Friday, December 9, 2011

Rant - Game Salute

EDIT: Feel free to read this bit, to see what a jackass I am, but after you do, please read the next post, right here. Because most of this article is wrong.

I love to wallow in my hypocrisy. For instance, I fully endorse my son dating pretty much any girl he can catch (and since he's 6 foot 2 and full of muscle, he can catch a lot of them), but when my daughter's suitors come to my house, I make sure to be cleaning a shotgun at the coffee table. I complain about the environmental impact of fossil fuels, and I drive an enormous SUV. But there has to be a line somewhere. So I've decided that I will no longer drink milk right from the carton (though in all honesty, we buy those big gallon jugs, and after the third time I spilled milk all over my shirt, I decided I better get a glass, anyway).

The milk thing has been going so well that I decided I needed to find another way to practice what I preach. And so I've decided that I will not be reviewing games carried by Game Salute any more.

This was not an easy decision to make, and I don't expect it will make me very popular. But then, I'm not doing this to be popular, I do this to get free games. Yes, OK, I'm kind of screwing up that particular goal, but I can explain.

There's been a lot of talk recently about this new fulfillment/distribution thing called Game Salute. A bunch of small publishers have signed up with Game Salute, who acts as both retailer and distributor. The way this works is, Game Salute will not sell games to anyone who will sell them online. They're ostensibly supporting physical stores by not allowing online stores any access to the games they represent.

Now, maybe I don't follow this whole thing. In fact, it's incredibly likely. But I've looked at a lot of different sources here, and I gotta say, this Game Salute thing smells fishy. And I don't mean like the kitchen at Red Lobster, I mean like the pier where they unload the catch of the day. Maybe like the dumpster behind that pier where they throw all the fish they can't sell.

Here's the nitty gritty part, as I understand it. Game Salute agrees to essentially be the distributor and retailer for the games they carry, and the publishers agree that they will not sell their games to anyone else. Then Game Salute agrees not to sell the games to anyone who would sell it online. Then Game Salute is the only place in the entire known universe where you can buy these games. And they're doing pretty well - they've got some really impressive titles, like Yomi and Alien Frontiers.

I'm not an economist. I should say that up front (or halfway through, I guess, since that's where we are now). But I don't think it takes an MBA to know that monopolies are bad for everyone - well, everyone except the company that holds the monopoly. They set their own price to buy, and they set their own price to sell. Everybody in the chain gets screwed, except, as I said, the guy holding all the cards.

I can see why a publisher might think this was a good idea. From where they're sitting, online stores undercut their prices and devalue their products. So the publishers sign up with someone who promises to champion the cause of undercut prices, by not letting those nasty online retailers undersell their games. But there are some painful flaws in that line of thinking, flaws that really ought to be addressed.

For one thing, online stores have to discount. It's how they exist. Are you going to walk up to your virtual salesman and say, 'pardon me, electronic chat window, but can you direct me to something I might like?' You have to know what you want, because even if they advertise, the fact is, there's nobody in an online store who can tell you what you might dig. Physical stores have a huge edge in the interaction department, and without discounting, online stores would die right out.

Second, physical stores are not going to carry as many copies as online stores. They can't. A physical store has limited shelf space, and is generally only going to carry stuff it knows it can sell. Online stores have lower overhead, and keeping stuff online for a year only hurts if their warehouse is smaller than my tool shed. So not selling to online stores means you don't sell as many games. The Spanish have a word for a business strategy that sells fewer products. That word is estupido.

Third, online retailers will account for a hell of a lot more sales than a small publisher is ever going to get selling direct. What makes more sense, selling 10 games and clearing $500, or selling 100 games and clearing $1500? (Yes, I'm accounting for cost of goods sold. I did take some accounting in college.) I'll give you a hint - it's the one that makes more money.

Finally, and in my opinion, most important, is that you don't see the big guys signing up with Game Salute. And you don't see FFG and Days of Wonder signing up because they're not threatened by online sales. Small publishers will get up in arms about not being able to sell their twenty copies direct, where FFG sells 2,000 copies to a discounter in Brazil and laughs all the way to the bank.

Of course I know there is a difference between the big guys and the little ones. But the reason small publishers stay small is because they think small. Acting like the underdog means you get to stay the underdog. The big publishers don't do what they do because they like to waste money or cost themselves sales. They have very good reasons for selling to anyone who will buy a copy, and those reasons resemble small green pictures of dead presidents.

So up to this point, Game Salute isn't so much bad as it is misguided. Deliberately snubbing online retailers might seem like a spit in Goliath's eye, but it's really just kind of short-sighted. I would just shake my head at the poor business practice, and just keep playing some of my favorite games, but then we get to the thing that makes Game Salute look less Dopey Dwarf versus Goliath and more just plain rotten - the monopoly.

