Thursday, June 18, 2009

There Was No Paintball Bust

Okay, that's not completely correct if you wish to say that the fall off in sales (& apparently participation) from the boom years constitutes a bust. What this is really about is offering an alternative theory for the present state of paintball generally. And it's not going to be a paintball based theory, it's going to be an economics based theory. I intend to keep things simple. (So don't hesitate to ask questions, disagree or whatever.)

By the way, this isn't the scheduled post. That post, Paintball Diversity, will be up tomorrow and will bump 'Return of the Pro Loser' to Saturday or into next week (again). (For you newer readers you're beginning to see how this scheduling business works out, aren't you? Trust me, this is as good as it's gonna get so consider the schedule one for likely posts. (The intersection of the best of intentions and reality.)

Conventional wisdom has been that the "bust" following the paintball boom was caused by paintball-related forces that can be corrected. Unstated is the presumption (hope) that fixing the causes of the bust will restore the boom. Hence we're now talking about the price of paintballs and blaming the ROF for all our ills. (It's not often you get to use "hence" in a sentence and I couldn't resist.) What if we've been focused on the wrong part of the boom bust cycle? What if the boom was "unnatural" and the bust is actually a return to something more like normal or at least predictive? After all, the bust mentality is mostly an industry perspective that has trickled down into the tourney world because of reduced sponsorship allotments. (I'm not suggesting some industry types aren't struggling. Only that their struggles are not the direct result of fewer players playing paintball.)

My working theory is this: The whole period of significant paintball expansion (rec, scenario & tournament) roughly corresponded to an economic period of artificial economies inflated with cheap dollars and cheap debt which, in essence, created an unintended bubble in the paintball industry and as the big bubbles burst and impacted the wider economy the same happened to paintball. If so, we can't rationally expect to predict any future result based on past outcomes because they were the product of a distorted market. [And the potential discrepancy between tourney and rec participation against scenario type participation in this environment is likely explained by the relative infrequency of scenario events and the known quantity factor of most of the participants. (They know what a big game is like and they already are motivated to play paintball within that context.) Whereas the tourney and team costs outstrip the others by a wide margin and rec play (and first time play) has a high initial cost against uncertain motivation. It's easier for ballers to justify the occasional discretionary expense of scenario play than it is to commit to the longer term cost of being on a team and training and competing. Or against a rec player's ambivalence measured against a traditionally steeper per time of participation cost. At any rate that's not really the point. Just an alternative explanation that fits the alternative theory.]

Here's how it played out: The bubbles, first in tech, then in real estate mitigated the impact of two minor recessionary cycles thru the late 90's and into the early 00's but in doing so monetary policy flooded the marketplace with cheap dollars and cheap dollars encourage immediate consumption (instead of savings) and that wave was followed by (and overlapped) a wave of cheap debt which also encourages consumption. So paintballers did what everyone else was doing, they consumed.
What you ended up with isn't an artificial rise in the popularity of paintball but an artificial rise in the accessibility of paintball. More peeps who wanted to were able to or chose to finance that desire (at least in part) on cheap available debt. And that artificial rise in accessibility caused an unrealistic (and unsustainable) level of expectation in the industry that made the bust worse in terms of overproduction in the short term and unsupportable production capacity and unresolved inefficiencies. The result has been dangerous debt loads for some, cut backs in employees, consolidations, scaling back and assorted other measures designed to realign with the current market realities.

Curiously enough, if that happens to be true, largely true, substantially true or even partly true a workable small ball (the 50 caliber solution) might, in fact, actually do (largely, substantially, partly) what its prospective makers claim it will do in terms of transforming the marketplace. Who'da thunk it?


houdini said...

You could have a point seeing that America's boom time has rolled on since 1982 and has only suffered two minor recessions in 90-91 and 2001 which lasted a total of 16 months. I don't think the current recession could be considered minor - let's just say it's been a global kick in the face for paintball world-wide.

I also hear those around here talking about paintball hitting the 'saturation' point but how does one equate when an industry has reached this point?

I don't see paintball as a trend sport but like other non-mainstream sports like skateboarding, paintball may have reached a plateau in popularity and all it's going to take is a little more media coverage and exposure to kick start the popularity again. One thing that hasn't been mentioned is the competition from other sports and hobbies. I suspect that in the States the growth of the X Games generation has seen skateboarding, bmx, moto X and in-line skating gain a huge chunk of teenage interest.

