investor.games-workshop.com/investor_relations/financial_results/Results2007/Interims/default.htm

Not good news for GW investors.

At least Kirby's stopped blaming the bursting of the LotR bubble...

Just been pulling apart some of the detail in the accounts.

The turnover slide of 4% over the equivalent period last year (which was down 17% over the year before) was bad enough, but I've just noticed their debt position.

They are now £18M in debt, compared to £9M in May. That isn't good. Dividends continue to be funded from borrowin it appears.

Kirby's faith in the long term improvement and a return to profitabilty seems unshakeable!

Found this interesting snippet in the press release:

<table width="379" height="280" cellspacing="0" cellpadding="0" border="1" style="border: medium none ; border-collapse: collapse;"> <tbody> <tr> <td width="569" valign="top" style="border-style: solid solid none; border-color: windowtext windowtext -moz-use-text-color; border-width: 0.5pt 0.5pt medium; padding: 0cm 5.4pt; width: 426.45pt;" colspan="3">

<strong style="">REVENUE BY GEOGRAPHICAL
[/b]

<strong style="">AREA OF SALES OPERATION IN [/b]

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<strong style="">LOCAL CURRENCY[/b]

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<strong style="">Six months to [/b]

<strong style="">26 November 2006[/b]

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Six months to

27 November 2005

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Continental Europe

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<strong style=""><!--[if !supportEmptyParas]--> <!--[endif]--> [/b]

<strong style=""><!--[if !supportEmptyParas]--> <!--[endif]--> [/b]

<strong style="">€32.1m[/b]<strong style=""> [/b]

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€34.6m

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United Kingdom

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<strong style="">£17.1m [/b]

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£17.4m

</td> </tr> <tr> <td width="190" valign="top" style="border-style: none none none solid; border-color: -moz-use-text-color -moz-use-text-color -moz-use-text-color windowtext; border-width: medium medium medium 0.5pt; padding: 0cm 5.4pt; width: 142.15pt;">

The Americas

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<strong style="">US$22.9m[/b]<strong style=""> [/b]

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US$21.9m

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Asia Pacific

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<strong style="">Aus$8.9m[/b]<strong style=""> [/b]

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Aus$8.7m

</td> </tr> </tbody> </table>
Interesting to see growth in US sales in local currency.  The big fall in the dollar vs sterling recently wiped that out in the final accounts.  The Evil Empire's performance in the US is (to me) a barometer.  If they are ever to grow it will be in the US - as sales opportunities are pretty much at saturation point in the UK and Europe, and they are real minnows in Asia.

Ok, let's first get the headline right - the revenue fell, not the profit. But apart from that yeah, their stuff is too expensive, what do they expect?

I stand by the headline:

Falling short of market expectations does not necessarily equal a slide in profits (it might do; I dunno what the market expectations are).

Operating profit for the six months to November:

2006: £456k
2005: £463k

That looks awfully like a fall of £7k to me...

Its tiny, but it ain't growth that's for sure! In "real" terms its a fall of around 4.7%

And profit attributable to shareholders, which is what the dividend ultimately comes out of, grew by £11k. So between a small fall in operating profit and a less small gain in net profit, I?d say the true story is that their revenue is still going backwards.

You're making my head hurt.

Which doesn't invalidate my title.

Of course turnover dropping is the most important thing about the results. Profits, particularly "profit after tax" are open to manipulation from one year to the next, but Turnover reduction is a lot harder to hide.

Essentially the story is that be being more efficient in inventory control and reducing overheads they have managed to increase their margin, which when coupled with exchange rate fluctuations and falling turnover has lead to a slight fall in OP or a slight gain in PAT.

That indicates to me that those kind of efficiencies can't continue forever, and all the signs are that turnover will continue to slide and profits whither yet further.  Add in the effect of increasing interest payments on all that borrowing, and PAT is lined up for a hammering.

As I said: The profit slide continues...

This sounds like most of the fluff from the upcoming Codex: Adeptus Financialis. It also includes details of the battles between the 'Cult of the Bear' (who believe the Emporer will be reborn in the form of a giant bear, bankrupting the Imperium and destroying the universe) and the 'Cult of the Bull' (who believe the Emporer will be reborn in the form of a giant bull, rescuing humanity - and dwindling profit margins)...

And here's me thinking that the "Cult of the Bull" was those that believed unquestionably everything emanating from the Golden Throne...

Posted By Osbad on 01/05/2007 6:34 AM
And here's me thinking that the "Cult of the Bull" was those that believed unquestionably everything emanating from the Golden Throne...

No no, that would be the "Cult of the Elephant"...

Aw come on fellas. D6 it. 1-3 profits are expected to fall. 4-6 profit has fallen.

"We have strengthened our gross margin to 70.1% (2005: 69.1%)."

Does that mean they make 70% profit on every sale?

Yes; for a $100 item, they would make $70.10 in gross profit.  How one defines gross profit can vary, but generally it is the difference between the selling price and the "landed" cost.  This number does not reflect overhead, R&D, taxes, etc.  I'd be curious as to their Net Profit, which takes these factors into account (except maybe taxes?).

AJC

In either case, it shows that have massive room to lower prices and increase volume if they chose to do so.

Yes, they can lower prices...at the cost of overhead, R&D...etc. If you thought they made a crappy product now, what would happen if they cut corners there?

Zoned?

Depends on what their net margin is.  If they're posting a loss, then their net margin would be negative; hence any drop in prices will immediately hit the bottom line.  It would all depend on how much increased volume a price drop would give them.  Based on a GP of 70%, if they dropped their prices 10%, they would need to see an increase in volume of ~17%, just to maintain the same level of gross profit.  Note this is a really rough comparison as it does not factor in reduced unit costs for increased volume, but it is a reasonable guideline.  Hence, for them to actually increase their profitability, they would need to see increased growth over 20% - something I doubt they could promise/guarantee to the shareholders.

They've really created a mess for themselves, raising prices with decreasing volumes.  In most of the business simulations that I've participated in, this is nothing but a stop-gap measure as ultimately one ends of with great margins, but little volume.

AJC

Posted By Asmodai on 01/05/2007 11:40 AM
In either case, it shows that have massive room to lower prices and increase volume if they chose to do so.

No it doesn't. It shows they have improved their operating costs - usually accomplished through the joy of  "forced alternate employment opportunities."  There is no guarantee that price reductions will result in quantifiable sales increases.  Likely yes, but there is insuffiicent evidence that the valume increase would offset the cost decrease per SKU.

Posted By jfrazell on 01/05/2007 12:45 PM

Posted By Asmodai on 01/05/2007 11:40 AM
In either case, it shows that have massive room to lower prices and increase volume if they chose to do so.

No it doesn't. It shows they have improved their operating costs - usually accomplished through the joy of  "forced alternate employment opportunities."  There is no guarantee that price reductions will result in quantifiable sales increases.  Likely yes, but there is insuffiicent evidence that the valume increase would offset the cost decrease per SKU.

It is kinda sad that they did all that pruning and still are losing money,

QFT.

Posted By malfred on 01/05/2007 9:02 AM
Aw come on fellas. D6 it. 1-3 profits are expected to fall. 4-6 profit has fallen.

EXALT.
I love you, Malfred!

Forget having babies with your wife, come have my manbabies instead.

I have miniatures, she doesnt.  8)

Actually I'd say part of their increased profits in the Americas comes from the insane disparity between the increased value of the Canadian dollar and GW's inflated price for CDN models. We've seen the standard price increases here even though our dollar has shot up from ~60 cents US to ~90 cents US.

I knew you couldn't trust those tricksy Canadians, and their magical currency that has +2 spending power!

But yeah, I flunked Econ 201. You say "investments in infrastructure" and "gross margins" and I die a little inside.

I find it humorous and sad that since Andy Chambers left GW, things have been going downhill very badly.

If I was AC, I would have to be smiling about how stupid the bean counters who took control of GW are. Tthe company was doing quite well when the gamers in that company had some say in how things went. Though that is merely specualtion and assumption that they had any say to begin with, but it felt that way in the early days up until a couple years ago.

Posted By Drake_Marcus on 01/05/2007 6:32 PM
Actually I'd say part of their increased profits in the Americas comes from the insane disparity between the increased value of the Canadian dollar and GW's inflated price for CDN models. We've seen the standard price increases here even though our dollar has shot up from ~60 cents US to ~90 cents US.

AFAIK the Canadian prices are set in relation to the British Pound and not the American dollar.

An incredibly smart idea given our close geographic proximity to the UK.

Oh, wait...

GW is run by idiots they continue to dump tons of sources into a dwindling product line (LOTR).  "only 10% of sales (are) still tied to Lords of the Rings" yet they continue to add supplements and dedicate huges sections of White Dwarf to it.

Where is the increase in core game releases that they promised 6 months ago?  The codex release schedule is far behind what it was when 3rd Edition was released.

Whoever in GW brokered the deal with Tolkein Enterprises should be sacked. Whoever in Tolkein Enterprises brokered the deal with GW should be hired.

I believe that GW is still under contract with TE and has to churn out more LotR gak regardless of what we want. So thank Frodo for the craptastic release schedule of WFB and 40K. Focking hobbits.

These problems were extant before Andy Chambers left (he was, at least, trying to fix them) and go back four or more years, and probably longer than that. Even LotR in and of itself was a very wise move, as it was wildly successful (for a time) and made GW boat loads of money. The real problem lies with Kirby & Co's dunderheaded and hubris infused handling of it's LotR's success that not only squandered their new found popularity but also used it to ignored how it was masking the sharp decline in their other core market while simultaneously siphoning talent that could have been used to reduce said decline.

