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.

lord_blackfang wrote:

Kroothawk wrote:
3.) Good thing that every GW store and Indy had to buy a completely new range of 145 colours (6 each -> 1300 € per store extra plus 4 new paint sets and a compendium) in April.

Just to clarify, Indies were in no way obligated to do this, nor were they forced to buy into the entire range at once.

Just to calrify, I know that here in the US the indy stockists had to purchase new rack and new paints in order to remain stockists. Failure to purchase their new rack and paints would result in loss of stockist status. Sure, they had the option not to buy it, but it meant losing what little prize support GW offered them for events, as well as free shipping on orders and the lower wholesale costs. And to boot, they were only allowed to send back $200 worth of the old paint for credit...

That's incredibly douchebag even by GW standards

UNCLEBADTOUCH wrote:That's incredibly douchebag even by GW standards

Just you wait.. the annual may/june price "adjustment" is right around the corner!

I honestly don't care if a company is making money (actually, I would hope that they are). What bothers me is the annual price increase. I took a two year break and was floored when I saw the current price for a battlewagon. $66 USD? I remember them being something like $42 about 3 years ago. There is no way these price increases reflect inflation. If they want to sell more, they shouldn't price people out of the hobby. From what I gather we even have it good here in the states, places like Australia have seen even more ridiculous numbers.

UNCLEBADTOUCH wrote:@elrabin GW is not succeeding despite falling revenue. It is failing because it is causing falling revenue.

If you adjust to take into account price rises, sales are falling for their retail chain.

As far as whether or not GW succeeds, does it really matter how their retail chain performs? GW is a manufacturer (and distributor) first, and a retailer second. Overall, sales revenue is up (even though volume may be lower).

GW uses their retail stores as a way to build their brand, advertise their products, and to separate themselves from other miniatures manufacturers. As long as that store gets more people into "the hobby," or encourages hobbyists to buy more GW products, it is doing its job.

UNCLEBADTOUCH wrote:Cost cutting, forgeworld and licensing revenue keep them profitable. Virtually 100% of the profit paid as dividend last time round came from licensing.

This is not a sustainable business model.

Why not?

First half of FY2012, GW paid out ~5.5m in dividends. They invested 4.3m on property, equipment, and product development. They are still sitting on 16m in cash, which is ~1.5m less than what they started with at the end of FY2011. Investors didn't fund GW with the intention of never seeing a return. GW is a mature, established company that invests heavily into itself for product development and manufacturing/distribution capability. How is this not sustainable?

I wonder what financial news would cause people to not freak out and bash GW? If GW makes more money, it's because management is advocating short-term profit instead of long-term growth and the company is going down the drain. If GW makes less money, it's because the company is going down the drain. This bias makes it very unlikely that anything productive will come out of conversations like this one.

I think that even though the prices are expensive, there are enough people interested to keep the hobby alive, even if they do go under, FLGS would still be open and gain more business and some wealthy person would start making models out of profit or love of the hobby.

Fetterkey wrote:I wonder what financial news would cause people to not freak out and bash GW? If GW makes more money, it's because management is advocating short-term profit instead of long-term growth and the company is going down the drain. If GW makes less money, it's because the company is going down the drain. This bias makes it very unlikely that anything productive will come out of conversations like this one.

Dakka advocates only utter contempt for GW. It may as well be in the rules.

DarknessEternal wrote:Dakka advocates only utter contempt for GW. It may as well be in the rules.

The opinions of some of Dakka's members are in no way representative of the site as a whole. The site has always had a spread of people who are quite vocal about their opinions both for and against GW's corporate attitude. There is no single 'Dakka' voice.

elrabin wrote:..... How is this not sustainable?

GW sales have been delining steadily for years now. GW may well be making a profit now but eventually they will reach a tipping point and their revenues will plummet. That is why GW's current situation is ultimately unsustainable. thats not to say that they are doomed of course but they need to do something, constant price rises and recycled core game editions simply aren't working.

Palindrome wrote:

elrabin wrote:..... How is this not sustainable?

GW sales have been delining steadily for years now. GW may well be making a profit now but eventually they will reach a tipping point and their revenues will plummet. That is why GW's current situation is ultimately unsustainable. thats not to say that they are doomed of course but they need to do something, constant price rises and recycled core game editions simply aren't working.

What do you suggest they do?

DarknessEternal wrote:

Fetterkey wrote:I wonder what financial news would cause people to not freak out and bash GW? If GW makes more money, it's because management is advocating short-term profit instead of long-term growth and the company is going down the drain. If GW makes less money, it's because the company is going down the drain. This bias makes it very unlikely that anything productive will come out of conversations like this one.

Dakka advocates only utter contempt for GW. It may as well be in the rules.

Ahh, internet hyperbole where would we be without it.

