Wednesday, February 4, 2015

What's Up At Battlefront?

by SandWyrm

Because they're a publicly traded company, we have the privilege of digging through Games Workshop's financial reports every six months. As such, we all have a reasonable idea of how well or badly GW is doing each year. But what about the other major miniature game manufacturers, like Battlefront, Wyrd, or FFG? Are they doing better than GW? About the same? Worse? Unless some scandal breaks and airs some dirty laundry, we generally have no idea.

Well, some laundry is now being aired in regards to Battlefront, Dust Studios, and their latest Kickstarter. We're mostly hearing from a very mad Dust Studios, who have not yet been fully paid from the nearly $470,000 that was raised for Operation Babylon. Battlefront isn't saying much, but their actions indicate that they may be experiencing some severe cash-flow problems, and have used that money to pay old debts instead paying for the completion of the Kickstarter.

Here's a rundown of what we know:

1) In May of 2013, FFG sold the rights to distribute Dust Studios' games (Tactics & Warfare) to Battlefront. BF is best known for its 'Flames of War' WWII wargame, and the very successful "Sparticus" and "Firefly" boardgames.

2) According to multiple sources, there was some kind of clause in the FFG/BF contract that BF could not sell any sets that FFG still had in stock. FFG has not been in any rush to ship their stock out, which has forced BF to create entirely new army box sets instead of being able to sell individual troop/vehicle kits.

Why BF didn't just buy FFG's stock outright is a very good question. But they needed some new kits to sell, so...

3) On June 19th, a Battlefront Kickstarter for "Operation Babylon" was successfully funded for $469,313, or 939% over what they asked for. Supposedly all the design and modeling work was done, so they'd be able to manufacture and then ship to backers immediately.

To quote the KS page:
"We have every confidence that we can deliver Operation Babylon without trouble.
Because the production and distribution of this project will happen in an accelerated timeframe, (that’s the main reason for doing it!) there is the unlikely possibility of unexpected delays. Production will rely on third-party manufacturers for casting, printing and packaging. Of course, we have a proven history of working with these businesses, and have found them to be very reliable. However, an unanticipated problem with any stage of production could delay delivery for some items.
Dust Studio are working with Battlefront to bring this project to completion. Battlefront will handle the fulfillment of the pledges, shipping the rewards to backers through their worldwide distribution network. Whenever you try to transport large volumes of goods around the world, there is always the potential for customs delays and other shipping headaches.
But we have worked carefully to plan our delivery estimates, and we do expect to be able to meet them. Theoretically, If it should transpire that most of the project is completed and ready to ship, with just a few late items holding things up, we intend to consult with our backers about the best way to proceed; if people preferred for us to ship items in ‘waves’, rather than waiting for the last few items, we would try to proceed accordingly. But honestly, we do not expect this to be a concern, and we look forward to completing Operation Babylon on schedule."
4) The Kickstarter was supposed to ship in August of last year, but instead BF decided to separate its shipments into two "waves" to backers. Wave one didn't start shipping until early December, and as of January 30th it was still not complete. Slow shipping times have been repeatedly blamed for the delays.

5) On February 1rst, Paolo (The owner of Dust Studios), dropped a bombshell in an interview, saying that DS has still not received a purchase order for the sets required to fulfill the 2nd wave of the Kickstarter. Nor have they received any money from the KS for its manufacture. So they have no idea how many sets, and of what kind, are needed. Nor do they have the funds to pay for them.

In addition, he released a copy of his contract with BF for the KS project, which specifies that immediately upon receipt of their KS funds, BF was supposed to pay DS in full for all of their manufacturing costs, plus another $220,009 that DS didn't receive for 3 other releases. If Dust Studios cannot manufacture the goods, then all refunds to backers come from them, and not BF (very dumb, by the way).

6) Battlefront released a zero-information statement to address all this. The lack of any direct statement on Paolo's allegations is kind of damning.

And Now For What All This Implies

David Galdasz, on the Kickstarter comment page, lays out a pretty good theory of what's going on.

