Tuesday, April 7, 2009

Marketing Management 101

What a mess.

Apparently I have been living under a rock for the past 12 hours or so, because I just received an email from Paizo telling me that Wizards is halting their sales of PDF’s, and that I should buy them now otherwise forget it. Of course by the time I saw that, it was a done deal. In the mean time, every blogger has already posted their commentary on the subject, and Enworld is shutting down posts on the subject that are already almost 20 pages long of folks complaining about it. I definitely feel late to the party on this one.

So I get the piracy thing. I really do. In this digital age, it is something that we have to deal with. The music industry learned that the hard way. Fans want to get their products through digital media, and through the internet is a prime way to do this. However, I do have some commentary on this.

1) It seems to me that the biggest issue is piracy on the new stuff. I am not convinced that Wizards is losing a lot of sales on the older product to PDF piracy. With this in mind, if Wizards is really concerned about piracy on PHB 2, they should delay the PDF releases until the hard cover books have been in circulation for a year or so. This is similar to what publishers do with hard covers and soft covers. The soft covers hit the street about a year after the hard covers. Let’s face it, the big sales spike is within the first 6 months of a product release then drops off significantly.

2) By eliminating ways for paying customer to buy PDFs, I think this has the opposite effect. I have no data to support this claim, but I am going to go out on a limb on this one.

3) Based on what I have seen so far, it feels like an inside job or more likely that Wizards has a problem with one of their printers illegally distributing their products before the release date. It seems like this would be a straight forward process to verify.

I also saw mentioned that Wizards wants to support the local game stores and that means limiting the availability of PDF files in order to keep sales of the books high. Again, I get this, and I think that if Wizards just delayed publishing PDF files until for a year, this could help out the smaller brick and mortar stores. However, I think it is online retailers like Amazon that is really hurting the FLGS, as they can sell it for 20-30% off the cover, and the FLGS cannot match discounts like that.

This brings me to my next point of the older material that is not in print any more. Again, I am going to go out on a limb and say that since Wizards is not selling or supporting the older products, and that the FLGSs probably do not have this stuff on their shelves, the only way to get this stuff is through PDF. Now Wizards is not doing anything to promote the older stuff, as they want everyone to move to 4th ed, so the sales potential on the older material is really just a drop in the bucket, and I suspect that piracy on the older material is very small.

My last comment on all this, is that this is a public relation nightmare for WotC. Clearly this is going to be seen in a bad light. The suddenness of it strikes me rather oddly. They shutdown everything rather quickly, and it feels a bit like a knee jerk reaction, regardless of whether or not this is indeed true. If this was a planned move, it feels like they should have immediately launched a counter marketing plan to put this in some sort of positive spin on the situation. Instead, it looks like things are getting wildly out of control. This cannot be good for business. I am not sure what’s going on over at Wizards.

This may sound strange, but even though I am not a fan of 4th ed, I do hope Wizards is successful at least on some level. Wizards is the big gorilla on the street, and I believe that it is actually in the best interest of the hobby to have a strong lead player in the market. I do believe that the current situation is not good, and it is leading to fragmentation of the fan base, which I think is bad for the hobby. The hobby is rather small to begin with, and anything that causes it to splinter off, will ultimately make the fan base even smaller, which makes it harder for companies and game stores to stay in business. Having a couple of big players in the market supporting a game system is just good for everyone, in terms of keeping interest high in the hobby, and allows the local game store to survive. The FLGS needs big brands to keep a good customer base. Without the big brand, their sales will drop off also. Just as a mall needs anchor stores, our hobby needs anchor brands. When I see fans say that they will not support Wizards, I see this as a slow death spiral to our hobby. This is a bad sign.

Now I do agree that there will be independent game designers that will publish, and that there will be diversity in choices. The retro movement is surviving on this at the moment, but I do not think this is a recipe for long term growth in the hobby. This is one of the reasons that I am rooting for Paizo. Potentially Paizo can keep some of the fan base together, as they have emerged as a strong player in the market.

So to wrap this up, I think Wizards has a mess on their hands. Yes I do believe that Wizards will pull PDF’s to their own stores to control distribution. However, this heavy handed tactic will not win favor with the fan base, and it will take a bit of work to get that good will built back up again.

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