[ASLML] AOO Status

[Seth W Fancher]

At 10:58 AM 3/6/2004, ron mosher wrote:

>1. AoO, compared to any of the other pre-orders, has a monstrous Pre-pub 
>number(over 1300).
>
>2. Thus generating a lot of guaranteed money for MMP to print AoO, and 
>have some left over.

Can you define "guaranteed money" for me?  Are you talking about 
profits?  Or positive cash flow?  Cash flow seems to be the relevant figure 
with respect to being able to produce other products.  Now, MMP figures 
they want to make 10% on AoO pre-orders (and thus 40% on regular orders), 
the standard AoO would cost around $75 to produce.  Suppose they want a few 
to keep around afterward...say only ~100.  At $75 pop it will cost them 
$93,750 cash to produce 1250 copies.  They sell 1150  for $84 each and have 
income of $96,600.  So the "guaranteed" money is actually ~$3K.  That 
should go pretty far, don't ya think?  Or, are you assuming that the 100 
additional copies are going to fly off the shelves later?

>3. BV and ASLRB, need to be in stock for several years to aid in expanding 
>the hobby.

Maybe.  But I bet the profit margin to re-print them is a lot higher, 
making the cash flow break even point a lot lower.  Not that we will ever 
actually know, but I would bet that MMP could print 1000 copies of the 
ASLRB and have more positive cash flow after fulfilling the pre-orders than 
they will with AoO.  And I bet that the additional copies will sell far 
more quickly too.  And I bet that the profits are probably quite similar in 
absolute dollar terms...but a much higher percentage on the ASLRB due to 
its lower cost.

>4. Their pre-print numbers are tiny, and could not financially support the 
>number of "back-up" or "on the shelf" copies we all seem to agree are 
>needed for newbies.

Given that ~500 is "tiny" and ~1300 is "monstrous" I expect that after my 
brother-in-law orders his two copies that the ASLRB will be into the realm 
of "medium" orders.  But again, I would ask you to clarify what you mean 
here.  If by "financially support" you mean generating positive cash flow, 
I'd say that you are absolutely dead wrong.  I would bet that MMP could 
print 1000 copies of the ASLRB, ship the 500 pre-orders and be in at least 
as good a position from a cash flow perspective as with AoO.  Sure, 
revenues may be less.  But I think cash flow is probably the most relevant 
metric when looking at MMPs economic viability.


>5. AoOs "extra" money can help support the  BV and ASLRB needed copies.

Again, please define what "extra" money you are talking about and where it 
comes from.  If MMP has revenues of $100,000 from fulfilling AoO 
pre-orders, but it cost them $100,000 to produce them, MMP does not have 
any money, let alone "extra."  They have an inventory of games and they 
have a profit (probably pretty small) on what they already sold.  But for 
them to actually generate positive cash flow, they will have to sell the 
"extra" copies of AoO that they have in inventory.  And I bet that the 
ASLRB and BV will sell far more units/month once pre-orders are filled than 
AoO ever will.

>In other words, how often do you want BV and ASLRB to need to be 
>reprinted? One time with enuf for several years, or every two-three years 
>with them OoS for 1 to two years of those years between printings(like we 
>have now)?

Again, I would bet that the reason that these items have been OoS for 
several years is because MMP lacks the positive cash flow to make this 
happen.  Above, I figured that MMP would probably spend ~$100K to produce 
AoO.  Bet they could print up ~2000 copies of the ASLRB for that same 
$100K.  And I bet that would last at least several years.  Or, they could 
probably print up 1000 copies of the ASLRB and ~750 copies of BV.  If 500 
copies is the sum of 3 years pent up demand, that's enough RBs for three 
years, and enough copies of BV for the long haul.

Or, they could put out the eASLRB too, which I bet has even higher profit 
margins and lower production costs (ie less cash flow out).

In any event, I think that your theory that MMP is better off financially 
by producing AoO first is badly flawed.  Other than gross revenues, MMP is 
worse off in probably every financial aspect printing AoO.  unless they are 
already making 40% profits on the pre-order price...that could be, I doubt 
we will ever know.  But, given the crying, whining, etc, I don't think MMP 
is making a whole lot of money on pre-order stuff.  I bet that they cover 
their cash outflows with the P#.  I bet they rely on additional sales to 
start showing positive cash flow.  And that's based on the rationale that 
MMP expressed when they explained why the went to the P# system.  They 
wanted to cover their cash outflow with the pre-orders.

Be well.

Seth