"And now for my much longer "angry biased viewpoint". (Now with 100% more half-assed guessing! :))
There is some evidence that the relationship between Dust Studios and Battlefront was somewhat rocky even before the KS. As noted in the contract Paolo posted, Battlefront owed Dust Studios a not insignificant amount of money for the production related to "Operation Achilles". 
Now - normally that would be minor information, except that over the last year, Battlefront has had a MAJOR release and many product releases for their own lines. (Note - "Fate of Nations" was published last year - approximately a year after Operation Achilles was released.) There is a chance that Battlefront ignored their fiduciary duties of paying their business partner in order to forward their own products.
Now, here's where the "half assed guessing” comes into play. My guess is that Battlefront WAY overestimated their ability to sell and distribute the "Operation Achilles" related Wave 9 materials - thus running up a large bill and a large stockpile of merchandise (Hence the giveaways and sales as part of the KS. It clears the stock off the books.). This probably pushed distributing Dust Tactics over the line into "unprofitable" - thus making Battlefront somewhat unwilling to spend more money distributing the line when they could manufacture and sell their own product at a greater profit. Battlefront - being a small game company - logically made the choice to follow the better money. But they still owed Dust Studios a debt that needed to be paid.
This is where things start getting really fuzzy. Judging by the contract Paolo posted, one of the unadvertised purposes of the Kickstarter was apparently to help Battlefront get out of the weeds in regards to Dust. Basically - the money (after KS's cut) was to go to Battlefront, who would do the logistical work related with the project. Dust Studios was to be paid on a "per model" price point - first for any Operation Babylon minis, and then - if any money was left over – the rest would go towards the outstanding debt relating with Achilles. 
The problem is - the Kickstarter has been both a greater success and disaster at the same time. A large number of stretch goals were posted and unlocked - increasing the production costs of the Kickstarter. Battlefront aggravated those problems with: poor communication - generating expectations that could only be fulfilled with heroic efforts, poor decisions regarding swaps adding complexity to the pledges, and poor execution on the pledge manager, which greatly slowed the processing of orders. The increasing number of "waves” and “corrections" have probably increased shipping costs across the board as well. I also think that Battlefront may have decided to give away the excess "Achilles" stock as a bonus in the Kickstarter so they could charge it against the initial portions of the KS total too, instead of keeping it as a separate debt that would only be serviced AFTER the KS production.
According to Paolo, mediation requested by Battlefront apparently broke down when BF demanded greater price reductions on the per piece nature - effectively saying that they've paid all they can for the Kickstarter and effectively wanting the remaining models "Wave 2" free or at such a low cost they are effectively free. As that is where the majority of Paolo's costs are right now (new dies, as opposed to producing off paid off dies) - that is not really a negotiable point.
So – the real result is that the Kickstarter is having the exact opposite effect to what the original intentions were. Higher production and distribution costs are demolishing all the "leftover" money that Battlefront was going to pocket or use to pay off the Achilles debt. In comparison to their "owned" product lines – distributing Dust Tactics is effectively a pit in which to throw money into. Odds are, the only thing they are going to get out of completing this Kickstarter properly is *possibly* salvaging their reputation. Still - they may consider 1500 angry backers as "Acceptable losses" - especially if their other product lines are going strong.
Meanwhile - Dust Studios is slowly being "starved" by Battlefront as well. I can't imagine the long delayed payment for "Operation Achilles" did good things to the company bottom line. (Slightly indicated by the limited releases produced by Dust Studios over the last year in comparison to the year before.) The long delays in getting the Pledge Manager together prevented a timely turnaround on Wave 1, and Battlefront has not given any information on Wave 2 to Dust Studios. Thus Paolo can either sit idle or try guessing what his production quantities should be. 
Now - I will admit that some of this is guesswork based off Paolo's information and looking at schedules. I could be very wrong, and if I am, I apologize. But the given information hangs together in a fairly plausible kinda way. Your opinion may vary..."

And My Take...

Paolo is an artist, and I can imagine that he's not exactly the easiest guy to work with. I also know that similar problems with model production caused problems even when FFG was distributing Dust. I get the impression that Dust Studios only produces models, not rules. So FFG (and later Battlefront) were responsible for taking DS's models and building proper games around them. This supposedly caused friction when Paolo didn't like the rules for Dust Warfare.

That said...

