On 2010-12-17 president of Avalanche Press, Mike Bennighof, posted Ode to Finance, a strikingly clear look into AP's financial situation, and made a direct plea to its customers for support during this time of trouble. PGers are a reasonable lot, and many told PG-HQ that they needed more convincing before they'd answer the call.
In response, Dr. Bennighof agreed to sit down with PG-HQ for an unrestricted interview, the first of its kind really when it comes to Avalanche Press.
Let the record show that every question I submitted was answered in full, and no topics were dodged!
For history's sake, the original article posted on the company's website has been preserved in PDF form here at PG-HQ.
When I first approached you with my idea for a Panzer Grenadier fansite, I must admit I was deliberately vague on the details. I firmly believed that PG-HQ would be a real boon for the series, but at the same time I was fearful that complete disclosure would result in condemnation. I figured it'd be harder for you to hate us if we had already launched. So, let me begin this interview by apologizing for that!
I guess I'm not as stupid as I seem. I knew what you had in mind. PG-HQ is exactly what I expected when I blessed it, just a lot better executed.
I don't really know many other wargame publishers well at all except Doc and Callie Cummins, so most of my professional contacts are in other segments of the game industry like RPGs. And sites like PG-HQ are fairly common over there and credited as powerful community-building tools, so I understood the concept right away and was glad you took up the challenge.
I've wanted to interview you from the beginning, but didn't want to ask for the Granddaddy of All Interviews too early in the site's life. Things change, though, and your voice - unfiltered and direct to the fans - has never been more needed. With that in mind, it is an honor and a pleasure to sit down with the father of PG.
Well, thank you. I came up through newspapers, back when those things existed, so I'm used to the notion that your brilliant work today is lining a birdcage tomorrow. I guess Panzer Grenadier is an achievement worthy of pride, but the truth is, I don't think of it that way. It's my craft and my profession. I'm pretty sure I've never put my own name on a game box.
But I want that craft to continue, and in particular, this series. It's brought fun to a lot of people.
Daily Content, April 21st 2009: Ode to Moving recapped the mess that escaping VA Beach, VA had become. Now here we are ~600 days later with Ode to Finance. Things were supposed to turn around in Alabama. Cassino '44 and Fall of France are both spectacular. How did things get so bad?
It's not a case of things getting bad so much as one where they never were all that good. We were on the fast path to dissolution in Virginia, and a good argument can be made (and was made) that we should have folded up at that point. Recovery's not a simple matter of "Okay, we moved, it's all better now." The Virginia overhead was just about exactly five times what it is here, in terms of rent and personnel. A lot of those bills followed us here: for the first year in Alabama, we were still paying off the lease on the Taj Mahal. Brian Knipple had guaranteed it personally and I wasn't going to leave him stuck with that huge payment (the original landlord there, to put it bluntly, rolled him when the lease was negotiated – it was a terrible deal). There are a number of older bills getting paid off in installments, mostly printing and shipping. In short, the Virginia plant didn't just disappear; though reduced considerably, its stack of debt remains.
Combine that with the disastrous state of what we received in Alabama (as just one example, orders had not been shipped for weeks if not months), and Lys Fulda's desire to head for bankruptcy at that point (delivered with great passion) had a lot of sense to it. The company is about the only real asset I have, and Alabama's bankruptcy code is charitably described as punitive. I didn't want to punish my children for poor business management; she argued that keeping the company did just that to her godchildren.
Some years back I worked for another game company that collapsed thanks to the boss' alcoholism. I was determined not to do the same thing here, that promises made had to be redeemed. It's probably not a rational path but then publishing these things for a living isn't exactly a well-thought-out career move, either.
