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Welcome back, readers! Today's article was inspired by Mr. Gus Landt's post in the forums. He posted the question "What would you start doing now if you were going to open a brick-and-mortar store in two years?" Gus himself already has a store, but it's a great question to garner feedback on for many reasons.
The biggest reason is that many small business owners are pretty inexperienced running a business (this isn't relegated to Magic or any specific industry). I'll be upfront and state that I have no formal education or training in running a business, so I'm not the ideal source for that specific information; but knowing my limitations, I wouldn't try and start a business without additional outside knowledgeable assistance.
Running a game store adds additional constraints and concerns to consider.
Playerbase Estimation
In my last article I mentioned that the most recent count of Magic the Gathering players (from WoTC) is around 12,000,000--which is pretty impressive until you realize that the earth's population is over 7,200,000,000. This means that of the earth's population only about 0.16% of the population plays MTG.
If we take a smaller sample than the entire earth's population (let's say your nearest cities population), we can assume that a similar percentage of said population might be interested in Magic. I currently live between two of the bigger cities in South Carolina and according to Wikipedia the entire county populations (for both cities) is 765,235. If we use our 0.16%, then we estimate there are around 1,224 potential players in the area (not bad really).
I've been to all of our stores and met a lot of different players, but nowhere near that many (which to me implies that WoTC's 12,000,000 may in fact include people who just buy a pack or two from Walmart once a month). But either way, at least we can get an idea of what kind of demand we can expect in our area.
Break-even Analysis
This is a very simple concept, but one that I think a lot of people don't grasp clearly. The actual definition can be found here. But the basic idea is to figure out how much you need to sell to cover your expenses. It sounds simple enough, but what's critical is for you to figure out all your actual expenses. Here's a quick list of a few I can think of off the top of my head:
- Rent
- Insurance
- Utilities
- Internet
- Security
- Property Taxes
- Sales taxes
- Product procurement
- Advertising
- Employee pay
This list isn't likely all-inclusive (there are probably some expenses I didn't think of), but all of these things take away from your profit margin.
Competition
Thanks to the internet and its availability to most people (especially MTG players), MTG selling is quickly reaching a point of "perfect competition." I base this claim on the following:
- All copies of a specific card in NM condition are identical (or at least extremely close).
- None of the companies selling MTG cards can control the market price.
- None of the companies selling MTG cards have a significant market share of the total number of copies of any given card (at least besides Alpha/Beta).
- Anyone can look up singles prices on TCG Player and numerous other website to compare prices of each card.
- You can easily enter/exit the MTG marketplace (though each may have a cost to do so, it's still easily doable).
That being said, as a brick-and-mortar store owner you have to accept that you are in fact competing with all the other stores/people who sell cards on the internet and in your local area. Thus you need to develop a pricing model conducive to this type of selling if you want to be successful. The good news is, this level of competition is limited to actual product sales. Another form of profit is tournament fees which have a much lower level of competition as tournaments aren't something one can currently "buy" online (at least not paper tournaments).
When it comes to local competition you'd ideally want to calculate the viability of adding another store to the local atmosphere with something like the Lotka-Volterra equation. This equation was created to model dynamic systems similar to how predators and prey interact in an environment. The equation is:
Where x is the number of local players (taken from your playerbase estimation analysis), y is the number of other stores in your area, and Dx/Dt represents the local playerbase growth rate, which might be difficult to determine.
Dy/Dt represents the store growth rate, which may or may not be difficult to determine (obviously it's pretty easy to count the total number of stores, but if a competitor is doing really well their store might grow in ways other than "additional locations", such as increased hours of operation, increases in store size, or even just increase in singles selection).
The other major challenge comes from your other constants (α, ÎČ, Îł, ÎŽ) which are real parameters that exist between the players and stores. These might include (but the list is certainly not all inclusive):
- Cost of entry vs prize payout of tournaments
- Price of singles compared to online prices
- Store proximity to players
- Store owner "likeability" to playerbase
- Desirability of players to remain or return to a particular store
- How "fun" the game is and/or overall player retention to the game itself
Unfortunately, there is no "right" answer to look for. One could simply judge the level of importance of the factors they want to look at and run the equations utilizing said factors and then comparing the outcomes. Doing this might help a potential store owner figure out what factors they need to focus on; however, even then I don't know if the answers will be definitive enough to be truly helpful (and not skewed by simple input bias).
