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 Azreal13 wrote:

Mr. Correct wrote:
Sorry, but the rest of you are just plain wrong. GW has explicitly stated in interviews that they are a toy company that makes toy soldiers. Toys come first, rules come in fifteenth place in terms of GW's priorities. This is because GW makes money by selling minis and fiction, not rules. That's just the way it is. If you disagree with me then you are wrong and ignorant.


Automatically Appended Next Post:
See, one of the biggest problem with you gamer types is that you think the world revolves around you. It doesn't. GW doesn't care if you play the game or not. They want to sell their pretty models to little Jimmy, the boy whose mommy can only afford 400 points of models. Thousands upon thousands of people buy the models without ever fully diving into the game or associating with a gaming group. The models are the point of the company. That's why Citadel Miniatures owns Games Workshop, not the other way around.

Ooooh, some other poster made that same mistake a week or two back.

If I can just find the post where I correct the I can get this troll ass account and the other one shut down for good.

Back in a minute...

lol. Inspector Azreal. I love the search function on this site, it took like 3 seconds to find what you were talking about.

Herzlos wrote:
Wait, that thing is cheaper* than a Taurox, but sports:

Linked movable front steering
Rotating soft plastic wheels
Green tint see through windows
Working doors hatches and hood
Movable defense gantry
Detailed crew compartment
12 seated crew

on top of it looking like it might actually be used/useful in combat.

...Dang!

*On sale at $45 from $65, Taurox is $50.

I know, it's hard for people who play GW games to imagine a vehicle that is designed to actually seat the number of occupants that it's stated to be carrying around. INSANITY!!!!1!!11!!

 Talys wrote:


And yet, they succeed in making millions of dollars a year after employing thousands of people. Hmmm... I guess that makes the rest of us.... even less intelligent?

I, for one, think GW is better at running and operating a business than me, because I have not, nor am I likely to in my lifetime, build/create a company more successful than GW.

By that metric I'm equivalent to Einstein and GW is Forrest Gump then.

"I may be dumb but I know what miniatures are."

"Life is like a box of space marines, you never know when the price is going to go up."

"Skull k-bobs, skull, skull creole, skull gumbo, pineapple skulls, lemon skulls, coconut skulls, pepper skulls, skull salad, skulls and potatoes, skull sandwiches, stir fried skulls..."

 Talys wrote:
@agnosto -- +1!

My point is simply that there are different ways of measuring "smart" or "intelligent". To take a step back and look specifically at wargaming, is the smart company the one that prides itself on excellence in rules and fosters competitive gaming... or is it the company that makes a massive amount of money based on miniatures that cater to a specific niche that buys a lot of stuff and over-the-top heroic games?

One view is that GW is "smart" because it's making a lot of money doing the type of things that its founders wanted to do. Another view is that GW is not "smart" because it's not doing what a big segment of the wargaming community wants it to do.

Personally, I think it's a balance. A company that can pursue its vision AND make money is a "smart" company. A company that can pursue its vision and survive OR make money in the absence of pursuing its vision is a slightly less smart. A company that can achieve neither is probably not very smart, at least at operating a business.

Also, Agnosto, we're not talking about "intelligence" as in the ability to make scientific discoveries (or at least I'm not), because it's just not applicable to a toy maker. Rather, I'm talking about intelligence as in business acumen -- the ability to set and realize business goals.

Objectively, I would say that a "smart" publicly traded company is one that creates opportunities for growth, expansion and larger revenues, year-on-year, that can be returned to owners. The only "smart" thing that I see GW doing is returning "excess" earning back to their stockholders in the form of dividend payments though I will not comment on how smart the size of these payments are in the grand scheme of things. There a plenty of companies that make money but without growth, I would not label them as smart as I believe smart decisions and leadership lead to growth and not prolonged retraction or stagnation.

I was just playing by your metric and being silly with it since it was a bit silly to begin with (in context and in intent I believe). As to your new statement, realizing business goals, let's see what GW believes its business goals to be:

We have a simple strategy at Games Workshop. We make the best fantasy miniatures in the world and sell them globally at a profit and we intend to do this forever.

