There's an old joke that goes like this:"I'm running a store, but I lose money on every product I sell!!"
"So how do you stay in business?"
"Volume!"
This article is about gaming and all those things that appear in the header--economics, technology, philosophy, and law. It's more about the roleplaying industry, which is having a tough time in the modern market, but a lot of the discussion could apply to Eurogaming as well--particulaly the niche sort of Eurogaming that we're more likely to enjoy that's less family-oriented, more strategic, and thus less likely to appeal to the mass market.
So accept my caveat that they may not apply 100% to the normal topics of this column, but nonetheless I think it's related.
Economics: The Deep Discounters Appear
In the mid-1990s the Internet was opened up for commercial use. This ultimately created many new industries,from MMORPGs to downloadable movies, but it also created a largely unique business model that hadn't existed before: the deep discounter.
Before that if you wanted to sell things you usually had to open up a brick & mortar storefront. This required lots of costs, like rent, local taxes, and additional staff. But, it also offered unique advantages like visibility, human beings to talk to, and the ability to physically inspect products you were interested in buying.
After the commercialization of the Internet you could now open up a virtual storefront. You no longer needed a physical building in the town square; instead you could get by with an online website. A web of interconnectivity ensured that even with minimal advertising, you could get the word out. And in return you shed all of those extra costs. A deep discounter could now "flip" products, buying them from a distributor, then selling them for just a few percent more.
On the downside, he lost all those cool advantages too, and perhaps that would be OK if they weren't the exact sort of advantages that keep bring people into niche gaming industries.
Technology: It Changes Everything
This is ultimately a story about technology, and how it changes everything.
For years gaming companies--and this is why these topics are definitely more about the roleplaying industry than the Eurogame industry, because it's even less approachable--had depended on a specific economic model for success. In this model they could expect to pay a certain amount for marketing and expect to get a certain amount of free marketing from game stores and through those bring in enough new customers to offset the constant (and expected) outflow of old customers.
Deep discounters changed that model because they didn't bring in new customers in the same way. This essentially broke the old economics of game publishing, and it got worse over the years as online discounters increasingly proliferated and drove brick and mortar stores out of business. In a generally tough time this additional loss of replacement customers hurt the most niche companies the most, but I'd bet by 2007 everyone has seen some result of this, whether it be contraction or just reduced growth.
However you can't really blame the deep discounters. Some of them are fools who literally are losing money on every sale they make and are dragged hobbyist industries down with them in their ignorance. Others, however, are doubtless eking out a living, living a small-scale version of the capitalist dream.
Instead you need to blame technology, and this isn't the only time that technology has screwed up an economic model. Here it's a bit harder to see the cause and effect, but I'd instead point you to a model where what's going on is much more clear: television.
Several years ago the Tivo came out. It allowed you to watch television without watching commercials. The problem: most television is dependent upon commercials for its income. Just as with the advent of deep discounters an improvement in technology broke an old economic model creating a new reality that is totally unsustainable in the long-term, no matter how much consumers might enjoy the short-term benefit.
Philosophy: Dead White Men Predicted It
Though our generation has seen more technological innovation than the rest of history, nonetheless dead white men predicted a lot of these problems that technology is causing.
"The Tragedy of the Commons" derives from an 1833 parable by William Forster Lloyd, though it was actually popularized in the 1960s by Garrett Hardin. It suggests that unrestricted access to a finite resource generally destroys the resource. For example if you have a field where many shepherds graze their flocks, each shepherd gets a notable gain when he adds a single sheep, while any cost in damage to the field is divided among all the shepherds. Thus, no one individual is encouraged to reduce their usage of the resource.
A closely related issue that's even more relevant to the topic at hand is the "Free Rider Problem". This states that when something has a cost, but provides a common good, then some people will enjoy the good without having paid the cost, but that when too many people do so, then the common good won't appear in the first place. This problem is most frequently used in discussions of labor unions, but it equally applies to any social benefit, and is the reason that countries' tax systems aren't voluntary.
So take this back to the world of gaming: those game stores are providing the common good. They're improving the hobby's visibility and bringing new players in. Everyone receives the benefits whether they shop at a brick & mortar store or not. Their favorite manufacturers are able to stay in business, and thus they keep manufacturing new games which everyone can purchase. However some people "free ride" by purchasing instead at deep discounters, and thus don't contribute to the growth of their hobby--or even to its continued existence at a very fundamental level.
Thus: set economic models + new technologies (as understood by old philosophies) = doom + gloom.
Law: A New Option
The big problem here was that manufacturers couldn't do anything about this. They could know that deep discounters were devaluing their product and decreasing their opportunities for replacement customers, but if they tried to cut deep discounters out they could be charged with price fixing.
Some took the route of refusing sales to stores without a storefront, which solved part of the problem, but not for stores which also ran deep discount operations.
Last week the Supreme Court changed this with a 5-4 decision which will probably allow game companies to set minimum prices for their products, saying, for example, that stores couldn't sell their products for less than 80% of MSRP for 90 days after receiving it.
I'm pretty sure the roleplaying industry is going to take advantage of this. I don't know about board game manufacturers. They've had a rosier last several years, but from what I've seen no hobbyist gaming boom ever lasts. It's going to be a big deal in any case. It's also going to cause considerable upset among consumers who could see their spending power go down by 15% or 25% (if they previously bought at deep discounters).
Personally, I went over to buying from brick & mortar-only a few years ago, but I'll be honest: it wasn't because I was making a philosophical statement. I just wanted to support a top-notch local store. If it weren't for them, I'd still be a free rider, destroying the commons.
For whichever hobbyist industries are affected, it'll be a hard time for customers, but it'll also be an entirely required economic change. The old model was broken. It's been broken for at least ten years. A new one had to be created. We benefited from unfairly low prices for ten years, and now it's going to seem unfair when prices return to their normal levels.
But that's change, and in our world of technology, there's always a whole lot of it.
You can read more about the decision, and a lot of comments on it, some very erudite, some totally uninformed at Ryan Dancey's blog.