What I would suggest GW do is steadily decrease their prices and attempt to re-engage with the large number of people who have moved on from GW. They also really need to take a long hard look at the rules that they produce, producing products that aren't aimed at young teens would be a good start.

lord_blackfang wrote:

Kroothawk wrote:
3.) Good thing that every GW store and Indy had to buy a completely new range of 145 colours (6 each -> 1300 € per store extra plus 4 new paint sets and a compendium) in April.

Just to clarify, Indies were in no way obligated to do this, nor were they forced to buy into the entire range at once.

Not only that, but my FLGS said that GW is trying to buy all of his old paints from him.


Automatically Appended Next Post:

Ajroo wrote:

I'd rather they made money than folded, i bet 95% of the the GW hating moaning bitches would cry if they shut down.

I have some Warhams to sell you. My last army before I am folding on GW. Check out my auction here!


Automatically Appended Next Post:

elrabin wrote:

UNCLEBADTOUCH wrote:@elrabin GW is not succeeding despite falling revenue. It is failing because it is causing falling revenue.

If you adjust to take into account price rises, sales are falling for their retail chain.

As far as whether or not GW succeeds, does it really matter how their retail chain performs? GW is a manufacturer (and distributor) first, and a retailer second. Overall, sales revenue is up (even though volume may be lower).

GW uses their retail stores as a way to build their brand, advertise their products, and to separate themselves from other miniatures manufacturers. As long as that store gets more people into "the hobby," or encourages hobbyists to buy more GW products, it is doing its job.

Not sure I agree here. This is comparing a product that sells 100 units at $10 each moving to a model that sells 10 units at $100 each. The object is to get people into the hobby, not price them out of it. Sure, they may be profitable, but their consumer base also might have shrunk considerably. And to infer that having retail chains open convinces parents to buy a $100 game for little Timmy I think is a little naive.

Alpharius wrote:
What do you suggest they do?

I think that the entire GW business model should be based on pushing people into heaviliy supporting more than one army (ideally more than two). The company grew at it's fastest level when people were able to do this. Sure they were expanding naturally for many years and there was the LOTR bubble, but even so...

They are currently doing the exact opposite atm I believe through their pricing strategies.

I would say 'someone at GW must have run the numbers a couple of dozen times and reckon they make more money in the short, medium and long term the current way, but then this is GW...

I must be a case in point here. My real income has risen a lot since say 8 years ago, but I am spending less now than I was then! Edit. Actually I'm spending less and getting less.

puma713 wrote:[

Not sure I agree here. This is comparing a product that sells 100 units at $10 each moving to a model that sells 10 units at $100 each. The object is to get people into the hobby, not price them out of it. Sure, they may be profitable, but their consumer base also might have shrunk considerably. And to infer that having retail chains open convinces parents to buy a $100 game for little Timmy I think is a little naive.

Wargaming is very dependant upon networking effects, the more people there are who buy your products the wider your potential consumber base becomes. Selling less for more in such a situation simply makes no sense.

elrabin wrote:

Kroothawk wrote:
1.) Total revenue is flat or declining for years (not considering the 10% price hike per year, so total sales decline massively).

Looking at their annual reports....yes, revenue has not been steadily growing. However, In 2006/2007, GW downsized, and spent a lot on automated tooling equipment and software. This reduced their operating costs and has allowed them to increase profit with nearly flat revenue. Royalties have also been a boost to profit (especially this year with Space Marine).

The annual reports also show sales over time (though I don't believe they are adjusted for inflation). You can see that sales decreased from 2004-2007, but since then have been increasing.

For the first half of FY2012, GW has done very well compared to the same period last year, and are on track for a very good year.

Kroothawk wrote:2.) All net profit is given to the shareholders, a.o. Tom Kirby. Often more than total net profit, sometimes they loan money to pay shareholders. So the company is drained each year.

Tom Kirby owns only 6.7% of GW. Furthermore, it's the board's policy (stated multiple times in the annual reports) to pay out all surplus cash in the form of dividends. This is not an uncommon practice, as idle cash does nothing for the company. Given that they just overhauled their manufacturing facility in 2007, what else should they spend their cash on?

Your "facts" and "rational analysis" are not welcome here! Leave us to whinge and armchair-manage a business far in excess of the scale any of us will ever work for let alone run in peace(cue some numpty going "hupa-durr ima bajillionaire and donald trump wishes he wus me ino whut ima sayin")!

Seriously guys, everyone knows GW have made a few questionable decisions, everyone knows their price increases are often unreasonable, but can we stop with this "imma let you finish but GW have the most incompetent board of all time!" rubbish? Some of you are acting like they're bloody bankers.

darkdm wrote:Just to calrify, I know that here in the US the indy stockists had to purchase new rack and new paints in order to remain stockists. Failure to purchase their new rack and paints would result in loss of stockist status. Sure, they had the option not to buy it, but it meant losing what little prize support GW offered them for events, as well as free shipping on orders and the lower wholesale costs. And to boot, they were only allowed to send back $200 worth of the old paint for credit...

