"The boardgaming industry isn’t really all that different from any other competitive industry, at least from an economics standpoint.”

I disagree.  Unlike many other competitive industries, I believe (but can’t verify) that many or most entrants are not primarily motivated by profit and return on investment.  This means that there will be more entrants than usual.  What keeps the industry from imploding due to low prices and profit is the fact that the various games are imperfect substitutes for each other - so publishers are more interested in finding the next great game than they are in cutting prices.

"In the next 5-10 years, I see the market continuing to grow, but I don’t think that publisher profits will follow.”

I wouldn’t be surprised if this statement was right on the money.

Jonathan,

You’ve obviously had some training in economics. 

I would disagree that there are companies in the industry that are not actively seeking profit.  Publishing is a LOT of work, and I don’t know of anyone in the industry who loves all the headaches enough to do it for free. 

Your imperfect substitute argument is a good one, I think.  The question is, at what prices do consumers stop caring about what game they purchase and start caring about how much or little cash it took to purchase it?  Those are questions without clearly defined answers, I believe.

I’ll stand by my statement that “most entrants are not *primarily* motivated by profit...” Of course everyone wants to earn money - and to some degree need to.  But when you decided to start Valley Games, which more characterized your thought process?

“I love games and it would be fantastic to get some of these classic games back in print.  Maybe I can publish them and even make some money at it.”

or

“I’m really looking to start a business and make some money.  Hey, I know something about games, and I enjoy them too.  I think I’ve got an idea and a business plan that could really take off.”

Now as far as how much consumers will substitute among games based on price - of course it depends on the consumer.  I’m a notorious cheapskate, so when I see a game like Vikings selling for $20, I figure I’ll take a chance.  And when I see a game a game like Containers selling for twice that (what I’d expect to get it for from Thoughthammer), I figure: it looks interesting, but I’ll play someone else’s copy - unless it really rocks my world.  But clearly not everyone is like me.  So - no revelations here - is when it comes to games, price matters, but sometimes it doesn’t matter that much.