Saturday, July 18, 2009

Good for Business, Bad for Hobby

"There's a rule in brand management that says that if you can't charge a premium for your brand, your brand isn't worth anything. In other words, the difference between "generic store cola" and "Coke" is the value of the Coke brand. If you are charging for your branded RPG products what the market is charging for generic D20/OGL products, your brand is worthless. In fact, most people are afraid to test this and find out how much their brand is actually worth, for fear that they'll be dissapointed.

When we priced the Forgotten Realms Campaign Setting at $40, I received a call from a distributor who will remain unnamed. That distributor told me that because of the pricing decision, his buyers were told to cut their orders for the book in half. $40, you see, was simply too expensive for an RPG product. $30 was the correct price. If I would change the price to $30, he would restore his order to its full amount.

I explained to this person that the Forgotten Realms brand had equity which was in addition to the D&D equity. If the price for a Realms product was the same as the price for a D&D product, then I was saying that the Realms was a worthless brand. Since I knew that was not true, my pricing for that product had to reflect the equity. I would not be lowering the price of the book."

- Ryan Dancey on RPGPundit's Blog

While that first sentence is undoubtedly true and drives a lot of business decisions out there in the world, it does not make it the right thing to do. Especially in terms of RPGs this is the kind of thing that kills the casually interested from getting into the hobby. When the industry's major player and only real household name is increasing the price of a book not because of expenses or inflation or any practical reasons, but just because they can, that's an absolute dick move. Period. It's pure squeezing of the fan base and surely showing a desire more to fleece the existing customer with no regard as to attracting new ones.

But here's me thinking like a person instead of a business, with the idea that the power of a "brand" should stand as a signifier of content, and that's how I see it. When the content changes, to me the "brand" becomes utterly worthless because it's no longer signifying anything.

Then again, I have also bought generic brand items when they have been available for as long as I've been spending my own money (even when the brand name was easily affordable), so I guess that says something for me as well. Hell, even when I'd take trips back home and Mom wanted to treat me and take me shopping, I would still go for the store brand. Because the only difference between those and the name brands are price and fancy packaging, and who the fuck needs that on a food carton that's going to be tossed as soon as the actual product is consumed? Shit, who needs that on anything?

... and think what you will about James Mishler and his industry views, he puts his name on his writing, unlike a certain someone who would call him a coward... Has Pundit ever argued with a response Dancey has posted to that blog?

14 comments:

  1. Actually, it's a business move. Driving down costs is good to compete or if profit and survival is not your concern. But a business should charge top dollar for biggest profit if it wants to survive as a business.

    While this may also be a dick move, this is how businesses stay alive and pay people who work for them top dollar rather than minimum wage (or outsourcing for even less). That said, the market will set a cap on sales. The people who think that a branded item costs too much will vote with their feet, which will help correct higher costs.

    If WotC started thinking like a hobbyist, they would be out of business tomorrow. Instead, the business and hobby sides of the RPG hobby should be thought of as two concurrently existing parts of the RPG hobby, with very different goals, culture, and priorities. Which seems to be a good thing, to me.

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  2. >>Instead, the business and hobby sides of the RPG hobby should be thought of as two concurrently existing parts of the RPG hobby, with very different goals, culture, and priorities.

    This is the part that doesn't make any sense to me at all. One exists solely to serve the other.

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  3. The hobbyists aren't in it for money. They're in it for the hobby. The industry is in it for the money. Industry writers and artists need to pay the bills, and if they can't do it with RPGs, they'll get a different day job and walk away from the hobby -- a pressure that does not exist for the hobbyists. So there are different goals, which lead to different culture and priorities.

    Should a major record label publish music the same way as a garage band? Probably not. In fact, both probably scratch different itches for different people, and the industry does marketing and recruitment better for the general population (building the general fan base) than the garage band (which will reach a niche fan base).

    Whether one or the other produces better product or not is unimportant. Whether there is a difference between how hobbyists approach and perceive professional and fan publications as products (and I think there is one-- just as magazines and zines do different things for different people), there is a different role for industry publications and hobbyist publications in the sales, marketing and play "ecologies."

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  4. >>Should a major record label publish music the same way as a garage band?

