Comments on: Insider- MTG Business Models (Part 1) https://www.quietspeculation.com/2020/01/insider-mtg-business-models-part-1/ Play More, Win More, Pay Less Mon, 20 Jan 2020 06:57:42 +0000 hourly 1 By: Edgar Espinoza https://www.quietspeculation.com/2020/01/insider-mtg-business-models-part-1/#comment-2024365 Mon, 20 Jan 2020 06:57:42 +0000 https://www.quietspeculation.com/?p=94536#comment-2024365 In reply to Wes Berghahn.

What an incredible comment.

]]> By: David Schumann https://www.quietspeculation.com/2020/01/insider-mtg-business-models-part-1/#comment-2024082 Fri, 17 Jan 2020 01:54:27 +0000 https://www.quietspeculation.com/?p=94536#comment-2024082 In reply to Wes Berghahn.

Wes,

Thank you for this fantastic comment. I appreciate your insights; especially given your history of owning a B&M store. I agree with everything you said on this one. We have one store in our area that is almost entirely Magic and they are struggling to get by. The other one just has Magic on the side and is predominantly a board game store and they are doing fine. I hope any other B&M store owners that read this article also read this comment and consider diversifying their merchandise.

]]> By: Wes Berghahn https://www.quietspeculation.com/2020/01/insider-mtg-business-models-part-1/#comment-2024068 Thu, 16 Jan 2020 23:30:45 +0000 https://www.quietspeculation.com/?p=94536#comment-2024068 The LGS business model from the ground up is unnatural and inefficient. In many ways, it’s closer to a glorified clubhouse than a business. And I’m referring to the average LGS, not the dominant players in the eCommerce segment of MTG. The removal of the entry barriers by TCGPlayer was one of the most significant blows to the LGS, and the more recent prioritization of MTG Arena and release of Pioneer to cannibalize Modern was the coup de grâce. I closed my B&M store in 2016 to take a job as a Project Manager and never looked back. I’d been toying with the idea after looking at the industry and seeing the combination of WotC’s business plan and comparing the ability of an LGS to maximize $/sqft vs other industries and it was a no-brainer. I closed while profitable and it was the best decision I ever made. Threat of entrants is one of the most significant dangers to the LGS with players moving more and more to TCGPlayer to buy and sell and playing at home rather than in a store. As competitive magic continues to wither and casual becomes king, the value added by the LGS becomes null. You’re competing against casual players’ comfortable homes with people they can choose and no table fees. This makes it increasingly difficult to monetize floorspace in an LGS when a large portion of it is devoted to “free” space for players. Food and Drink was my third highest revenue generator after online and in store singles sales. In store singles sales accounted for roughly half of online. Food and Drink mainly relies on tournaments, as the casual players are not a captive audience to the extent of grinders. Essentially, as Wizards pushes grinders online, it exponentially accelerates the declines of the traditional LGS. IF I were to ever open a store again (I probably wouldn’t), I’d do three things differently: 1) Offer a monthly membership in exchange for perks specific to being at an LGS–dedicated play space for a playgroup, discount on products etc and unlimited access to demo boardgames. 2) Alcohol–in a state where liquor licenses are often $500,000+, this wasn’t an option. However, in states where it is an option, I’d bring that into the picture. While it violates WotC’s rules for structured competitive play, if you’re not one of the incumbent leaders in competitive play at this point, I’d drop that as a goal from the business model altogether. I only ran Modern, Draft and EDH on the Magic side and EDH was most profitable by far. They tend to be brewing more often and less focused on maximizing value in every tournament they play in. This means you could easily do a gaming bar and still provide space for casual EDH players. 3) If you haven’t caught on already–drastically reduce reliance on MTG altogether. Take the segments that are easy money, but focus on a sustainable business model that is a business first and game store second. I’d even consider putting a big whiteboard on the wall with a monthly “keep the lights on” revenue target if you think your player base would like such a tacky thing. There needs to be an open dialogue between the LGS and its players. Most people don’t understand that WotC has drastically raised the wholesale price on premium and commander products to the point where a new set doesn’t pay 6 months of rent–or even 3 months–and the reality is the sheer existence of an LGS is often an illogical passion project kept alive by personal financing by an owner working another job. I care about money above everything, which made my decision to close the store and put in a more profitable business to that location an easy one. The genie is out of the bottle as far as TCGPlayer’s policy is concerned, and any store that didn’t see it immediately was at high risk of failure. You can’t ask players to come spend 30% more money at your store because you provide value because the reality is, you don’t. The LGS used to have a competitive advangtage in: 1) Singles inventory 2) Sealed product availability and variety 3) Play space. TCGplayer has destroyed 1, eBay and Massdrop have destroyed 2, and Wizard’s push for players to migrate towards Arena coupled with the shift towards casual magic has eroded and will continue to assail 3. If you have a good community (and you are truly lucky if you do) then that is probably the biggest advantage you have over TCGplayer. I remember many retailers making snarky remarks about Amazon like “good luck trying your clothes on over the internet” or even in magic stores “go ask TCGplayer if you can play in their warehouse” and these represent a fundamental misunderstanding of business, the industry and really just people as a whole. The won’t ask TCGplayer–they’ll take the path of least resistance, which will likely be playing together at a kitchen table after all their TCGplayer packages arrive. The reality is, WotC used the LGS to grow and market its game for years and the LGS gobbled it up under the pretense of a symbiotic relationship for years like the turkey getting fattened the months leading up to Thanksgiving and thinking “what a great deal this is”. Magic is growing, but its growth is much less dependent on the LGS now–in fact, if you look at the trends within set and character design alongside WotC’s sentiments regarding the traditional white male gamer, it’s clear that the favorable path is one in which the game’s image can be conveniently censored and replaced with a more “appealing” face of magic in the Arena streaming segment with handpicked personalities.

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