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 H.B.M.C. wrote:

 techsoldaten wrote:
Except they are not making any money. This isn't worth the time it took a Lawyer to draft an agreement. At these levels of sales, they have likely lost money just in man-hours. And it diminishes the brand to be engaging in minor commercialization efforts such as these. They look cheap.

Irrelevant. If the game doesn't sell it's not the end of the world for them. They already have their money.

Relevant. They went from a company that was selling 6.5 million units of a game that (briefly) topped global sales charts, to one that lets it's IP be used in crappy iPad apps that make them ridiculously small amounts of money. In the near future, they are counting on an MMO to restore them to some presence in the digital space, which didn't work out too well the last time they tried it (Warhammer AOR).

The point I was trying to make is that, gee, is GW going under? We live in a world where computer games make more money than movies, and franchises like Star Wars enjoy worldwide recognition. For that matter, lesser brands like Power Rangers, Beyblades, and GoBots enjoy worldwide recognition. It's not exactly hard or expensive to stand up a brand, merchandise it, and create new revenue streams off derivative products.

One would think GW might find something like this desirable, all the pieces are in place and have been since the early 90s. The fact they don't speaks volumes. When they say they are a model company, that's a fancy way of stating leadership doesn't know the first thing about the world outside Nottingham.

It's possible to go under by treading water, eventually you run out of things to do. That's what we are seeing now, in this late-stage corporate concern where prices go up without much actual creative output. Sure, the models look nicer than they did a few years ago, but that's a byproduct of advances in 3d modelling that anyone can take advantage of. It's a matter of time before someone comes along with a better mousetrap, or digital finally overwhelms their market, or their consumers finally get wise and move onto other things. There are so many risks to standing still these days, it's not even funny.

GW execs should be on the phone with MTV about distributing an Aeon Flux style cartoon to create credibility and awareness. They should be printing cheap marines in Vietnam and getting them into Happy Meals to create ubiquity. They should be sponsoring skaters in the X-Games on Inquisition decks to create recognition. They should have creative teams flying to Canada to tell Relic to get DOW III rolling and build the franchise they started. They should be converting buses into Thunderhawks to roll into Comicons with the 40k Experience to increase the weird factor. They should be talking to Warner Brothers about getting a movie in the works, just to get a mention in Variety that producers are talking with Sam Rockwell / Channing Tatum as the Force Commander and Rosie O'Donnell as Ghazghkull. They should be getting Alan Moore to say he doesn't like GW and won't work with them, just to make people think they are nasty, while hiring Simon Bisley as an art director.

Hit 2 of the marks on this list, and people won't be able to get enough. Tabletop models becomes the least profitable business unit in about 6 months and Forgeworld gets spun off into a Norweigan holding company allowing them to keep engaging in their 'core' line of business. Disney is suddenly trying to buy them for $2 billion.

Instead, they talk about moats in their annual reports and stand up poor Jervis in the occasional video to mollify the masses over their latest cash grab. Going under or are under?

I'll just come back to this thread in a few years when GW is still going strong(ish).

 techsoldaten wrote:
Hit 2 of the marks on this list, and people won't be able to get enough. Tabletop models becomes the least profitable business unit in about 6 months and Forgeworld gets spun off into a Norweigan holding company allowing them to keep engaging in their 'core' line of business. Disney is suddenly trying to buy them for $2 billion.

But, from the point of view of their existing customers, is this really any different from going under? Turning the brand into another pile of mass-produced garbage is effectively killing it anyway. Sure, the results for GW's shareholders might be better, but it's not exactly something we should be hoping for.

 H.B.M.C. wrote:

 Kilkrazy wrote:
BTW I understand that GW have stopped putting the name of the designer as the author of codexes. It is credited to The Studio or something like that.

Yet another example of GW burying their head in the sand. They saw the outcry against Ward for the fluff train wreck we got in the Grey Knight Codex, and the further outcry against Newcrons. Yet, like with social media, their forum and every other criticism they receive, rather than dealing with it they just ran away from it. Now it's "the studio design team". As someone who's had rules I've written published in multiple books, having your name in the credits is pretty damned awesome. Being reduced down to "a team of people who wrote some stuff" isn't cool.

Relevant. They went from a company that was selling 6.5 million units of a game that (briefly) topped global sales charts,

They didn't do any of that. The developer and publisher did that. I'll reply to the rest of your post when I'm not using a phone to reply.

