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Post by thebigcrabcake on Jul 24, 2020 0:45:46 GMT
But any business that is currently heavily reliant on MTH advertising dollars, no that's a whole different story. I’m wondering...what are these businesses that are heavily reliant on MTH advertising? I know that MTH is one of many sponsors of the OGR Forum. They might run half a page in OGR, CTT, and MR. But who is so heavily reliant on their ad dollars? Magazines like OGR, CTT, and MR are heavily reliant on ad dollars to exist. The cost of a subscription is basically a break-even on the printing, postage and handling of the Magazine. Any profit these publications might see comes from Ad dollars. As ad dollars move away from print media, Magazines shut down forever. Just look to your local newspaper that no longer exists for this very reason. As time has progressed many publications are seeing smaller and smaller margins. Most have reduced the number of editions they produce each year while they try to hang on. It won't take much to put some of our favorite magazines out of business. When MTH stops advertising, there will be a chain reaction of advertising reductions by any company that was competeing with MTH, most notably Lionel. Why? Because MTH and Lionel are the Coke and Pepsi of model trains. They have a virtual duopoly on the market and when that happens, advertising is an "Arms Race". When Lionel finds itself in a functional monopoly, they will no longer need to advertise with the exception of attracting "New" customers to the market. The loss of 100% of MTH AD dollars and 80% of Lionel AD dollars could be the straw that breaks the camels back. It's not that these figures are huge, it's more a function of Magazine margins being paper thin. Forums are another story. MTF is funded by Google ads so they shouldn't be affected. OGF is Member sponsored so we won't be affected either. OGR has some Member funding from selling digital access but mostly they are funded by direct Model Train advertisers. They have a decent roster of advertisers but the expense of maintaining their enormous database is extremely high. I would expect their margins are fairly vulnerable. Other ripple effects include the small Hobby Shops that are just getting by. I'm talking about the one's that stock mostly MTH and only a little Lionel. This has been where MTH made inroads by offering very favorable payment terms while Lionel has demanded significantly shorter terms and in some cases a "Pay as you go" approach. With MTH gone and no ability to get the substantial line-of-credit needed to sell Lionel products, these shops will begin to sell "Estate collections" (Used) supply and eventually close down. Without MTH as a competitor, Lionel will move to a predominentley Web-based strategy with a few large regional Hobby Shop sellers acting as distribution centers. It's already happening. The mid-sized hobby shops will disappear not long after the little ones. The only way to save things is for somebody to fill the MTH void. Maybe Menards starts a higher quality line. Maybe 3rd Rail starts a lower quality line. Maybe a Chinese Firm puts the tooling to work and joins the market. Either way, the MTH departure without a succession plan is a BIG deal. A BIG problem. The writing is on the wall. It's not opinion. It's Economics 101. Emile
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Post by Deleted on Jul 24, 2020 1:23:17 GMT
More than hitting a nail on the head. It is another nail in the coffin.
Gary.
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Post by anjdevil2 on Jul 24, 2020 12:47:47 GMT
So, I'll throw in my 2 pesos.......
Yes, I agree, IF Atlas was smart, the could buy the tooling for the engines and rolling stock. I am not much on DCS, I never liked that system and felt it was too high of a learning curve for my tastes. TMCC is licenced and would be great in that tooling. Or even conventional. Atlas could actually become an "MTH" with it's roster of N HO and O products. It already has a very nice track system (I'm not high on the switches, however).
If Lionel bought out the MTH roster and the accessories (which I think are superior), that could be a win. Here's why: Some of the Imperial stuff could be Vision Line. Lionel is down sizing to BTO (and frankly, not happy with the S1 or the SP4444 based engines, curves I have are O48 at best). The Rail King stuff is ripe for LionChief 2.0 or even conventional. A LOT less development time and ready for market. One of MTHs failings is using the same sounds for lower level engines (yes, Lionel did it as well, but with LionChief, that has changed a little). Lionel could also absorb the S and HO lines. They are already into Flyer and running into HO. Instant market share. FlyerChief 2.0 is ready to go.
If I had the money, and I'm not even close, I'd buy the O scale sector and the accessories. TMCC and conventional the whole line, including the accessories. I don't need track, there are a multitude of track purveyors from Atlas, Lionel, GarGraves, Ross, and Menards who has obviously picked up the tubular side.
DCS is going to be supported - that has been said. That's fine, but I'm not interested.
CTT has been MTH heavy because Lionel doesn't send them engines for review like Mikey had. So, what to do? CTT need to change their thinking.
OGR is fine, they give protection to those who advertise on their site. The forum, for me, is useless. CTT and OGR will survive.