Yay! We have a winner! - success. It's a broad goal and one that can easily be met; if they had stayed with this one, we could call them the smartest company in the universe. Unfortunately, they wrote a whole load of malarky after this which made their IQ drop into the toilet.

We make things. We are a manufacturer. Not a retailer. We do have outlets in retail locations. We call these Games Workshop Hobby centres because they show customers how to engage with our hobby of collecting, painting and playing with our miniatures and games. They are the front end of our manufacturing business. If our Hobby centres do a great job, we will recruit lots of customers into our Hobby and they will enjoy spending their money on the products we make.

Not a retailer yet we have retail locations that we call hobby centers and fire people who don't meet sales quotas, yeah, that's not retail at all. Looking at hard sales data, they are either successful at recruiting people who will only buy online or not successful at recruiting new people at all.

Every year we seek new and better ways of making our products and improving the quality. This is not simply a personal obsession; it also makes good business sense. We know that, for a niche like ours, people who are interested in collecting fantasy miniatures will choose the best quality and be prepared to pay what they are worth.

lol wut? Complete denial of such concrete business concepts as price elasticity. - I uh, don't know what to say to this. Willful ignorance of the real business world?

Because it takes time and care to find the right person to run a Games Workshop Hobby centre, it will take us many years to get the global penetration we want to achieve. So, in order to improve our coverage today, we seek out other businesses which can help us get to the places where our hobbyists may be found. The best businesses at helping us are independent shops, run by owners who know their customers and offer them a good personal service. We call these Stockists and we supply them with an easy to manage range of our fastest selling products, which we resupply every month.

More restrictive trade terms, more shops dropping product, reduced trade sales. - fail

For emerging markets in Eastern Europe, Asia and South America we work through experienced local distributors to ensure our product is available through their local networks of retailers. And, of course, in all these locations, we also have the Games Workshop Webstore, which gives customers a huge amount of information on the Hobby and access to our entire range of products with a fast and efficient delivery service to wherever they live in the world.

Product availability - success, unless you want one of the endless "limited" items, then fail and nonsensical loss of income opportunity. You don't make money by creating an environment that prohibits people from buying your product.

We don’t spend money on things we don’t need, like expensive offices or prime rent shopping locations or advertising that speaks to the mass market and not our small band of loyal followers.

Translation: we don't spend money on things that have objectively proven to create growth in literally every market across every industry. - stupid

Our continual investment in product quality, using our defendable intellectual property, provides us with a considerable barrier to entry for potential competitors: it is our Fortress Wall.

We are also clear that we will only make fantasy miniatures, not historical ones. Fantasy miniatures from our own Warhammer and Warhammer 40,000 worlds allow us unlimited scope for product innovation. In addition, we can, and do, defend our intellectual property rigorously against imitators, thus ensuring that our worlds are synonymous with quality.

Hugely costly, pyrrhic legal victory that cost them control of more IP "properties" than they actually retained. - fail

Compared to the UK, most of the rest of the world is for us still “green field” territory. This means we believe we can keep on growing steadily, using the same tried and tested approach of recruiting and retaining customers by opening Games Workshop Hobby centres, supported by the Games Workshop Webstore and independent Stockist accounts across the globe. With this growth we should be able to put more volume through our dedicated manufacturing and warehouse facilities ensuring that our gross margin continues to improve.

"keep on growing steadily" - fail.


-note: just having a bit of fun here making fun of GW is a pastime that I enjoy while I wait for my next dividend payment in September. Kirby's lucky that I haven't been able to take time off and travel to England to give him an earful at the annual shareholder meeting.

Because they paid 4 million pounds for a site that every other company their size would pay 100,000 for. And let's not forget that they hired the then CEO and current Chairman's wife to oversee its development who has no executive IT experience unless you count her experience as an athletic club sponsor and secretarial work for said chairman's shell company.

Only a genius company makes those kinds of decisions!

AllSeeingSkink wrote:

 agnosto wrote:
Because they paid 4 million pounds for a site that every other company their size would pay 100,000 for. And let's not forget that they hired the then CEO and current Chairman's wife to oversee its development who has no executive IT experience unless you count her experience as an athletic club sponsor and secretarial work for said chairman's shell company.

