Re: [DL] My 10 cents worth

[Steve Peterson <steve@herogames.com>]

>At this point I think the staff was at 7 which I feel was about the 
>appropriate number. There came a point where printing and freelance 
>delays were not allowing us to meet our schedule. Even though sales 
>were going up and costs were going down any sort of delay 
>jeopardized the ability to make payroll. Shane simply wasnt willing 
>to let this happen and decided to pursue the offer by Cybergames.
>
>It seemed that Cybergames would have the cash reserve to make it 
>through the gaps between products allowing for a much more even 
>release schedule. Not to mention the possibilty of increasing the 
>marketing that would be possible. It was hoped that this would also 
>allow the Pinnacle staff to stay together. As a company it was 
>decided to pursue this and I have to say that Shane probably had 
>other options that would have benefited him more personally but 
>thought this would be a chance to keep the staff together.
>
>Im gonna end this by saying that almost immediately I began to 
>disagree with Cybergames philosophy. I left the company shortly 
>afterwards and although I still remain close friends with the 
>Pinnacle staff I feel that Cybergames has made one mistake after 
>another. There intentions were probably good but I really think they 
>were attempting to use business models from other industries that 
>really dont apply to the game industry. They never grasped the fact 
>that this an industry driven by creativity and that in this industry 
>that means new products on a regular basis. Every product that has 
>been mentioned as being released soon was actually already finished 
>months ago when I was still there. I havent seen Cybergames do 
>anything except make cuts. They see a negative cash flow and their 
>reaction is to cut the staff and schedule. How on earth do they 
>expect sales to go up if they take this shortsighted approach. 
>(again this is my opinion for what its worth) I certainly dont think 
>they have done anything out of malice but I think they have made 
>terrible mistakes.

Dave, I think you have some misunderstandings about what 
Cybergames.com is doing with Pinnacle. For one thing, your statement 
that Cybergames.com doesn't grasp the nature of this industry is 
laughable. I've been in this industry for 20 years now, as a business 
owner, game designer, and marketing consultant. Cliff Perotti started 
a paper game company several years before I started Hero Games, so 
his experience goes back even further. Bruce Harlick has been in this 
business for 20 years also. We understand this industry very well; 
well enough to have founded a company that's been in business for 20 
years, and has earned a Hall of Fame award for its leading game.

Pinnacle's recent releases were created by Pinnacle... and that's the 
way it should be. Cybergames.com did not buy PInnacle to create their 
products for them. The pace of new releases had to be changed to suit 
the reality of the marketplace and Pinnacle's needs. Too many 
products at one time are a problem for a variety of reasons. The 
majority of gamers have only a certain amount of money to spend on 
new products, and it takes time for them to read them and enjoy them. 
If you release several products at the same time, you'll lose sales 
overall. The game industry's major distributors now work on a 4-month 
solicitation cycle, which means they require 4 months lead time from 
when you announce a product before they will ship it in order to 
maximize sales.  Distributors will substantially reduce orders (or 
not even carry a product at all) if you don't give them 4 month's 
notice with proper information.

We've had to get Pinnacle's product schedule on a proper basis in 
order to get the kind of orders necessary to make a profit on 
products shipped. It's also absolutely necessary to make sure that 
each product shipped makes a profit, because if you don't do that you 
won't be producing products very long. Higher sales won't help if 
you're losing money on every unit. More products won't help if the 
number of sales per product doesn't result in a profit. Yes, this is 
a creative business... but you have to have both creativity and good 
business practices for it to continue.
-- 
- Steve Peterson, Cybergames.com