So how did things get bad at this particular point? Because of those old debts and the long recovery process, there really isn't a cash reserve on hand. The term "perfect storm" should be banned from all human languages, as it's used to excuse poor decisions, and that's not what happened. It didn't take a lot to create a problem: some minor glitches delayed the flow of new product (a couple of illnesses, a problem product taking up way too much staff time than its budget allowed, that sort of thing) and those snowballed. That wouldn't have mattered much by itself; these things always happen and always will. But then wholesale orders fell off enormously in late November and early December. I don't have a good answer for that last issue, but the combination put a lot of pressure on cash flow.
Doug McNair, who's played a big role in developing PG games for years now, recently left AP. That news, probably more than anything, has the faithful worried. Given a chance to shine some light on this and put any worries to rest, what would you like to say?
Doug had done this for five years and needed to do something else with a larger and more secure paycheck. He had the opportunity and took it, and I agreed that he should. Doug did great work here, but five years is a long time. Working in the game industry is not a matter of playing games all day long. It's stressful and it's not often a whole lot of fun. When Doug gave notice he initially wanted to work through the end of the year, but later asked to modify that.
There's no reason for the faithful to worry. A new developer's in place, John Stafford. He designed the modern Panzer Grenadier sister game, and the Infantry Attacks game set in Palestine, and was pretty much the co-developer for the Infantry Attacks rules. He's very good and very eager, and knows the system very well. And as a very mature game system, there's not a whole lot of call for fresh rules development. We're not interested in re-inventing the wheel every time out. Players should be able to pick up a Panzer Grenadier game and start in immediately.
That was a Doug mantra, and one with which I've always agreed. Doug was reacting in part to a game designer of our acquaintance he calls "The Ego," but the principle is right on. These are supposed to be fun and they're supposed to be games, not showcases for the designer's cleverness. I don't care if you "admire the design," I want to know that you had fun and maybe got a little historical insight.
The scenarios in a new Panzer Grenadier product are rarely "played" in the traditional sense. Sitting in the basement with your friends drinking beer, eating chips and rolling dice is fun and diverting, but it is not testing. Real testing's hard and lonely. The scenarios are laid out and checked for accuracy: make sure they reflect what the designer intended, make sure each side has a reasonable chance to win. The moment you pick up a die, you are playing, not testing. At this point in the series' life, Mike Perryman and I write almost all of the published scenarios, and we've each done this hundreds of times, so we already have a pretty good idea of how they should be. The developer makes sure we actually did that as we intended.
I still value Doug's input and seek it out; this interview was his idea, as was the whole concept of approaching the hardcore fans for assistance. Panzer Grenadier is in his blood and I suspect that once he's comfortable in his new work he'll be back. Actually, I'm pretty sure he will, but I don't know when that might be. He did not part on bad terms and is always welcome here.
Keeping a full-time developer on the payroll was an unaffordable luxury as the company shrank, but Doug had made sacrifices and done nothing wrong so I was not willing to lay him off even though logically I probably should have. Loyalty is a forgotten concept in this world and it's not one I abandon lightly. But he relieved me of having to make that tough choice, and I'm really grateful for that.
Instead we'll use a stable of developers, much as we do game designers, working on individual projects. John Stafford will handle Panzer Grenadier and the Infantry Attacks games he doesn't design himself, and the other series will get their own developers.
Lys left earlier this year, and of course Doug several weeks ago. Would you mind telling us who all works for AP now, and what their particular responsibilities are?
At this point we're at four: myself, Susan Robinson, John Phythyon and Janet Tompkins. We'll hire a second warehouse position early in the new year, as I really can't be spending time on the shipping floor. I'm working to bring back a popular former staffer in that role.
Right now John handles sales and marketing, Susan is in charge of production and HR, Janet does customer service, order processing and shipping. I'm left with everything else plus I'm the lead creative. It's way too much.
The company desperately needs a competent business manager, and I am not that person. I'm hoping to get Phyth to take that over this coming year. I don't need to be running Avalanche Press any more. I could not convince Lys to move down here and take that over, and she'd stayed here way longer than she ever intended simply out of friendship. I couldn't impose on that any more.
