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crimsonfist832 wrote:I'm confused by all this because I haven't a clue of what it means. But could someone please simply explain to me whats happenning. Is GW going to go bankrupt????

No, the hyperbole is just people on the internet doing what people on the internet do. I can't remember a time in the last 20 years when people weren't convinced GW was just about to go under because they charge too much. Yet here they are, the biggest company in the industry, by a long way.

Thing is, GW doesn't have particularly flash underlying indicators. Sales growth isn't great, and hasn't been particularly great since they expanded into the US all those years ago. Nor is it likely to suddenly become great, their core product is a niche product that's expanded everywhere it can across the planet. People take that and use it to declare that doom is coming for GW and the prices that are obviously too high because they're more than they personally want to pay.

Meanwhile there's a steady line of miniature companies going bankrupt because being a sustainable miniatures company is a really hard thing to do, and yet no-one was ever able to predict their demise. It's almost as if people are just speculating wildly...


Automatically Appended Next Post:

sourclams wrote:40k really is not a good game below 1,000 points.

That's right. But you're average starting player has no idea about that. What he sees is dudes in power armour and big guns and buys AoBR. He plays some games, paints some dudes and thumbs through his army bok and sees all this new stuff. He starts forming army lists; this is what I'll have at 750 points, this is what I'll have at 1,000.... It doesn't matter than the game sucks at 750 points, because in a month's time he'll have new stuff and he'll be at 1,000 points. It doesn't matter that it sucks at 1,000 points because...

This hobby is largely based on how awesome things will be with just a couple more purchases, it's why people keep expanding their armies, start new armies, switch from 40K to WHFB and back, dream of how awesome it would be if only Epic were mainstream. Then they go to some other company because thinking it'll be different if it isn't GW.

And yeah, sometimes it actually is better. I know 40K at 1750 points is a lot more fun than it is at 750 points. And I've gotten plenty of fun out of FoW. But the point is true or not we keep dreaming of the next purchase, whether it'll actually make things more fun or not.

sebster wrote:But the point is true or not we keep dreaming of the next purchase, whether it'll actually make things more fun or not.

That was a lovely apology for GW, but I wanted to point out the flaw in your conclusion.

It doesn't matter if people dream of the next purchase if they never put the money down on it.

And going by the evidence, as opposed to anyone's feelings about GW, it seems that fewer and fewer people are putting money down on GW product.

You're right that the company isn't going bankrupt any time soon. But the numbers pretty clearly show they are in an unsustainable position and need to change something about the way they do business in order to increase their sales.

JOHIRA wrote:

sebster wrote:But the point is true or not we keep dreaming of the next purchase, whether it'll actually make things more fun or not.

That was a lovely apology for GW, but I wanted to point out the flaw in your conclusion.

I read no 'apology' there. Why the use of such a loaded phrase?

sebster wrote:Automatically Appended Next Post:

sourclams wrote:40k really is not a good game below 1,000 points.

That's right. But you're average starting player has no idea about that. What he sees is dudes in power armour and big guns and buys AoBR. He plays some games, paints some dudes and thumbs through his army bok and sees all this new stuff. He starts forming army lists; this is what I'll have at 750 points, this is what I'll have at 1,000.... It doesn't matter than the game sucks at 750 points, because in a month's time he'll have new stuff and he'll be at 1,000 points. It doesn't matter that it sucks at 1,000 points because...

Maybe that is how it goes in a GW store or in some other area, but in my FLGS and in my area it's more like:

New potential player strikes up convo with guys playing games
"Hey, this game looks pretty cool" "Yeah, it's pretty cool"
"Is this how games are usually played?" "Yeah, typical game size is about 2k points"
"How much it cost to get into a game?" "Bout $500, sometimes more"

::cue conversation with Malifaux or WM/H players::

New players really seem to gravitate toward the cheaper skirmish games. Our new 40k players seem to be people who already played/collected 40k and have a respectable 1500+ force, and are simply new to the store in search of new players or having just discovered the gaming store.

prime12357 wrote:However, GW seems to be missing out on a big chunk of sales in assuming (and maybe even planning for) that new players will only make one large purchase ever. If they can keep people playing their game, they can continue to milk cash from their wallets (or their parent's wallets). In four years, I cannot add up the price of all the gak that I've purchased from GW, and I would assume that the ammount that some of the vets has spent is beyond astronomical. Of course, eventually the older players will have bought enough to be "satisfied," and will either stop buying product, or will begin to buy less. To keep the cash flow going, they need more players, and then the cycle repeats.

It is perception of value too. It seems to be a matter of strategy and GW chooses to ignore that by simply tightening the main rules and putting out codexes more frequently with SMALL model updates will encourage the veterans to BUY NEW ARMIES - This seems non-sensical to me, as the veterans need no recruitment and are the ones who are cash rich enough to afford every new army that GW puts out there...

In my case, the "streamlining" of the 40k ruleset followed by continuous GW price increases (at a time when GW Canada's product was on average 30-50% more expensive than ordering it from the US, shipping-in) led me to try PP which has a ruleset that I find more enjoyable, mostly due to the PP's increased unit level flexibility. As a direct result, my LIFETIME PP expenditures are almost even with my GW expenditures... and I am a 15 year veteran of the GW hobby!

-edit- I had a huge falling out with the main ruleset in the transition from 3rd to 4th edition. 5th Edition is an improvement, but won't bring back the glory days of 3rd in my mind. Saddly, GW has also killed most of the non-gaming things I loved most about the hobby: GD Canada, GT Canada, Battle Campaigns, Chapter Approved etc.

For me personally, GW's perceived indifference towards game balance in 40k coupled with their glacial release of ever-more-expensive army updates has made me re-evaluate my involvement in the GW hobby in the last few years. Money's tight these days. 2011 resolution is to mostly keep the PP collection even and downsize my GW collection in a major way.

i think its disgusting that you have posted this on a fourm, things like this are not meant to be seen by the public, i hope whoeverposted this on here gets found out and is fired.

daviessa wrote:i think its disgusting that you have posted this on a fourm, things like this are not meant to be seen by the public, i hope whoeverposted this on here gets found out and is fired.

