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.

Just been completing my usual monthly trawl through the markets for reports, and it struck me again what a great time it is to be in business for the likes of GW and PP. Anyone creating and selling metal models to be honest.

Look at 3 key components of the supply chain.

1/ Tin prices. Back in May they were around $25k/tonne. Now they are down around $10k/tonne. A reduction of 60%.


2/ Delivery costs. Back in July, crude oil peaked at over $140/barrel. Now it is down to the $40/barrel mark. A reduction of 70%.


3/ Everything else. In the UK (haven't got data for US I'm afraid, but I believe there is a very similar picture), RPI has plummeted from 5% in September to 3.1% in December, and is anticipate to go negative!


Now I know the miniatures business is more complex than just these factors and pricing is more demand-led than supply-led, but these factors were the precise ones quoted by PP as being behind their last price rises - GW in October and PP a few months earlier.

So, I'm thinking what's sauce for the goose is sauce for the gander!

Of course GW and PP and the like will substantively reduce their prices when hell freezes over. But I think any attempts by them to increase prices again next year should be met with hoots of derision!

Very informative. Thanks for the info.

But... but... isn't there another half to the equasion?

Supply and ... something... defilers? devestators? I know it's a D word...

You forgot one key indicator-demand. There's a reason the commodity prices have fallen through the floor. We've already seen two toy manufacturers hit the skids in the last month with distressed debt and a Ch 11.

Arghh...KK beat me to it. Curse you demon!

I'm just glad GW had to tighten it's belt before all this began.

I dread to think what would have happened if they'd continued being bullish about their shape!

Demand will always be there for this sort of stuff. It may sound daft, but it's so niche, there is a constant customer base, and as most Games Companies (not model makers though) tend to provide for their own, and they alone do it, if you want to be part of that niche, you'll buy their stuff.

This is slightly rambling. I'll see if I can make my thoughts more cohesive later. Sorry.

Respectfully, I disagree MDG.

The demand drivers are tween/teen and old farts.

1. Tween/teens are having their budgets limited now. The price point for gaming is quite high compared to other options.

2. Old farts can always play with their existing toy soldiers.

Does this mean even more metal toy soldiers that fall apart unless you built an entire superstructure between each piece and still have to use multiple layers of superglue?

Reeto! I think I have sufficiently ordered my thoughts to get my point across!

When it comes to companies like PP, GW and even Rackham, they have a rare advantage in the world of hobbies and pastimes.

Consider other hobbies, which have similar if not higher costs involved, like Fishing (that equipment is pricey!) etc. For a budding enthusiast, there is a wide choice of make and model to choose from, varying quite a lot in price. Thus, when times are hard, the cheaper manufacturers can win out, simply by dint of not being as expensive as the rest.

BUT, when it comes to GW, PP, Rackham etc....well, if you want to play the games they write, you typically need to buy their models. At least, this is true of the majority of their players. Older, more experienced players are of course aware of the various alternatives out there which cost less money. And yet, most gamers will keep with the 'correct' model range. Thus, these manufacturers in particular could be seen to be relatively recession proof.

As Osbad correctly points out, this isn't to say the various players of these systems will be able, or indeed willing, to maintain the spending habits of the past. However, most gamers I know still have a sort of minimum spend, which they commit to in the interests of keeping their hand in. And this is where the manufacturers will win or lose. It is up to them to tempt the money from our wallets with lovely new models, and even updated rulebooks.

The trick is to kick off the vicious circle arms race. How so? Lets look at the most contentious book recently released, Codex Orks. Regardless of your opinion as to just how powerful the book is, I think we can all agree this was a master stroke of marketing. Not only did GW arranged a fantastic raft of models, but the book made the previously 'meh' Horde approach suddenly work. Now, this in itself is good enough. Lots of long term Ork players invested heavily in the spanky new models, all generating cash. But the sudden success of Horde Forces totally changed the Metagame. Suddenly, people needed to invest in anti-infantry rather than anti-armour.

And so the vicious circle arms race is rocking. In order to keep up, it is advisable (though not necessarily essential) to constantly expand your force. Units previously maligned and written off by some as 'sub optimal' (hate that expression. Smacks of someone taking it all too seriously, but I digress) are suddenly de rigeur, as they happen to be rather tasty at taking out the previously rare horde of lightly armoured troops....

So essentially, for the likes of GW, PP and Rackham (sorry I used a purely GW example, I'm not familiar enough with the other two to do similar) it's less about new business, or maintaining loyalty (though this can be a factor, see below) as encouraging the existing players to commit to a higher level of maintenance spending!

