Distributor cap

Miraclo has already noted WizKids' announcement that they will be consolidating distribution of all their product, very much including HeroClix, with one company, Diamond/Alliance... the company that already controls nearly all the comic book distribution in North America.

Reactions to this have been mixed, and you can find a representative spread of them here. Mike himself finds this to be pretty much an entirely negative development; he is what I would call a Type A buyer of HeroClix, which is to say, he has enough disposable income in his budget to buy his clix by the case, and take advantage of the bulk discount one can get from various online shops when one can afford to plunk down $220 or so at a time for an entire case of 48 boosters of clix whenever a new set comes out.

In point of fact, Mike's buying habits whenever a new expansion comes out have evolved over the last few sets to where he seems to spend about $340 per expansion -- $220 or so for the case, another $95 for a 'clixbrick' of 12 boosters from a 'brick and mortar' shop (so he can get the coupon and send away from the free clixbrick exclusive figure and any associated collector's sets), and then another $25 or so for three boosters at a local venue, so he can try and get one of the prize LEs -- and come away with a complete collection of figures for each expansion, plus extras to trade if he needs to.

This has worked very well for him, especially lately, with WizKids getting their per case figure distribution system down to the point where a player can buy one case and very nearly be certain of getting a complete set. With the extra brick for coverage, that $340 investment generally nets him every single figure in every new set that has come out lately.

Yeah, for the last couple of sets, the Type A buyer has definitely been sittin’ in the fabled catbird seat.

Me, on the other hand, I'm a Type B buyer. Nowhere near as financially successful as Mike, I just can't swing $340 dollars out of the budget at one chunk every four months or so to get myself a case and a clixbrick, and then enter a sealed booster venue to procure a prize LE. There's always something that's come up in the meantime -- doctor bills for the kids, lawyer bills generated by the Idiot Ex's perpetual War On Christmas, a Florida vacation, car repairs, Christmas presents, the rent... I have some expendable income, and I certainly expend it, but $340 at one time never seems to sit in my checking account long enough to be spent on something like HeroClix. There is always a better, more urgent hole to stuff it into. That's family life; the cost of having a fabulous apartment in a fabulous neighborhood and a fabulous fiancee and three fabulous kids to share it all with. I in no way begrudge it -- but a Type B buyer is what it makes me.

This means I buy my clix in boosters, paying full retail for them, as many as I can spare the cash for over the course of any given span of weeks or months. One paycheck I may have barely enough to afford a single booster along with my bi-weekly comic book fix. Another paycheck I may be a little more flush and can snatch up a half dozen boosters, or maybe even a clixbrick. SuperFiancee may pick me up a few boosters occasionally on the spur of the moment, too.

Eventually, this results in me getting to a point where I have nearly everything I want from each expansion, with lots and lots of extras of the very common, low numbered figures that nobody needs or wants any more of. The few figures that I will still need at this point are always what are called 'chase figs', stuff that everyone wants and that is distributed maybe one to a case, so when you buy random boosters, odds are, you will never see at least a few of them. You have to buy them as singles from the secondary market at exorbitant prices, or, if you get lucky, maybe you can find someone else to trade a few of your extras with for them.

For example, I got very lucky recently -- I pulled that Zombie Captain America from a random booster, and ended up trading it for 30+ figures, many of which filled in most of the gaps I had for the last two sets, SINISTER and SUPERNOVA. I'm still missing a few very hard to get figures -- a Veteran Daredevil, a Veteran Bullseye, a Veteran Silver Surfer and a Veteran Bulldozer, mostly, plus a Unique Binary -- and of course, there are older, very rare figures I covet that I will very likely never manage to acquire, like KC Green Lantern and Ultimates Thor and like that... but this is what it's like when you're a Type B buyer.

The Type As shell out their wad of cash and end up usually with complete sets almost instantly. In fact, for a brief time in Florida when I had no social life at all, I was a Type A buyer, and I bought myself cases of several sets, and it was a sweet, sweet life, except, you know, I had no friends and never got laid and was actually pretty fucking pathetic, sitting there in my tiny cinderblox duplex gloating over my little plastic toys. Which is yet another reason why I really don't much mind being a Type B buyer now. You lose something whenever you gain something, but nothing I've lost is anything compared to everything I've gained, and I don't miss that cinderblock hovel one little bit.

As you'll see if you actually head on over to that HC Realms comment thread I linked to, opinion as to WK's distibution consolidation is largely divided, with Type A buyers, some geek-shop owners, and some former WK distributors on the "It's the worst thing since Osama Bin Laden" side, while mostly us Type B buyers are over on the "Quit yer bitchin' this ain't so bad" side.

See, the Type A buyer knows that with WizKids making an exclusive deal with Diamond for distribution, the shop he buys his cases from at a huge bulk discount (about $4.60 per booster) will no longer be able to buy their cases direct from WizKids at wholesale prices, or direct from one of maybe a dozen distributors at only a slight mark up over wholesale prices. With only one distributor in the supply chain, that distributor will pay WizKids one wholesale price (probably a somewhat higher one than the other 13 or so were paying) for their clix, and then they will mark the product up considerably and pass it along at a much higher price to the retail shops. (No reason not to, they don’t have any competition. If the retailer wants WK product, he or she can no longer shop around for a better deal, they have to pay what Diamond wants to charge.)

