My family hails from Iowa, in the American Midwest. On my mother's side were farmers, Quakers (hence pacifists) originally of Norwegian descent. My dad was in the U.S. Air Force and his grandfather (of Welsh descent) fought in the American Civil War. Though I was being groomed to follow in my father's profession, something happened. OSG, in a way, is my little farm; the cellulose is just processed and packaged in the shape of the warrior's psyche. From time to time it is important to stop the world and ask, "Is this worth doing? What of value are we creating?" If you haven't seen it yet, run, do not walk, to your nearest theater and see the Errol Morris film, "Fog of War," about Robert McNamara. His way of calculating military efficiency will be familiar. Like a typical family farm, OSG tries to get along without any capital, with few funds to invest in new initiatives. The P-250 program, especially, helps to alleviate the lack of capital. It means that we pay for most of our printing costs within 30 days, and our printer doesn't add interest charges to our printing bill. In order to start graphic design, we've begun accepting pre-payment for this game. Your 250 pre-orders will bring in about $10,000, which will cover the majority of our production & printing costs. We will have to start shipping games to retailers and overseas distributors while we are finishing shipping the pre-orders to individuals. The Traditional Wargame Business Model Over the years the model of how games are sold in this trade has changed, especially since the implosion of the market in the mid-1990's. Prior to that, we could expect to sell at least 2,000 copies of a Napoleonic Game. (The Emperor Returns and Napoleon at Leipzig, from Clash of Arms, each sold over 4,000.) The formula required a strong network of distributors. In those days there were no web sales, but over a dozen major distributors. Direct mail sales required having a regular way of communicating with the core audience, such as a magazine. When we released Napoleon at Bay in 1997, one distributor, Berkeley games, took 144 copies on day one. That is a $2800 order. They came back with a reorder for 72 more copies before the end of that year. In the mid- to late-nineties all of the distributors were absorbed by one giant distributor, which became so big that they were no longer interested in our product. We decided to start selling direct to the stores and bypass this distributor entirely. That was in May of 2003. Clash of Arms was having success with this method, and since Clash had been our fulfillment agent through July of 2000, we knew which stores were buying our product. Gradually, however, we have found it harder and harder to get the stores to order. Generally, they'll only order when there is a new game. They will take a few of the new game and one or two each of the back list. The stores prefer to place one order with the distributor for all their game products. Prior to 1995, Clash of Arms could print 2,000 copies and sell a few hundred direct mail and the balance at sharp discounts to distributors. That business model worked because they were moving out 1,500 units of a title on day one; something like this: PRE-1995 MODEL (print run 2,000) Direct Sales 200x $40 $8,000 Distributors 1300x $16 $20,800 Remaining in-stock 500 If you can increase your direct sales via the web and decrease your discount by selling direct to stores at 45% off instead of distributors at 60% off - then you can realize the same income per title. TRANSITIONAL MODEL (print run 1,500) Direct Sales 300 x $40 $12,000 Stores 800 x $20 $16,000 Remaining in-stock 400 Now, however, we are seeing a collapse of the store market for our type of games. The store owners we talk to, who are old grognards, want to keep our games in stock, but commit all their dollars to German games, role-playing and collectible card games. We are now moving toward a new business model, which is based almost entirely upon direct sales plus overseas distributors and a few stores. As a result of this new business model, our gross income for 2003 was actually down by one-fifth from our gross in 2001. We have to find a way to invite those store customers back to ordering by mail or on the web. Practically all of our direct sales now come via the website. If someone doesn't have access to the web or cannot make a purchase from work, potentially half of our audience, they cannot order. So one very important piece of this puzzle is to be able to reach those guys who used to purchase our games in the stores. It means doing more mailings, and perhaps sending out a free copy of Wargame Design from time to time, but it requires a marketing budget to generate those sales. By the same token we would like to expand our website. It would be great to have an alternative to the paypal order form, as that would allow us greater flexibility with discounts and would avoid lost customers who don't like paypal. We could maximize our sales by having a better, more flexible order form and by having more information on the website, discussion boards, that would provide a resource of great interest. Unfortunately, all these things take time, and we have to keep our website updates limited to small weekly bites. If we had the requisite dollars to invest in the website, I am sure it would make a big difference. Our publication schedule at one game a year is not viable. However, it is uncertain whether we could reach a level of two games per year; maybe one every 9 months. Right now we have four games that are pretty well developed: The Seven Days of 1809, Swords Around a Throne, Four Lost Battles, and Dark December II. An increased publication schedule is the goal, but there are so many details that slow down the design and development of new products. Even with the long hours, uncertainties, occasional disasters and endless details, when we achieve what we set out to do, it makes it all worthwhile. Back to OSG News March 2004 Table of Contents Back to OSG News List of Issues Back to Master Magazine List © Copyright 2004 by Operational Studies Group This article appears in MagWeb.com (Magazine Web) on the Internet World Wide Web. Other articles from military history and related magazines are available at http://www.magweb.com