So what does GW do to fix this? Instead of working to increase customer relations, fixing things people are complaining about and making it easier for more independent stores and regular customers to get their product, what do they do? They raise prices while simultaneously lowering both product quality and general customer service, they cut off a massive retail channel (online sales) in an attempt to restrict it to only their own webstore (that worked out really well), and then also screw over indy stores in markets where they want to open a new Hobby Center. All the while arrogantly thinking their customers wouldn't notice. Well, we did.

I don't know what needs to happen, but it's obvious Kirby has been setting himself up with some very nice bonuses and a big golden parachute at the shareholders and company's expense, so to root him out will be rather expensive. By the time the board of directors does do something, I worry that GW will be in prime position for a hostile take over or similar acquisition by Hasbro or some other toy company. Won't that be fun?

Posted By Tazok on 01/06/2007 8:31 AM

"only 10% of sales (are) still tied to Lords of the Rings" yet they continue to add supplements and dedicate huges sections of White Dwarf to it.

Oh, come on now - nobody reads White Dwarf anymore.

The kiddies still do...

I still get WD sometimes, just so I have something different to read while I go poopies

Honestly though...isn't that where every magazine usually ends up?

Posted By whitedragon on 01/06/2007 7:40 PM
Honestly though...isn't that where every magazine usually ends up?

Wiping Necros butt?

I hope not, I still read mine when I go poopies as well. Id hate to use a "Used" copy of WD.

Posted By Tazok on 01/06/2007 8:31 AM

GW is run by idiots they continue to dump tons of sources into a dwindling product line (LOTR).  "only 10% of sales (are) still tied to Lords of the Rings" yet they continue to add supplements and dedicate huges sections of White Dwarf to it.

Where is the increase in core game releases that they promised 6 months ago?  The codex release schedule is far behind what it was when 3rd Edition was released.

SisterJoey: Your post reminds me. I'm so hungry...

Lot of good meat on a horse. The trick is in the sauce, as horsemeat can tend to be tough.

I'd be very interested in what the landed cost of the average box actually covers. At 70% GP for an average product, I'd expect it to cover the cost of development and moulds amortised over the model's production run. Materials are cheap, so is mass production of very simple products (cast and pack essentially, no assembly really!) and doesn't require a high level of specialist skills. Main expence would be initial tooling and maintaining production runs of hundreds of different mini's possibly simultaneously (hopefully they're not actually doing that!) as well as their hobby centers. Those things although neat, must soak up so much of their bottom line its not funny. Running 344 stores worldwide can't be cheap, their expansion model that includes 100% ownership of those stores is what I believe to be the main expence that cuts into their profits. They should franchise their retail operations and trim down the number of stores and make a big push back into independant outlets and helping those centers grow.

Name that movie!

"Slaughtered this horse last week... think she's startin to turn."

R-U-N-N-O-F-T

Posted By Bombot on 01/05/2007 4:14 AM
Ok, let's first get the headline right - the revenue fell, not the profit. But apart from that yeah, their stuff is too expensive, what do they expect?

10 GW Space Marines.....35 dollars = 3.5 dollars a figure.

6 Cygnar Sword Knights 32.99= 5.5 dollars a figure.

8 Brettonian Knight 35.00=4.4 dollars a figure

3 Storm Lance Knights 51.99=17 dollars

8 Starship Troopers 19.95=2.5 dollars

20 Light Armor Troopers 29.95 = 1.5 dollars

7 Star Wars prepaints 12.00=1.7

HQ and 2 Platoons of US Infantry for Flames of War 42.00.

5 Reaper Men of Anhur 12.99 = 2.6 per figure.

GW's vehicles are priced simliarly and less then many comparable plastic model kits. I find that the models that are expensive are the characters etc. Ragnar Blackmane used to be 5 bucks, now he is 15. But all in all...compared to what seems to be the most popular game competing, Warmachine, and even with others....are the prices REALLY too expensive?

No. It's just that the scale of the game means you're buying lots of figs and
converting them only to find out that the rules are tricky to work with or GW
makes your army obsolete. This is probably not a problem in the long run as
things come and go (Eldar jetbikes, woo?) but it does sting a bit (Storm
Guardians...boo!).

So you invest a large amount of time and money into a product that feels like
you're being yanked around with when it comes to rules and army updates.

The fourth best Cohen Brothers movie.

dang, thought that would have been a hard one

Posted By General Hobbs on 01/06/2007 9:26 PM

Posted By Bombot on 01/05/2007 4:14 AM
Ok, let's first get the headline right - the revenue fell, not the profit. But apart from that yeah, their stuff is too expensive, what do they expect?

10 GW Space Marines.....35 dollars = 3.5 dollars a figure.

6 Cygnar Sword Knights 32.99= 5.5 dollars a figure.

8 Brettonian Knight 35.00=4.4 dollars a figure

3 Storm Lance Knights 51.99=17 dollars

8 Starship Troopers 19.95=2.5 dollars

20 Light Armor Troopers 29.95 = 1.5 dollars

7 Star Wars prepaints 12.00=1.7

HQ and 2 Platoons of US Infantry for Flames of War 42.00.

5 Reaper Men of Anhur 12.99 = 2.6 per figure.

GW's vehicles are priced simliarly and less then many comparable plastic model kits. I find that the models that are expensive are the characters etc. Ragnar Blackmane used to be 5 bucks, now he is 15. But all in all...compared to what seems to be the most popular game competing, Warmachine, and even with others....are the prices REALLY too expensive?

Except that those 10 space marines/8 bretonnian knights equal less than 10% of a 2000 point game or roughly 10% of a 1750 point game.  That means you're looking at, at the very least, $350 just to get a decent sized game of 40k/fantasy, with no options and just those basic troops.

Those Storm Lances/sword knights make up roughly 20-25% of a 500/750 point game.  These two are equivalent in terms of game play, so you're looking at $150-200 for a 500-750 point game WITH OPTIONS.

The per model price means absolutely nothing when it comes down to the amount of money it costs to play the game.  Heck, I can buy a Star Wars minis army for about $30 from my FLGS.  Yeah, it wouldn't be the best, but I could play the game, not that I do.  It cost way too much money to play Warhammer/40k.  Nothing will change that, unless GW doubles the number of models in each box without increasing the price.  Twenty Space Marines, forty IG, 16 Bretonnian Knights for $35 bucks would bring the cost of GW games down to a managable level.  Will that happen?  my guess is no.  Heck, that's the only thing that's kept me from getting back into 40k when I saw the new eldar.  It'd just cost way too much money.

Knight

"But all in all...compared to what seems to be the most popular game competing, Warmachine, and even with others....are the prices REALLY too expensive?"

I wouldn't be so frustrated about prices if GW started working out issues with the rules. Just start writing FAQs... listen to the problems people have, and clarify the rules. I'd think it would be a win-win situation because better rules would make more people buy... and it doesn't exactly cost a ton to write up a FAQ.

I agree with ph34r on that, for sure.

And I would probably buy White Dwarf too if it wasn't the most expensive magazine on the planet.  Or at least I would have before it turned into a catalog with mostly useless articles.

Part of GW's problem, as well, is the fact that old models that haven't changed in 7+ years are going up in price. For example... ORKS! Ork warbikes, which haven't changed since 2d ed, and Ork Wartrukks, which haven't changed since 2d Ed and Gorkamorka, have all gone up in price. If I remember correctly (its been awhile), but Ork Wartrukks were only $15 each back in the day, now they are $25 each. Bikes have only gone up a little, but they still have gone up.

So why jack up the prices on a model that hasn't changed and probably already paid off its development costs? Pure greed.

The only way GW is going to fix this is by cutting prices, firing Kirby, and getting rid of dead weight armies (even if that means LOTR, Dark Eldar or any underperforming army or gaming system that doesn't sell that readily).

I hate to say it, but maybe its better for GW to focus on their main lines, and not so much on specialist stuff. They seem to have alot of it and have had alot of it over the years.

-Jmz

this was true of WARMACHINE a ling time ago.  I spent 350 on my 750 point list.

Pistol wraiths are 33 points, I have 2.  Thats 66 points.  16.00
Leviathan, 113                                                                          30.00
so far so good,
mechanithralls: 10 cost me 41.00, they are less than 100 points.

So far, thats about 300 points, no warcaster, and I am out 89.00.

I like Terminus, he is a lovely hunk of metal, but he is also 45.00, gladly spent dollars on this wonderful model.  Now we are at 134.00, and its about 400 points. 

Start buying bane nights, sytnaxis raiders, bone jacks, to make comeptetive, non all jack army, and the costs are actually higher for my 750 point warmacnine army than for my 1500 point brood lord led tyranid force i cooked up real fast for a pick up game.

What does this have to do with this post?  Well, it quells the whole WARMACHINE is cheaper argument, that was true at the time I started playing, but is most defeniately not true now.

Also, I hope GW tanks, and the company goes through a major reorganization, as plastic models should not cost this much when they are no longer imported.

Well the main problem with GW is not the actual pricing. The problem is what folks feel what they get for the price... and that´s much more with Rackham, PP and MG.

