http://www.londonstockexchange.com/exchange/prices-and-news/news/market-news/market-news-detail.html?announcementId=10586777

Games Workshop Group PLC ("Games Workshop" or the "Group") announces its preliminary results for the year ended 30 May 2010.



Highlights



· Revenue at £126.5m (2009: £125.7m)

· Revenue at constant currency* at £121.8m (2009: £125.7m)

· Operating profit - pre-royalties receivable at £13.0m (2009: £5.5m)

· Operating profit at £16.1m (2009: £9.0m)

· Pre-tax profit at £16.1m (2009: £7.5m)

· Earnings per share of 48.4p (2009: 17.6p)

· Year end net funds/(borrowings) of £17.1m (2009: £(1.6)m)

· Proposed gross dividend per share of 25.0p (2009: nil)



*Constant currency revenue is calculated by comparing results in the underlying currencies for 2009 and 2010, both converted at the 2009 average exchange rates.



Mark Wells, CEO of Games Workshop, said:



"We have a simple strategy at Games Workshop. We make the best fantasy miniatures and games in the world and sell them globally at a profit. This year we have improved Games Workshop's profitability and cash flow significantly. This has enabled us to repay our borrowings and recommend a dividend to our shareholders.



Games Workshop is now a much leaner business which is preparing itself for many years of steady profitable growth.

GW doubled their profit on flat revenue = no changes to current strategy!

And they felt confident enough to issue a dividend despite the flat revenue.

I wonder how much of the revenue stream changed from sales of gaming materials to licensing. A significant shift to the latter, which is very little cost to the company = significant PT contributions I imagine.

Overall I'm stunned. I'd be concerned though that this type of gain is a 1 period shift. Sooner or later you need to bring revenues up to show growth in the company. I'd be more interested to see how they intend to do that with the games/hobby end of the business given the economy. Their pricing structure moves the games well away from "kids play" to serious hobby expenditure (Like model trains) and I'm not sure how easy additional penetration into the market may be.

At a glance, their revenue looks to actually be not flat, but down, taking inflation into account. Calling profits due to cost cutting "growth" seems a wee bit dubious...

As predicted: Revenue down considerably (in constant currency and in real terms, i.e. after taking into account inflation), yet profits are up and their debt is paid off.

No surprises then (IIRC I said this was probably the case a couple of weeks back. Can't be bothered to find the post now, but it was obvious from the tone of their preliminary profit announcement last month). The shareholders will be happy. Or at least those needing a dividend to swell their cashflow. Those who are truly interested in the long term growth and development of GW will be less impressed and be getting on the backs of Kirby, Wells and co, to "do something". Now, more than ever, a buy-out seems possible. I think the only thing holding one back right now is the lack of availability of speculative finance to potentially interested parties.

Interesting quotes from the schpeel:

Sales are down on last year on a constant currency basis despite strong growth from the new Games Workshop Webstore. We increased the number of Hobby centres by 27 stores during the year, but the growth from these was not able to offset the decline in existing stores.

All is not well in GW retail-land, yet they still persist in developing in this area of operations. Despite acknowledging that they are primarily a manufacturer not a retailer... Ok...

Clearly they think the way forward is to squeeze their (fewer) remaining customers even harder for every penny and cent, and to search the globe for more like-minded addicts that they can squeeze just as hard.

The sales situation in Europe and North America is absolutely dire, while Australia is doing well.

Also there's a lot in the blurb of the full report about importing Australian management style into the rest of the operation. Apparently all the managers are being trained by Ozzies. Which is OK, I've got nothing against Ozzies, but we all know how out of whack Ozzie prices are in comparison to the rest of the world. So guess who's pricing strategy GW are likely to follow? Any excuse for a double-digit price-hike eh?

I've attached a couple of interesting graphs. The first shows turnover and profit over time discounted by inflation. It shows, as you would expect, that all their profits have come from increased efficiency and price rises rather than volume growth. The second shows the break down of turnover by region over time. As I said above, the situation in Europe and North America is dire.

One caveat on this latter graph - this year GW have lumped the UK into a larger "Northern Europe" grouping for sales area, and have therefore recategorised some sales away from the Continental Europe category, so we aren't comparing apples with apples. However if you compare this year's Continental Europe + Northern Europe total sales of £72.7M with last year's Continental Europe + UK sales figures of £81.2M we get a fall of over 10%, which when you consider May's RPI was 5.1%, means a "real" fall of 14.8% in sales.

In the US, sales have fallen by 6.3% in cash terms. I haven't got access to US RPI figures off hand, but again, proxying the UK RPI, this means a real decrease in sales revenue of about 10%.

Neither of those facts speak well for GW's core

Something else to throw into the pot is the £2.5M of licence income GW received in 2010. Down from the £3M they received in 2009, but still better than a smack in the face. Given this accounts for around 1/5 of their profits this yeear, yet has cost them absolutely nothing, I think we will see the GW brands being pimped all over the place in future.

So, yet again, GW avert crisis. As we expected. But they continue to haemhorrage customers at an alarming rate.

That was my thought Laughing Man, though the reduction is relatively slight.

However, recommending dividend on this performance is a tad questionable from a hobby point of view. (would prefer to see them reinvesting at this point imho)

Chibi Bodge-Battle wrote:That was my thought Laughing Man, though the reduction is relatively slight.

However, recommending dividend on this performance is a tad questionable from a hobby point of view. (would prefer to see them reinvesting at this point imho)

GW have long since stopped making decisions based on the hobby side of things. With the current crop of management, it is all about the bottom line; nothing more, nothing less.

I just forwarded this result page to our finance director and strategic liaison manager, both of whom are geeks and have a passing interest in GW.

Both of whom are staggered at the commentary from Mark Wells, whos constant reference to IP and defending against others and building fortress walls they both described as 'paranoid', 'insular' and aggressive, they also commented on the woeful lack of mention of the customer and what the customer is getting and how the customer is being treated, priority given over far too much to profit for the shareholder, something that astute investors would be highly wary about.

They also highlighted the actual reduction in sales and the increase in shops when GW should be reducing it's stores further and looking to strengthen ties and relations with indy shops.

Also the schism between slagging off 'playing games on a screen' on one paragraph whilst emphasising the profit generated by computer games using GW IP on others. This alludes to a fundamental disconnect between what GW sees as an 'evil' and what can actually make it money.

Both of them were taken back by the arrogance of the summary.

JohnHwangDD wrote:GW doubled their profit on flat revenue = no changes to current strategy!

No, they paid down debt last year. Without that debt they had more money left as profit.

"We no longer spend money on things we don't need, like expensive offices or prime rent shopping locations or advertising that speaks to the mass market rather than our small band of loyal followers. " Mark Wells, CEO


The rest of the world refers to them as 'customers', no followers... This isn't a cult, we are not beholden to you Mr Wells. This is a picture perfect example of what's wrong at the top of this company. The above comment reeks of the low perception the management have of it's consumer base.

aka_mythos wrote:

JohnHwangDD wrote:GW doubled their profit on flat revenue = no changes to current strategy!

No, they paid down debt last year. Without that debt they had more money left as profit.

Hmmm, as far as I am aware, their cost cutting measures have extended into this year as well. They certainly aren't done with it yet; at least not here in the UK (and possibly EU too). They have been steadily reducing store staffing levels for some time now. I agree; they are working on reducing debt but it comes at a price - they are 'fudging' the figures, for want of a better word, by cutting costs and hiking prices, making their profit look better than their sales figures would suggest. They have been doing this for a couple of years now but it isn't a viable long-term business strategy for survivability. I am surprised they haven't been called on it yet.

filbert wrote:Hmmm, as far as I am aware, their cost cutting measures have extended into this year as well. They certainly aren't done with it yet; at least not here in the UK (and possibly EU too).

They have made a provision for £1.5M in the accounts for forseeable redundancy costs in 2010/11.

