W. Eric Martin
On Dec. 17, 2015, the North American branch of Asmodee announced several changes in its structure and business model, starting with the formation of the umbrella organization Asmodee North America. As of January 1, 2016, all titles from Fantasy Flight Games (FFG), Days of Wonder (DoW), and Asmodee Publishing will be marketed and sold by Asmodee North America (ANA), which will be located in Roseville, Minnesota, home of Fantasy Flight Games.
Perhaps not coincidentally, at that time FFG CEO Christian Petersen will become CEO of Asmodee North America. A press release from ANA states that this change in the overarching business structure "will have no effect" on the titles being produced by FFG, DoW, and Asmodee Publishing, a claim that mirrors those made when Asmodee bought Days of Wonder in August 2014 and acquired Fantasy Flight Games in November 2014.
Even larger changes are taking place behind the scenes, with ANA stating that as of January 1, 2016, it will authorize only five distributors in the U.S. — ACD Distribution, Alliance Game Distributors, GTS Distribution, PHD Games, and Southern Hobby Supply — for resale of its products to retailers within the country. This new distribution policy will prevent some current distributors of FFG and Asmodee titles from doing so in the future; at the same time, Days of Wonder product will no longer exclusively be available through Alliance Game Distributors, a situation that's existed since July 1, 2008. Retailers can also purchase product directly from ANA.
What's more, retailers that want to continue carrying and selling titles from ANA need to become authorized as an "Asmodee Specialty Retailer" by April 1, 2016 — and to do that they need to agree to the terms of its Asmodee North America Specialty Retail Policy (PDF).
The existence of a retail policy isn't surprising. Businesses use these to ensure that the products that they deliver to distributors aren't tampered with or represented in ways not intended by the originating business, that buyers agree to specific payment terms, and so on. What is surprising is this all-caps section of the Specialty Retail Policy (SRP):
IV. Retailer's Conduct
A. Channel of Sale
RETAILER MUST NOT SELL OR TRANSFER ANY ANA PRODUCT PURCHASED HEREUNDER IN ANY MANNER OTHER THAN THROUGH FACE-TO-FACE COMMERCIAL RESALE EXCHANGE WITH END-USERS IN RETAILER'S PHYSICAL RETAIL LOCATION(S) OR AT A PHYSICAL EXTENSION OF THE RETAILER'S RETAIL LOCATION AT A CONSUMER SHOW/CONVENTION. ALL OTHER CHANNELS AND METHODS OF SALE FOR ANA PRODUCT IS STRICTLY PROHIBITED, INCLUDING BUT NOT LIMITED TO SUB-DISTRIBUTION, SALES OVER THE INTERNET, AND MAIL ORDER.
FOR THE AVOIDANCE OF DOUBT, ANY TRANSFER OR SALE OF ANA PRODUCTS TO SUBSIDIARIES OR AFFILIATE COMPANIES CONTROLLED, OR PARTIALLY CONTROLLED, BY RETAILER OR ANY OF RETAILERS' OWNERS AND/OR SHAREHOLDERS, ARE PROHIBITED HEREUNDER.
The first paragraph bans all online sales of ANA titles, a drastic change given that online game sales represent — well, it's actually not clear what percentage of the market they represent, which means that this change is drastic or not only depending on the buyers with whom you speak. (More on this later.)
This prohibition on online sales can even outlast the contract itself, as noted in the section on "Effects of Termination":
3. All ANA Products purchased hereunder shall remain subject to Section IV hereof, which shall survive the termination of the Retailer's active Specialty Retailer Account status until such ANA Product is sold.
4. Except for Section VII.B.3, upon termination, this Specialty Retailer Policy is no longer binding on Retailer or ANA.
The second "Channel of Sale" paragraph is meant to address the issue of distributors that act as retailers — that is, distributors that purchase goods from Asmodee, then transfer them at little or no cost to a retailer owned in whole or in part by the distributor, then resold to end-users. Goods handled in this way can be sold profitably by distributor-retailers at discounted prices that actual retailers cannot possibly match.
