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To be fair the 40KRPGs that FFG started out with used the self same system that Black Industries (GW) developed.

Licencing makes a hole lot of sense. Lots of money, none of the Risk.

The question was raised but no takers, I will have a go:

Q: What would 3 X-wing core game set cost?
A: $93.39 at Amazon as of now: http://www.amazon.com/Star-Wars-X-Wing-Miniatures-Game/dp/1616613769

Q: What could I get from GW as an equivalent to play?
A: Latest Dark-Vengeance $98.06 at Amazon as of now: http://www.amazon.com/Dark-Vengeance-Warhammer-Newest-2014/dp/B00M4KEQFY/ref=sr_1_1?s=toys-and-games&ie=UTF8&qid=1435156745&sr=1-1&keywords=warhammer+40k
So this does include a small rule book.
You would still need / want however a codex for one or both armies.
You also better get assembling and painting.

Q: Why would I buy three X-wing core sets? Wouldn't expansions be better?
A: The cards ARE different for the expansions but typically for named characters so you only need one unless certain add-ons you need.
For just models and cards in general to play with:
- 6 tie fighters and 3 X-wings plus all the extra stuff that comes with the 3 core game sets = $93.39 (see above).
- Assume you buy one core set: $31.13, you need two more X-wings: $28.54, four more tie fighters: $51.88, One core set and the rest, expansions totals: $111.55
http://www.amazon.com/Star-Wars-X-Wing-Expansion-Pack/dp/1616613777/ref=sr_1_1?s=toys-and-games&ie=UTF8&qid=1435157284&sr=1-1&keywords=X-wing+expansion
http://www.amazon.com/Star-Wars-X-Wing-Fighter-Expansion/dp/1616613785/ref=sr_1_1?s=toys-and-games&ie=UTF8&qid=1435157384&sr=1-1&keywords=X-wing+tie+expansion

 notprop wrote:
To be fair the 40KRPGs that FFG started out with used the self same system that Black Industries (GW) developed.

Licencing makes a hole lot of sense. Lots of money, none of the Risk.

£1.4 million, or just over 1% of revenue for all licences combined is not lots of money.

Licencing to some companies does make sense, in that you're correct. Making computer games for example is nowhere near GW's core business, so licencing that out is sensible. (Giving a licence to any old gakky mobile game is another debate). But RPG's for example are essentially a combination of rules and fiction. Erm hang on, that's exactly GW's core business, evidenced by Codex's. GW are a game making company that licences out making games to a direct competitor, for them to profit far more from than themselves. Can you think of any other company that does that?

£1.4M is allot of money in anyone's book. Its also a sum that reoccurs every year for a set term. It's bolted on turnover paid at the start of the licence (ordinarily) which is them smoothed over the term of the licence.

Now imagine you work for a company and loose £1.4M or 1% of turnover for them and imagine what happens.

GW makes plastic toys. That is their core business.

Printing books is not done by GW, nor is distributing them to bookshops. Licensing makes perfect sense.

The premise of you question is wrong.

1.4 million is nothing to a multi-natl with over 400 physical stores; that's not even enough to keep the lights on for an appreciable length of time.

 agnosto wrote:
1.4 million is nothing to a multi-natl with over 400 physical stores; that's not even enough to keep the lights on for an appreciable length of time.

Losing 1% of their revenue, on top of the losses of revenue from their stores, is quite a big deal.

1% on turnover isn't nothing.

1% of turnover that generates a disproportional amount of your profit (5-10% depending on source) is definitely not nothing.

Licensing make sooo much sense for GW it's hard to see what even the most pessimistic of people would try to argue it is somehow a negative thing to be given money by someone to carry out a task that you are not set up to undertake at virtually no cost?!?!

I'm not sure I can think of any company who would consider 1% of their revenue to be ''nothing''. 1.4 million is a significant amount of money to GW, especially when it's almost entirely profit. They're not that big of a company.

I'm sure if their revenue was up by 1% they'd be crowing it from the rooftops.

I'm sure if it's down by 1% it will be dismissed as a minor fluctuation.

Such is the nature of percentages (and spin.)

 notprop wrote:


Licensing make sooo much sense for GW it's hard to see what even the most pessimistic of people would try to argue it is somehow a negative thing to be given money by someone to carry out a task that you are not set up to undertake at virtually no cost?!?!

Licensing makes sense to a company when those licenses aren't competing with their core products.

In GW's case, licensing video games, movies, tv shows, etc, makes perfect sense.

