Recently, Wizards of the Coast posted a press release announcing that they will be pairing Amazon.com for a direct to consumer selling/purchasing model for Magic: the Gathering products. This has become a huge controversy with varying levels of success/failure among the MTG player base. Do I think this move will kill the local game store?
This is a power move by Wizards of the Coast. It is a direct response to the secondary market and has multifacet reasons on why this has occurred. Let’s take a deep dive into why I think this has occurred and what its implications mean for you the consumer and you the player.
Before anyone argues that Wizards of the Coast isn’t aware of the secondary market, let me stop you there. Wizards is very aware, but likely due to a legal or corporate policy, they decline to discuss it with their consumers; they aren’t ignorant to the positive and negative practices that happen within their own WPN platform as well as other LGS’ around the country.
Wizards of the Coast designed the WPN system to reward local game stores with better pricing on products, special promo cards, as well as exclusive products to help drive customers into stores and host events. While this is a noble thought, in practice it kind of fell apart. In order to be in the WPN system, you had to have a physical store where people can come to play magic. Inevitably, stores claiming to be LGS’s began popping up on Ebay and other online retail curators were receiving WPN products and selling them against their contract. When these stores were searched by people to find their locations, many of them were found to be personal residences and not actually an LGS.
Wizards also used to have great player rewards in the form of promos. These predatory stores would instead sell these promos online, many times before they were even released. Eventually, even real LGS’s started following suit, and it began to shake consumer confidence. Many local game stores also began to sell WPN exclusives much higher than MSRP, depending on what was revealed to be in the various sets. This gouging of the price is harmful to the playerbase and the game as a whole.
So how does the Amazon partnership work into this? The long and short of it is that this is WOTC’s attempt at price fixing. In WOTC’s release they announced that many players were already purchasing their products on Amazon, and that this new partnership will allow users to have a better experience ordering their products. This change will slash the prices for sealed products and make a consistent ordering experience. This is good news.
But why is this bad for LGS’s? It sort of is. Many stores were supplementing poor sales of product in their local markets by selling the remainder online. Other companies support their brick and mortar store solely through online sales. This direct competition from Wizards of the Coast threatens the stores that rely on these online sales. This can cause some companies to go out of business.
But it doesn’t have too. All investors know that a diversification of a portfolio helps hedge your risk. As more and more stores feel like WOTC is moving towards a direct to consumer model, the more successful of them have begun offering other options than just Magic. They offer board games, Yu-Gi-Oh!, Pokemon, Warhammer, etc. Some even host events to highlight new games from developers. Some can partner with a coffee shop or restaurant to be able to offer food to their patrons inside beyond a refrigerator full of Coke bottles and a basket of snack cakes. There are ways for game stores to be successful outside of offering just Magic products.
To say that the game stores are completely at fault is wrong. For one, there are many store owners who follow the rules and do everything that they are supposed to and it can feel like they are getting penalized for this. Really though, the ultimate failure is that of the mothership, WOTC. It was through their poor rules enforcement, poor product offerings, and poor margin coefficient that the WPN ultimately failed. Here are somethings that could have been done better.
Who could get on the WPN game wagon?
If WOTC wanted to make this program have special pricing available for their network, determining who gets on that network is the first step. Supposedly, having a game store that hosts events, sells Magic products to in-store customers, having a storefront suitable for customers, normal business hours and a store sign is all that is required to become a WPN location. Yet despite this, multiple fake stores have been created selling these WPN products online. Personally, I think in order to be signed up, WOTC should require a representative from their organization to come make a stop at the game store. I don’t think this should be at Wizard’s expense; instead, I believe that if the game store owner is serious about a program like this, they should write the expense off as an operating expenditure. I also think that after every 5 or so years, the store should pay to have a representative come and visit the store in perpetuity. This would help ensure that these store locations are still actively hosting events and meet all of the requirements to be a WPN location. I also think that having a website that clearly states a company’s events, times, with its contact information and address plainly visible should be a consideration to add to the list.
Secondly, WOTC should periodically investigate the WPN and player rewards products that begin appearing online, especially the player rewards. These are sent out to to game stores as a free offering to the player base as a thank you for playing. It has been theorized that the reason why there have been worse and worse player promo cards is in direct correlation to the online sales of promo cards before they are even to be released. If these are supposed to be handed out, they should not be sold online for profit. Period; and it is up to Wizards to investigate these sales and pull out the weeds from their system. On a side note if WOTC wants to continue with player rewards, they honestly should be using our planeswalker points data they receive from Friday Night Magic or other events and send the cards directly to the player base.
So ultimately, is this partnership with Amazon a bad thing? Personally, I don’t think so. Many game stores have already been competing with online sales for a while now. The big difference is that they were the ones setting the prices. Now that Amazon has promised to slash MSRP by some 37%, in order for game stores to be able to profit from online sales is through singles, cutting their own margins, or to continue to use other platforms such as Ebay to sell the products. Otherwise, game stores will need to work hard at marketing their store, bringing in new customers, and diversify their offerings in order to compete with the giants.