Except that those 10 space marines/8 bretonnian knights equal less than 10% of a 2000 point game or roughly 10% of a 1750 point game.  That means you're looking at, at the very least, $350 just to get a decent sized game of 40k/fantasy, with no options and just those basic troops.

Those Storm Lances/sword knights make up roughly 20-25% of a 500/750 point game.  These two are equivalent in terms of game play, so you're looking at $150-200 for a 500-750 point game WITH OPTIONS.

The per model price means absolutely nothing when it comes down to the amount of money it costs to play the game.  Heck, I can buy a Star Wars minis army for about $30 from my FLGS.  Yeah, it wouldn't be the best, but I could play the game, not that I do.  It cost way too much money to play Warhammer/40k.  Nothing will change that, unless GW doubles the number of models in each box without increasing the price.  Twenty Space Marines, forty IG, 16 Bretonnian Knights for $35 bucks would bring the cost of GW games down to a managable level.  Will that happen?  my guess is no.  Heck, that's the only thing that's kept me from getting back into 40k when I saw the new eldar.  It'd just cost way too much money.

Knight

Can you quote me in the rules where it says you HAVE to play a 2000 point game? You can easily have fun playing 500 points, or a 1000.

I think its not that the product isn't too expensive, its that alot of gamers just can't afford to play. Is that GW's responsibility? I don't think it is. It is a company out to make money. While they should put out well written rules and try and help out stores where people play, at the end of the day thay have no obligation to lower prices to help people who don't have high incomes be able to afford their product. The same is true of cars, watches, etc.

Yes they are out to make money. But they wont make much of it if they continue to price themselves out of the market.

Simple as that.

One problem: GW's target market are people who can't afford their product.

Ooops.

Posted By Janthkin on 01/07/2007 5:19 PM

I think its not that the product isn't too expensive, its that alot of gamers just can't afford to play. Is that GW's responsibility? I don't think it is. It is a company out to make money. While they should put out well written rules and try and help out stores where people play, at the end of the day thay have no obligation to lower prices to help people who don't have high incomes be able to afford their product. The same is true of cars, watches, etc.

One problem: GW's target market are people who can't afford their product.

Ooops.

Or is it?

I started playing 40K in 1993.. back then people were saying GW was gonna tank cuz they keep raising prices. I was delivering pizza making $5 an hour plus tips. Nowadays, I have 7 different armies for 2 different games, and I buy stuff almost every month, but I'm not poor.

All hobbies are expensive. Buy a PS3 and a game a month, you'll be out the same amt of cash, or more. Buy a big screen TV and collect HD-DVD movies, you'll be out a lot of cash too. My mom loves to knit, she's not going broke buying yarn because she just buys what she needs.

You don't have to have 2-10,000pt armies to enjoy the game. You don't have to buy every shiney new model and army that comes out. You don't have to have a closet full of unopened boxes of models. Sure, there's an investment requred to get into the hobby. Same thing with building cabinets or collecting cracker jack prizes. I don't wanna see GW's prices rise any more than anyone else, but it's been happening, it's going to continue to happen, and since price hikes haven't killed GW in the last 13 years that I've been playing, I doubt they will anytime soon.

we shall see....

Posted By General Hobbs on 01/07/2007 4:00 PM

Except that those 10 space marines/8 bretonnian knights equal less than 10% of a 2000 point game or roughly 10% of a 1750 point game.  That means you're looking at, at the very least, $350 just to get a decent sized game of 40k/fantasy, with no options and just those basic troops.

Those Storm Lances/sword knights make up roughly 20-25% of a 500/750 point game.  These two are equivalent in terms of game play, so you're looking at $150-200 for a 500-750 point game WITH OPTIONS.

The per model price means absolutely nothing when it comes down to the amount of money it costs to play the game.  Heck, I can buy a Star Wars minis army for about $30 from my FLGS.  Yeah, it wouldn't be the best, but I could play the game, not that I do.  It cost way too much money to play Warhammer/40k.  Nothing will change that, unless GW doubles the number of models in each box without increasing the price.  Twenty Space Marines, forty IG, 16 Bretonnian Knights for $35 bucks would bring the cost of GW games down to a managable level.  Will that happen?  my guess is no.  Heck, that's the only thing that's kept me from getting back into 40k when I saw the new eldar.  It'd just cost way too much money.

Knight

Can you quote me in the rules where it says you HAVE to play a 2000 point game? You can easily have fun playing 500 points, or a 1000.

I think its not that the product isn't too expensive, its that alot of gamers just can't afford to play. Is that GW's responsibility? I don't think it is. It is a company out to make money. While they should put out well written rules and try and help out stores where people play, at the end of the day thay have no obligation to lower prices to help people who don't have high incomes be able to afford their product. The same is true of cars, watches, etc.

1) Tournaments hover between 1500-2000pts per army and the way the rules are written, it is at about 1850pts that an army becomes truly cohesive with a nice mix of units to play with. Sure you can stick with 500pt games, but I'd get tired of that pretty quickly and the same money I've spent on that could've gone to quite a nice stack of DVDs, CDs or second hand PC or console games. And it is a hobby that not only encourages an expansion into higher points levels, but the business model RELIES on it. And at the current rate, the model is failing because they are spending so much time and effort getting new recruits, but spend very little in the way of KEEPING them once the initial 'OMG! this is cool! minis! paint! RAR!' phase in the average 10 year old subsides or when THEY themselves need to start paying for their own hobby from their $10 an hour Maccas job.

2) Is it GW's responsibility to make their products affordable? From a business SURVIVAL perspective as well as SHAREHOLDER perspective, HELL YES. Why? If your target market is struggling to afford your products and thus not only buys less, but becomes disenfranchised with the whole shebang, your bottom line goes out the window as is the trend now. Your analogy with the cars and watches is erroneous. A car company selling a family car won't price it beyond the reach of the average middle class family. Nor would a watch company aiming at getting its products into the mainstream such as Swatch. Hobbies tend to be more pricey than other leisurely pursuits, but they are by no means and their target market does not expect, it to be the Tag Heur or Porsche of leisurely pursuits and the price as well as value for money should reflect that if the business model is to be successful.

Something struck me about GW's business model. It's the whole "income stream" thing:

What I mean is that I expect a "typical" wargamer/customer to not just buy one or two items and then not buy any more. Instead I would expect a wargamer to make a whole string of purchases over a period of time - probably several years.

This means that a gaming company probably has fewer customers per £1 than your typical manufacturing company.

Normally a manufacturer would expect to sell one or two items to a customer and never see them again until those items wore out.

This means that "customer loyalty" is a prime asset for GW or PP or whoever.

It strikes me that with GW's turnover vaporising like it is, then due to whatever reason - prices rising, perceived lack of quality in product, etc., etc., then this is the nub of the problem.

Once GW lose a customer, then pretty much he is lost for good. They haven't just not sold that one item he walked into the store to get and changed his mind about - they have also lost everything else he was going to buy over the next 10 years!

Of course, often it isn't going to be as stark as that. There'll be a period of reduced sales before the customer gets disenchanted completely. But over time this is what is going to happen.

Make no mistake about it. The financial figures indicate that GW is in serious financial trouble. They cover the period when 7th edition was splash released and still they show lower levels of sales than the year before. Remember last year's financial results? 7th edition was trumpeted as being the Great White Hope of GW for 2006. And it hasn't materialised!!

And now they are massively increasing borrowing to pay shareholders' dividends.... OUCH!!

I'm not gloating. I'm not happy at GW's problems. I'm just feeling vindicated about my opinion that they really shouldn't cheese off the "vets" like they have being doing over the last few years. A company that takes its customers for granted in the way GW does is heading for a cliff. Looks like they are only feet away from the edge now...

Oh, and by the way, whoever blames LotR for GW's downfall blows so much smoke:
The "talent" that worked on LoTR was either recruited new (Mat Ward & Adam Troke), was contract labour (Perry Twins), or sucked (Gary Morely). The only "GW talent" that was diverted temporarily to LotR was Brian Nelson. So Yah Boo Sucks to that comment!!

The only "problem" LotR caused GW (apart from giving them a massive cash windfall to squander on Directors' bonuses) was that the sales generated by the success of it masked the fact that sales of their other lines were dwindiling fast! That is a management mistake, not a product-line one.

Here endeth the sermon!

I agree with Necros on his point.

One thing to remember, at least in the UK, is that the majority of GW's target audience (as far as kids are concerned) is the middle to upper middle class. Where daddy can afford to buy his kids X amount of £ on model kits.

There were very fewer kids of lower income backgrounds that used to come to the store that i worked in. Its very sad and totally wrong, but thats GW's demographic.

Just look at the placement of stores in London. There are only hobby centres (cough) in either huge shopping malls, or reasonably well off suburban areas. The Highest concentration being in or near central london.

Because of this misled belief and faith of their target market they think that parents won't be bothered. Thus they will continue to raise prices and try to push the "prestige" level. I think they refer to there models as "high quality scale models" or some BS like that.

Personally I don't care anymore. Its all about Forgeworld for me. Theres more passion and design flair in a FW Fuel canister accessory than there is in entire GW model ranges. IA books are outstanding and really take me back to the old days of GW. And the models both tanks and now troopers are amazing.

Exopensive yes, but put a Krieg Trooper next to a plastic Cadian or a metal vostroyan... man theres no comparison in quality.  

Posted By Necros on 01/07/2007 6:43 PM
(...) since price hikes haven't killed GW in the last 13 years that I've been playing, I doubt they will anytime soon.

