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 cincydooley wrote:
You all must run the most successful businesses! Where can I buy your company stock!

You're not a doctor so you can't have opinions on what's healthy and what's not!
You're not an architect so you can't have opinions on what buildings are good and which are not!
You're not a cook so you can't say food is bad!
You're not an Enron exec so you can't have an opinion on management milking shareholder value!

Hopefully that's enough to illustrate the fuzzy thinking you are operating under.

Also, you may have missed the part where I talked about how Kirby is getting super rich off of all this. GW is his personal cash machine and if the goal of becoming a CEO is to get more money for yourself, he's doing a great job. Unfortunately there's this whole acting in the long term interests of the shareholders thing that people lose sight of along the way.

 cincydooley wrote:
It's a public company. Their goal is to return value to their shareholders. This includes Kirby.

And nobody is disputing that they are going to successfully do that in the immediate future. I'm sure GW will continue to make a nice profit until the current management cash their retirement checks, but that doesn't mean that GW's long-term future is promising, or that their current actions are any less damaging.

(And if you think that the management of a public company would never trash it to make short-term profits and move on to the next business you really don't understand how things work.)

You can have an opinion, but unless you've run your own business or been a part of a public company's decision making process, it means about as much here as it would for me to give le maz lessons.

And what's your business experience?

Peregrine wrote:IMO that rate will probably start to increase. GW's current business model involves high turnover, without a constant supply of new customers they will struggle to exist as most of their existing customers quit the game with nobody to replace them. And one of the biggest reasons GW is able to get those new customers right now is their position as the biggest game in the market. People tend to default to playing the game everyone else is playing (why WoW is so big, for example), so as long as they keep that critical mass they'll continue to get most of the new miniature wargame customers. On the other hand, once they slip below that point the answer to "what game are all my friends playing" is not going to be a GW game anymore, and those customers will go elsewhere at an increasing rate.

This is a very interesting point. Where I am, GW has already become irrelevant. There's a local GW one person operation and once a year there is a 40k tournament (no WFB anymore) that some friends of mine run. The local stores that have miniature gaming days have all replaced 40k and WFB with other games. GW has become functionally irrelevant here. It's like a greater concentration of their lost market share happened here. So it probably means some other areas are holding out just fine. But I do see what you mean about a critical mass. I think GW has a long ways to go before they get there. The UK and EU areas of operation still have very, very high rates of GW saturation and they can shrink those areas through price increases for a long time. As you say, surely long enough for the current management to retire rich and happy.

cincydooley wrote:
No. It's just tiring hearing the same "blame Kirby blah blah blah nonsense".

It's a public company. Their goal is to return value to their shareholders. This includes Kirby.

There's no "blame" here at all. Kirby is doing what money sucking business people do-- suck money. I don't blame ticks for sucking blood, so why should I blame CEOs for sucking money? The only people who should blame him are those whose money has been sucked away. Since GW lost me as a customer, that's not me anymore. I don't own GW stock, so I don't blame Kirby for destroying shareholder value there either.

You can have an opinion, but unless you've run your own business or been a part of a public company's decision making process, it means about as much here as it would for me to give le maz lessons.

And you know about my life and career how exactly?

Peregrine wrote:And nobody is disputing that they are going to successfully do that in the immediate future. I'm sure GW will continue to make a nice profit until the current management cash their retirement checks, but that doesn't mean that GW's long-term future is promising, or that their current actions are any less damaging.

(And if you think that the management of a public company would never trash it to make short-term profits and move on to the next business you really don't understand how things work.)

Yeah, corporate governance is a difficult landscape to navigate. It's so easy for a company to have its shareholder interests and management's self interests diverge.

 Peregrine wrote:


And what's your business experience?

I don't have enough to make suggestions on how a successful multi-million dollar company should manage their business.

Manage projects and new product? Sure.

How they should manage their business in regards to its long term health? Nope.

That's why you don't see me speculating on it.


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"Money sucking business people"? What does this even mean?

 frozenwastes wrote:
Yeah, corporate governance is a difficult landscape to navigate. It's so easy for a company to have its shareholder interests and management's self interests diverge.

