Feb 212018
 

This is a snapshot of some information I tweeted about recently, with a few expansions of my tweeted thoughts. You can find the original thread here: https://twitter.com/fredhicks/status/965269395261059072

Evil Hat’s dice sales in distribution over time: a graph. See if you can spot where the Tabletop episode hit. (In support of that we also asked our distributors to start putting the word “Core” in more than just the Fate Dice: Core Dice set, because we had a suspicion that retailers were mainly finding and ordering only the Core Dice set because it’s the only one that popped up in a distributor’s search system when typing in “Fate Core”. Which helped some of the other items in the catalog some, but really, it’s all riding on the massive ocean-swell of Tabletop exposure.)

There are a number of stories that can be told about the data shown in this chart, but I’m bringing it up because represents the stretch of time between our first Fate Dice Kickstarter and our current one, which you can find here.

But back to that graph. Off the left edge of the graph is where we actually ran our first Fate Dice kickstarter, in April 2013, 5 years ago. The graph starts at the point after we shipped to our backers, and got the dice into distribution.

Our first Fate Dice KS raised about $78k and let us launch 8 new catalog items over the course of 2013. Fudge Dice weren’t abundant or particularly varied, and we felt this could limit adoption of Fate. It also let us sell our own accessories. At the time we were riding well enough off of the revenue from The Dresden Files RPG and Fate Core that we were able to make the goals a lot smaller than actual cost; aside from the $78k from the KS, we put in a LOT of our own money (maybe up to 50%?) to make all of these happen. That investment gave us a supply of dice (beyond what were bought by the first KS’s backers) that they were able to carry us through most of the 5-year span you’re seeing in the graph. The dice became a big tentpole for the company’s revenue stream. All by design.

Then came Tabletop. It’s no mistake that you see the Core dice along the bottom run dry after that giant spike. In one month we sold over 3000 units (accounting for over 36,000 individual Fate Dice), and the hits kept coming afterwards. Which is great so long as you can continue to supply for the demand. But when you’ve printed between 5000-8000 of each SKU (catalog entry), seeing nearly 6000 units across 9 SKUs evaporate in the space of two months is, yes, exhilarating, but also scary.

For a while there I thought we could ride that out, allowing a few SKUs to expire and eventually commissioning new ones to replace them. Then Chris Hanrahan and I took a deeper look.

The picture went a little something like this: we’d probably make it to the end of 2017 with some SKUs still available, but nearly all of them would be pretty low (fewer than 1000 units in some cases, around 1500 in others) in the face of accelerating demand. And remember, this product line had become a company tentpole.

So five years in it was time to make another investment. Reprinting the Core Dice wasn’t going to work due to some materials sourcing esoterica, so we looked to our second-most-popular set, Antiquity, and got a reprint of those underway. Antiquity did run out of stock before we got that reprint in, but because we triggered it as soon as we did, the availability gap was minimized. Keep in mind a reprint isn’t cheap because minimum order quantities can be high. In the case of our manufacturer, 5000 units (aka, 60,000 dice in our 12-dice-in-a-pack format) is the minimum, so when I say “reprint a set of dice”, think: “Spend $10k-$15k.”

As we watched the trajectory of our other sets we had to make a few decisions. We needed to reprint other popular sets, but the amount of budget we could spare from the overall company picture (we have many projects happening) would only allow for another 2 or 3 sets to reprint. We decided we’d let our licensed sets run their course on the supply they have (Winter Knight and Atomic Robo). We still have several hundred of each, but when they’re gone, for now, they’ll stay gone. We love the sets, but best revenue comes from a no-royalties situation. That left us looking at the others and making some decisions based on how low they were getting. So that’s how we landed on also reprinting Centurion, Vampire, and Eldritch sets. Roughly half of our dice catalog, at $10k+ per reprinted SKU.

Five years ago I’d had the notion that we’d let older sets run their course, and replace them with new sets, but by the time we got to this point there were a few flaws with that line of reasoning. One big one? As a strategy, it never broadens the catalog.

