State of the Gaming Industry

The most recent issue of Comics & Games Retailer, the sole trade magazine for the industry, arrived in the mail yesterday.

This is the “State of the Gaming Industry” issue — and I figured I’d post some summary and comment here, since if I do it at any of the usual gaming fora, I’ll be shouted down by wishful-thinking uninformed gamers, who seem to feel that any statement of how bad the industry is doing is somehow an attack on their very identity, and hence argue the contrary with all of the reasoned and logical thought that you’d expect from a Relgious Fundamentalist.

C&GR is flawed, to be sure, since it relies primarily on estimates based on a self-selecting sample, but, as I’ve said before, it’s the best thing we’ve got, and I’ve seen no major indications in my 10 years of reading it that it has ever been too far off the mark.

So, how’s the industry doing?

Let me answer that by giving you the titles of the main analysis article in the issue:

“2006: Extinction-level Event.”

Articles on various facets of the industry (distribution, freelancing, retail) are sub-titled: “That which does not kill us makes us stronger,” “A hard year, but we’re still here,” “Freelancing in interesting times,” and “A glass half empty is still a glass half full.”

Are you getting the picture here?

Here are some sobering quotes from the main analysis, by James Mishler:

  • “In 2004, the adventure-game industry lost 25% of its core game stores to closures, mergers or diversification. Over 2005, our estimates put the loss at an additional 20% from the number we stood at in January 2005. From 2000 core stores in January 2004 to 1200 core stores in December 2005 represents an overall loss of at least 40% — two out of every five stores that were with us two years ago are gone today. In addition to stores lost, the last year has seen dozens of role-playing game publishers close up shop, perhaps 25% of all game companies all told — albeit mostly d20 System publishers — even though that “shop” was often nothing more than a section of the garage at home. And we lost one major distributor, as well as at least one fulfillment house.”
  • “Trading card games had a down year –down by about 11% — but not severely.”
  • “Collectable miniatures game sales were down only 4% in 2005 [….] Traditional miniatures sales declined, especially Games Workshop sales, which were reportedly down as much as 20% in 2005.”
  • “Role-playing games were the hardest hit in 2005, with sales dropping around 45% Yes, you read that right, that’s forty-five percent.
  • “the d20 glut is behind us, but so are the sales that came with that originally, and so are the wide variety of products that simply no longer exist to sell, were there anyone to even buy them. While some game lines hae developed to fill the void left by d20, not nearly enough new games have been released to fill that broad and deep loss. Third, of those games that are coming out, a lot of retailers, burned by having too much, decided that a very tight inventory was a better policy — and of course, you can’t sell what you don’t have. Finally, of those publishers that remain, many have reported astounding, record-breaking sales on their direct-to-consumer websites.”
  • “Essentially, there are fewer role-playing games, retailers are not stocking them, and consumers are going to web to find them — in print or in PDF. These sales, my friends, are yours to lose. That’s what’s been happening in the last year.”

Those last two items are of particular interest to me and my company, Adamant Entertainment, because it confirms my experience over the past year — the print side of the industry is in a fucking tailspin, but there are consumers out there, and given that it is now possible to reach them directly, we’re seeing our sales go higher and higher every month, as more and more gamers realize that their local store (if they even have one any more) isn’t carrying what they want, and so they look online for it.

In my seminar at the GAMA Trade Show, I mentioned the October 2004 issue of WIRED, which talked about “The Long Tail.” To put it simply, it talks about the fact that for every niche interest, no matter how obscure, there are always folks out there interested in it, who represent a consumer base. Taken in a traditional distribution model, these people are far too little to make marketing to them worth the effort — however, with the internet and direct-to-consumer delivery, these people can be aggregated into a collective who are able to sustain a business. The term “The Long Tail” comes from a graph of interests, where the mainstream interests (top selling records, blockbuster films, etc) are a large chunk, and the niche interests (indie music, documentaries, etc), trail off in a long tail from that chunk:

The interesting thing is, that tail never reaches zero. There is always someone out there.

That’s the model that Adamant is operating on. Direct-to-consumer is going to be the future of most entertainment media, and I think that gaming is no exception. Those of us who have already made that leap are enjoying success….while folks stuck in the old model are suffering through year after year of declines which continue to cripple the industry.

126 Replies to “State of the Gaming Industry”

  1. Re: I actually blame d20 for this.

    The problem is the assumption that WotC views the P&P market as extending beyond themselves in any real way. They don’t. Granted, from their point of view, they have reason not to… the gulf between their sales and business model and market penetration and the rest of the industry is staggering. But to suggest that WotC has any great knowledge of or interest in the RPG market beyond themselves, or that they feel anything that happened to everyone else would affect them, is greatly overstating the case.

  2. Re: Where are the FARKING Girls???

    *laughs*
    You are a hoot :P

    I played both 2nd and 3rd edition D&D as well as shadowrun, some gurps and a smattering of other text based games. The most embarrassing thing to admit was the fact that I gave in to and played LARP games as well. Granted they were fun, but that’s a different breed of psycho geek than I am used to. :) We had a GOD as a GM in our D&D games and every game after it was ruined because he was so good that every game paled in comparison.