Well, don't forget that GW's management contains one of its major shareholders. So his interests align, he can spend a few more years writing dividend checks to himself (instead of investing the money in future growth) and raising short-term profits (again at long-term cost) until he retires and sells his stock at its peak before any of the long-term damage becomes apparent.


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 cincydooley wrote:
"Money sucking business people"? What does this even mean?

Management/investment bankers/etc whose sole contribution is to direct money away from doing productive things and into their own bank accounts. See also: corporate raiders, vulture capitalists, etc.

 Peregrine wrote:

 frozenwastes wrote:
Yeah, corporate governance is a difficult landscape to navigate. It's so easy for a company to have its shareholder interests and management's self interests diverge.

Well, don't forget that GW's management contains one of its major shareholders. So his interests align, he can spend a few more years writing dividend checks to himself (instead of investing the money in future growth) and raising short-term profits (again at long-term cost) until he retires and sells his stock at its peak before any of the long-term damage becomes apparent.

You do realize that the CEO of any successful company should be one if its largest individual shareholders, right?


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 Peregrine wrote:


Management/investment bankers/etc whose sole contribution is to direct money away from doing productive things and into their own bank accounts. See also: corporate raiders, vulture capitalists, etc.

Ahh. I see the perspective you're coming from now. Thanks. It enlightens any future commentary.

 cincydooley wrote:

"Money sucking business people"? What does this even mean?

It means that there's a conflict of interest when you have someone who is supposed to be maximizing shareholder value who is in a position to sacrifice long term growth and reinvestment of capital in order to pay themselves more. Kirby now has the incentive to not reinvest revenue in the business and instead pay himself more as Peregrine outlined. And the best part was that he got his shares mostly through stock options, so he never had to pay full market price for his dividend cash machine.

Kirby is outstanding at using GW as his personal ATM. Many new MBA graduates would see his position as "living the dream." He's got a small company held by institutional investors that he can placate while he pays out the company's value into his own pocket. His career is a complete success in terms of his own compensation.

 frozenwastes wrote:


You're not a doctor so you can't have opinions on what's healthy and what's not!

Sure, but I'm going to listen to the MD before I listen to the girl at GNC.

You're not an architect so you can't have opinions on what buildings are good and which are not!

I assume you mean "good" aesthetically, but it's so vague it's really hard to respond

You're not a cook so you can't say food is bad!

Completely subjective. I would, however, listen to the chef over the random joe when asking HOW to cook.

The entire point of "you don't run a big business so you don't know what you are talking about" is to shut down discussion that you don't like. We get that. You don't like that we're saying not-nice things about your pal Kirby and your favorite game company and you want us to stop.

Now you're nitpicking my analogies to the point where your asking about definitions of "good". The whole point is that we can have a discussion about these things without having to be currently in a profession related to them.

I used to be a corporate accountant. I'm not currently in the industry and have no plans to re-enter that world at all.

Now what you can do is say "I don't believe you ever worked as an accountant!"

Or you can stop trying to shut down discussion just because you don't like what people are saying.


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 Peregrine wrote:

 frozenwastes wrote:
Yeah, corporate governance is a difficult landscape to navigate. It's so easy for a company to have its shareholder interests and management's self interests diverge.

Well, don't forget that GW's management contains one of its major shareholders. So his interests align, he can spend a few more years writing dividend checks to himself (instead of investing the money in future growth) and raising short-term profits (again at long-term cost) until he retires and sells his stock at its peak before any of the long-term damage becomes apparent.

Perhaps I'm giving Kirby too much credit. Maybe he's not intentionally siphoning shareholder value. Maybe he thinks GW's current path really can go on for ever and that as they churn through their customer base, there will always be a new rube to take the place of the people who quit and that people really will buy their products no matter the cost. Maybe he built his cash machine as a side effect of actually trying to run the business well. Though I do remember Kirby making a list of overpaid CEOs back in the LOTR years, so probably not.

Honestly, mr wastes, you're one of the few that offers anything cogent. My initial reminds wasn't actually directed at you, but rather dudes like peregrine that are commenting without any appropriate sense of scope.

That's great that you were a corporate accountant. If that granted you insight to the senior level decision making, then guess what? Your opinion holds more water. But it becomes obvious in these types of conversations that plenty of those most vociferously commenting really don't have any background to substantiate anything they're saying.