If Battlefront is losing money on Dust, then it needs to pay what is owed and amicably sever their distribution deal with Dust Studios once this Kickstarter has been fulfilled. A healthy company should be able to write off the loss and move on. After all, Battlefront did say the following last May:
"We generate more revenue in a single boardgame release or month of FOW sales than DUST is worth all year so this project is all about the DUST Studio and their needs and we as partners are doing our part to help" Battlefront, May 22, 2014
The fact that BF won't (or can't) pay for the production of wave 2 makes me wonder what their cash flow situation is, and the wording of that contract (putting all the responsibility for delivery on Dust Studios) says that they're not being totally above board.

So let's speculate a bit more...

1) Ill-Advised Purchases?

Shortly after the release of 3rd Edition Flames, Battlefront spent much of their extra cash by purchasing the failing Wargames Illustrated. This prevented the magazine from going out of business, but to many, it didn't make much business sense. Battlefront gained a magazine in which it could highlight its own products, but who in their target demographics actually reads magazines anymore? I've seen them at my local shop, and flipped through a couple. But I've never bought them, nor seen anyone reading them at events. Battlefront's website is a much more interesting place to go for Flames of War specific content.

So it's hard to imagine that Wargames Illustrated is doing anything but losing money for them. Sucking money out of their Flames sales.

2) Low-Cost Plastics Competition

Then along came The Plastic Soldier Company. A little 2-man shop that started producing and selling VERY nice plastic tank and infantry kits for less than half of what BF charges for its Resin/Metal models.

Battlefront should have immediately swiveled to face this new threat head-on (like Microsoft did with the internet) with high-quality digitally designed/machined kits of their own. But they dragged their feet for over a year before timidly producing a few track and barrel sets for existing resin models. It was a good 2 years before they did any sort of real effort to release plastics (as a starter set), and these were not digitally designed or machined. Instead, they are still using decades old plastics manufacturing tech that reproduces hand-sculpted models (in a bobble-head style which many customers don't like).

But Still, 3 years on now, Battlefront is not offering plastics en masse. The vast majority of their kits are still resin-cast models. Some have plastic barrels and treads, but most still come with metal parts.

(Mind you, Games Workshop has had digital design and tooling for over 10 years now.)

Is this failure to meet the digital plastics challenge due to ignorance/arrogance? Or was BF simply not in a financial position (after acquiring Wargames Illustrated) to invest in changes to their manufacturing pipeline? When they finally were able to make the switch, did the higher up-front (but lower long-term) costs of switching to digital design and tooling cause them to go with older, less efficient technology that still can't compete with the quality and low cost of PSC plastics? Has even that investment paid off for them?

3) The Focus Shift To Board Games

It's been interesting to watch how BF has approached Gencon over the last 3 years.

In 2012, their huge booth was entirely devoted to Flames of War and Gale Force Nine products.

In 2013, Flames was relegated to one small shelf (with a special order form for everything else), and all of the focus was on their Dust, Sparticus, and Firefly games. The board games were selling like hotcakes, and BF was obviously chasing the money.

This last year, 2014, saw them ditch Flames completely. In favor of nothing but Dust, Firefly (with special add-ons), Sparticus, and their new 'Sons of Anarchy' game.

This speaks well to Battlefront's foresight in developing good boardgames (a growth market right now), but if Flames was selling well, they would have had that on display too. To me, that implies that Flames has become (due to new model competition and a general wargaming decline) a marginally profitable line for them. Possibly even a money loser. Which, when added to the almost certainly money-losing Wargames Illustrated (and under-performing Dust), becomes a big problem.

It might even be the case that Battlefront's boardgame sales are all that's keeping them afloat financially, and that their cash flow is so poor that paying off Dust Studios would break them. Or prevent them from developing and distributing their next licensed board game, which would eventually break them.

Whatever the truth of it, healthy companies don't act this way. I'll be very interested in seeing how all this plays out.

Oh, and CaulynDarr wrote a post last June about how Battlefront shouldn't be using Kickstarter. He decided that it was too mean-spirited, and deleted it. But now it looks like he was right all along. Maybe he should rewrite it in the light of what's actually happened?