Only a genius company makes those kinds of decisions!

Don't forget the horrible design of the website itself, some of the blame there has to lie with the management for approving it

That's what you get when you hire for attitude, well, relation in this case instead of ability. They hired a secretary with no background in IT for a job that required a Project Manager and/or Business Analyst. Granted the vendor more than likely had people doing that job but, big but here, a responsible company doesn't depend on a vendor to do all of the work without having someone internal able to check the work and make sure that they get what they want out of it.

I don't ask my secretary to do my bookkeeper's work or run HR and I certainly wouldn't ask her to run the network systems or design a website. It's not that she's not capable of doing these things, with proper support, it's that she has no background or training to do it.

Generally speaking, people who earn higher than average wages also have less than average time to spend on hobby pursuits.

Another factor to consider. Just because someone earns more money, doesn't mean that they find value in a higher priced product. Ask anyone with wealth how they attained their money and keep it; nearly universally, they'll say that they don't spend it frivolously. Factually speaking, lower-income people are more apt to be subject to impulse buying than people with wealth. This is part of the reason why GW is losing market share so rapidly, they have hit the price elasticity wall and are now paying the price with their customer base. Customers are turning to lower-cost rivals like Mantic who may not have as high a quality of product but are able to sell at a reduced rate.

Similar to this, GW may in fact value their product higher than even higher wage earners value it. Just because someone is able to afford their products does not mean that they value it at the same level as GW. I earn a healthy salary but have little hobby time, a $50 model kit from GW represents an additional cost in valuable time spent in assembling and painting it before I may benefit from my purchase. I can model or I can game; I believe there are more gamers than modellers out there in the market and GW believes differently. GW is losing market value and sales volume which indicates to me that they are likely wrong.

So, no. I don't believe that GW is intentionally targeting a wealthy audience. I believe that they are aware and mildly comfortable with continuing to lose market share to their smaller rivals for the time being which tells me that management isn't concerned about the long-term health of the company. Healthy companies create growth strategies not hide from their customers behind "moats" and "walls".

@Talys,

Though I agree with the gist of what you are saying, we'll have to disagree on GW as a luxury good. In economics, a luxury good is one where demand increases more than proportionally as income rises. Arguably, since demand for GW products has markedly decreased while the overall economic environment has improved, there leaves little doubt that GW does not fit in this category. Rather, I would categorize GW products as a normal good; one for which income and demand rise in proportion.

Irregardless of what type of good their products represent. I don't believe that they are intentionally targeting their "marketing" (laugh) at higher wage earners. They might like to but such people are actually not spending their money on stuff but rather on things that will build further wealth.

As families become richer, they spend a little bit more on entertainment, but significantly more on financial products such as insurance, annuities and retirement programs. The bottom 10% contribute 1.4% of their funds to these sources, or about $300. The top 10% allocate 17% to these sources, or a bit over $20,000 a year.

http://blogs.wsj.com/economics/2015/04/06/how-the-rich-and-poor-spend-and-earn-their-money/

Sure, wealthy people could buy all the hottest toys but they don't, not as a representative percentage of their income at least. No, the people who spend a higher percentage of their income on entertainment are much lower down the income ladder. Companies don't succeed by targeting one potential population but by attempting to create broad appeal.

So, who does GW "target"? Well, it appears to me that their current model stresses the importance of "buy big and buy now" or the impulse buying crowd. Such people will be male in the 18-29 age range as these are the people most likely to drop large sums of money on a whim.
http://www.creditcards.com/credit-card-news/impulse-purchase-survey.php

It would be exceedingly stupid for a company to target its products at a tiny segment of a population. Yes, there are companies that do so successfully but these are real luxury or veblen goods, GW products are certainly not in this category or they would be increasing sales volume as the world economy improves, not the opposite. You seem to think that GW wants a minuscule population of "super-fans" who will buy everything that they make and are so price elastic that GW can charge whatever they like and purchases will still be made. I would argue that no company, anywhere in the world, will long survive if their mindset is such; not to mention that this belief runs counter to GW's own stated goals of expansion as you can't aggressively expand into a smaller market than you have been serving, that's called retraction, not expansion.