Games Workshop would have made a lot of royalties off it though.

Yes, but it's not work. It's not something they put a lot of effort into (outside of approving things), and it's certainly not something they need to invest money into (that was THQ's job). It's a "Have fun while we collect the cheques" kinda deal.

If it makes money it supports the financial viability of the company.

 Accolade wrote:

 H.B.M.C. wrote:

 Psy-Titan wrote:
GW is not going under. Quite the opposite I think.

Contrary to all evidence?

GW isn't going under, but they're certainly not going up either. They're plateauing. They are raising prices and cutting costs... and going no where but sideways.

Yeah, I'm in full agreement with HBMC on this. The prices raises to models (both literal and through lowering model counts in boxes) coupled with a new MO on revenue generation on rules (i.e. books with shorter lifespans, broken up into more books) seems to have staved off any significant decline in revenue. However, I feel these techniques are rather short-sided and are hiding the diminishing population of 40k players/collectors. Many 40k fans may be die-hard fans that never give up the hobby- heck, more power to them! But I think the anecdotes of less 40k players in stores are systemic of a wargaming population that is less interested in playing a tabletop game with such a high cost.

Another thing to consider here as well. Even if sales are flat this next period with the same period last year, GW shot every bullet in their gun to make this happen. Rushed book/ebook releases, half-baked "armies" (IK and MT), and 7th edition only two years after the 6th. That leaves them with what, exactly, for the next year?

A business going sideways is like treading water in the middle of the ocean. You may survive for a time, but eventually your energy is going to be spent and you are going to sink - and when you sink it is going to be fast because you expended all your energy just to stay a float.

I don't know if GW has been okay the last five years because they have been able to stay ahead of the curve by recruiting new players at a rate that matched their churned players. However, I do believe their pricing to value ratio has finally crossed the threshold where that is no longer possible. $30 for one plastic Space Marine Librarian may be plausible for someone already into the HHHobby for a long time, but for someone new looking at the game, it has them laughing at the absurdity and buying another companies products.

This is an observation to why I say it is probably going to end up in outright collapse. Once you can no longer replace lost customers with new customers, it goes down hill very quick. GW also shows every sign that the only business strategy they know how to deal with is continuing to raise prices for those few that remain to try and make up this loss - instead it will have the opposite effect of what they intended.

 Wayshuba wrote:

This is an observation to why I say it is probably going to end up in outright collapse. Once you can no longer replace lost customers with new customers, it goes down hill very quick. GW also shows every sign that the only business strategy they know how to deal with is continuing to raise prices for those few that remain to try and make up this loss - instead it will have the opposite effect of what they intended.

1: it's always repeated as a given that GW only know how to hike prices. But the reality seems to be they're keeping prices steady on older models (eg Ork Stompa) and only increasing on newer models (eg Ork Morkanaut). So the claim that their only business strategy is raising prices is incorrect.
2: It's more accurate to say that their main business strategy is producing more models. As mentioned previously on dakka, by someone who actually spoke to the staff (I know, not as good as second-hand quotes from blogs, or facebook posts by ex-employees), they've purchased tooling for bigger models and recruited more designers.

 Hivefleet Oblivion wrote:

1: it's always repeated as a given that GW only know how to hike prices. But the reality seems to be they're keeping prices steady on older models (eg Ork Stompa) and only increasing on newer models (eg Ork Morkanaut). So the claim that their only business strategy is raising prices is incorrect.

That is hiking prices, as you just indicated. Here is the issue with the newer model hike strategy they have now adopted. First, they are using it to pass on 70% price hikes in some cases (old Kaskrin vs. new Scions). Second, it really makes their entire pricing strategy look out of whack. $105 for a model half the size of the $115 one? (seems to be a lot of the comment regarding the new Gork/Morknaut). Third, they seem to be pricing each release cycle higher than the last, to the point that everything they released for Orks has people scratching their heads on how they came up with such pricing.

 Hivefleet Oblivion wrote:
2: It's more accurate to say that their main business strategy is producing more models. As mentioned previously on dakka, by someone who actually spoke to the staff (I know, not as good as second-hand quotes from blogs, or facebook posts by ex-employees), they've purchased tooling for bigger models and recruited more designers.

