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Subject: The End of Gaming; Is Armageddon in sight? How to avoid it? rss

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Bonaparte
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If our current economic dip continues with any staying power, can game companies survive? Most of us have not lived through serious economic difficulties. As individuals, perhaps, but not sustained global economic recession. The preorder system has stabilized companies like GMT and MMP. GMT particularly was in trouble, and if I understand it, barely turned the corner in time a few years ago. Some have questioned if Days of Wonder may be in trouble as well.

If money becomes short and people start canceling preorders, stop making new orders, and game stores go belly up (which they will do in a hurry with a serious recession and credit crunch), will these companies make it? I think it will be tough. The reliance on preorders to evaluate demand is tricky if they dry up. The reliance on preorders to sustain current production could be catastrophic.

If they do get in trouble, how might they sustain themselves for the duration of the slowdown? Stock reduction sales? Less expensive games with cheaper components? Sell out to Hasbro?
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Jeffrey D Myers
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The silver lining for the players (as opposed to the producers) would be that we could concentrate more on our old games.

"Play new games, but keep the old; one is silver, and the other gold!"
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John Di Ponio
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This economy really has me concentrating on my collection. I am trading/selling many items and keeping and in some cases, expanding the ones with all the supplements that I plan to keep! I have way more that I am trading/selling than keeping. My pre-orders are WAY down...I have cancelled about 70% of what I had only keeping things on order that I WILL play close to right away. I am not one that keeps multiple copies of games...I like to play what I have (for the most part) and protect what I have aquired so that my kids (or whoever ends up with the game) will have a game in VERY good condition!
A tough economy makes you appreciate what you have and what you realy don't need!!!!
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Ryan Diel
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We will all look forward to new Print'n'Play games!thumbsup
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Paul Whittenhall
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After working many years in a music store, a video game staore and a software store, I can tell you that during a recession people tend to buy entertainment items like games and cds. The thought is is that people would rather spend their money on items that they can use over and over again. I think all retailers and manufacturers will take a hit this time around but I think they will all still be around in the end.
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Michelle
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I think with the cost of everything going up, gamers will concentrate more on their games and perhaps, more people will find gaming as a relatively inexpensive way to enjoy themselves.
When I look at a game I would like to buy, I look at the price and compare it to an evening out. Will I get more out of paying $50 for say, Combat Commander or having dinner at a restaurant?
Same goes with movies or whatever you usually do. Add the cost of gas in and you might not feel so bad about buying another game.
There might even be more people discovering games when they feel they can't afford to keep going out.
This might be rationalizing it on my part but I don't have enough games to get me through a recession yet.
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Martin Gallo
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There was a news item last week about game sales being up because people are staying home to save money on Friday nights...
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Chris Ferejohn
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Just to be devil's advocate: it is also possible that more people may turn to gaming to make their entertainment dollar stretch further. As is oft repeated on this site, taking a family of 4 to a movie is $30-40 if you don't buy any concessions. If you get food and drinks, you're looking at $70-80 pretty easy. That's enough to buy a game and still have enough left for a pizza/hot dogs/inexpensive family meal of choice, and at the end of the night you still have the game.

Libraries evidently have become much more crowded in recent weeks as people seek to stretch their dollar. While I'm not suggesting that the economic crisis heralds a boom for the gaming industry, it certainly doesn't have to mean a total wipeout.
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Scott Woodard
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My work situation has been varied and unpredictable over the last couple years. Because of that, I rarely buy new games any more (maybe 6 boardgames in the last year) and I'm occasionally selling off games from my collection to help out.

We're not in terrible shape just yet, but it is pretty distressing how it is impacting one of my favorite hobbies.
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Caleb
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Most gamers own more games than they've played. I for one am certain that, if all game companies went belly-up tomorrow, I'd happily play through my collection of around 85 games with very limited acquisitions from second-hand markets.

As with any hobby, anticipation of new acquisitions is high. I have Niagara and Princes of Florence coming as the result of a trade, and my Texas Glory pre-order should hopefully be shipping soon. But I don't *need* new games when I have a bunch of games in my collection I've played exactly once (War of 1812, Alhambra, Thurn & Taxis, Quebec 1759, Medici vs. Strozzi) and a lot of games I've *never* played (Princes of Florence, Niagara, Kingdoms, Fish Eat Fish). I would not need to buy any new games if they were unavailable. Of course I still maintain a wishlist and plan to buy some games over the next several months, and of course it's best for the hobby as a whole for these companies to stay in business and continue to produce great games.

If the global economic downturn is severe and prolonged, I think you'll see some companies (those on the margins already) go under, and the rest will probably scale back production, lay off staff, and morph into part-time enterprises producing only a few games each year. In the long run this may be beneficial, because I think there are a lot of lousy games being produced each year along with the great ones. The lousy or marginal games will be the first to go.

