Top Game SWAG Merchandisers

So who has the best game merchandising program? In taking on the task of helping my friends at Fans.lu, I had to do some research into how game companies merchandise their intellectual property.  I was both surprised and a bit dismayed at what I discovered. First, lets talk about Rovio and their Angry Birds success.

Angry Birds was a massive winner as a game and even more so as a brand. What is truly mind boggling is how they've managed their IP and created over $200M in sales with their branded t-shirts, plushies and other imprinted merchandise. You would think this would be slowing down but with the launch of their Star Wars Angry Birds, it’s only growing. It’s expected that in 2012, Rovio achieved a whopping $500M in sales of which 40% will be attributed to merchandise (http://www.mobileworldlive.com/rovio-plans-to-increase-merchandise-revenue). And you’re thinking, ‘yay for Rovio’ right? The ugly fact is that only about 2% of the games out there actually provide merchandise for their games and that 2% is really only the biggest players. The rest of the developers who have equal to (or even better) IP, artwork and concepts don’t take advantage of the power of their hard won brand.  So the real question is who else is creating incremental revenue via their IP, how are they doing it and more importantly, how can you do it?

The List (for context)

• Rovio's Angry Birds: Everywhere! and here http://www.angrybirdstees.com/
• Valve: Hits like Portal and Team Fortress http://store.valvesoftware.com/
• EA: From Plants vs Zombies to Medal of Honor: http://gear.ea.com/apparel/t-shirts.html
• Ubisoft: Assassins Creed: http://store.ubiworkshop.com/
• Rockstar Games with massive hits like GTA and Max Payne: http://www.rockstarwarehouse.com/

All of the above publishers have great games, no arguments. What they’ve also done right is create some pretty amazing t-shirts, hats, action figurines and posters.  They’re also making them available in very simple online stores that take advantage of their social network power.

How to do it

To achieve even a small measure of success in creating a line of game merchandise you first need to answer a few questions:

1.  Do your players want merchandise? You need to understand your players and nobody knows them better than you. If you have a solid following on Facebook, if you have dedicated fans who wait for your game releases and if you have great IP,  chances are there is already a demand for your merchandise. If you’ve been to E3 or GDC and see how many t-shirts are consumed at those shows, you’ll understand what I mean.
2. What are your options for getting it set up? You can create your own merchandise by designing everything from scratch and setting up your own store using Volutions or BigCartel. This gives you 100% control and great profit margins but the real challenge is you need to get your t-shirts printed and you need to manage the shipping and customer support. This requires some serious capital outlay and is a massive pain in the butt if you’re only selling a couple hundred shirts a month. You could use the ubiquitous Cafepress which will print and ship everything for you but the quality & cost makes this a very un-scalable solution. Still, not a bad choice if you are only going to sell 10 shirts a month. And then there is the Fans.lu service: they set up the store, create and imprint the product, do this shipping and handle customer support.  They also don’t require a set-up fee and take their profit from the sales (low risk). If you’re looking to sell between 100 and 1,000 shirts, posters ect a month, this is your best bet.
3. And finally, how are you going to promote it? Building a store and getting some swanky shirts made up is only half of the solution. Once you’ve decided what you’re going to merchandise, you need to promote the hell out of it. Facebook, twitter and of course, your own website. Not only will this create incremental revenue for you, but it will also expand your brand beyond the game.

However you approach it, take advantage of your brand power and create incremental revenue through merchandise. Even if in the end it only generates only 5% extra revenue (and not Rovio’s 40%), you’re still going to come out ahead.

Full Disclosure: Chris Hennebery is a consultant working with Fans.lu

In the Quest for SWAG

The first company I started was a t-shirt business. Having a background in art helped a great deal because the biggest difference between good t-shirts and bad t-shirts was the artwork. My art-foo was good and theirs was bad, so I had an edge. I used my little t-shirt venture to grow another business that focused on event management. I played a lot of volleyball so I started my own league and pretty soon I had over 500 teams playing every week. I take a small bit of pride in the fact that I was able to leverage my t-shirt business to build my event management company through brand, swag and uber-cool prizes (I still see my Starbucks Volleyball shirt at the beach). To me, it seemed a very simple thing to leverage t-shirts to promote a brand.