@Osbad: In your graphs, what is 'Turnover'? Not sure if I'm missing something in general, or if it's just a different term used in the UK vs the US.

I'm not sure whether the US uses a different term, but here it is total sales revenue for the year. I.e all the cash they receive from selling toy soldiers and related items (from customers via shops, and from retailers via trade accounts), net of VAT and other sales taxes. Note that licence revenue is excluded from turnover and is included lower down the P&L account as other income.

MeanGreenStompa wrote:"We no longer spend money on things we don't need, like expensive offices or prime rent shopping locations or advertising that speaks to the mass market rather than our small band of loyal followers. " Mark Wells, CEO


The rest of the world refers to them as 'customers', no followers... This isn't a cult, we are not beholden to you Mr Wells. This is a picture perfect example of what's wrong at the top of this company. The above comment reeks of the low perception the management have of it's consumer base.

What? when did they avertised to the mass market? Or used publicity in any diferent ways than the ussual client "word of mouth" or net of stores? Maybe I missed this but I cannot recall any advertising campaign.

"Small band o loyal followers" so vets are on the boat again?

filbert wrote:

aka_mythos wrote:

JohnHwangDD wrote:GW doubled their profit on flat revenue = no changes to current strategy!

No, they paid down debt last year. Without that debt they had more money left as profit.

Hmmm, as far as I am aware, their cost cutting measures have extended into this year as well. They certainly aren't done with it yet; at least not here in the UK (and possibly EU too). They have been steadily reducing store staffing levels for some time now. I agree; they are working on reducing debt but it comes at a price - they are 'fudging' the figures, for want of a better word, by cutting costs and hiking prices, making their profit look better than their sales figures would suggest. They have been doing this for a couple of years now but it isn't a viable long-term business strategy for survivability. I am surprised they haven't been called on it yet.

Thats been a part of their pay down efforts, but its also a long term strategy restructuring to optimize profitability. They had scheduled repayment for Q1 this year, so if they've increased their profit/revenue ratio, it can only be because that debt has been paid down. According to the above they are down to £1.6M, which is only short term operation loans, down from £12M, long terms loans, this time last year. This year they have £16.1M profit up from about £10M. As there profitability grows their ability to take risks on new products will as well.

I'm no money man but none of that sounds particularly good.

As a niche business, GW is actually doing fine.

Look towards what GW versus other larger corporations such as Hasbro, which is not a niche business but a full blown diversified company with many product portfolios has done.

http://online.wsj.com/article/BT-CO-20100719-709615.html

Hasbro reported a profit of $43.6 million, or 29 cents a share, up from $39.3 million, or 26 cents a share, a year earlier. Revenue decreased 7% to $737.8 million.

Analysts polled by Thomson Reuters most recently estimated earnings of 24 cents and $748 million in revenue.

A company that made almost 750 million dollars has only about 43.6 million in profits to boast about.

I just read the 'our strategy' section. I feel like I need to be decontaminated.

we will recruit lots of customers into our hobby and they will enjoy spending their money on the products we make - Only if you're holding a gun to my head nowadays after the umpteen price rises.

people who are interested in collecting fantasy miniatures will choose the best quality and be prepared to pay what they are worth - Wow. Arrogant prigs.

Our continual investment in product quality, using our defendable intellectual property, provides us with a considerable barrier to entry for potential competitors: it is our Fortress Wall.

That's a bit hyper aggressive. Most smaller companies cooperate and complement each other, GW not only want to be the biggest fish, but the only fish in the pond.

And yes, we got a taste of you wanting to tightly control your IP earlier this year. Although it's a bit rich to complain about "imitation" when your products are largely based upon generic fantasy races and concepts laid down in things like 'Lord of the Rings'. Perhaps this approach to aggressively attacking fansites over IP, which seems to be led from the top, should be reviewed in light of your very reliance upon your 'small band of loyal followers'.

NAVARRO wrote:
"Small band o loyal followers" so vets are on the boat again?

Yes and no, I'd imagine.

GW still really doesn't care about the veterans - not nearly as much as the 'new entrants' market.

And I still think advertising and finding ways to truly expand their customer base would be a good thing...

Just found the bit where Kirby agrees with me:

That is where we are today; a leaner, more efficient business, but still not showing good growth.

He usually gets around to it eventually!

Why pay for advertising when the small band of followers will pay for it for you.
Of course I am referring to WD

It's official! I'm a numpty!

I used the wrong Geographical split of information from the wrong note.

The corrected graph is below:

Not a vast difference, but you can see that most of the pain is still coming from plummeting sales in Europe, and the US is dead in the water. And expansion in the Far East and South America is all very well, but its proving expensive - they may have increased turnover there, but they also increased their losses.

Honestly people who are complaining about cost cutting measures are odd to me. When they cut a cost and revenue stays the same, that's a good thing. On the whole, when you get rid of costs, that doesn't automatically mean you're in for the short haul. Those costs are still streamlined the year after, it's not like those costs will now reappear and since revenue has stayed the same, that means it hasn't noticeably affected their ability to generate sales.

Thus, one can easily conclude that the business has been streamlined (which anyone in business can tell you GW's old model was getting unsustainable) their business and achieved a higher profit-cost ratio. One thing they should still focus on is dominating the NA market because it has perhaps the greatest potential.

Osbad wrote:I'm not sure whether the US uses a different term, but here it is total sales revenue for the year.

Ah, okay. I think we would call that revenue, or something like that.

tallshortguy wrote:Honestly people who are complaining about cost cutting measures are odd to me. When they cut a cost and revenue stays the same, that's a good thing. On the whole, when you get rid of costs, that doesn't automatically mean you're in for the short haul. Those costs are still streamlined the year after, it's not like those costs will now reappear and since revenue has stayed the same, that means it hasn't noticeably affected their ability to generate sales.

Sales is precisely what ain't happening...

"Our results for 2009/10
Sales are down on last year on a constant currency basis despite strong growth from the new Games Workshop Webstore. We increased the number of Hobby centres by 27 stores during the year, but the growth from these was not able to offset the decline in existing stores."

Again, what is principally being criticised is not cost cutting exercises but that the reductions in staff payment and shop fronts, along with the lease of IP, is being touted as profit, when the figures and the report clearly state actual sales are down.

Long term, this is not sustainable.

MeanGreenStompa wrote:

tallshortguy wrote:Honestly people who are complaining about cost cutting measures are odd to me. When they cut a cost and revenue stays the same, that's a good thing. On the whole, when you get rid of costs, that doesn't automatically mean you're in for the short haul. Those costs are still streamlined the year after, it's not like those costs will now reappear and since revenue has stayed the same, that means it hasn't noticeably affected their ability to generate sales.

Sales is precisely what ain't happening...

"Our results for 2009/10
Sales are down on last year on a constant currency basis despite strong growth from the new Games Workshop Webstore. We increased the number of Hobby centres by 27 stores during the year, but the growth from these was not able to offset the decline in existing stores."

Again, what is principally being criticised is not cost cutting exercises but that the reductions in staff payment and shop fronts, along with the lease of IP, is being touted as profit, when the figures and the report clearly state actual sales are down.

Long term, this is not sustainable.

It's down by 4 mil, which is small enough that it can just be considered a slightly down year and direct correlation to cost cutting measures simply cannot be definitively proven. Also, the closing of shops is largely a good thing because their profitability is heavily waning as most people purchase either online or through a different retailer outside of the UK. IP lease revenue was actually down some so the further development of games would increase that.

We're in a recession. A company that sells luxury goods (economically speaking, not like Ferraris and yachts) is going to sell less during a recession. That they were able to remain profitable means they're making intelligent management decisions for the economic environment they're operating in.

Does anyone realistically expect a luxury good company to grow during a recession where unemployment is at 10% (or higher) and people are struggling just to get by?

Redbeard wrote:We're in a recession. A company that sells luxury goods (economically speaking, not like Ferraris and yachts) is going to sell less during a recession. That they were able to remain profitable means they're making intelligent management decisions for the economic environment they're operating in.

