Report To The Stakeholders

[RevBob]

Originally Posted by adm

Does anyone know how many of these projects actually make money by the time they are done?

Originally Posted by lachimba

Um if they are funded then most of them?

Remember that "making money" is not a static target, as demonstrated by ongoing inventory costs from storage and taxes to shipping. As an absurdly simplified example, suppose a Kickstarter raises $100K and spends $99K in fulfillment. Depending on the costs involved in running the project, that $1,000 "profit" may represent a net loss, but let's assume those costs came out of the $99K. If there's any inventory left over that needs to be sold through other channels, $1,000 won't go very far in doing so. The disposition of that inventory becomes a race between ongoing costs and incoming cash, and it may well turn out that the entire project lost money.

Speaking for myself as a backer of multiple projects, from companies I will not name (but are not this one), I've seen several "successful" projects run far beyond schedule and/or fail to deliver. Shipping costs are a major bugaboo; they've risen sharply in the last year or two, which devoured a big chunk of the budget from projects that did not account for that possibility. I recall one campaign specifically that ran a second "we need to raise money to ship the stuff from the last campaign" project.

Knowing how to administer and budget for a traditional company does not necessarily carry over to running a successful crowdfunding campaign. I can think of three RPG campaigns I've backed that are well behind their projected fulfillment dates, and one board game campaign I backed only delivered because a white knight intervened. "Just do it as a Kickstarter" is no panacea.

[philreed]

Originally Posted by Phil Masters

(b) SJGames appears to have proportionately higher overheads than smaller companies which focus solely on RPGs.

Some smaller RPG publishers are -- these days -- running a distributed office without a central location. Employees, if any since most are freelancers, work from their home, or a coffee shop, or a library, or whatever place they're comfortable working. A place that the publisher isn't paying for at all.

Without the need to pay for a dedicated office space the company reduces their overhead automatically. No paying rent. No paying utilities. No paying for maintenance. And by relying on freelancers, the company eliminates the costs associated with hiring and employing people.

A larger company is going to have a larger support staff. Fantasy Flight Games, for example, has over 150 employees and a much larger office than SJGames. Their overhead costs are higher than at SJGames, but they're running a substantially bigger operation. A project that would be profitable for SJGames and worth effort is potentially too small for FFG to tackle.

Hasbro is even bigger, with roughly 5,200 employees and a lot more dedicated office space. Hasbro's overhead is dramatically higher than SJGames, and Hasbro has much higher expectations of sales. According to "The Real Toy Story" (Eric Clark, 2007) we find:

"For Hasbro to be interested in a game, its potential sales need to be huge, a minimum 250,000 in the first year."

A big company gets to take advantage of economies of scale while also balancing opportunity costs and finding a way to make projects fit within the larger needs of the business.

[Phil Masters]

Originally Posted by lachimba

You really think Pelgrane Press, Atlas games etc don't know how to run a budget?

Mmm. Given that they're still going, even after a few years of running Kickstarters, they either have some clue or some well-hidden backers.

Originally Posted by philreed

Some smaller RPG publishers are -- these days -- running a distributed office without a central location. Employees, if any since most are freelancers, work from their home, or a coffee shop, or a library, or whatever place they're comfortable working. A place that the publisher isn't paying for at all.

...

A big company gets to take advantage of economies of scale while also balancing opportunity costs and finding a way to make projects fit within the larger needs of the business.

The first paragraph rather implies that some traditional economies of scale don't actually exist any more. Interesting times.

[philreed]

Originally Posted by Phil Masters

The first paragraph rather implies that some traditional economies of scale don't actually exist any more. Interesting times.

I feel I have been unclear. Economies of scale have never (as far as I know) made an office a free workspace. Local governments sometimes grant large companies (typically retail and manufacturing businesses) tax breaks and incentives, but even there the company is bringing something to the community, and there are ongoing costs associated with running the physical facility.