There is a problem with this kind of "logic": it implies that there is no upper limit to the price GW may ask for a miniature.

Even the most diehard GW fan (I'm writing in broad terms here, don't take it personnally Necros) should agree that this upper limit does exist. If a space marine squad costs as much as a PS3 game, would it be over the top? If not, what about a month's rent? A used car?

Sure, this price is clearly a personal matter - each gamer has his spending habits and a specific budget for gaming. Some of us can afford to pay much, much more for GW products (Forgeworld is a brand specifically created for them) but on the other hand, many find that GW products are too expensive for their taste, and quit - or refuse to join. Perhaps GW itself could live on a market where half a dozen customers pay the price of a castle for a miniature box, but most of us will quit earlier.

GW priced itself out of the hobby, and the new thing is that sales curves are showing the limit has been reached. Any price adjustment should be carefully considered in regard to the number of players giving up the hobby - or joining the competition.

Posted By Osbad on 01/08/2007 1:29 AM
Something struck me about GW's business model. It's the whole "income stream" thing:

What I mean is that I expect a "typical" wargamer/customer to not just buy one or two items and then not buy any more. Instead I would expect a wargamer to make a whole string of purchases over a period of time - probably several years.

This means that a gaming company probably has fewer customers per £1 than your typical manufacturing company.

Normally a manufacturer would expect to sell one or two items to a customer and never see them again until those items wore out.

This means that "customer loyalty" is a prime asset for GW or PP or whoever.

It strikes me that with GW's turnover vaporising like it is, then due to whatever reason - prices rising, perceived lack of quality in product, etc., etc., then this is the nub of the problem.

Once GW lose a customer, then pretty much he is lost for good. They haven't just not sold that one item he walked into the store to get and changed his mind about - they have also lost everything else he was going to buy over the next 10 years!

Don't forget the couple of hundred dollars worth of stuff that he's going to be offloading for cheap on eBay. Indirectly affecting sales of fresh new models that are exactly the same!

Like I said before, they spend too much on getting the initial recruit and their starter splurge and do very little to keep them in order to get stable income from their hobby. Shame

GW's vehicles are priced simliarly and less then many comparable plastic model kits. I find that the models that are expensive are the characters etc. Ragnar Blackmane used to be 5 bucks, now he is 15. But all in all...compared to what seems to be the most popular game competing, Warmachine, and even with others....are the prices REALLY too expensive?

Over approximately 20 years, the rise in the price of a plastic space marine has outpaced inflation by a factor of 2.7.   Forget the comparison with other miniature companies (who likely are just following GW’s lead), the fact is that GW’s product is looking increasingly expensive when compared with other products, BIG E.G. computer games.  

 

The other thing is that you need more models to play 40k these days, so the increased cost is even more noticeable.  

Posted By BF44042 on 01/08/2007 2:36 AM
Like I said before, they spend too much on getting the initial recruit and their starter splurge and do very little to keep them in order to get stable income from their hobby. Shame

I totally agree.

Its a realy travesty that they ignore core gamers and vets.

Hobby centres? Yeah right...

Posted By Gundammecha on 01/08/2007 4:41 AM

Posted By BF44042 on 01/08/2007 2:36 AM
Like I said before, they spend too much on getting the initial recruit and their starter splurge and do very little to keep them in order to get stable income from their hobby. Shame

I totally agree.

Its a realy travesty that they ignore core gamers and vets.

Hobby centres? Yeah right...

Looks like Kirby agrees with you:

www.telegraph.co.uk/money/main.jhtml

"We have not been paying enough attention to the hobbyists.  We need to get back to our bread and butter," said Ted Kirby, chairman and chief executive of Games Workshop.

He's read Lotr. Must be some osrt of intellectual.

Haha, that article didn't even get Tom Kirby's name right, must have been written by a GW staffer!!!

Posted By General Hobbs on 01/06/2007 9:26 PM

GW's vehicles are priced simliarly and less then many comparable plastic model kits.

Calling BS here as this is absolutely not the case. Even using Tamiya, one of the premier plastic model kit manufacturers, their closest equivalent scaled kits (1/48; and even the larger scaled 1/35 ones) are going to be anywhere from 20-50% cheaper while also being better engineered, finer detailed, having more parts and generally being a better purchase than any GW vehicle kit from a modeling perspective. For example, the 1/48 KV-2 is $30 retail, while it's equivalent would be GW's $40 Leman Russ. And this despite GW having the income stream Osbad mentioned where GW expects customers to buy multiples of the same kit for their army (and if they don't, they charge out the wazoo for it, ie: character models that are $20 while a similar "trooper" is $5 or less).

Posted By Osbad on 01/08/2007 1:29 AM

This means that "customer loyalty" is a prime asset for GW or PP or whoever.

It strikes me that with GW's turnover vaporising like it is, then due to whatever reason - prices rising, perceived lack of quality in product, etc., etc., then this is the nub of the problem.

Once GW lose a customer, then pretty much he is lost for good. They haven't just not sold that one item he walked into the store to get and changed his mind about - they have also lost everything else he was going to buy over the next 10 years!

Of course, often it isn't going to be as stark as that. There'll be a period of reduced sales before the customer gets disenchanted completely. But over time this is what is going to happen.

Something I heard is that GW commissioned their own customer loyalty survey a few years ago and discovered that in the UK they expected to only retain 20% of new customers after two years, while in the US it was an even more dismal 10% over one year. That is a terrible, terrible customer retention rate and I can't imagine it's gotten any better. Kirby's remarks only reinforce how out of touch they are with the crisis underway.

Unlike the gripes of yesteryear, which were largely unfounded, never before has GW had such a drastic decline in sales and profts. In fact, this looks to be the first year since they went public that they might not post any profits at all. And they have nobody but themselves to blame.

Posted By Osbad on 01/08/2007 1:29 AM
Oh, and by the way, whoever blames LotR for GW's downfall blows so much smoke:
The "talent" that worked on LoTR was either recruited new (Mat Ward & Adam Troke), was contract labour (Perry Twins), or sucked (Gary Morely). The only "GW talent" that was diverted temporarily to LotR was Brian Nelson. So Yah Boo Sucks to that comment!!

The only "problem" LotR caused GW (apart from giving them a massive cash windfall to squander on Directors' bonuses) was that the sales generated by the success of it masked the fact that sales of their other lines were dwindiling fast! That is a management mistake, not a product-line one.

Quoting this for truth. The LotR license acquisition was a brilliant move completely and utterly squandered by senior management incompetence.

I'd heard the "two-year drop-off" statistic quoted by GW before but wasn't sure where it came from. Interesting that it was GW's own stats.

Given that what GW are supposedly selling is the chance to participate in a hobby, that they can only persuade so few to actually take up that hobby much beyond the time it takes them to assemble their first boxed set is not a measure of success by the standards of any dispassionate observer surely?

Given that survey must be a year or two old now, then presumably things are even worse now. (They've got to be otherwise turnover would be increasing, not decreasing).

I'm sure that customer retention report is at least a year old if not longer which does not bode well at all. Especially in a market where the competition isn't making the same mistakes (ie: Battlefront, Rackham and Privateer Press have all had explosive growth for several years in a row). The prices are bad enough but the institutionalized arrogance and contempt for their customer base only exacerbates the situation.

Right, and what has the cost of manufacture and materials done? I have to assume that injection molding has only gotten cheaper and faster thanks to improvements in the technology.



Why aren't we focusing more on this? It seems to me that the explosive growth of other miniatures companies shouldn't be taken as proof that GW should be exploding as well, but instead as a reason why they're not.

I'm not sure how it is for everyone else, but time, not money, is the major bottleneck on my miniatures expenditures. I spend only as fast as I need to in order to have models to paint. If I painted faster, I'd spend faster. If I decide I need a Warmachine army, that's probably 6 months of my time that will go to painting it, and thus that won't go to GW.  There's no real limit on how much money people can have, but there is a limit on time.  At most, people can paint 24/7...  I suppose it doesn't matter what your limiting factor is, but the bottom line is that other companies are taking market share away from GW. There's really nowhere else for it to come from.

Companies never want to cut costs. They never want to lay off employees, send their molding overseas, etc. etc. I think GW is absolutely at a point where this needs to happen. It's not a great time for miniatures games in general. With the sorts of computer gaming experiences available, miniatures are in for a fight even in the best scenario. But when you lose your monopoly, and now have serious competitors, you really need to get serious, and accept that it might mean a reduction in your staff. The fact that GW's sales are falling is understandable, and perhaps not something they can avoid. The fact that they're not responding appropriately is.

They need to downsize and run more efficiently.

Posted By Phryxis on 01/08/2007 11:56 AM

ie: Battlefront, Rackham and Privateer Press have all had explosive growth for several years in a row

Why aren't we focusing more on this? It seems to me that the explosive growth of other miniatures companies shouldn't be taken as proof that GW should be exploding as well, but instead as a reason why they're not.

Depends. If most of the explosive growth is just cannibalizing GW's customers and market share rather than a genuine expansion of the market, then it's hard to blame GW for not exploding.

It points to an entirely different problem.

While I don't play FOW or other games such as Warlord or Confrontation, I will comment on what I see as the strengths of some of these games, especially Warmachine, when compared to GW games as they exist at this point.

First off, I have been playing GW games of various ilks since the mid eighties and have seen them grow and expand into the nightmarish company they are today.