Does anyone realistically expect a luxury good company to grow during a recession where unemployment is at 10% (or higher) and people are struggling just to get by?

http://uk.reuters.com/article/idUKTRE66K5M020100721

(Reuters) - Spending on luxury goods by affluent Americans is forecast to grow by $28 billion in 2010, experts said on Wednesday, and the wealthy are happy despite most believing the United States is still in recession.

The "Survey of Affluence and Wealth in America" found luxury spending would rebound for the first time in three years, led by purchases of automobiles, services, travel and children's clothing.

But the online poll of 1,900 households with an average annual income of more than $235,000 by American Express Publishing and Harrison Group showed 94 percent still believe the United States is in recession.

The households surveyed between January and April represent 10 percent of Americans and 50 percent of all retail sales.

"Interest in luxury is trending up, but this interest is qualitatively different from the unbridled enthusiasm that characterized ... the mid-2000s," said Jim Taylor, Harrison Group's vice chairman. "People take pride in the way they have managed their finances and family through the recession."

"We think it's going to be a pretty good Christmas (for retailers)," he said.

And this pride had led to happiness among the rich, with 71 percent saying they are happy, up from 40 percent in 2007.

"It's because they didn't know they could survive something this bad," Taylor told the Luxury Marketing Council of New York on Wednesday. "They have got competent, they have gotten close to their family, they have self-esteem from their ability to handle a crisis."

"Happiness is now the abiding object of affluent American life, not success," he said. "They're really happy with their ability to operate under pressure."

More than 80 percent of families are now eating at least four meals a week together, compared with 16 percent five years ago, Taylor said.

The survey also found the recession has resulted in more people measuring their success by their personal lives, not their careers. Only 45 percent said they were successful in 2007, while this year 76 percent consider themselves successful in their personal life and 67 percent in their career.

"In (2007) people were really measuring themselves about the bigger house they were going to buy ... the better vacation, the next promotion," said Cara David of American Express Publishing.

"Few people are judging their success that way anymore," she said. "It's about the lives that they're living rather than the living that they're making."

I think they should celebrate with a price rise!

H.B.M.C. wrote:I think they should celebrate with a price rise!

I have no doubt that announcement is incoming.

Redbeard wrote:We're in a recession. A company that sells luxury goods (economically speaking, not like Ferraris and yachts) is going to sell less during a recession. That they were able to remain profitable means they're making intelligent management decisions for the economic environment they're operating in.

Does anyone realistically expect a luxury good company to grow during a recession where unemployment is at 10% (or higher) and people are struggling just to get by?

I hope not!

And in that light, maybe it isn't all bad news for GW?

Assuming (uh oh!) that GW doesn't attribute their 'success' during these times to something that they shouldn't, and continue to make 'smart' decisions?

Er, never mind.

And after the price rise, reinstate shipping, making it proportional to how much you spend!

WarOne wrote:And after the price rise, reinstate shipping, making it proportional to how much you spend!

And then base price costs on effectiveness in-game, 'cause that makes sense.

I'm surprised Kan hasn't shown up yet, shield in hand, waving his GW banner high and proud.

Redbeard wrote:

Osbad wrote:I'm not sure whether the US uses a different term, but here it is total sales revenue for the year.

Ah, okay. I think we would call that revenue, or something like that.

The US calls it revenue too. Turnover is revenue over your average inventory which shows how many times you flipped your product during the year.

H.B.M.C. wrote:

I'm surprised Kan hasn't shown up yet, shield in hand, waving his GW banner high and proud.

Inspirational banners?

Redbeard wrote:Does anyone realistically expect a luxury good company to grow during a recession where unemployment is at 10% (or higher) and people are struggling just to get by?

In general, you're correct but beware sweeping statements.

Gucci Group NV reported revenue results for the first quarter of 2010. For the quarter, the company's revenue rose 4.7% to €894.8 million, with a gain of 9.5% at Bottega Veneta. Growth was driven by emerging markets, particularly China, and by leather goods.

http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?ticker=GUCG:US

As an investor, I always expect companies that get my money to grow revenue. GW's doing what they can to remain attractive to investment and I can't fault them for that; however, cost-saving measures are a long-term bandaid and unless they can increase sales revenues, there's no point in investing in them. For the same reason you stated that we can't expect a company to grow in this economy, a price hike was a very bad idea; you don't increase ticket prices when your sales are stagnating or slumping, all that does is drive off even more customers. I would not be surprised if sales slump even further in the current quarter in response to the price hike; but they timed the hikes well with the release of 8th edition so the spike in sales there will help to cloud the overall picture so it will be harder to say the price hike caused a decrease. Issuing a dividend was a move to placate investors, kind of like throwing a party while the ship is sinking.

Overall, they've got some fairly savvy business-people working for the company so it's not as if the company will close shop within the immediate future.

agnosto wrote:

Overall, they've got some fairly savvy business-people working for the company so it's not as if the company will close shop within the immediate future.

And when they do sink, Hasbro will swoop on by and grab another gaming company and throw it into the jaws of oblivion (ya'know, not like run it into the ground, but make it a whore for mediocre products).

As to the 'Who buys luxury goods during a recession?' I've heard there's some hard data that movies and such actually did amazingly well during the US' Great Depression.

People delay big purchases (cars, houses, appliances, etc.) and don't take expensive trips, so they need some sort of escapism.

A five cent double feature in the depression is quite different than 50 dollars for three plastic toys. You could see movies for a year and not spend close to what you pay for one 40k army.

45p per share dividend is actually a pretty good return on investment for the shareholder.

GW's shares have just popped over the 400p mark so you are looking at 11% return.

They look a reasonable set of figures to me. They have more than doubled pre-tax profit, trebled the share earning, turned their balance sheet positive by a considerable amount and issued a dividend. They have obviously made themselves leaner, which is what all responsible companies should do when the economic climate is unstable and made what they have work harder for them. Sure they could have doubled their turnover but would that have doubled their profit? I doubt it. As the say "turnover for vanity, profit for sanity and cash is King".

H.B.M.C. wrote:

WarOne wrote:And after the price rise, reinstate shipping, making it proportional to how much you spend!

And then base price costs on effectiveness in-game, 'cause that makes sense.

I'm surprised Kan hasn't shown up yet, shield in hand, waving his GW banner high and proud.

And I'm not surprised you're making glib remarks about stupid things in a thread that has nothing to do with them.
Edited for personal comments. Knock it off, guys. -The Mgmt.
On topic:
I don't know enough about economics to really comment on what I read. I did like Osbad's graphs though, and am curious as to what their plan for veterans may be. They effectively recognized that most veterans have no interest in playing with the average playerbase at a GW official store(which is usually children being dropped off for the day), and provided a simple way for people to get tables and terrain for their own homes(albeit at a hefty price).

Kanluwen wrote:I don't know enough about economics to really comment on what I read.

I think you are in good company on this forum. But in short.

From a year ago...
Revenue is slightly up = good.
Cost of Sale is down = very good.
Op Expenses slightly down = good.
Overall profit way up = very good.
Net Assets way up = good.

Royalties down = bad.
Same store sales down = very bad.
Constant dollar sales down = bad.

Its all kind of a mixed bag. They financially are much stronger than a year ago, strategically I don't know if their position has changed much. Cost cutting is extremely important and it is working. To be making more money when sales are stagnant will be enough for Wells to keep his job. What they need to focus on (as Wells said) is growing sales. I think that is very difficult to do at their product's price point. In my opinion they have hit the elasticity boundary of the market and that market is pretty well saturated. If I were in charge (I don't think I need to say that I am not) I would hold prices at least flat if not slightly lower them over the next year to drum up excitement and sales.

I like GW, I want them to do well. But I think their prices are hurting their ability to compete as much as they are hurting our wallets.

Redbeard wrote:We're in a recession. A company that sells luxury goods (economically speaking, not like Ferraris and yachts) is going to sell less during a recession. That they were able to remain profitable means they're making intelligent management decisions for the economic environment they're operating in.

