Forum adverts like this one are shown to any user who is not logged in. Join us by filling out a tiny 3 field form and you will get your own, free, dakka user account which gives a good range of benefits to you: No adverts like this in the forums anymore. Times and dates in your local timezone. Full tracking of what you have read so you can skip to your first unread post, easily see what has changed since you last logged in, and easily see what is new at a glance. Email notifications for threads you want to watch closely. Being a part of the oldest wargaming community on the net. If you are already a member then feel free to login now.

I know that there has been a drop in sales and apparently they had to close some stores in 2007... but a GW employee I talked to said they're opening new stores every year too... some also use LotR as a scapegoat; has GW made a profit from LotR? What kind of future does GW have? I had hoped someday to be able to teach my kiddies how to paint GW minis *sniffle* :<

LoTR was huge for GW and still makes money. It has dropped off a lot because the movies did all the heavy lifting in marketing terms. The LoTR range no longer has any advantage over 40K or WHB except if a possible customer happens to like LoTR. It will probably come back when The Hobbit is released.

There's no doubt they lost sight of the fundamentals of the business when LoTR was booming. They opened too many shops in the wrong places. Their stock control was terrible.

Both these factors have been and continue to be addressed, hence the continuing closures and openings, and the emphasis on keeping only a limited range in stock -- you have to order anything a little bit unusual. The bitz service has gone too. It was great for fans but it was a money sink.

Revenues and profits have improved the past two years but a lot of this was thanks to exchange rate fluctuations, which is not a viable business strategy unless you are a currency exchange company. If the GBP got 20% stronger, they could be in trouble again.

Even so I think GW are clearly healthier than they were a few years ago. Their long term survival depends largely on whether they can continue to persuade 12-year-olds to join the hobby at the same rate that 16-year-olds drop out.

They seem to have a lot of hope invested in computer games. It's hard to know if the success of these games depends on the underlying popularity of the tabletop game.

My gut instinct says that the computer games are successful largely because they feed off the already existing market for the tabletop games. If this is true, they are the icing on the cake, not the cake itself, meaning GW will need to keep marketing the tabletop games to ensure an audience for the computer games.

My last concern is whether veterans are important for the recruitment of newbies. Again, I have a gut feeling that veterans help get newbies into the tabletop games in various ways, so GW should be paying attention to vets' wants and needs, which they aren't doing so well at the moment. However, I could be wrong about this. It would be difficult to analyse it in accountants' terms.

GW's main problem is getting rid of debt and under-performing stores which they have been doing.

However GW seems to be on the rise after looking at their financial report thanks to many factors a major one being license fees from video games. GW's future looks good in that area since they have an upcoming movie and more video games to make cash off of both of which are excellent gateways to their tabletop stuff.

In terms of catering to vets I think GW did a pretty good job here in terms of the products released namely Planetstrike and Space Hulk.

As for stuff both vets and newbies enjoy; the quality of their models has increased substantially and if its any indication of things to come - they won't have to worry about retaining their 'best models in the business' title. Imo the best vehicle GW has come out with is the Valkyrie and the best infantry models the ones from Space Hulk; huge steps above from models just a year or two older.

I like how GW has expanded its IP to video games and now a movie; this is stuff vets and newbies alike enjoy and should only strengthen the brand and IP. Particularly the upcoming Space Marine video game looks like a must-buy for a 40k fan.

Cane: i cant see anything isn your post i agree with. it sounds more like a GW pro press release than an honest answer.
Kilkrazy i think is much closer to the truth here.

LotR put them in a tough position. In the three years that had movies being released they made a tonne of extra money.

The first year without a movie saw most of that extra revenue dry up which seemed to catch them by suprise (I guess a lot of people at the top don't understand the product too well.)

Actually, it was the speed of the bubble shrinking that took people by surprise.

But hey they still make a profit on it.

Hawkins wrote:Cane: i cant see anything isn your post i agree with. it sounds more like a GW pro press release than an honest answer.
Kilkrazy i think is much closer to the truth here.

