For nine months we scraped, demoed, and clawed to keep the L5R CCG alive. Making the L5R CCG profitable was Mount Everest, we were on the hardest part of the ascent, and we were looking for an Angel Investor to help us reach the summit (and not die trying).
Set the Wayback Machine for 1996. Magic: The Gathering released in 1993. By 1994, dozens of companies had cloned it, mostly failing. In 1995, the companies that actually tried to make good games based on the Magic concept started to bring those games to market. Retailers, for a brief exciting period, bought everything. Collector/players bought everything the retailers stocked. Nobody wanted to miss out on the opportunity to get rich speculating and trading on the next Magic. People who had bought cases of Alpha Magic were buying cars (and sometimes homes! with the profits). Every Magic expansion was sold-out to pre-orders. A number of high-profile games hit the market to huge sales; games like Star Trek from Decipher, Jyhad, the follow up to Magic from Wizards itself, Illuminati: New World Order from Steve Jackson Games, Spellfire from TSR, etc. Tens of millions of dollars flowed into the tabletop gaming market – in the two years since the first release of Magic, a safe estimate is that the total size of tabletop gaming grew by a factor of 10x.
Then it all came crashing down – hard. It started (and it always starts) with the consumers who realized that they were spending money on worthless cardboard; there wasn’t going to be a “secondary” (i.e. speculative) market in most of these games and they stopped buying anything they didn’t like playing. Magic proved so dominant that if you were a “serious” player looking to make money in tournaments it was the only game worth focusing on, and the tournament scene for even some popular games collapsed. The result was retailers who had ordered enormous amounts of product suddenly not being able to sell those cards and thus becoming unable to pay their distributors and going out of business.
Dying retailers – especially big established retailers – started to kill distributors. It’s pretty easy for a retailer to switch distributors, but when a distributor dies, it dies owing a lot of money to the publishers. So a bankrupt distributor sends shockwaves through the publisher tier. A lot of companies that had been formed to make CCGs vaporized.
That was the environment we were faced with as we tried to keep L5R alive – a wasteland of stores in crisis, players becoming cynical overnight that any CCG other than Magic was worth their time, and distributors fighting daily to make payroll.
Enter Bob and Arnie. Bob was a toy guy who had spent some time at TSR during the heyday of RPGs and had a very keen insight for markets that were exploding and even though the first CCG crash had happened it had not killed Magic it had in fact strengthened it. Bob knew people who were willing to take risks on ideas like the CCG business. Arnie was a close friend of Bob’s who had been handling the finances for huge companies for decades and was retired but willing to lend his gravitas to our little venture.
Bob brought in just enough money for us to form FRPG Five Rings Publishing Group and get Shadowlands printed and out the door. He also had plans to bring in more angel money to allow us to grow quickly and run FRPG like a true business not a shoestring gaming company. We opened offices in Seattle. Hired our people, and we were off to the races.
The plan was simple (on paper). We had succeeded in finding a market of players who would support L5R with both purchases and with tournament play. Our game was different enough both in game mechanics and in style & genre that we had won a “segment” of the audience on which we could base a reasonable future projection of growth. This proved that while things looked truly grimdark for the CCG business as a whole, there could be and would be segments in the darkness that would shine brightly.
Our goal at FRPG was to find those segments. We did not think we could become as big as Magic – become a “dominant” game. What we thought was that we could grow L5R at a reasonable pace, and we could start new games that shared some of L5R’s DNA and start growing them too, and that the result would be a company that in aggregate could potentially scale up to be a true competitor to Wizards of the Coast. What they did with 1 game, we would try to do by combining 10 games together under one roof.
We had a great staff at FRPG. Phil & Mindy (Sherwood) Lewis handled customer service and online sales (did we mention that FRPG rolled up Ryan’s embryonic online gaming business RPG International that had been the glue that brought he & I together?) We had Danny Landers (now Block) who had experience at White Wolf and ran our marketing. We had a delightful secretary / accounting clerk named Heather Beiderman who handled all the routine day to day business tasks that have to be done to make a company run. We had Al Skaar and Blake Beasley – two of the best artists we’ve ever worked with doing graphic design for cards, packaging, rules, etc. We had Scott James Magner who filled the important role of doing whatever was needed when it was needed. Finally we had a growing network of volunteers and fans who were spread out around the country running demos in stores and conventions and running tournaments wherever L5R fans gathered.
As noted before my job was sales. During this time frame we still only had one game and I was responsible for keeping L5R sales on track. Thankfully the hard demo work we did to keep the game alive while we were looking for funds to print Shadowlands had started to pay off.
Ryan’s job was development. Our plan was to build FRPG on the “studio model”. Our plan was to find more “L5R” segments; places where we could design a unique game experience matched with a world or a genre or a brand that had or could build a stable community of players. His job would be to keep all the studios working on those games on schedule and delivering great game play and visuals.
Bob’s job was to find those angel investors and to use his contacts to get us a shot at some of the better hollywood licenses. But mostly his job was to find the investors.
Ryan and I had built what we thought was an amazing plan grow FRPG into the #2 CCG company behind Wizards of the Coast and AEG would grow as the featured studio and licensor. We just needed Bob to come through with the capital.
The fires were burning and the engine was running. Little did we know that Bob had plans to throw rocket fuel on the fire and super charge our plans. Things were about to get crazy.
NEXT WEEK- When your new partner says. “We are going to run your money towards a cliff.” to your potential investors. What happens next?