Does anyone realistically expect a luxury good company to grow during a recession where unemployment is at 10% (or higher) and people are struggling just to get by?

That kinda depends on your definition of "recession." Usually in the U.S. it's defined as two quarters of negative growth. I can't speak to other countries, but the U.S. economy's been growing for over a year now.

Still, the point remains that it's a slow economy. But the problem with thinking that it's all tied to macroeconomics is that GW's sales didn't boom during the strong economic growth in the middle part of the decade either. I tend to think that points to other causes.

gorgon wrote:

Redbeard wrote:We're in a recession. A company that sells luxury goods (economically speaking, not like Ferraris and yachts) is going to sell less during a recession. That they were able to remain profitable means they're making intelligent management decisions for the economic environment they're operating in.

Does anyone realistically expect a luxury good company to grow during a recession where unemployment is at 10% (or higher) and people are struggling just to get by?

That kinda depends on your definition of "recession." Usually in the U.S. it's defined as two quarters of negative growth. I can't speak to other countries, but the U.S. economy's been growing for over a year now.

Still, the point remains that it's a slow economy. But the problem with thinking that it's all tied to macroeconomics is that GW's sales didn't boom during the strong economic growth in the middle part of the decade either. I tend to think that points to other causes.

The Great Recession is really only hitting those on the fringes of the economy. It is not really affecting anyone that purchased what most would consider "luxury goods".

I think GW has a good business strategy for the future. They're making their business leaner and more efficient while marketing their IP. That's where the future of GW is. I can see a future in which GW breaks even, or even makes a loss, on the miniatures and game side so that they can market their IP for comic books, movies, video games, and other items. I remember reading a few years ago that this was Marvel's approach and I get the feeling that GW realizes that their IP is potentially much more profitable than anything they can physically sell and that by keeping the game alive and by running it at as low a cost as possible helps them transition to a company that exists to market an IP.

I would usually say that, despite my misgivings about GW prices, that things will continue as normal, the status quo will be maintained, and GW will be around to make more stuff to gouge our wallets with. Vets will bitch and moan, but then forget their hate when GW puts out the next shiny thing. I would usually have said that.

But now, GW's competition is much more mainstream. Things like Warmachine/Hordes and Flames of War have provided less obscure alternatives to the average gamer, which will entice the disillusioned GW "follower", since it is much easier to find other players for alternate game systems than it used to be. Admittedly, there have been some bumps in the road for the competition, such as Rackham (AT-43 seems to have been mismanaged, and there is no transparency so we really know nothing other than they are redoing the rules) and Catalyst (where's my Battletech Anniversary and Clan Box Sets?!?!).

Also, GW no longer holds a monopoly on top quality miniatures. Games like Infinity and Malifaux have also been making inroads with some spectacular miniatures. And PP has recently put forth some fantastic plastics.

And from what I can tell (read: I have no real data), D&D is making a comeback. My local gaming community forums seem to be more populated with people trying to get D&D campaigns than people looking for players for GW games. Maybe this has to do with the release of the D&D miniatures games or the fact that Heroscape is now D&D based...I have no clue.

If GW's goal is to be the only fish in the pond, it is failing miserably. Not only are there now more alternative fish in the pond, but the other fish seem to be larger than what GW is used to.

I will say, though, that with the Space Marine game coming soon, the Ultramarine movie coming soon, the 40K MMO coming soon, and the apparent success of the Black Library novels, GW's 40K IP is still very strong. Who knows...maybe 2011 will see a resurgence in GW sales due to it reaching out to the general public.

ArtfcllyFlvrd wrote:
From a year ago...
Revenue is slightly up = good.
Cost of Sale is down = very good.
Op Expenses slightly down = good.
Overall profit way up = very good.
Net Assets way up = good.

Royalties down = bad.
Same store sales down = very bad.
Constant dollar sales down = bad.

Its all kind of a mixed bag. They financially are much stronger than a year ago, strategically I don't know if their position has changed much. Cost cutting is extremely important and it is working. To be making more money when sales are stagnant will be enough for Wells to keep his job. What they need to focus on (as Wells said) is growing sales. I think that is very difficult to do at their product's price point. In my opinion they have hit the elasticity boundary of the market and that market is pretty well saturated. If I were in charge (I don't think I need to say that I am not) I would hold prices at least flat if not slightly lower them over the next year to drum up excitement and sales.

I like GW, I want them to do well. But I think their prices are hurting their ability to compete as much as they are hurting our wallets.

Thanks for this! Makes some good sense to me. Based on what I've read here, my impression is that while GW isn't going anywhere for the forseeable future (as in the next few years), the long term prognosis for the company doesn't look good as of right now.

I think you have some very valid points CaseyVa although I don't think they would want to sell the minis at a loss although a smaller margin may become acceptable.

I think it's only a matter of time before Hollywood becomes interested big time in the 40k universe. There is so much material to use and they would have an instant following. They just need to pitch it right, get the right Director, choose the right actors and Bob's your uncle.

Something GW could do to produce instant revenue would be to release a Space Hulk expansion LOL.

Wow.

I play a miniature wargame....It's a hobby.....that's it. That's as much as GW effects my life and family.

I can't even begin to understand why fellow hobbiests get this into this kind of minutia.....

It's like buying an airline ticket and knowing every CEO on that airlines board, their middle name, profit margin, and other information that has NO bearing on me, my hobby, or my life.....

Just always amazed at what people look into and get worked up over.......The way I sum up this kind of (useless) thread in regards to a simple hobby is (or the way I view the minds of those who get this deep into the background of the company) -

I eat cheese, the cheese industry is making less profit then last year, the cheese market is crashing, I'm going to stop eating cheese!

Well at the risk of sounding... grumpy...

This information is there for those who want it.

If people don't want it - no one's forcing them to digest it!

Well said spartanlegion. Now who stole my cheese?

spartanlegion wrote:Wow.

I play a miniature wargame....It's a hobby.....that's it. That's as much as GW effects my life and family.

I can't even begin to understand why fellow hobbiests get this into this kind of minutia.....

It's like buying an airline ticket and knowing every CEO on that airlines board, their middle name, profit margin, and other information that has NO bearing on me, my hobby, or my life.....

Just always amazed at what people look into and get worked up over.......The way I sum up this kind of (useless) thread in regards to a simple hobby is (or the way I view the minds of those who get this deep into the background of the company) -

I eat cheese, the cheese industry is making less profit then last year, the cheese market is crashing, I'm going to stop eating cheese!

Well said and thank you for saying it....

Cheers

spartanlegion wrote:
I play a miniature wargame....It's a hobby.....that's it. That's as much as GW effects my life and family.

I can't even begin to understand why fellow hobbiests get this into this kind of minutia.....

Many of us are quite vested in our hobbies. And, many of us know what happens to gaming systems when the company that operates them falters.

You cannot wargame without an opponent. People get older, they stop playing. New blood has to come in. And, if a game is no longer available, this happens faster, and new blood doesn't come in. The health of the company is directly related to the health of the hobby. This is why we care.

Redbeard wrote:The health of the company is directly related to the health of the hobby. This is why we care.

Spot on.

Redbeard wrote:We're in a recession. A company that sells luxury goods (economically speaking, not like Ferraris and yachts) is going to sell less during a recession. That they were able to remain profitable means they're making intelligent management decisions for the economic environment they're operating in.

Does anyone realistically expect a luxury good company to grow during a recession where unemployment is at 10% (or higher) and people are struggling just to get by?

This seems to come from an erronious assumption that GW is a Luxury product for the wealthy and seem to contain some of the elitist mentality that is plaguing the game/hobby. While GW's models are technically a luxury items they are by no means Ferraris or Porches and should not be priced as such.

GW is not kept afloat by the rich 1%, but rather the middle-class people that find their way into the hobby. In the current economy, middle class families do not have the cash flow to buy into the GW elitist club and their sales are showing such.