But then against also boils down to philosophical difference between what a CEO should and shouldn't be entitled to. We clearly differ In opinions there, so it's not much worth arguing. I have no problem with Kirby owning shares or being the largest individual shareholder: he should be. But those 4 investment firms with larger share holdings certainly have input as to the fiscal health and direction of the company.

 cincydooley wrote:
Honestly, mr wastes, you're one of the few that offers anything cogent.

I can only assume that you are including yourself in the list of those that don't?

 H.B.M.C. wrote:

 cincydooley wrote:
Honestly, mr wastes, you're one of the few that offers anything cogent.

I can only assume that you are including yourself in the list of those that don't?

Oh yeah? Glad that's the only assumption you can draw.


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But, you know, great addition to the dialogue. You're always there to add insight and wit, oh lord benevolent overseer HBMC. Whatever would we do without you?!?

 cincydooley wrote:
My initial reminds wasn't actually directed at you, but rather dudes like peregrine that are commenting without any appropriate sense of scope.

Then why not address that supposed "lack of scope" (whatever that means) instead of just complaining that we're not CEOs so we don't have a right to criticize? If we're as obviously wrong as you say then it should be easy to stick to the facts and demonstrate how we're wrong.

But those 4 investment firms with larger share holdings certainly have input as to the fiscal health and direction of the company.

You're assuming that those investment firms have any active involvement in the company beyond reading the financial reports (which are written to portray GW as favorably as possible). It's more likely that they read the reports, note the dividend checks and current stock prices, and leave it at that. After all, GW is profitable in the immediate future and that's all that matters. To them GW is entirely disposable, once it stops making immediate profits they'll happily dump their shares and invest the money in the next company.

Anyway, time for a summary post:

GW's current health? Fine. Revenue might be flat, but it's consistent. And GW is very very quick to lay people off in order to cut staff. They're not going anywhere anytime soon.

Long term health? Fine for a lot longer than most ex-customers might think. I think that GW's management has real sales data and has seen the impact of their price increases and knows that they can safely continue on that path for quite some time.

Market share? Shrinking. But they have a lot to shrink through before it's a major problem. I think they also isolate themselves somewhat from the critical mass problem because their customers are often ignorant of alternatives.

Share price? Probably up from here, but I'm not investing. The vast majority of shares are held by institutional investors and the volume available to trade is actually relatively low. So any major news or announcement will often have a larger effect on the price than it otherwise would. It's a volatile stock, but we're increasingly entering a period of time where aging investors are looking for income, so if they can keep up their regular dividend payments and continue to protect their margins (raise prices) and cut costs (lay people off) their shares will remain in demand.

 Peregrine wrote:

 cincydooley wrote:
My initial reminds wasn't actually directed at you, but rather dudes like peregrine that are commenting without any appropriate sense of scope.

Then why not address that supposed "lack of scope" (whatever that means) instead of just complaining that we're not CEOs so we don't have a right to criticize? If we're as obviously wrong as you say then it should be easy to stick to the facts and demonstrate how we're wrong.

But those 4 investment firms with larger share holdings certainly have input as to the fiscal health and direction of the company.

You're assuming that those investment firms have any active involvement in the company beyond reading the financial reports (which are written to portray GW as favorably as possible). It's more likely that they read the reports, note the dividend checks and current stock prices, and leave it at that. After all, GW is profitable in the immediate future and that's all that matters. To them GW is entirely disposable, once it stops making immediate profits they'll happily dump their shares and invest the money in the next company.

So this entire argument is predicated on the notion that the senior management of GW have no concerns for its long term health. Got it.


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I think that post is spot on, @frozenwastes.

They obviously have sales data that tells them the current path is working for where they need to be and want to go. None of us do. That's sort of my point.

I simply think its ignorant to argue that their entire senior management team has no concern for the long term health of the company.

 cincydooley wrote:
Honestly, mr wastes, you're one of the few that offers anything cogent. My initial reminds wasn't actually directed at you, but rather dudes like peregrine that are commenting without any appropriate sense of scope.