I had a girlfriend in my newspaper days who would accuse me of "thinking you can always write your way out of trouble." She meant that I'd count on turning in a great piece to make the boss forget what I'd called him the day before – and amazingly, it usually worked. I still have that sense and it's probably not a very healthy impulse. I can write 10,000 to 12,000 words a day or design 8 to 10 good Panzer Grenadier scenarios, if I'm not doing anything else. And that's what I need to be doing.
Janet's brand-new, replacing Jane Ehrhardt, who was head-hunted by a social media company with much deeper pockets than we have. Basically she now pretends to be other people on twitter and Facebook and is really good at it.
Once we're back at five, I don't anticipate any new hires. We'll contract out development and artwork, and keep the company as lean as possible.
Turnover's inevitable. Over the years Avalanche Press has included just about the full spectrum of humanity: Catholics, furries, Goths, Hispanics, Methodists, gays, African-Americans, Pacific Islanders, Communists, lesbians, Bengals fans, single mothers, Republicans, barbershop singers and on and on. That trend will no doubt continue.
Once and for all, could we have a list of PG titles that are more than just names in the air? And the real current status of each?
Right now there are two boxed games and three book supplements actually under way.
First of those would be a book, Go for Broke, on the 442nd (Nisei) Infantry Regiment and its associated units. Mike Perryman finished the scenarios some time back and wrote a lot of background as well, and John Stafford's working over the scenarios. The counters are in the warehouse, so I'd like to have this out the door in the next couple of weeks. Susan and I both working in the warehouse definitely held this one back.
We have another book, called Winter Soldiers, that hasn't gone into pre-order. The Perryman scenarios are either all or mostly done (I think they are but I'm not 100% sure) and I've written most of the background. This is just a straight scenario book, no counters, melding Battle of the Bulge and Elsenborn Ridge to provide the scenarios that weren't possible with just one of the boxed games because the terrain or pieces were in the other box (the SS attacks on Bastogne or Peiper's river crossings). This one needs to be fast-tracked.
Then there's a boxed game, Kursk: South Flank. Scenarios were by Perryman, and Doug turned them and the special rules in some time back. Christopher West's handling the maps. Boxes are on order. Counters are ready but have not gone to press. Maps will go to press last, as that's a pretty fast process.
Then another book, Panzer Lehr. Counters will print with South Flank. Perryman's scenarios are in, I haven't finished its background but that's not hard.
There's the other boxed game on the pre-order list, Kursk: North Flank. The Perryman scenarios are in but need to be worked over, and the counter manifests are ready but haven't finished layout. They need one or two drawings, but that's not a big deal.
Mike Perryman's also turned in a Cobra boxed game some time back, and that might be the next one we do simply because it's there. He is a scenario-writing machine and best of all he gets better each time out.
Dave Murray's sent in the draft of the third Campaigns and Commanders book, this one all about Americans in France 1944, but I haven't looked closely at it yet.
At some point there'll be another download. We over-farmed the Panzer Grenadier download fields for a while so I don't want to do too many of these, and Indian Unity sold far less than To Hell With Spain or especially Confederate States Navy. Kokoda Trail was very popular with its added maps instead of counters, and we have a couple of similar books in mind.
After that, I don't know. Perryman's hot to do a Korea game and I have no objection, and it would form a nice bridge to the modern Panzer Grenadier sister series. Whatever comes next is going to be a mercenary choice: the title Phythyon and I agree will be the most profitable and easiest to turn around quickly. Phyth is a great believer in alternate history titles, and while I know it's anathema to some of the Panzer Grenadier hardcore there's a (relatively) large market for it; the Grossdeutschland '46 download, a fantasy piece, has sold twice what Indian Unity, a historical one, did this month despite being a much older product.
