Disclaimer: a number of arguments developed in this article refer more specifically to “blockbusters” campaigns. Obviously, campaigns with more modest investments and objectives respond to different logic and face different issues.
Last June, in an article entitled “Re-establishing the risk factor at the center of the model”, we expressed our will to break-up with the traditional intermediated model in the industry (editor-distributor-retailer-player). We proposed to substitute this model with a disintermediated model (editor-player). At the same time, we also announced our will to break-up with traditional Kickstarter (KS) marketing models, which relies on the illusion of “free” stretch-goals (i.e. elements of the game payed by the pledgers but presented to them as “gifts”). These stretch-goals (SG) serve two functions:
Their first function is the one of “campaign dynamisation tools”, which explains why the variation of their differences is much more correlated with their expected effect on the pace of the campaign than with the reality of their cost of production. It would actually be relatively easy to demonstrate how much the impact of stretch goals is hypothetical and terribly over-estimated. At best, it is vague intuitions that have never been validated by any decent statistical studies. However, because they flatter the common sense by their apparent obviousness, they easily find the adhesion of the general public.
The second function is to generate a significant value difference between the KS version and the retail version of the game, in order to justify the purchase through KS. Given the average waiting time of 18 months and given the fact that the financial risk of a KS campaign is actually transferred to the pledger, the value difference needs to be significant, otherwise, the decision will be in favour of the retail version of the game. The aim is thus to ensure that the KS version is a “far better deal” than its downgraded retail version. In this case, the SG needs to compensate for waiting time and risk. This value differential obviously has no longer any reason to be within a new framework that excludes; retail version, waiting time, risk of delays, non-delivery, or differences between expected and delivered product, from the equation.
In the same article, we also expressed our will to share the value previously allocated to the intermediaries and to the stretch goals in a more equitable way between the pledgers and ourselves. The aim is the share the value added generated by the new model to consolidate our margins while pushing the prices down). When we wrote this article in June, we had not yet received quotes from all our suppliers. We have now. We can therefore progress from wishes to facts. The game Claustrophobia 1643 will be commercialised for a price of $79 (€68 at today’s rate). For this price, you will have:
Here is the almost final content of Claustrophobia 1643 core box
Content of the new version:
7 different minis for western warriors
13 different minis for the demons
2 different minis for the Hellhounds
2 tough troglodytes
individual boards for human and demon warriors
engraved dice dedicated to the different factions and to the fights
event cards, equipment cards and instinct cards
a rulebook which contains 20 scenarios:
9 original scenarios
11 scenarios, rewritten or updated to integrate the evolutions of the game
tokens, 3D tokens...
Reacting to increasing competition on KS, in a context of rarefaction of new pledgers
Since our first KS campaign (Conan, in January 2015), the competition on the platform has radically increased. The number of projects has literally exploded (with a 50% growth between 2014 – when we entered the sector – and 2017). Although the growth of the sector’s turnover is still greater than the growth of the number of projects, it is visible that the pool of new pledgers is growing at a far lower rate. This also indicates a probable shift of the consumption practices of those who are already pledgers, from retail to KS. Indeed, the higher growth of global turnover compared to the growth of new customers implies a higher propensity to spend by these already existing pledgers on the platform. If we hypothesise that delivery time, entry costs, and risks (of delay, of non-conformity, etc.) are the main barriers preventing new pledgers to join the platform, we can then imagine that if we manage to break those barriers, we would – in the end - be able to attract a new pool of pledgers to KS. Our development depends on the upcoming arrival these new pledgers. Competition will inevitably lead to lower margins (via lower prices or higher quality, probably a combination of both).
We believe that lower margins will make the co-existence of the same titles on KS and in retail impossible. Indeed, the price difference between these two channels will mechanically widen, making it impossible to purchase titles financed on KS in retail. By coming out of the retail model, we are only preceding an unavoidable movement of dissociation of the two markets. Recent “blockbuster” campaigns show that pledgers’ interest for material profusion (including as part of stretch-goals) has decreased in the last few months. It seems that we can now write that the latest blockbuster campaigns have ALL achieved lower results than they would have in a prior market situation (say 18 months ago). This relative downturn of blockbusters can probably be explained by their increasing number. Customers have more projects to choose from, and therefore spread across these projects, diluting their participation in each project. In addition, the following mechanism occurs:
Since the number of customers on KS is growing slower than it used to, we are evolving in an increasingly bounded market.
Overall, the customers purchasing large miniatures games are always the same buyers.
These customers are probably reaching saturation. The “penetration rate of miniatures” in their house is getting closer to a maximum, and storage space is becoming a problem, especially for those living in urban areas.
The inflation of quantity of miniatures mechanically generates a devaluation of their unitary value (profusion effect).
At the same time, the design and production costs of these miniatures have not decreased and are always transferred to the customers.
Thus, we are now in a situation, in which the value of miniatures as SG is following the law of diminishing marginal returns. Since the SG system is incremental by nature, the relative value of each additional SG is decreasing, while its costs remain stable. Consequently, the value of the overall offer marginally decreases with the increase of the number of SG. This value decreases even more when the player already has a large number of miniatures. Furthermore, the profusion of material brought by the SG has a significant impact on shipping fees, which further influences the increase of the overall price.
Thus, at Monolith, we think that the stretch-goals model is about to be outdated, and that it has created the conditions of its own obsolescence by contributing to the saturation of the market with a [material] of decreasing marginal interest (see above). SGs are costly both for ourselves and for our clients, whereas they become less and less interesting. Thus, we bet on lower prices rather than even more material. Indeed, we think that lower entry costs will encourage the growth of the community. Nonetheless, should we be proven wrong in the future, we would revert back to the old model. However, no one would be able to blame us for having tried.
In any case, only two things are certain:
We will know very soon if our bet was the right one (in October)
Whatever we do, “haters gonna hate” 😉
Artwork by Pascal Quidault