    In about 1993 or so I picked up a strange habit of something called a MuD in this little freaky thing on my computer called a BBS… it was all over from there. I went from LoRD to EQ to FFXI and now WoW…My days of having to actually imagine for myself are gone, now the computer does it all for me with highly intensive graphics and cookie-cutter quests! Okay, I admit, I miss my pen and paper days, but the massive social aspect of the MMORPG’s is great too. I can go on line at anytime, whether I am just getting home from work or I can’t sleep and its 3:30am.

    It’s give and take I suppose…

    As for strip d&d… the boys tried and tried, really they did… :D

  3. Re: I actually blame d20 for this.

    Then you should blame Magic: The Gathering, since it is that damned card game that made WoTC rich enough to fill the market with the piles of dren that have made the pen and paper world what it is.

    Too many expansions…
    I can’t handle it…
    Oh for the good old days.

  4. Re: to all those arguing….

    Contrary to popular belief, we aren’t all undersexed 30 year old stinky men who live in our parents basements and drink nothing but pepsi and eat pop tarts and pizza all day.

    There is always the .01% ;)

  5. Re: MMORPG

    On line rpg’s have been around a lot longer than most people believe. In 1992 or so I was playing LoRD on a multi-line Major BBS. Back then the audiences for the on line version and the pen and paper versions were essentially the same. Since then and with the introduction of better graphics and “Hawt night elf chiks” with striptease dances the MMO world has grown from just the average geek to include everyone from your typical high school jock to his mother.

    No… I would have to say the decline of Pen and Paper falls solely on the backs of the companies who killed their own games in their desire for more money and power. You need to buy too many damned books now.

  6. Re: MMORPG

    Oh yes, all of us game industry types are drinking champagne and doing lines of coke off the asses of 19-year old Swedish strippers.

    Money and power? Please.

    You silly, silly bint.

  7. Re: MMORPG

    Really?

    damn it, where was that room when I was working at Interplay? I knew I was missing something~!

    Bastards.

    *laughs* all I am saying is that I stopped buying books when they became too expensive and there were too many of them. I remember in High School saving my lunch money for weeks just so I could buy my own players manual for D&D. That manual had everything I needed.

    It could also be that most of us D&D generation kids have grown up and taken on a lot more responsibilities and just don’t have the time to run a campaign anymore.

    now… show me the way to the Swedish hooker’s coke-filled ass, please. I did my time, I deserve my just deserts! :D

  8. Re: I actually blame d20 for this.

    See… I remember what it was like when 2nd Edition was dominating the game stores. Dozens and dozens of half-baked modules covering the walls and spoiling the market for other RPGs…

    Other RPGs? WHAT other RPGs? There was Paranoia, which was considered a novelty more than a legitimate game. There was Top Secret, which played like crap. There was Rolemaster, which no one played. And others… always others… but I think you might be getting my drift. See, I don’t remember the “golden age” that everyone else seems to remember so vividly. I remember a brief bump in the early 90’s, just before Magic… but before that, it seemed that TSR was a monolithic bad guy, putting out the only game that anyone seemed to really play.

    Now? It seems that WOTC is the monolithic bad guy, putting out the only game that anyone seems to really play. No… I just don’t characterize WOTC as being any more or less malevolent than any other organization… so I guess I’m missing this whole “men in black” thing… heh..

  9. We have Indie games, just look at IPR for a major collection of these. They’re just spread mostly at cons or word-of-mouth.

    And this shows us that what’s needed isn’t “Fresh air”, but rather, people keep chasing the “Best next thing”, never content with what they have.

  10. Re: I actually blame d20 for this.

    It’s not a “men in black” thing. They aren’t bad guys. Heck, I’ve still got friends there and I still do work for them on occasion. It’s just the way it is. Working there was interesting, especially coming from a non-d20/TSR background, and that’s one of the reasons. I was continually surprised at the lack of knowledge of game companies, professionals, and systems beyond the walls of WotC. I mean, it makes sense in many ways. They want people who love D&D, so that’s who they hire and that’s what they play and write for. White Wolf is their closest competition, and as is the nature of business, if they could figure out how to siphon away all those players for D&D, they would (assuming the consumers aren’t playing both to begin with).

    Again, it’s not malevolence. It’s the fact that they are scales of magnitude off from the market share and business experience of any other company in the industry. No 800 lb. gorilla is going to be impressed with even a particularly fierce rhesus monkey or orangutan. Doesn’t mean orangutans aren’t important or relevant over all, but you can’t deny that from the gorilla’s point of view, they’re entirely irrelevant.

  11. Re: I actually blame d20 for this.

    Well spoken and rational. Sorry for my misunderstanding of your initial reply.

    On another note:

    I do wish I could convince someone to play Earthdawn with me around here… heh

  12. Re: I actually blame d20 for this.

    I blame Magic for smelly convention halls. You would think these guys would shower a little more like us PnP guys.