Peregrine and I pretty much completely agree on all points except I think a tipping point or critical mass event is either farther off than Peregrine might think or GW will continue to insulate themselves from it by doing their best to be a one stop source for hobby needs and thus keep their customer base ignorant of other options. It's entirely possible that GW will become so separated from miniature games sold through distribution that you'll have people who "want to play what everyone else is playing" choose GW even when GW is no longer the widest played option because they happened to be exposed to GW's channels rather than an independent store carrying multiple competing options.. Though betting on this is betting against the most internet savvy generation we have yet to see. It's easier than ever for GW's competitors to let miniature gamers know about their products.

I already see it happening. You have areas where GW has faded and has become functionally irrelevant (they gave up over half their market share from the LOTR highs after all) and areas where GW is the only game in town. The problem for GW is that they're not really growing. And if they don't change, I doubt macro-economic factors are going to give them new growth without them trying to get it.

 frozenwastes wrote:
I think they also isolate themselves somewhat from the critical mass problem because their customers are often ignorant of alternatives.

Depends on the area, I think. In the UK they're probably well insulated since (apparently) they've driven most of the independent stores out of business and have an obvious GW store in every town. In the US that insulation doesn't really exist. The geography is just completely different, everything is spread out so that even when a city has a GW store (and many don't) most of the people in that city are closer to an independent store (a problem made a lot worse by GW putting their stores in inconvenient places where the rent is cheapest instead of in major malls). So most people buy and play their games in independent stores with shelves full of competing products, game nights for competing products on the calendar, etc.

To give an example: WHFB in my area is pretty much dead, with none of the independent stores even attempting to run events for it. One of my friends tried to get it started again, but the critical mass was already playing Warmachine and anyone coming in looking for a fantasy game had a pretty obvious choice. 40k is still the default scifi game, but it would be very easy to see it switching to Infinity/X-wing/etc if too many 40k players moved on to different games.


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 cincydooley wrote:
So this entire argument is predicated on the notion that the senior management of GW have no concerns for its long term health. Got it.

Let's see...

Declining market share in a growing market but no apparent concern about the problem? Check.

Dumping entire product lines (which are making nice profits for their competition) instead of using them to attract new players? Check.

Complete refusal to do any kind of marketing, previews, etc, that would built interest in the game and attract new customers? Check.

Constant price increases that can not work in the long run? Check.

Cutting store hours and staff to the bare minimum? Check.


Yeah, I think it's pretty reasonable to suggest that GW's management are in "take the money and run" mode instead of building long-term growth.

The thing that annoys me about these threads is not whether or not someone has a high level of expertise in the business world but that arguments are made from the flimsiest of data and over reaching assumptions.

Lets take the growth rate of miniature games and the flat sales argument that is made constantly. One assumption made by GW critics is that the new customers coming into the hobby are equally likely to choose 40k or whfb but are choosing something else instead.

You just do not know that, it is possible that these new games are bringing in people to the miniature hobby that do not have any interest in GW products and would not have come in if it were not for the particular nonGW game that they did pick.

These threads really should be called "I wish GW would fail" or "I hope GW succeeds". They just do not hold up to close examination of the assumptions and data that people argue about.

 cincydooley wrote:
So this entire argument is predicated on the notion that the senior management of GW have no concerns for its long term health. Got it.

It is probably the argument with the most explanatory power. It explains why GW's management has been doing what they are doing better than almost any other explanation. It's also a very common issue with publicly traded companies-- the co-opting of corporate governance and the self interest of management. Some countries, like Switzerland, have even passed legislation about executive compensation in order to stem these conflicts. It's also fairly easy to build a case that such self interest is what caused the mortage-backed securities meltdown that we're still recovering from.

Peregrine, the only one of your check points that doesn't have a reasonable answer that can be attached to it is the marketing one. They could absolutely do more. Perhaps they think their stores are enough. No other miniature company has stores. Or maybe they think their book and video games are enough to draw in more folks. No other miniature company really has those either. They don't advertise in GTM like other minis companies, so that's their major deficit. But their lack of previews doesn't seem to be hurting sales.