As to loyalty... The only risk for GW is of course the fact that, although model prices are much of a muchness, their competitors offer games with a lower model count. The main advantage here of course is GW's sheer size and popuarity. PP might well offer nice models and pleasent enough rules, but if no one else I know plays, I will think twice about starting it up... Same goes for other manufacturers. I feel it is the gaming community that ensures continued customer loyalty. Unless you can convince 3 or 4 others to take the jump with you, you are more likely to just start a new force for the most popular local game to get your variety.

Peter Pig, Battlefront, Heresy and probably a few others also raised their prices due to increased costs of metal and such.

I wonder if any manufacturers would allow me to send them lead bits from my bits box to offset the costs?

George Spiggott wrote:Peter Pig, Battlefront, Heresy and probably a few others also raised their prices due to increased metal costs of metal and such.?

And there we get to the root of my post. Manufacturers pleaded poverty and increasing costs in justification of increased prices to the public. Not just GW and PP, all of them. And of course that was fair enough.

However, if they claim those causes for increasing their prices, when those causes evaporate overnight that leaves very little justification for those cost rises. They can't have it both ways - either it was the cause of the price rises, and therefore must be a cause of future price falls all else being equal - simple logic. Or were they lying? I don't believe they were - material costs were indeed at unprecedented levels, so they seemed to be left with little option at the time as no one could forsee the subsequent price falls.

Now, if there are new reasons for keeping their prices high - such as unprecedented demand, then lets have them. The indications are from rumours "in the trade" that here are challenges certainly, any many anecdotal comments about problems being faced by various individual stores. But there isn't anywhere near the financial armageddon that there has been in the rest of the retail world. And even if there were, a REDUCTION in demand means that suppliers are forced to decrease their prices in order to sustain output. Elementary first year O' level economic theory is that. Look at what happened on the UK High Streets around Christmas, when there were massive sales - even M&S had a 20% price reduction in the run up to Christmas - never happened before, ever!

And wage costs aren't rising very fast either, to answer the earlier poster. Over the next 12 months they are expected to be pretty static, and I would be amazed if there is any significant rise in the minimum wage this year. Nothing beyond 1% in the UK, and maybe nothing at all in the US.

So if material costs have fallen by 60%, delivery costs by 70% and wages are static, and all set to stay that way, why aren't prices coming back down again?

Clearly demand is holding up and producers don't feel any need to reduce prices to sustain output.

Which means I don't think there has been a better time for a company to be in the toy soldier business.

If GW, PP and the rest can't post bumper profit this year under these conditions, then they deserve a beating by their shareholders!

Of course I'm not naive enough to believe any of them will actually decrease their prices unless demand whithers in the teeth of the worst recession for 70 years...

Interesting times. No coincidence that in a falling stock market, GW's share price has risen steadily since their publication of positive financial results last month.

Mad Doc Grotsnik wrote:The trick is to kick off the vicious circle arms race. How so? Lets look at the most contentious book recently released, Codex Orks.

IMO, the thing that kicked things off wasn't Orks, so much as Apoc. There is a *lot* of spend tied to Apoc, far more than just Orks would generate. In a Tournament context, Orks causes people to change a couple units around, maybe buy some new heavy weapons. This is probably doable with <$100 for the average army, and easily fits in the standard annual maintenance budget.

But Apoc? People are filling out Datasheets, precisely because those Datasheets exist. It's easy to drop $100+ at a time on a new Superheavy or Squadron. And to keep going, because there's no FOC or points limit to put a stop to things. When you get right down to it, Apoc is the finest money-making machine GW has ever devised.

No, true.

But Codex Orks was purely as an example. Change the metagame, and people upgun to meet said change (or they just pointlessly whinge online it seems).

Apocalypse has indeed worked wonder for GW. Perhaps it's because the games can now fit the imagery in peoples head better. Sure, Epic did that as well, but the scale prevented, well, the sheer scale coming across.

And I am willing to wager that given I've only heard positive things about it (barring those who will always be negative about LotR for some unknown reason, though sheer snobbery is a good guess) War Of The Ring promises to be another good move.

My only question is where is the Fantasy one :(

Oh, I'm sure LotR WotR will be a *huge* money-maker for GW. No doubt about that. It probably won't be Apoc huge, but I wouldn't be at all surprised to see LotR easily overshadows Fantasy sales for the year.

Fantasy, I don't know what's up there. My sense is that the scalable FOC that they currently have, along with the long-established focus on 2000-pt tournament-style games has lead to a certain stagnation in the very concept of army expansion.