I did word my post carefully and didn't comment on LOTR part of the OP's question since KillKrazy did a good analysis, rather focused on the second part: "What does GW's future look like?" and worded that in terms of 'products released' imo GW has done well for vets including this year's Planetstrike and Space Hulk. In terms of making the forum community happy, they haven't done much at all to address much of those concerns namely a lack of quality communication.

I agree with Killkrazy that in terms that GW is healthier now than they were in past years and agree that video games can become a great addition to their money making arsenal and I think they already have. Also agree that they may not necessarily draw in users but I think it has generated significant interest and you see forum users from time to time saying they came into the hobby as a result of them. Quality games also strengthen the brand and IP imo and I believe they've been doing well in the market particularly DoW. GW makes a lot of money off of this which also generated a ton of attention for the brand and IP. Dawn of War games, Warhammer online, upcoming SM game and 40k MMO, and the decision to expand to a movie are all relatively recent and a lot of projects is expected in the near future. Imo these have been great moves for GW who in the past seemed reluctant to license their IP and notably missed the cash cows known as Warcraft and Starcraft.

In terms of their future I think GW is on the right track in terms of surviving as a public company and pleasing shareholders; and have been doing well in recent reports. By expanding to several video games and the movie it simultaneously satisfies vets while drawing in newbies and I don't see how someone can disagree with this especially in terms of financial success...these are great business moves

GW turned a profit this past year, and looks to continue to do so, so "financial troubles" is overstated.

Of course, their profits are based on price increases, licensing, and currency exchange.

And even with the pricing, people still buy. Newsflash - if people didn't support price increases, GW wouldn't do them.

They are in business only to make money, and I have sure seen this in resent years, shop assistance who's first thought is what they can get you to pay, mail order that now is next to useless, just try getting half the stuff you once could, the ability to convert a figure without paying two of three others seem long gone.

When I first started playing WH years ago GW seemed interested more in the hobby, yes they made money. This was brought home to me recently when I received a sprue of incompletely formed figures, the only way I can replace these is to take it to my local !! stores or return it to GW, we offered to supply pictures as proof but no must be returned, 6 weeks later I am still awaiting the replacements. Several years ago my younger but just a clumsy wife split Coffee on the rule book for Mordheim, not only did they replace the rules but sent a complete box set, this free of charge and no hassle, and it arrived a couple of days later.

Sorry ranting of an old man (in my day)

Cane wrote:

Hawkins wrote:Cane: i cant see anything isn your post i agree with. it sounds more like a GW pro press release than an honest answer.
Kilkrazy i think is much closer to the truth here.

I did word my post carefully and didn't comment on LOTR part of the OP's question since KillKrazy did a good analysis, rather focused on the second part: "What does GW's future look like?" and worded that in terms of 'products released' imo GW has done well for vets including this year's Planetstrike and Space Hulk. In terms of making the forum community happy, they haven't done much at all to address much of those concerns namely a lack of quality communication.

I agree with Killkrazy that in terms that GW is healthier now than they were in past years and agree that video games can become a great addition to their money making arsenal and I think they already have. Also agree that they may not necessarily draw in users but I think it has generated significant interest and you see forum users from time to time saying they came into the hobby as a result of them. Quality games also strengthen the brand and IP imo and I believe they've been doing well in the market particularly DoW. GW makes a lot of money off of this which also generated a ton of attention for the brand and IP. Dawn of War games, Warhammer online, upcoming SM game and 40k MMO, and the decision to expand to a movie are all relatively recent and a lot of projects is expected in the near future. Imo these have been great moves for GW who in the past seemed reluctant to license their IP and notably missed the cash cows known as Warcraft and Starcraft.