Quite frankly, aside from all those poor folks losing jobs, I'd be fine if they got rid of all of GW stores. But then again, if there's using them as their marketing, it doesn't make sense to. They've opened up 3 within 90 mins of me in the last 18 months, so they must be working however GW is intending them to.

JWhex wrote:
Lets take the growth rate of miniature games and the flat sales argument that is made constantly. One assumption made by GW critics is that the new customers coming into the hobby are equally likely to choose 40k or whfb but are choosing something else instead.

You just do not know that, it is possible that these new games are bringing in people to the miniature hobby that do not have any interest in GW products and would not have come in if it were not for the particular nonGW game that they did pick.

But that's not the assumption at all. It's just simple analysis of GW's own numbers:

Let's say I'm running a business, with $100 a year in revenue (coming from selling 10x things at $10 each, a number that I will not publish) in my financial reports. Now let's say this year I report $120 in revenue. That's 20% growth, that looks awesome! But what I'm not reporting is that I made $120 by selling two things at $60 each to my last two desperate customers who had to buy a thing this year no matter what the price. So this means a few things:

1) My "growth" only happened because of price increases. In terms of sales volume/market share/etc my company declined, I increased prices by 500% but only increased revenue by 20%.

2) I never be able to repeat that 20% growth. I can't lose any more customers without going out of business, and I probably can't increase my prices anymore without losing the last customers. So while my competition expands to fill the needs of my eight former customers my own company is going to remain stagnant at best.

3) I probably won't keep the remaining customers. Now that they've bought their thing they'll have a whole year to think about buying from my competition, and probably find them to be a better deal. So my revenue is probably going to decrease.


It's the same with GW: we know that they're losing sales volume and only "growing" because they're raising prices faster than they lose customers for now. Whatever the reason for people buying non-GW games the simple fact is that GW is failing to grow, and it's pretty unreasonable to think that there are no more potential GW customers for them to expand with.

 Peregrine wrote:

Depends on the area, I think. In the UK they're probably well insulated since (apparently) they've driven most of the independent stores out of business and have an obvious GW store in every town. In the US that insulation doesn't really exist.

.

Definitely. In my area, GW has become functionally irrelevant. A single employee store and one independent store that has shrunk the shelf space for GW in half.over the last couple of years. And four other stores that used to carry GW but no longer do at all. I think the US is going to see further segmentation of GW from the rest of the industry.

Let's see...

Declining market share in a growing market but no apparent concern about the problem? Check.

Dumping entire product lines instead of using them to attract new players? Check.

Complete refusal to do any kind of marketing, previews, etc, that would built interest in the game and attract new customers? Check.

Constant price increases that can not work in the long run? Check.

Cutting store hours and staff to the bare minimum? Check.


Yeah, I think it's pretty reasonable to suggest that GW's management are in "take the money and run" mode instead of building long-term growth.

cincydooley refuses to believe that the gaming industry as a whole is growing, so he won't accept point one. For point two, GW might actually believe that any game other than one sci-fi and one fantasy game will cannibalize sales rather than reach new people. What having many, many games in the 90s did for GW was allow people to take a break from 40k or WFB and still stay in the GW family by going with bloodbowl, epic, warmaster, bfg, etc.,. Now people will either give up the hobby as a break or switch to another companies products. As for 3. I agree completely. The LOTR boom was largely in part of the promotional materials produced by an outside company. The price increases can work for quite a long time, as we've discussed, so I'm more inclined to see them as GW's only option to keep revenue from falling, so they can keep up the status quo. So that's definitley support for your assertion there. The staff cuts are also a sign of expection of non-growth and no real thought about the future.

Earlier in the thread you mentioned the payment of dividends rather than reinvesting in the company. So that's another "check" on the list of signs of short term thinking. Dividends paid by most successful companies are usually combined with heavy reinvestment in the company itself as well as an avenue to get additional investment from the share-holders in the form of a dividend reinvestment plan. GW has neither of these things that are common amoung the dividend achievers of the stock market.

 cincydooley wrote:
Peregrine, the only one of your check points that doesn't have a reasonable answer that can be attached to it is the marketing one.