Mad Doc Grotsnik wrote:My only question is where is the Fantasy one :(

Didn't they do something a year or so back in WD? It looked very much as if it was a WFB version of Apoc that they didn't think was worth publishing on its own.

IIRC the kind of reviews I heard of the article were "What's the point, if you want to play really big battles the existing rules will accommodate them OK anyhow."

My guess is the staff felt the same so didn't pursue the idea beyond an early level.

Anyone got any idea how GW stock is going? I stopped paying attention about five months ago, and absolutely everything has changed since then...

Wouldn't mind seeing a graph of that.

No probs:

http://www.lse.co.uk/ShareChart.asp?sharechart=GAW&share=GAMES_WORKSHOP_GROUP_PLC_ORD_5P

With regard to the Fantasy Big Game...

The White Dwarf article was a good start of course, and as Osbad pointed out, the game already scales pretty well, and as I think we can all appreciate, the addition of Superheavies etc seems somewhat unlikely.

However, I'd like to see the Legendary Battles expanded upon in the following way. Essentially, just a book of the more Legendary characters from the background, personalities like Nagash and Sigmar who would be ridiculously hard in a normal game. Also, perhaps Legendary Regiments, whose presence affects other friendly units. As for Magic, we all know a single Wizard working on his own can do nasty things, but what about Sorcerous Covens? Combined spells which can do all sorts of horrors.

There is scope there for a product. Perhaps not on the sheer scale of Apocalypse, but there are thing which can be explored. Perhaps even set piece legendary battles?

As you said the game scales pretty well, they don't need it. What they should do with warhammer is update siege, there's scope for models there. When it came originally (99 i think?) I remember the castle pieces sold like mad.

Mad Doc Grotsnik wrote:With regard to the Fantasy Big Game...

The White Dwarf article was a good start of course, and as Osbad pointed out, the game already scales pretty well, and as I think we can all appreciate, the addition of Superheavies etc seems somewhat unlikely.

However, I'd like to see the Legendary Battles expanded upon in the following way. Essentially, just a book of the more Legendary characters from the background, personalities like Nagash and Sigmar who would be ridiculously hard in a normal game. Also, perhaps Legendary Regiments, whose presence affects other friendly units. As for Magic, we all know a single Wizard working on his own can do nasty things, but what about Sorcerous Covens? Combined spells which can do all sorts of horrors.

There is scope there for a product. Perhaps not on the sheer scale of Apocalypse, but there are thing which can be explored. Perhaps even set piece legendary battles?

They gave us "Weapon and Monster Batteries" for formations. I think that's about it.

Mad Doc Grotsnik wrote:...the game already scales pretty well, and as I think we can all appreciate, the addition of Superheavies etc seems somewhat unlikely.

This is a bit out of my area but wouldn't the old Emperor Dragon or some such super-monster fit in here. Do Orks have Squiggoths (minus the guns) in fantasy? You could just make unit sizes and rank bonus open ended.

With regards to the OP, credit is a huge issue, especially with the considerable decline in consumer demand and low retail volume.

Plus, large consumers are almost always working off of some sort of long term contract. You would be an incredibly ballsy and also lucky manufacturer if you purchased all of your basic materials on a spot market. If they happen to be on the other extreme (which is unlikely) of only taking delivery once a year according to seasonal lows (if such a thing exists within metals trade, I honestly don't know), their PNL could still be based off of July pricing.

Let's say GW averages a basic materials bought position of 6 months. Metals prices didn't really nosedive until late September, so realistically they wouldn't be capitalizing on the new price ceiling until next month, which is a typical retail lull after the big holiday rushes (that has been further intensified by the recession).

If they took a beating during those interim months, their credit situation might be very poor. The result would be the closing of a few less successful stores thereby reducing their market share (although I'd suspect other businesses within the industry would also be closing so it could be a wash) and inability to increase expenditure, so they'd probably have to buy roughly the same amount of raw material and use the extra cash to perform financial fire fighting.

In my inexpert opinion, low raw material costs probably contributed to why stock prices rallied mid January, but until the recession ends (and metal prices rally as a result) demand should be at a historical low alongside the rest of the higher end retail industry.

Check the other thread with Scrappman posting in it; a GW store has to average something like 2 new hobbyists a day to meet its sales target. There is no way that the current economy is creating enough disposable income to keep the 'tween allowance high enough, the late teen financially independent enough, or the 20-30 something financially stable enough to keep that going.

To answer the last post: It seems these days that GW is cash-generative. It has paid off a significant amount of the debt incurred a couple of years back, so I can't see any evidence of problems with its bankers. GW aren't seeking any capital injections at the moment so the "credit crunch" shouldn't have a significant impact on them other than perhaps a beneficial one on depressing the rate of interest they may be paying. There is no evidence that GW are having problems keeping their "lines of credit" clear.

