GAMA 2017 - Insights for New Game Companies

GAMA 2017The Game Manufacturers Association held its annual conference and trade show, GAMA 2017, in Las Vegas, March 13 to 17, 2017.  Their mission is to "promote the general interest of all persons engaged in the buying, selling, licensing, and manufacturing of hobby game products". The members-only conference drew 1600+ attendees; basically everyone looking to grow their game industry business—be they a retailer, distributor, game developer, or manufacturer.

Kyfak Games' is our new toy & game start-up and we were very eager to go to GAMA to learn from experienced industry folks and meet some other new game start-ups. Our GAMA membership approval came just six days before the conference! Totally last minute, we booked the trip from Guelph, Ontario, to Vegas, and let me tell you, it was absolutely worth it!

Some context: My background is innovation, start-ups, and funding.  I have worked with hundreds of companies over the past 15 years—making resources & funding available to help them, helping take their ideas from concept, to product, to revenue.  Most recently, I ran an Innovation Guelph and led an amazing team, building one of Ontario's most effective entrepreneur support programs. Now, I find myself back at the beginning, the President of a tiny start-up company with no end of great ideas and lots of ambition, but so many unknowns.  How do you build a game company? That's what Kyfak hoped to find out at GAMA.

I know a lot about how to build a company if you're starting with a scientific innovation, basically, how to scale a technology company.  I have helped dozens of tech start-ups get government funding and angel investment for their cool new app; helped new food companies launch products; helped clean tech & energy companies get off the ground; and designed programs to help small to medium-sized enterprises scale their operations.  Step number one is always to do your homework on your industry sector.  You need to understand how the industry works and who the players are.  Successful start-ups understand how to leverage their existing knowledge, experience, contacts, and assets, to break into the target market.  But, I knew very little about the games and toys industry, and almost no one in the industry. GAMA was my first real glimpse into that world.

GAMA is a conference and tradeshow for all the players in the hobby game industry, pun intended. When I say 'hobby game industry' I mean, board games, card games, roll playing games, miniatures, and all the accessories that one might need to play a game. The conference is attended by game developers (authors), game manufacturers, distributors, retailers, and miscellaneous folks linked to the industry, such as finance, legal, and brokers.   The mix of folks is real, from newbies to the most successful game companies in the world.  This is also one of the most welcoming industry groups I have ever had the pleasure of meeting.

The conference is divided into a couple different streams so that attendees can get what they need depending on which part of the value chain they occupy. Events, seminars, socials, dinners, and lots of game playing, populated the five day agenda.   Kyfak Games was in the game manufactures stream, specifically, a sub stream for newcomers and others trying to grow their game publishing businesses.  The retailers had their own sessions where they got sneak peeks of the newest titles from the top game companies. Then of course there was a trade show floor with a few hundred exhibitors looking to sell games & merchandise to buyers from the distribution and retail side of the industry. 

John Ward, Executive Director of GAMA, started the manufacturer's seminar stream with an important message.  He told us that the game industry was all about cooperation—companies helping companies—so that collectively we can grow the North American game market.  Apparently there's lots of room to grow because the NA market is almost 10x smaller than the European market! Basically, we need more games, more game companies, and more people playing games.  I'm down with that.  Larry Roznai, President & CEO of Mayfair Games, put this a different way, he said, "always look for the win-win scenario; being cut-throat won't get you very far in this business.

For a guy like me who's been making games since I could hold a crayon, GAMA was almost overwhelming; like being right there at the threshold of a dream.  I felt like I shouldn't blink just in case I'd miss something. All the ins and outs, dos and don'ts, and business dynamics of the industry were explained to us by those who live and breathe it every day.

I met many other game companies in the same boat as Kyfak. Despite the welcoming nature of the games industry, there were perhaps too many boats in the water.  Bobby Stickle from GTS Distribution, one of the largest distributors of games and toys, said GTS gets as many as 100 solicitations a week!  With that kind of noise, how can a new start-up get noticed? What's the best way to promote your game titles and increase your chances of success?

As I now know, it's really tough to break through, but with smart determination and a little luck, it's possible. Here are some golden nuggets I took away from Vegas and my GAMA 2017 experience.

1. Decide what sort of game company you want to be. If designing games is your passion, don't venture into the manufacturing side of the business unless you also love inventory, managing employees, and dealing with lots of bullshit.  Essentially, stick to your passions and talents

2. The game industry has four pillars: design, manufacturing, distribution, and retail. New game companies often think they need to do all these functions themselves. Yet, the better route is to leverage the strengths of other companies, particularly for manufacturing, distribution, and marketing. This road saves you money in the long run, helps your reach more retailers & customers, and lets you focus on developing the next big game title.