What I see as their biggest problem it that they have not changed with the times. Where other companies have changed their business model away from the 'codex' style schedule, GW has stuck to it with a vengence. FOW and Warmachine both are following a model that, while not new, is more successful and competitive in the current gaming market. By releasing sourcebooks and rules additions that cover several factions/countries within the same volume, these companies keep their customer base constantly engaged in purchasing and expanding.

By using the 'codex' style of production, GW leaves large numbers of their customers idle as they wait for their favorite army to be 'redone' or 'revised'. A good example are Ork players, who for whatever stupid reason, are still waiting after 7 years for a new codex. These idle customers are very likely to move on to other games and companies rather than wait for GW to get thier act together. What GW lacks is a coherent vision of their game system and how their various 'races' fit into the overall background.

What I would like to see is GW make a sea change and release basic troop types and characters in one volume with the rules that are needed to play. This would allow them to fine tune the rules as a whole for all of the armies rather than the adhoc rules creation that they currently use.This would solve a lot of balance problems as well as give equal representation to all of the armies and keep their customers interested.

I doubt that this will happen because to do so would mean admitting that senior management have made grave mistakes in not changing with the market. It's a bummer really as I have enjoyed thier games for the most part. Unfortunately for them the folks a PP seem to have grasped the changing market and they are now sucking up my descretionary funds.

I have a feeling GW does this because there has been proof that many die-hard
players buy into other armies while waiting for a codex. Or at least, that's the
way things were until the current explosion of alternative gaming systems.

Now people stable, almost mainstream options. They don't have to buy Black
Templar figs even if they don't want to.

That's my theory, at least as it applies to me. I got into 40k to play with Eldar,
and have bought different miniature armies over the years, but never took
big plunges. I stopped buying so many things because Warmachine got me,
and so I wasn't inspired to expand into other codex armies. Now that Eldar
is out, I do have a backlog from my brother who quit 40k, so I should be
happy with not buying GW stuff for now.

That's just me, though.

I'd agree with you on that, Blackspade and Malfred. I know after painting a certain amount of one particular type of thing I just *need* to pick up something else for awhile, simply to keep me interested and give me some change. In a world where GW was the only game in town that would mean buying other armies. But when a person can get started in Hordes or Confrontation for just $60 plus a rulebook instead, well, it's easy to see why that approach doesn't work so well anymore.

I don't think codexes are the problem per se, but rather the clustering of releases for products. Instead of being able to look forward to something new for, say,  Vampire Counts every 3-4 months ( a new character sculpt, a new sprue to customise the look of your troops, new bats to replace the old ones, etc.), a person has got to wait many many years since they release it all in a flood with the updated book. Which is plenty of time to go looking around at other games. A trickle of new things every few months would go a long ways to retaining your attention. I think GW is beginning to learn this and is in the very first stages of realising this. Or maybe not.

But I wouldn't say codexes and army books are all bad. Confrontation 3.5 is a total mess. It might not seem bad when you are just starting but as a person who's been playing since 2 was new, I know. The cards and their points values are just plain out of whack now, and not just the old ones. Each rules upheaval has made certain things either totally worthless or exceedingly capable for their cost. C3 made Griffon Duelists pretty laughable. C3.5 brought them back. But now Mystic Warriors, who were always very good in C3, are much too good in the hands of someone smart in C3.5, and mages in general are so much better than their warrior character counterparts in C3.5 there's little reason to take the latter over the former. Points costs need some radical rebalancing.

I think AT-43 is going to be the first game to get the longevity aspect of things absolutely right. Profiles are contained on cards. However, points costs are going to be listed seperately (until the full rules arrive in March or so, points costs for the few things available are listed on a thread in the forum and in the Cry Havoc! publication). Whenever there is a major rules upheaval, all points costs can be adjusted as well without invalidating your old cards and your old models.

I'm not sure which way works best. I think it's more the quality of the execution.

I was thinking, just a moment ago, that I don't like the "one codex at a time" approach, and would perfer the PP "across the board" style of releases but I dunno... There're a few issues that come to mind...

First, I'd be very annoyed if I just got done doing 20 Eldar Rangers, when it turns out that they're releasing new sculpts next month. When you go with a Codex release, you have a better idea of what's going to get redone and when.

Second, I tend to paint whole armies at once. While I know the feeling of wanting to do do something different, I also REALLY want my army to look consistent and uniform. If I've done half of my Blood Angels, I might be very tired of red at that point, but I've got the technique down, the color combinations memorized, the general "feel" of what to do, etc. If I stop for a few months, then come back, will I be able to assure consistency? With my Dark Angels, which I painted in 3rd Edition, I found I wanted to change elements of the list in 4th. The new models I painted, a year or two after the originals, simply looked different. Nothing that really stands out on the table, but my style had progressed, the colors were slightly different, to the point that I noticed it and it made me a little irritated. Even though the newer models were better painted, I'd almost prefer that they were more consistent. In any case, I don't think I'd be very likely to go modify finished models with a new custom sprue. Instead, I'd just be pissed it wasn't around when I would have loved to use it.

As much fun as it is to blame the pricing for the slide in GWs numbers, I feel that online games have made a much larger impact on GW, and non-electronic gaming in general.  Simply put many kids are opting to play console games online, WoW, or another computer online game.  They're cheaper, much more heavily advertised, and require no time investment.  Theres a reason GW has been investing more in electronic games, they know where the real money in gaming is.

-Accident

One problem: GW's target market are people who can't afford their product.

Ooops.

Yea, but mommie and daddie have a credit card, and if little johnnyfockstick whines enough, they'll get it for him.

Uhhh...

Other than that, you're right, but damn, dude, play WoW.

Yeah I was waiting for someone to make a crack about time requirements and WoW.  What I mean when I say no time requirement is that after the game is installed, you can immediately start playing.  Theres nothing to paint, assemble, you don't need terrain etc.  It is instant gratification which is a huge sell when you're talking about kids who tend to have rather limited attention spans.

-Accident

For at least some consumers of the hobby, this is true.

For me, I came to GW as a place to get cool models to paint, mostly for use in DnD games. Only after some time did I decide I needed to actually paint an army and play.

So, for at least some people, you can get immediate gratification, since the point of the hobby is painting.

But, again, I think you're totally correct that computer and console games are going to beat out miniatures gaming for kids' focus.

 

Just some general points:

1. I agree that video games hurt GW more then anything.

2. GW's target audience are people who want to play GW games. If you do, then you find a way to afford it.

3. I have seen model kits going for 50+ dollars. Granted, those are high end kits, but that still put sthem in the same range as GW.

4. I know maybe 5 people who play Warmachine. I know a couple hundred who play GW. I think its competition only in certain areas. Kinda like saying segways are competing with cars.

5. I agree that GW should do more to keep vets in the game. Americans thrive on competition....look at the Magic card scoring system and Heroclix and all that. GW should do something similar to give vets bragging rights....

 

 

 

 

But price is ALWAYS a factor I would argue.

I agree that perhaps all of the things listed in the posts above are eroding GW's sales - PP, Rackham and MP having games systems/models that are more attractive for many people; alternative sources of supply being available ever more easily via the internet; youthful fadishness and lack of attention span making computer games more attractive than painting up an army for kiddies; etc. etc.

But price affects everything because in all of these decisions about whether you spend your wedge on GW's products or on something else you are running a little calculation through your head: "will I get more fun for my money if I buy this or if I buy that?"  If money was not a factor then you'd just go ahead and buy everything.  If GW's models (for the sake of argument) cost just 1 penny each then even if you'd got fed up to the back teeth with 40k you'd snap them up just on the off- chance.  I reckon the price (which informs the "value for money" we feel we have received) pretty much comes into any decision.

There is a cogent argument that time is the limiting factor - and that is true.  As a father of 3 young kids, it is certainly my own major constraint as to how much painting and assembling of models (of whatever kind) I do.  However, price is still a major factor.  Not because my funds are limited (I have more than enough spare cash to build a backlog that would last me decades, even at GW, Rackham and PP's prices), but because I don't want to waste it.  I could buy X models from GW and feel I would get a certain level of value from them or I could by X models from an alternative company and feel I was going to get more value (or arguably less of course, depending on your p.o.v.).  In any case, while it is not the limiting factor (i.e. I will still be buying X number of models, whatever the cost), because I feel I will get better value from the alternative company's products - either because for a similar price they deliver more fun, or they deliver similar or less fun, but at a much lower cost.

No one likes feeling ripped off.

For some that point may have been reached years ago, for others it may still have to happen.  But it is a simple law of economics, even Bill Gates doesn't like paying more than he feels something is worth!

Never has competition for the wargamers money been more fierce.  GW need every weapon in their armoury to fight their corner.  By keeping their prices high, they are really painting themselves into a corner in that regard.

Anyhow, before I end the post, another point that came up in this thread is that allegedly the UK economy has had a bad few months, and GW's last quarter sales woes are symptomatic with the UK retail sector as a whole.  That simply isn't true:

news.bbc.co.uk/2/hi/business/6243541.stm

In the UK retail sector as a whole: "takings in December were up 2.5% compared with a year ago".  What is true though is that the performance was patchy.  Retailers that saw successful trading were those prepared to bring forward sales and offer discounts.... oh.  Oops!

No prizes for guessing why GW's December sales were disappointing then...