I was not one of the people who preordered Cassino. And I must admit I looked on with a bit of envy as that game just grew and grew before release. The product delivered was leagues better than that originally announced. Even so, AP honored all preorders at the original price. This is great for the customer, but must have hurt the company. Yet here we are, just one year later, and the same thing has happened with Kursk becoming Kursks. At what point can we start calling this self-destructive management?
It certainly did hurt the company. Moving the print work from China to the United States was the biggest factor in Cassino's performance as a product. Splitting Kursk helps avoid that same trap.
Self-destructive management? Probably would be if it went on. Every game has to have a production budget that it can't exceed, and I let Cassino break through its cost envelope. The real problem lies in the very concept of pre-orders, and not in the projects themselves. If Cassino had not been offered for sale until it was complete and off to press, as a $99.99 game from the start, it might have made more money to date (on the other hand, we might not have a lot of those lower-priced sales at all). Lys pressed hard for the low price point, and she had good reasons, and it was originally priced with Chinese printing.
That last bit is something the fans may have missed. We had huge margins printing in China, and the price model actually did accommodate an increase in components. Unfortunately, price was about the only positive of that experience and other problems (shipping, rejected components, general sleaze) ate all the savings and more.
Splitting the large older pre-ordered games that could be split was a good move. August 1914 made money when I was fearful it would not. So calling it self-destructive is an overstatement; the apparent problem looms large because we still have pre-ordered games on the books initially priced with Chinese printing. When we can finally bring out totally new boxed games, without a pre-order period, that won't be the case.
Would it be fair to call these major unpublished boxed games with piles of preorders an albatross, or several albatrosses, around the neck of AP? How does this problem get solved?
Yes it would.
There's really one solution: publish them. Because we get the bulk of our sales through the wholesale sector, there is still a lot of money to be had when the games are released. And August 1914 showed that they will also receive a considerable surge in consumer purchases. We'll make less than we would without the pre-order obligation, but they are still worth doing.
To get there, we're going to either need to continue the series of books and downloads or have a great response to the current fan appeal. The 1866 game isn't likely to make a whole lot of money, but it's mostly paid for so it doesn't really count. South Flank will help a lot, and it needs to be on the presses now – and for cost efficiency, it really needs to be accompanied there by the second Infantry Attacks game.
The biggest problem is with the former Classic Wargames: Red Desert, Army of Lappland, Fall of Empires, Hearts of Iron and the 1866 games. All of them were conceived as titles we KNEW going in would not be great sellers in the wholesale channel. And now we're stuck with them.
It's disturbed me that there's one point we haven't seemed to get across clearly, even though I've stated it more than once as bluntly as I possibly can: we don't do the books and downloads "instead of" the boxed games. Boycotting them to somehow force us to do boxed games instead is counter-productive if the desired outcome is more boxed games. It only makes it that much harder.
Those obligations have to be met, and there's not a magical pile of cash on which I can draw. The assets available are the company's stockpile of existing product, and my own ability to write and design at a very high rate of productivity. I am one of the fastest hack writers known to mankind.
Can you take a minute to explain the pricing to us, Mike? 1940 - The Fall of France is a hot item. A quick surf around the internet reveals one bulk boardgames e-tailer selling it for $45.49, another for $54.95, and finally AP's store has it for $74.99. While I think most serious gamers have an e-tailer they're particularly fond of, in the end we still all want as much of our money as possible to go where it should - into the creator's hands. Why can't AP match these prices straight-up? It's not retail if no other retailers are selling at that price, right? Buying games at full retail with no sale markdown from the AP store sometimes feels akin to giving to charity!
That's pretty simple: if we made $45.99 the retail price on our site, our wholesalers would demand that we sell it to them at $18.40, and that e-tailer you mention would sell it at $27.99. Distributors would then demand a wholesale price of $11.20, and the e-tailer would sell it at ... in a never ending downward spiral.
Discounting is the scourge of the game industry, and many other manufacturers have broken their lances on that windmill. It's actually one reason we do downloads: you can't get those off a discount site.
