The Problem: Intellinitiative's board games were flying off the shelves. Then, a giant brand muscled them out of the store.
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.
Confronting Target, Clay realized, would be self-destructive to say the least. After all, The 80's Game still sold well there and the chain had no plans to pull it. Instead, he turned his attention toward developing new channels for The 90's Game. He cold-called buyers for retailers large and small and attended every industry trade show he could find. Fortunately, a number of chains and specialty stores already had The 80's Game in at least a few of their stores. After hearing Clay's pitch, several chains -- including Borders Books, FAO Schwarz, and Toys "R" Us -- agreed to carry The 90's Game in a greater number of outlets. Siegert also contacted independently owned specialty stores, as well as regional chains -- like Books-A-Million, which has 200 stores in the Southeast. As it happened, many of these stores were unhappy dealing with giants like Hasbro, from whom they could rarely get the same discounts offered large competitors. He also began targeting foreign markets, getting the 80's and 90's games onto the shelves of 200 stores at two Canadian retailers, Chapters Indigo Bookstores and Calendar Club Canada. "It's one more way to diversify our sales chain," Siegert says.
Will it be enough to offset the Target debacle? Siegert slashed his 2004 projections for The 90's Game by half. Long-term, he still believes in the power of volume sales. To generate more, Intellinitiative launched a new product this August, The 80's-90's Combo Game, with 600 new questions about each of the decades and a lower retail price. The Combo Game was not available in time for the crucial fourth-quarter selling season. But the game is selling briskly through the company's website, Siegert says.
While Anne has taken a major pay cut and reduced her involvement at Intellinitiative, Clay is optimistic. He has meetings scheduled with buyers from Sears and Wal-Mart. And the games seem to be selling well at most of his new, smaller retailers. He's not rushing to create another game just for the sake of selling something new. "Every year at Toy Fair," he explains, "you see 20 or more things made by private companies. Almost everything fails. Right now, it's all about making what we have work at retail. Then we can figure out the next game we want to work on." After a turbulent year, Siegert is starting to feel, once again, like the guy who knows the answers.
Does Intellinitiative have a future without Target?
The first thing Intellinitiative did wrong was not to give its games a strong enough brand name. Trivial Pursuit is a brand name. The 80's Game and The 90's Game are generic. If its corporate name were great, it could use it. But it is something that sounds like a computer-chip maker. No matter what happens with sales, building a brand name is critical -- even if the company has to acquire the name at a cost. As far as rethinking distribution, Intellinitiative could be firmer. If Target decided to go to Trivial Pursuit, why not go straight to its competitors?
Laura Ries, President, Ries & Ries, Atlanta
Intellinitiative has a great product, but it has no way to protect its creations, or its brand, and there is no barrier to entry in making the kind of games it makes. I would recommend that the company try attracting a big guy, someone to produce and distribute the games it designs, and do national advertising, which is too expensive for a start-up. When we released our trivia game SceneIt we predicted Mattel would be a competitor, so we struck a licensing deal with them -- and now other big brands can't beat us.
Dave Long, CEO, ScreenLife Entertainment, Seattle
I don't know what the shelf life is right now for '80s and '90s games. Trends die. And it's an uphill battle anytime a competitor with deep pockets comes in. Intellinitiative needs to have other ideas if it wants to become a game company. It was ahead of the curve with its early products, so I'm sure it has creative people. They need to find the next thing that will resonate with customers. Selling at stores where they aren't lost in a sea of games will keep them alive in the meantime. Funky boutiques and gift stores that sell to college kids can be gold mines.
Tamara Leigh Murphy, President, Winerd Entertainment, Chicago