Errrr.....the chap who posted it works at my University. Last I heard, their employment agenda wasn't regulated by GW.

You do realise all this stuff is in the public domain right?

daviessa wrote:i think its disgusting that you have posted this on a fourm, things like this are not meant to be seen by the public, i hope whoeverposted this on here gets found out and is fired.

Posted what?

If you mean the financial reports, international company and accounting law requires them to be published, so there is no problem.

daviessa wrote:i think its disgusting that you have posted this on a fourm, things like this are not meant to be seen by the public, i hope whoeverposted this on here gets found out and is fired.

Congrats on winning the 'Overreaction of the Year' award...

daviessa wrote:i think its disgusting that you have posted this on a fourm, things like this are not meant to be seen by the public, i hope whoeverposted this on here gets found out and is fired.

Funny! Tell me its a joke

Ignore the troll.

daviessa wrote:i think its disgusting that you have posted this on a fourm, things like this are not meant to be seen by the public,

.... have you been browsing my personal photos ? Look, as I explained before : it was a one time deal, I was young and I needed the money.

BUT SOCIETY IS SO JUDGEMENTAL ! .

"No, I can't go now. Someone on the internet is wrong."

sorry about that, that person was a friend who decided to as usall mees around with my laptop.

..okay. These things happen. Let's leave that there then alright folks.

sebster wrote:

crimsonfist832 wrote:I'm confused by all this because I haven't a clue of what it means. But could someone please simply explain to me whats happenning. Is GW going to go bankrupt????

No, the hyperbole is just people on the internet doing what people on the internet do. I can't remember a time in the last 20 years when people weren't convinced GW was just about to go under because they charge too much. Yet here they are, the biggest company in the industry, by a long way.

Thing is, GW doesn't have particularly flash underlying indicators. Sales growth isn't great, and hasn't been particularly great since they expanded into the US all those years ago. Nor is it likely to suddenly become great, their core product is a niche product that's expanded everywhere it can across the planet. People take that and use it to declare that doom is coming for GW and the prices that are obviously too high because they're more than they personally want to pay.

Meanwhile there's a steady line of miniature companies going bankrupt because being a sustainable miniatures company is a really hard thing to do, and yet no-one was ever able to predict their demise. It's almost as if people are just speculating wildly...

Not to be confrontational, but it would seem rather... romantic, to describe consistently negative sales figures as "Sales growth isn't great". It seems generally agreed that the number of retail units being moved are consistently shrinking, while at the same time, aggressive price increases have only managed to keep the amount of revenue declining slightly.

You talk about people "speculating wildly", but it's important to realize that with some exceptions, many miniature companies are not publicly traded: since we don't have access to their financials, the suddenness of their demise always seems to come out of the blue. GW, by contrast, is relatively transparent and so we can see the trends developing.

That said, of course there is a lot of speculation going on: we know what GW is doing, but there are a lot of details that we don't know (I'm not sure anyone knows them), things like what is the overall size of the market? What are the shares of the market that various companies have? We know GW is moving fewer units, are other companies moving more? Is GW losing market share, or is the market as a whole in contraction?

Since the amateur consensus seems to be that the hobby market seems to be fine overall, the only conclusion we can tentatively draw (given that GW is moving fewer units) would seem to be that GW is declining relative to other companies.

sebster wrote:Automatically Appended Next Post:

sourclams wrote:40k really is not a good game below 1,000 points.

That's right. But you're average starting player has no idea about that. What he sees is dudes in power armour and big guns and buys AoBR. He plays some games, paints some dudes and thumbs through his army bok and sees all this new stuff. He starts forming army lists; this is what I'll have at 750 points, this is what I'll have at 1,000.... It doesn't matter than the game sucks at 750 points, because in a month's time he'll have new stuff and he'll be at 1,000 points. It doesn't matter that it sucks at 1,000 points because...

This hobby is largely based on how awesome things will be with just a couple more purchases, it's why people keep expanding their armies, start new armies, switch from 40K to WHFB and back, dream of how awesome it would be if only Epic were mainstream. Then they go to some other company because thinking it'll be different if it isn't GW.

And yeah, sometimes it actually is better. I know 40K at 1750 points is a lot more fun than it is at 750 points. And I've gotten plenty of fun out of FoW. But the point is true or not we keep dreaming of the next purchase, whether it'll actually make things more fun or not.

While there is a certain logic to this, the problem is the scenario you are describing is basically the one that GW seems to have rejected: their attitude, of selling in a single big sale to a fresh consumer, would seem to be at odds with the 'slow-growth' consumer you're describing. Certainly there seems, from what everyone is saying, no systematic incentives designed to retain players and have them develop multiple armies/multiple systems.

Also, the notion that the remedy to "40k really is not a good game below 1,000 points" being the fact that "you're average starting player has no idea about that" seems, first, somewhat dubious. Yes, someone that only buys one codex and the main rulebook doesn't realize how poorly balanced the game is at lower levels, but someone that takes some time and looks at the various codices will quickly come to that conclusion. Further, discussion with anyone in the hobby or on the various web-forums will quickly inform them of the fact.

"This hobby is largely based on how awesome things will be with just a couple more purchases," but that doesn't fit GW's model of selling. The consensus seems to be that GW wants to "Sell 'em young, sell 'em big, send 'em on their way."

daviessa wrote:sorry about that, that person was a friend who decided to as usall mees around with my laptop.

Okay, but until things are cleared up, you keep the forum title "Stinky Spore"

JOHIRA wrote:That was a lovely apology for GW, but I wanted to point out the flaw in your conclusion.

My point wasn't an an apology for GW, and I really have no idea how you managed to read it as such.

It was an explanation of behaviour, that people look at just the next purchase, and believe that next one will make it all so much more fun.

It doesn't matter if people dream of the next purchase if they never put the money down on it.

Well, obviously.