This probably won't result in the retail shops selling it for any more per booster than they already were, but it will keep retailers from selling cases to interested individual buyers at a bulk discount, because they will not be able to afford to do so any more. If Diamond is charging retailers significantly more per case than they had to pay previous to this, when they had a range of distributors to choose from, then they will have to recoup that price by charging all the market will bear. So, you want 48 boosters? You pay $7.99 x 48, or $383.52, for your case... if you're lucky, and a canny shop owner doesn't slap a 'case surcharge' on top of it, knowing as they do that when you buy a full case, you are very likely to get a complete set of that particular expansion... something that won't happen if you just buy 48 boosters at random from several different cases.

Paying full retail price for their complete sets of each expansion is something Type A buyers have no interest in doing, after years of effectively getting their clix at 2/3s retail price.

All of this presumes that Diamond will mark the price of the product up when they distribute it. It's possible they may not, but one of the perks of exclusivity is you can charge whatever you want to, and if people want the product, they have to pay it. Diamond isn't going to want to drive WizKids out of business, so they are unlikely to jack up their prices to the point where retailers would have to charge $10 or $12 per booster, which would pretty much end player interest in new figures from WizKids. But certainly, if retailers can afford to offer entire cases to buyers at 2/3s of normal retail cost, they must be paying much less than that per case to their own distributors. Diamond will absolutely increase their prices to the point where retailers will no longer be able to afford to offer that kind of discount. You want a case, again -- you will pay the full fare.

Diamond will probably also restrict supplies somewhat, to increase demand. I say this because it's something that any exclusive dealer does when they have the chance. With Diamond controlling the pipeline, retailers will get fewer cases of product, and will have to break those cases open and sell them at individual booster rates to make a profit.

So, yeah... I have to agree... for Type A HeroClix buyers, things look pretty bleak.

Yet it's not all bad. As this thread indicates, since announcing the new distribution deal, WK has agreed to offer formerly exclusive Collector's Sets to retail outlets, through Diamond/Alliance. Previous to this, these sets were only available direct from WK if you jumped through a lot of hoops to get special coupons. I can't see greater access to sought after product as being a bad thing, and I am as certain as I can be that this is something that Diamond insisted on, and that would never have happened if WK had continued to deal with a dozen different distributors. WizKids would have had no incentive to make their exclusive Green Lantern Corps set available to retailers through 13 or so different distribution chains; they'd have been selling them cheaply in bulk and those distributors would have turned around and sold most of the sets at a slight mark-up on the Internet, with no benefit at all accruing to the brick and mortar retailer WK is most interested in supporting.

Diamond, on the other hand, has a ready market in those retailers, and can put powerful pressure on WK to make desirable product available to them. And if these sets start showing up on the Internet at wholesale costs, or slightly above, well, WK doesn't have to guess which out of many distributors is doing it; they can go straight to Diamond with their bitches. Not to mention that as Diamond is doubtless paying WK more for the product than previous distributors were, they have less motive to sell product for a discount on EBay.

WK has announced that they are pretty much out of the Collector's Set business, but with Diamond in the picture, I am going to take that with a grain of salt. I have long thought WK was missing out on a very lucrative business opportunity by refusing to market specific sets like this to their entire target demographic. The world of comic book superheroes is rife with potential for exclusive boxed sets of this nature. Hobbyists enjoy buying boosters and being surprised (hopefully pleasantly) by what's inside, but we are also willing to sometimes pay a premium for a known quantity, especially if it contains one of a kind stuff we can't get anywhere else.

I have said for years now, if WizKids put together an Invaders collector's set, featuring new sculpts and new dials for Captain America, the Human Torch, and the Sub-Mariner, and completely Unique, exclusive to the set figures of Bucky, Toro, Union Jack, and Spitfire, all with a unique Invaders TA, they could sell 40,000 of them at $40 a pop without working up a sweat. And the history of superhero comics provides plenty of material for such ‘niche’ sets – any comics fan could probably put together a list of a dozen such sets they’d like to see after thirty seconds’ thought. Silver Age X-Men (one set in the original gold and blue uniforms, maybe another in the Neal Adams era costumes, each with unique sculpts and dials and a unique Silver Age X-Men Team Ability), Silver Age Teen Titans, Golden Age Batman Family, Golden Age Seven Soldiers of Victory, Silver Age Legion of Superheroes, maybe a Forever People set… I’d love to see a Kamandi set and a Norse Gods set (from Marvel’s Thor)… and while certainly not all these specific concepts are necessarily marketable, the collector’s set concept very much is. With Diamond now able to exert pressure on WK as to what kind of product they will produce, I think more sets like this become a very real possibility.