A small publisher, one running a decentralized operation without a dedicated office, strips the burden of a physical office from the business' expenses. A project's revenue doesn't need to cover the cost of rent or a mortgage, any taxes, or any of the other costs associated with running a physical location.

For more on economy of scale please see this Economist article: http://www.economist.com/node/12446567

"Economies of scale are factors that cause the average cost of producing something to fall as the volume of its output increases."

"The larger an organisation becomes in order to reap economies of scale, the more complex it has to be to manage and run such scale."

[Phil Masters]

But, if everyone needs a physical office, as used to be more or less the case, running an office for ten people is probably less than ten times as expensive as running one for one person, for reasons of physics as much as anything. And publishing companies used to always need a bunch of specialist people to handle layouts and such, armed with letraset and razor blades - and a bigger company could share a minimum team of such people round the company, paying little more than a small company had to pay. And so on. Fixed costs like that, which rose a lot less quickly than the size of the company, provided real economies of scale.

But now you've got "small companies" that can use, as you say, a coffee shop as a free office, and a DTP program instead of razor blades and letraset. They aren't paying any dedicated office space or layout team costs, whereas the bigger company is still paying for such stuff (as well as paying more people to manage it). So down at that end of the range, economies of scale may have gone negative.

[lachimba]

Originally Posted by Phil Masters

Mmm. Given that they're still going, even after a few years of running Kickstarters, they either have some clue or some well-hidden backers.

I read comments (and I restate that I have no knowledge of or interest in knowing the internal process of SJ Games) from SJ Games fans ( and I'm not commenting on the helpful information that SJ Games provides) saying that SJ Games must know what they're doing in regards to GURPS because.....
Basically they say so or they've been around a long time.

Yet all these other companies might not be making money because .... we have no internal information (which I'm also uninterested in knowing) and we only have what they say to go on (which is usually wow it was a huge success and we are doing it again here is your hardback and oh we are releasing etc etc hear about it on the weekly podcast our authors do etc).

Just seems like there's a disconnect between the evidence that people need to prove something. I'd be inclined as a customer to assume that any genuine RPG publisher knows what they are doing until my books don't arrive (after I've paid for them ofcourse) and the projects start falling over in disaster.

Anyway, I just want the books I like to come out (as PDF increasingly, as space is too much of an issue for me now). I've said before that the last few years have really been among the best years for GURPS books (so long as they are PDF). Increasingly other companies are also having their best years ever.

[Johan Larson]

How important is it to have a fully playable starter set? Early versions of GURPS had a fully contained set of rules in one volume, including a starting adventure.

If this is important, it would probably be possible to meet this requirements by paring down GURPS into a 128-page soft-cover book or a small box.

[Phil Masters]

Originally Posted by lachimba

I read comments (and I restate that I have no knowledge of or interest in knowing the internal process of SJ Games) from SJ Games fans ( and I'm not commenting on the helpful information that SJ Games provides) saying that SJ Games must know what they're doing in regards to GURPS because.....
Basically they say so or they've been around a long time.

Incidentally, I completely accept that. I'm 99% certain that SJGames will still be around in five or ten or fifteen years from now. (The 1% is because nothing like this is 100% certain.) GURPS, on the other hand, is more of an open question. Yes, yes, they're "committed" to it - but they also say that, e.g., disastrous sales on a print book would be dangerous for the line. Ergo, bad things are possible. Confidence in the company's survival is not the same thing as confidence in any given product's survival.

And talking of false equivalencies, by the way, I've been guilty of perpetuating one of those myself, by implication. There are, doubtless, roleplaying companies which are run entirely on someone's laptop out of a coffee shop. However, those aren't the same as the small-ish roleplaying companies who we've mentioned by name on this thread. Atlas and Pelgrane and Cubicle 7 all, I believe, have real, physical office space.

[PK]

So . . . http://www.sjgames.com/general/stakeholders/

[Turhan's Bey Company]

Originally Posted by PK

So . . . http://www.sjgames.com/general/stakeholders/

So it looks like things with Car Wars are going to have to happen in a Real Big Hurry. Good luck to everyone involved.