Yeah, that is flatout wrong. Mikhaila has busted that whole myth time and again.

H.B.M.C. wrote:

Oakenshield wrote:Now that they've gotten away with all they did over the past year they're going to feel bold enough to dissolve the galactic senate. The Regional managers will now have direct control over their territories. Fear will keep the local customers in line.

Don't be so proud of this oligarchical terror they've constructed. The ability to control the HHHobby is insignificant next to the power of the its customer base.

This is the most amazing thing I have read all day literally so funny I made my wife read, and then had to explain it to her....lol.

Palindrome wrote:GW sales have been delining steadily for years now. GW may well be making a profit now but eventually they will reach a tipping point and their revenues will plummet. That is why GW's current situation is ultimately unsustainable. thats not to say that they are doomed of course but they need to do something, constant price rises Yand recycled core game editions simply aren't working.

FY Revenue Profit 2005 134,804 9,996 2006 114,468 2,864 2007 109,501 -3,300 2008 110,345 449 2009 125,706 5,351 2010 126,511 15,080 2011 123,052 11,720 2012* 62,717 6,909 (est)

First half 2012 results look stronger than 2011. (And of course it doesn't include sales for December). (It may also be worth noting that GW didn't pay out dividends during FY2008-2010)

Revenue has not increased over the last few years, but profitability has. And that's not solely because of licensing and BL/Forgeworld. GW has spent a lot of effort over the last 5 or so years cutting costs and making their supply chain and distribution more efficient. Now they are working on their retail chain, focused especially on North America. So far in 2012, NA sales increased by over six percent vs the same time last year, while Europe and the UK were relatively flat across the same time.

In any case, I'm not sure I see this "steady decline in sales" that you referred to. GW certainly isn't growing explosively, but they have gotten control of their costs and process and now have a rock solid core. They are now focusing on how to get more people involved. The current strategy is by leveraging (newly) trained retail staff and managers.

elrabin wrote:
Revenue has not increased over the last few years, but profitability has.
.

How much have GW's prices increased over the same period? Rheinholdt (I think) on Warseer did a graph which plotted GW's reported revenues against the average yearly price rise and the result was about an annual 5% decrease in sales. Its cigarette packet accounting I know but only GW has the actual data so its the best that we can realistically do.

Revenue and profitability are almost irrelevent to the long term health of the company if GW can't convince people to start buying again.

Alpharius wrote:

Palindrome wrote:

elrabin wrote:..... How is this not sustainable?

GW sales have been delining steadily for years now. GW may well be making a profit now but eventually they will reach a tipping point and their revenues will plummet. That is why GW's current situation is ultimately unsustainable. thats not to say that they are doomed of course but they need to do something, constant price rises and recycled core game editions simply aren't working.

What do you suggest they do?

Now that is a good question. Mature industries usually stagnate on gross revenue, so they improve performance by focusing on margins. That's good for the short term, but with the fact that prices on actual products are increasing, it means that the player base is getting smaller and smaller. And at some point, there's a "crossover" point, where there are just too few people playing in some areas that the handful that are left just quit...

My thoughts?
1. Sell your novels digitally on Kindle. Crazy that many aren't available that way.
2. PDF all rulebooks.
3. Aggressively reobtain MMO rights, find new partners to publish. THQ's financial difficulties remove a significant revenue stream (good size MMO yields $2m/month...of which GW would get around 10%). Ideally, start your own digital division. There's too much $ on the table there to continue to license it out, IMHO.
4. Create gateway products (small $ initial investment) - squad based games that serve as a cheaper alternative for newer players.
5. Create new IP's once every five years. IP's as significant as Warhammer or 40k. Not one off games. Disney does the same thing; they're constantly creating new characters in animated films and adding to their IP. GW, if anything, has shrunk its focus. Post Apocalypse. Modern day horror. Cyberpunk. Tons of possibilities.
6. Explore selling either prepainted or pre-prepared like Dust.
7. Change the codex philosophy. Introduce regular updates w/ "campaigns" where each army gets new units.

Also keep in mind that just because GW is paying out a dividend doesn't mean it's doing well. In the past they have borrowed money at interest to pay dividends, completely irrational from any business perspective, but it did manage to roughly double Mr.Kirby's yearly income due to his stake while he was (illegally under UK law) both Chairman and CEO.

