Part Two: Why Traditional Retail and Niche Games Don’t Work
Part One
In my blog of 02/24/2005, I talked about my definition of a niche game, a recap of the retail market in 2004 and why a niche developer will never get rich at retail. I will not go through that discussion again, since you can go to Why Traditional Retail and Niche Games Don’t Work and get all the details there. What I do want to discuss in this second, and final part, is why the Shrapnel Games model can and does work.
Six Years and Going Strong
Shrapnel Games was formed in June of 1999 and started operations on July 9, 1999. In that time we have published 27 games and varied expansion packs. We have signed three new developers this year, and expect to have six new developers on board before the end of 2005. We have developers who have been with us since 1999 and have developed a number of products that have been published under the Shrapnel Games name.
It Works, It Really Works
“So why are you telling me this,” you ask? Well, I am telling you this information to let you know that there are alternatives to trying to take a niche product into traditional retail, where you will be lucky to make $40,000. Our model works. We were one of the first and by far one of the most successful non-traditional publishers, bringing niche market games to the fans through online and catalog sales (and in recent years through nontraditional retail outlets such as game and hobby shops). We have had several companies copy our model with varying degrees of success. The ones that haven’t been successful are the ones that sign title after title with no regard to the product’s uniqueness and integrity of gameplay.
We are very exclusive in the products we release and work hard with our developers to make the game as playable and enjoyable as possible. In fact, we think this is the number one service we offer our developers. That and our knowledge of the marketplace. You won’t find us jumping from market to market like some of our competitors, because we understand how and where to get the audience niche games need.
Our results speak to our success. For instance, we know that a top selling niche game, marketed by us, can reach unit sales in the mid 5 figures (we believe we can take that number to the upper 5 figures in the coming years). We also know the average price point of our games is almost double what it would be at traditional retail and that we offer one thing that a developer will never see at retail: longevity. In traditional retail, a developer is lucky if his game remains at its original price point for three months while we have products that have been in the market for 5 years that are still at their original price points.
The Good News
The good news is the market is still growing! Almost 75% of our customers at the Gamers Front are making their first purchase of a Shrapnel Game! Let me say that again, after six years in business, ¾ of our monthly sales are to first time purchasers.
We see a bright future for nontraditional publishers and developers. If you are a developer in the niche game marketplace, look for this industry to continue growing as the large traditional publishers move more and more to the consoles, leaving the PC Gaming market an afterthought. With these publishers being forced to put out more and more ‘clones’ of hit titles as the production budgets edge toward the $10+ million mark, the new, truly unique products will all be published in the nontraditional market. And as this market grows, as the fans start looking for alternatives to the ‘clones’, the production values of these niche games will slowly edge towards a level that will bring even more gamers to the niche games marketplace.
Happy Niche Gaming!
Hi,
Firstly : I gather you mean “mid 4 numbers” unless you’re really selling 50.000 units …
“We have had several companies copy our model with varying degrees of success. ” - what other companies ? - and what’s so special about having an online store ? - because that’s what it basically boils down to in evading retail.
“You won’t find us jumping from market to market like some of our competitors” - from the publisher who just announced a pen&paper rpg, a turn-based fantasy game and a hardcore wargame - right
And I wouldn’t classify only 25% of my customers returning a success …
Greetz,
Eddy Sterckx
Comment by Eddy Sterckx — 3/30/2005 @ 2:53 am
Hi Eddy:
>Firstly : I gather you mean “mid 4 numbers” unless you’re really selling 50.000 units …
No, mid 5 figures is exactly what we mean.
>what’s so special about having an online store ? - because that’s what it basically boils down to in evading retail.
Evading? That makes it sound like they are hunting us down. :0 We see it as making money over giving our products away.
>from the publisher who just announced a pen&paper rpg, a turn-based fantasy game and a hardcore wargame
That’s genre. We’re talking markets. Differing ways of bringing your product to market. Sorry that wasn’t clearer.
>And I wouldn’t classify only 25% of my customers returning a success …
Who said only 25% of our customers return? We have multiple sales to over 80% of our existing customer base. We said that 75% are making their first purchase. Far different than only 25% return.
Tim Brooks
President, Shrapnel Games
Comment by Tim Brooks — 3/30/2005 @ 5:04 am
Hi,
“mid 5 figures” : congrats on doing extremely well
Evading : well you’re good at it - evading the question that is
- the question of who you are competing with in the marketplace. In my opinion it’s Matrix, Battlefront, Shrapnel and HPS who form the “big 4″ of wargaming but you might look upon your company from a different angle - maybe you’re comparing yourself to other Indy (non wargame) game publishers - who knows - that’s why I asked for clarification
genre vs markets : can’t seem to grasp your meaning here. Are there direct competitors (other publishers of strategic games/wargames) who have totally different markets ? Or is this an Indy thing again ?
If 75% of customers in any given month are first time customers it means that 25% of customers in any given month are returning customers. Mathematically this indeed doesn’t mean that only 25% of your customers are returning - my bad - throwing away my degree in math …
Greetz,
Eddy Sterckx
Comment by Eddy Sterckx — 3/30/2005 @ 7:07 am
Hi Eddy:
>the question of who you are competing with in the marketplace.
We, as a general rule, here at Shrapnel try not to get into naming names. There are many competitors out there, not just those you have named. In fact, you didn’t name the one we consider to be our largest competitor. I almost get the feeling that you are looking at what I said as attacking our competition. This is not the case, the idea here is to awaken the market (as a whole) to the realities of niche marketing. This blog is not an attack on anyone, but an idea by which I believe that we - all niche publishers - can grow the market. At the same time it is my opinions.