We’ve made a few efforts to broaden the catalog ourselves: in 2015 we introduced the Frost set (cyan on the graph), our first Fate Dice set from outside the KS. And late last year we debuted our single-style/single-player Fire and Midnight sets (red and dark blue, on the right). Those efforts have show us it’s definitely worth doing. Obviously: more variety means a taller graph. But we had the problem that we’d already spent approximately $40k-$50k on those reprints. If you want to continue to lean on a product line… you gotta feed what you already have. (That reprint expenditure isn’t far off from what we spent ourselves, additional to the 2013 Kickstarter income, to actually deliver those 8 sets we debuted originally.)

Which brought us to our second Fate Kickstarter. We knew we wanted to broaden the catalog, maybe add another accessory type to it (hello Fate Points), so we could actually get *bigger* as opposed to maintain the status quo. We also wanted to address our Core Dice shaped hole. That’s why we’re leaning on our fans another time to back this campaign — and why the stretch goals are sized the way they are this time. If we hadn’t had to spend to maintain our supply of dice funded by the first KS, that money could’ve subsidized the goals of the new entries. But this time, we need more help to grow our crop of dice (and Fate Points), because the prior help we got in 2013 gave us a garden we have to keep watering too. So while we’ve stretched the budget to fund the creation of those Fate Points ourselves, subsidizing the KS to that extent, we can’t subsidize every goal in the KS like we did the first time due to the obligation to reprint those prior SKUs.

Infernal Dice – our current stretch goal in progress

I’m hopeful we’ll reach more than the Accelerated Core Fate Dice and Points, and those Infernal Dice. As noted, we’ve already committed to investing an additional $10k+ into this campaign to make sure those Fate Points will happen, combining them with our initial funding goal’s dice. The rest is up to y’all! Thanks as always for your support. I hope to see you over on the Kickstarter campaign this week as we roll towards the final 48 hours!

Questions? Comments? Problems? Drop me a line using the Comment Form on this site. I like getting messages and I like giving answers. Just make sure you doublecheck that you’re typing the correct email address for yourself. 🙂

Share
 Posted by at 1:36 pm  Comments Off on The History of the Fate Dice Line and Why We’re Kickstarting Again  Tagged with: ,
Feb 212018
 

This is a snapshot of some information I tweeted about recently, with a few expansions of my tweeted thoughts. You can find the original thread here: https://twitter.com/fredhicks/status/965632969988825088

At Evil Hat we’ve been selling Monster of the Week in distribution since the beginning of 2015. But it was only in the last couple months that The Adventure Zone podcast got into the mix. What’s that look like when it goes well? Well, this.

So, yeah, that’s why I fired off a reprint order a week or so back. The sales spike we’ve been seeing isn’t paralleled at any other time in the product’s history, except maybe the spike following its initial launch in early 2015, but even that gets drowned out by the month that was most heavily overlapping the new episodes showing up on TAZ. As you can see most months the game sells under 100 copies, reasonably steadily, so it’s been a modest and very satisfying success for us here at the Hat. But that also means it hadn’t necessarily found it’s bigger potential audience, until TAZ put it in front of people who didn’t even know they should be looking for it.

Relatedly, here’s Fate Core over time in distribution. We started selling Core into distribution in July of 2013. Those big spikes to the right are largely thanks to the debut of Fate’s Tabletop episode, released first on Alpha and later on YouTube.

The lesser spikes prior to what’s happening on the right more-or-less correlate with yearly hotzones like Summer conventions and retailers tanking up on a hot product for the coming holiday sales season.

Why am I sharing these two graphs today? Both show solid-performing products that suddenly started outperforming the trend by a lot due to online exposure involving actual play. Which goes to the title I put on this post: Streaming is the new best way things get sold. Conventions still a factor, sure. But, seriously, look at those graphs.

Granted, we got lucky to be picked up by two shows that have large audiences that were largely unexposed to the games previously, and the actual play that happened went very well. There is a bit of a lightning-in-a-bottle phenomenon going on here. It’s hard to replicate. I think it still underscores the importance of streaming and supporting a strong online actual play culture around your games (“you” as in “you, a games publisher”). These days I feel Evil Hat can regard many conventions, even the big ones, as optional. But not what’s online.