In terms of their future I think GW is on the right track in terms of surviving as a public company and pleasing shareholders; and have been doing well in recent reports. By expanding to several video games and the movie it simultaneously satisfies vets while drawing in newbies and I don't see how someone can disagree with this especially in terms of financial success...these are great business moves

All right i'll retrack my comment now that youve clarified your position more, i dont agree with all of it, but your stance makes more sence now.
I will refute your claim on planet strike and SH being for the vets, i dont see any evidence to support that, and the new plastics do have major problems in quality that GW i feel isnt adressing, but over all do have advantages in every way over the older plastics.

Kilkrazy wrote:Even so I think GW are clearly healthier than they were a few years ago. Their long term survival depends largely on whether they can continue to persuade 12-year-olds to join the hobby at the same rate that 16-year-olds drop out.

I'm genuinely curious about this 'average age of a GW wargamer is 12' thing. I've only seen one or maybe two early-years teen playing 40k at the LGS -- the rest of them are college aged and up, even though I seem to be the old broad of the store now at thirty. Where does this perception come that only kids who can't really afford it play 40k? My friends that suckered me into playing are all at least old enough to drink booze and not get carted away by the cops...

Hawkins wrote:I will refute your claim on planet strike and SH being for the vets, i dont see any evidence to support that,

The biggest one, at least so far as Apocalypse is concerned, is that the vets are the ones more likely to have the models to play.

But for both of these expansions, they're giving alternate ways to play the game. That's always going to be far more attractive to vets looking for ways to spice up their games before they lose interest completely than to kiddies just getting started, who generally (at least from my observation) are more than happy to just put their armies on the board and play a standard 'kill the enemy until they are dead from it' game over and over again...

Nice responses guys, but I think you could use some more optimism; Kilkrazy's post stoo out most for me... and I just want to address what he said.

Kilkrazy wrote:LoTR was huge for GW and still makes money. It has dropped off a lot because the movies did all the heavy lifting in marketing terms. The LoTR range no longer has any advantage over 40K or WHB except if a possible customer happens to like LoTR. It will probably come back when The Hobbit is released.

There's no doubt they lost sight of the fundamentals of the business when LoTR was booming. They opened too many shops in the wrong places. Their stock control was terrible.

Both these factors have been and continue to be addressed, hence the continuing closures and openings, and the emphasis on keeping only a limited range in stock -- you have to order anything a little bit unusual. The bitz service has gone too. It was great for fans but it was a money sink.

Revenues and profits have improved the past two years but a lot of this was thanks to exchange rate fluctuations, which is not a viable business strategy unless you are a currency exchange company. If the GBP got 20% stronger, they could be in trouble again.

Even so I think GW are clearly healthier than they were a few years ago. Their long term survival depends largely on whether they can continue to persuade 12-year-olds to join the hobby at the same rate that 16-year-olds drop out.

They seem to have a lot of hope invested in computer games. It's hard to know if the success of these games depends on the underlying popularity of the tabletop game.

My gut instinct says that the computer games are successful largely because they feed off the already existing market for the tabletop games. If this is true, they are the icing on the cake, not the cake itself, meaning GW will need to keep marketing the tabletop games to ensure an audience for the computer games.

My last concern is whether veterans are important for the recruitment of newbies. Again, I have a gut feeling that veterans help get newbies into the tabletop games in various ways, so GW should be paying attention to vets' wants and needs, which they aren't doing so well at the moment. However, I could be wrong about this. It would be difficult to analyse it in accountants' terms.

First off, I think that you're wrong about the computer games only attracting tabletop gamers. Perhaps that was true before Dawn of War, but the aforementioned series has really boosted Warhammer's popularity as a story; most the people I know who have played it have no/do not collect the miniatures, and yet they find the game fun and rewarding. The computer games move is expanding the franchise into the common market in my opinion... As a matter of fact, it was the games and the books that got me back into 40k... I only played it for a year aged 8 or so, but after completing DoW 2 for the second time I decided I'd like a Blood Ravens army; so, in essence, I returned as a new player.

Damn... I really thought I had more to write, oh well!