Shrapnel Games believes that competition isn’t a bad thing and we really only compete for developers games. After a game is in the market, it is in the best interest of all publishers that it be a success. This grows the niche marketplace, which benefits us all.
Genre vs. markets. Markets, as I am using the term in this blog refers to retail vs. downloads vs. mail-order physical product vs. rental, etc. etc. etc. Not wargames vs. 4x games vs. rpg’s etc. etc. etc.
Hope that helps!
Comment by Tim Brooks — 3/30/2005 @ 7:36 am
Hi,
Getting curious now who you consider your biggest competitor - really at a loss here, but I respect the fact that you’re not into naming names but this does tend to make your blogs hard to read - too vague.
Genre vs Market : you lost me there - a distribution channel (retail, direct download, webshop mail order) isn’t a market in my terminology. I buy wargames (and occasionally a FPS) - these are genre products. That for instance Matrixgames chooses to publish Flashpoint Germany as a direct download and is going retail with World at War is what in your terminology would then be “jumping market to market” - well, I don’t see a problem with that from a consumer pov - it’s not as if choosing a different distribution channel for game A has any bearing on the quality of game B.
The only publisher I’m having trouble with quality-wise is Paradox, but even they seem to have cleaned-up their act with HoI 2.
Greetz,
Eddy Sterckx
Comment by Eddy Sterckx — 3/30/2005 @ 7:55 am
>chooses to publish Flashpoint Germany as a direct download and is going retail with World at War is what in your terminology would then be “jumping market to market” - well, I don’t see a problem with that from a consumer pov - it’s not as if choosing a different distribution channel for game A has any bearing on the quality of game B.
Not at all. And to a hardcore fan like yourself, visiting that site on a regular basis, there is no real problem. The problem with jumping market to market is with confusing the broader base of consumers, IMHO. This game I get at retail, this one only by download. A more casul consumer of this type of product would go, “They must have nothing new out. I bought x at EB, but I can’t find any of their other games.” Number one rule in marketing KISS. Look at the big publishers, do they put game a in retail and game b only as download, and game c as mail order, etc. What I am saying is it is hard enough to develop a following, inconsistnecies in distribution is just another way to confuse the consumer.
From a consumers perspective it can make short term sense, but if you want a publisher to flourish and bring you more games, my opinion is don’t confuse people. Find a distribution path that works and then scream it to the world.
Comment by Tim Brooks — 3/30/2005 @ 8:14 am
A well written peace. Very informative and cutting edge. Thank you.
Comment by Atrocities — 3/30/2005 @ 11:54 pm
The entire idea that TBS games are “niche” is false. Civ3 III is a TBS, and has done very well at retail. I personally use mods (mainly DyP), but that does not in any way invalidate the original engine.
Retail can and does work for some niche PC games. X2 - The threat is an example, the storyline being basically crap, but the system being solid, and it being a truly innovative game. The ammount of freedom, and the feeling of progress, I’ve personally not seen for years. The game itself has shone through for so many gamers.
I am but a consumer. I enjoy formulaic games too… the Gran Turismo series I play avidly. Innovation is not necessarily condusive to gameplay. I’ll continue buying within that series, because it’s a very effective series.
The point I really want to make is that the notion that innovative game design is dead because of larger budgets is a fallacy. I personally still research what I buy, and I think a lot of others do too.
Comment by Smauler — 3/31/2005 @ 9:08 pm
“The problem with jumping market to market is with confusing the broader base of consumers, IMHO.”
I think you´re really wrong here. The retail release of GGWAW is a really clever move. This game is not really a niche game. It appeals more to the casual strategy gamer IMHO.
I have bought the retail box and it contains a nice big catalog with almost every title they offer. And it makes really clear in it where to get the other titles and how things work.
It can only broaden the customer base, not make it fewer. And for our hobby in general it´s only good to drag in new and fresh blood.
It can´t hurt at all to go retail once in awhile.
Comment by Flammpunkt — 4/1/2005 @ 8:03 am
>The entire idea that TBS games are “niche” is false.
There are always exceptions to the ‘rules’. I’ll buy your statement when there are equal numbers of TBS as FPS, RTS, etc.
Comment by Tim Brooks — 4/1/2005 @ 9:16 am
>I think you´re really wrong here.
Time will tell. Oh, and I am wrong quite a bit, just ask my wife.
Comment by Tim Brooks — 4/1/2005 @ 9:18 am
Quote from response #9: “The retail release of GGWAW is a really clever move. This game is not really a niche game. It appeals more to the casual strategy gamer IMHO. I have bought the retail box and it contains a nice big catalog with almost every title they offer. And it makes really clear in it where to get the other titles and how things work.”
The only problem here is that Joe Blow casual gamer shopping at EB wouldn’t give you a plug nickel for Battles in Normandy or Tin Soldiers. End of story.
“It can only broaden the customer base, not make it fewer. And for our hobby in general it´s only good to drag in new and fresh blood.”
Been there, done that. It’s called Panzer General, 1995. Has our base been broadened yet? That was the promise in 95. It’s now 2005 — and we’re still chasing this holy grail?
Comment by Dave Erickson — 4/15/2005 @ 8:43 am
I was hoping that since you are so in touch with the wargaming arena you could help me. I would like to be able to purchase Allied General but have no idea of price price and have not been able to find Allied General to buy. Thank you for any consideration.
Comment by Mike Yeksavich — 4/23/2005 @ 8:26 pm