Cut the Cord (Business Brilliance #4)

1 February 2018

A few days ago, I heard about a new Netflix movie in the vein of Groundhog Day. I’m a sucker for any Groundhog Day-style movie, so I watched the trailer for When We First Met.

It looked fun, but like most movie announcements, I figured I wouldn’t get to watch it for 6-12 months. Then the trailer revealed the release date: February 9! Less than 2 weeks from now! Amazing.

This short turnaround is enabled by a series of decisions Netflix has made over the last 20 years to cut the cords that made them dependent on other companies:

  • Studios: Originally Netflix’s entire business model was based on buying DVDs from studios and renting them to customers. However, this put them at the whim of those studios–they relied on someone else’s content and the prices they’re charged for that content. So they started to create their own shows and movies.
  • Theaters: Traditionally, movie studios produce films to release to theaters. This means they’re reliant on those theaters to deliver their content to people. Netflix doesn’t need theaters to accomplish this.
  • Networks: If you want to produce content for TV, you must follow rules about cursing, nudity, and length (in the US, most shows fit into 30- or 60-minute blocks). Netflix has their own website–they don’t rely on TV networks and FCC guidelines.
  • Advertisers: Netflix has always charged customers a subscription fee for access to all content. Aside from some brief experiments, they don’t rely on advertisers for income or approval.
  • Other Websites: When you want to watch a Netflix show or remind yourself to watch a new Netflix release, you don’t go to another website–everything is centralized on Netflix itself. They are their own aggregator.

While Netflix isn’t completely independent–they still rely on the Internet–they’re pretty darn close.

What does this mean for Kickstarter creators? 

If you’re a Kickstarter creator, in all likelihood there are many cords you simply can’t cut: You rely on Kickstarter itself, your manufacturer, shipping and fulfillment companies, artists, graphic designers, etc. This isn’t a bad thing–after all, we would hardly have any Kickstarter creations if every creator had to personally manufacture their product.

However, I think it’s good to simply be aware of how much you rely on other people and companies. Do your research and build buffers everywhere. You can’t control how fast your manufacture will make the product, but you can get estimates from them, learn about faster/slower times from them, and talk to other creators who have worked with them.

What does this mean for other companies and entrepreneurs?

Every now and then, write a list of everyone you rely on to keep your business functional. If any of those partners decided to double their rates or halve their production speed, could you survive? Is there even one area where you can rely more on things you can directly control and less on someone else?

What does this mean for tabletop game publishers?

Most tabletop game publishers are at the whim of at least a few external forces. On one end of the spectrum are companies like GMT Games and Cards Against Humanity, who focus on sales from their store (I’m pretty sure both of them handle fulfillment themselves or own companies that handle their fulfillment). I would also put industry giant Asmodee in this area, as they even have their own factories, a rarity in the gaming industry.

On the other end are companies like Stonemaier Games, which relies heavily on external companies (manufacturer, freight shipper, warehouse, distribution broker, distributors, and retailers) to get games in the hands of consumers. However, I always try to have a backup plan for each stage of the process, and I try to diversify (i.e., I’ll sell to any distributor instead of making an exclusive deal with only one).

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How much do you rely on other people and companies to keep your business functional? Have you ever cut the cord and seen great results?

This series features innovative strategies from non-Kickstarter, non-tabletop game businesses as they might apply to creators and entrepreneurs.

11 Comments on “Cut the Cord (Business Brilliance #4)

  1. You need to raise investment to create Stonemaier Manufacturing. That would be quality manufacturing you can trust. Almost everyone would get their board games made by you and you’d probably make more money as a manufacturer, like companies during the gold rush that sold the shovels instead for digging for gold.

  2. Loving this series Jamey! I’ve always been a big fan of vertical integration. I think other great examples of this are Tesla and Apple.

    Apple every year adds more parts to their products that they design and get manufactured themselves instead of buying the product from other companies.

    Tesla in the beginning had to outsource basically every part of the company. Then they bought a factory, then designed their own car from scratch, made another factory to produce batteries, and routinely adds more and more that they make themselves, they cut ties with Mobile-eye and are now producing their own car camera and sensor systems, they created their own glass division and made a thermonuclear-proof windshield for their semi etc. etc.

    But in any business the more you can vertically integrate the better. If I can design a game with my own in house designers and bring it to life with my own artists and then make the game in my own factory and then ship it out with my own fulfillment company and sell it on my own online store. The only person that can hold up the chain is me. (you could even go once step further and fund the game on your own crowdfunding platform as well)

    – Cody Thompson

  3. If someone just makes a card game they might be able to skip worldwide shipping, if they contact a card manufacture in the U.S., Poland (or Romania), China, and Australia. Get all 4 to make the cards, as cards are simpler to make than board games. That would probably only save money if the amount manufactured is low.

    PC games have had the option to cut a lot of cords and sell direct from their website, but it doesn’t work. Portals like Steam, and Google Play attract millions more people than small company can. Even though they can do it, it is not wise to. Even with share-ware games they relied on magazine (with their demo floppys).

    1. The catch to that is that manufacturing costs vary wildly across those different geographies. For example, a game that costs $1 to produce in China will cost you about $10 to produce in Australia. Low manufacturing quantities actually make the problem worse rather than making it doable.

      It really comes down to quantities and coordination. Jamie has a reputation for amazing quality in his games already. That’s because he’s very picky on who his subcontracts with to do manufacturing, but logistically, and at the quantity he makes, it would be impractical to try to make his games in their entirety (yes I realize that they are not just card games) in Germany, Poland, or even the USA. Those cost would become prohibitive.

      If you want to make games in smaller quantities, some companies simply won’t do it. For example if you want to make a card game, and you want less than 3000 copies, you have already eliminated over 80% of the non print on demand manufacturers. Cartamundi for example has a 5000 unit minimum quantity. Whereas places in China such as Longpack and Wingo will try to get you to do a minimum of 3000, but are a bit flexible in this regard.

      The other problems is that unless it is only a card game like you mention, it can’t be done in one location like Australia. We don’t have any end to end game manufacturers. And if you were going to do it anywhere, that would be the place to do local manufacturing. This is because shipping to and from Australia is insane. For context, I sent a couple of our playtesters and customer copies of our card game. To send it from Australia to the US was about $45 AUD. The shipping was more than the MSRP/RRP of the game. But sending the same game from Seattle to Florida was $7.

      I agree, local manufacturing would be ideal. The industry just isn’t set up for it yet.

      1. Thanks Rocky, I did not think the requirements or costs were that high for cards. There is a gap in the market there (for small run global printing of card games) if anyone can think of a way to fix it. If printing a deck of cards was only as easy a printing business cards.

  4. Thanks for this article, Jamey. I’m almost a little intimidated by the thought of making backup plans… since I’m still so much in the midst of making the first set of plans! haha! Hopefully this article pops back up in my mind when I’m ready to act on it.

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