CGL Speculation #7 Options

[otakusensei]

This little "factoid" keeps getting bandied around, and it's ridiculously false. Early editions of Shadowrun sold in the hundreds of thousands. SR4 has been selling well, considering the RPG market of 2005-2010, but that market is *FAR* different from 1989-1999.

Thanks for the correction. Does it help any that I'm enjoying this edition more than the previous ones?

[Wandering One]

I start this off with a comment: "YES, I'm pulling these numbers out of thin air and I am not a member of the industry!"

However, a little mental exercise to determine profitability off some simple assumptions, and my estimated guess for every number in cost here is lowballed.

Let's assume the licensing is $200,000/year + 10% distributor price royalties.
We've seen some numbers bandied around by a few of the writers involved for word counts and the like. To estimate with 3 writers of varying lengths, and some art, assume it costs $10,000 to simply write the book. Not edit, not layout, just write.

Your line developer makes some salary, let's assume a nice simple $60k/year (because it divides by 4 nicely), and it takes 3 months of work to layout/edit a book to final production. That's another 15k in just salary cost.

Your book, so far, has cost 25k. No marketing, etc... just to put together the initial item to feed to a copier somewhere. POD is always rediculously high, so a bad case for actual prices, but let's assume a bulk print of will cost half of that. Augmentation (as a sample) was 178 pages. To make 1,000 (a really low number) would cost 5.70/book. Halve that and a discount for larger bulk with binding, color covers, etc, let's assume $2/book.

You print up 10,000 of these for initial distribution, it's now cost you 45k... to *make* the book and put it one on a shelf in 10,000 stores. Please remember we've done no marketing yet. Let's assume they spend ~10k in marketing, relying on word of mouth after that. (Basically some posters for game shops and some targetted internet ads). So it's 75k to produce the book, give it light marketing, and put it on shelves in stores around town. Base price is 55k + printing costs. Shelf price of Arsenal on Amazon right now is ~$23.00.

Assuming (remember, shelf price needs to make money for the shop too) you're selling these to the distributors for half shelf price, and they're doing a 100% markup, you're looking at ~$11.50/book income to the main company. x 10,000 copies and you're at $115,000. Take off 10% in royalties and the company has gotten a return of $104,000. Remove the 75k for the production and printing and the company has earned 29k. Do this 10 times in a year and you make your license costs. You haven't paid for the lights, the workspace, workers comp, etc.

Now, the argument. 10k is a really low # of sales for the books. And what about pdf sales, that cost the company nothing?! You have to administer the sites for websales or you have to share in profits with those who do.

So, let's say we can sell (equivalently, hardcopy + pdf sales) 100,000 copies of these books, either pdf or hardbound. That's 200k in printing/pdf site maintenance costs, still only 55k for base creation, and the company's grossing 1.15 million in cash. That equals down to (carry the 3, add the 2...) roughly $780k in profit after royalties. Enough to cover the license, buy a small mansion, and get the dog groomed. I think we can assume this is... wishful thinking. If they were selling that much noone would care WHAT LLC had done with the finances after a few books.

As mentioned earlier, THESE NUMBERS ARE PULLED STRAIGHT FROM MY ASS, other then the currently public prices of Lulu.com and Amazon for the books. But it's an interesting exercise. I'd be quite curious to know the # of volumes sold/book, etc etc, but I believe Furluge has the right of it. The profitibility of this game as a cash cow is either rediculously high, which means noone would care what the hell LLC did other then "Take a powder on the withdrawals for a year and we'll call it good", or it's not as high as it's made out to be, and needs to be carefully considered. A new company not holding the publishing rights etc etc to existing books, and immediately turning profit on those books, would need to make a major splash... especially since my 200k/year on licensing I assume to be quite low.

[Adam]

Just what any discussion about business needs, is more totally made up numbers. (IMG:style_emoticons/default/smile.gif)

[Wandering One]

Just what any discussion about business needs, is more totally made up numbers. (IMG:style_emoticons/default/smile.gif)

(IMG:style_emoticons/default/smile.gif) Well, it's not like I got into a discussion on different shipping methods and pricing, storage of goods for inventory on demand stores, actual marketing methods and the cost thereof, anti-piracy costs, federal and local taxes, book-keeping and other staff costs, etc etc. (IMG:style_emoticons/default/smile.gif)

So, yeah, alright, maybe not the best idea in the world, but it helps to show that the 'cash cow' theory is busted. It's a business with reasonable profit margins and expectations, like anything else, and needs product to sell to be viable, and a solid amount of it.

