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According to the publicly available GW financial report published on their investor information page, the company has suffered a 26% reduction in revenue since year end 2004.

2004 Gross Revenue: 151,775 Profit:19,855
2007 Gross Revenue: 111,483 Loss: 2,075 ( includes 4,028 one time cost reduction program )

http://investor.games-workshop.com/latest_results/Results2007/full_year/fiveyear.aspx

I had heard the numerous statments that GW is not doing well, but at least for me, this really drove it home. The difference in just 3 years seems dramatic to me.

As a fan of GW products ( if not perhaps all of their business practices ) I wonder what, if anything, this means for the fans of the warhammer world? I am neither an investment banker nor an industry expert, but I wonder what this might mean for the future of the company and our hobby.

Im submiting this more to see what the thoughts of the community are than anything else.

So, in short, do we care? If so what does it mean for us?

On the plus side, despite rapidly falling revenue they have managed to reduce costs significantly during a period of rising inflation so they are in good shape for high profitability if they can grow sales (and revenues.)

I'm not sure that this will have a direct effect on most gamers. Sales ebb and flow. The decline could be as much based on the rise of MMO games and money going to the 7th generation consoles as it is on GW's policies.

Revenue is still higher than it was in the 1990's (even post-inflation). GW is just a bit too bloated. The cut backs to the retail network won't effect most gamers though (aside from the ones going to those particular stores).

GW certainly doesn't want this trend to continue, but from a hobbyist's perspective, their year-to-year results are pretty much irrelevant.

Furthermore the US economy is in bad shape now. I presume that sales in the United States account for a large amount of the total sales of GW product. I would imagine entertainment would be the first to be hit.

It makes sense they'd make more money early in an edition's life cycle. Selling the new 4th ed core rule books, along with C: SM and an increase in model sales that come with it, in 2004 certainly accounts for some of this. And sales naturally taper until you give a reason to buy something new/more. What would concern me more is that 2007 is so much less than 2003, not 2004, in terms of both revenue and profit. And makes me wonder what factors caused 2003 to be good for them.

2003 = Return of the King

The Lord Of The Rings films have been and gone and the extra sales Games Workshop got from that have more or less dried up. Profits soared during the Lord Of The Rings craze and now they have gone back down again. No surprise. Also the world economy hasn't been that brilliant this year compared to a few years ago, so people will be spending less.

What effect will this have on the hobby? In the short run, nothing. Large companies can afford to ride out bad times. In the long run, were this to continue (and I don't think it will) Games Workshop would possibly seek to keep costs down by opening less stores and selling more through other vendors.

Its not like they are going under. Heck after warhammer online is released they will have huge profits flowing in, at a cost of nothing to them, simply for permission to use their IP. Wait till warhammer 40k online is complete, even if its only decent, a 40k mmo would be like printing money.

Orock wrote:Its not like they are going under. Heck after warhammer online is released they will have huge profits flowing in, at a cost of nothing to them, simply for permission to use their IP. Wait till warhammer 40k online is complete, even if its only decent, a 40k mmo would be like printing money.

Im hopefull that the MMO can inject some cash for them to stabilize, and the 4m they spent on cost cutting should have a double positve on next years numbers.

"It makes sense they'd make more money early in an edition's life cycle. Selling the new 4th ed core rule books, along with C: SM and an increase in model sales that come with it, in 2004 certainly accounts for some of this"

and big surprise they are suddenly talking about 5th Edition this summer.

Year to year accounting profit doesn't mean a whole lot. Long term return on investment is the key, and the best indicators of that are sales growth and growth in overheads and direct costs.

They bloat in costs seems to have been largely brought under control, so this is one argument in GW's favour.

However, but they've now had three years of negative sales growth (although the decline seems to have tapered off). This is a very serious issue and one GW is most likely printing reams of paper discussing the problem. But all we've got to go on is a yearly gross sales figures, and detailed line by line, model by model analysis is needed to know the exact nature of the problem.

Yeah, 5th ed. sales should help. If not, let's remember that hobbies with much smaller corporations behind them have to rely upon (gasp!) fan support rather than corporate directives. If profits go way down, extras like the GT system might get trimmed, but maybe more Adepticon-style indy GTs will fill the breach.

stecal wrote:"It makes sense they'd make more money early in an edition's life cycle. Selling the new 4th ed core rule books, along with C: SM and an increase in model sales that come with it, in 2004 certainly accounts for some of this"

and big surprise they are suddenly talking about 5th Edition this summer.

Frankly I think it has more to do with 4th ed being the suckiest edition so far as opposed to a last ditch effort to rejuvinate the company.

GW's accounts have been out since July 07 so this isn't news, but its still interesting!