Instead of using that excess cash for additional lines, speeding up releases, helping stop the bleed from their stores, reorganizations, new ventures, additional promotions, etc.

pretre wrote:

darkdm wrote:Just to calrify, I know that here in the US the indy stockists had to purchase new rack and new paints in order to remain stockists. Failure to purchase their new rack and paints would result in loss of stockist status. Sure, they had the option not to buy it, but it meant losing what little prize support GW offered them for events, as well as free shipping on orders and the lower wholesale costs. And to boot, they were only allowed to send back $200 worth of the old paint for credit...

Yeah, that is flatout wrong. Mikhaila has busted that whole myth time and again.

No offense to Mikhaila, but I trust the owner of the shop I game at more. If what I said is not the case, then that's way better than what I heard.

The biggest problem I have with GW's business practices, specifically its annual price hike is that GW seems to think its selling things people NEED, not what people WANT. For example, gas companies due pretty much the same thing GW does, hike up their prices annually despite the moaning and groaning of consumers. The difference being that at the end of the day, people will still pay the new gas prices because they need the gas, otherwise they can't get to school/work/home etc. On the other hand, nobody needs to buy 40k,/WHF stuff, and eventually the time will come when GW prices things just way too high the average buyer, and it won't be pretty. I consider myself a loyal customer to GW and even with last year's price hike I still kept buying lots 40k stuff, but really, a box of assault marines or a Trygon can only ever be worth so much, at one point I will have to say F*** it and not buy GW stuff anymore. And I fear that will happen rather soon...

elrabin wrote:The annual reports also show sales over time (though I don't believe they are adjusted for inflation). You can see that sales decreased from 2004-2007, but since then have been increasing.

Maybe I should have been more explicit. Revenue is flat or declining for years. Add an annual 5-10% price increase (mostly on introductory products), GW sells 5-10% less products each year. Selling just one Space Marine box for 120 Mio GBP some day in the future might keep revenue flat but is not enough to sustain a decent customer base or gaming community.

elrabin wrote:Given that they just overhauled their manufacturing facility in 2007, what else should they spend their cash on?

Alpharius wrote:What do you suggest they do?

Well, the management should google the words marketing and advertising for a start. Then they should make a brain storm session, why making introductory products 10% more expensive each year is a bad idea, esp when you have so few introductory products (all with 100+ pages of rules). Recruiting new customers is crucial to any business, but currently GW is doing anything to remain unknown and to raise the hurdle for entering this hobby. That's where they have to invest.

pretre wrote:

darkdm wrote:Just to calrify, I know that here in the US the indy stockists had to purchase new rack and new paints in order to remain stockists. Failure to purchase their new rack and paints would result in loss of stockist status. Sure, they had the option not to buy it, but it meant losing what little prize support GW offered them for events, as well as free shipping on orders and the lower wholesale costs. And to boot, they were only allowed to send back $200 worth of the old paint for credit...

Yeah, that is flatout wrong. Mikhaila has busted that whole myth time and again.

If it is the same as in Europe, he is actually quite right. Only the new racks are free and you are aloowed to send back about 150 pots of old paints. The "GW wants to buy all old paints", as mention by someone else, certainly is a misinterpretion.

darkdm wrote:

pretre wrote:

darkdm wrote:Just to calrify, I know that here in the US the indy stockists had to purchase new rack and new paints in order to remain stockists. Failure to purchase their new rack and paints would result in loss of stockist status. Sure, they had the option not to buy it, but it meant losing what little prize support GW offered them for events, as well as free shipping on orders and the lower wholesale costs. And to boot, they were only allowed to send back $200 worth of the old paint for credit...

Yeah, that is flatout wrong. Mikhaila has busted that whole myth time and again.

No offense to Mikhaila, but I trust the owner of the shop I game at more. If what I said is not the case, then that's way better than what I heard.

Well, I'll let my point stand until someone with firsthand exp steps in. Hearsay helps nothing.

Or maybe not every store is the same, my wing'ed friend, and thus while Mikhaila is certainly not lying about his experiences, his experience might not be the only one out there.


Anyway. Most of this is moot. Come November The Hobbit will hit, that will last 2 and a bit years, and then Kirby will give the "Hobbot Bubble" excuse in each annual report for the two years after it bursts. In other words, second verse same as the first.

Why am I winged?

DarknessEternal wrote:

Kroothawk wrote:
3.) If all management decisions would be made random, GW's total renevue would easily increase 10% per year without the need for price hikes. A decent manager could achieve even more.

With your brilliant financial mind, why aren't you a billionaire already then and buy GW?

How do you know he isn't? *wink wink* Either way, I doubt he'd invest in GW.

I would call this dividend bad news. Divis attract and keep investors happy but you rarely see dividends in tech companies or companies with constant investment and R&D and I do not count GW as a secure franchise company like burgerking or walmart. I'd rather see them reinvest the money into more forms of digitalizing the WH franchise. Poor myopic CEO silly ceos.

I'm fairly sure I remember the FLGS saying they were given the new paint rack for free.