Sure, taken in isolation each one can be explained without "GW IS DYING OMG!!!". But when you add it all together the result is a company that is focused on extracting the maximum possible profit from a declining customer base instead of long-term profit increases through growth. It's the kind of strategy you use when you want a short-term paycheck and consider the company expendable as long as you get paid and transfer your investments before it dies.


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 frozenwastes wrote:
For point two, GW might actually believe that any game other than one sci-fi and one fantasy game will cannibalize sales rather than reach new people.

This is especially funny because GW's competition are busy making similar games to take those sales. It's absolutely insane to worry about Blood Bowl taking some sales away from 40k when the alternative is Mantic's game taking sales away from GW entirely. Unless of course you're near your retirement and share-selling day and are more concerned with the fact that investing in a re-launch of Blood Bowl would mean a smaller dividend check this year, while the profits from the game would only appear after you've already left the company.

JWhex wrote:
Lets take the growth rate of miniature games and the flat sales argument that is made constantly. One assumption made by GW critics is that the new customers coming into the hobby are equally likely to choose 40k or whfb but are choosing something else instead.

You just do not know that, it is possible that these new games are bringing in people to the miniature hobby that do not have any interest in GW products and would not have come in if it were not for the particular nonGW game that they did pick.

But this is worse! This means that GW has no chance to grow into that segment of the market. This means that their competition is successfully reaching new people that they are not and cannot.

 frozenwastes wrote:


cincydooley refuses to believe that the gaming industry as a whole is growing, so he won't accept point one.

No. He doesn't. It's clear that its growing. But when your market share effectively began at 100%, the only place to go is down. He does, however, have trouble acknowledging that anyone beyond Privateer is doing any substantial damage. Could there potentially be a death by 1000 paper cuts? Maybe. But I don't see tons of conventions in the US devoted to infinity or mantic or zenit or malifaux or spartan or dropzone commander (all of which i foolishly own, btw) and I do see multiple where GW games are the star.

For point two, GW might actually believe that any game other than one sci-fi and one fantasy game will cannibalize sales rather than reach new people. What having many, many games in the 90s did for GW was allow people to take a break from 40k or WFB and still stay in the GW family by going with bloodbowl, epic, warmaster, bfg, etc.,. Now people will either give up the hobby as a break or switch to another companies products.

Without seeing some kind of cost-benefit analysis, we'll never know. It could be as simple as the cost of supporting the games not justifying the return on investment.
.

The staff cuts are also a sign of expection of non-growth and no real thought about the future.

Correct me if I'm wrong, but did they not add design staff this year?

Letting go of production staff could simply mean more efficiency, could it not?

I see no problem with killing the B&Ms to one man operations. Is the retail space in any of them really large enough to warrant more than one FTE anyway?

Earlier in the thread you mentioned the payment of dividends rather than reinvesting in the company. So that's another "check" on the list of signs of short term thinking. Dividends paid by most successful companies are usually combined with heavy reinvestment in the company itself as well as an avenue to get additional investment from the share-holders in the form of a dividend reinvestment plan. GW has neither of these things that are common amoung the dividend achievers of the stock market.

Again, could not the introduction of more design staff be seen as reinvesting in the company? Presumably, designers are brought on to develop new/more product, yes?

 Peregrine wrote:

This is especially funny because GW's competition are busy making similar games to take those sales. It's absolutely insane to worry about Blood Bowl taking some sales away from 40k when the alternative is Mantic's game taking sales away from GW entirely. Unless of course you're near your retirement and share-selling day and are more concerned with the fact that investing in a re-launch of Blood Bowl would mean a smaller dividend check this year, while the profits from the game would only appear after you've already left the company.

The self interest over long term interest of the company really does have the best explanatory power.

I have a further theory though. Given that GW brought tooling, mould making and plastic injection in house and that the number of units sold has dropped dramatically compared to their capacity during the height of the LOTR phase, GW needs to manage their tooling capability with their now limited production staff. Space Hulk and Dreadfleet were tooling schedule fillers and the reason they were limited edition products was because they simply have no way to commit their undermanned tooling and moulding equipment to ongoing support of the games. They've simply fired too many production staff to do anything other than limited runs. Only 40k and WFB get regular production runs now and there was even mention about the under performance of WFB in the last few financial reports.