The actual graph of these equations (with a predator-prey relationship) often looks something like this:
As you might expect, the predator (or store) population increases when the prey (or player) population increases, but it's slower to do so, emphasizing that there's always a delay between actual demand and its perception in the community.
Understanding Your Customer's Wants
One thing I've seen a lot of stores do is diversify what they offer. Magic players often have plenty of other hobbies that game stores can access from their same distributors (board games, comic books, action figures, other card games, video games, graphic novels, etc). However, the best way to understand your customer's wants is to ask them (and gather data).
It would also be wise to gather sales data so you can analyze buyer trends. For example, you're most likely to have the most Standard sales before FNMs on Friday and the most EDH sales on EDH night. This seems obvious, but you might notice other trends; perhaps certain days of the week are barren, and these would be the best nights to offer other games or sponsor new or different formats (Tiny Leaders, Sheriff Commander, etc.)
Conclusion
What is most important to pull from all of this is that there is in fact a relationship, and areas can become "saturated" with stores. This will actually hurt all the stores simultaneously until some close and the proper balance of stores to players is reached.
This is why doing the break-even analysis is so important. If you can figure out how many players on average your store will need to see to cover your expenses you can evolve your store's operation to maximize your profits.
Burn gives you interaction
Burn gives you reach
Always go wide
Goblin grinding
Non-traditional interaction
Refueling with Ranger and Vial
All-in aggression
for Grixis Twin and Burn, and around 60% for Elves and Amulet Bloom. Although some decks held value (Jund only jumped by a negligible 2%), the overall picture was one of increasing Modern prices. This was perhaps most notable in individual card prices, if not necessarily the decks using them. Cards like Snapcaster, Moon, and Liliana rose over 90% (over 100% in Snapcaster's case). Modern Masters may have driven down prices for staples like Confidant (down about 50%) and Tarmogoyf (-25%), but any card excluded from the set skyrocketed in the opposite direction. Modern hallmarks like Inkmoth Nexus, Cavern of Souls, and Aether Vial all saw huge price increases since the Modern community confirmed their MM2015 absence. Even uncommons and commons weren't immune to this effect: see Heritage Druid ($18.50), Might of Old Krosa ($8.99), and the embarrassing Serum Visions ($13.10).
demand with supply increases through reprints and Modern Masters-style sets. This also relates to a classic eternal/nonrotating format argument about the difference between card "price" and card "availability". Did Wizards promise a format to solve card availability issues? Yes! Did they promise one to solve card price issues? Not explicitly, and maybe not even implicitly depending on how you define "availability" (Wizards hasn't). I don't want to get too involved in this argument here and you shouldn't either. Whether or not Wizards acknowledges Modern prices as a problem, the community is certainly worried. We all know players who don't care how "available" a Tarmogoyf is if it's still about $150. This article assumes that rising prices are a potential source of worry, especially for those who fear for Modern's longterm health.
Because Wizards isn't going back on the Reserve List, no matter how many reddit, Source, and Salvation players argue otherwise, Legacy will continue to have reprint issues. That's bad news for Legacy prices. Unless the format gets less popular or someone discovers a bunch of Revised boxes in their basement, it means cards like Tropical Island and Tundra are unlikely to fall too far below $180 in the near future. But as we saw in the section above, Modern prices are also rising fast, with some cards already reaching Legacy levels. This leads us to ask: should we all just be playing Legacy instead? Or, stated another way, is Modern secretly just as expensive as Legacy (especially with all of the recent spikes)?
of the average card price in those two formats. Modern has some expensive outliers with Legacy-level prices, namely Jund and Abzan, but those decks are still cheaper than seven of the other eight decks in Legacy's tier 1. On the Modern side of things, Liliana of the Veil and Tarmogoyf are two of the biggest contributors to high deck prices. It's no coincidence that the two most expensive Modern decks are also the only two tier 1 Modern decks to play Goyf. Legacy is more mixed, with expensive cards sneaking into decks no matter what strategy they are playing: Show and Tell, Force of Will, and Wasteland all add up over the different lists. On its own, this table handily discredits the argument about Modern being as expensive as Legacy, but we also want to dive deeper to address some other takes on the debate.