  1. Flames of War has always puzzled me. BF's unhealthy relationship with plastic models is really weird.
    I think the core of it is that their approach to game design is a WW2 fan's approach rather than a businessman's approach. They want /everything/ in their game no matter how obscure it was or how few were actually made. It's cool so it's in!

    The trouble for a model company is you end up with loads of product lines. That means lots of small production runs, which in turn favours resin casting.
    A smart game design would be much more streamlined and focused on a smaller number of core units. Looking at the FoW site and the vast number of infantry squads rams home the problem. They want to sell you not only a rifle squad vs an SMG squad but an SS rifle squad or a pioneer rile squad etc.
    They should sell a "box-o-dudes" like PSC does and then give extra options on the sprue to turn them into pioneers or whatever. That way they could run off a ton of them and get their costs down without constricting their range.

    1. When you're facing competition that can crank out superior versions of the most common tanks and infantry at less than half of your prices, then the only viable defense (if you can't match them) is to concentrate on the low-run niche versions of those troops that a company like PSC isn't going to bother with.

      Trouble is, the tooling for a single-tank sprue like the ones PSC uses can be as low as $5,000. Which means that eventually PSC (and others) WILL BE producing North African and SS types of stuff eventually. Their limitation is less about tooling costs than about the time it takes 2 guys to make a new production-ready 3D model, and buy injection-time with a plastics manufacturer.

      Surely, the costs for producing a Resin version for each of the 5-6 Sherman tank types (that only experts can tell the difference between visually) must be in the $5-10K range for the resin tooling, molds, labor, etc. It's just that Battlefront hasn't embraced digital design/tooling the way that Wyrd has. So they can't pump out their niche stuff in plastic efficiently.

    2. The problem is that they're WW2 fans first and businessmen second. The trouble is, once you know the difference between the Shermans it seems terribly important to depict that difference. And it's true in a way. I love WW2 trivia and I love that they have a model for a sIG33 auf Panzer I AND a Bison. It's a ludicrous level of detail and there's people who will eat it up.

      The issue is that they can't scale their game and they're locked into this weird setup where they want to depict the whole of WW2 at the company-ish level.

      If I were designing a WW2 game I'd go totally the other way. Maybe as few as 4 core kits per side, 6mm (Epic) scale, massive operations with huge numbers of units. It's not as detailed but you get a much bigger scope for operations. At that scale you don't need to depict units as clearly and can proxy a lot more.

    3. The problems isn't them being WWII fans, it's that for the longest time their resin/metal models WERE the best in the business (for WWII games). But now they're not, and BF really has no idea how to compete with the likes of PSC (or 3D printing for that matter).

      I'd compare them to Apple in the early to mid 90's. They had their die hard fans still, but when Windows 95 came out they were blindsided. Their products were overpriced crap in comparison, and they didn't recover until Jobs returned and concentrated on making their products stand out again.

    4. I dunno, their idea of a new release is to put out a book with a huge list of new units: Nuts! is like "hey you can collect the 653. Schwere Panzerjaegerabteilung now! How cool!!" Are people really that bothered about collecting hyper specific units? I doubt it, especially not how BF expects you to do it - buying new versions of your infantry and tanks to depict the new units perfectly.

      I'd much rather see books that help us to recreate scenes from famous films and documentaries from the period. Product lines would be terrain focused with big boxes to support the key units needed from the scenarios.

  2. Is that Microsoft jab some hidden weird joke, since as far as I know MS basically ignored the internet for a long time, leading to Netscape being bigger than they probably would have been. Only later they build up their dominance by putting IE into their OS (which got properly punished by the EU years later).

    1. Yes, Microsoft did ignore the internet, until Gates suddenly realized what a big deal it was. Then, in one of the most famous business pivots in history, they suspended all development work and re-designed all of their products to introduce on-line features. They also developed Internet Explorer as a competitor to Netscape.

      Now, this being Microsoft, they didn't always do it the right way. But neither did they fail in the transition. By version 3, IE was actually better than anything else at the time, and their various technologies (like ActiveX) did actually work pretty well until the security problems with them became known.

      The "embrace, extend, extinguish" dominance thing was MS's classic MO under Gates, and that's what got punished in various anti-trust cases. But those actions were also what led Gates to invest in a failing Apple when Jobs returned. Jobs needed cash to keep Apple alive, and Gates needed a 'competitor' to trot out in front of the anti-trust people.

