The lifeblood of a gaming community is the local game store. This is where you go to play Magic, trade cards, buy singles, and generally have a good time with your friends. But game stores are a risky business and many of them go out of business, or become toxic, or just die out. Is there a problem with the basic business model of a game store? This week we take a look at one New York City store and the re-envisioned game store.

Running a Game Store

If you’ve been around the NYC gaming community at any point in the past five years then you’ve probably come across the following three words: Twenty. Sided. Store. This gaming mecca in the Williamsburg neighborhood of Brooklyn, affectionately known as 20SS to the community, is undergoing some changes and they strike at the very core of how a local game store is operated.

The community is deeply concerned, and they have a right to be. The local game store is the heart and soul of a gaming community. Without it we have our public spaces, our kitchen tables, and our office break rooms. With it we have so much more. When Twenty Sided announced that they would be suspending all regularly scheduled Magic tournaments in order to undergo store-wide renovations there was a wide array of emotions from anger to panic and everything between.

This is the second stage of grief, so it’s not surprising that Magic players who mostly consider themselves over-achievers jumped right to this step.

All of this got me thinking about the model of running a game store, the business of Twenty Sided, and what the future held for the future of game stores in general. After giving it a lot of thought I came to one simple conclusion: no one should be running game stores the way we commonly think of them as being run.

The “Traditional” Game Store

When we think of a game store what comes to mind? The traditional store, with respect to Magic, operates in very much the following way:

  • Sell sealed product (booster packs, fat packs, duel decks, etc.)
  • Sell gaming supplies (dice, playmats, sleeves)
  • Host tournaments (FNM, Game Day, Prerelease, Launch Party, PPTQ, etc.)
  • Buy and Sell single cards

That all seems pretty straight-forward, right? I bet it sounds a lot like your local game store where you regularly drive down to FNM, pick up some new sleeves, buy a couple new cards for your deck, sleeve up, play a few rounds, and then spend your store credit on a fat pack. Sound familiar?

On Theros it seems that being the only merchant who isn’t actively scamming their clientele is considered competitive advantage? At least to the police…

This is a terrible business model.

Competitive Advantage

The problem with this design for a game store is that you have a very limited amount of control over your competitive advantage. Imagine two game stores in the same general area. Both stores will have the latest booster packs in stock. Almost all sealed product is available to all game stores. The only exceptions are high-end products like Modern Masters and From the Vault. This is a very small competitive advantage. The income from that sort of product is negligible compared to a product like Battle for Zendikar or Magic Origins.

The same is true of dice, play-mats, sleeves, and other gaming supplies. These aren’t unique to each store. Virtually nothing prevents two stores from stocking the same products and in fact almost every store does in fact stock the exact same products. The only advantage one store could have over the other is in pricing. However, unless that store somehow gets a deep discount from their distributor, or is paying their employees poorly, odds are they can’t lower their prices enough to generate a real advantage.

If gaming stores want to compete with each other by offering lower tournament entries, higher prize payouts, higher buylist prices, and lower sales prices, then the result is every local game store will run each other out business.

What about card singles? Again, the only way to gain a competitive advantage here is to undercut the market. Joe’s Comic Shop is buying the new Jace for $10? Well then Mike’s Comic Shop is going to buy it for $12! This logic works when selling as well. Joe is selling Jace for $20? Well then Mike will sell it for $18. So now Mike is losing $4 on every Jace, but he’s taking business away from Joe. The end result is that both stores will likely go out of business.

Undermining both of these transactions by the way is the internet. Star City Games, TCG Player, eBay, and Craigslist all serve as competition to any game store buying and selling singles. It should be virtually impossible for a brick-and-mortar store to compete with the pricing flexibility of the internet.

Last but not least we get to tournaments. Friday Night Magic should be the same almost everywhere, as should Prereleases and most other events. When I asked people what they were concerned about the most with Twenty Sided closing for renovations the answer was almost unanimously “consistent tournament scheduling.” The simple fact that they could play Modern every Tuesday night or Legacy every Monday night was of the utmost importance.

The illusion of permanence is one of the major philosophical ideas I’ve come across and it’s one of the biggest problems with the Magic community (among many others)

But where is the competitive advantage in having a consistent schedule? Almost nothing prevents Joe’s Comic Shop from copying Mike’s Comic Shop’s Magic schedule verbatim save the ability to host the same number of players.

Monopoly Money

So why do so many gaming stores succeed on this model? They don’t have a unique product to sell. They can’t provide competitive pricing against an online marketplace. They can’t build a better tournament schedule. So what gives?

Monopolization.