And going by the evidence, as opposed to anyone's feelings about GW, it seems that fewer and fewer people are putting money down on GW product.

You're thinking people on the internet are evidence of something...

Seriously, dude, people have been claiming prices are too high and that they're quitting and therefore GW will go bankrupt since at least the early 90s. In that time they've steadily become a hundred million pound company that utterly dominates the industry. I'm not going to declare they're never, ever going to disappear or that they're business model is terrific, but I'm certainly not going to think of the people on the internet as evidence of anything.

You're right that the company isn't going bankrupt any time soon. But the numbers pretty clearly show they are in an unsustainable position and need to change something about the way they do business in order to increase their sales.

The numbers do not clearly show an unsustainable position. That's just internet experts making crap up. There are no business analysts here, and if there were they'd tell you need to look at a whole lot more detail than what's in the annual report before you knew anything of substance about the underlying business position.

Buzzsaw wrote:Not to be confrontational, but it would seem rather... romantic, to describe consistently negative sales figures as "Sales growth isn't great". It seems generally agreed that the number of retail units being moved are consistently shrinking, while at the same time, aggressive price increases have only managed to keep the amount of revenue declining slightly.

No, 'isn't great' is about right. The sales position indicates to investors that GW is not going to be a growth stock, but it doesn't signal imminent demise. To make any better assessment we'd have to get a decent idea of what is really driving the sales decline, and where (if) the sales decline will stop. From there we'd need to establish if GW can be profitable at that

Without that information, all we've got is a company dropping sales growth in the midst of an economic downturn, and that's not really indicative of anything at all.

And for the record, back when GW actually recorded a loss and people were really declaring their imminent demise, I posted that a one-off loss is not really a big deal, they really ought to be more worried about declining sales growth.

You talk about people "speculating wildly", but it's important to realize that with some exceptions, many miniature companies are not publicly traded: since we don't have access to their financials, the suddenness of their demise always seems to come out of the blue. GW, by contrast, is relatively transparent and so we can see the trends developing.

We aren't seeing trends developing. We're looking at the annual report and we're speculating wildly, same as we've been doing for a long time now. I mean, you've been around yeah? You'd know how year in and year out people declare the annual report has signalled the death of GW.

I'm not a business analyst, but I am in finance so I know enough to know that if you attempted to forecast anything about a company from nothing but the annual report beyond the bleedingly obvious such as 'they're losing $50mil a quarter and there's only $25mil in liquid assets so they're probably stuffed' then people will laugh at you then tell you to try auditing or something else.

Actual analysis would ask what the company's primary strategic assets are, and ultimately that'd come down to the fact that they've got an established network of stores while their competitors do not. It would then look at what value those stores deliver to the company, basically asking if the cost of renting all those mainstreet locations is worth it, basically looking at what value there is in GW's primary strategic advantage. It's a good question and one I'd love to see answered, but you'll never see it answered in an annual report.

That said, of course there is a lot of speculation going on: we know what GW is doing, but there are a lot of details that we don't know (I'm not sure anyone knows them), things like what is the overall size of the market? What are the shares of the market that various companies have? We know GW is moving fewer units, are other companies moving more? Is GW losing market share, or is the market as a whole in contraction?

And as importantly, is the GW retraction a permanent thing, or are we looking at a movement towards a new equilibrium (either the same share of a smaller market or a smaller share of the same market). If we are, is GW a sustainable entity at that new level of sales?

Since the amateur consensus seems to be that the hobby market seems to be fine overall, the only conclusion we can tentatively draw (given that GW is moving fewer units) would seem to be that GW is declining relative to other companies.

Sure, but note that that is purely an amateur consensus, on a board inclined to predicting GW's horribleness and imminent doom every other day, and that a declining market share is not the same thing a business collapse.

While there is a certain logic to this, the problem is the scenario you are describing is basically the one that GW seems to have rejected: their attitude, of selling in a single big sale to a fresh consumer, would seem to be at odds with the 'slow-growth' consumer you're describing.

Note that GW's model doesn't rely on all those purchases being at once. All those purchases can happen over a year or even longer. I'm not describing a 'slow growth' model, I'm describing how a customer can spend $500 or $1,000 over the course of a year, without ever predicting or seriously considering the fact that he's about to spend $500 or $1,000 in total.

Also, the notion that the remedy to "40k really is not a good game below 1,000 points" being the fact that "you're average starting player has no idea about that" seems, first, somewhat dubious. Yes, someone that only buys one codex and the main rulebook doesn't realize how poorly balanced the game is at lower levels, but someone that takes some time and looks at the various codices will quickly come to that conclusion. Further, discussion with anyone in the hobby or on the various web-forums will quickly inform them of the fact.

He doesn't have to believe the game is perfectly playable at 1,000 points, he just has to believe it is playable enough, that space marines are cool, and that he'll really, honestly find the time to paint everything he's going to buy. From then on he doesn't have to believe all the above, or any of the above for most of the time, he just have to believe when he next really, really wants to convince himself that it's true on the day he makes the next purchase.

The thing to remember here is we're not looking at people rationally considering the pros and cons of a purchasie we're looking at people who want to justify a spending decision they really, really want to make. It's a well documented phenomenon that's hardly unique to GW, it exists for a wide range industries that could collectively be described as 'over priced and unnecessary consumer goods'. Think fashion, think perfume, think remote controlled cars, 'collectable' plates...

sebster wrote:

Buzzsaw wrote:Not to be confrontational, but it would seem rather... romantic, to describe consistently negative sales figures as "Sales growth isn't great". It seems generally agreed that the number of retail units being moved are consistently shrinking, while at the same time, aggressive price increases have only managed to keep the amount of revenue declining slightly.

No, 'isn't great' is about right. The sales position indicates to investors that GW is not going to be a growth stock, but it doesn't signal imminent demise. To make any better assessment we'd have to get a decent idea of what is really driving the sales decline, and where (if) the sales decline will stop. From there we'd need to establish if GW can be profitable at that

Without that information, all we've got is a company dropping sales growth in the midst of an economic downturn, and that's not really indicative of anything at all.