3. New games come from two sources, inventors (freelance developers) and game companies (development studios and publishers).

a. Inventors/Freelancers develop their game ideas with hopes of selling titles (polished and well-tested prototypes) to an established game company, in exchange for a royalty agreement, and if you're lucky, an upfront payment. To get any traction as an inventor, you need quality, tested prototypes, sell sheets (product profiles) for each of your titles, and some insight into which game companies might be looking for the games you've got in your quiver. You also need to have patience because even if you sell one of your titles, it might take a few years before it surfaces and the royalty cheques start rolling in.

b. Game companies (development studios and publishers) develop new game titles and sell them in bulk to distributors. They often develop their own titles in-house, but also entertain pitches from freelance developers. Freelancers can license their games to publishers and hope that they will one day actually get published—no guarantees though. Most release less than 10 new titles per year, where 6 or 7 might be the average number.  This means that they have a backlog of titles waiting to see the light of the retail shelves and some may never get there.  It's nearly impossible to pick winners so these companies release a suite of different titles annually to hedge their prospects. Developing their brand is a priority. A strong brand means that distributors, retailers and consumers will associate certain types of games, authors, art styles, or other niche features with their name and logo. Reputation is everything in the game industry.  But, to survive long term, game companies must stay on top of the latest game trends and be ready to reinvent themselves in response.

4. A game manufacturer is a factory that can mass produce games and game components. There are hundreds of them around the world but most of today's games come from China, Europe, and the USA (in that order). It's expensive to publish a game, so to drive down the costs, publishers need to think about balancing the cost of materials, shipping, duty, and quantity, against the final manufacturer's suggested retail price (MSRP). Production costs tend to be cheapest if the game is made in China, but there are options to have your game made in the USA and even Canada—which might make sense if the shipping costs from overseas were too high.

To make our first game Kyfak outsourced the manufacturing logistics to Print Ninja, a US-based company facilitates the manufacturing of games in China and subsequent shipping to wherever they need to be.  They were really helpful and Kyfak is grateful to them for how seamless they made the process—our first product would not exist without them!  In some cases the middleman mark up could make this approach out of your price range—this approach work best if your volumes are high.So the lesson here is to do your research on game manufacturers, get some quotes, and do the math before ordering your game.  If your manufacturing costs are too high it will drive up the MSRP—if that's too high, no one will buy your game.

5. Distributors are a super important part of the game industry because they are the gatekeepers to the retail shops. To be successful, your games need a distributor—in fact you probably need more than one distributor so that you can achieve the greatest reach across Canada, USA, Europe and the world. If you're a small new game company like Kyfak Games, you need to be pitching your games to some distributors as soon as possible. Note that I say 'games' because most distributors do not buy one-offs. Also be warned that distributors' shelves are full and many aren't buying a lot of new titles from new companies unless they are getting requests for certain titles from retailers. So it's a good idea to promote your new games to your fan base so that they go ask for it at their local game store. If lots of people are asking for your game, the distributors will hear about it and will be more likely to order cases of your games.

If you're a new game publisher, you will be selling your games wholesale to distributors. They typically buy games at 60% off the MSRP—in turn they will sell your games at 50% MSRP to the retailers.  Because they only make 10%, you can negotiate a few points with them to sweeten the deal and secure distribution—a few points can mean a lot if your game turns out to be a popular title.  

Lastly, beyond facilitating access to thousands of retailers, distributors will help market your games.  They can get your titles into catalogues and web promotions—they can even help produce promo videos, how-to videos, and other marketing assets.  

6. One thing to know about the game industry is that its small, everyone knows everyone and the communication channels touch every aspect of the industry from consumers & retailers to distributors & game publishers. This also means it’s a very noisy industry where new game companies will have to fight to be noticed. Promotion is essential. If you're a new game company you want to promote your brand—who are you and what kind of games do you produce?—then promote your new titles through social media, at events (the big ones are Origins Game Fair [Columbus, Ohio], GenCon [Indianapolis, Indiana], and Essen Spiel [Germany]), and especially through the top industry game sites like Dice Tower and Board Game Geek. Try to get your game reviewed by an insider who has a large following of people who are also your target customers. A great review can propel your game to best seller status, a bad review can sink it.  Pay close attention to your target market because there's no sense in getting a review from someone who typically reviews new role playing games when your game is a board game. 

7. Understanding the retail side of the industry is important too. Most new games start out small and many stay small—selling only a few copies in each retail outlet per week (or month)—but this can add up if your distributor can get your game into a few hundred (or thousand) retail locations.

Small retailers can be hobby shops, game stores, book stores, comic shops and specialty shops. They are where your game must take root and start building a fan base. If you're lucky, your promotions and reviews will pay off and you could end up with a game that sells 10,000 copies per year.  Of course there's also the big retailers like Walmart, Target, Toys R Us for example—and it's possible to get your game into those store too—but be warned, the terms of sale can be very daunting for a small new game company—the rewards can be huge, like selling 100,000+ copies of your game; but if your game doesn't sell, guess who has to buy back the inventory? Yikes!

8. The last big takeaway has to do with collaboration. Over and over again I saw instances where companies were coming together to produce new games. As I already mentioned, it's impossible to do everything so think about partnerships and cooperation with other game industry companies. Working together on a new title can help you leverage each other's networks, produce a high quality game, and increase your chances of having a great selling game. Think about your strengths and your weaknesses—make partnerships with people who can fill in the gaps.  I saw many examples of this at GAMA, for instance a game development company collaborating with an accessories company and a publisher to put out a top quality game, where the distributor is also a member of the team. It's a recipe for success.

To close out, I would recommend looking into GAMA if you're serious about braking into this industry.  Their members include lots of friendly folks who really do want to see a game on every table.  To do that, we need more game companies and many more games!