 Talys wrote:
@agnosto - I really don't think we're actually very far apart, to be honest.

In recent years, a lot of wealth has been generated, but the income gap between the wealthy and the poor has become stunning. So what you have is more wealth in the world, but a much smaller middle class compared the 80s, particularly a middle class not really worried about money.

This much is true in the US, not so much in other countries; some countries like Japan have a very large middle class. Your home country, Canada, actually met and surpassed the US in terms of the strength of the middle class in recent years. The Luxembourg Income Study generates some interesting data for data nerds, check it out some time if you're inclined.

The problem is, GW's best customers in years past were the people who were "a little bit rich" -- in other words, they have paid everything they need and the things that dramatically improve their lifestyle (including a home, cars, kids' tuition, someone else to mow the lawn, whatever food they want, a reasonable amount of eating out, a plan to retire at 55, etc.) -- this demographic has shrunk dramatically. I would hazard to say, "almost to non-existence". It's limited to a small group of highly skilled professionals and successful entrepreneurs; whereas before it would have included many skilled labourers and technical workers. And like you said before, this group largely works long hours.

I think that you and I could probably agree on the above.

*moved this since it makes sense here.
I don't think the 18-29 crowd is the perfect fit for GW, because at that age, most will REALLY want other luxury goods, like a car, first. And a lot more people in that range who are professionals now have student loans -- some lawyers and doctors go into their FORTIES still paying off their loans, and they sure aren't going to spend $5,000 a year on 40k models.

Instead, I think 35-55 will yield much more success. People in the prime of their life, who are in comfortable jobs, have extra time and extra money, and have plotted out "the path". Particularly those who fulfill all of these criteria with extra TIME and who enjoy hobby, as opposed to, for example, sport. I think the issue is that this group is not large now.

Actually, I think we'll have to disagree with the above; I feel that GW has always marketed towards that age group, 18-29 year old males, as they are the people most likely to be interested in GW products. More discerning, older people would generally turn away from the cartoonish nature of GW's universes on average. That's not to say that there aren't people in the groups that you've indicated who are interested in GW products, it's just that they are not the larger bulk of GW's customers, traditionally. I would argue that whether they intend it or not, the 30+ middle-high income earner is who they're going to get but that is not a route I think that they should take because the number of people willing to purchase their products from that category are much, much smaller than the 18-29 bracket due to a number of economic reasons.

Depending upon when they entered the field, most lawyers and doctors have their college debt paid off very rapidly; sure, you said "some" but some is a very small number in this instance; even smaller in the case of doctors who have the opportunity to have others pay their debt for them by working in high-need areas for a few years. The average life of student loan debts for doctors in the US is about 12 years for those who do not take advantage of such systems, based upon an average of $176,000 in debt accrued.

Now, regarding luxury goods --

There are only 2 types of goods (in economic terms): necessity goods and luxury goods, and toys of any type are definitely not necessity goods. Not all luxury goods increase in demand as income rises, but this is a characteristic of many luxury goods. Also, keep in mind, luxury goods don't necessarily imply quality.

There are all sorts of luxury goods. For example, Dyson vacuum cleaners are, what, $400-$600? But they're no more functional than a $60 Hoover (especially if it just sits in your closet). Channel handbags can cost anywhere from $5,000 to $50,000. Yet it is not any more functional than a $25 knockoff. But does GW fall into this category? I think not, because GW models are generally not status symbols.

I'm sorry but this is not accurate. There are many types of goods; the most basic are Inferior, Normal and Luxury but there are also Complementary, Substitute, Giffen, Veblen, etc. I really don't understand where people arrive at GW products being a luxury good, it's a true head scratcher and a gross misuse of a real economic term. You simply cannot compare GW products to Chanel or Porsche or any other true luxury good. Why? Because GW products have proven to be price inelastic whereas luxury goods have a high price elasticity or elasticity of demand. Here's a test, as people earn more, do they spend a much higher percentage of their income on GW products? Some might but the majority won't because then they would wind up with a garage full of boxes that collects dust. People only have so much time in their lives and someone who is able to spend thousands on GW products likely will not spend every waking moment playing with plastic army men.

