike other durable goods (like major appliances) they get sold at low price points and fairly low profit margins.

To take an example from the mass market: Monopoly is one of the most popular board games in the world (certainly, it was a favorite of mine as a kid), but even the most enthusiastic Monopoly player could run off and hide with his copy and Hasbro might never sell him anything else in his lifetime. A copy of the game could theoretically last decades; it would take a lot of hard use to truly render the components unusable, and even if you lost a few houses, or some currency or a token or two you could still make do. You wouldn’t have to buy another copy. But in the meantime, the $15 that you shelled out to Hasbro and its distribution chain has long gone, and they need to generate new revenue to stay in business. That means either expanding the audience for Monopoly year over year so that you keep selling copies, or you publish new games every year that will supplant your customers’ interest in your old games. In the first case, you may find eventually that there is a natural limit to people who enjoy Monopoly. In the second, you will certainly find that good ideas are hard to come by. There is a reason why Parker Brothers and Milton Bradley no longer exist as going concerns.

You may counter-argue that Hasbro has gotten around that problem by publishing different editions of their most popular games, and through marketing tie-ins. There are those endless and mind-numbing collector’s editions of Monopoly. Fair enough.

But when you look at the core hobby market through the lens of that dilemma, the problem really becomes apparent, because the audience for those games is so much smaller, and the business of publishing them so much more fragile. For instance, the fact that there is still an active secondary market for Advanced Dungeons  & Dragons books suggests that there is still a solid core of players who, 30 years on, are still playing AD&D. Those old hardcover books were made pretty sturdy, and even if they wear out (i.e., accumulate too many grease, soda and ketchup stains), you can easily find replacements on eBay or Amazon Marketplace. Even if these same folks dipped their toes into AD&D 2nd Edition, 3E, 3.5 and 4E, they’re still playing a 30 year-old game, and TSR/WotC didn’t fully monetize them according to the Platonic ideal of how a new edition of the game would work as a business proposition.

I use D&D as an example simply because of its age; obviously, TSR dominated the game industry for a respectable length of time, and Wizards of the Coast remains the 500-pound gorilla of the industry today. But it does illustrate my point that game consumers can effectively jettison themselves from publishers and still get plenty of value for their time and money, even as publishers would like to have ongoing revenue from them in order to survive.

Well, this has gone on longer than I’d intended. It’s really just a prelude to a series of observations on the business of publishing core hobby market, with which I hope to kick this blog into orbit. These posts will follow, in time. Got another Legend of the Five Rings RPG book to edit right now. Also in the meantime, there will be a post on an old friend who reappeared in new clothes last year, Nobunaga’s Ambition: Rise to Power. Just have to crush the Uesugi Clan, and I’ll be good to go with it.