There are wargame makers who've solved the problem by refusing to sell to distributors at all, either bluntly telling them to go to hell or through setting their wholesale prices higher than industry standard. That brings its own set of problems that may or may not be worth the trade.
A vicious war is going on behind the scenes between the deep discount guys and other retailers, who have developed some pretty nasty tactics to fight them. I believe deep discounting will become unsustainable as a business model very shortly, without any action on our part.
On a related note, AP does offer many excellent discounts throughout the year, but as the road to Hell is paved with good intentions, some buyers invariably purchase just before a sale and feel duped. Would it be possible to move to a somewhat more systematic and predictable series of sales? Or would that screw AP on the cash flow issue?
I'd rather not do them at all. Moving to a set schedule would screw the cash flow in multiple ways. First off, a predictable series requires predictable cash flow, and we do not have that. If we had that, we probably wouldn't do many special sales at all.
How about going to a no-commitment PXXX system? It works for so many other publishers in the industry. Granted, many of them aren't drawing their primary incomes from selling games, but still. As a trial you could switch one of AP's main series (PG, GWAS, SWWAS) over to a PXXX and say "listen, games are going to come more slowly for this series for awhile, and we're only going to publish the most popular ideas, but this will keep it alive..." and see what shakes out.
It's called the "ransom model" in the rest of the game industry and the broader publishing business, and it has its merits. We tried it with the ill-fated Classic Wargames, and it was pretty much a disaster.
For starters, many credit cards used for pledges turned out to be invalid when it came time to charge them. I think it was about one-third of them, but don't remember exactly. So no problem, contact the customer and get updated info, right? Nope. "Well, I'm not sure I still want that game. That's a lot of money. Let me think about it." In short, you have to make the sale all over again – and in the case of Alamein, the game with the huge number of bonked cards, the cash taken no longer covered production.
Another real problem with the model is the nature of the work. I design most of the games we publish, and a cadre of long-time freelancers do almost all the rest. Unless you're going to offer total vaporware, the game has to have progressed to a certain point before it's placed before the masses. In particular, they want artwork. They want details. They want to read all about the wonderful game and feel in their guts the fear that it might die unborn, and that its extinction would make them sad. The ransom model depends on emotional blackmail (the 900-foot-Jesus school of marketing: "pre-order this game or Jesus is calling it home!"), and there's a lot of preliminary work to be done before you can commence the blackmailing.
I have no philosophical problem with that. I do have a problem with putting in time and effort for a product that might never be sold. Every item I or my cohorts write and design needs to be turned into cash. Once the customers figure that out, and they will, then the emotional blackmail no longer works.
Finally, like you say, there's that whole "primary income" problem. We have to have a steady flow of production; that's the whole reason for the appeal to the fanbase. The ransom model doesn't accommodate that. Instead, it's built for a model where each product is treated as a unique business unto itself, subscribed much like a 17th-century trading expedition.
In Ode to Finance you state that Kursk: North Flank should have a 3K copy print run. Now I know a little bit about bulk production - the more you order the cheaper the per unit price, and that it's usually a tiered system so perhaps you only get the price break after every 1,000 units. But at this point in time do we really need 3,000 Kursks? Could we chop that to 1,500? Per unit costs would rise, the game would sell out faster, and you'd make less money per sale... but raising the cash to print would be significantly easier, wouldn't it? So what if it sells out and becomes a $200~$300 game on eBay. It could always be printed again, right?
Yes, we do need 3,000 Kursks and ultimately probably that many more. Now, we have a few tricks to lower that; we're not going to make 3,000 maps at once, or 3,000 sets of black and whites, or 3,000 slipcovers. The boxes are used for all new boxed games and reprints. So it's only the counters that get made at the full 3,000 initially.
However: we have to be ready for good sales, and not get caught in short supply. Some of the CCG makers in the past deliberately shorted print runs, but we're not that important. The customers will find something else and move on. Kursk will do better than 1940 or Cassino so based on their early numbers I think we need to be ready to ship 2,000 of them in the first 30 days.