Let me try to explain how luxury goods work:
Someone picks up GW in college, they are earning $19,000 per year. They spend about $300/year that's about 1.6% of their income.
This person continues on and when they're in their 40s, they're now earning $50,000 per year and an army costs about $600 to build or 1.2% of their income.

So, did the percentage of their income spent on GW products go up disproportionately to their income? Nope. Sure there may be outliers here, these mystical "super-fans" that you like to talk about, but most people do not have limitless time to devote to piles of plastic army men. At some point, people have lives, families, work and other time commitments that will prevent them from buying 100 boxes of $50 kits.

True luxury goods would see demand go up disproportionately to increases in wealth. At $19,000 per year a student will spend $0 on Porsche but at $150,0000 per year, they'll spend a great deal more; going from 0% to some other percent.

No, GW products are normal goods (a real economic term) which means that demand increases at a like percentage to income. In my example above, there's really not that great a difference between percentage of income spending between 1.6% and 1.2%.

Someone may pay someone to build and paint their army but GW doesn't benefit from that and it has zero impact on what type of good is produced. After-market, 3rd party business are complementary goods and services, not the goods themselves.

Edit -- incidentally, despite not conducting "market research" I think GW has a really good handle on the number of dedicated fans and what their ideal demographic is, because they have a good idea of what they sell, and they have information from when they were a virtual monopoly in the market. They can pair statistical information available today with their sales data. For instance, if you want to open an online account, you have to tell them your age, and obviously, they can mine purchasing trends from online purchases easily. As I've said before, it's entirely possible that they know pretty much who/what their fanbase is, and their current strategy is what they think is the equation to maximize profits (or minimize attrition of profits).

Of course, I'm making generalizations, and there will be many edge cases and exceptions. Also, sorry this is so long :(

Nope. That's not how it works. If you were to have a direct line to the decision makers at GW and they told you this and you have a modicum of business or analytics experience/training and did not laugh at them, you should be ashamed. You don't base current decisions on 20 year old reality, in the case of knowing who their customers were way back when they had a veritable monopoly on mini wargaming and a company which bases their entire corporate strategy on the results of who is shopping in their online store (a relatively small proportion according to their financials) is doomed....doomed I say.

Note: I don't think any of this is actually happening. I believe your assumption of GW being supported nearly completely through "super-fans" to be incorrect, otherwise I would not own stock in GW because that's just bat-gack crazy talk in the world of business.

 keezus wrote:

 agnosto wrote:
Your home country, Canada, actually met and surpassed the US in terms of the strength of the middle class in recent years.

The earning power of the middle class in Canada is declining. Net worth is increasing due to ever skyrocketting (and dare I say unsustainable) value in real estate. Due to the rock bottom interest rates, average household spending is 163% of disposable income. The strength you describe is artificial.

Nationally, Canada is in much better shape than other comparable countries in Europe and the US. It may be declining (though not in 2010) as you say but it is doing so at a less rate than other countries.




All of this though has little to do with the actual topic as I just used Canada as an example. I'm sure that if I had used Sweden, someone would have said the exact same thing as you.

 keezus wrote:
Risking going further OT: However, trends in disposable income are relevant.

Two comments about Canada's performance in the recent years. You'll notice the tail end of the graph is flattening out. (Its awful small, but it looks like your graph starts at 1900???)

1. The graph shows increase against USD presumably? I'd be interested if this graph also takes into account the actual increase vs inflation.

2. I wonder if this graph takes into account fluctuations in currency. Canadian buying power growth in recent years would have been buoyed by the strong Canadian dollar (as a byproduct of oil prices). Our dollar has gone into the toilet (as a byproduct of gov't pro-oil policy), so it'd be interesting to see where this all stands in 2015.

Looking at the GW years in the graph... They are raising prices like crazy in the face of what I might be considered relatively stagnant increases middle class buying power.

That graph's hard to see but it's 1990. Keep in mind that these studies are done considering differentiations in spending power relative to inflation and currency fluctuations but they're done infrequently due to the massive amount of data that it takes to do it properly. Still, interesting read. LIS is located in Luxembourg so no US bias as far as currency goes. The get the data for different years, depending upon when and how it's collected in the various countries and then do a comprehensive analysis for years where the stars align.