And for the record, back when GW actually recorded a loss and people were really declaring their imminent demise, I posted that a one-off loss is not really a big deal, they really ought to be more worried about declining sales growth.

First, thanks for the respectful tone. That said, I find your analysis remarkably unpersuasive. So, when they posted a loss a decline in sales growth was something that they needed to be worried about in the past, but even though now GW has been experiencing sustained sales contractions over the period of years, things just "isn't great"?

Also, saying "it doesn't signal imminent demise" is a bit of a straw man: does GW have to be on the brink of bankruptcy for re-evaluations of their corporate philosophy to be valid? Isn't a sustained downturn coupled with dramatic austerity measures sufficient to merit rolling out the caution flags?

sebster wrote:

You talk about people "speculating wildly", but it's important to realize that with some exceptions, many miniature companies are not publicly traded: since we don't have access to their financials, the suddenness of their demise always seems to come out of the blue. GW, by contrast, is relatively transparent and so we can see the trends developing.

We aren't seeing trends developing. We're looking at the annual report and we're speculating wildly, same as we've been doing for a long time now. I mean, you've been around yeah? You'd know how year in and year out people declare the annual report has signalled the death of GW.

I'm not a business analyst, but I am in finance so I know enough to know that if you attempted to forecast anything about a company from nothing but the annual report beyond the bleedingly obvious such as 'they're losing $50mil a quarter and there's only $25mil in liquid assets so they're probably stuffed' then people will laugh at you then tell you to try auditing or something else.

Actual analysis would ask what the company's primary strategic assets are, and ultimately that'd come down to the fact that they've got an established network of stores while their competitors do not. It would then look at what value those stores deliver to the company, basically asking if the cost of renting all those mainstreet locations is worth it, basically looking at what value there is in GW's primary strategic advantage. It's a good question and one I'd love to see answered, but you'll never see it answered in an annual report.

Again, with due respect, it's my impression from other posters on these boards that GW's sales have been in decline for the better part of a decade. At what point, exactly, does that become a "trend"?

Further, you point out that "know how year in and year out people declare the annual report has signalled the death of GW" as if this is support for the argument that it is doing 'not great'. That's akin to the following fact pattern;
-At Christmas one year, Uncle Bob has a wet, wheezing cough, particularly noticeable when he comes in from the outside after smoking his unfiltered Camels. You admonish him, saying "you know you should quit, those things are going to kill you," to which he replies "they haven't yet!"

Again and again, you see him at family gatherings, again and again he wheezes and sputters and hocks up chunks of phlem, again and again you admonish him, and every time he replies that he's still standing.

Given the logic surrounding your statement about "year in and year out people declare the annual report has signalled the death of GW"; at what point does Uncle Bob's retort become wisdom and the admonition to quit smoking become folly?

sebster wrote:

That said, of course there is a lot of speculation going on: we know what GW is doing, but there are a lot of details that we don't know (I'm not sure anyone knows them), things like what is the overall size of the market? What are the shares of the market that various companies have? We know GW is moving fewer units, are other companies moving more? Is GW losing market share, or is the market as a whole in contraction?

And as importantly, is the GW retraction a permanent thing, or are we looking at a movement towards a new equilibrium (either the same share of a smaller market or a smaller share of the same market). If we are, is GW a sustainable entity at that new level of sales?

Since the amateur consensus seems to be that the hobby market seems to be fine overall, the only conclusion we can tentatively draw (given that GW is moving fewer units) would seem to be that GW is declining relative to other companies.

Sure, but note that that is purely an amateur consensus, on a board inclined to predicting GW's horribleness and imminent doom every other day, and that a declining market share is not the same thing a business collapse.

There are a number of problems with this, the first is twofold within "on a board inclined to predicting GW's horribleness and imminent doom every other day"; this is first, an ad hominem (the Devil can quote scripture when it suits his purposes), second, of dubious factual nature. Note that what would appear to be a relevant poll has GW almost 2/1 on Like/Dislike, so the notion that the board is institutionally biased against GW seems counter-factual. That said, there are certainly many critics of GW's business model. Perhaps we can attribute that to something other then simple innate hostility? Presuming that, as you point out above, year after year GW's financial disclosure has prompted cries of doom and gloom. In what way is that inconsistent with a company in a sustained decline?

Of course, a declining market share is not the same thing as business collapse, especially if it is just one element among several positive ones. What exactly would those positive elements be? The understanding seems to be that GW has stripped it's retail assets to the bone in many places, has fired several of it's long time employees, is consistently raising it's prices at a rate outpacing inflation...

sebster wrote:

While there is a certain logic to this, the problem is the scenario you are describing is basically the one that GW seems to have rejected: their attitude, of selling in a single big sale to a fresh consumer, would seem to be at odds with the 'slow-growth' consumer you're describing.

Note that GW's model doesn't rely on all those purchases being at once. All those purchases can happen over a year or even longer. I'm not describing a 'slow growth' model, I'm describing how a customer can spend $500 or $1,000 over the course of a year, without ever predicting or seriously considering the fact that he's about to spend $500 or $1,000 in total.

Also, the notion that the remedy to "40k really is not a good game below 1,000 points" being the fact that "you're average starting player has no idea about that" seems, first, somewhat dubious. Yes, someone that only buys one codex and the main rulebook doesn't realize how poorly balanced the game is at lower levels, but someone that takes some time and looks at the various codices will quickly come to that conclusion. Further, discussion with anyone in the hobby or on the various web-forums will quickly inform them of the fact.

He doesn't have to believe the game is perfectly playable at 1,000 points, he just has to believe it is playable enough, that space marines are cool, and that he'll really, honestly find the time to paint everything he's going to buy. From then on he doesn't have to believe all the above, or any of the above for most of the time, he just have to believe when he next really, really wants to convince himself that it's true on the day he makes the next purchase.

