Surviving the fallout:

In the past I have given you the information about how the industry is changing. The big rock hit about mid-1996 when we noticed the orders for games and magazines hit a brick wall. In short, auto ship numbers have dropped 65%, magazine numbers are down 75%. Hey, this is not a good trend.

Since that October we have seen Ludis International, a major French distributor go bye-bye, Greenfield, a major domestic distributor, go in and out of chapter 11, Traggs, a minor distributor, bye-bye, Berkeley Distribution, a major domestic distributor, bought by a company that may severely restrict the titles it sells in the future, yada yada yada. Not good, no sir, not good at all.

Some would say, hey go direct only. Not a good answer, though it is not entirely ruled out. There are some companies that are doing this.

Going direct means an expense of many thousands of dollars to get and keep an active and current direct mail list. A very expensive proposition, I assure you. A direct mail list of 10,000 costs, at an absolute minimum, $18,000 a year. That does not count additional costs such as maintenance of the list and other overhead costs.

Advertising would cost another $5,000 for a half page ad in the General 6 times a year (a must). This does not count other print media adverts. Remember, this is a minimum. Add to this the necessary cost of a real web page, maintenance of the web page and you got another level of expense of about $2400 a year. This is adding up but is some of the real cost of going direct mail.

Going direct drives the price of games up because you sell fewer games and you spend much more per game to support the sale. Going direct means that without the up front cash to invest in getting to the potential customer you have to take a couple of years to build the corps.

We are working on some alternative plans, but the question and answer remain: "Where do you sell your games?" "Everywhere we can." Now, the next Europa game, Narvik, is going to be direct mail only for the first three months with the exception of the HQ stores. This is a test of the direct mail market for GR/D.

Another solution is an exclusive distributor. This would certainly help production if done the way we want it to be done. We have been approached by some distributors to do this. We are talking about such a program but have not entered the negotiating stage. The key to all of this is to be flexible, to evolve with the market.

Dinosaur or chicken?

Okay, a continuation of the problems of the past year plus. What to do.

1. publish more games per year
2. expand the Europa system into other areas
3. pre-market other ways to sell games
4. seek an advantageous contract
5. expand presence within the existing market

Sounds simple enough, eh? It may sound simple, but it requires a great deal of time and energy, and money. Over the past five years we have been working on these formulas as best we could.

Some conclusions based on the work done to this time. There is no magic bullet. When dealing with a niche market certain rules apply. The trick is to learn the rules then apply the knowledge within the budget available. We have been building the corps in the event we are forced to go direct. We have kept a positive relationship with as many distributors as would have us. We promote the Europa HQ stores in every issue of the magazine. We have spent money to promote our games overseas. We have encouraged others to expand our systems with licensed products. We have increased our advertising budget every year as much as we could. We have produced an outreach program to retail and increased that program every year. We continue to promote, advertise, expand, increase every year. In short, we have done the list printed above.

Guess what ...it works. Yes, by gum and by golly it really, really works. In the face of the declining market, loss of retail space and sales, etc. etc. the persistence of the plan works.

The preorder for MTV was bigger than the preorder for WitD. Because our ad campaign appeared in the General magazine we sold 33% of the MTVs to new customers who had never purchased a game from us. While our autoship numbers were a bit less than expected, we got a second wave of orders within a week of the autoship. In short, our new series on WWI has been widely accepted by new customers as well as the corps of Europa players.

The premarket info on War of Resistance shows a strong market for the Glory series. Stronger than the Great War Series. More good news.

When the web site goes up, another brick in the wall. The seed money we have invested in our associations overseas has demonstrated a steady growth. The monthly inquiries for catalogs has also shown a sustained increase. If it gets much better we may have to pay taxes.