The experience at my FLGS is that new players come in every age from 12 to 30. I was in my mid 20's when I got into 40K. Most of them seem to spend a couple of hundred dollars on their first force before they have played enough games to get an idea of whether or not they will make it a long-time hobby. GW knows this, and they have organized themselves around it. If they really wanted a monetary boost, they need to do something to encourage all of these new players to paint their miniatures. Then their paint sales would go through the roof. Those overly complicated stage-by-stage painting articles in White Dwarf are not the answer, they turn off casual gamers with their insistence that every model be painted to Golden Daemon standard.

This graphic illustrates that real turnover (i.e. sales discounted for RPI movements), which proxies for volume sales, in theory is far from healthy. Last year they saw a boost from US sales from the 20% devaluation of the £ vs the $, but again, once that is taken our of the equation they are still selling less product now than they did back in 2001.



That is despite an unarguable improvement in their plastic moulding technology, the introduction of Apocalypse and the rebooting of their main games.

They are a lot more "efficient" now than they were in 2005 (by which I use their definition - they invest a lot less money in areas that cannot be shown to make a profit - e.g. "bitz ordering") and have axed numerous jobs they considered "unproductive".

Why they still sell less product than they did back in the day? Well you pays your money you takes your choice: more competition from MMORPGS, higher prices, more competition from Privateer Press and others, gamer disatisfaction with their lack of FAQs, bad reputation with the fans, etc., etc.... it all adds up.

The figures indicate that they are surviving and may continue to survive. Will the "golden era" of the late 90's/turn of the century when they were gaking gold bricks come back? I doubt it.

Apocalypse was a great idea IMO. You suddenly encouraged people to buy masses of big vehicles and build huge armies simply by writing a game that told people to play with more figures. Forgeworld appears to have had a huge boost from Apocalypse and that's what they need to support. Having a large backlog of orders creating long waiting times combined with a worrying frequency of badly cast and incomplete orders sent out supported by almost no customer sevice through email shows how lacking the whole operation is.

I think they did suffer a dip when the LOTR bubble burst a few years ago. I'm quite suprised they are still supporting it, perhaps they are hoping for a last hurrah when the Hobbit film is released.

If GW lowered its prices say 20% do the highbrows in this thread think they would make more money?

I have to say I find it hard to justify to myself to buy anything nowadays, I cant be bothered with internet buying the only way I would buy is directly. Also I live in Australia.

The last thing I bought was space hulk..

I think if prices were 20% lower I would make new armies again.

Shaman wrote:If GW lowered its prices say 20% do the highbrows in this thread think they would make more money?

IMO, no.

GW is banking on the idea that demand for their product is essentially inelastic, which means that (within reason), the demand for their product does not directly correlate to price. A 20% price reduction reduces revenues by 20%, but devastates the profit margin. Price reductions also hurt retailers, who see their inventory drop in value overnight.

One thing to consider about price elasticity is that people regularly buy at GW stores and from the webstore, despite there being plenty of options at 20% off or more. Yes, a lot of that is due to convenience or gifts or whatnot, but some of it is simply not caring much about price.

Howard A Treesong wrote:Apocalypse was a great idea IMO. You suddenly encouraged people to buy masses of big vehicles and build huge armies simply by writing a game that told people to play with more figures. Forgeworld appears to have had a huge boost from Apocalypse and that's what they need to support.

All that's missing from the Apocalypse cycle now is a Jervis article in White Dwarf proclaiming "What were we thinking" and "Too many unused options". You all know it's coming.

20% off the price wouldn't bring me back. 20% onto the rules quality on the other hand...

Polonius wrote:

Shaman wrote:If GW lowered its prices say 20% do the highbrows in this thread think they would make more money?

IMO, no.

GW is banking on the idea that demand for their product is essentially inelastic, which means that (within reason), the demand for their product does not directly correlate to price. A 20% price reduction reduces revenues by 20%, but devastates the profit margin. Price reductions also hurt retailers, who see their inventory drop in value overnight.

