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Well, as expected:
1.) Revenue down by 10% +
2.) Prices up by 10% + to compensate
3.) "We no longer spend money on things we don't need, like (...) advertising that speaks to the mass market rather than our small band of loyal followers."

It's CUSTOMERS not FOLLOWERS, and losing customers and revenue is NOT a good thing to celebrate with paying dividends!
As good as the designers are, the management has a serious loss of reality. When will they learn the basics of economics.

Having said that, I expect some increase in sales next time because of a revived Fantasy section.

Yes... although I tend to be upset at GW's attitude towards customers in general, I'm really enjoying have a decent little GW retail shop near me, the near release of the fantasy rulebook, and some of the new fantasy models.

Still worth the money for me, although I have to budget it out and be more careful about it now!

So I'm not really nerd-raging about this report... although I reserve the right to do so in the future when I feel differently

"We no longer spend money on things we don't need, like (...) advertising that speaks to the mass market rather than our small band of loyal followers."



i do want to point out that they did just send all their managers to Vegas for a meeting.

and they moved HQ to TN.

.... ..... Man i wish i got sent to vegas because we are saving money.

Probably cheaper and easier to send all the managers to vegas for training than to Memphis. With the re-alignment and cuts to regional staff, they could easily be saving money than employing several mid levels of management. Cutting out a couple of the tiers of the pyramid could easily free up dollars for twice yearly staff trips to vegas.


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When these reports come out, it's always funny to see the long threads. Pretty much the same. GW loses money, we bitch and say they don't know what they are doing. GW makes money, we bitch, and say they don't know what they are doing.)

They could also build robots to do all the work for them. I'd suspect people wouldn't know the difference either.

I need to build a robot to do my painting for me...

I'd pay a lot for such a beast. And a scenery making bot.

Hell, I'd be happy with a trained monkey to roll dice for me, so I'd have more time to drink beer during games.

Osbad wrote:

As I read it from a numbers standpoint, UK is growing slowly & steadily since 2006, presumably the first of GW's ops improvements.

US is on the upswing, having broken through the 5-year upper trendline in 2009 and growing again in 2010, presumably due to GW's more recent cost control efforts. Good success in key US and UK markets.

Europe is down from the 2004 peak, but appears to be leveling. Still has net growth relative to 2002, and is likely mature / sustainable at the 40k-50k level, still appears to be above 2008 level. GW should focus on cost cutting AND RAISING EURO PRICES.

Rest of world (Oz) has slow, steady growth, doubling since 2001. Clearly, this is the best model to follow, so KEEP INCREASING AUSTRALIAN PRICES!


Overall, GW seems to be doing just fine, aside from the dip from the 2009 peak in Europe.

Quite frankly, these numbers show GW continues to enjoy luxury margins from players who gladly pay more and more for their plastics. I would not expect GW to make any changes in strategy, so I anticipate buying quite a bit less as GW continues to raise prices overall.

mikhaila wrote:Probably cheaper and easier to send all the managers to vegas for training than to Memphis. With the re-alignment and cuts to regional staff, they could easily be saving money than employing several mid levels of management. Cutting out a couple of the tiers of the pyramid could easily free up dollars for twice yearly staff trips to vegas.

Quarterly trips to Vegas from what I've gathered. The local manager has went twice since the change to one person shops.

Not that it matters much. I'm sure flights to Vegas from all over the country are cheaper than to Memphis. Everybody likes to gamble, don't they?

Redbeard wrote:We're in a recession. A company that sells luxury goods (economically speaking, not like Ferraris and yachts) is going to sell less during a recession. That they were able to remain profitable means they're making intelligent management decisions for the economic environment they're operating in.

Does anyone realistically expect a luxury good company to grow during a recession where unemployment is at 10% (or higher) and people are struggling just to get by?

Mercedes-Benz and BMW are both doing very well this year, and they're not cheap transportation.

OTOH, Hyundai & Kia are also doing well, among those "people struggling just to get by." Used Cars are selling fantastically.

So yeah, people are suffering, but not so much at the top. As usual.

Kirby's still got his yacht, right?


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skrulnik wrote:

mikhaila wrote:Probably cheaper and easier to send all the managers to vegas for training than to Memphis.

I'm sure flights to Vegas from all over the country are cheaper than to Memphis. Everybody likes to gamble, don't they?

The flights are probably the same, but Vegas rooms can be had dirt cheap - they built up all these big expensive hotels, and desperately need people to fill them.

tallshortguy wrote:
Whether GW had lower prices or not would not have affected the now oversaturation of the market with competitors. The fact is GW has branched more into other consumer products such as games, books/comics, etc. 40k is more known by the general public than it has ever been, something competitors are simply unable to replicate. I will agree along with everyone else their price hikes are very annoying but the handling of their IP is still far and away superior to anyone else in the industry. Cash is King but the value of an IP is also very important to a company as it allows future, untapped revenue.