    Don't get me started with the music industry. Looking at the example of a lot of musicians I've followed and some that I've know, I don't know whether to more fear success or failure in my own creative endeavors.

    ah well.

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  5. Much of the higher cost of the books IMHO is the super high quality of the artwork and the full color pages.

    I ask why make them so flashy when line art worked just fine.

    Just because a game has line drawings and is only in B&W does not make it any better than a full color RPG.

    It's not bad to make money but many of the "problems" in the gaming industry are caused by the industry itself.

    With those self inflicted problems from the mainstream gaming industry comes this doorway of the OSR. It's for the most part inexpensive to free and from what I can see it's growing every day.

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  6. "This is the part that doesn't make any sense to me at all. One exists solely to serve the other."

    "It is difficult to get a man to understand something, when his salary depends upon his not understanding it!" - Upton Sinclair

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  7. I don't think the rpg hobby can be analyzed like a regular business. The hobby end is too closely entwined with the business.

    Both Mishler and the pundit is highly entertaining, and both make good points, though.

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  8. >>Much of the higher cost of the books IMHO is the super high quality of the artwork and the full color pages.

    This I could understand, even if I don't care for it.

    And I don't have a problem with people making money. Certainly books should be priced so everyone gets paid, and I hope to scratch a few pennies together myself.

    The issue here is "brand equity" justifying a higher price tag. As I said in the original post, I recognize this is how the world works, but I don't support it and certainly won't behave this way myself.

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  9. Jim...it's not just about business decisions. It's about monopoly.

    Say you've got three products: Coke, Pepsi, and Generic Cola. The GC will need to be priced lower than the other two as it doesn't have "brand recognition;" however, Coke and Pepsi aren't going to be priced much higher because if they do they'll lose out to their lower-priced, brand recognized competitor. GC will need to make some kind o profit to stay in business; since the Big Two will have similar operating costs, and are competing for lower price points they can't afford to be too far removed from ol' GC.

    WotC has had the biggest, flashiest product in the RPG market since acquiring TSR's flagship brand and giving it a makeover. They have a brand recognition no one can match. Until such time as they have a direct competitor (or until such time as the industry disintegrates) the Big Boy will be able to dictate market price and push folks around.

    It appears to me that the only remedy is for another brand recognized product to emerge in the market. This will force WotC and Name Brand X to equalize their market price and allow other companies market value to compete, while giving consumers more choice based on preference of play and product content.

    To do this...well, we've got to continue to put out quality product and market-market-market. It's a long haul, but what else can you do?

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  10. But, if one of your major distributors is telling you the price istoo high, wouldn't it make more (business) sense to go back and see if it can be pared down? (Depending on where in the process this dialogue occured)

    WotC: The book will be $40.

    Distributor: Oh, boy. Isn't that a bit high? Woudn't $30 be more appropriate to maximize sales?

    WotC: Ok, let's do a little research and see we can re-price at $35. We've already paid for the expensive artwork and staff, but maybe there will be profit benefits for (X) sales at $35 instead of (X-Y) sales at $40.

    Instead, it sounds like the conversation ended this way:

    WotC: Nah. $40 is what our brand is worth. You'll come begging for more books in 6 months!

    And we're all left to wonder if sales met expectations...or could have been higher.

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  11. >>And we're all left to wonder if sales met expectations...or could have been higher.

    I don't doubt Dancey's skills as a businessman.

    And I don't think that it's bad that WotC stood firm on their price (it would really suck for a distributor to strongarm a publisher's price).

    Want to have a grade A + presentation with all the bells and whistles with art and paper quality and yadda yadda? Sure, factor that in for the pricing and make sure everybody gets paid. (whether a game book needs or should have such a presentation is a completely different discussion)

    "We're hot shit, so let's jack the price up $10," which is how Dancey presents it here, is not cool.

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  12. Modern Coke sucks ass. It's a thin, alkalyne, chemical stew with a bitter after taste. It has nothing in common with the Coke of thirty years ago. Content is all. Brand means absolutely nothing to me.
    I pay more for Jones pure cane cola, because it has the content which Coke only pretends to retain.
    This goes for a certain rpg as well.

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  13. It's a dick move, and it's business as usual at the same time. Our morally ambiguous pulp fantasy protagonists would understand that ;)

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