A good while back I came across an analysis of GW's P&L A/c (Note this excludes the "Exceptional Costs" (approx £4m) related to the downsizing in 2007.)



Doesn't make healthy reading and explains why Kirby had to step down as CEO last month (he's still there as Chairman though). The "LotR bubble ended late 2004, since then the decline in sales has pretty much all been related to WFB and 40k sales levels reducing as LotR sales have (allegedly) held steady at around 10% for the last couple of years. 4th edition in '04 and

The interim financial results (6 months to November 07) will be published on 22nd January and that should be interesting as these will incluyde further redundancy and other exceptional costs, but will also give some initial idea about the real impact Apocalypse has had on sales.

The Share Price has been tumbling like Topsy since the summer, so expectations aren't mega:

I assume that PAT means Profit After Tax (that is, final profits with no further deductions to be made.)

If true, what surprises me is how little the PAT grew during the boom years 2000 to 2004. Clearly their costs grew as fast as their turnover, which may reflect a high licence fee for the LoTR in which case the entire LoTR "boom" may be seen as a boondoggle which superficially made the company look good for a few years through vastly increased turnover, but in the end has added nothing of any lasting value to their customer base.

Expect a few more store closings, a few more closing down sales, and a few more GW fanboys to start working for burger king.

Hope they can speed up this new and improved buisness model for fixing the game soon.

They know what they need to do to fix it, thier just too stupid to do it.

I for one will be anxious to see what apoc and all of the subsiquent releases did for thier number in the final quater of 07. It had to be good for them across the board.

Kilkrazy wrote:I assume that PAT means Profit After Tax (that is, final profits with no further deductions to be made.)

If true, what surprises me is how little the PAT grew during the boom years 2000 to 2004. Clearly their costs grew as fast as their turnover, which may reflect a high licence fee for the LoTR in which case the entire LoTR "boom" may be seen as a boondoggle which superficially made the company look good for a few years through vastly increased turnover, but in the end has added nothing of any lasting value to their customer base.

They spent like drunk sailors during the boom years upgrading and adding stores. The changes don't seem to have had a positive impact on thier sales.

I think they've actually lost many fans. I know many of my old school mates still play but can't afford to collect anymore due to the price increases over the last few years. They're not huge but reemebering that most of the buyers tend to be the younger generations and dare I say students, a £2 increase on a common boxed set DOES mean the difference between starting a new army or making do with the old models you already have.

Also they should make better use of the 'hobby centres' they have. Most people use it as a shop and those that use it as the hobby centre GW say it is tend to be from a small group and the same regular faces. I know the smell puts many people off (another debate). To get more people in they should maybe start more regional events. Last year Birminghams GW ran thier own painting competition and it wasn't the bussiest I've seen the store but it definatly was busy and also had a good atmosphere. It would also be a good lead up to golden Demon as a 'practise run' for some and also give people a target to aim at. I definatly do more building/painting and concepquently buying when I know there's a good event coming up. Many can't afford the grand tournys but why not have more in store? It would need thinking out and may have many problems but I think it's the way to go.

Orock wrote:

stecal wrote:"It makes sense they'd make more money early in an edition's life cycle. Selling the new 4th ed core rule books, along with C: SM and an increase in model sales that come with it, in 2004 certainly accounts for some of this"

and big surprise they are suddenly talking about 5th Edition this summer.

Frankly I think it has more to do with 4th ed being the suckiest edition so far as opposed to a last ditch effort to rejuvinate the company.

Little bit of stack a and a little bit of stack b I think.

covenant84 wrote:I think they've actually lost many fans. I know many of my old school mates still play but can't afford to collect anymore due to the price increases over the last few years. They're not huge but reemebering that most of the buyers tend to be the younger generations and dare I say students, a £2 increase on a common boxed set DOES mean the difference between starting a new army or making do with the old models you already have.

Also they should make better use of the 'hobby centres' they have. Most people use it as a shop and those that use it as the hobby centre GW say it is tend to be from a small group and the same regular faces. I know the smell puts many people off (another debate). To get more people in they should maybe start more regional events. Last year Birminghams GW ran thier own painting competition and it wasn't the bussiest I've seen the store but it definatly was busy and also had a good atmosphere. It would also be a good lead up to golden Demon as a 'practise run' for some and also give people a target to aim at. I definatly do more building/painting and concepquently buying when I know there's a good event coming up. Many can't afford the grand tournys but why not have more in store? It would need thinking out and may have many problems but I think it's the way to go.

I agree, more than one person I used to play regularly with left after model prices started going up. I understand inflation, but it's tough to be a college student and shell out $50 for a box of Terminators, when it's either that or eat for a week.
I also agree with holding events at a particular store. I guess that takes some imagination.