Our marketing folks are keeping an eye out looking for chances to help out folks who bring our games to an online audience. Many of the smaller shows won’t produce spikes that are quite this noticeable, but that’s mainly a matter of audience magnitude. Every drop in the bucket helps. If you’re a games publisher and you’re not thinking about how to build an online actual play presence for your games — whether through fan efforts, or directly through your own — I feel you’re dangerously close to dropping a critical ball in the 21st-century marketplace. Think about it.

As an addendum, here’s what the Fate Core graph looks like with FAE and the Fate System Toolkit added in; the overall “spine” of the Fate Core line. (Thanks to Twitter user for asking.)

Blue is Core, red is FAE, green is Toolkit (click to embiggen). What’s interesting about this one is sometimes you’ll see the trend riding lock-step with Fate Core, but other times you’ll see a sort of one or two month aftershock pattern in the other two. This connects to the tangential point that it’s even better to have a product line that folks can reach for along with a strong core product, but that’s likely a topic for another time.

Questions? Comments? Problems? Drop me a line using the Comment Form on this site. I like getting messages and I like giving answers. Just make sure you doublecheck that you’re typing the correct email address for yourself. 🙂

Share
 Posted by at 1:03 pm  Comments Off on The Importance of Streaming and Actual Play Online in Modern Tabletop Publishing  Tagged with: ,
Aug 252016
 

Evil Hat has gone through a number of changes over the years. We’re going through a new one now. But to talk about that, perhaps we need some context.

We—Rob Donoghue and I—established the company late in 2005, right on the heels of getting an offer from an old friend of mine to do an RPG based on his series of novels.

Right away we knew we weren’t the equal of the job that offer set before us. We had zero publishing experience. We’d gotten onto the radar as a possible team to make that RPG because we’d put some well-laid-out house rules for the Fudge system online, named them Fate, and gathered something of a community of interested gamers around them, which culminated in us getting a few awards for that work. Those awards got noticed by my friend’s agent, who in turn asked my friend if he’d rather have people he knew working on the game rather than a company of folks he didn’t know.

Looking at that lack of experience, I started charting a course that would get us to it. I severely underestimated the time involved in crossing that distance, but we did cross it over time. Early on, in 2006, we leveraged the early rise of affordable, online-friendly print on demand to release our first two games, first a “one-off” that I wrote called Don’t Rest Your Head, and the second a few months later, Spirit of the Century. That latter one was in essence an unadvertised-as-such public beta of the system we were working on for the game that started the company off in the first place.

That game was the Dresden Files RPG, and it took us four more years to get it to where we released it at Origins in 2010. We went at a slow and careful pace in all the years in between, putting out a few more things here and there, all relatively small, and supporting the hell out of the Fate community along the way. Open licensing for Fate and my strong tendency for (as Jeff Tidball puts it) pathological transparency helped give us an online presence that was far bigger than we actually were. We were a loud, small indie throughout.

When the Dresden Files RPG launched, a few things happened.

First off, we suddenly ended up bringing in considerably more income for the company than we had previously. Not tons, mind you, but enough that I started paying myself more than $0 a month for the work I was doing for the company, and enough that I was able to pay back both Rob and myself the money we’d put into the company to get it started back in 2005 (a total of about $10k).

Second off, we started getting into bed with traditional games distribution. Previously we’d been solely selling our stuff through Indie Press Revolution (I am a very big fan of paying specialists a cut for doing what they do best when what they do best is something I don’t do particularly well — in this case, running an online storefront and handling shipping; ESPECIALLY shipping). But the Dresden Files RPG was a big enough deal that it meant the distributors came to us asking to carry it, rather than the other way around. And that gave us some power; we were able to dictate a few terms (which a few years later we relaxed towards more standard rates, etc, because it meant we’d sell more), dip our toe in to exactly the depth we were comfortable with, and see how it went. Over the years that followed we eventually expanded beyond IPR and Alliance, and today we’re carried by most major RPG distributors.