The only one it could be a 'cash cow' for is Topps, and even then, I'm not sure.

Though I'm sure it was answered somewhere in the last 450 pages on this topic I can't remember the answer. IF the license was transferred, could the new licensee sell the products originally created, produced, and sold by CGL? Did CGL 'inherit' all prior versions of Shadowrun for resale?

[Adam]

The Shadowrun license, up until this point (I do not have a crystal ball) is a bundle deal. You get all Shadowrun, or you get no Shadowrun.

Nothing in the RPG market is a "cash cow." I'm not trying to be a jerk, just the simple truth. A yearly salary of 60K? My mind swims with the luxury that would provide. (IMG:style_emoticons/default/smile.gif)

(In the future, Posthuman Studios will be releasing real numbers -- sales figures, expenses, etc -- to help educate the fan base. Evil Hat is one company already doing this -- it's enlightening. Check out Fred Hick's blog at http://www.deadlyfredly.com/ to see the level of transparency they have!)

[Demonseed Elite]

Nothing in the RPG market is a "cash cow." I'm not trying to be a jerk, just the simple truth. A yearly salary of 60K? My mind swims with the luxury that would provide. (IMG:style_emoticons/default/smile.gif)

That's one of the big contradictory subjects about this whole IMR/CGL mess that people have trouble getting their heads around (or at least, I do). I never had the impression that RPG industry staffers make lofty salaries (though I wouldn't call $60K lofty). But then it gets so hard to imagine, if that's the case, that no one noticed the large sums of money vanishing from IMR that supposedly vanished. You'd think that money would stick out like a sore thumb in an environment like the RPG industry.

[Adam]

It did make some things seem... suspicious. But when you can't look directly at the books, following-up on those suspicions is difficult.

I think that tangent of this conversation is best served with drinks. (IMG:style_emoticons/default/smile.gif)

[RunnerPaul]

The Shadowrun license, up until this point (I do not have a crystal ball) is a bundle deal. You get all Shadowrun, or you get no Shadowrun.

Except the Video Game rights.

[Demonseed Elite]

I think that tangent of this conversation is best served with drinks. (IMG:style_emoticons/default/smile.gif)

Haha, I agree!

[Wandering One]

It did make some things seem... suspicious. But when you can't look directly at the books, following-up on those suspicions is difficult.

I think that tangent of this conversation is best served with drinks. (IMG:style_emoticons/default/smile.gif)

Wait, you mean ANY part of this conversation ISN'T best served with drinks? I'm working on a drinking game around it. 1 shot per unfounded rumor, two fingers for each 'anonymous insider information' bomb from Frank (per site found and quoted), a beer for every unique amusing tangent, or combination thereof. (Unicorns prostituting themselves to Lone Star to afford Diamond Belly Button rings comes to mind... well, they're mounted, no?)

And... 60k... is luxury? Oh lord, I figured that was one I definately lowballed. JH... you must REALLY love the game.

[Adam]

In the tabletop gaming industry? Yes, a 60K salary is luxury, at any tier -- retailer, distributor, manufacturer.

[Wandering One]

(In the future, Posthuman Studios will be releasing real numbers -- sales figures, expenses, etc -- to help educate the fan base. Evil Hat is one company already doing this -- it's enlightening. Check out Fred Hick's blog at http://www.deadlyfredly.com/ to see the level of transparency they have!)

Okay, I like Dresden but $50/book is a bit much. However, you're right about the transparency. I do wish he was able to spell it out completely, but contracts are private and I can appreciate that. Just... wow. It's nice to see someone do everything but open up the super-duper-secret files to the world.

[hermit]

I updated your status to active "Member" so you should have PM capability now. Hermit, please continue your discussion through PMs. Don't mean to jump on you guys, just keeping things on topic, and as mentioned, within ToS. Thanks.

Thank you. Will do.