GW's historic problems stem entirely from demand issues. Over the period 2001-2007 GW were struggling to attract new players to 40k and WFB. Their results seem to show that they have turned a corner in that regard due to (presumably) 5th edition and Apoc. The trick will be continuing that trend. Have they abandoned their tendence to take their customers for granted. Are they learning to respond to what customers actually want in terms of rules design and model kits, or will they revert back to the isolationism which saw them increasingly estranged from their fan base? Will they mistake the good (for them) economic times as the results of their own endeavour or will they lose their "fat and lazy" approach to marketing which resulted back in the mistakes of the early 2000's?

Will the recession affect demand? It really is hard to tell. There is a lot of hard evidence that tabletop games as a market sector is *relatively* safe in bad economic times. Notwithstanding a lot of anecdotal evidence of individual hardship, at times like these people spend more on "cheap" and "escapist" hobbies - such as wargaming (and as a hobby wargaming can be cheap: £20 is a low individual purchase for any hobby - and pence per hour (as MDG has proved) the GW hobby *can* be a lot more cost effective than many alternatives - such as going to the movies or buying a new video gaming console, say.

Remember the venerable boardgame "Monopoly"? That was invented and released in the midst of the Great Depression! And to quote the editorial from The Dragon issue 54, and issue released in early 1981 at the height of the deepest recession since the 1930's.

Jake Jaquet wrote:Looking back over the happenings of 1981 as they relate to games and gaming makes one forcefully aware of the growth and evolution of the hobby. New game titles are appearing on the market with ever-increasing frequency. Supplements, play aids, and accessories to existing games have become almost a market unto themselves. A recent listing in one of the trade magazines showed over 60 different companies now making books and magazines on games. For a year that also exhibited a frightfully high unemployment rate, outrageous interest rates, and an overall depressed economy, the expanding industry of hobby gaming nearly defies logic and reason (did I hear someone mention the word “fantasy?”) itself.

There are real reasons for the growth of the gaming industry in the midst of a depressed economy. As an individual’s spendable income “shrinks,” he becomes very conscious of the value of any given purchase — measuring value in terms other than simply monetary cost. History bears this out: During the depression of the 1930’s an individual’s entertainment budget had one of the lowest priorities, and any money so spent had to bring the highest possible return in value. Motion pictures, spectator sports, and the like had a relatively low value; while the event may have been very enjoyable (another measure of value), when it was over, it was over. The money was gone, leaving only an intangible memory. Games, on the other hand, were not only enjoyable, but were tangible items, and could be used again and again by the purchaser and his fellow players.

I for one really hope they learn from their mistakes, stop blaming other things for their problems (the "LotR bubble", competition from computer games, the price of tin, the recession, the weather, their horrible customers who just don't get it and are "in the wrong hobby") and really see that there is a strong fan base who are prepared to buy stuff from them in large quantities, if only they create a product of sufficient quality. And they allow the customers to determine what "quality" is rather than relying solely on their own internal, random ideas generated in the Lenton ivory tower.

Correct me if I'm wrong here Osbad, but doesn't everyone accept that this sharp drop in prices for these commodities is only temporary. As soon as the economy settles down these prices should jump right back up, if not higher. Now sure the recession could last years, but no one knows that absolutely for sure right now.

It would seem to me to be suicide on their part to slash the prices on their models at this point, especially since for all the current metal they have in stock right now they paid those extremely high prices for (although to be honest I have no idea how long it takes from purchasing the raw materials to get into a customer's hands, but I'd imagine its probably like 6 months).

I would think that MAYBE if the prices continue to bottom out for like another year these companies would consider lowering their prices, but even then it would kind of be a risky move since they would just have to pop the prices right back up again when the global economy recovers.

Yeah, demand. Consumers of these products have relatively higher disposable income. Few mortgages to worry about, little savings. Just money to spend on their hobby. Stuck in doors, don't want to splash out on anything big, nothing to do? Entertain yourself at home with cheap supermarket beer, take out pizza, DVD's, console games and little plastic and metal models. All areas that are not being affected by the crunch.

Add a little escapism from life's depressing news and you're onto a winner. No need to cut prices.

yakface wrote:
Correct me if I'm wrong here Osbad, but doesn't everyone accept that this sharp drop in prices for these commodities is only temporary. As soon as the economy settles down these prices should jump right back up, if not higher. Now sure the recession could last years, but no one knows that absolutely for sure right now.