Licensing things like card games, RPGs and board games, that they could "easily" produce in house creating a much higher revenue stream? That doesn't make as much sense.

 notprop wrote:
1% on turnover isn't nothing.

1% of turnover that generates a disproportional amount of your profit (5-10% depending on source) is definitely not nothing.

Licensing make sooo much sense for GW it's hard to see what even the most pessimistic of people would try to argue it is somehow a negative thing to be given money by someone to carry out a task that you are not set up to undertake at virtually no cost?!?!

Who said that they were losing it? But let's say that they did; they've already lost much more than that last year and didn't bat an eye. Let's put this in a personal perspective, your company hits hard times and hands down a 1% pay cut to all staff. Are you suddenly destitute? Sure, you'll miss the money but the world didn't end it just means you might not take that trip next summer.

Another way to look at this. Kirby gave himself a 26-ish% percent pay raise last year as the company dropped in revenue around 10%. 10% didn't even make the company look at executive compensation decisions. 1% is nothing to GW.

PhantomViper wrote:

 notprop wrote:


Licensing make sooo much sense for GW it's hard to see what even the most pessimistic of people would try to argue it is somehow a negative thing to be given money by someone to carry out a task that you are not set up to undertake at virtually no cost?!?!

Licensing makes sense to a company when those licenses aren't competing with their core products.

In GW's case, licensing video games, movies, tv shows, etc, makes perfect sense.

Licensing things like card games, RPGs and board games, that they could "easily" produce in house creating a much higher revenue stream? That doesn't make as much sense.

I appreciate that your term "easily" is in inverted commas, because I don't think GW's forte these days is in producing card games, RPGs, and board games. Have they got some experience in it? Maybe. But remember that even the 40k CCG years ago was licensed to Sabertooth Games, not designed in-house. We don't know the exact state of their in-house designers and writers, so who are we to comment on whether them making the games would be "easy". Again, we don't even know the terms of the licensing agreement, whether GW is taking a % of revenues that FFG makes off of their licensed products, whether its a fixed sum annually, or whether its a compound of both. What we do know is that FFG can't make GW miniatures, which insinuates that GW considers miniatures to be their core business, and doesn't want their licensees to cannibalize on that.

Besides, given the ambiguous writing of a lot of the 40k game system's rules, do you really want them writing different sets of rules for new game systems based on their IP, when FFG has a crapton of experience writing very clear and easily-understood rules? Plus the supply chain connections and expertise to distribute these game systems to the relevant shops?

PhantomViper wrote:

 notprop wrote:


Licensing make sooo much sense for GW it's hard to see what even the most pessimistic of people would try to argue it is somehow a negative thing to be given money by someone to carry out a task that you are not set up to undertake at virtually no cost?!?!

Licensing makes sense to a company when those licenses aren't competing with their core products.

In GW's case, licensing video games, movies, tv shows, etc, makes perfect sense.

Licensing things like card games, RPGs and board games, that they could "easily" produce in house creating a much higher revenue stream? That doesn't make as much sense.

It would also create a much larger expense stream. A license is 99%+ profit. Doing it in-house would involve hiring new game developers, handling printing and distribution, additional space in stores for merchandise, etc. It might increase revenue generated, but there is absolutely no guarantee that it would result in higher actual profit.

If doing it themselves would always result in higher profits, nobody would issue licenses.

 Enigwolf wrote:


I appreciate that your term "easily" is in inverted commas, because I don't think GW's forte these days is in producing card games, RPGs, and board games. Have they got some experience in it? Maybe. But remember that even the 40k CCG years ago was licensed to Sabertooth Games, not designed in-house. We don't know the exact state of their in-house designers and writers, so who are we to comment on whether them making the games would be "easy". Again, we don't even know the terms of the licensing agreement, whether GW is taking a % of revenues that FFG makes off of their licensed products, whether its a fixed sum annually, or whether its a compound of both. What we do know is that FFG can't make GW miniatures, which insinuates that GW considers miniatures to be their core business, and doesn't want their licensees to cannibalize on that.

Besides, given the ambiguous writing of a lot of the 40k game system's rules, do you really want them writing different sets of rules for new game systems based on their IP, when FFG has a crapton of experience writing very clear and easily-understood rules? Plus the supply chain connections and expertise to distribute these game systems to the relevant shops?

No, I completely agree with you that FFG makes much better products out of those licenses than GW could currently make. The current crop of incompetents working in GW's design team couldn't write a decent game, of any type, if their lives depended on it.