Given that these activities are a lot cheaper and more accessible maybe in these harsh ecomnomic times teenagers have turned their attention back to these activities. As most of these sports are also individual sports teenagers don't have to rely on a team to succeed. Now that there is no ESPN coverage of paintball anymore the general public and an international audience don't get to see paintball played anymore which is a huge loss to paintball publicity and promotion.

I live in South East Asia where tournament paintball has only been played since 2006. Tournament paintball in neighbouring Malaysia has seen a steady rise in popularity probably riding on the ripple effect of tournament paintball in the States. The rec-ball fields are seeing growth in participation because they can sell the sport as a 'team building' excercise (for sure there is also hundred of staff who would love the opportunity to shoot paint at their bosses) and as long as the fields market themselves properly and provide decent service they will always survive even with high prices.

I don't see the woodsball market or recball market having problems in maintaining customers if they a creative. There is no right or wrong way to create game-types at these venues so it's simply a matter of offering a product that is 'entertaining'

to be continued...

Reiner Schafer said...

Well, when an economy is in a "boom" cycle, money is being spent and it usually drives all sectors including leisure and entertainment. So yes, the paintball industry was most likely artificially "larger" than it should have been.

We started from Zero in 1981, and grew. We probably grew a little past where we should have. Industries in growth states usually do that as those involved in the industry are always tryingto be ahead of the curve, so for instance, paintball prices dropping in price due to increased attendance and consumption, most likely were dropping quicker than they should have. In the end, the artificially low prices were attracting more people than there really should have been involved in the game at that point. And then prices had to come back up.

But...explain why paintball, as an industry, slumped way ahead (in time) of most other leisure and entertainment industires. It slumped long before the world felt a recession coming on.

I'm not buying your theory. I believe in free enterprise and believe that any leisure activity is going to attract exactly the number of participants who find value at what is being offered for whatever the cost of participating is.

Paintball has slumped because less people find value in it, as a leisure/entertainment activity. Those not spending their time and money in paintball, are spending it where they DO feel they are getting value. Leisure and entertainment equates to "fun". It all has to do with the Supply and Demand Curve for fun. Hence, if you provide a product that is a lot of fun, and it will have a higher demand. Lower the "fun" and you will lower the demand. It's really quite elementary. It's in the interpretation of "fun" that we get hung up. But from an industry perspective (rather than an individual's perspective), makig the product fun for the greatest number of potential players, is what is wanted. The problem here is that the greatest number of potential players are not the most vocal. We have a vocal minority, that influences much of what the industry does. That seems to be slowly changing, but it is verrrrry slow and there is a lot of resistance.

houdini said...

On the other hand the tournament paintball market is in trouble here since L Bros went bust. Lost jobs, tighter budgets and added family stress has seen many give up the sport.

Tournament game rules are at the mercy of the US and European pros and pro event organisations. Unfortunately grass roots tournament players and organisers follow the
trends set by the paintballs Pro circuits but at the lower end of the market these tournament players and teams don't get free paint, free
gear and field support and yet are expected to keep up with the trends the Pros are setting?

I struggle to motivate the rec-ball player to becoming a potential tournament player or the mech marker player to using an eMarker simply
because the costs here and the access to training facilities make it "too expensive" or "too time consuming to commit" (ok Singapore is an extreme case of paintball stuck in the dark ages where marker ownership is illegal and it costs US$206 for a case of paint because local filed claim their operational costs are too high)

Paint costs and paint consumption are big issues to me as a team leader and player. For me it's all about what's happening at a grass roots level so what my local field charges, how much it costs to enter tournaments and where I can play tournaments becomes a huge factor in
how often I can train and compete. Maybe some of these multi-national paintball companies should look more closely at how they can help
develop paintball more quickly in regions like mine. If paintball regains that 'International' appeal then the hype is sure to gain
momentum everywhere.

Paint prices are a huge issue to me as well but I don't see 50 caliber being the answer to my problem. If tournament organisers looked at ways
at keeping costs down for the average tournament player - the not so good, not so athletic player who may not want to get shot up so much by the guy with the modded-up state-of-the-art talking paintball marker that does everything but clean your toilet then maybe tournament paintball will see some new players willing to give it a go.

I gather this needs to be looked at at a field level in the States/Canada as well given the comments I've read.

Here we're seeing more players willing to compete in lower divisions with mech marker tournaments because 1. the markers are supplied by tournament organisers 2. the cost of participation is much less 3.players need less skills.