Third, it prompted a conversation with Rob. I sat with him in his house one evening and said something like this. “So with Dresden Files money coming in, we’re at a fork in the road. We can consider us done, since we’ve achieved what we set out to do, but I don’t think either of us is interested in Evil Hat stopping where it’s at. We can continue to be an RPG publisher, which is us doing pretty much what we’ve been doing for the past 5 years, just on other things. Or we can look at what it will take to turn Evil Hat from a roleplaying game company into, simply, a game company.”

Rob and I both felt that that last option was the way to go. And this was the first big pivot for us, really. You can tell when you’ve hit a pivot point, because the clock gets reset to zero. We were back to a point where we were about to go and do something … and had no little experience in how to do it, just like we did in 2005.

The next four years, the time between 2010’s Dresden Files RPG release, to 2013’s Fate Core Kickstarter and its release late into that year, is what followed. That lack of experience meant a lot of experimentation, of selecting incremental “stretches” for the company where we’d take a few steps in a new direction, testing our footing, making mistakes, and learning how not to repeat those mistakes. We tried publishing fiction (my conclusion: not something Evil Hat should do unless it’s willing to really focus on the fiction market; it does not work well as a half-measures thing). We started looking at publishing board and card games, making a series of newbie mistakes both on the Kickstarter and manufacturing side as we did so, but still producing a game that as of today is in the black (Race to Adventure). And we pushed towards producing that no-setting-attached Fate system book we’d been promising our fans for years.

Honestly, it was a pretty messy time. We got some great work done in that time, and I at least started getting smart (I’ll let you know if I ever actually succeed at that) about running the company, by bringing Chris Hanrahan on towards the end of that time-span to help me chart a trajectory for the company’s growth. I was aces at implementing, at getting stuff that was ready to go out the door out the door, that sort of thing, but I needed help to do more than just fight the daily fires well. There was plenty of stumbling, and Chris had his work cut out for him, but he’d built other businesses before, and I knew he’d eventually compensate for enough of my stupidity that we’d start to get somewhere.

When Fate Core hit, we had another “Dresden-class event” on our hands, a big influx of funding that put us into a bigger weight class than before. This prompted the second pivot, the one where I started getting better about admitting that I was carrying too much on my plate and that we needed all sorts of help to have any hope of delivering what we promised. Chris, what with it being his job and all, blazed the trail, encouraging me to bring on Sean Nittner as our project manager (if you like how we manage to deliver our stuff on time and as promised, thank Sean, he’s the reason why we didn’t belly-flop after Core happened), and Carrie Harris as our head of marketing. This was our “and I’ll form the head!” moment, where the leadership of Evil Hat that we have today first really started to coalesce. If we hadn’t made this move, Core might have been the beginning of the end, instead of starting a new chapter of growth.

Since late 2013, then, we’ve been inside of Evil Hat’s third phase. We’ve expanded from making just books to also making dice and the occasional board game. We’re starting to realize that goal that Rob and I set for the company in 2010, and to push beyond it. A great bit of which culminated in the big success we saw with the Dresden Files Cooperative Card Game near the beginning of this year.

Which brings me to Origins 2016 and staying up late Saturday night there. I’d just finished trying out Tim Rodriguez’s excellent new deckbuilder design when Mark Diaz Truman came over and started talking about how companies in the “indie” space who are still around, like Evil Hat, should start thinking more heavily about the business side of things, and about how it might be time to transition from being indie publishers to operating at the smallest end of the “mid-tier”.

This dovetailed also with a conversation I had with Chris Badell from Greater Than Games where we talked about our different perspectives on risk (grossly oversimplified, me bearish, him bullish). And in the background over the past couple years leading up to both of these conversations, Chris Hanrahan, incrementally laying the groundwork for when I’d be ready for us to pivot again.

All of these conversations together started to get me clearer than I had been on how Evil Hat has still been running like an indie, and maybe shouldn’t be doing that any more, not at our scale of success, and certainly not with our ambitions factored in.

