Case Study

The Problem: Intellinitiative's board games were flying off the shelves. Then, a giant brand muscled them out of the store.

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A buyer at target delivered the bad news. The retail chain had been key to the success of Intellinitiative, creator of the popular trivia board games The 70's Game, The 80's Game, and The 90's Game. But now that relationship would have to change, the buyer told Clay Siegert, founder of the Boston-based company. One of the largest board-game manufacturers in the world -- the buyer declined to say who -- was preparing to release its own '90s trivia game and was promising a huge national ad blitz. The catch? If Target wanted in on the new game, which was expected to be a huge seller, it would have to carry it exclusively. The 90's Game would have to go. (The 80's Game, which Target also carried, faced no such competition and could stay, the buyer said.)

Siegert says he felt physically ill when he heard the news. No wonder. Intellinitiative had a lot riding on a fruitful relationship with Target. The retail chain sold some 150,000 copies of its games a year -- sales that propelled Intellinitiative's revenue to about $2 million in 2003. Sure, the company also sold games on its website, as well as in specialty stores and a handful of Borders Books and Music and Toys "R" Us outlets. But the numbers were nowhere near what was generated through Target. Sales of The 90's Game through the chain accounted for a full 40% of Intellinitiative's revenue in 2003. And Siegert had projected 2004 sales of The 90's Game at Target would approach $2 million. Clearly, Siegert had to do something fast.

A lifelong trivia buff who prides himself on knowing the answers to the most obscure pop culture questions, Siegert founded Intellinitiative in 2001. Target was his first major customer. The fact that he now faced competition was not exactly a surprise. "When you have two successful games on the shelf in one of the nation's biggest chains," he says, "the big guys are going to notice you. And they're going to compete." But a month after his phone call with Target, while attending the annual Toy Fair in New York City, he found out exactly what he was up against. The competing game, scheduled to hit the shelves in August, was called Trivial Pursuit: The 90s Edition, and it was manufactured by none other than Hasbro. Hasbro had big plans for the game, which would be introduced by a publicity campaign including nationwide demonstrations and appearances by era-appropriate icons -- including Janet Reno and Naomi Judd.

Siegert, along with his sister Anne, the company's co-founder and vice president of marketing, immediately set out to revise Intellinitiative's business plan. They thought about trying to sue Hasbro but quickly dismissed the idea as unrealistic. After all, trivia games are based on general knowledge. Unless Hasbro lifted Intellinitiative's copyrighted game names, rules, graphics, and content, it would be impossible to prove charges of unfair competition. "Legally, we wouldn't have a leg to stand on," says Anne.

Another possibility was to maintain the company's edge by raising capital and developing some new games. But good board games take time to produce. Each of the 70's, 80's, and 90's games -- which feature 3,000 trivia questions, brightly colored boards, plastic pieces, and dice -- had taken Clay, Anne, and their younger brother Evan, a copywriter and researcher, nine months to complete. Even if they could develop a new one, sales would hardly offset the hit they would suffer when The 90's Game was booted from 1,300 Targets.

If the company had any advantage at all, it was that it had three decade-specific games ready to go. Why shouldn't Intellinitiative play hardball with Target, demanding that the chain carry the 80's and 90's games together or not all? Siegert was angry. Out of loyalty to Target, he had resisted initiating relationships with other large retailers. That no longer seemed like such a smart move. Would Sears, Wal-Mart, or Walgreen's have dropped The 90's Game despite strong, consistent sales? Perhaps it was time to talk to Target's competitors.

Unsure of what to do, the Siegerts called a meeting of their 15 angel investors, who collectively owned about 20% of company stock. "Half said, 'You're better than the stock market -- here's more money,' and half wanted to cash out," recalls Anne, who along with her brother wound up buying out the skittish investors. One of the remaining investors suggested they try making year-specific games. It was hard to imagine something like The 1985 Game attaining the popularity of the other games. But the siblings suspected the investor's instincts were right: If they created nothing, they risked losing everything.

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