My train budget has been busted more times this year than I will admit. Cooped up here in Central Jersye, I'm buying more. Just purchased a caboose from Holly Beach and ordered another Holly Beach exclusive. I've spent thousands - no joke. I think that the COVID BS has spurred spending but that's my observation.
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Post by dennym57 on Jul 24, 2020 13:59:47 GMT
I'm wondering will Lionel jack up their prices. Someone may have mentioned that, but I had to ask.
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Post by JDaddy on Jul 24, 2020 16:39:29 GMT
I guess I am confused. I thought MTH was only shutting down per its name under Mike. The employees will pick up and carry the company from there. Nobody is going to buy DCS systems and boards with out the locomotive. It wouldn't survive. If the company will carry on and it chooses to thrive, it will have to offer future locomotives, train sets, and rolling stock, etc. I bet track and accessories carry a high rate of return as well. Like I said before, first thing I would do is set the tool up for more remotes!
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Post by ptc on Jul 24, 2020 17:04:31 GMT
"I guess I am confused. I thought MTH was only shutting down per its name under Mike. The employees will pick up and carry the company from there. Nobody is going to buy DCS systems and boards with out the locomotive. It wouldn't survive."
Not sure of that at all, John. I understand that the MTH world headquarters has been liquidated, so anyone considering a purchase would be facing a good deal of start-up costs. I bet it will take some very deep pockets for a few employees to fund any takeover. Not to mention the risk of having manufacturing based in China with all of the uncertainties that involves today. My guess would be that Mike wants a clean break, so holding paper for any buyer is questionable.
Mike's had a good ride and has chosen this time to exit stage right. He is a shrewd businessman and loose strings no doubt are not part of his game plan.
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Post by anjdevil2 on Jul 24, 2020 18:11:32 GMT
I guess I am confused. I thought MTH was only shutting down per its name under Mike. The employees will pick up and carry the company from there. Nobody is going to buy DCS systems and boards with out the locomotive. It wouldn't survive. If the company will carry on and it chooses to thrive, it will have to offer future locomotives, train sets, and rolling stock, etc. I bet track and accessories carry a high rate of return as well. Like I said before, first thing I would do is set the tool up for more remotes! I was my understanding that the employees are buying/maintaining the electronics part of MTH and developing DCS further. Yes, I thought the same, but this was in an email sent a week after Mike made the announcement.
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Post by ptc on Jul 24, 2020 18:18:40 GMT
"I was my understanding that the employees are buying/maintaining the electronics part of MTH and developing DCS further"
I believe that another firm will be taking over this part of Mike's business, not the current employees.
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Post by JDaddy on Jul 24, 2020 20:05:30 GMT
Wow really? I guess there is more information out there that I have not heard. That is my biggest weakness...not being able to identify at what stage of grief I am in … I am mired in stage 2 - denial
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Post by Deleted on Jul 24, 2020 20:20:57 GMT
And just think....here I am, avoiding all that angst!
Not ONE piece of MTH on the property! No stupiphone 3.0! Computers are XP! Engines are flatheads! 1911 is 1915!
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Post by rockymountaineer on Jul 24, 2020 21:07:24 GMT
Too much uncertainty these days everywhere we look. The last place I want more uncertainty is here in a hobby. So no more big MTH purchases for me that carry significant risk, and that includes locomotives. If a piece of rolling stock catches my eye, that’s fine. But no more big investments until ALL the dust settles.
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Post by ptc on Jul 24, 2020 21:26:30 GMT
"But no more big investments until ALL the dust settles."
Very smart approach.
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Post by dennym57 on Jul 24, 2020 21:39:22 GMT
I geuss I should buy a RailKing engine before the prices jack up. I have my eye on one.
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Post by david1 on Jul 25, 2020 3:18:04 GMT
The one thing I think that Mike wolf dropped the ball on is not having a succession policy already in place. If that is true then it will be that much harder to sell the company in one piece if that was his plan. I can't see other modelrailroad company's wanting to invest cash in this financial climate to buy parts of MTH. As far as AtlasO goes I don't see them doing anything, they have been reluctant to invest in the O GAUGE line since Jim Weaver died. They just keep using the same tooling with different paint schemes in the O gauge part of their business.
Of course this all a guess and we will not know for sure till the fat lady sings.
Dave
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Post by rockymountaineer on Jul 25, 2020 3:54:47 GMT
.... Of course this all a guess and we will not know for sure till the fat lady sings. .... Dave, that's precisely why I've stayed out of the fray regarding MTH futures. There's just so much we don't know. And speculating on the company's purchase by employees or an outside party is useless -- although admittedly "fun" to do at times.
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