In business you are supposed to charge what the market will bear. You find this magical point by watching for where price increases correspond with a drop in sales revenue that breaks even. If the overall sales revenue drops, then you have passed the point of what the market will bear and should either hold the pricing, stable until the market shows signs of growth, or (gasp)reduce pricing to the point that the company begins to show sales growth again. GW has past that tipping point and shows every sign of another 10%+ price hike, this is poor business management.

GW doesn't think that its customers remeber the emergency price increase of 2007-2008 when material cost had gone up. Those costs came back down but prices remained up. GW has given the excuse that they were paying off debts for keeping the elevated prices. Those Debts/Asian factories have been paid off and GW is handing out dividends. They are profitable and have no dire need for increased revenue that would call for entropic price increases, yet they are still raising prices.

GW talks about protecting their IP but are creating their own problem with inflated prices that are the primary cause for why knock-offs and clones are becoming an issue. The only thing currently keeping many people from using knock-offs is their own paranoid guilt that someone at the local GW store will recognise the models as fake. GW needs to realize that their stores primary function is to provide a place to play and a source for reasonably priced models. Understaffed stores with reduced gaming area, overcosted models and restricted hours of operation are pushing players to find other venues in which to play. When customers are no longer playing at the GW stores they will feel more comfortable in using knock-offs. I'm pretty sure that most of us know some recasters that once their peices are painted, you can't tell the difference. What is GW going to do then? Scratch test random models? Yeah, that will go over well.

spartanlegion wrote:Wow.

I play a miniature wargame....It's a hobby.....that's it. That's as much as GW effects my life and family.

I can't even begin to understand why fellow hobbiests get this into this kind of minutia.....

It's like buying an airline ticket and knowing every CEO on that airlines board, their middle name, profit margin, and other information that has NO bearing on me, my hobby, or my life.....

Just always amazed at what people look into and get worked up over.......The way I sum up this kind of (useless) thread in regards to a simple hobby is (or the way I view the minds of those who get this deep into the background of the company) -

I eat cheese, the cheese industry is making less profit then last year, the cheese market is crashing, I'm going to stop eating cheese!

Spoken like someone who can afford both GW and cheese.

I'm old school. If a company is price gouging their customers I stop spending money on that company's product and try to help others realize that they are getting soaked unnecessarily.

Also, your analogy is off. If Kraft was saying that that because they make american cheese that you can't buy Land-o-Lakes or bordens versions and because Kraft copied other companies cheddar, swiss and Jack cheeses recipes that in general you couldn't eat any of these unless they are made by Kraft, then you have a starting point for a comparison.

Edit: spelling

Redbeard wrote:

spartanlegion wrote:
I play a miniature wargame....It's a hobby.....that's it. That's as much as GW effects my life and family.

I can't even begin to understand why fellow hobbiests get this into this kind of minutia.....

Many of us are quite vested in our hobbies. And, many of us know what happens to gaming systems when the company that operates them falters.

You cannot wargame without an opponent. People get older, they stop playing. New blood has to come in. And, if a game is no longer available, this happens faster, and new blood doesn't come in. The health of the company is directly related to the health of the hobby. This is why we care.

Well said Redbeard!

Anyone 'invested' in this hobby would do well to pay attention to its overall health - ESPECIALLY if you're thinking of 'investing' in a new army, or two!

Additionally, the health of the store chain and changes to their operation directly affects the hobbyists that regularly frequent those stores.

pombe wrote:I would usually say that, despite my misgivings about GW prices, that things will continue as normal, the status quo will be maintained, and GW will be around to make more stuff to gouge our wallets with. Vets will bitch and moan, but then forget their hate when GW puts out the next shiny thing. I would usually have said that.

But now, GW's competition is much more mainstream. Things like Warmachine/Hordes and Flames of War have provided less obscure alternatives to the average gamer, which will entice the disillusioned GW "follower", since it is much easier to find other players for alternate game systems than it used to be. Admittedly, there have been some bumps in the road for the competition, such as Rackham (AT-43 seems to have been mismanaged, and there is no transparency so we really know nothing other than they are redoing the rules) and Catalyst (where's my Battletech Anniversary and Clan Box Sets?!?!).

Also, GW no longer holds a monopoly on top quality miniatures. Games like Infinity and Malifaux have also been making inroads with some spectacular miniatures. And PP has recently put forth some fantastic plastics.

And from what I can tell (read: I have no real data), D&D is making a comeback. My local gaming community forums seem to be more populated with people trying to get D&D campaigns than people looking for players for GW games. Maybe this has to do with the release of the D&D miniatures games or the fact that Heroscape is now D&D based...I have no clue.

If GW's goal is to be the only fish in the pond, it is failing miserably. Not only are there now more alternative fish in the pond, but the other fish seem to be larger than what GW is used to.

I will say, though, that with the Space Marine game coming soon, the Ultramarine movie coming soon, the 40K MMO coming soon, and the apparent success of the Black Library novels, GW's 40K IP is still very strong. Who knows...maybe 2011 will see a resurgence in GW sales due to it reaching out to the general public.

Whether GW had lower prices or not would not have affected the now oversaturation of the market with competitors. The fact is GW has branched more into other consumer products such as games, books/comics, etc. 40k is more known by the general public than it has ever been, something competitors are simply unable to replicate. I will agree along with everyone else their price hikes are very annoying but the handling of their IP is still far and away superior to anyone else in the industry. Cash is King but the value of an IP is also very important to a company as it allows future, untapped revenue.

Well, as expected:
1.) Revenue down by 10% +
2.) Prices up by 10% + to compensate
3.) "We no longer spend money on things we don't need, like (...) advertising that speaks to the mass market rather than our small band of loyal followers."

It's CUSTOMERS not FOLLOWERS, and losing customers and revenue is NOT a good thing to celebrate with paying dividends!
As good as the designers are, the management has a serious loss of reality. When will they learn the basics of economics.

Having said that, I expect some increase in sales next time because of a revived Fantasy section.

Yes... although I tend to be upset at GW's attitude towards customers in general, I'm really enjoying have a decent little GW retail shop near me, the near release of the fantasy rulebook, and some of the new fantasy models.

Still worth the money for me, although I have to budget it out and be more careful about it now!

So I'm not really nerd-raging about this report... although I reserve the right to do so in the future when I feel differently

"We no longer spend money on things we don't need, like (...) advertising that speaks to the mass market rather than our small band of loyal followers."



i do want to point out that they did just send all their managers to Vegas for a meeting.

and they moved HQ to TN.

.... ..... Man i wish i got sent to vegas because we are saving money.

Probably cheaper and easier to send all the managers to vegas for training than to Memphis. With the re-alignment and cuts to regional staff, they could easily be saving money than employing several mid levels of management. Cutting out a couple of the tiers of the pyramid could easily free up dollars for twice yearly staff trips to vegas.


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When these reports come out, it's always funny to see the long threads. Pretty much the same. GW loses money, we bitch and say they don't know what they are doing. GW makes money, we bitch, and say they don't know what they are doing.)

They could also build robots to do all the work for them. I'd suspect people wouldn't know the difference either.

I need to build a robot to do my painting for me...

I'd pay a lot for such a beast. And a scenery making bot.

Hell, I'd be happy with a trained monkey to roll dice for me, so I'd have more time to drink beer during games.

Osbad wrote:

As I read it from a numbers standpoint, UK is growing slowly & steadily since 2006, presumably the first of GW's ops improvements.

US is on the upswing, having broken through the 5-year upper trendline in 2009 and growing again in 2010, presumably due to GW's more recent cost control efforts. Good success in key US and UK markets.

Europe is down from the 2004 peak, but appears to be leveling. Still has net growth relative to 2002, and is likely mature / sustainable at the 40k-50k level, still appears to be above 2008 level. GW should focus on cost cutting AND RAISING EURO PRICES.