[Furluge]

Topps isn't selling the game, they are offering licenses to the IP so that other companies came make a game off of it and send royalties back to Topps. It's a cash cow for them. The upside of this is that we don't have to worry about the IP disappearing when a publisher decides to implode. Topps will just hand it out to someone else who can get the job done and turn a buck. There are downsides to that, but since it seems like Topps has kept a hands off approach to development, we have yet to see the owner impact the lines. If that happens in the future you can blame Loren Coleman and crew for screwing up and giving Topps a reason to worry about their property.

Since I don't have the numbers so I can't say how likely it is to go the way you want. But in the past it's been impressed upon me a couple times just how small our a niche our hobby has, and how small the returns are, even if you're on top of the market.

I don't know about you, but I clearly remember just how dark things looked when FASA closed their doors and no one knew what was going to happen. Things could just as easily go back to being that way. (IMG:style_emoticons/default/frown.gif) If CGL goes under and Topps doesn't get a offer to buy it that they think is worth their time the properties could just as well be thrown in a vault never to see the light of day except when they need some generic material to shill for some other product. (This week on Sci- Err, SYFY channel: Mega Cyberzombie Unicorn with Jeweled Belly Button Ring *Cues clip of a man laying on the ground bicycle kicking a swarm a swarm of cyberzombie unicorns*)

[otakusensei]

Since I don't have the numbers so I can't say how likely it is to go the way you want. But in the past it's been impressed upon me a couple times just how small our a niche our hobby has, and how small the returns are, even if you're on top of the market.

I don't know about you, but I clearly remember just how dark things looked when FASA closed their doors and no one knew what was going to happen. Things could just as easily go back to being that way. (IMG:style_emoticons/default/frown.gif) If CGL goes under and Topps doesn't get a offer to buy it that they think is worth their time the properties could just as well be thrown in a vault never to see the light of day except when they need some generic material to shill for some other product. (This week on Sci- Err, SYFY channel: Mega Cyberzombie Unicorn with Jeweled Belly Button Ring *Cues clip of a man laying on the ground bicycle kicking a swarm a swarm of cyberzombie unicorns*)

The licenses are basically money to Topps. How much money depends on the developer and the fan base. As long as there is someone out there who wants to give Topps money, I doubt they are going to throw the licenses in some vault. It just doesn't make sense.

If you want to be scared about something, be frightened of Topps taking a creative interest. They should have a financial interest now that it's been called into question whether or not they are getting their due from IMR. But I hope that doesn't go forward into the game line as well. They could always decide to handle development in house as well, which would be another unknown.

Thankfully I don't think those are really options, at least I hope not, but they are definitely more likely than the lines just getting shelved. That is assuming that there are other viable companies coming to the table, but I have to think that someone wants Shadowrun or Battletech.

And yes, I'm aware that the game might end up in worse hands than IMR. We might get D20 Shadowrun and all die of cancer.

What can I say, I'm a little bitter.

[kanislatrans]

I have been doing my own research on the CGL situation and have found some startling information that I will share here.(my sources are highly placed the U.S Government. I could reveal them but then I would have to hunt down the entire DS community and use"extreme prejudice" )

It appears that CGL has attracted the attention of a benefactor and is getting things back on track. Now I was a bit curious so I started digging abit. I was somewhat confused as at first I could find no evidence to support the theory of a benefactor. However, through a contact in an unnamed intelligence agency, I obtained the phone records of all of the "major players" at IMR and CGL and after cross referencing them came up with a name. Phillip Mckraken, a Scotsman who resides partly in London but has a cottage in the village of Drumnadrochit. I tried contacting Mr. Mckraken, but the calls kept getting transfered to an office at this address: Broadway,London SW1H 0BG. i have no idea where it is and don't really care. I wanted to talk to the mysterious Scotsman.

About this point in the journalistic investigation, strange things began happening. A tree fell on my house, my truck tire blew out, and the gas company began hounding me as to a late bill. At first I passed it of as coincidence but as the evidence grew, I began to realize that the more I tried to find data on the link between IMR and Phil Mckraken the more things went awry. I knew then I must be on to something.

Turning to my sources, I was eventually contacted by someone from the covert ops community who at great risk, filled me in on the "whole story".