  3. I think that Dust is Paolo's baby, and he is a little to close to it. FFG can apparently still work with DS on X-Wing manufacturing, so it must be that he get gets a little too protective of his original IP. So a typical contract dispute that is usually handled behind the scenes(cause it's a bad idea for both parties to air dirty laundry) turns into a Facebook war.

    1. Paolo may not be acting professionally, but if he's not getting paid for his work, that's a legitimate gripe. If his company is facing ruin due to BF not honoring their contract, he may well feel that going public is the only way to shame BF into paying up.

  4. PSC has been very clever in their growth- they're now producing the 'Battlegroup' Books, and I've seen more chatter about them online than I've seen about BF's silly 'Israel vs. the Muslims' Flames Expansion, which seems to be even LESS popular than their Vietnam effort.
    Dunno how that's possible, cuz FLG's I went to for Flames Tournaments were literally giving that stuff away for peanuts and still no one wanted it.
    Every single rivet counter type I know wants the same thing- 15mm Fulda Gap 80's era USSR vs Nato.
    That's it. That's all we want. No middle east 6 Day War nonsense. No Vietnam, which barely had tanks at all and one side is basically insurgents.

    In all seriousness I think BF had eyes bigger than their stomach, as the saying goes.
    They released the new Edition without a real starter set, and they basically GAVE AWAY tons and tons of rulebooks.
    Ok, fine- that got 'em out there...wouldn't it have been awesome if all those folks who got one just outta curiosity had a starter set to buy?
    Oh- that came much, MUCH later.

    Then PSC came along, and BF flailed about pathetically. I'll probably never stop laughing at this:
    'Hai this is Battlefront. We know we said 3rd party models are no problem and we welcome competition,, we were really wrong! 3rd party models are a HUGE problem if people are actually going to buy them! And competition is actually HORRIBLE when your competition buries you with a superior product that's selling for HALF of what you're charging! Who knew? So yeah- y'all are gonna have to quit it with the 3rd part models.'
    Oh that was just classic.

    Of course, while all this was going on they were screwing up late war and totally neglecting mid and early.
    In a very Games Workshop-like maneuver, they decided to give a lil' boost to the Americans to help them...stop being the army no one plays.
    They did that by making the Americans ridiculously OP, and any late war tournament results you see will clearly reflect this.
    Bill Wilcox himself sealed the deal, when he wrote on WWPD that the Germans don't have a list of any type- Infantry, Mechanized or Tank, that is capable of competing on equal terms with the Americans. Ouch. I wonder if WWPD got an angry email from their sponsors when that post went up. Lolz.

    And now this unseemly nonsense.
    Hey- nice job avoiding the subject with that post, BF.
    Yeah, we're SURE you want to resolve this through mediation- you certainly don't wanna get sued, huh?

    To tell ya the truth, I've lost any respect I had for BF as a company. The decisions they've made since the release of 3rd all make me suspect they very much wanted to be the next Games Workshop, but they skipped the VERY FIRST STEP:
    Invest in the switch over to plastics.
    Instead they skipped right over to the more advanced GW stuffs, like ignoring your customers and telling 'em what they want and continuing to overcharge for your products.
    They did get one GW move right- 'We don't understand why everyone isn't buying our stuffs- we told them they wanted it!'

    And now Bolt Action is kicking Flames of War in the crotch.
    Suck it, Battlefront.

    1. I think it's more like X-Wing is kicking everyone in the crotch. :)

      But yeah, it's sad to see BF getting a Palladium-like rep. They had such promise when 3rd edition was released. But they made some terrible strategic errors that they may never recover from.

    2. I dunno Sin, Arab Israeli is more interesting to me than 'Nam. If we lived closer to guys that played, I'd totally do Jordanians, esp after the rules re-write. Before it was Israelis kicking everyone else around the sand, now it's a tough fight for both sides.
      'Nam is interesting because of the point system, which makes it a pretty different game than WW2 or AIW. I played Nam Scenario for playtesting AbleKo's Gencon game. it was interesting. Americans are OP, until the point system comes into play.

