On Thursday, board game publishing giant and international distributor Asmodee held its first Annual General Meeting since separating from erstwhile parent company Embracer Group, updating shareholders on its progress against a new long term growth strategy. Some parts of that strategy chime closely with the troubled AAA videogame industry - plans to grow by acquiring other companies, and by pumping up a few IPs into mega brands.
Asmodee is an internally diverse business that makes money from more than one layer of the tabletop gaming hobby. It contains dozens of board game development studios, and is the distribution partner for many more, in many territories around the globe. It owns, directly or via subsidiaries, many of the best board game brands in the world, including Catan, Ticket to Ride, and 7 Wonders.
Asmodee emerged from the wreck of Embracer Group carrying debt worth roughly 2.3 times its annual earnings before tax, interest payments, and other deductibles, but also holding a cash stash of €100 million to fuel future mergers and acquisitions. In June it purchased the massive Zombicide IP from the foundering CMON games, and was able to provide good continuity of supply of the game since much of the stock was already consigned to its warehouses.
An over-exuberant acquisition policy was one cause for the collapse of Embracer Group. But Asmodee has good reason to think it is insulated from some of the risks inherent in acquisitions. Asmodee has enviable intelligence about the board game industry thanks to existing relationships as a distributor, and already has working relationships with the businesses involved.
This isn't directionless acquisition, either. Asmodee plans to turn more games into household brands. In the Annual General Meeting presentation it pointed to train-tripping board game Ticket to Ride as an example of how the firm can amplify a successful game into a brand.
The presentation on this point - which you can watch online - is rather thin on details, but the strategy makes sense. Asmodee has turned Ticket to Ride from a single game into a product line, offering simpler and more complex games to catch more of the market, and expansions for fans who want to dive deep. It's done this without alienating or burning out the designers and development studio working on the games.
Putting these together, we have Asmodee's vision for the future of the industry: it will look for games that catch buzz, buy them or their studios if it needs to, and amplify them with marketing and expansions to reach an ever larger audience, hopefully turning them into mega brands.
This has troubling similarities with the triple-A videogame industry. There's the creative conservatism of putting more money into sequels rather than entirely new properties; and a certain hubris in expecting that, given enough money, it's possible to create a mega-hit.
Unlike the videogame industry, where repeated rounds of layoffs and studio closures are the predictable outcome of ever-ballooning projects, I don't think that doubling down on big games is a ruinously bad idea for Asmodee. Investing in a single videogame for three years has no off-ramp - it needs constant cash until it's complete before it has any chance of returning a profit. Ramping up a board game into a brand involves many far smaller projects, each one able to return some of the investment capital, and with many opportunities for course correction.
Asmodee CEO Thomas Koegler remarks in the presentation that the hobby board game industry remains 'fragmented'. He's correct - it's full of small firms working with small budgets. The opportunity for Asmodee is real - it can shuffle IPs around so studios can specialise on a narrower band of games, and leverage economies of scale in product buying and marketing, to make more money from existing games than their current owners can. But if it does end the era of fragmentation, Asmodee may usher in an era of homogeneity that I am not deeply thrilled by.
What do you think? Are there other risks from the videogame industry that will apply to board games? Or are they too different for that to be the case? Let us know in the official Wargamer Discord community.
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