What does the rise and rise of Asmodee mean for the board game industry?

Logo_AsmodéeI listened to board game industry commentators largely gloss over the recent acquisitions of Days of Wonder and Fantasy Flight by Asmodee Group with interest.

The vast majority of responses seemed to be, “Well that’s good huh?” with very little actual thought put into the topic. Naysayers tended to be brushed off as fear mongers, seemingly due to the fact Asmodee is seen in the industry as a good egg.

On a superficial level, you can simply read the press release and agree with the publishers that this is purely a US/EU buyer/gamer win/win – everyone will benefit from increased resources, distribution channels etc etc on their opposite side of the pond.

Now I’m no expert, but I’d like to put a few things out there for debate. I don’t think this is something we should just accept and move along from without digging a little deeper into the possible ramifications.

Euraze-who?

While everyone and his meeple announced this as the gaming news story of 2014, very few spoke about the fact 2014 also saw French private equity firm Eurazeo buy an 83.5% stake in Asmodee for €98m – making it just another portfolio company in its €6bn stable of assets. While we were innocently talking about the possibility of slightly cheaper Star Wars minis on our local games store, the business press were talking about a possible new contender on the high street for Hasbro and Mattel.

I recently read an old article from the Harvard Business Review titled The Consolidation Curve. It looks at new or deregulated industries and how they have a “clear consolidation life cycle” with your average successful industry taking around 25 years to move through it fully. And this is every every industry, so there is no reason to suggest board (or should I say hobby) games will be any different.

Very briefly (I’m no business grad), this curve moves through four stages:

  1. Opening: After one or a few companies start the industry, their market share quickly drops to between 10-30% of the market as competitors arise – start-ups and spin-offs, plus consolidating companies from other industries.
  2. Scale: Major players emerge and buy competitors. The top three grow back to 15-45% market share as the industry consolidates. It’s all about protecting a core culture while taking and keeping the best people and products in the industry.
  3. Focus: Aggressive expansion sees the top three empires grow to control 35-70% of the industry, while there will generally be 5-12 players in the market. It’s now about global deals, profitability and the eradication of under performers.
  4. Balance and alliance: The big three now have 70-90% of the profit and concentrate on alliances, as there’s nothing left to grow into. It’s about defending their position, while looking for areas to branch out into – while avoiding regulation.

I think there’s an argument that says we have just moved into phase 2, ‘Scale’, and that our third industry ‘major player’ has begun to put its stall out.

Is it fair to say we now have Mattel, Hasbro and Asmodee?

The wrinkle point in these four stages, in terms of hobby games, is it was very much a cottage industry – but it has always been a little brother to a giant: high street toys and games. But now we can see the rising tide in terms of sales, boosted by a mainstream media softening towards nerds thanks to smartphones and tablets. It was only a matter of time before a big investment firm took a punt on the industry – and is it any surprise 2014 was also the year we saw Mattel dipping its toe back into euros at Essen with Bania?

Using the UK as an example, where Mattel and Hasbro had things sewn up was the high street; but even this has started to change. Non-traditional stores such as book shops have started to take hobby games seriously, while board game cafes and bars are starting to appear – let alone booming online sales. So where are people getting these games from? Well the UK hobby games distribution market has been sewn up by Esdevium, but don’t worry – it’s in safe hands of its owner, Asmodee.

The quote you hear all the time from the board game media is “you don’t go into the board game industry to make money” – but what they don’t add on the end is, “unless you’re going into manufacturing or distribution”. These firms employ creative people, of course, but they’re first and foremost businesses: just like film studios or record companies, they rely on exploiting (as in – making full use of) the talents they sign to make profit.

Mattel and Hasbro work in the same way. Designers are employees, not people worthy of having their names on game boxes. They work within the confines of a business remit for a product, rather than having total creative control, and work to deadlines. None of these things are intrinsically bad; they’re just not ideal for free spirited hobbyists, or people doing these things for the love rather than to pay the mortgage.

When will me move from ‘scale’ to ‘focus’?

There are so many questions. Will Asmodee work towards a similar structure to compete with these two gaming behemoths on an even footing? Will other conglomerates of gaming companies form to try and compete with them on a global distribution scale, creating the 5-12 ‘focus’ stage players? Is the upward trend of hobby games too slow to see this happen in the next five years – or is it actually a blip, that will see sales decline and enthusiasm wane from such big investors (which could of course have its own ramifications)?

From both a designer and customer perspective, these will be interesting times. An obvious move would be to see a smaller range of games being released each year from a shrinking number of players, but these games being released in bigger volumes as the popularity of the hobby increases.

This would drive price-per-unit down and force games on lower print runs into niches or bankruptcy – which, judging on the quality of many one-and-done Kickstarter projects, wouldn’t be a problem and will probably happen anyway as people come to their senses. But then of course there is the rise of the digital space and the possible love-love relationship that should blossom between 3D printing and print-and-play. There are just so many possibilities!

Of course I’m sure this article will be labelled naive, and I’ve already admitted I’m no expert – but if helps create a bit of debate on the subject that goes beyond giving this news a ‘Story of the Year’ award then I’m happy with that. I’m keen to learn more on the topic, and about the industry, so here’s to healthy debate.