 So I find it a bit frustrating that in the games business, 98% of companies are not taking advantage of this. So many great games and so few cool t-shirts. And yet when you go to E3 or GDC, there are hundreds of gamer-shirts. Yes, companies like Jinx and Play.com do some brisk business and the marketing companies helping the publishers also have no problem creating the swag. What I don't get is why these publishers and developers don't push more merchandise to create incremental revenue. You would think everybody would be all over pumping out plushies, bobble-heads and t-shirts after Rovio's success with Angry Birds. But very few are. You could imagine how happy I was to find out about Fans.lu. This company has created a turn-key solution that allows games developers/publishers to launch a store to sell merchandise based on their IP. Fans.lu build the store, creates the products, manage the inventory and fulfill to the fanboys/girls with the publishers only having to provide the game imagery needed to create the product.

 But why is this important? So many great games and yet the profit margins continue to shrink. Now look at Rovio's Angry Birds again. In 2011 their revenues were up 963% to $106M and of that 30% came from t-shirts, plushies ect*. That is over $30M from merchandise alone and Rovio is projecting 50% of their revenue will come from merch in 2013. Ok, so you're not a Rovio and your side-scroller isn't Angry Birds but even so, chances are you are leaving money on the table by not offering a t-shirt to your players. Even using the worst case scenario where 1/500 players will buy a shirt or poster from you, you could be talking about a boost in revenues of 3-5%. And if you do have a great fan-base then its more likely to be 1/25 that are interested. That could be a lot of incremental revenue that might mean the difference between your little game being solvent and you having to sell a kidney to make payroll.


Full Disclosure: I'm helping out at Fans.lu which is in the business of helping game developers create merchandise for their IP. Let me know if you'd like more info.

~chris hennebery


*Kathleen De Vere, May 7th, 2012 http://www.insidemobileapps.com/2012/05/07/rovios-revenues-jump-963-year-on-year-to-106-3m-in-2011/

Microsoft’s Smart(Glass) Approach to Tablet Dominance

When I was at E3 this year I spent some time talking to industry leaders about Microsoft’s SmartGlass. This isn’t so much a piece of hardware, as it is an app. SmartGlass turns any android or iOS device into a controller/peripheral device for an Xbox. I was somewhat skeptical about this approach until after E3 was over and it sunk in. Tablets are the only growing segment in the consumer hardware market and they are expected to double every year for the next two years. Tablet sales outsold PC sales this year (a first) and this trend will continue. As the go-to device, the tablet and superphone will be the dominant technology of the foreseeable future.

Now as a console maker, I might find this growth combined with the declining sales of consoles very disturbing (which I’m sure they are). You could, as a console maker, try to compete head-to-head as Sony is with their portable players or the sure-to-fail Wii U GamePad but I think Microsoft’s approach is much... well, smarter. Instead of competing directly with the tablets, they’re leveraging their popularity (and adoption) to become the next peripheral device. More than that, they’re using these tablets to extend the functionality of Xbox to outside their console. Whether you’re watching a movie on the device, using it to provide behind the scenes info on the movie you’re watching on the TV or as a controller for an Xbox game, SmartGlass is connecting the value of their entertainment platform to the power of your portable device.

As with all new ideas, it’s not really the validity of the idea that determines success, as much as the ease of adoption. SmartGlass is a great idea, but its true test will be how Microsoft brings it to market.

For a complete outline of Microsoft’s SmartGlass go here. 

Chris Hennebery

June 10, 2012

Why the Next Consoles Will Be the Last

It’s kind of like in the Matrix when the black cat walks by twice and Neo says “huh”.  Déjà vu might be caused by glitches in the Matrix or in delays between visual and cognitive recognition, but when it comes to the releasing of new consoles, you’re right to think we’ve seen this before.  When the industry decided to release new DVD players (remember HD vs Blueray), many pundits spoke out at the obvious money grab by the hardware makers. Everybody knew the movie rental business was on its way out as more and more content was moving to digital distribution but that didn’t stop those hardware makers from having one more kick at the cat.

And now we’re in another familiar situation where console makers are left with one more swing at the gamer’s pocket-books. Whether its Sony’s Orbis or Microsoft’s SmartGlass, you can bet this next push will be a big one. And as it should be as it will be their last. While thanks to the Xbox Kinect, Microsoft only saw a 2% decline from 2010 to 2011, the Wii dropped over 28% and Nintendo is down almost 50% over the previous year. The entertainment hardware market is still strong at $18B a year but 11% of that was tablets and that’s expected to double next year. 

We all see the industry shifting: some of it back to PC and Mac but most of it over to tablets and TV. In the same way as the movie market had to shift from physical disk to streamed content, so will the gaming industry. Companies like Onlive and Gaikai will continue to make inroads with Telcos and Cablecos and the very thought of playing a game off a disk will be as ridiculous as going out to your movie rental store to pick up a blueray.