When I said "easy" I was commenting on the fact that they already have (or should have in any case), all the tools for producing those types of products in house and have even made similar products themselves. Excluding card games, GW has produced both board games and RPGs in fairly recent times.

Even if in their now reduced capacity GW can no longer make them, they throw away millions of pounds each year in what Kirby calls "truly surplus cash" paying dividends because they claim that they have no other use for the money. Part of that cash could and should be used to explore these alternative revenue streams and to take advantage of the huge boom that the boardgame and cardgame markets are currently experiencing.

PhantomViper wrote:

 Enigwolf wrote:


I appreciate that your term "easily" is in inverted commas, because I don't think GW's forte these days is in producing card games, RPGs, and board games. Have they got some experience in it? Maybe. But remember that even the 40k CCG years ago was licensed to Sabertooth Games, not designed in-house. We don't know the exact state of their in-house designers and writers, so who are we to comment on whether them making the games would be "easy". Again, we don't even know the terms of the licensing agreement, whether GW is taking a % of revenues that FFG makes off of their licensed products, whether its a fixed sum annually, or whether its a compound of both. What we do know is that FFG can't make GW miniatures, which insinuates that GW considers miniatures to be their core business, and doesn't want their licensees to cannibalize on that.

Besides, given the ambiguous writing of a lot of the 40k game system's rules, do you really want them writing different sets of rules for new game systems based on their IP, when FFG has a crapton of experience writing very clear and easily-understood rules? Plus the supply chain connections and expertise to distribute these game systems to the relevant shops?

No, I completely agree with you that FFG makes much better products out of those licenses than GW could currently make. The current crop of incompetents working in GW's design team couldn't write a decent game, of any type, if their lives depended on it.

When I said "easy" I was commenting on the fact that they already have (or should have in any case), all the tools for producing those types of products in house and have even made similar products themselves. Excluding card games, GW has produced both board games and RPGs in fairly recent times.

Even if in their now reduced capacity GW can no longer make them, they throw away millions of pounds each year in what Kirby calls "truly surplus cash" paying dividends because they claim that they have no other use for the money. Part of that cash could and should be used to explore these alternative revenue streams and to take advantage of the huge boom that the boardgame and cardgame markets are currently experiencing.

Thanks the for explanation. Then yes, I do completely agree with you. Personally, I'm don't know why GW is a publicly-traded company, and I want to understand the business strategy behind them having done so eons ago. FASA/Ral Partha were never public, and neither was Wizards of the Coast, nor are companies like FFG now.

Saldiven wrote:


It would also create a much larger expense stream. A license is 99%+ profit. Doing it in-house would involve hiring new game developers, handling printing and distribution, additional space in stores for merchandise, etc. It might increase revenue generated, but there is absolutely no guarantee that it would result in higher actual profit.

If doing it themselves would always result in higher profits, nobody would issue licenses.

Licenses are issued for things that aren't a part of a company's core business.

Making board games, RPG's and card games are all things that fall within GW's core business.

Card games are nothing more than rules, artwork and printing. GW already does all of those.
Boardgames are nothing more than rules, artwork, miniatures / tokens and printing. GW already does all of those.
RPGs are nothing more than rules, story, artwork and printing. GW already does all of those.

PhantomViper wrote:

Saldiven wrote:


It would also create a much larger expense stream. A license is 99%+ profit. Doing it in-house would involve hiring new game developers, handling printing and distribution, additional space in stores for merchandise, etc. It might increase revenue generated, but there is absolutely no guarantee that it would result in higher actual profit.

If doing it themselves would always result in higher profits, nobody would issue licenses.

Licenses are issued for things that aren't a part of a company's core business.

Making board games, RPG's and card games are all things that fall within GW's core business.

Card games are nothing more than rules, artwork and printing. GW already does all of those.
Boardgames are nothing more than rules, artwork, miniatures / tokens and printing. GW already does all of those.
RPGs are nothing more than rules, story, artwork and printing. GW already does all of those.

I would argue that board games are part of GW's extended business rather than core business, which is miniatures & wargames. At one point, RPGs were part of GW's core business, but it's not anymore.

The core business of an organization is that organization's main or essential activity. It isn't "everything they do and everything they've ever done". It expresses what they do, not what they could do or are capable of.

To give an example, a web design company might make promotional flyers for its customers. The desktop publishing aspect of their business is not their core business even though it derives some revenue; their core business is web design.

