Corona: Small publishers, big worries
The games industry is one of the winners of the corona crisis. But not all publishers are celebrating rising sales. Small publishers in particular are suffering from business closures and the cancellation postponement of the Spiel trade fair.
Crisis winner: the German board game industry defies corona. Sales of board games at Spiele-Offensive rose by 20 to 25 per cent in March and April. That’s according to Frank Noack, managing director of the online retailer, speaking to the trade magazine spielbox. At Ravensburger, family games and titles for young adults sold particularly well in March and April, such as Minecraft and Villainous. But not everyone is happy about more money in the till. “While the industry as a whole has actually benefited from the contact restrictions, this doesn’t apply to many small publishers. For a time, for example, it wasn’t possible to get advice or try out games in specialist shops, so many buyers focused on well-known titles,” says Henning Poehl, board member of the Spiel direkt cooperative.
Spiel direkt is a distribution cooperative for small publishers. The cooperative counts all publishers that release a maximum of five titles per year, are run by sole traders or consist of just two to three people. “Small publishers are often also run as a side business,” says Poehl. Despite these definitions, the line between tiny, small and large publishers is fluid. Igel Spiele is a member of the Spiel direkt cooperative, as are Frosted Games, Qango and Feuerland Spiele. The corona crisis affects each cooperative member differently. “However, there will be a noticeable loss of earnings for all companies. Depending on how financially strong a publisher is, this will have consequences,” says Poehl.
“A financial imbalance is looming”
As well as some game publishers, Amazon also benefited from corona. According to Tagesschau, sales in the first quarter rose by 26 per cent year-on-year to €68.9 billion. However, the online retailer also had high expenses, such as a hiring drive in response to the surge in customers. Nevertheless, Amazon was able to further expand its market-dominating position. Some Spiel direkt members also sell via Amazon. Games like “17 Kronen” or “Mord bei Tisch – Der Backstage-Fall” are even “Amazon’s Choice” products. But this hasn’t compensated for the loss of sales due to closed shops.
This makes the cancellation postponement of Spiel even harder for some small publishers. The world’s largest public trade fair for board games is taking place online only this year. “After several events had already been cancelled, this cancellation is causing problems for many small publishers and some of our members. It removes an important sales market,” says Poehl. According to him, the trade fair is one of the most important sales channels for small publishers. “There, they can sell games directly to customers without intermediaries, achieving the highest possible profit.” This applies above all to small print runs. Every game production incurs fixed costs. The more copies you produce, the lower the cost per unit. “If you produce a game in a small print run and want a selling price that’s acceptable to customers, you have to push the calculations to the limit. If wholesalers and retailers also take a margin, the publisher is left with very little. A small print run therefore usually only pays off if the publisher can sell a significant proportion directly to end customers,” says Poehl. He warns of serious consequences for the small publisher scene due to the cancellation of Spiel. “Small publishers in particular have previously sold a substantial part of their production at the trade fair. What’s more: many work specifically towards this date and align their entire publication process with it. Due to the cancellation, these publishers could face a financial imbalance that could threaten the existence of some.”
No trade fair, no demand
At trade fairs, publishers also reach multipliers such as expert players, retailers or influencers. If these recommend a game to friends, customers or viewers, demand for it increases. This way, even small publishers without a large marketing budget can draw customers’ attention to their games. “Because of the low margin when selling a small print run, small publishers can’t invest much in advertising. That’s why direct marketing at trade fairs is all the more important for them,” says Poehl. “Retailers primarily buy products for which there is demand. If no one is asking for a game, retailers have no reason to stock it.” This also applies to online retailers. “I don’t think Amazon can generate demand. Essentially, Amazon only satisfies demand that is created elsewhere, for example at a trade fair.”
Currently, Spiel is working on the virtual edition of the trade fair. Stands are now tiles floating in space. “Particularly high visitor numbers at individual publisher tiles will be visualised. This means small publishers with good games can also attract a lot of attention,” states the trade fair’s sales documents. These also point out that exhibitors could sell games via their own or partner webshops. Poehl still doesn’t believe the virtual trade fair can replace the real one. “Buying a game in a webshop isn’t the same as buying it at a stand, then carrying it around the trade fair and exchanging thoughts about what you’ve bought and seen with people you meet. What happens among the visitors is a large part of what makes a trade fair special. This will be missing at a virtual trade fair.”
Video calls instead of trade fair appointments
The cancellation also affects business behind the scenes. In Essen, editors, authors, illustrators, distribution partners and retailers meet. They negotiate contracts, licences and future games. None of this is happening this year. Ravensburger and Pegasus have therefore already organised virtual author meetings. There, authors were able to present their prototypes to editors. Other business meetings are now taking place via video calls. The organisers of the digital Spiel are aware of this and are therefore also offering virtual business lounges. At the same time, they want to transfer as many trade fair experiences as possible to the internet. Planned are virtual gaming sessions, livestreams and discussion panels. The Spiel direkt cooperative is not planning its own digital formats. “We only distribute to retailers. The marketing for the products is the responsibility of the individual publishers. Our concept is that we support each other in this,” says Poehl.
Poehl’s conclusion: “There have always been numerous ways online to find out about games. Trade fair visitors usually do this in advance of the trade fair. In the halls, it’s about seeing and experiencing a game in real life, examining it more closely and feeling the materials. At a virtual trade fair, you get more or less the same as what you could already do online beforehand. The virtual Spiel will therefore not be a replacement for the physical one. However, it is a new way for publishers to present themselves. Whether and how this works remains to be seen. I can imagine that the concept of a virtual trade fair could establish itself as an additional option alongside physical trade fairs. After all, not every interested party has the opportunity to visit the trade fair in person.”