Their handling of their IP is both good and bad. Spreading out into videogames was a natural move, and their universe is now rich enough to support a growing library of novels (though, I will have to attribute the majority of their Black Library success to hiring Dan Abnett). Their heavy-handed policies, though, have cost them a lot of goodwill from their "followers", though I don't know how much in revenue this has cost them.

I will disagree by saying that I think GW prices have affected how the market has developed. High prices allowed others the opportunity to enter the market by offering cheaper alternatives (see Mantic). This could have also been affected by the aforementioned loss of goodwill. If GW had not disenchanted its "followers" and/or driven them away through price increases, many of the other companies may not have been able to establish a foothold in the pond.

focusedfire wrote:This seems to come from an erronious assumption that GW is a Luxury product for the wealthy and seem to contain some of the elitist mentality that is plaguing the game/hobby. While GW's models are technically a luxury items they are by no means Ferraris or Porches and should not be priced as such.

No, it comes from the assumption that given the choice between not buying GW models and not buying food, or clothes, or paying your utilities, GW will be the first to go. A good does not have to be overpriced to be highly dependant on consumer confidence, it just has to be a "want" rather than a "need".

tallshortguy wrote:Whether GW had lower prices or not would not have affected the now oversaturation of the market with competitors. The fact is GW has branched more into other consumer products such as games, books/comics, etc. 40k is more known by the general public than it has ever been, something competitors are simply unable to replicate. I will agree along with everyone else their price hikes are very annoying but the handling of their IP is still far and away superior to anyone else in the industry. Cash is King but the value of an IP is also very important to a company as it allows future, untapped revenue.

While this is the current status quo, I don't really expect it to hold steady. Privateer Press, for instance, will have its own PC/console game in the next year or so (by some of the guys responsible for the original Fallouts and the MoH series, to boot), along with a major motion picture by Tim Burton. While none of GWs other competitiors have branched out of wargaming quite yet, the increased presence of these properties in the public eye certainly won't hurt their chances.

Laughing Man wrote:

tallshortguy wrote:Whether GW had lower prices or not would not have affected the now oversaturation of the market with competitors. The fact is GW has branched more into other consumer products such as games, books/comics, etc. 40k is more known by the general public than it has ever been, something competitors are simply unable to replicate. I will agree along with everyone else their price hikes are very annoying but the handling of their IP is still far and away superior to anyone else in the industry. Cash is King but the value of an IP is also very important to a company as it allows future, untapped revenue.

While this is the current status quo, I don't really expect it to hold steady. Privateer Press, for instance, will have its own PC/console game in the next year or so (by some of the guys responsible for the original Fallouts and the MoH series, to boot), along with a major motion picture by Tim Burton. While none of GWs other competitiors have branched out of wargaming quite yet, the increased presence of these properties in the public eye certainly won't hurt their chances.

Privateer Press' games appeal to a very different audience than GW's, especially in terms of background.

How much does your average plastic mold cost? I think I'd have a better perspective if I knew this. I know their not cheap, but I'm sure GW can afford them.

They cost in the realm of thousands...

JohnHwangDD wrote:
As I read it from a numbers standpoint, UK is growing slowly & steadily since 2006, presumably the first of GW's ops improvements.

If his graph is just in pounds, you'll need to adjust for historical currency changes. And the pound has fallen a lot. So in terms of real purchasing power or a basket of world currencies, GW's hasn't done so hot even in the UK.

US is on the upswing, having broken through the 5-year upper trendline in 2009 and growing again in 2010, presumably due to GW's more recent cost control efforts. Good success in key US and UK markets.

Again, currencies. The USD is now worth way, way more than it used to. I think if you adjusted it all to historical currency values to the US is flat.

Quite frankly, these numbers show GW continues to enjoy luxury margins from players who gladly pay more and more for their plastics. I would not expect GW to make any changes in strategy, so I anticipate buying quite a bit less as GW continues to raise prices overall.

I agree completely.

Reflecting on Mr. Well's comment that Web store sales have increased while store sales have declined. Seeing how many old and new items they have moved to direct only, even in their own stores would explain a lot of the increase, not to mention the increase in "limited" release items to create the impression of greater scarcity. From this I assume GW stores do not get credit for direct only orders placed in and delivered to those stores.

So ultimately the touted increase in Web store sales is a dissertation and only reinforces that fact that GW is losing customers.

A fascinating annual report, I thought. And not an entirely discouraging one, either IMO. Here's my take on it.

