Announcement From Hero Games

[Darren Watts]

Greetings, Herophiles! We wanted to talk to all of you about a change in our sales strategy that we're introducing, effective today.

 

First, a little background. Those of you who pay attention to the gaming industry probably heard the news in early January about how Guardians Of Order was scaling back operations drastically. Up until then, GOO was a small company — about Hero's size, in fact. Now it's a company of one, struggling to survive in the gaming industry. All the people at GOO are our friends, and we wish them the best going forward. But more to the point, we don't want something similar to happen to us.

 

While we haven't suffered from the American/Canadian exchange rate problems that have plagued GOO (which is located near Toronto), the steady downturn in RPG sales over the past 18 months or so has really begun to put the squeeze on us. It doesn't seem to have much to do with us in particular — nearly every company in the industry's feeling the pinch. Nor does it have anything to do with the specific books we've chosen to publish during that time; from, say, 2002 and early 2003, our sales are down proportionately across the board, regardless of product line or subject matter. We could discuss a lot of theories about the situation, but regardless of what explanation you prefer, RPG sales are far below what they were even a couple of years ago.

 

As we told you when DOJ bought the Hero Games assets three years ago, we're in this for the long haul — and that remains true. We want Hero Games to be an ongoing concern, able to publish high-quality RPG products month after month, year after year, without any difficulties. While we're not in trouble yet, from our position in the cockpit, Steve and I can see the ground getting a lot closer than we're comfortable with. If things keep going the way they are, the blunt truth is that Hero Games won't remain an ongoing concern — it will, sooner or later, grind to a halt. The way things stand right now, sales of our books simply aren't high enough to sustain the company in the long term.

 

To keep the unthinkable from happening, we've come up with a lot of ideas and strategies to try to improve our efficiency and, most importantly, increase revenue. A lot of them are behind-the-scenes sorts of things that won't necessarily be apparent to you, the fan and customer. But there are two of them that focus specifically on you, and that's what this (now rather long-winded) announcement's all about.

 

There are two things we'd like you to consider doing to help Hero Games keep going along the road it's been traveling for the past three years:

 

1. If you can, please buy more books. We understand that many of you can only buy a certain number of books, and we definitely appreciate that you spend some of your hard-earned dollars with us. But if you're considering buying some of our books that you don't already have yet, now would be a very good time.

 

2. More importantly, please consider buying your books directly from us, through the Online Store (or, if appropriate, at a convention where we've got a booth.) This is one of the real linchpins of our new strategy, for the simple reason that we make a lot more money per book that we sell directly than we do on books sold through distributors and retail stores.

 

As many of you know, in the past, we've encouraged our customers to buy from local retailers instead of buying from us, offering the Online Store as a sort of last resort for people who didn't have a local retailer they wanted to shop with. We still believe that quality, professionally-run retail gaming stores are an important part of the RPG industry, and we still intend to sell our books through them. But the simple truth of the matter is that sales of our books through traditional methods isn't going to support Hero Games in the long term (not unless there's a rebound in the size of the RPG market, as some people believe there will be). Therefore we're reversing our policy and saying: if you can, please buy books from our Online Store (or our convention booth) instead of any other source.

 

The way the distributor-retailer sales system works, we only get a percentage of the cover price for each book. When sales are relatively strong, as they were in 2002 and early 2003, that's enough to sustain a company of Hero's size. But when they take a dip — and over the past 18 months they've certainly taken a dip — supporting Hero Games starts to become problematic.

 

Sales through the Online Store don't suffer that problem. We get 100% of the cover price of a book. Keeping the company going on that amount of money is much easier. For example, if even half of you who now buy our books from retailers were to switch to buying from our Online Store, it would increase the amount of revenue we earn per book by 75%!

 

To encourage Online Store sales, we're taking several steps:

 

1. Effective immediately, we're going to start putting all of our books in the Online Store as soon as they become available to retailers. We are not going to make them available before retailers get them — that wouldn't be fair — but we're not going to delay for a month or more the way we have in the past.

 

2. We will no longer charge shipping and handling on Online Store sales of more than $20 US (which is to say, virtually all of our sales, since any book we sell costs more than that). If we're going to ask you to buy from us instead of them, it's only fair that you not have to pay more to do so. So, no matter whether you buy one book or ten, they'll come right to your door for the same price you'd pay at a store.

 

3. We are going to offer for sale more Online Store-only items, primarily PDFs of existing books and related products. We're getting that started today with the release of The Ultimate Martial Artist on PDF, and we'll roll out others in rough order of how well they've sold as we have time — we don't want to bring the production schedule to a halt just to produce PDFs, particularly when getting one ready only takes a little time and can easily be fitted in between other projects.

 

4. We're going to devise more bundles and other "buy a group of related items together for a discount" packages.

 

5. As part of our new PDF push, we're revising our policy on multiple downloads of our electronic products: you'll now be able to make multiple downloads if you like. That way if you lose a PDF for some reason, you can get a replacement without any difficulty. Similarly, if we get reports of errors or problems in a PDF, or want to correct newly-found typos, we can make the changes, and you can download the new version if you'd like to

 

So that's pretty much where things stand at this point. We hope you'll be able to help out and shift at least some of your purchases to the Online Store so we can keep revenues high enough to see us through the tough times to what we hope will be much better times in the future. As always, thanks for your enthusiasm and your support. dw

 

 

(Quick edit from Steve: if you have a comment or question, please post in the "Company Questions" thread of the same name -- it's easier for us all to keep track of one thread than several. )