Zeus, a moment of your time?

[Agent 57]

So, a lot of the conversations I've been privy to lately have centered around job satisfaction, career choice, changing of careers, etc. (My girlfriend is currently making up/changing her mind as to what she wants to do, and several of our friends are thinking about career changes due to job dissatisfaction, or have already done so.) Naturally, even though my job pays very well and I don't hate it (though I don't pop out of bed in the morning thinking "Oh boy! I get to go to work now!" either), I've been pondering the same sorts of things.

And, being that the majority of my free time (and even my not-so-free time, seeing as how I'm posting here while I'm at work) is taken up by a) video games, b) reading about video games, and c) talking about video games, it would seem to follow that some sort of video game-related career might be fulfilling, in that Office Space, "what would you do if you had a million dollars?" sort of way. Unfortunately, the usual suspects of careers are not exactly what I would call feasible, for a myriad number of reasons:

-Development: Nope. Spent my college years learning how to fiddle with hardware instead of software. Besides, I like NOT being slave driven, thanks.

-Beta testing: Not only would that be mind-numbingly boring (kind of like my current job without the fun of doing the bug fixes myself), it could easily turn me off gaming in my spare time. Don't want that.

-Magazine/website writer: Not only do 90% of guys with a jones toward working in the industry try to go this route (meaning supply greatly outnumbers demand), there's all the other pitfalls of reviewing games for a living to keep in mind, most of which involve bad games (having to play them in the first place, writing good things about them even though they're bad due to pressure from above, fanboys, etc.).

-Some form of non-technical development/publishing job like marketing or production: No experience, no real aptitude, so probably not gonna happen.

With the previous options closed off to me, the obvious choice pops up - the one that is so obvious, you've already done it (and Flip had the same idea as well) - start up a game store of some kind, either an independent shop or a new franchise. (I personally think it would be more fun/fulfilling to start an independent store, myself.) That being the case, I'd just like to throw some questions your way, and if you could answer them, I'd really appreciate it.
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1) First off - before I ask anything else, which I'm doing mainly out of curiosity - this is a dumb idea, isn't it? Digital distribution is the wave of the future - MS has started it with Xbox Live Arcade, Nintendo already has announced their entry into it, and Sony is very likely to follow suit. Sure, they're all still using media for their games now, but digital distribution of any kind cuts into the dollars being spent at retail - and besides, what's going to happen after five years of technology improvement in home bandwidth and data storage?

2) I guess my second main question here is, how is someone able to make a living owning a game store? I know nothing about what kind of profit margin retailers get on games or what amount of volume is usually needed to ensure that margin is enough to live off of. Any information you can share from experience is welcome here.

3) How long would you say it takes before your ideal of sharing your love of games with like-minded people and creating a fun, personalized environment that a community can enjoy gets destroyed by a constant barrage of rudeness, stupidity, and thievery, and your store transforms from your gamer haven into a monument to your misplaced faith in human nature?



Thanks for anything you write back. Just hoping to nip this in the bud before I spend too much time thinking about it.

[Flip]

Run a search for Video Game Exchange Franachise and you'll hit a cheesy site with a sketchy offer; video game store consulting from a guy, Tom Martin, who owns 3 game stores in CA. I was skeptical, and still am, but i did call the guy and talked to him about these kinda things for a good hour. If i do decide to suck up the risk and go the route you are pondering i would use this guy, he seemed to know what he was talking about.

A few things he said that still stuck with me. He would feel confident opening up a game store in any city in the US, and if i wasnt making 50k a year by my second year i was doing something seriously wrong and he wouldnt let that happen to me.

[Zeus]

Here are the answers to your questions. Too lazy to quote:

1) First off - before I ask anything else, which I'm doing mainly out of curiosity - this is a dumb idea, isn't it? Digital distribution is the wave of the future - MS has started it with Xbox Live Arcade, Nintendo already has announced their entry into it, and Sony is very likely to follow suit. Sure, they're all still using media for their games now, but digital distribution of any kind cuts into the dollars being spent at retail - and besides, what's going to happen after five years of technology improvement in home bandwidth and data storage?

- there's no doubt that digital distribution will be big, but there's something to be said for have an actual copy of the game, just in case there's a hardware problem, you accidently erase the game, whatever. So, IMO, there will always be room for the traditional sales method, particularly in the used market. A big reason for that is these companies think that a digital copy is worth as much as a hard copy, so they sell it for the same price. Yeah, OK.....

2) I guess my second main question here is, how is someone able to make a living owning a game store? I know nothing about what kind of profit margin retailers get on games or what amount of volume is usually needed to ensure that margin is enough to live off of. Any information you can share from experience is welcome here.

- first thing's first: you need cash, and a lot of it. You need to get your leasehold improvements (ie. look of the store) done, then your shelves, you comp system (you need it to keep track of stuff), and, last but not least, your games. Of course, you have to build in a cushion of about 4-6 months of low sales (ie. not enough to cover expenses) AT LEAST. So, really, before you get started, you need $100k.