Well the problem of the TT-market is at the moment that all competitors fight about the seem pool of gamers and that´s going on for years. What all companies were not able to reach was: the folks outside the already established gamer pool. So, every customer gained was a customer lost to any other company. While not bad it also creates a problem, how often can we get players to switch system, and there are more companies on the market than back in the 90´s.

I think it was the right decision Rackham made when deciding to go with the AT43-concept. It is the first major try to get players from outside the pond. And as it looks all other companies have at least accepted that this is a direction thy must at least try to go. Mongoose and Rackham do their first steps and while others might avoid their mistakes they might also get fewer pieces from the new cake if they do not come out with something similiar in 2007/8.

AT-43 does seem to be going down a storm. I have yet to try it, but will do soon. So far feed back seems universally good - the painting quality seems good enough not to alienate those with high standards, and the gameplay seems pretty fun from the reviews I've read.

With those factors in its favour, it should do well with the "new starters".

I would be amazed if GW doesn't come out with something similar at some point. It's got to be attractive to the novices. Everyone (me included and I love painting now) was intimidated by the prospect of painting up even a small army the first time around!

Of course GW have a track record on focussing everything on traditional 40k and WFB. But those are dwindling assets. They've *got* to break out.

Maybe we are seeing signs of renewed diversification with the pending re-release of Talisman (their first boardgame in absolutely ages) and with the revision of BFG, the new rulebookbeing made available via their stores and not just online. We'll see.

For me, there are 3 things GW have to do to retain market share in the face of vigorous competition from the likes of AT-43:

1/ reduce prices drastically somehow and NOW before their fanbase has walked altogether.  Sales/bulk discounts, anything to reward the dedicated fan who pays through the nose as things stand.

2/ Reinvigorate 40k and WFB. They've got to somehow tighten up their systems without alienating their existing fans. Who wants to read a thick rulebook and 17 army books just to play a simple game these days? That for me is as big an obstruction to new entrants to the hobby as painting is, and one of the scoring points of WM. Maybe a "Warhammer Lite" or something. However they do it, it has simply *got* to be done IMHO. Their old core systems are bloated, old-fashioned and unwieldy and falling apart under their own weight.

3/ Diversify. All their eggs are in one basket (well, OK, 3 baskets). Their main competitive advantage these days is their store network. Yet they only have their "core" stuff for sale at them. They need to get more variety in stock so that they attract more customers. Show off their Specialist games, and Forgeworld, and the new Talisman etc. Radically I would love them to also sell other manufacturers' games. They need to embrace their comepetition instead of pretending it doesn't exist. If they *truly* had faith in their own product they would encourage players to try other systems, take their cut of the profit of the sale, safe in the knowledge the customer would keep playing GW games as well. As things stand the "tribalism" they encourage of "GW only" is just slitting their own throat!

And finally, not one of my "key-three", but just a plea from the heart: for goodness sake clamp down on the insane mouthbreathers that all too often pollute their stores. Also, train their staff in effective low-impact sales techniques instead of winding them up on caffeine. The retail environment has to be attractive to work properly and no one except the insane wants to be bounced up to by tigger and pestered. Nor do they want to be bored to tears by a sticnky fellow-customer. Make the wearing of under-arm deodorant compulsory and tone down the sales pitch FFS!

Heh. Just my 2p anyhow

Significantly that story fails to mention the substantial increases in pre-Christmas discounting, to which many analysts attribute the increase in high-street sales. Effectively, the sales season was moved ahead of Christmas this year, so its somewhat premature to conclude that Christmas was a success on the high street, and Analysts will be looking very carefully to see how this impacts on results for January and February. In this sense I think Kirby is right, in that the demand for hobby figures is not seasonal, and entering into some kind of discounting competition effectively devalues the product.

Edit: Agree with your subsequent comments, particularly on lack of new product development and customer service issues

 

Posted By torgoch on 01/09/2007 3:27 AM

In this sense I think Kirby is right, in that the demand for hobby figures is not seasonal, and entering into some kind of discounting competition effectively devalues the product.

It is an interesting issue.  Clearly GW used to hold sales and now they don't.  I accept that Kirby may well have a valid point and have found that many people were deferring full price purchases in order to wait for sales coming up.

My feeling though is that many people are like me and will only buy at a discount.  I find full price GW stuff to be too poor value for money and so would only by direct from GW now if they offered some form of discount.  It's either discount or no sale at all, not a case of discounted sale now or full price sale at another time for me.

The report seems to indicate that pre-Christmas retail sales held that mold.  Shops that discounted well, sold well, those that didn't discount well, didn't perform well either.

Something I never understand about the "GW sales are not seasonal" point though is that from their own admission GW sales clearly are seasonal - they advertised like crazy in WD and in WDOnline for the Christmas market - my inbox got something like 5 or 6 "WDOnline" spam emails in the run up to Chrimbo.  Many people buy their kids stuff as Christmas presents.  As well, many more kids get cash for Christmas and look to spend it on something on Boxing Day.  GW potentially offering poor value for money compared to a discounted Playstation game or something is a missed opportunity.: "Hmm, do I develop my Eldar army, or do I snap up that half-price video game I always wanted...?"

I really think Kirby has got the "no sales" policy very, very wrong for the current commercial reality.  It may have been right 5 or 6 years ago, but nowadays retailing is a dog-eat-dog world.

Still, I'm not the one who's salary depends on GW's turnover, so I guess he knows better than me...

I think it was the right decision Rackham made when deciding to go with the AT43-concept. It is the first major try to get players from outside the pond.

 

Heroquest and Space Crusade were basically doing that, and they did it very well.  I doubt Hasbro would be willing to repeat the venture with GW.  However, GW have the clout now to do it themselves.  Maybe they should note that one thing those game used was TV advertising.  Relying solely on word of mouth advertising seems less wise when there are many gamers willing to slag you off at every opportunity.

Osbad's pretty much got the analysis right in that GW needs to not only invigorate their core lines of WFB and 40K by tightening the rules structure and reviewing their release structure, but also in their need to diversify their product range. Many many specialist games such as Mordheim, Necromunda Blood Bowl etc are FANTASTIC games that don't cost a lot to get into and can reach outside of the current pool of hobbyists/gamers in order to bolster their bottom line as well as potentially introducing them to the main lines. As it stands, LOTR is the worse introduction to the GW hobby as its a dead end. There is no logical progression once you've got all the models that you wanted and really, how much fun IS reenacting scenes from the movie anyway? Why would anyone spend $100 to get those extra models JUST to be able to play Scenarios 5 and 13? Sure it has SOME replay value but the game dynamic isn't as elegent and esoteric as say Chess to warrant endless runs at it to 'get better'. Whereas using the specialist games range to get people into the GW universe and thus drive the imagination and interest at a low cost is what is needed here.

The strength of the hobby is that it is one of the few things out there that still tickles our imagination and engages our interest in much the same way as a book but adds a very thoroughly fulfilling tactile dimension to the expression of such imagination through miniatures that a videogame, cd or dvd simply lacks. Once GW actualy realises that THAT is the biggest strength they have, they must act on creating a vision for the HOBBY and defining what its future is THEN building a profitable and sustainable business model to fulfill that vision.

Posted By Bombot on 01/09/2007 5:25 AM

I think it was the right decision Rackham made when deciding to go with the AT43-concept. It is the first major try to get players from outside the pond.

 

Heroquest and Space Crusade were basically doing that, and they did it very well.  I doubt Hasbro would be willing to repeat the venture with GW.  However, GW have the clout now to do it themselves.  Maybe they should note that one thing those game used was TV advertising.  Relying solely on word of mouth advertising seems less wise when there are many gamers willing to slag you off at every opportunity.

They had a MASSIVE opportunity to do external advertising and that was LOTR and the subsequent Battlegames of Middle Earth magazine which for some completely slowed reason were not sold in stores, nor was it promoted at all after about several weeks after its launch. In the world of expensive mass marketing campaigns, those were freebies and they squandered it by creating a LOTR game in the same mould as their WFB and 40K lines. What they should have done was to have created a pre-painted or at least snap together set with all the things that you need to build and paint with a playing mat and even simpler rules that could be mass marketed and sold outside of GW stores and then gradually released similar expansions for them along with the movies. What they needed was an innovative and good value for money product that won't tie them down, gave them mass exposure to the hobby on the back of a pop cultural juggernaut as well as lining their pockets with cash because such a game is not 'hobbycentric' and would appeal even more to the kiddies or indeed any fan of LOTR who'd buy it as just another form of merchandise.

After that, they can of course introduce higher quality metal models that brings this game more into line with the rest of the hobby but only for the nice things such as characters or monsters but still easier to construct and paint than their current line. I believe that would ultimately have been more beneficial to the company than the way the actually went about it.

A niche hobby such as Warhammer can't afford mass advertising on its own, the market simply isn't there to sustain it with such large overheads. It needs a mass product/s that ties in with their core products of WFB and 40K (say from the same universes etc) that is sold outside of GW and is classed more as toys/games in order to support such advertising for those said products which would then lead exposure for the hobby. They can start with Talisman and work on others. I mean they're called GameS Workshop, they should constantly create new and innovative games to statisfy the mainstream in order to introduce people to their traditional lines in order to expand them.

Their current best hope to net more gamers and turn them into hobbyists is through computer games. They need to make that connection and actively support and promote that link rather than merely seeing DoW etc as mere spin-off limited time cash farms.

They did. They released a 40mm LotR CMG and marketed it through Sabretooth. Sold reasonably well through indies and comic stores for a while and then tanked after a couple of years when the film hype died.:  www.boardgamegeek.com/game/8139

Certainly didn't rescue them from their depression.