Chris Hennebery

June 9, 2012

Dress to Impress or Dress for Success

I recently found out my role is being moved to the UK. Not a huge deal but as much as I like the company I'm working for, I can't find it in me to uproot the family. So I'm back on the market and find myself sending out resumes and getting my head back into the 'interview' game.

One of the dilemmas I always find myself in is how do I ensure I'm dressed appropriately. A good friend and former recruiter always suggested you should dress one level above your interviewer and if you don't know how they dress then wear a suit and tie. This is pretty solid advice if you're a banker, investor or accountant. Me? I'm in the software and internet-based world and I can say that this advice has burned me in the past. Nothing worse than showing up for an interview with the CEO and have this go horribly wrong. Me: Slacks, tie and sports jacket. Him: 'Holey' blue-jeans, t-shirt and leather jacket. A minute into the interview and he asks "so, do you dress like this all the time?"... Didn't get that job.

I wish I didn't live in a world where my clothing options and lack of a leather jacket didn't impact my employment opportunities but here we are. How you present yourself is as important as what you present and to be competitive, you need to do some research on the companies you're interviewing at.

There are two, supper easy ways to find out what would be appropriate to wear at an interview. Firstly, go to the company website and check our the 'management' page. Here you'll normally find photos of the CEO and company leadership. The marketing department is usually pretty keyed into the culture of the company so you'll normally find the management team wearing something they would find dressy, but appropriate. And that is what you're shooting for: formal, but appropriate to the organization. If they don't have any photos, you can always search for their names in LinkedIn and see what they're wearing there.

On the odd occasion that the leadership are photo-phobic, you always have the ability to pop into their office a couple days before your interview to drop off your beautifully printed CV. The receptionist is the person the company presents to the world and will always be dressed appropriately.

Last word of advice: I don't suggest stalking the leadership to find out what they're wearing, as this might come up in the interview later...

QuiBids and Darwin

I've spent that last couple days watching QuiBids and I have to say I'm impressed. The greedy capitalist side of me says "why didn't you think of that" while the savvy consumer side screams "Warning!". And honestly, there are two very different sides to QuiBids depending on your how you approach it.


QuiBids is an auction site that allows you to buy iPads, gift cards, trips, waffle irons, golf irons and just about anything else under the sun. And they sell all these products at cents on the dollar. For example I just saw a Nintendo Wii package (normally retails for about $200) sell for $4.99! The person that won only had to pay $4.99 for a $300 product... well, kind of.

In QuiBids you need to purchase your bids and each bid cost $.60. If you buy a package of 100 bids you pay $60 up front. Each time you bid, it costs you real money. For the Wii package above, the individual had to bid 120 times (each time you bid, the auction price is increased by $.01) and since it sold for $4.99, we know there were 499 bids (it starts out at zero cents). In real money, the winner of this deal actually paid $4.99 plus $.60 per bid (120 bids = $72) for a grand total of $76.99. Still a really great deal right? Well, yes, for the person who won. This product had twenty other people bidding on it and all of them (499 bids minus the winners 120 bids) paid out $227.40 in bid fees. Fees they don't get back. They paid to bid, not to win. When you look at some of the auctions, its really crazy how long and drawn out they go on for because even though the action counts down, every time somebody bids, it add 10 to 20 seconds to the auction. Literally, these can go on for hours and hours. A Joola Quattro Table Tennis Table sold yesterday for $33.56. That's 3356 bids for a grand total of $2013.60 in bid sales for QuiBids. All for a product that retails for $500 and QuiBids buys at wholesale for $300. That's a whopping profit of of over $1,700 for a single auction. A Callaway Razr Hawk Driver worth $370 retail sold for $30.56 and did over $1800 in bid revenue for QuiBids.


QuiBids makes it fun too. They have achievements with badges and everything. The 'More Bid Combat' badge, 'Running Riot Badge' (no, not for Vancouverites) and 'Going Rouge' badges are awarded for aggressive bidding. Their site is slick, easy and engaging. Its a little bit like gambling because its competitive, exciting and there is risk and chance involved. Will the people I'm bidding against give up before me? Each bid you make, makes you more committed financially to winning the deal. As I said above, I might win the Callaway Driver for $30 but everybody else has already invested $1,600 to win the same product. I'd hate to invest 100 bids just to walk away empty handed (and $60 bucks less in my pocket).

And this is where the greedy capitalist side of me says "wow!". I spent a couple of hours monitoring some bidding and here is what I've found when I looked at a sampling of completed auctions:

• QuiBids has about 400 auctions complete per/hour
  
• I averaged these out and based on what I tracked, QuiBids is doing about 10,000+ bids an hour.
  