It would seem to me to be suicide on their part to slash the prices on their models at this point, especially since for all the current metal they have in stock right now they paid those extremely high prices for (although to be honest I have no idea how long it takes from purchasing the raw materials to get into a customer's hands, but I'd imagine its probably like 6 months).

I would think that MAYBE if the prices continue to bottom out for like another year these companies would consider lowering their prices, but even then it would kind of be a risky move since they would just have to pop the prices right back up again when the global economy recovers.

I think you have a good point there. No one knows how long commodity prices will remain low. Personally I think the recession will become a depression and commodity prices will remain relatively low for some time - maybe years. At least as long as it takes the US to pay off its bail-out deficit anyhow. But that's just my opinion. The truth is no one really knows at all. The recession could bottom out next month, next year, next decade, or indeed never. I've heard pundits push all these scenarios, and more. COmmodity pricing is more erratic than many financial markets - and is all about betting/speculation on future events which may or may not happen. There is no right answer until its too late. Back in March speculators were betting that the boom market in metals would never end. Now the "collective market wisdom" (which is a doublespeak term if ever I heard one) is that the depression will never end. Somewhere between the two extreme views lies the truth. If I know precisely there I wouldn't be wasting my time posting on a forum, I'd be out making a mint on the commodities markets!

And so GW (and the rest) are right to be cautious of lowering prices (which as I said above, I don't think they will do) because they might well start going up again.

The truth is though that commodity prices have indeed halted and reversed their spectactular rise into the stratosphere, and so even if they think prices will rise in future, a company the size of GW or PP can lock in futures deals now that safeguard their metals prices at low levels for a good long period - years even. Enough to satisfy their own production needs for the forseeable future. Shoot, if the worst came to the worst, they could stick a billion tonnes of tin in the back lot at Lenton, and sit on it for a decade if they wanted to. They of course will have more sophisticated means of doing it of course, but the result should be the same

Of course they can't do much about oil prices, but still, we all know how much GW Direct already gouge on shipping charges....

Also, of course, metals prices are only a small fraction of the total cost of the model. But by their own admission, GW and PP cited increases in metals costs as the largest factor in their price rises last year (GW's were around 20% IIRC for metals), and that reason has now evaporated. Unless of course they locked themselves into long term deals back when the market was at its peak! GW and PP can't seek to have it both ways - either the short term peak of commodity prices which has now disappeared for as long as GW want to fix a futures contract for, or they were lying to us about how much that peak impacted on their cost base. One or the other must be the case. Not both.

And I reiterate. I expect GW not to pass on those cost saving to us, but to trouser them instead, justifying this as "defending their margins" (by which they mean the simple capitalist notion of selling something for as much more as you have paid for it as it is physically possible to do). I think the best we can hope for is no rise in metals prices for 18 months or so. But then I could be wrong. I didn't believe GW would pass on the VAT saving in December either, and they proved me wrong there. GW is nothing if not unpredictable!

The Vat cut (mmm! All 2.5% of it! Thanks Gord!) thing though was also a matter of customer perspective.

If it wasn't passed on...you'd be seen to be a greedy swine. As happened in my previous job, where they only made a 2% cut. Client picked up on it and kicked up a fuss, mentioning they worked in a bank so they know how to do figures. Salesman politely asked if her Bank always passed on Interest Rate Cuts.....Yeah. Point made.

Somehow I don't think manufacturers would agree.
While it sounds great in principle I think if you did
a survey of figure companies,they'd probably tell you
that they've had to cut back in production/staff and
some of them have if they are lucky a second job.
I worked for a resin model manufacturer and the resin
supplier upped their prices 4 times before and during
the fuel crisis!As far as I know their prices are still
at that level,regardless the drop in oil price.(oil is
used in resin production)Also you'd better believe there wil
be a ridiculous price hike when the slightest hint of a
recovery appears!

Slipstream wrote:Somehow I don't think manufacturers would agree.
While it sounds great in principle I think if you did
a survey of figure companies,they'd probably tell you
that they've had to cut back in production/staff and
some of them have if they are lucky a second job.
I worked for a resin model manufacturer and the resin
supplier upped their prices 4 times before and during
the fuel crisis!As far as I know their prices are still
at that level,regardless the drop in oil price.(oil is
used in resin production)Also you'd better believe there wil
be a ridiculous price hike when the slightest hint of a
recovery appears!

So the resin manufacturer is coining it in? The principle still stands.

In times like these its the largest wallet that counts. Whoever's got the biggest clout with the bank gets the best deal.
So GW and PP will get better results than little one-man-band companies.