Just to throw in my two cents... I will NOT buy GW stuff at retail. It just isn't worth it.

I wonder where GW makes its' money? Is it the models or the rules? I think they should keep the codexes and make the core rules and IA type rules updates/additions into free net based items. Have one day every 2 months when they update/add new stuff. Changes would be predictible and easy to access. Hopefully this would get us back to the fun o fthe hobby from back in the early days while buying a bit of good will from the old timers.

Also, armies really do need to be more managable. Remember 300 point 10 man marine squads? 3 squads were the core of a solid 2000 point SM army. 

Oh, I don't play orks but even I tink they need a new codex.....

ender502

 

Clearly, the price of rulebook and codecies alone is a turn-off for newcomers.

GW hasn't ever admitted it makes profit from miniatures, not rules - or at least, they are too greedy to ever let slip a single penny, even if it costs them new players.

The only good point regarding GW princing is that it creates a sustainable second-hand market. Ebay prices for GW old miniatures is doing well, OOP or not, thanks to the insane prices reached in official stores. But this money doesn't flow in GW pockets.

Posted By Kotrin on 01/09/2007 6:26 AM
Clearly, the price of rulebook and codecies alone is a turn-off for newcomers.

Actually... this is true.

One of my friends is trying to get me into Fantasy.  I own all the models, and the V6 rulebook / army book.  However, to rejoin the game, I need to spend $100 cdn for the new V7 rulebook / army book.  That's a pretty ridiculous startup cost considering it doesn't include any models!

That is why you buy a starter set that includes the mini rulebook and split the figs, or get one off of ebay for $15 shipped. Much easier and what I recommend to almost anyone getting into 40k and fantasy. If after that point you like it, then get the nice big books. GW did a good thing there, though I am not sure if they will ever be available individually.

It's the exact reason I have been so loathe to get back into Warmachine. I sold all of my stuff a time ago, and now to get all up to date with all of my units I have to buy a bunch of books!

and I love the price of a single codex and a rulebook over the price of multiple books.

Posted By Toreador on 01/09/2007 2:15 PM

It's the exact reason I have been so loathe to get back into Warmachine. I sold all of my stuff a time ago, and now to get all up to date with all of my units I have to buy a bunch of books!

You don't have to buy a bunch of books.  The stats for the units are on the cards that come with them.  You only need to really buy the main rulebook. 

Posted By Osbad on 01/09/2007 6:06 AM

What they should have done was to have created a pre-painted or at least snap together set with all the things that you need to build and paint with a playing mat and even simpler rules that could be mass marketed and sold outside of GW stores and then gradually released similar expansions for them along with the movies.

They did. They released a 40mm LotR CMG and marketed it through Sabretooth. Sold reasonably well through indies and comic stores for a while and then tanked after a couple of years when the film hype died.:  www.boardgamegeek.com/game/8139

Certainly didn't rescue them from their depression.

Never sold here in Australia. Just had a look and its a rather lame attempt at a game though. Also they should've sold these at toy stores and the like, may have had better sales. The problem was product focus and design with LOTR. Too much investment to the detriment of other systems whilst not really bringing new players into the hobby that can be moved onto WFB or 40K once the hype has died.

Posted By BF44042 on 01/09/2007 10:07 PM
Never sold here in Australia.

If you mean 'Wasn't available in Australia' you would be incorrect... it was available, although a lot of stores didn't bother to get it in.

If you mean 'Just didn't sell'... then you'd be right.

Posted By BF44042 on 01/09/2007 10:07 PM
Also they should've sold these at toy stores and the like,

They did. Both Toyworld and Toys are Us had it. Toyworld just recently cleared out the last of their stock (a rather large pile of Balrogs) at a substantial discount.

Posted By insaniak on 01/09/2007 10:51 PM

Posted By BF44042 on 01/09/2007 10:07 PM
Never sold here in Australia.

If you mean 'Wasn't available in Australia' you would be incorrect... it was available, although a lot of stores didn't bother to get it in.

If you mean 'Just didn't sell'... then you'd be right.

Posted By BF44042 on 01/09/2007 10:07 PM
Also they should've sold these at toy stores and the like,

They did. Both Toyworld and Toys are Us had it. Toyworld just recently cleared out the last of their stock (a rather large pile of Balrogs) at a substantial discount.

Excellent promotion then *sarcasm* lol

Still was a lame attempt at a game. Not innovative enough to be more than a toy but not quite a 'hobby' level product.

Prime Remix is out this month, that's the only book you will need.

From Ryan Dancey's industry predictions for 2007:

http://web.mac.com/rsdancey/iWeb/RSDanceyBlog/Blog/C44E7E19-26A7-4C05-89B8-15803410A740.html

Interesting. Who is Ryan Dancey?

Per his blog:

I just caught that. Again this is very interesting. I did not know of the stock trade. While Fidelity could have just dumped in the open market, its interesting if it was a one party sale.

The fact that Fidelity just dumped GW's stock speaks volumes. Fidelity is no small fish in the investment world.

I wouldn't be surprised if GW went private. It would reduce the stock market pressures (but not internal pressures) on their decision making and profits. But that might also sound the death knell for quality control. If GW isn't worried about external market pressures, then it would be easier for them to ignore change as long as they can internally justify their decisions. At least in an open market, the need to notify stockholders of profits/losses and business activities kept them somewhat honest.

Of course GW could go private, fix their problems, then reemerge in the public markets and do better, but that would require some long term fixes.

I would hope against GW either merging or being bought out. A buy out would probably come from Hasbro, Mattel, or some toy/game producer, since GW is the largest mini producer out there. That would probably mean a slimmed down GW product line, probably better books, maybe similar quality plastics (but not metals), and a more customer/gamer friendly system and feedback capability. I don't know if that would be better for the game overall or not, but I'm thinking not. At least not and keep the game the way we all generally like it.

But this is all speculation.

-Jmz

Just had to add this:

I wouldn't mind if GW got bought out by Hasbro as long as my models came with a kung-fu grip! Yo Joe!  8)

-Jmz

 

I think going private might be good - if it came along with some major changes in management. It would allow GW to work more on developing the market than worrying about quarter to quarter results and its stock price.

In short, a return to the practices that worked well for its first 20 years.

The big ones do not really understand how this niche market works.... going private would be the best for GW.

Also, there has been a trend of medium-sized to fairly large businesses going private in the last year.

If this does happen, it'll be interesting to see if it is bought out by another related industry giant (eg Hasbro) or by a group of investors who have no interest in the industry per se, but see some potential in GW as a commodity to sell off, either by breaking it up or by keeping it whole, albeit after massive reorganization.

Wow...Fidelity dumped GAW? I am not suprised, but this is definatly news.

I think the emorkicon says it best:


Holy carp, Fidelity kicking GW to the curb is bad, bad news. That is also one hell of a comment on Kirby's helming of the company. I've said this for a long, long time, Kirby and his band of idiots need to get fired ASAP if GW is to have any chance at fixing the problems it is in. Perhaps all his stock buying is in preparation just for this: having his company getting taken over (hostile or not) by some disinclined third party, say a buy out or take over by Hasbro, Mattel or some other huge toy company, and floating away on his golden parachutes as they boot him out.

We really may live to see the day that GW collapses or disappears (not their IP, but the company). This year no less. Having Hasbro or Mattel is not going to make anything better for the hobbists and may turn GW's games into yet another clicky flash in the pan hobby replete with a corresponding downturn in miniature quality. Rules might be better written/edited, but as we all know rules alone do not a game make. The figures have to be good too.  GEEEE DUMBYA!!! Please wake up and smell the concrete you block headed gits! Argh.

Reasons to buy GW:

Mattel might want it to give them something to compete against Hasbro?s games divisions;

Hasbro always seem linked to it but I?m really sure why they?d want it;

Someone sees potential in buying the company, selling some property and ditching the retail chain, then reselling the slimmed down gaming side (sounds like a lot of effort for little return to me).

Personally I hope GW will go private, not because I hate plcs generally, but because I think in GW?s case the kind of growth that institutional shareholders look for is just not obtainable by a company selling toy soldiers. And so we get hacked down R&D costs and stupid prices.

I agree Bombot. I expect whoever buys GW, a delisting from the stock exchange is probably inevitable. I really can't see the wargaming market being large enough to support GW's bloated weight any more. It bucked the market trend when it siezed on the LotR franchise, and if it had not, we probably would have been having these kind of conversations a couple of years back.

Dancey's comment about "some new platform" being required rings true. There just aren't enough "died in the wool" gamers out there to support a company like GW. I don't think, to be honest, there ever were, but there always used to be enough "new entrants" around to make the difference. Those new entrants though, for whatever reason - its easy enough to think of half a dozen good reasons - are now staying away. Without some paradigm-shifting new development I thing GW are ultimately doomed.

Maybe pre-painted (a-la Rackham, not a-la Mongoose) could be that paradigm shift, but they would have to manage it without alienating existing fans - and they haven't a good track record in that department - they even managed to cheese off the 40k vets with something as ostensibly positive as the introduction of LotR! Getting pre-painted wrong could sink them overnight. And in any case, are they in any financial shape to fund such a shift? With £8m debts, their breathing space is getting awfully cramped it seems!

