A Critical Look: End of an Era?

It's been awhile since I talked about the state of the industry as I see it here, in Saginaw. Much has changed since that last blog post many years ago, and unfortunately, not all of those changes were for the better. While there were some positive changes in the industry (more like a lot, actually), I find it more helpful to discuss those things that require change to better the hobby world. Talking about success isn't without merit, but talk of failure is crucial to prevent past mistakes repeated.

The segment of our industry I am most concerned about is R/C aircraft. It has seen a drastic falloff in the past few years, though until very recently, seemed fine to us. This is because we group all of R/C aircraft (airplanes, helicopters, and drones) into one department in our store instead of splitting them up. So for a few years, the department appeared okay, when in reality, it was being propped up by the country's interest in drones. When that bubble burst at the beginning of 2016, the true situation appeared, and the free-fall we're currently experiencing in that department shows no sign of recovering anytime soon.

How did we get here? What happened to the segment of the industry that was our bread and butter for many, many years? I see two culprits.

First, and most egregiously, we (as in the industry) killed off the majority of R/C airplane builders. We did this by creating easier-to-fly airplanes and lowering the barrier to entry. Making the hobby more approachable was, ostensibly, a good call - why wouldn't you want to open up the hobby to more people? Seemed like a no-brainer.

What we couldn't foresee, however, was the end result: a completely lopsided market with few builders left and most of the people who start the hobby don't continue on. Without the time and energy being put into building, with so low a barrier to entry, people don't have as much invested in the hobby. What used to be hours of craftsmanship became simply a toy. With no ownership — no effort — the hobby transitioned from a group of people enthusiastically engrossed in R/C aviation to a small, hardcore sect and a much larger group that tried it once or twice and moved on. We can't seem to latch onto new customers that stick with it. And the existing ones? That's where the second culprit comes in.

Cheap hobby outlets like HobbyKing have proven to be devastating...

Cheap hobby outlets like HobbyKing have proven to be devastating, taking away long-time customers who are lured away with the low prices, all while operating costs here in the States continue to rise. Minimum wage has risen in Michigan over the past few years, but margins and prices haven't, making it harder and harder to compete with the vast selection and low prices that foreign-owned websites offer. At the same time, small, independent manufacturers have popped up, offering a (cumulatively) wide selection of different aircraft, few of which are available to hobby shops. The major hobby distributors can't come close to competing with this vast assortment.

The net result is a decentralized market which has moved from the various hobby shops around the country onto the Internet, and ultimately, the downfall of the entire hobby aviation industry. Without hobby shops, there will be fewer and fewer places for beginners, interested in the old ways, to learn to build and seek advice, in turn shuffling those new pilots into the rank-and-file ways of the "buy it, fly it, crash it, move on" crowd. Simply put, without some intervention, the R/C aviation industry will eventually transition from a hobby industry to a toy industry.

I'm at a loss to offer up a solution to this problem; the only one I see is a quick and harsh 180 degree course-correction, and that is not something either of the two major players (Hobbico and Horizon Hobby) can execute — especially Horizon, a company that has — somewhat humorously, if you have a dark sense of humor — put themselves in an awkward position by developing technologies that ONLY work if the status quo is maintained. The tent-poles of their R/C aircraft offerings are AS3X and SAFE - very technically-involved tools that only seem to work well when built into the aircraft they sell. The thing that differentiates them from the others is exactly the thing that will prevent them from course-correcting away from oblivion.

I'm looking forward to our upcoming trip to the Toledo Weak Signals show in April, where I hope to see the future of the R/C aviation hobby on full display. Hopefully something will wow me there, and provide some clarity as to what path rejuvenates the market — but I doubt it. I personally suspect that we've gone down our current path too far, and turning back now is beyond our capabilities. Instead, the hobby industry will have to learn to live with this new, stifled R/C aviation market, and hope that someday we circle back around to a time when kits and builders exemplify the R/C skies.

Never before has our R/C surface (meaning cars, trucks, and buggies) department so thoroughly dominated our sales as they did in 2016. That department saw an increase of more than $50,000 year-over-year, most especially surprising when the store, as a whole, was down for the same period. The name at the head of the table, of course, was Traxxas. Eight out of the top ten products in our store last year were from the R/C giant down in Texas. If you frequent our store, that isn't exactly a shock, but it does beg the question: why do we focus so much on Traxxas? Where do the other big names in R/C fit in our world view?

Our philosophy here is to always put the customer first. It's easy to say, and probably every business you've ever visited claims to do this, but we don't just say that — we live it. You can see that in the products we line our shelves with, and how we conduct ourselves in the store. Traxxas is a big part of that. Traxxas has a history that none of the other R/C manufacturers should ignore. The Rustler and Stampede have been, consistently, on sale since 1994. That's twenty-two years, uninterrupted. This time has allowed third-party manufacturers the stability to produce aftermarket items for those cars, bolstering the value those vehicles have to consumers. It's a classic situation of a symbiotic relationship between Traxxas and the aftermarket companies, in which each company's products benefit from the other. No other R/C manufacturer has that kind of relationship with third-parties.

If the definition of an economy is the flow of money through a society, the stagnancy that these lesser brands offer does nothing to bolster the companies that sell them in the first place.

Basher-centric brands like ARRMA and ECX can't hope to compete with that level of symbiosis, and so they compete on the one thing they can control: price. The problem is that, while the prices of these vehicles may be less than Traxxas' similar offerings, their value is still lower, because the customer is still put in the position of having to either jury-rig aftermarket parts together, or simply keep the truck as it was when purchased — and a stagnant truck doesn't give the customer what he/she is looking for, it doesn't infuse more money into the local hobby shop, and ultimately, it doesn't help the industry at large. If the definition of an economy is the flow of money through a society, the stagnancy that these lesser brands offer does nothing to bolster the companies that sell them in the first place.

Why none of these brands have looked with critical eyes at Traxxas' business model and mercilessly copied it, I don't — can't — understand. It seems so simple. Until they do, however, Traxxas, even with its flaws, will be our R/C surface brand of choice. Speaking of Traxxas' flaws...

I'd certainly like to see Traxxas reboot their battery line to make some semblance of sense. Their prices are too high, their batteries aren't hard-cased, and while the ID connector is a great idea on paper, the implementation of the technology, and how closed off it is, leaves me dismayed. We don't carry Traxxas batteries on hand, and until such time as they get their act together, we won't. I see a way for Traxxas to protect the entire domestic hobby world from the Chinese outlets — which of course, will never happen, but a guy can dream, right? If Traxxas were to refit their speed controls to include the ID connector, while simultaneously licensing their technology to domestic battery manufacturers like Venom, MaxAmps, Horizon, Hobbico, and others, then Traxxas would be able to prevent non-ID batteries from working in their cars. Without the ability to produce compatible batteries, the Chinese manufacturers would lose market share, protecting US-based manufacturers and hobby shops. Like I said, this will never happen, but it's an interesting thought.

Those are just two of the departments we deal with, albeit the two biggest. These aren't the only problems vexing us in these departments, either, but one can only cover so much at a time. Perhaps I'll cover some of the other problems plaguing the hobby world, as I see it, sometime soon. There's no such thing as perfect, and even if there were, our industry is quite far removed from it. There's always room to improve.

Whether you agree or disagree with the things I've said, sound off in the comments. Le'ts start a conversation.