One way that ANA will police this policy is hinted at in another section of the SRP: "Retailer understands that ANA Distributors must provide ANA with frequent detailed reports outlining Retailer's ANA Product purchases from the ANA Distributor." In other words, ANA will know which distributors sold which products to which buyers.
In a Q&A-style press release meant to clarify the above policy, ANA wrote the following:
Q: I sell some Asmodee North America products in my store, and some on my website (or through another online marketplace). As an Asmodee Specialty Retailer, will I be able to continue to do all of this?
A: No, as a Specialty Retailer, you are limited to the channel of sale involving resale of Asmodee North America products to end-users only, by transaction in your physical retail stores only.
Q: I want to sell products from Asmodee North America online, how do I do this?
A: We will be very selective as to which online merchants will be authorized to sell our products. To qualify as an online merchant, you will need to contribute either significant scale, unique service, or other exceptional differentiation. Most online sales activities, including sales through third party websites, will not be authorized.
Q: I sub-distribute products to other businesses, what do I do?
A: Asmodee North America will not authorize sub-distribution of our products, unless by rare and unique exception.
What will happen to retailers that violate the SRP?
A: We reserve the right to evaluate each violation on a case-by-case basis, and we will make a decision on how to respond based on severity, intent, scale, repeat behavior, and other factors. Generally speaking, a Specialty Retail account who knowingly violates the Specialty Retail Policy will be deactivated and therefore no longer have access to products from Asmodee North America.
I sent many questions about the ANA SRP to FFG's VP of Marketing Aaron Elliot: What constitutes an online merchant of "significant scale, unique service, or other exceptional differentiation"? Will retailers such as Amazon, Target, and Barnes & Noble be allowed to sell ANA product online in 2016? What about online retailers such as Funagain and CoolStuffInc? What negative effects does ANA perceive as being caused by online sales of its products? What changes does ANA hope to effect with this new sales policy? What percentage of sales comes from online outlets versus physical retail stores?
Elliot initially stated that Christian Petersen would answer these questions, but noted that all of FFG was taking the afternoon off to see Star Wars: The Force Awakens — no surprise there given how invested FFG is in the Star Wars brand! However, Elliott later sent the following note: "After carefully considering your questions, along with many of the questions we've seen from others, we have decided to issue a statement on Monday [Dec. 21, 2015] to clarify a few things from the initial release."
Thus, we'll have to wait for further clarification of who will be affected by the SRP and what ANA hopes to achieve by adopting this policy, but that hasn't stopped plenty of people from speculating on these topics, as evidenced by this BGG thread started by game retailer Rockin B' Games.
The game industry has gone down a similar road before in 2007 when Mayfair Games announced that it would allow retailers to discount its titles by no more than 20% from the MSRP. Many on BGG stated that this policy would lead to the demise of Mayfair, and I wrote a column on Boardgame News — the site I ran at the time — explaining why such claims were nonsense. (I'll republish this column in the near future since these types of arguments are already being made about Asmodee, and they're still equally ridiculous.)
The biggest issue to keep in mind is that despite BGG having a huge readership and user base, that base in no way represents the game market at large. Days of Wonder, for example, claims to have sold more than three million Ticket to Ride games, and while the publisher doesn't state whether that number relates to sales of the base game, all of the standalone games, or every Ticket to Ride-branded product, a glance through the BGG database shows that no more than 175,000 TtR items of any type are listed as owned by BGG users. Not every BGG user uses the collection function, of course, but I don't think I'm going out on a limb when I suggest that the hardcore, price-conscious BGG user base is a tiny fraction of Days of Wonder's entire sales base.
As Mayfair did nearly a decade ago, Asmodee is willing to bet that it will more than make up the difference of lost sales to price-conscious gamers through the support of physical game stores that will have more of an incentive to market and promote titles from ANA. At least that's my takeaway from the announcements; ideally we'll see in a few days how closely they match ANA's stated reasons for the policy change...