From the business perspective (as an investor, bank, accountant, or management) the core business comprises a significant percentage of at least one of: revenue, cost, opportunity cost, or talent.

 Enigwolf wrote:
Personally, I'm don't know why GW is a publicly-traded company, and I want to understand the business strategy behind them having done so eons ago. FASA/Ral Partha were never public, and neither was Wizards of the Coast, nor are companies like FFG now.

I am wondering if because typically dividends are taxed less as income and the company pays a measure of it = increased income for the board and shareholders?
https://www.gov.uk/running-a-limited-company/taking-money-out-of-a-limited-company
https://www.gov.uk/tax-on-dividends/how-dividends-are-taxed 35.6% if in the "high end income" rate for dividend income, 36.11% if "additional".
https://www.gov.uk/income-tax-rates So if less than 150,000 pounds a year you pay 40%, higher it is 45%.

Well, if you make more than 150,000 pounds a year it would be the most bang for the buck mainly receiving income from dividends.

 Talizvar wrote:

 Enigwolf wrote:
Personally, I'm don't know why GW is a publicly-traded company, and I want to understand the business strategy behind them having done so eons ago. FASA/Ral Partha were never public, and neither was Wizards of the Coast, nor are companies like FFG now.

I am wondering if because typically dividends are taxed less as income and the company pays a measure of it = increased income for the board and shareholders?
https://www.gov.uk/running-a-limited-company/taking-money-out-of-a-limited-company
https://www.gov.uk/tax-on-dividends/how-dividends-are-taxed 35.6% if in the "high end income" rate for dividend income, 36.11% if "additional".
https://www.gov.uk/income-tax-rates So if less than 150,000 pounds a year you pay 40%, higher it is 45%.

Well, if you make more than 150,000 pounds a year it would be the most bang for the buck mainly receiving income from dividends.

Well, you don't need to be a public company to issue dividends, and so far as I'm aware, dividends from a public company aren't taxed any differently than dividends from a private company (in Canada this is the case for sure). On the other hand, there are capital gains exemptions, such that the first X number of dollars (several hundred thousand in Canada) that you make from the sale of shares ("capital gains") are tax free, and this is a huge thing. I made quite a lot of money this way Also, in North America, capital gains are taxed at a lower rate than regular income (to encourage investment). Hence, Warren Buffet saying that he pays less income tax than his secretary. Keep in mind that dividends are NOT capital gains; the sale of shares (at a higher price than their acquisition) are.

The two most common reasons for going public are an exit strategy for founders and a means of raising capital.

With respect to the former, you can sell 49% of your company and still maintain absolute control over it, so a lot of folks think, "why not"? It's a way to get a bunch of money for the people to cash out some. With most companies, you can probably sell of 70% of it and still safely retain control. Most of the shareholders will never attend or vote, or just give management their proxy. With some companies, the founders can sell of 90%+ and still retain control. Look at Microsoft -- as far as anyone is concerned there, "it's Bill's company", and what he wants, goes, even though I don't think he even owns 3% of the shares anymore. Steve Jobs owned a negligible percentage of Apple after his return; yet, the company was essentially his to command until his death.

In GW's case, I think it is more the former than the latter. Their cashflows are very strong, and as much as I think Kirby is a bit of a douche, he is right; there's not really anything useful they can do with that cash, their reserves are quite high and very stable, and the responsible thing to do for a company in such a situation is to pay it out (not horde it).

The other thing they could do with all their cash is scoop up other companies, but they seem to have zero interest in this.

You pay a lower rate of tax in the UK from dividends than you do from salaried income.

Take it from a former company director.

Also, GW's cash reserves have taken a beating in the last couple of years IIRC.

 Azreal13 wrote:
You pay a lower rate of tax in the UK from dividends than you do from salaried income.

Take it from a former company director.

Also, GW's cash reserves have taken a beating in the last couple of years IIRC.

Given out in the form of those same dividends....

I wonder what would have happened if Kirby had put that same money into, let's say Market Research and/or advertising?

The Auld Grump

They actually have a pretty consistent amount of cash from one year to the next.

http://www.bloomberg.com/research/stocks/financials/financials.asp?ticker=GAW:LN&dataset=cashFlow&period=A¤cy=native

Just click on the balance sheet. Their cash position in 2014 was better than 2013, but both are very healthy for a company of their size, with their obligations, etc. Most companies would love to be un those shoes.