By persuading publishers that online retailers will steal their wallets, Game Salute has managed to be the exclusive distributor for their games. Game Salute sells online at full retail, because they can - they've created a market with no competition. Without lower-priced games available anywhere, however, fewer people will buy those games. Publishers will not sell as many games. And physical stores were unlikely to buy them in the first place, because they buy stuff they know they can sell. So your scorecard looks a little like this:

Online retailers: Just Plain Screwed
Publishers: Selling fewer games, so Screwed
Customers: Paying more for games, so Screwed
Physical stores: Not carrying the games anyway, so Breaking Even
Game Salute: WIN WIN WIN WIN

And that's the part that bugs me. To me, that looks like dirty pool. It looks like taking advantage of inexperienced businessmen for personal gain. It just looks sleazy. And I'm not going to use Drake's Flames to help promote sales for a company that I think is sleazy, so starting right now, I'm not reviewing anything else that comes from Game Salute.

This wasn't an easy decision. For one thing, I only write this stupid website so I can get free games, and deliberately cutting someone out of my supply chain means I get fewer free games. For another thing, those free games are some really good games. Alien Frontiers was one of my favorites from 2010, and I am a huge fan of Sirlin Games, and now I won't be reviewing anything from either of those companies. I didn't just jump into this without thinking, and for me to stop getting review copies means I'm pretty serious about this.

My hypocrisy has to stop somewhere. I'm still going to get furious at anyone who flips me the bird, even though I will most assuredly fly you the eagle if you cut me off on the freeway. But once my wife found out that I wouldn't drink out of a gallon jug and started buying the big milk, I have to find some other way to pretend that I have at least an ounce of integrity.

I willingly admit that I could be reading this wrong. There's probably something I'm missing. Please, feel absolutely free to point out my errors. Hell, I want you to. I want to believe that Game Salute is simply making an honest mistake. Because, really, I want that Puzzle Strike expansion. In fact, there's the gauntlet - I'm throwing it down. Show me the error of my ways, and I'll write another whole article about how wrong I was.


Sarebear said...

/salute to you. No pun intended . . . that takes some brass ones.

GeekInsight said...

"So up to this point, Game Salute isn't so much bad as it is misguided." I was with you here. Maybe the business model isn't one that you agree with, but apparently enough small publishers believe it will help that they've signed on to Game Salute.

And Game Salute isn't really a monopoly. The individual publishers are free to distribute through Game Salute or through internet channels. They've chosen to go with Game Salute. But Game Salute doesn't make any company go through them.

So, I guess what I'm saying is, while it wouldn't be my preferred method of distribution either, I also don't make games. I think the small publishers are competent enough to make their own decisions about how to distribute their games.

Matt Drake said...

I'm just going by the contract Game Salute has posted on their site. Here are a couple salient quotes:

"For all Game Salute Select Stores Exclusive products, serves as the official online store."


"The retailer also agrees not to distribute or wholesale any Game Salute Select Stores Exclusive products to any other retail establishments or parties."

I grant you that not all the games they carry are subject to these rather draconian exclusions, but a heck of a lot of them are, including Alien Frontiers, Yomi and some others that you might actually want to buy.

I also grant you that the publishers are welcome to make up their own minds. But just because you're free to get screwed doesn't mean the guy screwing you is off the hook.

I really like the guys at Clever Mojo and Sirlin Games. Hell, the guys at Clever Mojo bought me beer. I'm not the least bit delighted to wave them off. But until I hear an explanation that makes that Game Salute agreement sound like something besides price-fixing, I'm not of a mind to help them sell games.

Derek Thompson said...

Pretty much agree with you, but if price fixing is the problem - what's your stance re:Mayfair and the max 20% off enforcement?

Matt Drake said...

Well, three things:

1) I don't really know anything about the Mayfair thing you mentioned. Like, that's the first I'd heard of it.

2) A 20% max discount is not the same thing as not letting a retailer carry the game at all. Hell, gaming consoles set the prices, and don't let retailers discount at all, and I'm pretty much OK with that. And at least you can actually get a PS3 on Amazon.

3) I don't review for Mayfair, anyway. They don't send me anything, and most of their games are boring.

PTK said...

Am not sure if those contracts with Game Salute would prevent the developers from selling the games to new publishers. I mean, most of the games I want to buy here in Spain are published by Spanish publishers, so I am benefiting national economy and letting the (usually) small publishers in Spain subsist at the same time. I think this is a moral responsibility, like buying a CD from a band you really like: you've got to support people making what you like. However, sometimes this is not possible, since some games seem risky to publish as they are very unknown. That's the reason I bought Puerto Rico Anniversary Edition from an import store, still not publish here nor in development.