The thing to remember here is we're not looking at people rationally considering the pros and cons of a purchasie we're looking at people who want to justify a spending decision they really, really want to make. It's a well documented phenomenon that's hardly unique to GW, it exists for a wide range industries that could collectively be described as 'over priced and unnecessary consumer goods'. Think fashion, think perfume, think remote controlled cars, 'collectable' plates...

Buzzsaw wrote:First, thanks for the respectful tone.

And thankyou for the same.

That said, I find your analysis remarkably unpersuasive. So, when they posted a loss a decline in sales growth was something that they needed to be worried about in the past, but even though now GW has been experiencing sustained sales contractions over the period of years, things just "isn't great"?

Also, saying "it doesn't signal imminent demise" is a bit of a straw man: does GW have to be on the brink of bankruptcy for re-evaluations of their corporate philosophy to be valid? Isn't a sustained downturn coupled with dramatic austerity measures sufficient to merit rolling out the caution flags?

Thing is, they need to be worried about it. It's a factor in assessing the level of profitability of the company in the medium to long term, and would be the difference between expecting 5 million or 8 million in profit (numbers made up on the spot obviously, but you get the point, yeah?)

But in terms of the rhetoric people have put forward in this thread, it really doesn't mean anything of the sort. New entrants will capture a portion of the market, and that comes from the existing members. Seeing this happen doesn't mean the the existing members will keep shrinking until they collapse. What matters is where, long term, the markets shares will stabilise, and that's something we the internet pundits cannot possibly know.

Again, with due respect, it's my impression from other posters on these boards that GW's sales have been in decline for the better part of a decade. At what point, exactly, does that become a "trend"?

They haven't been in decline for a decade. That's just more stuff that people on the internet are throwing about. Sales in 2001 were about £90million, and they grew every year until the high water mark in 2004. They declined for two years, stabilised at around £110 million before spiking in 2009 then dropping back in 2010. Seriously, the internet is full of lovely people but they are very imaginative, and I really wouldn't take anything they say at face value.

Further, you point out that "know how year in and year out people declare the annual report has signalled the death of GW" as if this is support for the argument that it is doing 'not great'. That's akin to the following fact pattern;
-At Christmas one year, Uncle Bob has a wet, wheezing cough, particularly noticeable when he comes in from the outside after smoking his unfiltered Camels. You admonish him, saying "you know you should quit, those things are going to kill you," to which he replies "they haven't yet!"

No, it's more akin to folk who claim eating potato chips causes brain cancer. It may be true, I don't know. But I do know that when these people talk constantly about
how potato chips cause cancer, then my uncle notices the mole on his arm might be changing colour, sure as anything they'll declare it's cancer and it's because he was always eating those potato chips.

Those people are silly, because we just don't have the information to know if it's cancer, and even if it was there's nothing tying it to the potato chips.

Given the logic surrounding your statement about "year in and year out people declare the annual report has signalled the death of GW"; at what point does Uncle Bob's retort become wisdom and the admonition to quit smoking become folly?

That lots of people like saying something is very poor evidence for considering it is true. Not when they lack the the access to information or the expertise to actually make a decent assessment of the matter. And especially not when there's lots of reasons for them to want to believe it without any consideration of the actual evidence (annoyance over price increases, flair for drama, traditional geek hatred of the biggest product).

There are a number of problems with this, the first is twofold within "on a board inclined to predicting GW's horribleness and imminent doom every other day"; this is first, an ad hominem (the Devil can quote scripture when it suits his purposes), second, of dubious factual nature. Note that what would appear to be a relevant poll has GW almost 2/1 on Like/Dislike, so the notion that the board is institutionally biased against GW seems counter-factual.

Nah, read what I said more carefully. I said "on a board inclined to predicting GW's horribleness and imminent doom every other day". I didn't state a majority of users were hostile to GW (that'd be a weird thing on a board set up to discuss their games), I said this board is inclined to predict GW's doom every other day, which is still possible if the minority is loud enough. Indeed, it isn't just possible but directly observable, read this forum and note how often someone says GW is about to collapse...

That said, there are certainly many critics of GW's business model. Perhaps we can attribute that to something other then simple innate hostility? Presuming that, as you point out above, year after year GW's financial disclosure has prompted cries of doom and gloom. In what way is that inconsistent with a company in a sustained decline?

Except that GW's business model was the subject of attack while revenue grew year after year. As they came to utterly dominate the market people still declared that GW’s time was almost over, and the some new company or another was just about to take their place. It never happened, but the predictions have carried on regardless.

And I never said it was innate hostility. I simply said it had nothing to do with any kind of analysis of GW's business. Which would be very hard for you to deny, given that no-one commenting in this thread, or any other thread I've ever seen on the subject, has proffered anything like actual business analysis.

Instead we’re getting the wild speculation of disgruntled customers.

Again, you seem to be saying that what GW needs is not so much a consumer as a border collie with an expense account (perhaps that's not quite fair to the collies).

It’s a fantastic demographic if you can reach it.

The most basic problem with your analysis is you are comparing "luxury" items with GW items without the critical element, what people use "to justify a spending decision they really, really want to make": Advertising.

No, I’m really not forgetting it. Advertising simply isn’t a part of the business model of a wide range of high priced consumer goods. In fact, advertising is often counter-productive, as it can be seen to remove exclusivity. More applicably in GW”s case, miniatures simply aren’t that mainstream a business, so instead promotion needs to focus on events days and, you guessed, all those mainstream stores.

I'm a bit mystified by what exactly is driving this fellow to buy? You seem to share GW's basic conceit that people simply want to buy their products. Like them, you also seem to be proposing that new players exist within a cloud of sorts, where they are only exposed to the positive elements of the hobby, without being snapped out of their revere by contact with vets with... more sober perspectives.

What dirves someone to start buying GW stuff shouldn’t be a mystery. It isn’t to me, because I’ve been one, a lot of friends have been or are such people, and I presume it’s the same for you.

And yes, setting the price to never, ever turn anyone away is terrible business practice. You want the price set right at the point where the increase in revenue per unit sold is equal to the loss in customers, but no further. Finding this point is no science, and companies can be unsure of it even with all marketing analysis in the world. But all that study means they’ve certainly got a better guess that we do.

