Talking about prognostications
Recently Ryan S. Dancey posted some 2007 predictions for the Hobby Gaming industry in his blog. I’ve read through the article a few times and thought that I’d post my own comments on his predictions. For the record I don’t think that Ryan is necessarily wrong its just that a few things he says don’t sync with my own feelings.
That said, Ryan has far more experience in this industry than I do and indubitably has contacts in the companies that he discusses. I suspect that he has more concrete information than he leads one to believe in his blog post but is just presenting his comments as his own predictions to protect his source, or more commendably, to not be name dropping.
That said, here are my own thoughts regarding some of the issues he discusses.
By the end of 2007, Wizards of the Coast will have reduced its game output to Dungeons & Dragons and a handful of other RPG products of little consequence, Magic: The Gathering, and the Star Wars Starship Battles game.
If Lucasfilm was only going to be seeing revenues from Wizards that came from a single game I don’t know that they would have extended their license deal they have with Wizards. The deal also specifically mentions the Star Wars RPG series and the Saga edition of the game is already planned and coming out soon.
This isn’t to say that Wizards won’t be trimming their product lines. I wouldn’t be surprised to see the Axis and Allies line get the axe and while I will personally be sad if the Axis and Allies: War at Sea title doesn’t get published I have always been quite curious about the lack of advance publicity for the game.
Ryan talks about companies going mainstream and it almost seems that Axis and Allies is a title that would do far better in toy stores and other mass-market retail outlets than it does in Hobby Game stores. If it doesn’t do so already. I’m not privy to the sales figures for these games so this is supposition on my part.
WotC will be preparing to attempt to ride a small number of horses extra hard to meet the demands of corporate parent Hasbro for the next few years.
Nothing to disagree with here but it seems to me that any Star Wars branded game is a cash cow for Wizards (and therefore Hasbro) and it seems unlikely to me that they would stop developing the products.
Before the end of 2007, Games Workshop will announce it is either being bought, is going private, or is merging with some other entertainment venture to form a new entity. On November 27th, Games Workshop was notified that Fidelity International had liquidated its position in Games Workshop’s stock, selling approximately 2.4 million shares, or 7.83% of the company. On or about that date, 6 million shares, or more than a third of the company, changed hands.
I’m always confused about what does and doesn’t make a good time for a company to be purchased. Ryan has more experience in this than I do having helped broker the TSR purchase of WotC. GW doesn’t strike me as a good purchase target at the moment. It hasn’t gone anywhere but sideways for the last three years and I don’t see anyone who manages the company who has the slightest clue how to bring back their customers.
He is correct that the institutional investors that own large portions of GW may be (and should be) attempting to shake the company up to get sales back but I think its already too late. GW’s near-term goals are really just to stop hemorrhaging customers.
Tom Kirby, Michael Sherwin and Mark Wells have recently been repurchasing stock with their own funds. This would lead one to think that the company is either planning its own stock repurchase and the management is trying to get themselves in a postion to make some funds from that or that they know a sale is in the works or they plan to sell the company.
I am again left to wonder who would buy GW? Perhaps one of their larger investors will seek to gain a controlling postion in the company. That seems somewhat more likely than someone attempting to buy GW. Its sales are flat, it has a gigantic and expensive retail arm and even the people who play their games don’t like the company.
One idea that might be more likely is a spinoff company, similar to Marvel rebranding itself as Marvel Enterprises and moving into the business of making its own movies and animated series based on its stable of characters. This might be an interesting property to own a part of and one can see investors looking at this as a way to recoup money invested in GW.
By the end of the year, Privateer Press’ successes will make it a likely takeover target, as Matt Wilson and his team try to navigate the incredibly challenging shift from startup to successful sustained growth company while remaining independent.
Privateer Press was founded by people who left companies like WotC to be able to control their own creations and be in control of the design and development of those creations. As such I can’t see them turning around and selling the fruits of that labour to someone like Hasbro or Mattel. I think Matt Wilson and Brian Snoddy already know what would happen to their company if they sold it to a larger corporation and that alone will stave off any sale until such point as Matt and co. want to cash out.
And why would you want to do that when you’re right at the cusp of first real large-scale success with the company?
WizKids will make a graceful, if forced, departure from the hobby gaming market, seeking to mainstream their offerings, and migrate the bulk of their sales into the mass market channel.
WizKids recently announced that they will be distributing their products only through Diamond/Alliance. I think this is the first step in moving out of the Hobby Game area altogether. WizKids has had a series of poorly received products and it wouldn’t surprise me to find out that only their Heroclix line was making any money. Crimson Skies, Mage Knight, Rocketmen, High Stakes Drifter, MLB Sportsclix and Creepy Freaks all came and went quickly and even the obvious tie-in with the Pirates of the Caribbean movies isn’t helping their sales of Pirates CMG packs.
WizKids and WotC suffer from the same CMG business model that only works if gamers have a compelling reason to collect the product. Heroclix works because its basically one of the only ways that tabletop gamers can play with a wide range of superhero figures. This is the same reason that the Star Wars miniature games are so successful for Wizards. If you want to have a tabletop game with Droids and Clones from the New Trilogy you only have one source for figures. Games like MechWarrior and Mage Knight have far more competition and competing products that provide a better game.
I’m actually surprised that WizKids made it through 2006 and like Ryan I won’t be surprised if 2007 sees us producing retrosepctives on the history and demise of WizKids.
The one area where I wholeheartedly agree with Ryan is that the retail sector is in danger of immanent collapse in the US. Canadian retailers are sheltered somewhat by duties, shipping and exchange which adds a price buffer to sales from US online retailers. The fact remains that “brick and mortar” retailers are going to continue to get hammered by online sales. The Hobby Game market is, like almost all aspects of society, being wildly influenced by the spread of the Internet. If you read TGN you are a part of this process. You get news from websites, you probably participate in gaming conversations in online message boards. Its easy enough to find information about the games you play online and its a short step from there to purchasing miniatures online as well. A few clicks and you’ve purchased a new Infinity starter and the rulebook. And probably for less than your local game store. It is difficult to compete with that and 2007 will indeed see the continued decline of the local hobby retailer.
Ryan’s full blog post is worth the read and I urge you to take a few moments to have a look through it if you haven’t done so already as its a thought provoking piece about the industry we all love.