Except this is coupled with the first instance above. If selling "new" was their strategy that is one thing, but each "new" release is climbing in price to similar products with each successive release. They are simply using new now to mean it is a time they can implement massive price hikes.

So, I reinforce my initial point - the only strategy they know, is to continue hiking prices until eventually, no one will see the value in their products for the prices charged.

I still think GW are lining up to get 'sold off'. I know there's the whole public-company thing with shares.
But, if they wanted someone to come in and take over, they've demonstrated that they can sell new books and supplements every month, box sets quite regularly, and even computer games based on the IP.
If the new 'owner' wanted to change things around, the groundwork has been laid. They'll be saddled with 7th-ed 40k for a while, but they could work towards a full overhaul in the meantime.

So, how is the Management's pension coming along? Check back when the next yearly report comes out, as I see it happening soon.

If we look at the data from the CHS trial, the issue with stores, the types of products they're releasing, and comments from ex-staff members about product performance over it's lifetime a reasonable conclusion is that they're actively targeting they're remaining fan base to squeeze more profit out of them.

There would be very little point in raising the price on existing products because the number of units they sell is not significant.

 Baragash wrote:
If we look at the data from the CHS trial, the issue with stores, the types of products they're releasing, and comments from ex-staff members about product performance over it's lifetime a reasonable conclusion is that they're actively targeting they're remaining fan base to squeeze more profit out of them.

There would be very little point in raising the price on existing products because the number of units they sell is not significant.

So GW are raising prices on things they've not even released yet? Also, what's wrong with charging whatever people will pay for a product? GW would be fools not to.

nvm

 Hivefleet Oblivion wrote:

 Wayshuba wrote:

This is an observation to why I say it is probably going to end up in outright collapse. Once you can no longer replace lost customers with new customers, it goes down hill very quick. GW also shows every sign that the only business strategy they know how to deal with is continuing to raise prices for those few that remain to try and make up this loss - instead it will have the opposite effect of what they intended.

1: it's always repeated as a given that GW only know how to hike prices. But the reality seems to be they're keeping prices steady on older models (eg Ork Stompa) and only increasing on newer models (eg Ork Morkanaut). So the claim that their only business strategy is raising prices is incorrect.
2: It's more accurate to say that their main business strategy is producing more models. As mentioned previously on dakka, by someone who actually spoke to the staff (I know, not as good as second-hand quotes from blogs, or facebook posts by ex-employees), they've purchased tooling for bigger models and recruited more designers.

Most prices have gone up, some merely by natural inflation so to speak; the Tau Hammerhead has gone up from £25 to £35 in 10 years, a 37% increase (ignoring VAT) which is not a massive rate of increase.

Other models have inflated very quickly in bursts. The new model Zoanthrope went from £12 to £15 in one go in 2010 -- 2011 (?), and has stayed there since.

As you say, there seems to be a policy now of keeping older models at the same price for a few years, and launching new models at high starting prices. The Knight Titan at £85, for example.

However it is true overall that GW have put up their prices pretty quickly in recent and that has caused a lot of grumbling by veterans.

Book prices have inflated very quickly in recent years. The cost of army books for Fantasy and codexes for 40K was basically doubled by putting them in hard cover.

There is no doubt in my mind that prices have gone beyond the point where people grumble and have started to push people out of The HHHobby and inhibit the recruitment of new players.

This no doubt is helped by the serious erosion of real incomes since 2008.

KommissarKarl wrote:

 Baragash wrote:
If we look at the data from the CHS trial, the issue with stores, the types of products they're releasing, and comments from ex-staff members about product performance over it's lifetime a reasonable conclusion is that they're actively targeting they're remaining fan base to squeeze more profit out of them.

There would be very little point in raising the price on existing products because the number of units they sell is not significant.

So GW are raising prices on things they've not even released yet? Also, what's wrong with charging whatever people will pay for a product? GW would be fools not to.

There's no intrinsic problem with the concept, and no ethical issues either.

But. GW have been increasing unit prices very much in the recent years, and simultaneously revenue has been going down (lately very dramatically). This means less people are buying stuff from GW.

Again, from a general business perspective, the idea of selling less for more, with a higher profit margin, is good.