 Talys wrote:
@agnosto - thanks for the very detailed reply

I don't have time to respond point by point in kind today, so I'll be (somewhat) brief --

I guess I look at GW products differently than you, since they're through the filter of my own spending habits. As my own income increased, I have proportionately spent more on miniatures & hobby, at least to a point (within a faction there's only so much stuff to buy), and owning more hobby stuff makes my happier. At points in my life, when I have had less income, I purchase fewer (or no) hobby products. So, I think this is pretty close to the definition of a luxury good.

You are right about there being other sorts of goods such as Veblen, normal, and inferior goods, though these terms are not all mutually exclusive -- a luxury good can also be a Veblen good, for example (where increasing the price increases the perceived value of the product, like a $50,000 Channel handbag). Another example of overlap is that GW products are a luxury good to me until I own everything in the collection in multiple quantities, and then, they become normal or inferior goods though only as they relate to me (at some point I hit pause until there is a new release I want).

With regards to Canada's economic middle class bursting with happiness and joy, studies can be very deceiving. Vancouver is second most expensive place in the world to buy real estate (second only to Hong Kong), and the cost of living here is extremely high, especially compared to our American counterparts.

Spoiler:

I watch the 6pm news almost every day, and at least once every other week, there is an article on how unaffordable it is to live here -- how even renting has become unaffordable. To give you an idea, an 85 year old, condemned shack on a main road that has a bus stop in front of it and 30,000 cars drive within 20 feet of the front door every day, on a tiny lot cannot be had for a million dollars in Vancouver, today. If you put it up for sale at a million dollars, there would be 10 offers within hours, some offer for 1.5 million, and many of them with certified cheques attached and no sale conditions. It's literally nuts here, because it is perceived as a "great place to live" (it actually is, just really expensive). Most people, if they want to own a home, must live very far away from where they work; and to give you an idea, an average couple who make a combined income of $50,000 can't ever actually own a home here.

It's not just Vancouver, too -- other metropolitan centers like Toronto and Calgary have also gone gangbusters, and the cost of living has skyrocketed. Anyways, my point is: for people in this situation, owning a home and paying for things they need is more important than hobby, and even if hobby spending would constitute a tiny part of their income, a lot of folks around here spend almost everything they earn just to pay the bill.

For renters, it's a really scary picture. A 1 bedroom apartment in an old building without insuite laundry, and not even in the city core can be $1,300. An hour away from the city, a basement suite that's a couple bedrooms can cost even more than that. When 90% of household income goes towards housing costs:

http://www.vancitybuzz.com/2012/08/vancouver-still-the-least-affordable-housing-market-in-canada/

That leaves not much in the hobby kitty. And by the way, that article was written in 2012; the housing situation in 2015 is even worse!

That's not to say that there aren't a lot of people who can afford GW products and meet GW's target demographic in Vancouver, though. Despite life being very tough for the average person, guess what -- someone owns those 1.5 - 25+ million dollar homes, and in fact, a ton of homes are purchased entirely with cash -- it's actually stunning, because the chances of buying a desirable home if you need to put a subject to sale of your old home, or subject to financing, is very low (or zero); if you want a good deal on a good home, you better have your million bucks or more in cash or equivalents and ready to go. So there are lots of super-rich people. Just proportionately, a lot more people who struggle to get by, which was my point about income disparities

I think you're still not getting the difference between normal and luxury goods but I'll leave off as it will be a distraction is just me being nitpicky about using actual definitions for things.

Anecdotally, I've lived in Seoul and Tokyo, I know what I can get for a similar amount of money (laundry on the balcony and a one-room apartment, not one-bedroom, one room). Big city living is expensive which is why suburbs exist around the world and the life of a commuter... *le sigh* My wife's parents could sell their plot of land just outside Tokyo and probably buy half of the state that we live in.

This is beside the point. People still buy cars, still buy homes, still spend money on entertainment expenses and food and all the other necessary and non-necessary things in life.

The point here is that smart companies market to the people who they know are able and willing to buy their products.

Smart companies realize such things as price and product elasticity exist and are real concepts that affect the bottom line.

