The impact of tariffs on board games
This could be a huge blow to small board game publishers. All board game publishers actually. Even the whole industry.
On May 10th, a new 25% tariff was imposed on Chinese imports of goods sold in the US, including board games and card games.
In retaliation, China announced that they will impose tariffs on imports from the US.
Most board games are manufactured in China. There are so few US-based board game manufacturers and they are known to have much higher costs and lower quality than their Chinese counterparts. They just can’t compete (at least not yet) in terms of infrastructure and labour costs.
Needless to say, this will have a big impact on board game publishers as well as gamers, who will likely have to pay a lot more for games in the near future.
The hope is that negotiations will continue and these, along with further tariffs, will not be in place for long, but nobody knows for sure.
Here’s an article with more details about the situation and how it pertains to board games: https://icv2.com/articles/news/view/43201/games-books-periodicals-toys-targeted-new-round-china-tariffs?utm_source=dlvr.it&utm_medium=facebook
Obviously, all board game publishers will have to have a close look at their expenses and pricing. This will likely result in games being much more expensive to manufacture, and with the thin profit margins in the board game industry, price increases will undoubtedly be passed on to the customer.
So, a game that now sells for $40 could easily cost $50 or more in the very near future.
While gamers may have to be more selective about the games they purchase as a result, publishers will also have to think harder about the games they publish, the components they use, and where they can keep costs down.
This may result in lower quality, cheaper components, and/or higher sticker prices. Each publisher could approach this in a different manner.
What about your friendly local game store (FLGS)? They may find it harder to keep afloat if they’re selling less games and their inventory doesn’t move quickly enough.
Game designers could also be greatly impacted. Publishers may need to focus on publishing fewer games or be more restrictive about the games they sign, particularly if the components cause the price to be too high. This could make it harder on game designers, who may already have a tough time making a living at this profession.
However, there’s one group who will feel these changes the most.
Who will be hit the hardest
Let’s say you’re a publisher or a game designer or who has decided to put your game up on Kickstarter.
You’ve spent money on amazing art, stunning graphic design, a great Kickstarter video, marketing, and everything else you need to be successful. Your campaign has just finished, and it was a great success.
You had priced your game based on the best manufacturing quote you received from a Chinese manufacturer (both in terms of cost and quality), crunched the numbers, and felt good about being able to deliver to your backers and make a small profit at the same time, which could potentially be invested in the next print run.
Now imagine your manufacturing cost being increased by 25% or more.
If you’re really lucky and have planned well, you may be able to jump on that original quote you received, however, they always have a short window, typically 30 to 90 days from the time you receive the quote. But this will of course impact the manufacturing company negatively. If your quote has expired or you don’t have everything in place in order to take advantage of your original quote in time, you’re in for a big surprise.
In a lot of cases, you won’t have much choice. You’re going to have to pay the higher price.
So, what do you do?
If you’re in this situation, you do have a few options, however, none of them are really ideal.
1. Suck it up and pay the higher manufacturing price
You made a promise to your backers and you want to deliver. You move ahead, despite the fact that your profit has shrunk drastically or maybe even caused you to take a loss. That second print run may not happen now and if your margins were already very tight, this may even be the last game you can afford to make.
Hopefully, if you’re in this situation, you’ve built in a buffer in case anything went wrong or any costs were higher than expected. It’s always wise to hope for the best and plan for the worst.
2. Make changes
You could look at ways to reduce your costs through fewer or cheaper components, or skimp in some other way. While this may save you some money, it’s not likely you’ll be able to reduce the manufacturing cost back to what was. And if you did, backers would certainly notice this, and not in a good way.
You want to produce a good quality product and build a following. You want your backers to be happy about supporting you and get exactly what they paid for. This will greatly increase the chances of them backing you again future.
3. Look for another manufacturer
It can’t hurt to get more quotes from other manufacturers. However, if you already had the lowest quote possible, you may not be able to find anything much better. You can look to manufacturers in US and Europe, but you’re still likely looking at a much higher cost.
Still, it’s worth shopping around and seeing what other options are available. There may just be another good manufacturer out there who costs a little bit less.
4. Ask your backers for help
You can always ask your backers to pay a bit more to cover the additional costs. However, this is not likely to go over well. While you may have some people willing to pay a bit more to make your game a reality, you will likely anger many other backers. They’ve paid an agreed upon amount to get your game. Asking them for more money is not an easy thing to do, nor something they will be happy about hearing.
5. Go back to the community
One approach could be asking your backers for their opinion on the situation. If you are open and honest about the situation, you may get some great suggestions or offers that will help you in some way.
Of course, this could also backfire if it’s not done right. You’ve built a community that is passionate about your game and wants to see it become a reality. Engage them and keep them involved. Look to them for support.
If these changes are going to bankrupt your company, you can always consider refunding your backers their pledge.
However, this does come with some substantial costs. Kickstarter takes 5% of all funded projects. Their payment partner, Stripe, takes an additional 3-5% on each transaction. You’ve probably also paid for at least some of the art, graphic design, and other production costs. So, you’d definitely end up in the hole. Maybe just not as deep.
We all hope that that these changes will not have a huge impact on our board game community and that negotiations will continue and result in the tariffs being pulled back. Until then, we’ll have to see how this plays out.
What other options would be worth considering in this situation? How will these tariffs potentially impact any of your plans?