It appears that on August 20, 1890, a mana spike enabled a slumbering dragon to stir.The dragon didn't fully awaken until 1989. This dragon who calls itself "Brody" appointed the young Phillip Mckraken as its mouthpiece and has been influencing history ever since!!!

This means...Catalyst Game Labs has cut a deal with a Dragon!!!!!!

How much more evil can they get!!!!!I am tempted to return my SR4LE in protest.

But its so...pretty...yes! pretty...We won't send you back...must keep you safe...so very safe..NO!!! NO!!! Get out of my head you Reptilian Bastard!! I"LLL hit the psost key and then they will alll KNow,,They mmustt alll lknow!!!!!!!!

[kanislatrans]

Kanis is um, away for a moment but he wanted me, his good ...friend...to tell you that the above post was just a joke...all in good fun..ha!ha! thank you.

[Ancient History]

Well, for some real news: InMediaRes only has a couple days left to respond to their involuntary summons on that bankruptcy case, and they are no longer listed as being represented by a lawyer. So, there should be some news on that next week in any event.

[Adam]

We might get D20 Shadowrun and all die of cancer.

Nobody has made a "new" d20 game in ages. It's not going to happen. Put that worry out of your mind.

[knasser]

Well, for some real news: InMediaRes only has a couple days left to respond to their involuntary summons on that bankruptcy case, and they are no longer listed as being represented by a lawyer. So, there should be some news on that next week in any event.

No lawyer? I always got the impression that was illegal in the USA.

[kzt]

No lawyer? I always got the impression that was illegal in the USA.

No, just a bad idea in the vast majority of cases.

[Dread Moores]

(In the future, Posthuman Studios will be releasing real numbers -- sales figures, expenses, etc -- to help educate the fan base. Evil Hat is one company already doing this -- it's enlightening. Check out Fred Hick's blog at http://www.deadlyfredly.com/ to see the level of transparency they have!)

Thanks for that. The blog impressed me enough to make me pick up their Don't Rest Your Head books and the Dresden stuff. I'd be darn happy to see that transparency with more companies.

[darthmord]

No lawyer? I always got the impression that was illegal in the USA.

As with most things RL & SR... representing yourself is often a recipe for disaster as you have an idiot for a lawyer and your lawyer has a fool in his client.

[the_dunner]

I start this off with a comment: "YES, I'm pulling these numbers out of thin air and I am not a member of the industry!"

Just a little edification. These are some real numbers, though they're rounded off for simplicity. (I've been working on some independent game publishing that is in no way related to Shadowrun.) I've tried to keep out any commentary.

Printing a hardbound, 4-color book, of c. 200 pp, using a US printer, at a 3000 copy print run, costs ~$7 per copy. So, that's an upfront cash outlay of $21,000.

If a publisher uses any major gaming distributor, they'll pay the publisher around 40% of the cover price of the book. (So, a $40 book means the publisher actually gets paid $~16. The retailer pays ~$22, the other ~$6 goes to the distributor.)

So, that means the publisher nets ~$9 per copy.

If the full print run sells through, that means the publisher nets ~$27,000. With that money, the publisher needs to pay A) Creative Staff (~$10,000), B)Taxes (~$9,000).

That leaves $8,000 of net profit on an investment of $31,000. (Printing and Creative costs.)

This ignores warehousing costs, which may be substantial. It also ignores marketing expenses and any payments of non-creative staff. Finally, this assumes that the IP is original, not licensed.

Further, it's unlikely that the full print run will sell out in less than a year, if it sells through at all. If it takes longer then, every year come tax time, the publisher needs to pay taxes on the unsold books (they constitute an asset). The tax on these is significant enough that I honestly don't know why more RPG publishers don't pulp a high percentage of their warehoused books.

Yes, there are ways to cut costs. Some, like offshore printing, are more viable than others. Yes, a reprint is far more profitable to a publisher as the creative staff is already paid. Yes, this ignores any profits that can be made on ebook sales (~$200 - $300).

[tete]

Nothing in the RPG market is a "cash cow." I'm not trying to be a jerk, just the simple truth. A yearly salary of 60K? My mind swims with the luxury that would provide. (IMG:style_emoticons/default/smile.gif)

Go work at WOTC... I don't know what they pay their writers but the I.T. guys industry standards so I would say they are at leased competitive with writers pay for newspapers, magazines, etc.