  13. Reap the benefits

    There are two more problems. One, RPGs do not advertise. Not even ONLINE! The other, these local retailers can learn a lot from the online stores. Buy in bulk. Sell a few in-store for the same price that they can sell on ebay, or whatever. The unfortunate problem is that the folks that run the old school gaming stores aren’t taking advantage of the new opportunities because they are too hooked on the old idea of the “community” game store. Reap the benefits of both!

  14. It’s not so much the rules changes that bother me, nor is it the marketing towards children. It’s the really the bullshit pricing and their business stragety that kill it. Their miniatures are better than ever, but there’s just no way I’m going to spend money on it…

  15. Aren’t indy games just another incarnation of chasing the next best thing? Ideally an indy game takes off and becomes the new next best thing. Keep in mind D&D started out as an indy game named “Chainmail” but just because something is independant doesn’t automatically make it innovative.

    With that in mind, being that sales are down for the new product, doesn’t that lend credence to the theory the people are content with what they have?

  16. Re: Reap the benefits

    I’ve always wondered why RPG companies don’t advertise online. It’s relatively inexpensive to do it and can be targeted to specific audiences.

    –sam

  17. No. I believe they simply do not know of Indy games yet.
    People, especially from our sub-culture of geekdom are always looking for the best next thing.

    Fifa 2004, 2005, 2006….
    Computer upgrades.
    It’s all about the next best thing.

  18. This is obviously all an April Fool’s stunt. Much kudos for the jest. More subtle than Jared Sorenson’s, and because of it you pulled in more people. :)

  19. Re: MMORPG

    I agree. The number of books you need to play some games keeps expanding and expanding. It was one thing to have extras that you could add if you wanted to, but another to need a whole shelf. And frankly, keeping track of that much crap is not as fun. Granted, this is not true for all companies, especially smaller, more sensible ones.

  20. Just my two cents.

    A lot of factors are at work here, but I think the biggest one is the same as with any special interest – you have to bring in enough new blood to offset the folks who move on. This is true of gaming, of comics, of classical music performed in concert. People get old, die, get married, get lives, get jobs, and don’t have time. That’s normal. It’s a natural process. But you have to have new people to replace them. More kids are starting with video games now – both online and off. If you don’t entice them to be interested in RPGs, you lose by attrition.

    There are ways to combat this. But it’s not easy. Local stores have to do more than just stock shelves. And speaking as someone close to a former store manager, many can barely keep their heads above water now. Let alone find more time to increase business. WOTC and GW have done to the stores and distributors what Marvel and DC did to comics. You can’t keep up without stocking the trendy, and the trendy just keeps getting harder to stock. It’s a sad, vicious circle.

    Eventually, the system that has become bloated crashes, and unfortunately takes a lot of companies and stores with it. Eventually the industry will right itself and shrink to a sustainable size. There will be fewer players and companies than at the height of Magic, but it will be more stable.

    In the meantime all any one can do is recruit. I also happen to agree with the “try marketing to females” viewpoint. As a gamer girl from way back, I’ve never really felt welcome in the industry. The few times I’ve gone to stores recently they ignored me when I had a credit card and real disposable income to spend, in favor of the 16 year old male with $10.

    I’d also like to say a few words in defense of Amazon. I do a lot of my game book purchases online. (Sadly, now mostly just as reading material.) For most of us with jobs and lives, we don’t have time to go to stores for gaming. Our shopping time is for groceries and RL. Isn’t it better to at least be buying products rather than give it up entirely? And, as a lot of my purchases are used, I am helping sustain many small stores. The ones that are smart enough and competitive enough to move with the times and join Amazon or Alibris, where they can actually find new customers to replace the ones that go away.

    Again, just my two cents. (BTW I got here from Fark.)

  21. Ah, but Jared Sorenson’s started a week before April 1st, and therefore we cannot trust anything from the game industry from, oh, the Ides of March to about the 3rd of April.

    You know, just to be safe.

  22. Online on-demand Publishing

    I recently found a service that I thought was amazing called Lulu <http://www.lulu.com>. It’s a self-publishing website. If we could just get the word out to our small publishers that are doing PDF only, we could help the small stores (i.e. the one I work for) get some of those great PDF products into the store. It only costs the publisher a small fee to get an ISBN for their book and then all printing costs are covered within the price of the book. It’s a great idea, and it could help save the industry, small publishers, and small retail stores. I know I may be beating a dead horse, but small stores are where gamers are created, where gamers come to gather. Without us the gaming world will decline drastically. So this is the route I think that could save us and the small publisher.

  23. Re: Where are the FARKING Girls???

    I missed your reply –

    The boys apparently just need to keep trying. LOL.

    I’ve played from the pre-1st edition days. Afraid to admit that because I’m giving up some serious years. *sigh*

    We played D&D, AD&D, Traveller, Gurps, Car Wars, and Boot Hill. Some GammaWorld, but it was crap.

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