- As for profit margins, you're looking at pathetic for new games (less than 10% for brand new stuff, but you can make more if you get the games after they've been on the market for a while), especially with stores like Walmart, EB, and Best Buy being able to return any unsold games and getting price protection on price drops (that's even worse for you than the deals they make). But, where you make that up, is in the used sales. Best Buy is thinking about it, Walmart doesn't do it, and EB is too greedy while they're doing it to have a decent price. So, if you price yourself properly and ensure you don't make people feel like they're getting ripped off, there's tons of profit and potential in the used market. Of course, all that means is you have to give as much as EB gives (not including their guaranteed trade-in amounts) and sell for 15% or more less. That means you're still making, on average, 40% on them. I did quite well with that formula as well as stocking up on a great collection of the $20 new games since I was buying them for about $15 or less, thereby decent margins. But you have to make sure you keep up with the prices (ie. check EB or Best Buy for drops).

- by far the most important thing in a capital-intensive business like a games store is inventory control. You'll have to learn your market, but what you want to do is move the games out as fast as you can. That means being tight in your purchasing, but not so much that you're losing out on sales. You'll have to know how good your supplier is at getting you stuff and how fast it takes; basically try to create your own JIT. And if a game just ain't sellin', get rid of it and never bring it in again (unless it drops a lot). You'll find that a lot of new games just sit there. It's no good to you sitting there, you need it to go out, even if you lose money, so you can use that money to make more money. If a game costs you $40 and you have to get rid of it for $30, it's better to move that game out and use the $30 to buy other games that you'll be able to sell quicker than to hold onto it for a year hoping to get $50 for it. You can likely make up that $20 and a lot more if you move your inventory, making the 10% off new stuff or more off of used.

- another thing you can do is bring in related items that don't take up too much space but sell to the same people and make good margins (ie. diversifying your store). I also had VHS/DVD rentals which was perfect for me and were well received by the area. Unfortunately I didn't have control over what I got in (didn't have the money to buy my own, so I was going through a distributor and getting a cut) and thus couldn't realize my potential. It does open up another can of worms, but it's the same as renting games, which you'll definetely want to do. Creating a niche for yourself with something like DVDs (ie. having a great anime or indie film collection, for instance, or having a good buy/sell/trade thing going, which Blockbuster don't do too well; just remember, DVDs drop in price VERY quickly) or maybe even figures (like the MacFarlane stuff) or comics (a little tricky, but feasible). You'll have to look at your market/supply as they all provide their own challenges. But it's better to have a selection of various stuff than just one thing. Look at Walmart. Just remember that you want to make sure you do each thing well, don't just do it half-assed.

3) How long would you say it takes before your ideal of sharing your love of games with like-minded people and creating a fun, personalized environment that a community can enjoy gets destroyed by a constant barrage of rudeness, stupidity, and thievery, and your store transforms from your gamer haven into a monument to your misplaced faith in human nature?

- I grew up in retail (family owns convenience stores), so it never tired. The only thing that got me was knowing that my idea of merging a full games store with a full movie store worked, knowing EXACTLY what was require to fix it, but not being able to 'cause I couldn't get the money.

- you can't let people bug you, that's my philosophy in life and it's vital for retail. For each prick, thief, moron, and rude mother you're going to get that super-hot gaming chick who's a regular (yes, they exist, I can atest to that), guy who loves games and/or movies as much as you who you can talk to for hours, or mother/parent who you help out and is grateful and becomes a regular customer and maybe even starts trying out the stuff they buy for their kids (yes, that happens too). It's really what you focus on. It's retail at the end of the day. But the good thing is that games are often much more of a involved/personal purchase, some due to money some due to personal love for it, so it's a little more of a selling job and a culture you see. And since you're into it and if you like to help people, you'll get much more satisfaction out of it on a regular basis than pumping gas or selling cigarettes or even auditing financial statements (you know it's true, Flip ).

- but make no mistake about it: it's hard work and it's hard to succeed. The odds are against you and 95% of all retail ventures fail. You just have to determine whether or not you can live with the fact that you didn't try. I couldn't and gave it a shot and learned never to try again, but that was me. My partner (and long-time friend) longs for it even though we failed and has been looking into other small business ventures ever since. Just determine what you want to do and do it. You now have a better idea of what the risks and rewards are and if it fails, you know to be prepared to pay things off. So, if you wanna do it, do it, don't deny yourself that.

