SUCCESS IS COSTLY this time of year. As the 17 April tax deadline approaches, we hope that you don't share our experience. That is, despite paying more estimated taxes than ever before, we still owe thousands. Ah, the cost of freedom.

FINE GAMES SPRING 2000 PRINTED CATALOG hit the mails beginning 6 March. These were sent to all active customers. Prior to that, we took pains to insure that each was properly addressed and that we have your current contact info on file.

We still have plenty of these on hand. If you'd like one, the cost is $3. What you get is the most complete listing of our available inventory ever mailed -- a 48pg catalog listing 1,641 unique gaining items plus our magazine-only inventory. Again, if you want a copy, they are $3 or free with an order.

These catalogs are valuable to you, our customers, and to us. Yet we're surprised to discover that 90% of our customers are now online. And preparing and mailing these catalogs is an expensive endeavor, and the info they contain quickly become stale (in the minds of those working on Internet time). There's got to be a better way....

ADDRESS PROOFING AND YOUR PRIVACY. We emailed or mailed all customers of record in late February to insure that we have your current contact info. We repeat our pledge to protect your privacy; we do not sell or trade this confidential info with any other organization.

PAYPAL SIGN UP BONUS is still available. Currently, you will get a $5 cash credit from PayPal immediately, and a further $2 trade credit from Fine Games, when you sign up using this link: htttps:/secure.paypal.com/ refer/pal =m.dean% 40finegames.com. PayPal is a very convenient service allowing domestic (USA) customers to email money quickly and painlessly to anyone with an email address. It costs nothing, You simply draw in money from your chequing account or credit card, then "beam" money to your chosen recipient. Here at Fine Games, we regard PayPal payment as a cash payment and can ship as soon as payment acknowledgment arrives. Thus, it's as fast as credit cards but counts as a cash payment.

Industry News

ANOTHER ROUND OF PRICE INCREASES this month. Multi-Man increased their prices on virtually all of the AH titles they now control. Perhaps the harsh reality of the royalty arrangement they made with Hasbro hit home. Our prices for the bulk of these ASL items either remained the same or decreased.

Both GMT and Decision Games announced significant (and suspiciously similar) decreases in the discounts they allow distributors and dealers. The net effect to us is to increase costs by about 10% for both companies' products. And in the case of GMT, we may not be able to buy direct from them which may hinder our providing quick service to this fine line of games. Quite frustrating, all in all. One step backward.

Similarly, Wizards of the Coast/TSR (remember, a Hasbro subsidiary) announced that they, too, are decreasing the discount allowed to the hobby distribution system. While this has negligible impact on us, this will have a significant cumulative impact on the industry as a whole. Their products represent a plurality of those sold through distributors and retailers, and there is just no avoiding them. One step back, no step forward.

SEVERAL DISTRIBUTORS ARE AGAIN CARRYING ASL PRODUCTS

You may see MMP's new designs, and the balance of the AH Advanced Squad Leader line, in retail stores again as a result. Unfortunately, the discounts MMP allows distributors is such that only dedicated stores, and those charging full list price, can buy in this manner. One step forward, one step back.

MMP ASSERTS COPYRIGHT CLAIMS, befuddling the Advanced Squad Leader (ASL) world. Curt Shilling, the savior of the ASL line and MMP main man, asserted in a ASL emailing list post (reprinted in View from the Trenches #29/30) that MMP has exclusive license to all trademarks and copyrights related to ASL products. In Curt's view, this includes all intellectual property associated with ASL such as the term "Advanced Squad Leader or ASL hex center artwork, counter artwork, etc." If "third party" companies such as Critical Hit and Heat of Battle won't pay royalties for the use of such intellectual property, MMP will sue (and apparently already has).

The case of what is "intellectual property" here, and even more so whether our patent law is out of whack, can be araued. But the real bottom line here is that Hasbro has money & lawyers; Critical Hit, Heat of Battle and other publishers do not. For small publishers to fight is suicide; to not fight is suicide. What's the choice?

The long term impact, it seams to me, is that production of "third party" ASL material will be sharply curtailed. Sales of existing stock may even be prevented. Multi-Man market share climbs from 60% to 90%. And our choice of ASL products drops to the 2-4 that MMP can produce in a year. Two steps back.

A good part of MMP's motivation here is the "$40-50,000" in royalties they've just paid Hasbro, as Curt acknowledged. That's a lot of ASL that must be sold, especially when the rules set and Beyond Valor are both out of print. MMP does need to recover their costs over time. But what we're seeing is, in my view, the hobby self-destruction through intenecine squabbling.

THE GAMERS IN 1999

Dean Essig provided one of the most candid explanations of a game company's operational results since Jim Dunnigan wrote about SPI in the '70s. The article I refer to is in the current issue of Operations (436). In brief, [The Gamers] lost some ground in 1999."

Their sales declined by 10% in $ from '98, 14% in games (26% since '96). They struggle with an inventory on a few older games they can't move. Their net cash flow has been negative for 2 years running. And now, they are diversifying into vending a broad range of other publishers' games at a 30% discount, this providing 18% of their income. Hmm.

I mention all this because Dean provided such good insight into a game publisher in 1999 and what hard work it is to make a go of it in this small end of a small hobby. And, in The Gamer's case, a stand-alone game publisher trying to sell direct to a customer base of no more than 8,000 gamers.

HIGHER SHIPPING COSTS ON THE WAY

While UPS has not yet elected to impose a special fuel surcharge on all shipments, it does reserve the right to do so. We're rather surprised they haven't already. But with fuel costs having escalated substantially and projected to remain high through the summer and this being one of UPS's two largest costs, it is only a matter of time. Increases in UPS shipping costs, together with increases in the average box size and weight for new ,came releases -- Acquire 3rd weighs 3.4# -- are having a notable impact in Fine Games' own shipping costs, too.

TAXING THE INTERNET, again:

As reported in the last Update, a congressional commission was to make recommendations as to how Internet transactions should be taxed, if at all. instead, no consensus was ever reached and the commission will merely send multiple options to congress. At the same time, the states have increased their pressure for some form of nationwide, uniform sales tax. And there *is* general support to prevent any Intenet access or usage taxation.

Reprinted by permission from the Fine Games Update Newsletter: www. finegames. com.