But the point I'm trying to make here is: does all you said mean games belonging to Game Salute are not going to be sold out of the US? Because, if any store decides to import it, it would be the big ones, which sell on-line. If this is the case, Game Salute are a bunch of "estúpidos" or "idiotas" or even "capullos", as I would call them in Spanish.

I couldn't agree more with you and you're doing the right thing. They are like those evil musical managers who make profit of starting bands by offering them draconian contracts which they would accept hands down, as their chances of getting any better chances are just close to none. The difference is they usually know better how to making the bands than Game Salute knows how to sell their products.

PTK said...

Sorry for double posting: What does exactly those contracts forbid exactly?
a) Selling the published games to stores who would sell them online
b) Selling the game to new publishers
c) Both "a)" and "b)"

Matt Drake said...

PTK, you're right, the developers could still sell their games - but in this case, they're self-publishing, for the most part (Clever Mojo buys games; Sirlin Games does not). Developers selling games to publishers is kind of outside this entire discussion, though it is a very valid issue.

And there is international distribution for these games. However, no online stores will be able to buy the games, regardless of location, which will serve to drastically limit international sales.

The contract does not limit (or even apply to) developers selling games to publishers. That's an entirely different discussion. The contract does, however, expressly forbid anyone who signs it from supplying an online store with the published games.

ninthdoc said...

WizKids did this exclusive distribution thing with Alliance/Diamond Distribution a while back. It was all about saving them money on warehousing their product. Guess what happened? Many retailers don't want anything to do with that distributor so their games got dropped in many areas. Then WizKids died.

When they came back, they changed some of the distro headache and they're now more visible.

So, congratulations, you just killed your companies!

Phil said...

This has also bugged me. I'm not sure why they think its in their best interest to greatly limit the number of copies they can sell by restricting who can carry it.

I buy almost all my games online. So the dilemma for me is both Tasty Minstral and Clever Mojo are either Kickstarter or wait for it on Game Salute (at list + shipping). You save some decent cash pre-ordering it on Kickstarter but you are buying it blind or hoping that the few reviews posted aren't "bought".

And you make a very valid point that the "big" publishers have no worries at all selling to whomever wants to buy them. You don't see Z-Man sticking their nose up at Thoughthammer or B&B.

To be honest I think the small local game store is on life support. We have a local gaming club that meets every week and the city I live in has a monthly meet at a local club. We really don't need local stores any longer. We usually pool our orders together and save a ton of cash that way. How can you possibibly compete with that?

Wind Lane said...

Service and selection are going to be the game store's future.

If their service (and I include things like gaming space and cleanliness in that) is good enough - people will come just because they feel so welcome there and don't feel it's something they need to guard others from.

How many people don't invite their non-gamer friends and family to the local FLGS just because it too closely fits the stereotypes?

Selection wins customers because people have a MASSIVELY easier time browsing in person than online.

The two most successful game stores I know of focused on one of those two things. The one with the service is such a nice place you almost feel like it's a quality restaurant rather than a game and comic shop. The store with the selection isn't the greatest in terms of how nice it looks, but its selection is massive and worth the trip every time.

Game stores that can't or don't focus heavily on at least one of those two things will die a slow death.

It also doesn't hurt if they've got good business sense in knowing what to buy, how much of it, and when. No business survives without somebody doing a good job handling the money.

AndroidLover said...

I just stumbled upon this article. Met GS peeps a bunch of times.

They are a group of, seemingly super nice people, mostly family actually, I think?, who love the games industry and don't wont to see retail stores and game companies continuously live and die. Re-sellers and online discounters under-sell the games we love, all while removing the social and human aspect of the gaming industry to nobodies benefit. Not even their own. Many lose money on product.

You want to talk about a terrible business model? Cards against Humanity couldn't even afford a re-print from it's profits because they had no clue what they were doing. But high numbers look impressive, don't they? And they had to kickstart to re-print. Yet that was online only wasn't it? The anti-GS model failed instantly. They couldn't afford a single re-print.

And you understand that when you buy a game from an online discounter, you are saying with your wallet, "This game is not worth it's value."

I guess what I don't understand about the writer or the other posters is why
a) would you want a company to NOT support only retail


b)want stores to not be in an online catalog like GS's, that you can just search whereever you are. And I'm pretty sure those exclusive games you are thinking are some terrible monopoly allow gamers to demo them for free at all those awful partnering stores.

Like the writer of the blog, that's just my opinion. Of course, I'm not speculating with wild conspiracies while claiming to have no formal education or understanding of the industry at all lol. I think I know what I'm talking about more than a guy who's just quoting a website and making crap up.