But. GW is not a general business. It's a niche business, and a relatively small company that does not have the resources for marketing to bring in new customers. This makes GW much more reliant on repeat customers than other businesses, and due to the social nature of tabletop wargaming, GW's growth and future revenue streams are very reliant on market share. If everyone at your store plays Warmachine, that new guy who wanders in and wants to start playing with mandollies isn't going to pick up GW products, is he?

And, unlike their competition, GW is a public company, which, in addition to tying their hands with regards to short-term growth, makes them unable to contract and re-consolidate around their core products and markets without having their stocks tank, being taken over, and exposing the management to legal action from shareholders.

Remember not just hardcover, but full colour as well. SO a definite quality increase, especially with the shafting they got from some printers on quality (e.g. WoC 7th ed fell apart seemingly in minutes)

Whether you find it worth the extra money or not is up to you - I tend to, as they last a lot longer when handled reasonably poorly, as the ones slung in my bag tend to be...

KommissarKarl wrote:

 Baragash wrote:
If we look at the data from the CHS trial, the issue with stores, the types of products they're releasing, and comments from ex-staff members about product performance over it's lifetime a reasonable conclusion is that they're actively targeting they're remaining fan base to squeeze more profit out of them.

There would be very little point in raising the price on existing products because the number of units they sell is not significant.

So GW are raising prices on things they've not even released yet? Also, what's wrong with charging whatever people will pay for a product? GW would be fools not to.

There's nothing wrong with it. At least until you reach a point where many will NOT pay that amount in which case the company is a fool for allowing prices to climb that high.

Also, making the most margin on an individual product is usually not the smartest business. Let's say, for sake of example, a product costs $5 to make. If you sell it at $50, you move 1,000 units of it and make $45,000 in profit. If you sell it at $25, you move 5,000 units and make $100,000 in profit. If you sell it at $10, you move 10,000 units and make $50,000 in profit. Clearly the best price point was $25 as it contributes $100k in total profit to the company, while the $50 price point contributed more margin. At the end of the day, it is not always wise to price at a level that some will pay for it and much better to price at what MOST will pay for it.

 Thud wrote:

KommissarKarl wrote:

 Baragash wrote:
If we look at the data from the CHS trial, the issue with stores, the types of products they're releasing, and comments from ex-staff members about product performance over it's lifetime a reasonable conclusion is that they're actively targeting they're remaining fan base to squeeze more profit out of them.

There would be very little point in raising the price on existing products because the number of units they sell is not significant.

So GW are raising prices on things they've not even released yet? Also, what's wrong with charging whatever people will pay for a product? GW would be fools not to.

There's no intrinsic problem with the concept, and no ethical issues either.

But. GW have been increasing unit prices very much in the recent years, and simultaneously revenue has been going down (lately very dramatically). This means less people are buying stuff from GW.

Again, from a general business perspective, the idea of selling less for more, with a higher profit margin, is good.

But. GW is not a general business. It's a niche business, and a relatively small company that does not have the resources for marketing to bring in new customers. This makes GW much more reliant on repeat customers than other businesses, and due to the social nature of tabletop wargaming, GW's growth and future revenue streams are very reliant on market share. If everyone at your store plays Warmachine, that new guy who wanders in and wants to start playing with mandollies isn't going to pick up GW products, is he?

And, unlike their competition, GW is a public company, which, in addition to tying their hands with regards to short-term growth, makes them unable to contract and re-consolidate around their core products and markets without having their stocks tank, being taken over, and exposing the management to legal action from shareholders.

Do you have any data on these price rises? Preferably annual increase on year using a "typical" army.

 Kilkrazy wrote:
As you say, there seems to be a policy now of keeping older models at the same price for a few years, and launching new models at high starting prices. The Knight Titan at £85, for example.

Look at the Stompa, currently at £70, and the so-much-smaller Gork/Morkanaut only £5 cheaper.

Yep, because size alone should dictate the price of a kit. A bit like those complaining that the in game points cost of the new ork guns means the kits should be cheaper...

nosferatu1001 wrote:
Yep, because size alone should dictate the price of a kit. A bit like those complaining that the in game points cost of the new ork guns means the kits should be cheaper...

