No matter how involved you are in the board game hobby, you’ve no doubt been hearing a lot about tariffs lately. It’s an issue that’s been dominating the news in general, and it’s been particularly relevant to our industry. Just this past week, we’ve seen reports of how they are leading to layoffs and closures among tabletop publishers. As we head into the launch of our next big Kickstarter campaign for Battle Monsters, we felt this was an important time to address our fans about all of the steps we’ve taken to deal with the situation and why we are well prepared to weather the turmoil.
Where Things Are
What time is it? Which way is the wind blowing? As of the time of writing this post, the tariff on board games being imported from China is 145%. This is a tax that we pay when the games reach a US port from China. The amount is calculated on the cost of the goods. So this tax more than doubles our cost. By way of example, a standard Unmatched 4-pack has a manufacturing unit cost of around $5. When it reaches port, we will owe roughly $7.50 in tax, bringing the total to $12.50. Mind you, this cost does not include other expenses incurred bringing that game to market, such as design and development, illustration, freight, marketing, etc. We have had to manage tariffs before, but the current rates are unprecedented and, on their face, not promulgated with any basis in reality.
The fact is that the large tariff numbers are a problem, but the larger problem is the chaotic nature in which they have been rolled out and communicated. New rates seem to be announced and rescinded at random times and through random channels, whether it’s on social media or in response to a reporter’s question. We have seen statements of intent that were not followed through, and we have seen rapid increases seemingly decided on the fly. This haphazard approach is layered upon an international freight ecosystem that is already convoluted and antiquated.
I don’t want to get too far into the weeds on tariffs generally, and others have written in greater detail if you want to learn more. But, in summary, it is a massive challenge.
Putting In the Work
When Rob and I started the company in 2016, our goal was: “2-year company in year one; 5-year company in year two”. It was shorthand for our mindset to approach the business in a professional manner. We had both dabbled in self-publishing at various times, but we couldn’t handle things that way now. Rob had just left Hasbro after an illustrious 14-year career, and I had just sold my law practice after 20 years roaming the halls of justice. We had families and employees to support. We wanted to be running Restoration Games until we decided to retire.
At the outset, this meant investing in our team. We brought on veterans with years of experience in graphics, production, and marketing – not just in tabletop but across a range of industries. Rob led the design. I handled the legal and the business side of things. This gave us a lot of institutional knowledge to avoid some of the mistakes that new publishers can make. We were also very careful about which outside vendors we partnered with. We went with companies that had long track records and excellent reputations for fulfillment, freight, manufacturing, and more. In the end, this provided us with a rock solid foundation to pursue further growth.
Over the next several years, we continued to grow the team – now 16 strong! We added key members in project management, sales, logistics, and customer service, as well as strengthening our design and graphics departments. In the same way we approached everything, we were thoughtful and deliberate about who we added. We looked for stars with the right skills and, more importantly, the right fit. One of the things I’m proudest of is that we’ve never had anyone quit. It speaks to the strength of our culture.
During that “start-up” phase, we were less concerned about profits and more focused on building a healthy company. In the past couple of years, with the team in place and in the wake of the disruption caused by the pandemic, we realigned our goals. We started focusing on efficiency, cost reduction, and diversification. If the foundation was the bones of the company, we were now getting on a vigorous cardio routine.
In that time, we have: deployed new project tracking software, built up our cash reserves, obtained a credit line, renegotiated existing vendor agreements on more favorable terms, entered into new outlicenses for international, role-playing, digital editions, and accessories for our games, revamped our website and online store, expanded our Blue Ribbon retailer program to increase direct sales, and so much more.
This isn’t to insinuate that other publishers, who are having more difficulty with the current situation, aren’t operating responsibly. I can’t speak for them. I don’t know their specific circumstances. All I can do is tell you about ours. Likewise, it is my hope that the negative news coming out of these other publishers doesn’t reflect on us. We will continue to work with our fellow publishers to improve the current situation and brainstorm creative ways forward.
What the Future Holds
All of these efforts have led us to a point where we are able to manage the current situation and deliver the same level of quality and service that our fans have come to expect. That is not to say that we are continuing with business as usual. We are planning on raising prices on selected products. We previously had online exclusivity periods, where some of our games were available earlier on our website and with exclusive promotional items. We plan on using this approach with more games and for longer periods. The improved margins on direct sales and crowdfunded projects are a critical way for us to maintain our cashflow even in the face of uncertainty.
We are launching our latest Kickstarter campaign for Battle Monsters on April 29. It’s worth noting that this will be our eleventh crowdfunding campaign and that all of our prior campaigns have fulfilled on time or nearly so. Our most recent campaign for Unmatched Adventures: Teenage Mutant Ninja Turtles is also on schedule. We have never asked our backers for additional funds, and we confirmed that will also be the case for that campaign and this next one.
The tariffs are impacting the campaign in two critical ways. First, if the status quo holds, there is a real chance the game will not be available in standard distribution. It’s one thing to have your profit eaten up but quite another to literally lose money on every sale. Second, we’re genuinely concerned about how the current state of things might be affecting backer confidence. It’s completely understandable, but we’re hopeful that our track record puts people at ease. We fulfill our campaigns roughly one year after launch, and we expect the situation to have stabilized well before that. Importantly, each crowdfunding campaign is used to fund that project; we never use those funds to pay for prior ones. We’re confident that all of the work we’ve put in over the years prepares us well to deal with whatever the “new normal” is at that time. For those who’ve asked or are curious – if you want to support us and have the means, the single best thing you can do is back the upcoming Battle Monsters campaign.
I’m incredibly proud of what we’ve built over the years. If you catch me at a convention, I’m happy to talk your ear off about how great our team is. And we have so many exciting projects on the horizon that we can’t wait to show you. We will continue to put all of our knowledge, experience, and effort into bringing you the games you love. Thank you.
– Justin D. Jacobson, Board Game Necromancer