One thing to consider about price elasticity is that people regularly buy at GW stores and from the webstore, despite there being plenty of options at 20% off or more. Yes, a lot of that is due to convenience or gifts or whatnot, but some of it is simply not caring much about price.

Polonius, I agree with your opinion about GW's belief about the average price (in)elasticity of their customers. I also believe (based on the evidence of declining sales volumes, and "real" revenues) that they are somewhat incorrect. And while I do believe an overnight 20% price reduction wouldn't increase their sales volume, I think that economic theory indicates that people's price elasticity tends to be asymetric. In otherwords people react with one level of sensitivity to a price decrease, and with an other level of sensitivity to an increase. In other words an increase in price of X% may have a greater effect than a decrease of a similar magnitude. So I don't believe cutting their prices would improve things for them much, but I do believe increasing prices at rates >RPI are having an adverse effect on their profitability.

My impression (based on the comments I have received from various individuals over the years who have worked at various levels within GW management) is that GW's price policy is based on dogma and the constant repetition of Tom Kirby's mantra of price inelasticity, rather than on any objective study of *real* customer behaviour.

@ Osbad: I think you might be right, but I've pretty much exhausted my economics knowledge.

I think one crucial factor is that for nearly all hobbyists, money isn't the limiting factor for GW purchases: it's time. I know there are a few guys who don't own anything unpainted, but nearly all of us have piles of product in various states of "not quite painted." GW could reduce the cost 80%, and I"m not going to buy that much more, as I'd never get around to painting it all.

Henners91 wrote:I know that there has been a drop in sales and apparently they had to close some stores in 2007... but a GW employee I talked to said they're opening new stores every year too... some also use LotR as a scapegoat; has GW made a profit from LotR? What kind of future does GW have? I had hoped someday to be able to teach my kiddies how to paint GW minis *sniffle* :<

LotR gets alot of blame becuase it covered up alot of flaws in GW that got exposed once the easy money from the license dried up. Its slightly unfair, but thats how it is.

Otherwise Kill has it mostly right.


Automatically Appended Next Post:

insaniak wrote:
The biggest one, at least so far as Apocalypse is concerned, is that the vets are the ones more likely to have the models to play.

That is of course, only one way to look at it. The other is that it will get folks to buy more money to play in the bigger games......

If you search for an Article called "Dare you roll the dice with Games Workshop" it's a nice report of their finances up to 28th July. I will quote a few of the handy parts:

"Today's results beat even the upgraded expectations that followed June's trading statement. Full-year revenue for the year ended 31 May was £126m, up 14%, while pretax profits were £7.5m compared to 2008's £1m. After tax, diluted earnings per share came in at 17.4p, compared to a loss of 2.4p. True, growth was helped by sterling weakness, which offset poor sales in continental Europe; currency moves accounted for around £0.5m of the profits before royalty income, or almost 10%. Meanwhile, those royalties payments doubled to £3.5m, massively improving profits and cashflow.
Rather than using this cash to reinstate the dividend it axed last year however, the company has massively reduced its debt, from over £10m to just £1.6m."

"There was a net increase of 21 such stores to 355 worldwide in the past 12 months, up from 324, but those figures hide a lot of shuffling.
In North America, Games Workshop has been closing stores in malls where the opening hours don't suit it, and where costs are higher. Strip mall stores are cheaper, and presumably enable its hobby centres to open late or at weekends to host impromptu games for fans."

The biggest problem with GW imo, is not a matter of price, though the increases do sting. To me it is the shoddy support they grant to their own product. The length of time in which they leave rules unFAQ'd or broken is absurd. It has always felt to me as if GW lives in their own little bubble world where only they and their employees exist. Honestly I feel that if they had even one big competitor that simply outdid them in service, support, etc... GW would crumble like a house of cards.

Shaman wrote:If GW lowered its prices say 20% do the highbrows in this thread think they would make more money?

Absolutely not.