Now Given Dreadfleet failure and how the limited edition Hobbit sets are still available, I'm guessing GW is going to be taking a real hard look at return on investment for their tooling schedule. We could see WFB eventually hit the point where the ROI isn't good enough to justify regular tooling of new kits.

 frozenwastes wrote:
Earlier in the thread you mentioned the payment of dividends rather than reinvesting in the company. So that's another "check" on the list of signs of short term thinking. Dividends paid by most successful companies are usually combined with heavy reinvestment in the company itself as well as an avenue to get additional investment from the share-holders in the form of a dividend reinvestment plan. GW has neither of these things that are common amoung the dividend achievers of the stock market.

Ok, whoa, hold on. I think it would be unfair to say that GW hasn't invested in themselves. I mean, their plastic technology has come a long, long way and whilst we might all hate it and it might be a gak product, they did undergo a big shift when they moved to FineCost. The later was down as a cost-saving mechanism as well, I know that, but still, it's not as if all the money coming into the company just goes into wages, production and filling Kirby's money vault.

 cincydooley wrote:

Without seeing some kind of cost-benefit analysis, we'll never know. It could be as simple as the cost of supporting the games not justifying the return on investment.

We don't really need one. GW obviously wasn't making enough money to want to keep producing their other games. Whether or not they caused the lack of revenue themselves through a lack of support or if they just weren't that good at selling, we'll never know for sure. But as far as cost-benefit goes, the cutting of the product lines is all we need to know.

It's Peregrine's position that these alternate game experiences are what their competition is now providing. If you want a sports game or a smaller model count game, or a space ship game, or a variety of other things that GW used to sell, now they are not selling them at all. You simply have to go elsewhere. So even if they were cannibalizing the sales of 40k/WFB/LotR, cutting them didn't necessarily help.
.

Correct me if I'm wrong, but did they not add design staff this year?

Letting go of production staff could simply mean more efficiency, could it not?

I see no problem with killing the B&Ms to one man operations. Is the retail space in any of them really large enough to warrant more than one FTE anyway?

The design staff isn't really reinvesting because there would have been room in the budget after no longer having to pay long standing employees like Rick Priestly. I'd be willing to bet he was making more than the new entry level positions combined. My guess is that the next financial report is going to brag about reducing design studio costs rather than making further investments there.

I don't think that the production staff cuts are a result of efficiency gains. I bet there are tons and tons of injection moulding machines and equipment from when they were operating at full capacity during the LOTR booms in storage to be used as parts and replacement. They're no where near their levels of production that the LOTR days had. Also, we still have the issue of inflation adjusted revenue being flat and inflation adjusted prices being increased. There is no other answer other than less actual product being sold. So they don't need as many production staff.




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 H.B.M.C. wrote:
Ok, whoa, hold on. I think it would be unfair to say that GW hasn't invested in themselves. I mean, their plastic technology has come a long, long way and whilst we might all hate it and it might be a gak product, they did undergo a big shift when they moved to FineCost. The later was down as a cost-saving mechanism as well, I know that, but still, it's not as if all the money coming into the company just goes into wages, production and filling Kirby's money vault.

I didn't mean to imply the reinvestment was at zero. It's just proportionately low. They revamped their paint and hobby products. Their design studio was been shifted towards computer based design. But none of these things are large investments. Much, much smaller companies like Spartan have the same 3d design infrastructure and anyone can get supplied a line of branded miniature paints by contacting HMG or Vallejo and placing an order. Privateer's paint line is a great example of this as it was done when they were a very small company and it's outsourced to HMG.

The paints also shows that something I said earlier is not technically correct. It's the one part of GW's product offerings that they don't produce themselves. I actually don't know who produces the current paints that GW sells.

I honestly don't know what GW should be reinvesting in. I'm really not sure what would work to turn them back into a growth company. Maybe the best interest of the shareholders at this point is to stay the course and arrange a buy-out or merger. Maybe there really is nothing GW can do with their revenue to turn things around short of a complete overhaul of the customer experience of the product.

 frozenwastes wrote:

JWhex wrote:
Lets take the growth rate of miniature games and the flat sales argument that is made constantly. One assumption made by GW critics is that the new customers coming into the hobby are equally likely to choose 40k or whfb but are choosing something else instead.

