Strategy & Tactics - TSR

TSR

Financial mismanagement also cost SPI money, and a recession didn't help matters. Negotiations began with Avalon Hill and then TSR, Inc. for a buy-out.

From Greg Costikyan:

TSR indicated initial interest, and SPI, desperate for cash, asked for the loan of a few thousand dollars to meet its payroll. TSR agreed, requiring that the loan be backed by SPI's assets, making it a secured creditor. Shortly after SPI paid its employees, TSR demanded repayment of the loan. SPI agreed to be taken over by TSR, for no cash money.

TSR sent out a press release announcing that they had taken over SPI. Soon, however, they realized the extent of SPI's liabilities; and, horrified, "clarified" their own initial announcement, claiming that, instead, they had assumed SPI's assets but not its debts.

Now, while TSR had been a secured creditor, it was a tiny one. SPI's printers and the venture capital investors were owed far more money. Legally, TSR's position gave them first crack at SPI's assets, but hardly entitled them to take over the company, lock, stock, and barrel, without assuming any liabilities. However, no one in SPI's management was going to sue over the ownership of a bankrupt company, and TSR's takeover seemed the only shot at keeping the company together. And TSR quickly paid off the major creditors, at some cents on the dollar, to avoid the possibility that anyone else would challenge the transaction.

By the time of the buyout in 1982, SPI was selling, it is estimated, some 60-70% of all wargames in the world. Avalon Hill remained a bigger company, but only because it sold many more sports and general interest games than wargames. By this point, S&T boasted 30,000 subscribers and the magazine was truly the flagship of SPI.

The popularity of S&T reached the point where SPI began publishing a second magazine, Moves, that consisted primarily of articles on winning strategies for playing SPI games and additional scenarios for them. A third magazine, Ares, devoted to science-fiction and fantasy games and including one in each issue, was also published for a time.

One innovation of S&T was its feedback system, in which readers could answer various multiple-choice questions on a return card, whose data would then be entered into a Burroughs minicomputer for analysis. Thus S&T always had good information about which games readers were looking for.

Again, from Greg Costikyan:

Perhaps S&T's most important innovation...was its feedback system. Using primitive Burroughs, later IBM, minicomputers, Dunnigan put together a highly sophisticated system to obtain marketing information from his customers. In every issue of the magazine, there was a response card, with 96 numbered blanks. At the back of the magazine were a series of questions, to which a reader could respond by entering a number between 0 and 9 on the blanks of the card. Some questions provided marketing data, e.g., average age of the readership; some were used to provide competitive rankings of SPI's and other publishers' products, charts that S&T's readers pored over when deciding what game to buy next. And some were used to ask the readers what kinds of games they'd like to see. Indeed, every issue provided brief write-ups of game ideas, and SPI would design the games which received the highest ratings.

This kind of market research was astonishing for the field, remains astonishing for the field, would be astonishing in any field. SPI had immediate, timely data telling it precisely what its most valued customers thought. For years, the sales of SPI's games correlated very closely with the feedback results; SPI could predict, with virtual certainty, a game's sales before embarking on its design.

Through this feedback, it became obvious that S&T's readership included many of the avid wargamers - over 50% of readers claimed to own 100 or more games; many bought a dozen games every year on top of those contained in the magazine. SPI estimated that 250,000 people in North America had ever bought a wargame based on the total number of games sold by all companies to date, and felt that its subscribers probably owned a disproportionate share of those games. In other words, these subscribers were the key market audience for the entire wargaming industry. And SPI had its finger on their pulse through the feedback system in S&T.

However, in at least one instance, the readers' feedback was disregarded. SPI sometimes published games exploring hypothetical—sometimes seemingly far-fetched—conflicts such as warfare in the United States following an all-out nuclear war, or what might happen if the Soviet Union and/or the People's Republic of China attempted to invade the United States under some set of circumstances. In 1978 a proposal for another "what if? game titled Case Geld, a game that explored the ways that Germany might have been able to attempt to invade North America during World War II, scored very high in feedback but was not published because a faction within the magazine staff felt that the subject encouraged "fascist fantasizing". The decision was discussed in one of the magazine's regular opening features ("Big Tsimmis"), but SPI did not publish the game. Games on the subject of a hypothetical German attempt to land somewhere in North America were subsequently published by other companies. The original 'Case Geld' design was eventually published by 3W in 1990, under the title 'SS Amerika'. The designer notes include a history of the argument at S&T.

When TSR took over SPI, it made a colossal blunder: it refused to honour commitments to the dedicated S&T subscribers. SPI unfortunately had no assets to its name when the takeover occurred, but there were over 1,000 subscribers who had made a significant payment (in c. 1978 terms) for a "lifetime subscription" to S&T, meaning that they were entitled to all future issues without any further payment. These subscribers were informed that their subscriptions would not be honored. People who had placed pre-release, paid, orders for certain games that had been in development were informed that they would receive neither the game they had paid for nor a refund of the money they had paid for it. TSR saved money in the short term, but alienated its best customers.

Greg Costikyan claims that this was the turning point in the wargaming industry; few S&T subscribers renewed, even though the magazine continued to be published (TSR published issues 91 through 111); many also refused to buy any TSR titles due to bitterness over the handling of their subscriptions.

SPI's design staff moved on to Avalon Hill, where they set up a subsidiary company based in New York called Victory Games. It produced many unique and popular titles, which by the late 1980s were outselling even Avalon Hill games. TSR continued making games, hoping to recoup its investment in SPI (another reason was the enthusiasm of some staff members for wargaming), but despite a healthier distribution chain than SPI had enjoyed, its wargame line was never successful. S&T Magazine was eventually sold to 3W, a small company which published The Wargamer magazine, a direct competitor. By this time, other companies were also stepping up production, and a splintered market ensured that the days of selling 50,000 copies or more of a title were gone. Publishers became happy to sell 10,000 copies, with 20,000 being considered phenomenal.