Given that this is the case then maybe manufacturers and organisers should look at how they can create cheaper and more accessible levels of paintball for new players. How much exposure could companies like Smart Parts get if they supplied low-end eMarkers to tournament
organisers to use for an intro novice eMarker division. Players all using the same markers and only having to pay for registration and

If tournament paintballers can be given any credit it must be because they are invaluable promoters of the sport because they talk
about paintball 24/7. Increase ease of access for these new players and you increase the marketing effect for paintball in general.

Just my 2 cents worth from another side of the world where paintball is in it's infancy.

Reiner Schafer said...

Houdini, some of what you say makes a lot of sense. I don't play tournament ball. I got out of it fairly quickly after realizing I would not have the time or the money (mostly time) to commit to it.

But as someone in the paintball business who was going to get into the speedball side of paintball as well as the recreational side of paintbal, I can share opinions on why I opted to stay out of the speedball side of paintball.

Tournament paintball is in my opinion based on a poor business model. Basically, competitive paintball amounts to an arms race. Pro players with paint sponsorships maybe can't relate to that fact anymore. But the other 90% of wannabe competitive paintball players that are footing the bill can't stay in a perpetual arms race forever. If they are lucky enough to get good enough, quick enough, they may end up with some sponsorships and be able to stick with it. But the others will, eventually, get discouraged and quit.

The point is, any business model built on the need for participants (customers) to always be spending everything they have in their wallet, will be continually losing those participants. It's just a lousy business to be in. New blood must be recruited continually to replace the constant flow of players that can no longer afford to take part.

raehl said...
This comment has been removed by the author.
raehl said...

Houdini, you are very wise.

Baca Loco said...

I'm not sure I'm buying my theory either but you make one assumption that isn't supported by any actual evidence. The timing of the participation slump. If it exists--and I think it certainly does exist today--it doesn't necessarily correspond to the beginnings of the industry bust which is the only place real numbers exist as far as I know. The industry slump pre-dated the larger economic decline when sales figures faltered. And sales figures faltered on two counts; a failure to match predicted growth and the resulting surfeit of product. (Much of the industry over-produced on the calculation of another year of unprecendented growth and when it didn't happen were stuck.) A couple of questions arise from this--did sales plateau or did they actually decline during the initial "bust" period? (I'm pretty sure they only plateaued.) And can a case be made that sales directly equate with participation? Since correlation isn't causation and no other real data apparently exists the flattening of sales may not reflect a simulataneous flattening or decline in participation.

Frankly, it's a miracle anyone over there is playing competitive paintball given the obstacles you need to overcome in your situation. That's dedication.

Baca Loco said...

And, of course, no single factor answers all questions or conditions. Lots of other factors have had their imapct, I'm sure, but the point of the theory is to revise the baseline from which we do our calculations when considering how best to move forward.

Reiner Schafer said...

Baca, you are right, there doesn't seem to be any real hard evidence that the decline in participation paralleled the decline in sales. I can only go by what I was hearing from fellow field owners across the continent at the time. Things were "slower" in 2007 and 2008. Were they down 19% and 20% as wholesale sales were? Probably not as paintball participation on any given day is made up mostly of renters and ocassional players that don't buy a lot of gear.

The drop in wholesale sales would most likely be due, in at least part, to what you (and I) mentioned being caused by a misjudgement of growth rates and overproduction of product.

But from the feedback I was getting at the time (a time of high consumerism, before the start of the current recession) was that things were defintitely slowing down on all fronts (except big scenario and milsim gaming). The increase in the sceanrio/milsim scene was/is more to do with a shift of participants. Not to say that Milsim hasn't attracted new players to the game, but it is as much of a shift as anything else. But the overall participation measured in player-days (or dollars and cents) was down.

I guess you can say I'm making an assumption, but as far as I am concerned, it is not an assumption I make without at least some feedback I was getting at the time. The guys in the trenches (field owners) were starting to feel the pain. Not all obviously (we were having record increases at our field for instance), but enough.

Reiner Schafer said...

I agree that there is no single factor that is responsible for any slump that has happened. But some factors have more influence than others. I also believe that some factors that have influenced declines are almost impossible to fix/reverse, which is realy daunting and most people don't want to admit or think about that. Denial in such cases is human nature I think. Who wants to admit irreversible failure?

Anonymous said...

First, I think that there is no "one" reason for the decline in paintball. Rate of fire and economy can both be part of the problem.