It didn’t really gel until I had a follow-up conversation with Mark a couple weeks later. I opened up the Evil Hat books to him and had him look over elements of cash flow and such, some deeper accounting stuff that I hadn’t really “got” before. Lots of light dawned with Mark able to point at specific numbers and such in our accounting to back it up — pointing out how we were keeping more cash on hand than we really needed to, for example — and then I had an afternoon eating call with Chris Hanrahan about all the stuff it made fall into place, particularly along the lines of realizing it was time to really, fully put people into jobs instead of treating all the work of running Evil Hat as something folks could just fit into their available time whenever. And so we realized we were now at the point where Chris had been trying to get us for a few years — so now it was time for us to start clicking everything into new positions, spinning dials, etc, to get all that happening.

The new pivot, the third-ish one, was here. And that started kicking off for reals around early July of this year. (Those paying close attention will notice that Evil Hat’s pivot opportunities have lined up with the biggest and most public successes we’ve had — DFRPG’s release in 2010, Fate Core’s big KS in 2013, DFCO’s big KS in 2016.)

The upshot of all of that goes a little something like this.

Thanks to the success of the DFCO KS, now is as good a time as Evil Hat will ever have for taking some risks to grow into the next-phase company we’ve been looking to become since 2010.

Chris Hanrahan, who was already acting as the company’s Vice President, has gone full time for Evil Hat. He’s working harder than ever at making sure that Evil Hat continues to grow and continues to seek new opportunities where we can find them (and where they fit our ethical and corporate and fans-of-games perspectives).

Carrie Harris’s head of marketing position has gone full time as well, bringing along with it an attendant increase in authority, scope of action, and marketing budget for the company. (Some time back we also brought on Tom Lommel to help us with our social media presence, freeing Carrie up to focus on bigger-picture marketing things.)

Sean Nittner continues to work for us in a part-time capacity, but we’re bumping his salary to pay him closer to what he’s worth (but it’s hard to pay someone whose work is priceless to the company what they are actually worth, let’s be honest). We’ll grow his project management team as needed, too. (We brought on Sophie Lagace and Chris Ruggiero a while back to help, already. Sean will tell us when he needs more help.)

We also brought on Brian Patterson as our “artist in residence”, generating original art for our marketing and product needs, as well as heading up our art direction efforts. Brian’s a multihyphenate talent, and he’ll be lending his support both to marketing and to product development.

That all said, this latest pivot isn’t just about putting people on the payroll and giving out raises & responsibilities. It’s also about shifting our perspective on how we handle our product releases, our crowdfunding strategies, and more.

We’re still sorting out what all of that means. The newest pivot is far from done with its “spin-up” really!

But, as one example, it does mean we need to stop doing things like this famine-or-feast release pattern we’ve been mired in for years. 2016’s been rough on the retail and distribution channel largely due to us focusing all of our releases into the recent Fate More kickstarter: folks looking for what Evil Hat’s releasing in 2016 have seen essentially nothing-nothing-nothing-nothing-nothing-OH HOLY CRAP HERE ARE SEVEN BOOKS ALL AT ONCE-nothing-nothing. Frankly that runs a real risk of undermining the individual books there — we’re having a tough time helping each one of them shine individually, if at all, when they’re all muscling through the doorway at the same time. (Mmmm, smell those metaphors mixing! It’s a heady aroma.)

That’s the sort of thing we absolutely need to stop doing if we want to continue to grow, and that means we need to stop the last few years’ pattern of trying to kickstart entire product lines — at least in scenarios where they all print, ship, and release at once. There are probably other things like that that we need to work on too, all part of this pivot, as we try to cement the company in that “small mid-tier” category and rise out of our indie, seat-of-our-pants roots.

It’s going to be a LOT of work. Work that I can’t, and shouldn’t, do myself. So I’m grateful as ever for the team we’ve been able to assemble to make Evil Hat’s continued growth and success a reality. It’s a scary time ahead, well out of my comfort zone as far as risk goes — but that’s what growing up as a company involves. I’m excited to see where the journey takes us next.

EDIT: In the original version of this post, I left out Leonard Balsera out of a concern to keep his day job as uncomplicated as possible. But now I feel I’m more able to cover that ground, so let me add this.