Mad4Minis wrote:"The focus remains on investing in Hobby centre openings and improving retail volume"


They could try opening a store or 3 in Florida. A state with a population of aprox 16 million, and one of the largest tourist destinations in the USA, and it doesnt have a single GW store. Not a single one.

Closest one is around 400+ miles away.

Same in Oregon! Washington, just to the north, has NINE stores (all more than 2hrs drive away from the OR border), while Oregon has NONE. And the Portland-Metro area has a gak-ton of gamers. I don't get it.

daviessa wrote:i think its disgusting that you have posted this on a fourm, things like this are not meant to be seen by the public, i hope whoeverposted this on here gets found out and is fired.

Or at least get a C and D letter?

I love tragic overkill as much as the next one, but you do have to know that the info is public knowledge, don't you? I'm going to sig this one, by the way.

And now for something completely different.....


On a lighter note, I don't agree that small games suck. I think that they are crucial if you want to get people into gaming, and in use as a teaching tool for basics and the game in general. Along with that, there are many things you can do to encourage your mates to play games and add in thier units, either as a result of a game objective, ALA Dawn of War, or as a result of scenario driven play.

Ive played many games, in the same scheme as the "Tale of Four Gamers", as well, where we would pick a different faction - start out with a basic 2 troops and an HQ, and both buid and play in public, as a training tool for new players.
As a sales tool, the small game is invaluable to teach, increase interest, and get your fanbase to care and actually buy smart, along with being able to have good conversations about how to get the most bang for your buck.

When a squad box costs around twenty bucks or so, then you add in the tanks and other heavys, the fast attack stuff, and everything in between, it might be high time for the troop selection template to change, as in to get rid of it altogether.

As for the decline of buying, it has to do with more then a number of factors that arn't atributed to one or two reasons, it has to do with the differences in European, and American play styles, The opinions of price have always been there, but in this period, they have come to the forefront, because GW has been in point of fact, pretty much throwing it in customers faces as of late. Along with the preemtive strikes on fan based materials, and the C and D craze, it doesn't do much to endear them to players.

Everyone seems to forget that GW was on the higher end of the spectrum in as far as wargaming is concerned. They've always had higher prices then most. In investigating the way that Great Britians Economy works, I can honestly say that most american players really don't have a fathom as to the impact that outside factors have on the prices the reasons behind the increases, and the through and through high cost it actually is to run a company over across the pond.

" They haven't been in decline for a decade. That's just more stuff that people on the internet are throwing about. Sales in 2001 were about £90million, and they grew every year until the high water mark in 2004. They declined for two years, stabilised at around £110 million before spiking in 2009 then dropping back in 2010. Seriously, the internet is full of lovely people but they are very imaginative, and I really wouldn't take anything they say at face value. "

Thats kind of a blanket statement, seeing as we have this conversation at least three or four times a month, consistantly. And as for informed ,Osbads had some pretty good conversations, as well as other people who are in the trenches, living the dream, firsthand. Of course it would be nice that the Sky would fall, but in point of fact, even if it were, GW would be the last ones to hear it from. You have to remember that they are a bonified business, and even hints of doom and gloom hit them where it hurts.

Just one Grot's opinion....

sebster wrote:They haven't been in decline for a decade. That's just more stuff that people on the internet are throwing about. Sales in 2001 were about £90million, and they grew every year until the high water mark in 2004. They declined for two years, stabilised at around £110 million before spiking in 2009 then dropping back in 2010. Seriously, the internet is full of lovely people but they are very imaginative, and I really wouldn't take anything they say at face value.

I would recommend charting out GW's share price versus the S&P500 index to get a more market-anchored impression of GW's financial performance. From an investment perspective, it's not just about what a stock does, moreso about what it does in relation to everything else.

In 2002-2005, the "spread" was roughly steady at around -300 points. GW and a basket of other end consumer-centric companies performed comparably. In '05-07 the spread widened about a thousand points, a clear gross underperformance by GW; in a market environment where most other companies were able to increase in value by 30% GW managed to lose 60% of their net worth.

The 08-09 global recession was a bit of a tail wind for GW since they managed to maintain roughly the same overall value when most equities dropped 50%. Still, at this point the spread narrowed to less than its old highs in 02-05, and in the last 2 years has retraced to 50% of its lows.

GW is very probably far, far from bankruptcy, but from an investment perspective it's definitely a bit of a stinker. At best, they're a "safety" stock, that you can toss some money into on the assumption that a big negative economic event will allow GW to be a safe harbor against market volatility--at worst you'd be a fool to put your assets into a stock that has underperformed a basket of similar equities for 8 of the last 10 years.

sourclams wrote:

sebster wrote:They haven't been in decline for a decade. That's just more stuff that people on the internet are throwing about. Sales in 2001 were about £90million, and they grew every year until the high water mark in 2004. They declined for two years, stabilised at around £110 million before spiking in 2009 then dropping back in 2010. Seriously, the internet is full of lovely people but they are very imaginative, and I really wouldn't take anything they say at face value.

I would recommend charting out GW's share price versus the S&P500 index to get a more market-anchored impression of GW's financial performance. From an investment perspective, it's not just about what a stock does, moreso about what it does in relation to everything else.

also, sebster, I am afraid you are more than likely wrong. If you go back through the results and chart sales/ revenue and then start thinking about the LOTR bubble, currency and the rapid increase in BL sales over the last 10 yrs you will soon see that the core part of the business (40k and WFB) has been in decline continually. a friend and I did just such a thing 2 yrs ago I believe - both of us are what you in the UK would describe as F. analysts.

I have never believed GW was in trouble until now - this set of results, if not arrested during the rest of the year, has all the hallmarks of the beginning of what is in slang terms a death spiral which takes years to actually happen. the trouble is, as with anything in life, no one extreme works. A focus on the costs with out a focus on revenue retention (and hopefully growth!!) has to go hand in hand. Often, a focus on only cost can lead to a drop in revenue that outstrips cost savings. The one man store is a perfect example - less cost but less revenue and less growth equals few new customers and as current customers drop off who is going to replace them - hence the need to focus on growth at same time to avoid the death spiral.

