Gen Con: An Investor's-Eye View of "The Best Four Days in Gaming"

It's probably not too much of an exaggeration to say that there's not a gamer in America who hasn't heard of Gen Con.


At GenCon, the weird and wonderful come out to play. All photos taken by author.

A dozen years after Hasbro (NASDAQ: HAS  ) sold the franchise to Gen Con's own CEO, this has become the largest "gaming" convention in North America -- and just held its most successful event ever in Indianapolis.

A record 56,614 gamers visited Gen Con 2014. Weekend "turnstile attendance" hit 184,699 as gamers swarmed the Indiana Convention Center, shopped, played games with their friends for eight hours straight, went home for some shut-eye, then returned to start right back up again the next day -- for four straight days.

Nor was this year a fluke. For four years in a row now, Gen Con has boasted 10% or better year-over-year increases in attendance. Since emerging from bankruptcy protection in 2009, the conference has literally doubled in size. And no wonder. According to Gen Con CEO Adrian Swartout, this year offered gamers "the best attendee experience yet," with more than 370 separate exhibitors serving up over 14,000 separate events to Gen Con attendees.

A Connecticut Yankee in King Arthur's Court (of a sort)
As an investor, these kinds of numbers grab my attention. They suggest a large and growing market is represented at Gen Con, one that few investors even know exists. And so it was that this year that I made my first trip to the convention to see what all the fuss is about.

There was quite a lot of fuss.


The big event.

Dungeons & Dragons lives!
Dungeons & Dragons dominated the headlines for this year's Gen Con, with Hasbro subsidiary Wizards of the Coast plastering the Indiana Convention Center with banners touting the new fifth edition of Gary Gygax's venerable tabletop role-playing game.

Hasbro unveiled the new Dungeons & Dragons Player's Handbook at this year's Gen Con. With a small store selling the first few player modules for the new gaming system, days-long demonstrations of the new game in action, and an hours-long after-party on Day 2 of the convention, Hasbro did its best to drum up a lot of press attention for the new product.

At Hasbro itself, though, D&D remains lost within the larger toy empire. Search the company's 10-K filing with the SEC, and you'll find not so much as a footnote mentioning D&D. Not a dungeon to be found in there, nor a dragon, either -- and no breakout of results from Wizards of the Coast.

Deal me in
Indeed, the big revelation about Gen Con was that it's about more than just Dungeons & Dragons. Much more.

Despite all the publicity, D&D occupied only one half of one of the convention center's six main exhibition halls. Role-playing games such as Pathfinder, miniatures activities like Warhammer, popular board games including Settlers of Catan -- and scores more -- featured heavily at the conference. And the real stars of the show were increasingly popular card-based fantasy games -- Yu-Gi-Oh, Pokemon, and especially Magic: The Gathering playing cards (like D&D, a property of Hasbro) being the heavyweights. 

How big is this segment of the gaming industry? In 2013 alone, Magic: the Gathering (or "MTG," as it's commonly known) saw nearly 600,000 player tournaments held around the globe in 2013. Fellow Fool Andrew Marder recently crunched the numbers, concluding that MTG is worth $250 million in annual sales to Hasbro, a figure that has nearly tripled over the past five years.


Magically large revenue.

And if you think that's big...
That $250 million is big money. But Hasbro is still just one small segment of the wide and widening world of tabletop gaming that Gen Con represents. One company out of more than 370 companies manning the booths and running the gaming tables at Gen Con this year.

Video game publisher GameSpot reported that 170 million Americans now play video games. Some analysts argue that such video games (a market covered by Gen Con, but not its primary focus) are replacing board gaming in America, citing figures such as the $15.9 billion of revenue in digital game software and content generated in 2010, versus the $1.3 billion that Hasbro raked in as "Games" revenue last year.

Other pundits, though, point to the strong 10% to 20% annual growth board games have experienced over the past decade, arguing we're now in a "golden age for board gaming." Market researcher ICv2, for example, noted that "hobby" games (which are right in Gen Con's wheelhouse) were a $700 million business in 2013.

Perhaps the most important point for investors is this: The fast-growing world of tabletop gaming remains wide open to small and independent players. In a world in which Hasbro is one of the few big, publicly traded names in gaming, companies like Mayfair Games (publisher of Settlers of Catan) are gaining heft. So are smaller, as-yet undiscovered-by-investors companies including Privateer Press, Paradox Interactive, Steve Jackson Games, and Wyrd Miniatures.

Whether these smaller, privately owned players ultimately grow up into franchises the size of Mayfair -- or Wizards of the Coast, or even Hasbro itself -- remains to be seen. Maybe, like Wizards, they'll instead be brought into the fold at Hasbro, which can use Gen Con as a "farm team" from which to pluck the best ideas for its own portfolio of games.

Either way, it's a dynamic environment offering rich possibilities for investors to get in on the ground floor at new gaming franchises. It's one I will be watching as an investor as I return to Gen Con time and time again, much like those 184,699 "turnstile" attendees.

Gen Con returns to Indianapolis on July 30, 2015. 

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