What should dictate the price then if not the amount of materials? A larger kit likely has more plastic so has a bigger cost.

how many units you can sell per player. If let say there is a huge market for bolter marines, because everyone plays them and everyone needs multiple of them. Then you can put their price lower , then sternguard or assault space marines which sell a lot less. That is why HQ options could cost like a box of marines.

nosferatu1001 wrote:
Yep, because size alone should dictate the price of a kit. A bit like those complaining that the in game points cost of the new ork guns means the kits should be cheaper...

Number of sprues should dictate price as that is what dictates the cost to make the moulds for the models.
A new thing seems to consist of three of the larger vehicle sized sprues. I don't know how many sprues the stompa is but looking at the size of the box it cant be less than 4, if it is like the other superheavies I have built it'll be 6 or 8 though. At the very least the new thing should only cost 3/4ths as much as the stompa.

jonolikespie wrote:

nosferatu1001 wrote:
Yep, because size alone should dictate the price of a kit. A bit like those complaining that the in game points cost of the new ork guns means the kits should be cheaper...

Number of sprues should dictate price as that is what dictates the cost to make the moulds for the models.
A new thing seems to consist of three of the larger vehicle sized sprues. I don't know how many sprues the stompa is but looking at the size of the box it cant be less than 4, if it is like the other superheavies I have built it'll be 6 or 8 though. At the very least the new thing should only cost 3/4ths as much as the stompa.

WayneTheGame wrote:

nosferatu1001 wrote:
Yep, because size alone should dictate the price of a kit. A bit like those complaining that the in game points cost of the new ork guns means the kits should be cheaper...

What should dictate the price then if not the amount of materials? A larger kit likely has more plastic so has a bigger cost.

Like everything else, the business case should determine the price, based on likely / desired return on investment period.

So generally, in fantasy special units cost more than core, as people generally have more core than special. Meaning the ROI period is lower for the same given price, meaning you can reduce the price (or increase the other) to mean your ROI is roughly the same. If you get your sums right. Greatswords are a prime example of this for Empire.

The amount of materials is essentially unimportant to the overall price, when talking plastic. WHat does matter is complexity of the sprue (increased tooling cost) and of course number of sprues.

Its why they can now release more character plastics -they can make multi - character sprues now, reducing the cost per model to an acceptable level.

Its why they often get things wrong - the old plastic rhino was arguably priced too low, as it only really paid itself off a year before replacement.

WayneTheGame wrote:

nosferatu1001 wrote:
Yep, because size alone should dictate the price of a kit. A bit like those complaining that the in game points cost of the new ork guns means the kits should be cheaper...

What should dictate the price then if not the amount of materials? A larger kit likely has more plastic so has a bigger cost.

There are various ways to assess the "correct" price for a product and firms often use a mixture of them.

Cost of design and production is a factor, of course, and cost of bringing to market. In general you want to sell stuff at a profit. GW's shops eat up a lot of their revenue and force their prices to be much higher than bare cost of production.

Competitor prices are another factor. Possibly GW can ignore these because customers can only buy genuine 40K and Fantasy stuff from them.

The ability or desire of customers to purchase the goods is important. Some goods are priced at premium or luxury levels to enhance their psychological appeal.

KommissarKarl wrote:

 Baragash wrote:
If we look at the data from the CHS trial, the issue with stores, the types of products they're releasing, and comments from ex-staff members about product performance over it's lifetime a reasonable conclusion is that they're actively targeting they're remaining fan base to squeeze more profit out of them.

There would be very little point in raising the price on existing products because the number of units they sell is not significant.

So GW are raising prices on things they've not even released yet?

Sure, if that's what you want to take from that, more power to you.

KommissarKarl wrote:Also, what's wrong with charging whatever people will pay for a product? GW would be fools not to.

Generally the optimum solution is to sell at a price that maximises the profit you make from the market of potential customers as a whole, so "whatever people will pay for a product" isn't sufficiently specific about anything to have any meaning in a market pricing conversation.

When you're dealing with network effect products where ubiquity is an important factor in demand, pricing for maximum profit may cause damage to future demand.

Cost to design,
Cost to produce, based on size and material,
Cost to ship and store, based on size,
Additional cost to recoup other costs, if limited production run.

 Baragash wrote:

...
...

When you're dealing with network effect products where ubiquity is an important factor in demand, pricing for maximum profit may cause damage to future demand.

This is where I think GW are vulnerable. Lots of people start to play Warhammer because lots of people play it.

If enough people stop playing it, the network effect would go into reverse.