      I agree that BF dropped the ball by not going more plastic sooner, and doing digital sprue design. I don't know for certain, but I'd suspect their sculptors are doing things the way they've been done for a while (handsculpting), and that translates well to resin production perhaps. I think it's time to use CAD based design, and machine out some injection molds, for a wide range of things.

      I liked Wilcox's article. I agree that for his playstyle, there aren't too many great LW German lists. Having said that, Panzer Lehr lists with primarily PzIV's are really good. They spearhead, and can bring a ton of AT11 guns to bear, plus numbers. With Allied players wanting to run big toys, cheap, protected ammo tanks with stormtrooper are awesome. SuperShermans.

      And like Steve-O points out below, WWPD isn't really on anyone's chain. They're hobby enthusiasts, and occasionally get benefits from close associations with companies (kinda like press-pre release stuff). I sat and played games with the guys at GenCon last year, and asked a bit. I didn't want to pry a lot, but basically, they like the Hobby and gaming, like we here at Back40K do.
      Their interests vary, like ours do, Steve-o and most of the guys at WWPD are from Virginia, we're mostly from Indiana. I listen to their podcast, and the Breakthrough Assault podcast, because I think they're good, and I get a FoW hit from 'em. They're gamers, we're gamers. Steve-o went bigger on the network thing and polish than we did. That's more his area of interest and expertise. I can repair complicated lab equipment, and run cells through a cytometer like a mutha. SandWyrm can do 3-D stuff in his sleep.

      I also think if you want to read a bit more about it, the WWPD forum post has some good info, as well:
      Webgriffin has done a good job digging up pertinent stuff to share there.

      and Bolt Action isn't kicking FoW around everywhere. I have almost no interest in 28mm WW2. ok, I have more interest in it than I do playing 28mm Weird War 2, but that's not saying much.

      My interest in this topic is mainly as a gamer/hobbyist. I really like FoW. I have an interest in how a company who makes product I like is handling moving into a new market environment. I think buying Wargames Illustrated was a move done with the heart, and not the head. I think not moving into plastics is a business misstep. I think perhaps BF should have made a move to buy PSC instead of WI. I think BF's moves to do more TableTop boardgames is probably a sound business move. I think ultimately buying Easy Army was a good move, even if people complained a lot about having to now pay for something they more or less got for free before.

      There are two sides to every story. I want to hear BF's side. We don't know how things have gone down, but signs are pointing to a cash flow issue at BF.
      It's too bad the Kickstarter backers are the ones getting caught in the crossfire.

  5. " I wonder if WWPD got an angry email from their sponsors when that post went up. Lolz."

    As the owner of WWPD- I can assure you, that we are not under any pressure from our advertisers (of which Battlefront is NOT one) on our content. We're keeping a close eye on this unfolding situation, and there is lively and totally unmoderated conversation going on on our forums. I'm not sure why you feel compelled to throw us in here as if we were guilty by association :)

    Hell, we were happy to post Bill Wilcox's thoughts, and would do so again!

    1. I think Syn's comment has more to do with a perception (both somewhat founded, but also assumed) that WWPD has closer ties to Battlefront (especially on a personal level) than any other gaming website that might cover them.

      I'm glad to see that you're not taking money from BF as a sponsor, or moderating your forum conversations. I'm also glad to see that you're putting up some BF critical articles. This is the age of gamergate though, so you'll always be viewed with a little suspicion where BF is concerned, since you did work for them at one time.

  6. I believe actions speak louder than words, and I Stand by our treatment of Battlefront both on the site and on our podcast. Because I worked there (for a short time...) I do tend to avoid commenting on anything that would violate NDAs or be unprofessional. I've come to their defense when I felt it justified, and I've called them out when it was equally justified. Ultimately, WWPD is about FLAMES OF WAR, not Battlefront.

    I understand your comments, but I think they are unfounded :)

    1. I understand the difficulties Steve. It's one of the reasons that we've never tried to monetize our blog. The moment you do, you have all sorts of temptations and incentives tied up in that model that can lead you off track (or at least appear to). Even so, we've had problems when certain people/organizations wanted to cozy up to us to control our message about their event, and then went apeshit when we posted anything at all critical.


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