(Standard disclaimer - The views reflected herein are mine, only mine, and do not reflect the views of anyone else, especially not my current employer or anyone I may have interacted with at any point in the last ten years or so...)
For nearly a decade I've been a retailer, and while my full-time job within the industry now is with a publishing company, my role within that publishing company is to do everything I can to help retailers succeed. As a retailer I'd place orders with dozens of companies; some distributors, some publishers, some tiny little resellers of niche products, all in an effort to do two things.
1.) Provide a superior experience for my customers. 2.) Make some darn money.
ACD was a huge part of this for me. Cole called me one day, literally cold-called me, and sold me on opening an ACD account, and Cole became the first person in distribution who I considered a partner in the success of my business. Cole knew what my store succeeded with, and he knew which products I just refused to carry, for whatever reason. He took the time to understand those things.
Then eventually, like all great reps, Cole left me to do something else for ACD, and Tam became my rep, and she continued to provide customer service that was never anything less than stellar. Cole and Tam aren't just two of the best reps I've ever worked with the game industry, but two of the best ever, in two decades of sales and marketing across three industries.
ACD wasn't always the cheapest, we could get Magic and Dungeons & Dragons product cheaper elsewhere pretty frequently, but I believe you get what you pay for. We sold Magic product for more money than an online store because we provided play space, we provided community, we provided a customer experience that cost us money and that we believed was worth money, so we charged for it. ACD, in my mind, has always done the same thing. It's not always about just buying the cheapest widget you can acquire, it's frequently about paying a little more for the widget because it's worth it to reward someone who is providing you a service. So, because of customer service, ACD was my primary distributor.
(Please don't take this to say I was unhappy with the customer service I was receiving anywhere else. This was about how much I respect Cole and Tam, and why that respect meant I was happy to spend more money with them.)
Now though, let's peel back the curtain and talk about the industry, and the relationship between publishing, distribution, retail, and the consumer...
Yes, I added the consumer here. I frequently hear this industry referred to as a three-tier industry, but none of this industry exists without the fourth tier, the consumer. I don't get to sell awesome games if there are not people playing awesome games, so thanks to all the people who play awesome games.
So, a publisher makes a game. It costs them some amount of money to do so. Then they sell that game to distributors, who sell it to retailers, who sell it to consumers. There are variances in this model, as publishers may sell direct to retailers without distribution, or direct to consumers without distributors or retailers, but I'd guess that the majority of product moves from publisher to distributor, to distributor to retailer, and through to consumers. That's a guess, I can't back that up with any sort of statistics, but I've been doing this long enough that it's a semi-educated guess.
But there's a part of the distributor/retail relationship that is important for this discussion, especially when we're talking about the effect losing Wizards of the Coast could have on ACD Distribution. The thing you as a consumer reading this might not know is that most distributors sell to most retailers on a tiered discount structure. It may look something like this.
Spend less than $30,000 per quarter - get MOST products at 42% off MSRP. Spend at least $30,000 per quarter - get MOST products at 45% off MSRP Spend at least $40,000 per quarter - get MOST products at 48% off MSRP. Spend at least $50,000 per quarter - get MOST products at 50% off MSRP.
Getting more than 50% off MSRP is rare, and I have to say MOST products because it's not all products, and heck, it might not even be most anymore, because a lot of products exist outside the tiered discount structure, or they exist in a different tiered discount structure. But, ultimately, everything you buy counts, so even though Magic, and Dungeons & Dragons, existed outside the tiered discount structure, purchases of those products help a retailer save money on all the things that they buy that are subject to tiered discounts.
Let's do mathity math math! We love math.
Hypothetical store spends $50,000 with hypothetical distributor every quarter, they qualify for the top tier, at 50% off MSRP on products subject to tiered discounting. Hypothetical store fits exactly within ACDs statement about the percentage of their sales that came from Wizards of the Coast, meaning hypothetical store spent 39% of that money on Wizards products. The loss of Wizards of the Coast most likely means that store goes from spending $50,000 every quarter to spending $30,500, so they've automatically lost 2% on a lot of products, and are super close to losing 3% more on those products.
Those percentage points matter. A respected colleague and friend of mine, Gary Ray, wrote about the $100 Board Game on his blog, go read that so I don't have to reinvent the wheel here, you can see what happens if you lose two points, or five points, on what you are paying for games.
There's a secondary concern here as well, one that moves outside of a strict dollars and cents line of thinking and into one that is about dollars and cents in a different way. ACD and I are tight, I've always respected their service and been willing to pay for it, they've always respected my loyalty, my support, and my ability to pay my bills on time. Any industry is about relationships, and having a relationship that's positive can mean you get some perks. Those perks could be important to the bottom line, in that a highly desirable, limited product, I was more likely to get extra of. As a regular customer of hypothetical distributor I got better treatment than the dude who saw a product was limited, called someone I wasn't a business partner of, and begged for extra. That's just how relationships work, and why it's valuable to treat your business partners with respect.
So, as a consumer, if your favorite local game store was buying their Wizards product from ACD, you could see some of the following.
1.) Less product, because your local store has to find a new place to buy product from, and they won't have the relationship they had before.
2.) Less product, because they may be losing some margins and can't afford to buy as much product as before.
I'm not a retailer anymore, but for a decade I fought and learned through constant changes in this industry, and this is just another one. I consider many of the people who work at ACD to be friends, and wish them nothing but success before this, and in the aftermath of this, but this will be difficult for some retailers. When I left my retail store (it's still there, I'm just not in it right now) we were 25% to 33% or so Magic: the Gathering. Not giving that twenty-five to thirty-three percent to ACD hurts, and when you add in the Dungeons & Dragons product, our discount with ACD isn't just in danger of changing, but it will change, and that hurts because I liked giving ACD money.
I don't know what the impetus for this was, why the decision was made. I can't pretend I do. All I can do is be a little sad for retailers who are being shook by this decision today, and maybe help people understand how it affects consumers and retailers, and be especially sad for my friends and colleagues at ACD, who are most hurt in the short-term by this decision.
ACD was a partner to me as a babytailer, a partner to me as a retailer, and a deeply valued part of my business. I wish them the best here.