Aside from the LOTR factor, GW got away with it's growth tactics by the fact of there being no significant competition for the type of games it sells. But it's tactics left the door open for someone to come and steal disgruntled customers, and that's exactly what Mongoose, Privateer Press, et al are doing.

"The more you tighten your grip, the more gamers will slip through your fingers"

GW should have listened to Princess Leia

GW can recover, as I think they have stronger backgound material than the competition. But as yet they aren't showing any willingness to lower the cost of their games, which is the prime problem.

I agree that GW could recover - if they made a change. As you say though they show no willingness to change their pricing strategy at all.

It reminds me of the band playing on the Titanic...

Its unlikely that this company would be bought by a sponsor group-its too small and too nichy without room for further acquisitions.  I'd see a management buyout or a larger public company buying them for the niche market.  Either would be better than a sponsor/LBO. I've seen high investment grade companies get smashed by hedge funds/sponsors with great ease as they lever it up and cut costs even further to make the bills.

I have difficulty seeing where this industry goes in five years, as the overall industry is in a downturn, not just GW.  Pile on the effects of an economic recession and this industry could potnetially get pretty boned.

But thats why I'm in energy, we're the boners not the bonees :S

 

 

I think it's time for a change in course.  An increase in marine releases is in order.  Maybe GW can move up the Space Wolves' and Blood Angels' scheduled deployment?  And they could change their current policy of 5-6 years between codex revisions to call up Codex: Space Marines for a second tour.  They must increase the marine las/plas troop levels from 6 to 10!

Ah someone will be around selling toy soldiers. Tom Kirby was right when he said there's a certain percentage of the population that are just drawn to them.

GW: There must be a surge in pricing if we are to succeed against the efforts of
the militant Dakkamentalists.

Posted By jfrazell on 01/12/2007 4:31 AM

 

But thats why I'm in energy, we're the boners not the bonees :S

 You've always been the Boner JF, regardless of employment 

 

 

 

Posted By Big O on 01/12/2007 8:42 AM

Posted By jfrazell on 01/12/2007 4:31 AM

 

But thats why I'm in energy, we're the boners not the bonees :S

 You've always been the Boner JF, regardless of employment 

  

well thats true of course...

Any wargame is a set of rules, a bunch of figures and a background. These are not hard to produce. The main problem is finding people to play with. GW's major contribution was to bring everything together in a wide chain of hobby stores where people could pretty much walk in and get everything they needed including opponents. Network effect meant the more the number of players grew, the more attractive the GW games became because it got easier to find players.

I didn't scroll through the entire thread to see if this was posted, but did anyone notice that Mark Wells (I think he's the cfo) purchased 52,467 ordinary shares on the 8th?

Mmm... more golden parachutage. Kirby & his cronies sure are going to make off like bandits whenever the axe falls.

perhaps
I kinda took it as them having faith in the company rebounding, and then making some nice $$$ when it does.

Maybe they know something about a takeover that should send the share price up. Not enough to be considered insider trading - of course (that should cover my arse).

I get the feeling GW is changing in ways that are not immediately obvious and I believe over the last year or two there has been a distinct change in how they are approaching "the GW hobby".

In the last year we've seen the GT's completely done away with and revamped. Now, back and improved (theoretically). We'll see how this works out, but I like the fact Jeff Hall dropped in to get feedback on the GT info. I'd like to see more GW interaction in the future. Hey, although we bash GW, I like to think we've been civil to the GW employees that dare to visit.

We've seen more plastic kits introduced and more blisters/metal models removed from the shelves. Models for basic troop choices are coming in boxed sets and all the weapons upgrade options are often included. We're also seeing Chapter customization plastics (Black Templars & Dark Angels) - something that was once only available from Forgeworld. I think we're going to continue to see a lot more plastics kits in the near future.

We've also seen a new approach to rules, from the friendly "d6 it" game to the Rules As Written (RAW) approach. Hell, we saw even Ed published in White Dwarf...I'm sure we're all still trying to figure out how that happened...but it did. And I have a theory the rumored Space Marines redux may be the result of an effort to tighten up the language in the Codecies.

I honestly think we're seeing GW transitioning into something else...either they're finally identifying and addressing the problems the consumers have gotten fed up with, or they're trying to change their image and business approach. Not for our (direct) benefit, but for something else...Anyway, keep an eye out for more financial news on GW. I think something big is brewing.

It better be, because people wont wait forever for them to get their poop stright.

It doesnt take a rocket scientist to get the job done right.

If I were an employee of a company and gave them work ethic that GW has tried to sell us, I would be fired.

Posted By Furious on 01/13/2007 4:22 AM
I get the feeling GW is changing in ways that are not immediately obvious and I believe over the last year or two there has been a distinct change in how they are approaching "the GW hobby".

In the last year we've seen the GT's completely done away with and revamped. Now, back and improved (theoretically). We'll see how this works out, but I like the fact Jeff Hall dropped in to get feedback on the GT info. I'd like to see more GW interaction in the future. Hey, although we bash GW, I like to think we've been civil to the GW employees that dare to visit.

We've seen more plastic kits introduced and more blisters/metal models removed from the shelves. Models for basic troop choices are coming in boxed sets and all the weapons upgrade options are often included. We're also seeing Chapter customization plastics (Black Templars & Dark Angels) - something that was once only available from Forgeworld. I think we're going to continue to see a lot more plastics kits in the near future.

We've also seen a new approach to rules, from the friendly "d6 it" game to the Rules As Written (RAW) approach. Hell, we saw even Ed published in White Dwarf...I'm sure we're all still trying to figure out how that happened...but it did. And I have a theory the rumored Space Marines redux may be the result of an effort to tighten up the language in the Codecies.

I honestly think we're seeing GW transitioning into something else...either they're finally identifying and addressing the problems the consumers have gotten fed up with, or they're trying to change their image and business approach. Not for our (direct) benefit, but for something else...Anyway, keep an eye out for more financial news on GW. I think something big is brewing.

Yes. Big in the question, Who picked up those cast off stock? Another one to me is, Who owns the stock, and who will own the majority in six months. The company is only a dog because they let it get that way, I'm sure we will be seeing what the shareholders have to say shortly.

Posted By deitpike on 01/13/2007 12:24 AM
perhaps
I kinda took it as them having faith in the company rebounding, and then making some nice $$$ when it does.

Or it could be that Wells and Kirby know that the company is going private and want to grab a bunch of shares for themselves before it does. 

I work for a company that just went public, and when we were private we set our own stock price every quarter.  My companies private stock price did not directly correlate into a public IPO, and it really couldn't.

But if GW went private, and their stock price was low enough, then there isn't any reason for it not to be the baseline for which GW would  base their stock prices when they do go private.  So if Wells and Kirby are buying up stock now when the price is low, then that could be a signal that they know the company will see better days in the future, and in the private market, make them big money.

The other thing, too, is that maybe they think a large (ie Hasbro) firm will buy them out.  Usually that will drive the price of the buyee's stock up, and lower the buyer's stock.  But that would be insider trading.  I also don't think Fidelity would dump GW if that were the case.  But if Fidelity thought GW was to go private, than why not dump them now, before they become too much of a drag on the fund?

-Jmz

Doubtful they grabbed even a good chunk of that 6 million shares that changed hands. THey are officers of the company, they have to disclose what they buy or sell.

Wasn't it disclosed that Kirby took in 350,000 shares? Or some equally large number?

more somwhere around 140.000-170.000

Posted By carmachu on 01/13/2007 4:12 PM

Doubtful they grabbed even a good chunk of that 6 million shares that changed hands. THey are officers of the company, they have to disclose what they buy or sell.

That's not the point.  Kirby and Wells would be smart to pick up the shares before the company goes private, because the prices are good.  If the company goes private, than the company controls the value of the stock. 

Who owns the 6 million shares that has changed hands is not the issue either.  If GW goes private than the company itself would have to purchase those shares.  Once the company owns the shares, it can sell/hold/whatever, once it went private.

-Jmz

Oh? its not? And if its Hasbro thats grabbed the large chunks of it....?

That's different.  Hasbro (or any company) buying that many shares in a company would look like Hasbro trying to take over GW, or at least gaining a controlling share.  That's obviously not the case because it would have made news.  Remember when Kerkorian bought 7% of GMs shares?  That made news.  It would also reflect in the stock purchase price because GWs stocks would rise if investors saw Hasbro's purchase of GW as a good thing for GW.  But that hasn't happened.  And you can't hide a company purchasing another company's stocks.

My point was that it doesn't matter if only 3 or 4 people outside the company picked up those 6 million GW shares. If GW wanted to go private, they could.  I don't know all the legalities behind it, but I would assume it meant GW telling the stock markets to stop trading on their stocks; offering non-GW stock holders a buyout on their current stocks; and leveraging whatever assets, or taking loans to purchase those remaining stocks.  GW, the company, would own those stocks and could sell them internally if they wished or hold them.

Now, if Kirby and Wells bought a whole bunch of GW stock before the company went private, that is probably not insider trading (I really don't know, I'm guessing).  But, if they thought GW was going private, than buying more GW stock as its going down only makes more sense.

-Jmz

6 million shares changed hands and n one knows who. A change of stock completely unprecidented in GW stock history.

Somethings up. Now whether its kirby and company(doubtful, since they have to sidclose) or someone else remains to be seen.

Agreed.

Edit: Content change b/c I was stupid.

-Jmz

Erm guys, isn't the alleged stock sale a prediction for 2007?

No, the stock sale took place in November.