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Friday, January 05, 2007

The Three Tiers of the Industry

Those of us in the "adventure game industry" (which includes the wargame industry and the roleplaying game industry) speak and think in terms of three tiers: Manufacturers (such as ADB Inc.), wholesalers, and retailers.

There are actually six tiers:
1. Vendors (printers, artists, game designers, landlords, utility companies) who are paid by manufacturers for various goods and services.
2. Manufacturers (companies that design and publish games).
3. Consolidators (companies that collect the products of tiny companies and sell them in batches to wholesalers. Fortuntely, ADB is big enough we don't have to use this level.)
4. Wholesalers alsoknown as distributors, who buy games in bulk from manufacturers and sell to stores.
5. Retailers (stores, either on the web or "brick and mortar" stores in your home town).
6. Gamers, also known as consumers, end users, and customers.

We manufacturers sell games at 40% of retail price to Wholesalers, who sell them at 50-55% of retail price to stores. A hugely big deal in this is "channel manners"which means nobody in the food chain sells to somebody two or more steps down for less than that person can buy from the step above. For example, we don't sell to end users (you!) for less than the retail price that stores charge, because if we did, the stores would stop carrying our products and we would lose the most valuable thing there is, shelf space in stores where gamers who just happen to walk by might be intriqued by the cover art and stop to check out a new game. (If the cover art can get you to pick the game up in your hands, the back cover -- basically a full page ad for the game -- is there to convince you to buy it.)

So you can see why we don't sell at a discount on our web site.

We'd rather you bought our game from a brick and mortar store that has it on the shelf. That encourages the store to stock and display the product and maybe sell it to someone else. If your store is only willing to special order it for you, try to get him to get two copies and put one on the shelf. And if that fails, make it a point to go to the store and PLAY the game so at least other gamers walking by will see it.