Assuming the economic downturn is really bad (e.g. depression), you'll see most game stores and publishers close. This will have the effect of reducing prices on the open marketplace (e.g. eBay) as they and their creditors liquidate stock. Subsequently, with no new supply, prices may stabilize or even rise, but of course if everyone's hurting economically, demand will fall too. It's more likely that those with stable finances will be able to buy games at bargain-basement prices, compared to today.

As the economic situation stabilizes and improves (as it must at some point, be it in 18 months or 5 years), some companies may come out of hibernation, and others will enter the marketplace, and production will begin again as demand once again rises.
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1603-1714
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I don't think the end of gaming is coming, but I must say I have cut back on my planned game purchases and I certainly don't think I'm the only gamer who has or will do this. I still want lots of games, but I've decided (with some input from my lovely wife) to put these game purchases off until the economy improves. Too much is uncertain about the economic future at the moment and more games are not a necessity for me. While it's easy to say that a $50 game is a better value that a $50 meal at a restaurant, it's not easy to say that a $50 game is better than $50 worth of groceries. Plus, Christmas is coming up and I'd rather spend the money on gifts for my kids (and of course, I'll by them some games and I'm sure my wife will pick up a couple for me). Hopefully these economic problems begin to clear up sooner rather than later.
 
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Alan
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I don't think the end is in sight at all. How long have games been around? Have the weathered past storms? Do we still have FLGS' in spite of past recessions and downturns? There's no question in my mind that they will survive.

Of course, it's the quality of that survival that lies in doubt. As a whole or in general, there will be FLGS' around. But will your particular FLGS survive? No clue, and I don't know that anyone can predict it with any degree of certainty.

I see a few competing motivations or arguments. In an economic downturn/recession:
(+) People tend to turn towards more permanent forms of entertainment (e.g., towards video and board games, away from movie theaters and theatre/concerts).
(-) People spend less money and, thus, fewer people will be purchasing board games.

Personally, I spent a little too much on board games in the past year. I can guarantee that I will be reducing my spending for the next year, limiting my purchases to the ones I *really* want. I don't know how much of the industry's sales are derived from the hardcore, repetitive buyers (in which I would include myself), but I expect that demographic to reduce their purchases. As noted above, however, it is likely that the overall population will increase and new people will buy games. I don't know whether that will/would be enough to offset the hardcore loss.

I don't know my elbow from an investment, so the above is just quasi-random, unsubstantiated musings. Take with boxes of grains of salt. I admit to knowing nothing, though I also often know something about everything, anything about nothing and everything about something.


EDIT: Excellent tag for this thread.
 
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Bonaparte
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I agree with many of you. I could live the rest of my life and never purchase another game. My collection, combined with my game group, would last more than my natural life. Along with that, I am getting good mileage out of BGG trade system.

As far as the value of games to movies or dinner out, that is true, but I don't think sustaining. Certainly some will see the repeat value of games, but if money is tight, they will not be buying substantial quantities and most will turn to Scrabble or Apples to Apples.

For me, I do not know how long this financial dip will last, but if it is a year or more, I do expect significant impact on game stores and suppliers.
 
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(ʇllıʍ)
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cannoneer wrote:
Most gamers own more games than they've played...


I totally agree that an economic slump is not necessarily a death sentence to the gaming industry. [hijack] I do, however, wonder whether the statement quoted above is correct. Certainly a few hundred of the more active members here on BGG have many unplayed games on their shelves, but what about everyone else? Do you really think that the 95% of people who play games that have never visited BGG "collect" unplayed games? [//hijack]
 
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Kristi Belmonte
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If demand drops, and it will, supply will drop. If these drop, suppliers will drop. It does not matter if it is game stores or coffee shops. Luxury suppliers will feel the pinch first. Only the efficient will survive. Social Darwinism.
 
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Caleb
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WillT wrote:
cannoneer wrote:
Most gamers own more games than they've played...


I totally agree that an economic slump is not necessarily a death sentence to the gaming industry. [hijack] I do, however, wonder whether the statement quoted above is correct. Certainly a few hundred of the more active members here on BGG have many unplayed games on their shelves, but what about everyone else? Do you really think that the 95% of people who play games that have never visited BGG "collect" unplayed games? [//hijack]


Of course not. In that particular section, I was referring to people here on this site. I think it's a fair representation to say most of us own games we haven't had a chance to play yet.
 
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Andrew Brannan
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I hate to say it this way, but game companies come and go all the time. When they do, other companies buy up what they had that was worth something to them, and discard the rest. When cash becomes available again, new companies will spring up to replace the fallen. It's all part of the economic circle of life. Fortunately for all of us, the barriers to entry in the games biz are fairly low. Not much gov't regulation, no expensive factories to build, not a lot of employees needed, etc.