reduction. Grixis Control is the big winner here with a 62% price drop: that's the price you have to pay for those 4 Volcanic Islands and 2 Underground Seas. Comparing between formats, this makes seven of the eight tier 1 Legacy decks cheaper than two Modern options: Jund and Abzan. With the exception of Legacy's Grixis Control, all of the Legacy decks are still more expensive than the non-BGx Modern ones. Even the expensive Twin decks beat out the Legacy Ux strategies, and that's after removing the Reserve List posterchildren. This table shows both the price issues with Legacy that exist beyond the dual lands alone, but also just how much those dual prices affect Legacy decks. 40% of a tier 1 Legacy deck's cost is bundled in the 4-8 duals alone, which is a price issue Modern doesn't share.
especially if you are comparing between Modern and Legacy. We can see a big reason for this in the average card prices, which actually increase when you exclude sideboard cards. This is because sideboard cards (with a few exceptions like FoW and Karakas in Infect or Moon in Twin) are relatively inexpensive. Another factor is how people build sideboards, which leans towards singleton bullets and not playsets. When you're only running one Blood Moon instead of three, that's $100 back in your wallet. Even cutting all the Legacy sideboard cards, the deck cost average is still twice that of Modern (assuming we leave in the Modern sideboard cards). Both formats see some standout sideboard-savers like Infect in Legacy (which drops to Modern Jund/Abzan price levels) and Affinity in Modern (enjoying a 20% price drop down to Burn levels), but most sideboards aren't taking up a big enough share of deck price to matter.
For me, I think it comes down to weighing the alternatives and comparing power levels. Jeskai Control in Modern plays Mana Leak and Path to Exile side by side (which at times can be considered a weakness of the deck) but is born out of necessity to answer creatures like Tarmogoyf and Siege Rhino that dodge Lightning Bolt and Lightning Helix. This can be awkward at times as Pathâing a creature only to âloseâ Mana Leak as a follow-up answer can be quite disastrous for the deck. Jeskai usually gets around this by boarding Leak out, or getting to six mana to Leak/Snap/Leak (an inefficient answer, but an answer nonetheless). If Jeskai had a comparable alternative, you can bet that either Leak or Path would get cut, but the options just arenât there. Patrick Chapin and Guillaume Wafo-Tapa worked together on this sweet list in 2013 that cut Path to Exile for Azorius Charm:
The answer to this question is due more to the state of Modern and the deck you are playing with/decks you expect to face than anything else. In my mind, a classic example of this when deckbuilding is Stony Silence vs. Izzet Staticaster in the UWR sideboard. Stony Silence has a few applications (mainly Affinity, and to a lesser extent Tron and the pretty much extinct UB Tezzeret deck) but is insanely good at what it does. On the other hand, Izzet Staticaster has very broad applications against most decks (mana creatures, Affinity, Infect, BW Tokens, Lingering Souls, Dark Confidant, half the Merfolk deck), but is rarely âlights outâ when cast. Modern as a format exists in this weird environment where there are too many decks to prepare for everything, but most decks are very powerful and demand sideboard trumps. One strategy when constructing sideboards is to find the most applicable cards for the widest variety of matchups so you can improve against everything. The other end of the spectrum involves picking the worst four-five matchups, and playing multiple copies of the card/cards that best fight that specific strategy.
Grixis Control! While Jeskai can offer the most âpure controlâ experience out of any deck in Modern, Iâve always find Jeskai to be lacking in a few areas that place it firmly in tier 2 in my mind. The ability to turn the corner, play a relatively low land count, maximize mana efficiency and answer threat-for-threat all combine to make Grixis Control a fun, challenging strategy for control lovers in Modern.
I find it hard to imagine a scenario where I would rather have Languish vs. Damnation. Most of the time, the two will be interchangeable, except for when Damnation is better because Languish only hits x/4âs or less. Against Siege Rhino, Gurmag/Tasigur, creatures that regenerate, creatures pumped by modular, Tarmogoyf and Titans, I would rather have Damnation. I imagine that a deck full of x/5âs could use Languish as a one-sided wrath, but a careful opponent could always save a Lightning Bolt to finish off your creature after it has been shrunken.
I do think this is possible and much of my testing for Pro Tour: Magic Origins has in fact been done on stream! Streaming is an incredible resource that to this point has been under-utilized for testing purposes in my opinion. There are downsides to this as all information discussed is public, making it difficult to âhoard techâ, but the positives greatly outweigh the negatives in my opinion. Sharing information with viewers, gaining multiple perspectives on every issue, just working and learning together has made me a much better player, and I owe it all to streaming and to my viewers. Hereâs to hoping that more people embrace streaming and testing on stream in the future!