How often have you heard the plight of a gamer who only has one store to go to that’s within reasonable driving distance? Many stores rely on the fact that they have a monopoly on the local community. I don’t want to say that Twenty Sided relied on this monopoly as well, but they certainly had it.

This is what you have when you rely on a geographic monopoly to sustain your unsustainable retail gaming business model.

When Twenty Sided opened they were virtually the only game in town (not to be confused with Somerville, NJ’s “The Only Game in Town” which is also literally the only local game store in a very large area of one of the most densely populated states). Neutral Ground was long gone. Jim Hanley’s ran tournaments but couldn’t sell singles. Local club gatherings like Fat Cat or the public space meetups couldn’t sell sealed product or report to the DCI. Kings Games was… well we don’t talk about Kings Games around here.

A monopoly means you don’t need competitive advantage because there’s no competition. Sure there was the internet but if you needed sealed product, gaming supplies, singles, and a place to play all under one roof then Twenty Sided was the place to go.

Over the past few years this monopoly has been disappearing. Geekery HQ, which opened last weekend in Astoria, Queens joins a long list of stores (including Montassy and the Uncommons) which are taking away community share from Twenty Sided.

Because no store has a true competitive advantage, people will go to whichever store has the formats they want to play, or is located closest to them. If I live in Queens why would I go to a store in Brooklyn? Even if Twenty Sided had never closed for renovations and was still running Legacy every Monday night, the existence of a store in Queens providing the exact same tournament on Monday nights means people would inevitably leave Twenty Sided’s community for a more local one.

Brick and Mortar

I’ve been somewhat misleading you for the past 1,300 words and for that I apologize. Twenty Sided Store most certainly has a competitive advantage over other game stores but it isn’t the traditional competitive advantage of the retail world. What Twenty Sided is able to provide is a physical space that caters to the gaming community and a level of customer service that cannot be matched.

Serfdom sucks no matter which castle you serve so you might as well serve the castle with the nicest wall tapestries. I dunno where I’m going with this metaphor but this was the best card I could find to represent “brick and mortar” so let’s just run with it.

The reason gaming stores fail is because people treat them like a retail business. They spend money on product from distributors and then make a profit by selling that product at a retail location. Tournaments are a way to attract people to your store to buy your retail products. There are a number of problems with treating gaming stores like retail businesses but most notably is the complete lack of a competitive advantage. So long as Wizards of the Coast is the only product creator and sets all of the prices, there simply isn’t a lot of flexibility on advantage.

The reality, and the epiphany that I came to while researching this piece, is that a gaming store is actually a bar. A bar is not selling you alcohol. The moment you walked into a bar you were already sold on alcohol (or whatever beverage you decide to drink). What the bar is selling you is their service and their space as a place for you to socialize (or perhaps enjoy some private time). A gaming store is this exact thing. The moment you walked into your local game store you were already sold on games. But you went there for their service and a space to socialize.

That’s the sound of a light bulb turning on in my head every time I think about this epiphany.

I don’t know if this is the exact same line of thought that brought the owners of Twenty Sided to renovate their store and redesign their business model. It very likely isn’t because my understanding is that the store owners have had this plan for a very long time now. However, the reality is that Twenty Sided has recognized the problems of the Magic the Gathering Retail Business Model and are moving away from it. Very, very far away from it in fact.

When Twenty Sided Store reopens it will be focused wholly on two things: space and service. Sure there will still be a retail component to the business. You will be able to buy board games and card games there. You will be able to buy and sell Magic singles there. But the focus on that will be as a service industry, not as a retail industry. Bars still need to buy alcohol from distributors and sell it to their clientele but they’re not retail businesses.

The Game Store of the Future

The local game store of the future is a bar that serves gaming. It doesn’t sell games. It doesn’t organize games. It serves gaming. Maybe there will be dive gaming stores, and cocktail gaming stores, and sports gaming stores. When you rethink your local game store as a bar that serves gaming you’ve totally changed the way you can structure your business but more importantly you can actually provide a service you have complete control over.

If your local game store is still focused on being a retail game store that runs Magic tournaments then I recommend you find some investors and open up a bar that serves gaming.

I can’t predict the future but if I were a betting man I would bet that this time next year Twenty Sided Store will still be thriving and will still be the premiere place to play Magic in NYC.

Wallpaper of the Week

I can’t believe this art exists. This is the thought I have every time I look at this art. I am refusing to put it on my desktop.

Grade: F

What We Learned is a weekly feature here at Hipsters of the Coast written by former amateur Magic Player Rich Stein, who came really close to making day two of a Grand Prix on several occasions. Each week we will take a look at the past seven days of major events, big news items, and community happenings so that you can keep up-to-date on all the latest and greatest Magic: the Gathering community news.

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