Rest of world (Oz) has slow, steady growth, doubling since 2001. Clearly, this is the best model to follow, so KEEP INCREASING AUSTRALIAN PRICES!


Overall, GW seems to be doing just fine, aside from the dip from the 2009 peak in Europe.

Quite frankly, these numbers show GW continues to enjoy luxury margins from players who gladly pay more and more for their plastics. I would not expect GW to make any changes in strategy, so I anticipate buying quite a bit less as GW continues to raise prices overall.

mikhaila wrote:Probably cheaper and easier to send all the managers to vegas for training than to Memphis. With the re-alignment and cuts to regional staff, they could easily be saving money than employing several mid levels of management. Cutting out a couple of the tiers of the pyramid could easily free up dollars for twice yearly staff trips to vegas.

Quarterly trips to Vegas from what I've gathered. The local manager has went twice since the change to one person shops.

Not that it matters much. I'm sure flights to Vegas from all over the country are cheaper than to Memphis. Everybody likes to gamble, don't they?

Redbeard wrote:We're in a recession. A company that sells luxury goods (economically speaking, not like Ferraris and yachts) is going to sell less during a recession. That they were able to remain profitable means they're making intelligent management decisions for the economic environment they're operating in.

Does anyone realistically expect a luxury good company to grow during a recession where unemployment is at 10% (or higher) and people are struggling just to get by?

Mercedes-Benz and BMW are both doing very well this year, and they're not cheap transportation.

OTOH, Hyundai & Kia are also doing well, among those "people struggling just to get by." Used Cars are selling fantastically.

So yeah, people are suffering, but not so much at the top. As usual.

Kirby's still got his yacht, right?


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skrulnik wrote:

mikhaila wrote:Probably cheaper and easier to send all the managers to vegas for training than to Memphis.

I'm sure flights to Vegas from all over the country are cheaper than to Memphis. Everybody likes to gamble, don't they?

The flights are probably the same, but Vegas rooms can be had dirt cheap - they built up all these big expensive hotels, and desperately need people to fill them.

tallshortguy wrote:
Whether GW had lower prices or not would not have affected the now oversaturation of the market with competitors. The fact is GW has branched more into other consumer products such as games, books/comics, etc. 40k is more known by the general public than it has ever been, something competitors are simply unable to replicate. I will agree along with everyone else their price hikes are very annoying but the handling of their IP is still far and away superior to anyone else in the industry. Cash is King but the value of an IP is also very important to a company as it allows future, untapped revenue.

Their handling of their IP is both good and bad. Spreading out into videogames was a natural move, and their universe is now rich enough to support a growing library of novels (though, I will have to attribute the majority of their Black Library success to hiring Dan Abnett). Their heavy-handed policies, though, have cost them a lot of goodwill from their "followers", though I don't know how much in revenue this has cost them.

I will disagree by saying that I think GW prices have affected how the market has developed. High prices allowed others the opportunity to enter the market by offering cheaper alternatives (see Mantic). This could have also been affected by the aforementioned loss of goodwill. If GW had not disenchanted its "followers" and/or driven them away through price increases, many of the other companies may not have been able to establish a foothold in the pond.

focusedfire wrote:This seems to come from an erronious assumption that GW is a Luxury product for the wealthy and seem to contain some of the elitist mentality that is plaguing the game/hobby. While GW's models are technically a luxury items they are by no means Ferraris or Porches and should not be priced as such.

No, it comes from the assumption that given the choice between not buying GW models and not buying food, or clothes, or paying your utilities, GW will be the first to go. A good does not have to be overpriced to be highly dependant on consumer confidence, it just has to be a "want" rather than a "need".

tallshortguy wrote:Whether GW had lower prices or not would not have affected the now oversaturation of the market with competitors. The fact is GW has branched more into other consumer products such as games, books/comics, etc. 40k is more known by the general public than it has ever been, something competitors are simply unable to replicate. I will agree along with everyone else their price hikes are very annoying but the handling of their IP is still far and away superior to anyone else in the industry. Cash is King but the value of an IP is also very important to a company as it allows future, untapped revenue.

While this is the current status quo, I don't really expect it to hold steady. Privateer Press, for instance, will have its own PC/console game in the next year or so (by some of the guys responsible for the original Fallouts and the MoH series, to boot), along with a major motion picture by Tim Burton. While none of GWs other competitiors have branched out of wargaming quite yet, the increased presence of these properties in the public eye certainly won't hurt their chances.

Laughing Man wrote:

tallshortguy wrote:Whether GW had lower prices or not would not have affected the now oversaturation of the market with competitors. The fact is GW has branched more into other consumer products such as games, books/comics, etc. 40k is more known by the general public than it has ever been, something competitors are simply unable to replicate. I will agree along with everyone else their price hikes are very annoying but the handling of their IP is still far and away superior to anyone else in the industry. Cash is King but the value of an IP is also very important to a company as it allows future, untapped revenue.

While this is the current status quo, I don't really expect it to hold steady. Privateer Press, for instance, will have its own PC/console game in the next year or so (by some of the guys responsible for the original Fallouts and the MoH series, to boot), along with a major motion picture by Tim Burton. While none of GWs other competitiors have branched out of wargaming quite yet, the increased presence of these properties in the public eye certainly won't hurt their chances.

Privateer Press' games appeal to a very different audience than GW's, especially in terms of background.

How much does your average plastic mold cost? I think I'd have a better perspective if I knew this. I know their not cheap, but I'm sure GW can afford them.

They cost in the realm of thousands...

JohnHwangDD wrote:
As I read it from a numbers standpoint, UK is growing slowly & steadily since 2006, presumably the first of GW's ops improvements.

If his graph is just in pounds, you'll need to adjust for historical currency changes. And the pound has fallen a lot. So in terms of real purchasing power or a basket of world currencies, GW's hasn't done so hot even in the UK.

US is on the upswing, having broken through the 5-year upper trendline in 2009 and growing again in 2010, presumably due to GW's more recent cost control efforts. Good success in key US and UK markets.

Again, currencies. The USD is now worth way, way more than it used to. I think if you adjusted it all to historical currency values to the US is flat.

Quite frankly, these numbers show GW continues to enjoy luxury margins from players who gladly pay more and more for their plastics. I would not expect GW to make any changes in strategy, so I anticipate buying quite a bit less as GW continues to raise prices overall.

I agree completely.

Reflecting on Mr. Well's comment that Web store sales have increased while store sales have declined. Seeing how many old and new items they have moved to direct only, even in their own stores would explain a lot of the increase, not to mention the increase in "limited" release items to create the impression of greater scarcity. From this I assume GW stores do not get credit for direct only orders placed in and delivered to those stores.

So ultimately the touted increase in Web store sales is a dissertation and only reinforces that fact that GW is losing customers.

A fascinating annual report, I thought. And not an entirely discouraging one, either IMO. Here's my take on it.

First, as a preamble, I'm speaking as a hardcore GW player. Kind of a fanboi, I guess, though I do get frustrated from time to time with specific decisions the company makes. More basically, though, I want the company to do well and the game/hobby to survive. (I'm not a GW employee, for those who may wonder. And I do know something about business, being a business writer and consultant by day.)

This report is trying to send a strong and clear signal, namely, that GW is dedicating itself to, and managing to succeed at, its core mission. Which is not to grow as fast as possible, nor to make piles of money rapidly, nor to throw off cash, so much as it is to sustain enough profitability to keep itself in business and its people, its IP, its games alive and healthy.

Kirby says as much in the preamble. He does assure shareholders the company will strive to make money. And he does express disappointment that the company is not successfully growing in key markets. But he pointedly describes GW as

a small, steady-growth company that will pay a dividend when it has the cash. The difference now is we are not going to make promises about the dividend - once bitten, twice shy. Shareholders who look for a predictable dividend on their
shares might want to look elsewhere.