Another fine analysis by Psyberwolf over at Warseer:

While looking back over several years of financial statements and press announcements, trying to glean some additional insight, it struck me that many of the statements made by the Chairman and CEO were sometimes funny but often ironic, sad and confused when viewed over the course of many years. I wanted to try and pull some of these out and add some comments. I tried to put a reference for each statement but some of them were left out.

Return to growth
Statement: …sales in September, October and November reinforce our confidence that the business is returning to growth. (November 2006 Interim report)
Statement: We believe that it is only a matter of time and hard work before we re-establish our historic linear growth rate. (June 2007 Full year report)
Statement: …our energies are now focused upon returning the business to profitable growth. We believe that the sales declines of the last three years have been arrested and that the business has stabilised. (June 2008 Full year report)
Statement: So a pleasing set of results. But the real story this year is that we have been preparing ourselves for growth. (June 2009 Full year report)
Statement: The principal risks and uncertainties for the balance of the year lie in the ability of the sales businesses to establish and maintain sales growth… (June 2010 Full year report)

And we are still waiting…

Focused on growing sales
Statement: …sales delivery remains an area of key focus. (November 2007 Interim report)
Statement: Although sales have declined in the first half of the year in constant currency terms… (November 2009 Interim report)
Statement: …our principal focus remains restoring real sales growth. (June 2010 Full year report)
Statement: Sales fell by 4%... (Nov 2010 Interim report)

A lot of focus but not much growth in sales.

Continental Europe
Statement: Management's response to the decline in sales since 2005 has led to changes in the management teams in all but one of our Continental European territories… appointed our most experienced senior manager as head of sales for Continental Europe in order to increase the focus on profitable growth. (June 2007 Full year report)
Statement: We still have work to do in Continental Europe to re-establish sales growth. However, we believe that the right managerial and operational steps are being taken. (November 2007 Interim report)
Statement: As you will see we have not had such great success in Continental Europe. I expect to be extolling their virtues next year. Or else. (June 2008 Full year report)
Statement: The work needed to establish growth in all channels in all territories goes on with some significant progress being made in this half-year where, with the exception of Continental Europe. (November 2008 Interim report)
Statement: Northern Europe and North America both showed growth in the year, while Continental Europe continued to decline, although at a slower rate than in previous years. (June 2010 Full year report)
Statement: Continental Europe made similar staff reductions in retail a year ago and that territory is in growth in the first half. (Nov 2010 Interim report)

Finally… only took 5 years. Must have been those management changes 3 years ago, back in 2007 – yeah, that’s it!

Restoring growth through Warhammer
Statement: In 2010/11 our focus will be the issue of restoring LFL growth in our Hobby centres.
Statement: The third global project has been the relaunch of Warhammer this summer. We relaunched Warhammer 40,000 in 2008/09 and this created a great amount of excitement, gaming activity and purchasing. After four years of development, we expect the Warhammer relaunch to create similar levels of excitement and purchasing activity in the coming year.
Statement: Sales fell by 4%...

A great amount of excitement, gaming activity and purchasing for the new version of Warhammer… eh, not so much.

Emphasis on opening new stores
Statement: Our emphasis has been to focus on the development of our own Hobby stores and on investing in recruitment and also in structured training at all levels of management and staff. We are strengthening all direct channels to market. (Nov 2005 Interim report)
Statement: Our strategy to underpin this growth remains the same: we will continue to open new stores. (Nov 2006 Interim report)
Statement: Investment has been focused on two key drivers of performance, opening more Hobby centres… (June 2009 Full year report)
Statement: We make things. We are a manufacturer. Not a retailer. (June 2010 Full year report)

Customer retention or lack thereof
Statement: There are no silver bullets for growing sales at Games Workshop. It requires a consistent focus on the basics of recruiting new hobbyists through our Hobby centres and using our games to teach them how to buy, build, paint and collect ever larger armies of miniatures.

There is only one other industry, business, group, etc. that I know of that spends so much energy on finding new clients and so little focus on retaining them – and that would be caretakers – but that’s only because they literally can’t sell anything else to their customers.

Employer loyalty?
Statement: The return to growth has also been assisted by the US business, and a lot of credit must go to the head of that business - Ernie Baker. He has been working tirelessly for many, many months to re-instil the simple disciplines we need and recruit the right kind of people for our future, and all the while displaying and championing the attitudes and behaviours we ask of all our staff. (Full year report 2008)
Statement: We have also asked Ernie Baker, head of our US business, to take responsibility for our Canadian business as well, ensuring that we have a co-ordinated strategy across the Americas. (Full year report 2008)

Interesting that the individual that returned them to growth was sacked about 1.5 years later. My, how things change…

Bad economy is no excuse
Statement: We said at the last half year announcement that as a niche business we do not usually suffer, or benefit from, macro-economic factors. (Interim 2009)
Statement: We are not significantly affected by economic factors, as recent results show. (Full year 2010)

I wonder why when sales goes down GW defenders blame it on the overall economy? They must not think that GW’s management knows what they are talking about!

A pathetic excuse to raise prices
Statement: Amongst the product delivery risks are those relating to input prices. The cost of raw materials, such as metal and plastic, represents no more than 4% of our sales and therefore we do not believe that the price volatility of these inputs represents a significant threat to our long-term profitability. (Full year 2007 report)
Statement: The cost of raw materials, such as metal and plastic, represents no more than 5% of our sales and therefore we do not believe that the price volatility of these inputs represents a significant threat to our long-term profitability… However, the recent increases in the price of both metal and plastic have been significant, and we will take action to protect our gross margins. (Full Year 2008)
Statement: Among many other concerns the world has been struggling with the rising cost of energy, transport, and materials... Today we are contacting all of our Trade customers globally to announce that due to these rising costs, we too will be raising some of our prices. We do not do this lightly. We fully understand that the timing of the price rise directly conflicts with our annual July price review and for that we deeply apologize. I hope that you understand that this price rise is not something Games Workshop Global desires to do, it is something we have to do. (Sept 2008) (emphasis mine)

So we have statements here that say costs for raw materials represent no more than 5% of sales and that price volatility does not represent any long term threat but then a month or 2 later they raise prices on metal miniatures 25% because of the price of raw materials. Note – their gross margin increased. Worse, when the prices later dropped there was no corresponding drop in price.

