I've used The Blue Chip Edition for two semesters, and the first semester went very smoothly -- students liked it a lot. In the second semester the students liked the game itself, but there were transaction errors. Records showed purchases of the wrong stock, or stock that students claimed had been bought didn't show up, or the wrong number of shares were recorded. I think as the volume has gone up, there's been some decline in the service.
If that's so, DeMello's got a real problem, especially in the education market. A large number of errors kills the aspect of realism and creates ill will on the part of professors. If I assign the game, I'm essentially vouching for its quality. If there are lots of errors, I can't go on assigning it.
But it is the right market, especially if WSG can broaden the product. I use it only in my introductory courses now. For advanced courses the game needs options and futures, and more than the allotted $100,000 in funds -- make it $10 million, say -- so a student could act as a portfolio manager rather than a private investor. But the price is right. Most college textbooks are $30 to $60, and if a student is paying $1,000 tuition for a course, another $45 for WSG doesn't seem too far out of line.
The education market offers a customer base that's continually renewing at a low market cost. There are several thousand professors of finance in the country, and DeMello will have to figure out how to get to them. But the nice thing is that once you've got professors on, you don't have to go back and resell them every quarter. I teach four of these sections a year, and each course has about 40 people -- that means I deliver 160 customers per year. That's where WSG can come up with a sustainable customer base -- not from onetime promotions in catalogs.
CUSTOMER
JOHN D. SPOONER
Stockbroker; senior vice-president at Shearson Lehman/Hutton
DeMello did a wonderful job. It's well thought out, packaged very well, and easy to understand. As a learning tool, it's terrific. But I just don't see the demand. There is zero need for it among my customers. Most of them are passive. They want me to do it. Sure, if I lost money for them they'd ask why, but a game isn't going to teach them. The only thing that will do that is life.
The main problem with anything that deals with money in a hypothetical way, whether it's betting on horses or playing the stock market, is that unless you're emotionally involved, it's not valuable. When it's play money, you're not emotionally influenced. To learn anything, you have to have put real dough on the line. Students can say they were up 400% in a college course on the stock market, but the result would be different if they had their own money at risk.
Another problem for WSG is timing: nobody cares about the underlying product right now. Wall Street is in a full-fledged depression. The average investor, even one with plenty of money, is buying CDs or staying in the money market. The atmosphere is one of fear, anxiety, or at least indifference. I think we may be in this climate for quite some time. If at first the game was bought as a fad, that thrust is now completely taken away. DeMello might as well paint the windows of his brokerage office black, because right now nobody cares.
The college market is viable. But how much is marketing going to cost? I think his projections are way off, given the climate. Even college stock-market courses tend to decline in periods when nobody cares. So he's in for some tough sledding. There already have been layoffs on Wall Street, and you haven't seen the half of it. The average stockbroker isn't even making $200 a week. It's not a glamorous job anymore.
This is a business you can't force. At most, you can cut prices, advertise, reposition. But you can't make people buy stocks -- for real or for pretend -- when there's no appetite for it. I would hate to start a business with something that may be out of favor for a long time.
DeMello is obviously a true entrepreneur. He's going to make it big in one direction or another. But this isn't the one.
MARKETER
JOSEPH CORNACCHIA
President, The Games Gang Ltd., marketers of Pictionary; turned down DeMello's request to market The Blue Chip Edition
This is a tough call. I think WSG's product is well done, but I can't tell whether it's going to be successful or not. When Tim showed us the product, we were fairly excited at first to take it into our line and sell it to stores. Then we estimated the number of phone calls each player would generate and realized we could get into a real jam if we sold 200,000 or 300,000 units over the next two years. Tim says that not everyone calls, that the phone calls dry up after the first month. Well, if that's the case, then it's not going to be successful. I told him I still think it's a great product, but maybe he should rethink it.
To me, he's selling $100 worth of smoke -- the phone calls. And if Tim's right about usage patterns, the player is going to figure out he's paying a lot of money for phone calls he's not using. That's what I thought was wrong. I would bring out the game for much less and have people pay an extra charge for the toll-free calls, or pay for the calls themselves.
The game needed testing. What has to be determined is whether the public will respond to the product and have fun playing it. Is it a game or an educational tool? I perceived it as a game, because the stock market is a game. If the public sees it that way and is willing to spend the $100 or so, it will be successful. If, on the other hand, it's educational, then the educational emphasis should be reflected in its packaging and accompanying materials -- it should teach you about the stock market. Then say, "By the way, if you want to play with fake money, for another $5 or $10 you can join up and get monthly mailings and an account, and you can phone in and play the market like it really is the market." Tim's had it in Brookstone, and my guess is it didn't sell. I don't think it can work at retail.