And then, in the CEO's commentary, Mark Wells expresses the company's determination to hew to a strategy that nurtures the essence of what makes GW's gaming and hobby experience unique and engaging. Tabletop gaming, quality miniatures -- that is what the company sees as its strategic core.

Painful cost cutting measures have been necessary to make this thing work and keep GW alive through a truly grim economic downturn. GW has shaved its community-building efforts down to the bone and beyond (a decision I strongly regret, and a strategy I question). Still, I do have to agree with Wells when he maintains that the most important aspect of the business--making beautiful miniatures set in weird and wonderful game universes unlike any other--that GW is still doing.

Actually, doing strikingly well, I would argue. I consider GW's latest plastic kits to be some of the finest work the company has ever produced -- and that in the midst of a punishing market downturn. Call me a fanboi, but when I consider products like the new bloodcrusher and seeker kits, the new skaven stuff, the valkyrie kit, well, I have to applaud. Or, to put it currently fashionable business vocabulary: as a customer I am indeed "delighted." (I hate that word!)

So I take heart in the report. There's a kind of defiance in it that speaks to me. Kirby and Wells are saying just enough to address the financial concerns and questions of their profit- and growth-minded investors. While spelling out plainly and strongly that the company remains dedicated to customers just like me: the hard-core fans, rather than the casual ones.

There are things I would do differently, certainly. For example, I would make much more of an effort to deepen and invigorate relationships with FLGS partners. (Maybe the fact that I'm an American influences me here.) Regardless, this is the kind of annual report that speaks to me and says things I find reassuring. Above all, what I am hearing from the company is that they are not in business to make a quick buck, or to prostitute their IP in pursuit of profits or growth in more fashionable media (computer games and so on). They're in this for the same reasons I am. They want to be a toy soldier company with unique, weird, cool narrative concepts and game setting. Which is exactly what I want from GW. That is a strategy that requires GW's executives to "manage" the expectations of its investors. This report is all about expectation management.

Fire away. By all means, bitch and moan at what you think warrants bitching and moaning. But this report said pretty much what I was hoping it might.

GW lost a little this year, so they'll have another price increase.

Eventually, what will happen is that they'll raise prices so high, that discount retailer's prices will be what GW's prices are RIGHT NOW.

They can only raise them so high until people draw the line.

"Hey mom, can I get this box of spess mehreens? There's 10 for $70!"

They can only raise them so high until people draw the line.

I've had many conversations on this topic over the many years I've been buying GW products and that phrase always comes up from at least one of us in the conversation, yet the prices keep going up and people are still buying their products. I'm not sure where that line is that customers won't cross over, but no matter how many times I or my friends think GW has reached it it has not happened yet. Seriously, I remember that comment coming up in conversations twelve years ago or more, yet it just never happens.

Karon wrote:
Eventually, what will happen is that they'll raise prices so high, that discount retailer's prices will be what GW's prices are RIGHT NOW.

That's been the case since that last price increase, when I was going to go purchase the Dark Elf armybook off of maelstrom, it came out to $22, which is what the books used to be before the price hike.

BrassScorpion wrote:Seriously, I remember that comment coming up in conversations twelve years ago or more, yet it just never happens.

It happens. I'm sure there are many people who quit after each price rise, but as those people are not GW's targeted customer base, the overall effect is nil.

GW wants new players and treats them like shooting stars - they burn brightly for long enough for them to make some money off of them, and then quit either before or just after the next price rise. 18 month window - initial purchase + supplemental purchase, one Birthday, one Christmas - that's all they need. The majority of players are therefore new, and consider whatever the prices are right now to be the standard prices. In two years time most of the player base will have been replaced with new shooting stars, and the price increase that happened in the meantime won't impact them as they weren't around when the prices were lower.

Karon wrote:GW lost a little this year, so they'll have another price increase.

Eventually, what will happen is that they'll raise prices so high, that discount retailer's prices will be what GW's prices are RIGHT NOW.

They can only raise them so high until people draw the line.

"Hey mom, can I get this box of spess mehreens? There's 10 for $70!"

Wrong. GW made more profit this year, so price increases are clearly working.

Ahh, my poor little n00b, that has *already* happened several times since I got into The GW Hobby over a decade ago. Indeed, way back then, Wraithlords were made of metal and called Eldar Dreadnoughts. They retailed for a whopping $25, and could be gotten on discount for as little as $15 shipped. Now, this model is plastic and GW charges an outrageous $44.50, which means that a typical retailer with a 40% discount pays more today than what GW stickered it for way back when. The average discounter charges over $35, which is more than twice what I would have paid for one back in the day.

As continuing sales of Chaos Daemons and other Fantasy 10-packs show, you are grossly mistaken.

I wonder, what princely sum does GW charge Australians for 10 Tactical Marines?
____

BrassScorpion wrote: I've had many conversations on this topic over the many years I've been buying GW products and that phrase always comes up from at least one of us in the conversation, yet the prices keep going up and people are still buying their products. I'm not sure where that line is that customers won't cross over, but no matter how many times I or my friends think GW has reached it it has not happened yet. Seriously, I remember that comment coming up in conversations twelve years ago or more, yet it just never happens.

QFT.

I don't know what the point is, but I suspect that GW can raise prices by 3 to 5% per year on average from here to infinity.

JohnHwangDD wrote:I wonder, what princely sum does GW charge Australians for 10 Tactical Marines?

62 AUD, or approximately ₤36.

So, only 8 more to get to the magical 70 for 10.

Go GW OZ!

I think the somewhat WTF Australian prices are well known about by all who frequent the board, luckily there are online retailers who are able to provide the same goods at a substantial discount for our Australian brethren, so we don't really need to throw such obvious jibes/ good natured ribbing around please. Ta.

BrassScorpion wrote:

They can only raise them so high until people draw the line.

I've had many conversations on this topic over the many years I've been buying GW products and that phrase always comes up from at least one of us in the conversation, yet the prices keep going up and people are still buying their products.

It's already happened to me. Back in the end of 40K 2nd edition I got several people buying GW minis and we excitedly rode the wave into 3rd edition. Before the big price rises began, most of us had multiple armies worth 1500 points at least. We bought minis whenever we liked them, regardless of if they fit well with our armies or not. We happily plonked down extra for conversion material (often making large orders from GW's at-the-time excellent bitz service). We used to even make custom conversions for each other as Christmas presents. Every one of those people has quit. I quit for about 5 years, only returning to start a fantasy army and build it very slowly (I'm spending probably a quarter of what I used to on miniatures overall, because the high prices keep me from ever spending impulsively enough to get a good, exciting momentum going. At this rate, I may get 1000 points of beastmen finished over 2 years. I know someone who, on impulse, bought a Battle for Skull Pass starter set. He got it home, got the guys plugged into their bases, and started excitedly planning an Orc & Goblin army. He took one look at the cost of the regiment boxes and shoved his minis in a drawer that I bet to this day he hasn't opened.

TL,DR version: we all spent more on GW back when prices were low enough we didn't feel the need to justify the expense of individual items. Now, almost no one I know still plays.

There are two factors to take into account that I can think off when it comes to price increases putting people off buying.

Firstly, the simple supply/demand laws don't strictly apply to GW products. There is an elasticity of demand so that if prices rise demand does not fall off so rapidily. Some people will still buy stuff to feed their addiction for GW products.

Secondly, the main target market of new kiddywinks. Being new and fresh have no previous marker of what a reasonable price is. They just accept that a box of 10 minis costs x dollars.
I have seen this at our club. They even tell me that the prices aren't that much. Which I guess is true when it's the parents paying in a the cases i have seen. (I know some of our youngsters on Dakka pay their own way by the sweat of their brow)

But I wish my mommy and daddy had the same willingness to splash out on my behalf!

Chibi Bodge-Battle wrote:Firstly, the simple supply/demand laws don't strictly apply to GW products. There is an elasticity of demand so that if prices rise demand does not fall off so rapidily. Some people will still buy stuff to feed their addiction for GW products.