Depends where you look, 2010-2012 it's consistent, drops ~25% in 2013 and then recovers a bit in 2014.

It's certainly been markedly less consistent since the reports started reporting contraction of revenue.

They're not looking down the back of the sofa for loose change yet, but in £m the last few years since 2010 have roughly gone 17,17,17,13,14.

 Azreal13 wrote:
Depends where you look, 2010-2012 it's consistent, drops ~25% in 2013 and then recovers a bit in 2014.

It's certainly been markedly less consistent since the reports started reporting contraction of revenue.

They're not looking down the back of the sofa for loose change yet, but in £m the last few years since 2010 have roughly gone 17,17,17,13,14.

Which was the year they took out a loan to pay the dividend? Was it one of those or before them?

I think it was pre 2010, but the on-site records don't go back before 2010 and I wasn't involved enough at the time to remember.

Businesses make investments, though. Sure, some years they'll have a little more cash than other years. The GW bank account is about as good as it gets for a small cap company of reasonable success, and they are a debt-free company.

Often, people overemphasize p&l and don't put enough emphsis on balance sheet and cashflow statement. The real crux of it is often in the notes, too, because that's often where the 'why' is embedded.

For a small public company, it isn't hard to get an auditor to see things your way, too.

To a previous point, going public is a great way to cash out some money, but it's usually TERRIBLE for a small business. I wish in our company we never had, and many C-level execs and founders of small businesses have expressed the same to me, whether it's helicopters, tours, or tech. On paper, it's so easy, you get so much money and liquidity, and all that. But in practice it totally changes how a company works in a very short period of time, and pulling down your pants for everyone to see sucks.

I am not a fan of companies GW's size being public, frankly. At about a billion dollars of revenue, or at least the prospect of it, I'd think it's the only way to go, but I think with its cash flows and profitability, and apparently no desire to enter other markets (acquisitions), my opinion is that fans and founders alike would have been happier with them as a private company.

Then again, I didn't make millions from the deal and have a liquid asset to pass to my successors, pr rather, wasn't the one faced with that option, so it's easy for me to say

GW's problem is not their current balance sheet, cash in hand, cash flow, or profit and loss account. It is the recent trend of declining sales. At some point, if sales should continue to decline year on year, the company's fixed cost base will inevitably change the profit into a loss, eroding cash and reducing the balance sheet, etc.

Each half year's statement, or annual report, is a snapshot of a moment in time. The longer term trend is what is important.

To be clear, the company is currently in a financially healthy position, but its market position has been growing worse for some time and this should give some cause for concern.

 Kilkrazy wrote:
GW's problem is not their current balance sheet, cash in hand, cash flow, or profit and loss account. It is the recent trend of declining sales. At some point, if sales should continue to decline year on year, the company's fixed cost base will inevitably change the profit into a loss, eroding cash and reducing the balance sheet, etc.

Each half year's statement, or annual report, is a snapshot of a moment in time. The longer term trend is what is important.

To be clear, the company is currently in a financially healthy position, but its market position has been growing worse for some time and this should give some cause for concern.

Yes, the opposite trend would be better for them!

The question is, does management want to do do the things that would take the company that way. It feels to me that GW is a company that says, "we'll do what we want and the people who like it will give us money", rather than, "what do we need to do to make more money?"

I can actually relate to both, and like I said, at some point GW may have to suck it up and do stuff they don't like so much in order to make the money they need to keep the lights on.

 Enigwolf wrote:

Thanks the for explanation. Then yes, I do completely agree with you. Personally, I'm don't know why GW is a publicly-traded company, and I want to understand the business strategy behind them having done so eons ago. FASA/Ral Partha were never public, and neither was Wizards of the Coast, nor are companies like FFG now.

There was an interview from a (now defunct) wargames magazine with Rick Priestley and John Stallard five or so years back. Both mentioned being part of the management buy out that made GW a publicly traded company. As I recall, Bryan Ansell wanted to get out of the business at the same time as the company was poised for large scale growth. Stallard, leading the sales team, realized they could run profitable stores in much smaller locations than they thought previously. The vision was that every boy should own a football, nintendo, and warhammer box set. They had the vision, but needed the cash to do it..

I believe the interview also mentioned that Kirby was one of the best GM's the two of them knew and an avid gamer at the time. Funny how things pan out.

I agree with you. I think GW management have a vision, or at least an idea of how they want things to work, but it doesn't seem to be working at the moment as well as it might.