I projected this decline for a different reason in one of my original sales projections I made about 12 years ago. I think the boom was caused by the lowering of the insurance age for participants.
My theory is that the average player only plays for one period of time in their life (1-2 years). In the late 90's and early 2000's we were effectivly "double dipping" the potential player base. We were getting new players in their early teens and new players in their early 20's. As the people who played paintball in their early teens reached the age of 20+, the were not reentering the game for a ssecond time. This caused both a change in the demographics (younger) as well as cutting down the number of players.

Reiner Schafer said...

Yes anonymous. That probably kept the growth rate higher than it would have been had we not been "double dipping". It would be interesting to see, if the statistics were available, what the growth rate would have been, had the kiddies not been included in those years. Has participation among adults possibly been declining for a much longer time than we think? Have the kids chased the adults away (I know some think that) or would participation by the older players have declined anyway?

raehl said...

What would be interesting is the number of people who continue in any activity for more than 2 years.

I would guess that everyone only has time for one life-long hobby. So then the next question is, when do people usually pick their lifelong hobbies, and let's focus on hooking them then.

Reiner Schafer said...

Another good point. Loooking around at my personal friends and family, those that I would say actually have life long hobbies, most of them probably picked those hobbies up in their mid teens. (There has probaly been some research done on this.)

But some (many) don't have life long hobbies. They too might still want to play paintball. I guess those are the ones I have built my business around. Those people aren't going to make good tournament players I guess I'll keep them. ;)

Anonymous said...

We just had a tourney that was "gravity hoppers" only. Any gun was fine, you just had to use a gravity hopper. It was better attended than the other local tournament. We didn't even care what mode they were shooting in. It was called the "Shake n Bake Classic" since everyone was constantly shaking their hoppers to move the paint into the feed neck.

Reiner Schafer said...

Baca, I just reread your article and I don't understand what the .50 calibre ball is supposed to do. If your theory that paintball's slump is in part due to general economic reasons as you outlined, what exactly will a .50 caliber ball do? Is it the fact that it is supposed to be cheaper that you feel it will have an impact? Or is it that it will create excitement with the new equipment associated with the ball that will spur interest/spending?

Baca Loco said...

Well, yes, Reiner. All along I have been skeptical of the magic powers of the small ball. IF the small ball pricing does make paint more affordable and IF cost to participate is a significant factor--then the no bust theory makes the utility of the small ball look better--to me--than it did before.

And there is little doubt that a cheaper paintball would be a life saver for high end tourney play as we are almost certain to see another reduction in teams at the end of this season. (Though one might argue that new teams stepped in to replace the lost old ones. Not an argument I would make but ...)

Anonymous said...

Folks are STILL not really taking into account the effect of alternative 'action shooting sports' (lasertag, airsoft, chalk guns, rubberband wars, LARPs, etc)

I live and work in a town that has been at the heart of paintball for many years - right next door to some of the first commercial fields, former home to one of the first national publications - and all I hear from the 'kids' is "airsoft, cause it's cheaper - and the balls are more accurate" (and besides, those paintballs hurt)

Good luck to the intro of the 50 cal ball - but please stop touting the 'economic savings': why would anyone assume that the arms race dynamic will be any different for 50 cal than it was for 68? No matter how many 50 cal balls are in the case 'for the same price as 68 caliber', players are going to increase their volume to match/exceed their budget just like they do now.
This is not a move to 'help players economically', this is a move to split the established mfgs/distributors off from the core market.
I can't wait to see 'mixed' events, caliber re-sizing kits and the rules mess tangle that will ensue.
If the balls were going to be 6mm and the same cost as airsoft pellets, I'd say it was an economic move that might benefit players in the long run. Until that happens (not), its a marketing move and that's all that it is.

Reiner Schafer said...

Of course it is. But whenever you enter the market with a new product, you need to establish an advantage, or at least a perceived advantage. Shooting more paintballs for the same price is considered an advantage by most, or at least its not difficult to make them believe it is beneficial for them.

But I agree with you that it will do very little to make it more economical for teh aveage player. If we end up seling paintballs at close to half the price at local fields as they are selling now, it will, in my opinion, do much more harm to the industry than it will do good.

Players will spend the same but will shoot more. That does nothing for a player's wallet but changes the game dramatically. There will be an even lower percentage of the general population that will want to play paintball in that type of environment. In the end we will end up with less players playing paintball, but each player shooting more paintballs on average.

The biggest problem this creates, that even if many or most of the industry finally figures that out, it is very difficult to reverse that trend.

Of course as a recreational field owner who has figured this out long ago and caters to the larger part of the pie that prefers the lower volume game that higher paintball prices creates, I have to sit back every once in a while and shake my head.