GW would, however, suffer huge losses for doing so. The best GW can do for the people in this thread is to hold prices steady for 2 or 3 years.

However, as GW probably does make plenty of money off people who'd buy at twice the price (and aren't on this thread, because they could care less how much GW charges), they're doing just fine with their increasing price / lower volume model.

And while Osbad's volume shipment numbers are nice, GW would be happy to sell one unit at a billion dollars. GW is clearly happier moving less product for more money - they're no longer interested in carpetbombing the world with their product. The sheer volume of product out there encourages lower-price resale that GW doesn't get a piece of. Same with metal.

GW is moving to a single-owner model for their IP, just like every other IP producer in the world. GW does this via extensive use of somewhat less-expensive plastics that are a PITA to strip and prep for repaint, and by increasing prices. GW gets the same per-capita spend out of their core customer base, for less product, leaving less product available for resale to new / existing customers.

Like it or not, we're not GW's target demographic.

JohnHwangDD wrote:

GW is moving to a single-owner model for their IP, just like every other IP producer in the world. GW does this via extensive use of somewhat less-expensive plastics that are a PITA to strip and prep for repaint, and by increasing prices. GW gets the same per-capita spend out of their core customer base, for less product, leaving less product available for resale to new / existing customers.

Like it or not, we're not GW's target demographic.

I suggested in a thread a number of months back that GW was trying to put the crimp on people buying used, and I was pretty roundly accused of paranoia. http://www.dakkadakka.com/dakkaforum/posts/list/244994.page

To be fair, you had my back there too.

Novice gamers are unlikely to buy used.

Vets have the skills and knowledge to buy used, strip them and fix them up nicely.

But the hoards of novice gamers will sell their used when they eventually jump ship.

If you search for an Article called "Dare you roll the dice with Games Workshop" it's a nice report of their finances up to 28th July. I will quote a few of the handy parts:

"Today's results beat even the upgraded expectations that followed June's trading statement. Full-year revenue for the year ended 31 May was £126m, up 14%, while pretax profits were £7.5m compared to 2008's £1m. After tax, diluted earnings per share came in at 17.4p, compared to a loss of 2.4p. True, growth was helped by sterling weakness, which offset poor sales in continental Europe; currency moves accounted for around £0.5m of the profits before royalty income, or almost 10%. Meanwhile, those royalties payments doubled to £3.5m, massively improving profits and cashflow.
Rather than using this cash to reinstate the dividend it axed last year however, the company has massively reduced its debt, from over £10m to just £1.6m."

"There was a net increase of 21 such stores to 355 worldwide in the past 12 months, up from 324, but those figures hide a lot of shuffling.
In North America, Games Workshop has been closing stores in malls where the opening hours don't suit it, and where costs are higher. Strip mall stores are cheaper, and presumably enable its hobby centres to open late or at weekends to host impromptu games for fans

This is the only post with real information. Thanks for the link.

The pay down of debt is huge. The fact they don't need to compete today for shareholders demanding a dividend is also a bonus. I think a lot of companies that sell a non necessary product in a globel recessionary environment would like to be building a foundation such as this.

I am excited to see how they turn that capital toward their games. Either in quicker production cycles or enhanced production methods.

and the new plastics do have major problems in quality that GW i feel isnt adressing

Man, please elaborate.

I must be missing something b/c I think their plastics are great. I continue to buy stuff out of most of fantasy release over the last 24 months. Chaos Warriors (knights), Chaos Daemons (blood letters), Skaven (clan rats/Screaming Bell), Vampire Counts (plauge cart), Lizard men (Stegadon). I just don't see poor quality. They fit together like a glove and paint up like a dream. Are they as complicated as say a Gundan, no but they are not for "expert" modelers.

I myself started painting mini's with the old school lead battletech models. After you have painted a nice lead mini, nothing seems to hold the paint or show it off quite as well. Then again I was a little kid at the time, so maybe that is just the fog of fond memories.