Outsourcing fail
Statement: We implemented a new factory layout in Nottingham which will help deliver gross margin improvements as volumes increase. We have improved our resin manufacturing processes in Nottingham and implemented a new resin cell in Shanghai to manage the significantly higher levels of sales growth we have been experiencing from Forge World. (Full Year 2009 report)
Statement: The decision was taken in the first half to close the Shanghai facility as the global cost benefits no longer justify its continuance. The paint and resin manufacturing operations have been consolidated in our Nottingham factory thereby achieving greater operational efficiencies. (Nov 2010 Interim report)

Wow! I got to give credit on this one… kudos for actually recognizing that in many cases you don’t save that much money by outsourcing/offshoring. Unfortunately, it took them a couple of years to figure it out.

The buck stops with...?
Statement: The main source of risk to this business remains management error. This is one of the reasons why management recruitment, development and succession planning are so important, and this is why we will continue to invest in our internal Academy which is our 'people development' function. (Full year 2008 report)
Statement: As we have stated in previous years, we believe that the key risks which face Games Workshop are not external but internal... Performance shortfalls in the past have been down to the quality of management and decision making. (Full year report 2010)
Statement: Sales were down largely as a result of shortfalls in Northern Europe and North American retail following staffing changes in Games Workshop Hobby centres to reduce overheads.

Well whose fault is the staffing changes?

GW & Quality
Statement: In addition, we can, and do, defend our intellectual property rigorously against imitators, thus ensuring that our worlds are synonymous with quality.

How about producing quality products to ensure that your “worlds” are synonymous with quality. About half of the sets I have gotten from GW have been miscasts – where one half of the miniature is offset from the other half. Or what about the holes that are common in the marine backpacks? What about poorly fitting models that you have to use “Greenstuff”on to fill huge gaps?

CoD GW
Statement: We are also clear that we will only make fantasy miniatures, not historical ones. Fantasy miniatures from our own Warhammer and Warhammer 40,000 worlds allow us unlimited scope for product innovation.
Statement: Our continual investment in product quality, using our defendable intellectual property, provides us with a considerable barrier to entry for potential competitors: it is our Fortress Wall. While our 382 Hobby centres which show customers how to collect, paint and play with our miniatures and games provide another barrier to entry: our Fortress Moat. We have been building our Fortress Wall and Moat for many years and the competitive advantage they provide gives us confidence in our ability to grow profitably in the future. (emphasis mine)

Sounds a bit paranoid to me! GW has steered away from historical because it would mean they have to compete. It’s like they’re holed up in a CoD ruin with the windows boarded up and the only weapons they have is lawsuits and retail stores (except wait remember - they’re not retailers – they’re manufacturers) So dang – they only have lawsuits – sorry CHS!

Ketara wrote:I read no 'apology' there. Why the use of such a loaded phrase?

Because the loaded phrases in sebter's post, particularly:

sebster wrote:No, the hyperbole is just people on the internet doing what people on the internet do. I can't remember a time in the last 20 years when people weren't convinced GW was just about to go under because they charge too much.

...communicated to me that he's more interested in protecting GW from criticism than in seriously attempting to understand why this financial statement has generated 5 pages of mostly critical opinions about the way GW does business.

sebster wrote:Instead we’re getting the wild speculation of disgruntled customers.

In most industries, a body of disgruntled former-customers this large and going to rival companies products would normally be cause for concern, don't you think?

HA! Every GW financial report generates at least 5 pages. I expect them to go 10 or 12 minimum. That means people like to talk on the internet.) People were blasting them in the years they make money, and the years they lose money.

As far as Sebsters statement:
No, the hyperbole is just people on the internet doing what people on the internet do. I can't remember a time in the last 20 years when people weren't convinced GW was just about to go under because they charge too much.

..that's essentially true. Whether or not this report shows anything, people have been talking about GW going under for charging too much for a couple of decades. But in those decades I've seen a couple dozen miniature games grow up and then slide into bankruptcy.

GW is selling less now than before. Then again, the economy sucks, and one hell of a lot of people are selling less than before. I worry more about Privateer than GW. I could sell a lot more Privateer if they would just make more models. They've sucked at getting out re-orders since august. My sales are down on their line, for the simple reason they aren't shipping our product in a timely manner.

GW certainly has problems. And I don't like the trend in pricing. Don't like it in Privateer either, or board games, comics, gasoline, and beer at the local pub. My problem with selling more GW right now,(and anything else), is lack of money in people's pockets, not so much with the products I have to sell.

But if nothing else, the financial reports give people something to talk about, and flex our internet muscles every six months.)

I hope they don't go under. I havent found another mini game that has an Inquisition faction with as good a quality as GW's.

sebster wrote:
They haven't been in decline for a decade. That's just more stuff that people on the internet are throwing about. Sales in 2001 were about £90million, and they grew every year until the high water mark in 2004. They declined for two years, stabilised at around £110 million before spiking in 2009 then dropping back in 2010. Seriously, the internet is full of lovely people but they are very imaginative, and I really wouldn't take anything they say at face value.

And this is why we do anaylsis, as do other people, with more knowelege then you. Your looking at the gross sales, which is fine. What your NOT doing is looking at the real indicator, which is unit sales- how many units moved, which has been in decline since 2001(with the exception of If I recall, 2004 was a bump up, then slide back down). With cutting costs and a few other things the numbers your showing hide the underlying problems- less units sold at a higher prce, which is eventually unsustainable. When that point is reach is a debatable point.