First, as a preamble, I'm speaking as a hardcore GW player. Kind of a fanboi, I guess, though I do get frustrated from time to time with specific decisions the company makes. More basically, though, I want the company to do well and the game/hobby to survive. (I'm not a GW employee, for those who may wonder. And I do know something about business, being a business writer and consultant by day.)

This report is trying to send a strong and clear signal, namely, that GW is dedicating itself to, and managing to succeed at, its core mission. Which is not to grow as fast as possible, nor to make piles of money rapidly, nor to throw off cash, so much as it is to sustain enough profitability to keep itself in business and its people, its IP, its games alive and healthy.

Kirby says as much in the preamble. He does assure shareholders the company will strive to make money. And he does express disappointment that the company is not successfully growing in key markets. But he pointedly describes GW as

a small, steady-growth company that will pay a dividend when it has the cash. The difference now is we are not going to make promises about the dividend - once bitten, twice shy. Shareholders who look for a predictable dividend on their
shares might want to look elsewhere.

And then, in the CEO's commentary, Mark Wells expresses the company's determination to hew to a strategy that nurtures the essence of what makes GW's gaming and hobby experience unique and engaging. Tabletop gaming, quality miniatures -- that is what the company sees as its strategic core.

Painful cost cutting measures have been necessary to make this thing work and keep GW alive through a truly grim economic downturn. GW has shaved its community-building efforts down to the bone and beyond (a decision I strongly regret, and a strategy I question). Still, I do have to agree with Wells when he maintains that the most important aspect of the business--making beautiful miniatures set in weird and wonderful game universes unlike any other--that GW is still doing.

Actually, doing strikingly well, I would argue. I consider GW's latest plastic kits to be some of the finest work the company has ever produced -- and that in the midst of a punishing market downturn. Call me a fanboi, but when I consider products like the new bloodcrusher and seeker kits, the new skaven stuff, the valkyrie kit, well, I have to applaud. Or, to put it currently fashionable business vocabulary: as a customer I am indeed "delighted." (I hate that word!)

So I take heart in the report. There's a kind of defiance in it that speaks to me. Kirby and Wells are saying just enough to address the financial concerns and questions of their profit- and growth-minded investors. While spelling out plainly and strongly that the company remains dedicated to customers just like me: the hard-core fans, rather than the casual ones.

There are things I would do differently, certainly. For example, I would make much more of an effort to deepen and invigorate relationships with FLGS partners. (Maybe the fact that I'm an American influences me here.) Regardless, this is the kind of annual report that speaks to me and says things I find reassuring. Above all, what I am hearing from the company is that they are not in business to make a quick buck, or to prostitute their IP in pursuit of profits or growth in more fashionable media (computer games and so on). They're in this for the same reasons I am. They want to be a toy soldier company with unique, weird, cool narrative concepts and game setting. Which is exactly what I want from GW. That is a strategy that requires GW's executives to "manage" the expectations of its investors. This report is all about expectation management.

Fire away. By all means, bitch and moan at what you think warrants bitching and moaning. But this report said pretty much what I was hoping it might.

GW lost a little this year, so they'll have another price increase.

Eventually, what will happen is that they'll raise prices so high, that discount retailer's prices will be what GW's prices are RIGHT NOW.

They can only raise them so high until people draw the line.

"Hey mom, can I get this box of spess mehreens? There's 10 for $70!"

They can only raise them so high until people draw the line.

I've had many conversations on this topic over the many years I've been buying GW products and that phrase always comes up from at least one of us in the conversation, yet the prices keep going up and people are still buying their products. I'm not sure where that line is that customers won't cross over, but no matter how many times I or my friends think GW has reached it it has not happened yet. Seriously, I remember that comment coming up in conversations twelve years ago or more, yet it just never happens.

Karon wrote:
Eventually, what will happen is that they'll raise prices so high, that discount retailer's prices will be what GW's prices are RIGHT NOW.

That's been the case since that last price increase, when I was going to go purchase the Dark Elf armybook off of maelstrom, it came out to $22, which is what the books used to be before the price hike.

BrassScorpion wrote:Seriously, I remember that comment coming up in conversations twelve years ago or more, yet it just never happens.

It happens. I'm sure there are many people who quit after each price rise, but as those people are not GW's targeted customer base, the overall effect is nil.

GW wants new players and treats them like shooting stars - they burn brightly for long enough for them to make some money off of them, and then quit either before or just after the next price rise. 18 month window - initial purchase + supplemental purchase, one Birthday, one Christmas - that's all they need. The majority of players are therefore new, and consider whatever the prices are right now to be the standard prices. In two years time most of the player base will have been replaced with new shooting stars, and the price increase that happened in the meantime won't impact them as they weren't around when the prices were lower.

Karon wrote:GW lost a little this year, so they'll have another price increase.