Smart companies actively plan and pursue growth strategies and then perform research on the actions that they take to ensure effectiveness.

Smart companies react to retractions and market adjustments that negatively impact their revenues.

Smart companies adjust their company culture with the change in times and market environment.

Smart companies make you want to buy their products by drawing you in, becoming your friend and engaging you as a customer. People will buy your stuff if they feel it has value to them and studies have shown time and time again that relationships matter when it comes to selling stuff to people.

That's not to say that a company can't be dumb and still be profitable. But just being profitable doesn't make a company smart, sometimes it just means it's been lucky.

 Talys wrote:
Agonsto, I get everything you're saying -- and on many points I agree. I'm still not convinced the optimum point for profitability isn't to maximize prices to those who are price-inelastic and who want to buy a lot, versus having more customers that individually buy a little.

I can't recall the exact number, but let's just say, GW's US/Canada sales are $30m for the sake of argument, and that an "average gamer" spends $500 a year (I will admit I don't know if this is true, but it kind of feels right, based on what I and people I know spent in their youth, when we didn't have very much disposable income).

That would take 60,000 average fans, right?

But what if you had fans that spent $1,000 a month? That's only 2,500 customers that spend $12,000 a year!

I know that this is an achievable number, because within our gaming group of 6 people, 3 hit that number, with one person way, way over that because he buys Forge World stuff, and another who buys everything direct from GW's web store because he doesn't want to drive out to the hobby shop (he also doesn't live very close to one). The other 3 probably spend about $300 a month (or, around $4k / year).

I think appealing to this group is simply a lot easier than trying to sell multiple armies to the 30 model per army crowd and growing that crowd. In part, as the last half-year has shown, if you produce stuff these guys want, even at a crazy release schedule, they'll just buy it.

This is where economies of scale come in, producing (and selling) less product makes each item more expensive for GW. You have to remember that they've got that massive retail chain monkey riding shotgun on their back, or a loadstone ready to pull them down. In any event, ideally a company will hit a sweet spot where the per unit price reaches a sustainable level. Since there is a retail chain to begin with, it kind of discounts the concept that GW is around to support a handful of fans who spend massive amounts of money. If this were the case, they would close the retail outlets and just make an online buyers club or some such for these fans to interact with them; this would increase their profits exponentially overnight.

Since the retail chain exists, the assumption is that GW is a growth-minded company that wants to attract new customers, not simply maintain a steadfast core of current hobbyists.

I'll also disagree that catering to a select group would be sustainable for any length of time because if any of them dies or falls off, they're not as easily replaced as 1000 other people buying a few models each. Restricting your audience will result in a smaller consumer base that opens your company up to any of a myriad of issues that could result in its premature demise; it would only take one miscalculation to send the company into a death spiral so tight that there would be no escape. GW has avoided this due to strong cash reserves. I disagree with Kirby et al on a number of management decisions but I invest in the company because I know that, if nothing else, they know how to manage and manipulate the balance sheet to show a profit and continue to pay dividends. I shiver to think of a real gamer running the show up there, the company would truly die quickly then.

 Talys wrote:
You make good points, agnosto

I would say that there should be a balance between gamers, hobbyists (p&m), and business folks at the helm. At the end of the day, you need to run the financial component competently (which I agree with you, they do well), and try to be the company that your core customers and peripheral customers want you to be (which I think they have less success in).

In the absence of products at least SOME people love, you wind up with HP: a company that doesn't make much that's cool anymore, and is run by corporate types that don't really connect with anyone other than Wall Street. Cough. Carly Fiorina. cough. I can't believe she's now running for US president and polling at 9% (among likely Republican voters).

All very true. I've learned through my own missteps to let the creative types do their thing, within reason, while I keep the money and compliance stuff straight. Some painful lessons in there over the years.

 Chute82 wrote:

Back on topic

I think one of the biggest bone head moves from GW over the years was to end the outriders. These where the guys and girls that helped build your local communities. All other companies have these volunteers that help grow your communities which in turn makes the company more money. A health community is good for the buisness.

I'd argue that this makes more sense and is more "intelligent" than running their own, costly retail stores.