You just do not know that, it is possible that these new games are bringing in people to the miniature hobby that do not have any interest in GW products and would not have come in if it were not for the particular nonGW game that they did pick.

But this is worse! This means that GW has no chance to grow into that segment of the market. This means that their competition is successfully reaching new people that they are not and cannot.

I don't understand how proponents for GW's business model (because apparently there are some) can reasonably conclude that what they're doing is reaching new customers? I mean, honestly.

They do not advertise. They rely on word-of-mouth advertisement from veterans that (anecdotally) seem to be leaving the game in droves. Not only that, but a veteran player with a well-painted army trying to explain the cost and time put into his army can easily scare off a new customer. Telling them how cool the lore is and how the game plays is a tough sell when they need the buy-in that the do to really get into the game.

So, while the veteran word-of-mouth avenue is still open, it is more difficult than ever because GW has made it so. So, that leaves their Stores. Now, I cannot speak for any other country (or any other state, for that matter), but there is 1 Games Workshop within 100 miles of where I live. Every time I go there, there is 1 person there browsing or it is locked (during business hours). This does not scream advertisement to me. Also, they have 1 gaming table and the painting area is a shelf bolted to a wall with bar stool lined up to it. No thanks, I'll sit in my comfy chair at home and paint. It is not in an inviting area - the foot traffic is minimal. The only people that are going to go to this Games Workshop are people that know about it. So, that is not an effective advertising tool. Secondly, if someone is attracted into the Games Workshop, they're confronted with the costs of starting up the game. Now, the Hobby Center's job is not to sell them an entire army, but to get them hooked. If they can just get them to buy Dark Vengeance, then they'll be in there like swimwear. Unfortunately for the foot traffic, dropping $100 on what might as well be a board game to parents is unreasonable. Timmy might ask for it for Christmas, but then Timmy will soon realize what all he needs to play a real game and then costs become prohibitive. Dark Vengeance alone is not enough to sustain new customers.

Finally, Black Library and video games were mentioned. I can actually see the Black Library bringing in new customers. The lore is one of the most attractive thing about this gaming system and to get someone hooked on that may cause them to get woven into the game itself. However, what advertising is done for the Black Library? How often do you go into Barnes and Noble looking for a book you don't know exists? Outside of www.games-workshop.com, where is Black Library advertised? I mean, to someone who knows nothing about GW? And lastly, video games. The Dawn of War series was good but it is nearly a decade old. And those playing the new games are going to be faced with the same problem that foot traffic into stores will face - the price tag. Sure, it is reasonable to think that a video game will get you interested in the tabletop game. And then you learn about the startup costs. Suddenly that $50 video game is looking a lot more reasonable than $300-$700 for a decent army. Not to mention the rulebooks, deciding which army to play, finding someone to play against, and breaking into a new gaming group, which can be just as tough and socially awkward as starting a new school.

So, in the lack of advertising, in the prohibitive startup costs, and in the way they are shunning their most loyal fans (the veterans), folks see true growth potential and healthy long-term viability? I'm sorry, I just don't see it.

 cincydooley wrote:
I see no problem with killing the B&Ms to one man operations. Is the retail space in any of them really large enough to warrant more than one FTE anyway?

It's not the space*, it's the store hours. The local GW store is only open five days a week, for limited hours, and is randomly closed when the single employee can't make it to work on a given day or has a lunch break. So when your store network is your only source of advertising I can't see how it's a very good idea to have potential customers show up and see nothing but a "closed" sign.


*Though the tiny space doesn't help, every time someone decides to play at an independent store with more gaming space they're getting exposed to GW's competition.


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 frozenwastes wrote:
If you want a sports game or a smaller model count game, or a space ship game, or a variety of other things that GW used to sell, now they are not selling them at all. You simply have to go elsewhere. So even if they were cannibalizing the sales of 40k/WFB/LotR, cutting them didn't necessarily help.

Unless of course GW starts to believe their own propaganda about being their own Hobby (tm) independent of the miniature wargaming hobby, and having devoted fans who spend all their money with GW instead of customers who pick from a wide range of business depending on who is producing what they want.