I don't agree. I think the laws of supply and demand apply to the product, but not to some people. Some people will buy GW products no matter what the price is (or for that matter, what the product is). That has no bearing on the rules of the product itself.

The people in this forum are among the most dedicated of the most dedicated (we're analyzing their financial results for crying out loud!) The fact that we are still buying GW should not be taken as a sign of what normal customers are doing. Simply by posting here we're self-selecting for a greater-than-average level of GW fandom.

I don't agree. I think the laws of supply and demand apply to the product, but not to some people. Some people will buy GW products no matter what the price is (or for that matter, what the product is). That has no bearing on the rules of the product itself.

Why do you suppose I wrote that SOME people will continue to buy despite price hikes?

Also people will have a different beaking point before the elastic snaps. The point is that the model is not a simple price increase causes a fall in demand which all things being equal would then stabilise the price.

I went into GW store for a pot of paint the other day. It cost me £60 or so. But I did get a few boxes of stuff at the same time. . . .

Face it, as soon as I walk into GW store, I am going to spend money.

I therefore try and keep away, but this is not always possible. . . More stores, more opportunity for me to be enticed.

I buy WD regularly although I understand that it is 100% about advertising GW.

They are onto a winner and I expect will be for some time.
I just wish I had thought of it first.

So, we're here talking about the Price Hike Which Hasn't Happened yet?

Come on guys, let's at least wait until it is announced!

@ Alpharius: Tru dat. It'll be at least 6 months before the next one.

Now that we're talking about price raising..
Johira has a valid point; there is no product, other than food that I'm aware of, that is immune to the laws of supply and demand. Just look what happened to gas prices here in the US after they topped $3/gallon...the elastic broke and the prices rebound down to $1.98/gallon (here in Oklahoma) before leveling off.

One of the oft stated maxims on this board whenever this topic arises is that lil Tommy's parents seem to have bottomless wallets and buy whatever their pride and joy demands from them. In reality, as parents already know, parents don't buy just anything their kids want (I wish, when I was a kid) and on top of that, Tommy's dad may be one of the millions that is currently out of work. I guess I disagree with this view, based solely on my own experience; the game stores I go to have the same faces, day in and day out with only the occasional new gamer. If GW depended soley on Tommy (and by extension his parents), the game wouldn't exist in my neck of the woods. I was in the local shop a few months ago when a young man (maybe 11) came in with his mother, there were several of us playing 40k and he was going on about how cool it was, came over, asked some questions and then he and mom went to look at the GW section of the shop. Before they left, I heard mom say that there was no way she was going to pay that much for a game.

GW is in fact, IMHO, driving up prices as customers fall out of the market. It's a finely tuned dance to maintain/slightly increase a profit level that is fairly stagnant in business terms. Go back and look at the sales charts and note how they correspond with major new releases. What would be even more interesting is to see a month-by-month breakdown of sales firgures, you'd probably see spikes in certain months followed by flat or decreased sales.

Overall, they're a healthy company and I don't look for them to die out,be bought out, or suddenly close shop.

/2 cents

This is yet another example of GW surfing the wave. Everything they do is used as justification for price hikes but as the falling sales figures attest what they are trying to do is maintain short to medium term profitability over long term growth.

Yes, a 10% price increase will offset a 9% loss in sales, but what I have never understood is the blinkered approach of GW management to the marketing value of their customer base. The vast majority of gamers play because they were introduced by an existing player (friend, relative, colleague, etc) so the more players GW has, the more it is able to grow.

The model aught to be grow the customer base until saturation, then look at price rises, not put up prices and watch sales falling whilst saying 'its ok, we're still making profit'. This is not sustainable in the long term and all it will take is for one of GW's competitors to start seriously challenging them in the global market and they'll fold faster than superman on laundry day...

I never realized that a simple hobby of playing with plastic model miniatures could be so complicated and life altering!

I never realized the desire to remain ignorant on a subject made people come on a thread specifically to taunt those who do.

BrassScorpion wrote:

They can only raise them so high until people draw the line.

I've had many conversations on this topic over the many years I've been buying GW products and that phrase always comes up from at least one of us in the conversation, yet the prices keep going up and people are still buying their products. I'm not sure where that line is that customers won't cross over, but no matter how many times I or my friends think GW has reached it it has not happened yet. Seriously, I remember that comment coming up in conversations twelve years ago or more, yet it just never happens.

In fairness, you're probably seeing a bit of sample bias there: after all, people so turned off by the pricing structure may simply sell off their models and stop playing, moreover, few people announce that they have hit the wall with purchasing, they simply drift away. I myself haven't bought a GW product in some time, not because some of their models aren't fantastic, but because the sticker shock is simply too much.

For me, the "straw", as it were, was looking at the new plastic ravagers; the price point for the trygon I could justify to myself, but ravagers at nearly $15 each? I shelved any plans for a nid army, and simply drifted away.

You can't expect people who stop caring to announce that they stoped caring, after all.

JohnHwangDD wrote:

Karon wrote:GW lost a little this year, so they'll have another price increase.

Eventually, what will happen is that they'll raise prices so high, that discount retailer's prices will be what GW's prices are RIGHT NOW.

They can only raise them so high until people draw the line.

"Hey mom, can I get this box of spess mehreens? There's 10 for $70!"

Wrong. GW made more profit this year, so price increases are clearly working.

Ahh, my poor little n00b, that has *already* happened several times since I got into The GW Hobby over a decade ago. Indeed, way back then, Wraithlords were made of metal and called Eldar Dreadnoughts. They retailed for a whopping $25, and could be gotten on discount for as little as $15 shipped. Now, this model is plastic and GW charges an outrageous $44.50, which means that a typical retailer with a 40% discount pays more today than what GW stickered it for way back when. The average discounter charges over $35, which is more than twice what I would have paid for one back in the day.

As continuing sales of Chaos Daemons and other Fantasy 10-packs show, you are grossly mistaken.

I wonder, what princely sum does GW charge Australians for 10 Tactical Marines?
____

BrassScorpion wrote: I've had many conversations on this topic over the many years I've been buying GW products and that phrase always comes up from at least one of us in the conversation, yet the prices keep going up and people are still buying their products. I'm not sure where that line is that customers won't cross over, but no matter how many times I or my friends think GW has reached it it has not happened yet. Seriously, I remember that comment coming up in conversations twelve years ago or more, yet it just never happens.

QFT.

I don't know what the point is, but I suspect that GW can raise prices by 3 to 5% per year on average from here to infinity.

Appreciate the enlightenment.

I was just saying, that eventually, it will be too expensive. Right now, its outrageous, but GW can only raise so high (I can't imagine a parent in the right mind who would buy 10 plastic miniatures for $70+)

Heh, I am relatively new to the hobby compared to many on here, so I take my lashings.

wait till january when VAT goes up to 20% over here in the UK can't wait to see how that will effect the market on the continents. plus now BP seem to be getting a proper solution to their leak, can see price of oil shooting up which will also mean price of plastics rising. what miffs me is how much stock is produced at cheaper times then released (or should i say rules change so people want them in armies) when market price is at a high.

Karon wrote:

JohnHwangDD wrote:

Karon wrote:They can only raise them so high until people draw the line.

"Hey mom, can I get this box of spess mehreens? There's 10 for $70!"

As continuing sales of Chaos Daemons and other Fantasy 10-packs show, you are grossly mistaken.

but I suspect that GW can raise prices by 3 to 5% per year on average from here to infinity.

Appreciate the enlightenment.

I was just saying, that eventually, it will be too expensive. Right now, its outrageous, but GW can only raise so high (I can't imagine a parent in the right mind who would buy 10 plastic miniatures for $70+)

Heh, I am relatively new to the hobby compared to many on here, so I take my lashings.

No biggie, it's GW in perspective over time.

Over a decade ago, if you had told people that the Eldar Dreadnought would be plastic and $45 *each*, they probably wouldn't have believed you. 5 years, ago, they would have, and been scared about the coming price hike..