Eventually, what will happen is that they'll raise prices so high, that discount retailer's prices will be what GW's prices are RIGHT NOW.

They can only raise them so high until people draw the line.

"Hey mom, can I get this box of spess mehreens? There's 10 for $70!"

Wrong. GW made more profit this year, so price increases are clearly working.

Ahh, my poor little n00b, that has *already* happened several times since I got into The GW Hobby over a decade ago. Indeed, way back then, Wraithlords were made of metal and called Eldar Dreadnoughts. They retailed for a whopping $25, and could be gotten on discount for as little as $15 shipped. Now, this model is plastic and GW charges an outrageous $44.50, which means that a typical retailer with a 40% discount pays more today than what GW stickered it for way back when. The average discounter charges over $35, which is more than twice what I would have paid for one back in the day.

As continuing sales of Chaos Daemons and other Fantasy 10-packs show, you are grossly mistaken.

I wonder, what princely sum does GW charge Australians for 10 Tactical Marines?
____

BrassScorpion wrote: I've had many conversations on this topic over the many years I've been buying GW products and that phrase always comes up from at least one of us in the conversation, yet the prices keep going up and people are still buying their products. I'm not sure where that line is that customers won't cross over, but no matter how many times I or my friends think GW has reached it it has not happened yet. Seriously, I remember that comment coming up in conversations twelve years ago or more, yet it just never happens.

QFT.

I don't know what the point is, but I suspect that GW can raise prices by 3 to 5% per year on average from here to infinity.

JohnHwangDD wrote:I wonder, what princely sum does GW charge Australians for 10 Tactical Marines?

62 AUD, or approximately ₤36.

So, only 8 more to get to the magical 70 for 10.

Go GW OZ!

I think the somewhat WTF Australian prices are well known about by all who frequent the board, luckily there are online retailers who are able to provide the same goods at a substantial discount for our Australian brethren, so we don't really need to throw such obvious jibes/ good natured ribbing around please. Ta.

BrassScorpion wrote:

They can only raise them so high until people draw the line.

I've had many conversations on this topic over the many years I've been buying GW products and that phrase always comes up from at least one of us in the conversation, yet the prices keep going up and people are still buying their products.

It's already happened to me. Back in the end of 40K 2nd edition I got several people buying GW minis and we excitedly rode the wave into 3rd edition. Before the big price rises began, most of us had multiple armies worth 1500 points at least. We bought minis whenever we liked them, regardless of if they fit well with our armies or not. We happily plonked down extra for conversion material (often making large orders from GW's at-the-time excellent bitz service). We used to even make custom conversions for each other as Christmas presents. Every one of those people has quit. I quit for about 5 years, only returning to start a fantasy army and build it very slowly (I'm spending probably a quarter of what I used to on miniatures overall, because the high prices keep me from ever spending impulsively enough to get a good, exciting momentum going. At this rate, I may get 1000 points of beastmen finished over 2 years. I know someone who, on impulse, bought a Battle for Skull Pass starter set. He got it home, got the guys plugged into their bases, and started excitedly planning an Orc & Goblin army. He took one look at the cost of the regiment boxes and shoved his minis in a drawer that I bet to this day he hasn't opened.

TL,DR version: we all spent more on GW back when prices were low enough we didn't feel the need to justify the expense of individual items. Now, almost no one I know still plays.

There are two factors to take into account that I can think off when it comes to price increases putting people off buying.

Firstly, the simple supply/demand laws don't strictly apply to GW products. There is an elasticity of demand so that if prices rise demand does not fall off so rapidily. Some people will still buy stuff to feed their addiction for GW products.

Secondly, the main target market of new kiddywinks. Being new and fresh have no previous marker of what a reasonable price is. They just accept that a box of 10 minis costs x dollars.
I have seen this at our club. They even tell me that the prices aren't that much. Which I guess is true when it's the parents paying in a the cases i have seen. (I know some of our youngsters on Dakka pay their own way by the sweat of their brow)

But I wish my mommy and daddy had the same willingness to splash out on my behalf!

Chibi Bodge-Battle wrote:Firstly, the simple supply/demand laws don't strictly apply to GW products. There is an elasticity of demand so that if prices rise demand does not fall off so rapidily. Some people will still buy stuff to feed their addiction for GW products.

I don't agree. I think the laws of supply and demand apply to the product, but not to some people. Some people will buy GW products no matter what the price is (or for that matter, what the product is). That has no bearing on the rules of the product itself.

The people in this forum are among the most dedicated of the most dedicated (we're analyzing their financial results for crying out loud!) The fact that we are still buying GW should not be taken as a sign of what normal customers are doing. Simply by posting here we're self-selecting for a greater-than-average level of GW fandom.