Reprints are tougher to do in practice than they sound. The biggest reason for that is there's no surge of initial cash to offset the reprint cost, just a resumption of the steady backstock sales (and sometimes that takes a little while to restart). Retailers and customers talk a good game – we reprinted Battle of the Bulge when we did in large part because one retailer claimed he would order 100, and he ended up taking four. But an old title doesn't excite the same way as a new one does.
I fully anticipate Kursk will need reprinting – that 3,000 is already a chopped figure.
AP gets a lot of criticism on CSW and BGG for not allowing its products to be played over VASSAL et al. How bad do things get before you start reconsidering that position? Dan Verssen has been a pioneer in the pay-to-play VASSAL field. There are real options available for ensuring that the rights to play a module have been paid for. Scenario packs with DIY counters would be about 10x more appealing if they came with a VASSAL option...
I get raging e-mails periodically, along the lines of "Your games are garbage. And so are you. I hope you die and your company goes out of business. Then I can make modules for your crappy games and you won't be able to stop me. So fuck you."
That's pretty much a direct quote. And believe it or not, that sort of thing hasn't made me more willing to change the policy on such modules.
That said, we'd like to get into the pay-to-play business, there just hasn't been time to investigate it and set it up properly and recruit people to make them. Most likely it would be with series games/modules unique to the electronic platform, not translated versions of existing physical games. So we'd release a brand-new Panzer Grenadier module in cyber form only, though I like your suggestion of doing the downloads that way. I can say for sure there won't be a sudden announcement of "Open season on Avalanche Press games!" Once the toothpaste is out of the tube, it can't be put back, and I'm not willing to make that move just on a wild unsupported guess that it might boost sales.
And while I don't talk business with other wargame publishers very often, I do know for sure that at least one who's declared open season with a happy face in public bitterly regrets it in private. An RPG publisher I know once suggested using the ransom model on these modules: once fans have pledged a certain amount of money, the license is freely released. Wargamers tend to be more individualistic than role-players, and I doubt many would cotton to the notion of handing over money so some leech who didn't pay gets stuff for free.
Another problem is that I don't use them myself, nor does anyone who works here or is among our inside crew. I don't have a guide and the "fuck you" people aren't all that helpful in that regard.
Have you considered adding some themed non-wargame products to the webstore? I'm thinking mugs, mousepads, t-shirts etc. AP, if it's famous for anything, is famous for its excellent counter artwork... and it'd give people who have everything they want wargame-wise something else to spend money on to support the company.
We actually did that some years ago. Lys had some t-shirts made, and we ended up giving them away at cons. Previous to that, Peggy Gordon created a whole raft of Café Press items – coffee mugs, mousepads, all sorts of stuff. We did not sell into the double digits.
Avalanche Press has to survive by doing what it does: publishing games and books. We're looking to broaden that in the future, well beyond wargames, but knick-knacks aren't going to pay the bills. Only core product does that.
All in all, Mike, I like this conversation a lot better than what was hashed out in Ode to Finance. You've given us a clear look at the guts of AP, an honest assessment of the state of the PG series, and candid answers to a lot of touchy questions. I thank you for that. Any final words to rally the faithful?
First off, thanks for doing this on such short notice. I'm sure you had better things to do with your weekend. You've put a lot of yourself into the series and your site, and that's one of the reasons I can't allow it to be put in jeopardy.
So far the response to the appeal has been very good, and I'm gratified to see the comments added and some gamers even forgoing the discount coupon. Thank you all for taking part. We're still well short of our goal, and we wouldn't have made the appeal if we didn't all feel it absolutely necessary.
If we can get a nice flow of boxed product going, the future for the Panzer Grenadier series and Avalanche Press is very bright. I deeply appreciate everyone who's helping us secure it.