• Even though I've used examples of where the bids revenue is way higher than the product price, they do have about 40% of their products selling at less than their cost (bid revenue + sale price - product cost). Take into consideration though that QuiBids does not pay retail for these products and their losses drop significantly.
  
• In my sample of 20 transaction QuiBids made approx $4k in top-line revenue for about $900 in products (again, retail price, not wholesale).
  
• In none of my samples did the buyer ever pay more than the value of the product (auction price + bid cost).
  

Based on the auctions I dug into, QuiBids is making an obscene amount of profit. And this is just in the first month of operations. As it takes off and gets some traction, I'm betting this company could give eBay a run for their money. Amazon for that matter to. Buying something online is normally as much fun as doing laundry and QuiBids has come up with a way to make if fun, addictive and, if you're an auction winner, a great place for a deal. I also find it a bit frighting because it combines so many compulsive behaviors like casual gaming, shopping and gambling all into a single experience. And lets be clear that this business model relies on those compulsions. QuiBids is the opposite of Groupon and other social dealz sites. Where those programs rely on the crowdsourcing to help initiate and secure that same crowd a deal, QuiBids is more crowdfleecing. Groupon is socialized deal making for the many and QuiBids is survival of the fittest (and by fittest, I mean that person willing to stick it out till they win).

Will I be using QuiBids to buy stuff? No, its a rip off unless you have the fortitude to fight tooth and nail to win the auction. Do I wish I thought of QuiBids? Hells yes.

~ chris

The Cable Guy (or lack thereof)

My wife and I decided to shut off the cable for the summer. I know, its a vain attempt to promote that our kids get outside and enjoy the summer but honestly, its was as much for the two of us as it was for our children. Turning off was simple (although the cable company did protest). What we found out was that turning the cable back on was much, much harder.

Everybody has a horror stories about waiting for telephone or cable service repair people. The standard "we'll be by between 7am and 8pm on Wednesday" is pretty standard. At least you know they'll come by... or will they? In Vancouver we've traditionally only had one cable provider and that was Shaw Communication based out of Edmonton Alberta. That single provider had a monopoly until some deregulation allowed in some much needed competition. Last week my wife decided to turn the cable back on and was told that a service person would be out to our home on Friday between 1 and 5pm. Firstly, why do they need to send somebody out? In this day and age why can't access to the existing cable services (already in place) be toggled remotely? Anywhoo, the wife waits around but unfortunately we had to take off to a dinner party at 5:15 and, you guessed it, the cable guy showed up at 5:30.

Ok, kind of crumby but no worries, we phone and they tell us he'll be back on Saturday to hook us up. I wait around all day and sure enough, no cable guy. We phone Shaw at 7:45pm on Saturday night and they assure us he is still on route. And now I'm pretty perturbed. We phone again (now this is part of the story where the rubber hits the road as they say) and again, we're hit with half-heated promises of service follow-through. In fact, we phoned Shaw on Friday, Saturday and Sunday and each time they apologize for the misunderstanding. Each time they also tell us that somebody will call us back shortly to explain/recommend solutions. Nobody ever calls us back. Never. What worse, they tell me that this is my fault. They say:

• They couldn't get access to the cable box because I live in a gated community. Wow. Just wow. Not only don't I live in a gated community, but my house is 100 years old and we've left the side gate open for the last 3 days giving the cable guy full access the cable box, power box and even the kids sand box.
• They came by on Sat but nobody was home. And again, wow! Sat in the house the whole day (didn't even go out back in fear I wouldn't hear the doorbell). Still the side gate was wide open.
• We'll call you back. Four times they said this and yet nobody has given us a call at the writing of this post (day three of our first call).
  

I've now just got off the phone with another poor service rep who again tells me somebody will call me back, but now its too late. The wheels have come off this service experience ride and I've just decided that my hobby for the next 30 days is to make the cable guy rue the day he decided to piss on back and tell me it was raining.

So here is what I'm going to do:

1. Set up a Facebook page called: Shaw Cable: I'm Tired of Your Horrible Service! http://www.facebook.com/?ref=logo#!/group.php?gid=149537638407522
2. I'm going to write to all the senior leadership at Shaw Communication including their board of directors (yes, getting their email was pretty easy)
3. Write letters to all of the local and national newspapers, blogs and advocacy organizations
   
4. I'm going to give Telus (the competition) my business and make it my goal for the next 30 days to drive as much business away from Shaw as possible.

In the end my rants and raves won't amount to much. But hell, its damn therapeutic :)

Christopher Hennebery