Beyond that, I can’t imagine Diamond is going to remain content to see some of WK’s most collectible and avidly sought product remain solely accessible through gaming events or the secondary market, neither of which Diamond has any piece of. I’d like to think that there is a possibility that as time goes on, Diamond will put pressure on WK to create pre-packaged retail shop versions of some of the most sought after LEs and con exclusive figures.

This last is something I would very much like to see happen. Fifteen years ago, one of the factors that drove me out of Magic: the Gathering was the rarity of certain extremely powerful, out of print cards. Wizards of the Coast, the creators and suppliers of the game, had decided that certain early edition cards were ‘broken’, mostly because they were much much more effective than WOTC wanted them to be within the gaming environment they were trying to evolve. So they took those cards out of print – but to keep from enraging the secondary market, they refused to ban those cards from play.

This quickly created a gaming situation in which relative skill at the game mattered far, far less than a player’s disposable income. 12 year olds with wealthy, indulgent parents could afford to pay outrageous prices for these insanely expensive OOP (out of print) cards, and since the cards were still legal for tournament play, such Million Dollar Decks quickly came to dominate every venue.

If WOTC wasn’t going to ban the OOP cards, which would have been the fairest overall solution, my thought was that they should have reprinted every single one of them in a cheap, easily available edition. Original first and second edition ‘black border’ versions would still be sought after, so collectible prices would remain up, although not at the obscene levels we saw then and still see now; but people who wanted to put their decks on an equal footing at tournaments would be able to get inexpensive versions of the cards as well.

This is the kind of thing I’d very much like to see happen with HeroClix eventually. I may not much care about the Marvel Zombies, for example, but I’m sure there are clix players out there who are also huge fans of the mini series and who are extremely frustrated that they will never be able to assemble a complete set of the figures. Eventually marketing a retail boxed set of the figs, with maybe a few new figures thrown in, would satiate those collectors, and the original LEs from Supernova will still have their own allure for the diehard collector. The only people who will scream about it will be those mean spirited dickweeds who always want to be the only person in their area that has something cool, and, well, I don’t worry much about those assholes, and they aren’t much of a sales driver in the collectibles marketplace, either, since they generally only want there to be very few, or, ideally, one (theirs) of anything.

All of this may be nothing but a pipe dream, of course, and none of it is much consolation to the Type A buyer who is looking at the elimination of his treasured bulk discount, facing with no little despair the prospect of living in a world where everyone is a type B buyer, or, at the very least, where only a vanishingly narrow elite of collectors can continue to buy a case, a clixbrick, and three random boosters at a venue as each succeeding set comes out.

As a Type B buyer, I’m not as gloomy about the development. There are valid concerns about the flexibility of a more open market vs. the lockdown of having to deal with an exclusive monopoly, and I’m not dismissing them… although I will note that many of those who are grimly and/or loftily citing these issues seem mostly to be using them as a mask for their own more personal interests.

Which is to say, as always, it’s the people who stand to lose something who are objecting the most vocally.

Many are bitterly – perhaps even petulantly – predicting that this decision is a huge mistake for WizKids, one that the company will deeply regret in times to come. Spurned former WK distributors are muttering darkly about how all the geek-shop owners they personally know hate Diamond/Alliance and because of that, they will drop WizKids product immediately and start pushing other miniatures games, like Star Wars, on their gaming customers instead. Pissed off Type A buyers are saying this will drive them out of the game entirely, and as always happens when someone who loves a game decides to quit it, at least some of these folks seem to be possessed of a dark certainty that once they walk away from HeroClix, the game itself will quickly founder.

I tend to have my doubts as to any of this. Geek-shops are generally never more than three steps away from bankruptcy court at any given moment; it’s the nature of the beast that such shops always have huge amounts of their cash flow tied up at any given time in very expensive inventory that may or may not ever sell. It’s a maxim of any business that if your customers want something, you will try to get it and sell it to them, and by the nature of economics, there will always be more Type B customers than there are Type A. If Diamond is stupid and does something to keep Type B buyers from getting boosters when they want them – like restrict access prohibitively, or drive retail price up to a point where we all just say to hell with it in disgust – then, yeah, WizKids is going to deeply regret this move. But Diamond has been around for a while and for all that their competitors have absolutely nothing good to say about them, they don’t seem to have stupid business practices. My guess is, Type B buyers will continue to want to buy WK product, and retail shops will continue to want to supply them with it. Those retail shops that ordered extra cases to sell on the Internet at a discount will lose some of that business… but profits couldn’t have been particularly high there, anyway.

I don’t even think the secondary market is going to take too much of a hit from this. We’ll still buy boosters for $8 each, occasionally get a Unique that is worth $10 or $15 on the secondary market, and that’s where we’ll go to sell it, if we don’t want to trade it. If Diamond starts putting pressure on WK to re-issue some of the rarer, more exclusive and sought after figures in retail sets, then prices on those LEs will go down on the secondary market… but it will still function.

Still, I’ll be very sorry if my buddy Mike Norton ends up getting out of clicks over this. For one thing, I’ll lose just about the only person I ever have to talk about the damn things with, and, for another, well, Mike will lose one of the few things he seems to genuinely enjoy in his life right now. That’s a sad thing.