Remember, Monopoly was developed during the great depression.
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Jeff Hinrickson
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We will have to have a board game company bail out.
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Ralph T
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Game companies need to rely less on making new titles and game development, as opposed to expanding the reach of its older titles that were proven successes. Making new titles every season that only the gamers is a losing proposition--it was Avalon Hill's business model. Why did they need 200+ titles, instead of just focusing on flagship titles? And raising prices when the number of buyers is falling is not going to help your bottom line.

I'm surprised that so many companies persist making this mistake. GMT especially. There are enough game titles to last a lifetime. Produce the ones that were good--put them back in print. Expand your reach to retail chains or online stores. Make a new edition and improve components and lower cost of production. Sell direct from Amazon or to your customer.
 
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Bonaparte
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ralpher wrote:
Make a new edition and improve components and lower cost of production.


Can all three of these be done at the same time? You can do A + B or C but not A, B, and C.


ralpher wrote:
Sell direct from Amazon or to your customer.


This undercuts your retailers. If a company wants to go to direct purchase only they can, but that meets with significant disapproval as well.
 
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Will
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ralpher wrote:
Game companies need to rely less on making new titles and game development, as opposed to expanding the reach of its older titles that were proven successes. Making new titles every season that only the gamers is a losing proposition--it was Avalon Hill's business model. Why did they need 200+ titles, instead of just focusing on flagship titles? And raising prices when the number of buyers is falling is not going to help your bottom line.

I'm surprised that so many companies persist making this mistake. GMT especially. There are enough game titles to last a lifetime. Produce the ones that were good--put them back in print. Expand your reach to retail chains or online stores. Make a new edition and improve components and lower cost of production. Sell direct from Amazon or to your customer.


Or a combination strategy. Try out some new games (but not a crazy 200+ like AH), but also keep in print or bring back to print new edition of the more successful titles, and expand them, etc.
Then you can keep more people happy, the ones that want something new, and the ones that like the good ole games
 
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Bobb Beauchamp
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I don't think it's about demand...although to a degree the market will be shaped by that. When demand drops, companies can always drop supply to match. We might see some lines cease to get support, but games are one area that a recession might actually benefit from. Boardgames are durable goods that often provide repeat benefits. Even console games, which in price are comparable on their own to boardgames, provided one already owns the console unit, only provide a limited amount of hours of play time, and often for only one or two people.

So as the cost of travel, food, and outside entertainment increases, the value of in-home entertainment goes up, making boardgames a more attractive buy.

What's going to matter is how the production company or FLGS has established how their business is run. If they've come to depend on using credit for everyday or repeat costs, like payroll and inventory, they're going to have a hard time getting by. Credit is tight and scarce, and you can't rely on it to be there these days. So businesses that were smart and limited their operations to cash-on-hand will weather things better than those that routinely took out loans to restock or pay salaries.
 
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Tom Grant
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A few observations...

For companies like GMT that use it, the P500 model might cushion the impact of the economic downturn. The list of new P500 items might have to shrink, however.

If game buyers are looking more strategically at their purchases ("What am I likely to play more than once?"), impulse buys are likely to drop.

If buyers are waiting to see which games are actually any good, the latency period between a game's release and the initial spike in its sales might lengthen. If so, it might be harder for game vendors to tell, in the first few weeks or months, if a game is a hit or a turkey.

Collectible games may take a big hit. Magic and other CCGs survived earlier economic downturns, but the wealth of non-collectible games is much larger now than, say, 2001.

A big loser might be the new edition of D&D, to the extent that its business model depends on gamers buying boatloads of plastic miniatures. If WOTC/Hasbro sticks to the old D&D model (miniatures are nice but purely optional), they might be able to convince more consumers to "upgrade" to the new D&D (and, of course, all the follow-on supplement sales).

Game stores might take a bigger hit than game companies. I'd hate to bet my business on predicting which games will be worth stocking.
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tony brotherton
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A slightly different perspective is that the digital media revolution is the Armageddon of traditional business models.

We are now in an era of digital consumerism, gone are the days when the majority of disposable income was spent on things like CDs, DVDs and even books. The popularity of mass downloading (and piracy) has reduced the intrinsic value (and reproduction costs) of many of these items to a level where they cease to be come luxury items.

However, when considering boardgames, they are relatively difficult to reproduce digitally, piracy is minimal and have therefore retained much of their intrinsic value. This may insulate publishers from the worst of the credit crisis as the relatively small production runs are snapped up by bggers the world over.

IMHO it's more likely that we will see increases in the production costs of games and a subsequent re-focusing of product lines in an attempt to reduce losses.

As for Pre-orders, are they really a barometer of success which prop up publishers? or are we all now re-booting our hype-o-meters in the 20/20 hindsight that is BattleLore/Starcraft etc etc

BTW I will still be pre-ordering Munchkin Quest and Moto Grand Prix
 
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tony brotherton
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jjloc wrote:
We will have to have a board game company bail out.


Will that be $700Bn in monopoly money?
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