[Chris]

take what zues said but Don't diversify into comics. comics are a very very niche market and an expensive one. you branch out into that you have to worry about getting hold of backissues, and expecting at least a grand a week in new book purchases. yeah you will probably sell more than that (almost guaranteed once you have enough regular customers) when you have a comic shop you have to offer the ability for people to have books pulled for the side for them every month and adjust shelf orders and box orders accordigly, offering competative box discounts, etc. It's absolutely insane and not only that but ordering is very complex having to deal with diamond and almost constant miships. there will almost always be at least one error in what they ship you and tyo them it really doesn't matter since they have a monopoly on distribution. drove me batshit insane dealing with the fuckers. wildly varying book discounts from them too. ordering the proper numbers is hard as hell too. being such a niche market you will never be profitable in your first few months until you get we'll say 50 regular customers with pull boxes and even then it's cutting it close. to make profit you have to sell at least half of what you buy. usually more the way diamond works it's discount system.....

[Andrew, Killer Bee]

Ditto Chris. Getting into comics is not a good idea.

[Chris]

especially if you're in australia....I've heard enough stories about comic shops there from a couple friends of mine. speaking of which andrew....

you going to the supernova convention?

[Andrew, Killer Bee]

I worked in a comic shop in my youth. It was fun, but it was not a profitable business. I could see maybe getting in a few trade paperbacks if you were determined to diversify in that direction, but never never single issues.

Hadn't planned on going to Supernova, Chris! When/where is it?

[Agent 57]

Zeus, thank you so much for your reply - that was an excellent, excellent post! Thanks to everyone else who replied, too.

I've got some more thinking about this to do, but I'll definitely be reading this thread again and again as I get closer to making a decision. Thanks again!

[Chris]

I worked in a comic shop in my youth. It was fun, but it was not a profitable business. I could see maybe getting in a few trade paperbacks if you were determined to diversify in that direction, but never never single issues.

Hadn't planned on going to Supernova, Chris! When/where is it?

It's a massive show this weekend in Brisbane and then also takes place in melbourne in october

http://www.supanova.com.au/

[Zeus]

Zeus, thank you so much for your reply - that was an excellent, excellent post! Thanks to everyone else who replied, too.

I've got some more thinking about this to do, but I'll definitely be reading this thread again and again as I get closer to making a decision. Thanks again!

Anytime. Hit me up on MSN or ICQ if you want to discuss it more. Or you can just ask here again and I"ll answer to the best of my abilities

[Ishamael]

I've never run any kind of brick and mortor store, so take this with a grain of salt. I'm giving an opinion from the perspective of a potential customer.

Bottom line is that you have to offer something that the mall chains don't. I go by these mom and pop places and usually I walk right past them. They don't have as good a selection as the EBs/Best Buys/etc, the stores are grungier, etc.

I'd say take the financial end that Zeus provided and then figure out what your value-add is over the regular chains and concentrate on that.

[Nev]

Ya know, Agent, just because I work in the development arm of gaming doesn't mean I don't know anything about the retail side of my industry....

I would love to offer some of what I know on the subject - which probably covers some material that differs from what Zeus touched on; I'm sure he knows more about the nuts and bolts of retail, but I probably know more about the relationships between the various parties in the industry that you'd have to work with to do this - if you're interested at all.

Actually, in a display of coincidence, a small game store opened down my street about six months ago, and I talk with the owner (a very sweet and businesslike fortysomethingish Malaysian woman) probably about once a week about the kinds of issues she's been facing trying to get it off the ground. It's helpful for me as a budding developer to know the little tricks of retail in order to increase my ability to work with marketing guys and the various distribution arms I'll certainly have to work with someday if I become successful as a developer, and so I know a decent amount about the challenges she's been looking at as a small and brand-new game store owner.

I'm not going to say it would be a mistake for you to ignore me in looking for advice here, but... The fact is, and I'm not trying to be in any way arrogant about it, I do have some insider knowledge on the way the videogame industry is doing business right now that you may or may not discover to be hard to find in other places. So just let me know if you'd like to discuss some of it.

We can do it over PM, or just here, if you are...let me know.

[Agent 57]

Ya know, Agent, just because I work in the development arm of gaming doesn't mean I don't know anything about the retail side of my industry....

Ya know, Nev, just because I didn't ask you specifically in the first place doesn't mean I wouldn't value your input....

Although, I'm curious about your reticence. Flip is also interested in starting up his own game store, and thus posting it here would be beneficial to more than just me. Is there any reason why you wouldn't want what you know to be common knowledge on the board?

If there is, that's cool, just send me a PM and we'll go to town - although I think I'd prefer an open discussion so that everyone here can get in on both reading it and responding to it.

[Nev]

Well, some of what I have to say is the kind of thing that is highly likely to provoke cries of "horrible, nasty, overbearing corporation" regarding more than a few different companies, I think, and as small as this place is compared to the market as a whole (read: it basically doesn't exist), I still just have an aversion to giving my industry negative P.R...which, in truth, might be warranted, but actually probably more than likely isn't. Large companies do all sorts of things designed towards a slightly-less-than-level-playing-field in all sorts of industries.

So, that being said, if we can all agree to be as mature as our egregiously immature personalities will allow, I'll give it a shot. I have some stuff to do this morning, and I should really go back and read this entire thread top to bottom too, but I'll try to get something in tonight.