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Okay! Coffee made, inbox reasonably contained. Let's talk about Allocations in Gaming! A thread about industry stuff (1/??)
So, what are Allocations? Well, so, sometimes, there isn't enough of a game made. When that happens, the publisher has to limit quantities of who gets what, often restricting what is shipped to distributors, who in turn limit what they send to their retailers. That's a high level
Allocations aren't good – no one likes them, not even the publishers. But they're a reality of the industry and so I'm going to do my best to talk about why they happen, then how we (try) to prevent them, and deal with them when they happen.
SO! When a game is to be made, the publisher has to order a quantity to be manufactured. Manufacturing games takes a lot of time to setup for a factory, and so a manufacturer needs to know the quantity pretty far in advance, so make time on the schedule.
Because, depending on the game, making 1000 units can be just as time intensive as printing 3000 units – this is why factories often have minimums. On the other side, printing 10,000 units will take 2x as long as 3,000. And these factories are BOOKED, so they schedule everything
Depending on a publisher's relationship with a manufacturer, sometimes they can schedule a 3-5k print run as little as a month out. Sometimes it needs to be 3 months out. Sometimes? 6 months! You get the idea. We'll say 3 months, to make this example easy.
SO a publisher is like "We're going to make this game! We have to tell the manufacturer how many units we want THREE MONTHS before they will actually make the game, which is roughly SIX MONTHS before we want the game on shelves. So how many units do we need?"
Well, so, the publisher asks around. You show the game to key influencers in the industry that know a thing or two about the market. You ask your distributors, key retailers, content creators, basically everyone you trust: How big do you think this game will be?
There are a lot of factors in coming up with a number. Like, is the game from known designers? How many people will just buy it because it's from your brand? Is it a HOT theme? Sexy artist? You want to try and be as accurate as you can with your number BECAUSE..
... if you're too generous and manufacture too many games, you'll have to sit on warehousing fees and have extra shipping costs and all that. But if you're UNDER, you'll have to allocate. And if you're REALLY under, you're going to have a lot of mad people.
So sometimes a publisher will approach retailers and consumers and be like "Okay, this is the game, we're making it for this release date, how many do you want? If you tell us now, before we print it, you'll definitely get that number." But mostly? They don't ask this.
Anyway, they get a number and they tell the manufacturer the number, manufacturer schedules the print run, and the hard work is done! Except not. Because the publisher still does light marketing while the game is in this phase. And sometimes, they'll realize "we gotta make more!"
Depending on timing, they can sometimes increase the print quantity. But if it's too close to the scheduled print date, and the manufacturer can't shift stuff around, those more units they're ordering get on the schedule THREE MONTHS out from the order increase date. Not ideal.
What does a publisher do when they realize they're not going to have enough units to meet initial demand, and they can't make more in time? Well, three options. 1) Cry. 2) Delay until your inventory boost can be added, and 3) Allocate the initial print run.
1) might feel good, but it's not helpful in the long run. 2) is a great option! If you can do it. But if you're talking about trying to get this game for Gen Con or Christmas.. delaying won't work, and will hurt you more. So then, you pick 3 – and allocate.
Allocating SUCKS. But, it's also a sorta (depressingly) fun math game. You have to try and spilt your limited inventory up among all your customers. You have to weigh everyone's happiness vs their effectiveness to impact the market with your games before the next wave arrives.
Let's say, for ease of math, I have 1000 units landing and I have, two months before the product lands, 917 pre-orders. Not.. not good, friends.
I look at what pre-orders I have already and I see who I can cut. So, let's talk about pre-orders.. haha. BASICALLY, 90 days before the targeted releases, I send my retailers and distributors a pretty spreadsheet with all the game's info and images. Distributors..
.. put that info on their website and solicit pre-orders from THEIR customers. So I'll end up with pre-orders directly from retailers, and I'll get pre-orders from distributors, who get their numbers based on pre-orders from THEIR retailers.
If I already know I'll be short units when I send that 90 days solicitation email, I will warn my distributors. Sometimes, I will even allocate then! That way, they can limit their pre-orders so they don't accept orders for games they won't get. But sometimes, that doesn't happen
So, 917 pre-orders, 1000 units landing in two months. First thing I do? Lock down orders. I message all my distributors and say "we're done! No more!" And then, I ask them how much cushion they need above their existing pre-orders. They know I don't want to allocate, they get it.
I have one distributor, who I won't name, that orders a MASSIVE CUSHION. They know it, I know it, they know I allocate them first. So I'll shift around some of their pre-ordered units first. I'll tell orders to only accept retailer pre-orders, and only up to X quantity.
I wanna make sure the retailers that pre-order direct DEFINITELY get their games, so I don't take from them unless it's desperate. We email announcing an orders closed date, and mentioning we're close to sold out. Any order after that date, or above our limit, back-ordered
Our priority is always getting pre-orders filled. I won't list our stuff on our own website if I have to, but that's not idea. So, like in this instance, I'll put in a hold order for, say 50 units, of the game for our own website.
This is all an example of a "we're going to sell out, but it won't be insane." What happens when you are two months out of getting your 1000 units and have 1400 in pre-orders? Option 1), mostly.
That's when it sucks. That's when you have to restrict everyone, and seriously weigh the idea of delaying the release until the 2nd print run can land. But that's not always an option, so you do what you can and do back-orders. You release inventory to key retailers and customers
A store that has a whole section dedicated to your brand, that you know runs events featuring your games? You're more likely to send to them than a nameless store that orders through a distributor and only gets 1-2 copies. It sucks, but it's the truth of the matter.
Distributors have their own system for allocation to their customers, and I know it sometimes is based on quantities ordered, past orders, etc. I can't speak to that. But yeah, allocation sucks. It's not actually fun, or what we want. BUT, we also don't want to over order.
Gil said it – over-ordering a game, especially as a small publisher, can put you out of business. Because you're paying (and shipping) those games assuming they'll sell. If they don't.. you won't be able to pay all the bills. AND you'll have 2-3k in games you can't sell.
This is how certain games end up in deep discount just weeks after their release, and stay that way for a while. Also where those free games at BGG often come from. It's a tender subject for publishers, but I'm sure you all can think of a title or two that had this happen.
Better to piss off a few customers than go out of business with thousands of units you can't even give away. So! Yeah! There ya go! Allocation! I know publishers all try to avoid this a little differently, but that's a sky-view tweet thread of this industry thing for yer Thursday