As part of this overall pivot, we’ve also brought Lenny on, more officially than ever before, as the Fate Line Developer for Evil Hat. Lenny has been with us nearly from the beginning — he signed on in 2006 and was instrumental in ensuring that Spirit of the Century actually saw the light of day (he’s on the cover for a reason), and ensured that the Dresden Files RPG had a strong backbone able to sustain the weight of the license, not to mention his truly groundbreaking work in reengineering the system represented in those two products into the newest modern form found in 2013’s Fate Core System. I’m pleased as hell that he’s a part of the company, as he really always has been over the past ten years, and I’m particularly excited to see how the Fate line continues to grow and develop under his guidance.

Share
Aug 182016
 

I posted this to Google+ a while back, but it strikes me it’s probably best served as a blog post. So here you go!

Here’s my position: Pricing a PDF at 50% of MSRP means the publisher, in the most common sales contexts (DriveThru for PDF, distribution for physical items), gets about the same payout regardless of format.

Therefore — for me at least — that sort of pricing strategy means that I’m consistently selling the content at about the same price, and everything beyond the content that the customer (and middleman) pays for is packaging for that content.

So if that’s the case, what’s the market value of the content on a product? About 1/3rd of its physical format’s MSRP. That means that about a third of a PDF’s price (assuming 50% of physical MSRP as its price point) is for the format & hassles & sales cost of providing that content in PDF. Meanwhile, with a physical item, about 2/3rds of its price is about the packaging, the plastic, ink, and paper that makes it something you can hold in your hand and not have to plug in a separately purchased electronic device to enjoy.

If you’re curious as to how I got to that approximate assumption, here’s the math, cribbed from a comment I recently wrote (which is a repetition of something I’ve written months before, I’m pretty sure).

Say you have a product with physical copy priced at M, and your PDF is therefore priced at .5M.

On DriveThru, that .5M is faced with a 35% cut (5% less if you’re exclusive); you’re gonna get 65% of it (tho you can increase that a little if you make a regular habit of using your referral code every time you link to your stuff there). .65 * .5M = 0.325M.

In distribution, you sell your physical book with an MSRP of M to the distributors at .4M (60% discount) most times. You’re often in a setup where you’re also paying some of the costs of getting the product to the distributors, as “must order a minimum of $X in order to get free shipping” deals are common in such transactions. So .4M is your cap. It’s not too much of a stretch to imagine that transactional and transportational costs could reduce that from .4M to something close to 0.325M.

So, conversationally, a good general estimation is that any established publisher that’s in reasonably wide game retail distribution and sells their PDFs on the premiere PDF retailer for games at 50% of the MSRP of the product is, regardless of the format, bringing in gross revenues of about 1/3rd of the MSRP of the physical book.

This should also illustrate why direct sales by the publisher to the customer, without a digital or physical middle-man taking a cut, are still attractive and important.

A PDF sold direct to a customer at 0.5M is going to bring nearly 0.5M to that publisher, which is about a 50% increase in unit sale revenue vs. DriveThru.

And physical items remain the king here: if you sell an item direct to a customer at M, it’s going to bring nearly M to that publisher. Even factoring in unit manufacture costs (which if managed smartly only come to 0.2M at most) you’re in great shape as a publisher making that sale, representing a 100% or greater increase to unit sales revenue.

Kickstarter is chock full of direct sales, which means that publishers get a lot more $ per sale than they normally would, which means they can cover a lot more of their costs and shore up risk factors much better. It just costs the publisher about 0.1M to do that, which still leaves a lot of M for the pub.

Even reward tiers that sell direct to retailers at 0.5M do better for the publisher, leaving him with about 0.45M per sale, which is at least 10-12% better than selling to that retailer through distribution.

Share
 Posted by at 12:21 pm  Comments Off on The Value of Book Content Is About 1/3rd of the Cover Price (And Other Related Topics)  Tagged with:
Apr 192016
 

Share
 Posted by at 12:37 am  Comments Off on This Old Rodeo Again