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And there in lies the problem. Concentrating one's business model to the degree that GW has is a long-term value problem.

As for companies not being for sale? Every company is for sale...every company. The reason you start a company may be passion and all of that other stuff, but in the end a company exists to make money. Selling a company you successfully build for more than it's worth can be one of the great moments of being an entrepreneur. And if you have faith in yourself and your ideas, a great entrepreneur can do it again.

Bringing smaller studios under your roof is a strategy that software companies have used forever. You are buying talent. This is what was so irking about Kirby's statement. He stated the following:

"Risks
People
Our biggest risk is the people we employ.
The potential damage to the Group is enormous.
We mitigate this risk through internal recruitment and using our Academy to educate and train and ensure we recruit well."

Creativity is limited only by one's willingness to be creative. As this quote implies, GW doesn't want to be creative. Purchasing a smaller studio and taking a creative risk could do wonders for this company. This reports says effectively, "We don't need to be creative." For a game company that is a real problem.

Funny, I've seen (and heard of) enough guys refuse ridiculously high offers because the company was earning more than enough for them to live comfortably (and then some) and they loved doing what they did there.

Might be an issue of different continents, though, But no, certainly not every company is for sale. There's a surprisingly large group of folks who don't give a damn about more money once they have enough of it

 Bolognesus wrote:
But no, certainly not every company is for sale. There's a surprisingly large group of folks who don't give a damn about more money once they have enough of it

Every public company is for sale. Once you go public, you are for sale.

YakManDoo wrote:
Bringing smaller studios under your roof is a strategy that software companies have used forever. You are buying talent.

Exactly. And established talent with a track record at that.

Kirby wrote:Our biggest risk is the people we employ. The potential damage to the Group is enormous."

I can't imagine working at a company where I was seen as the enemy. Where those above me are afraid of what I might do to the point that they claim it is the biggest risk their business has.

What a nightmare.

No wonder there is no room for creativity. That would be potentially damaging to the Group!

YakManDoo wrote:
Creativity is limited only by one's willingness to be creative. As this quote implies, GW doesn't want to be creative. Purchasing a smaller studio and taking a creative risk could do wonders for this company. This reports says effectively, "We don't need to be creative." For a game company that is a real problem.

No creativity, no reinvestment into their own business. I guess that leaves doubling down on the yes-man culture, raising prices on new releases and cutting costs wherever and whenever possible. And then paying out every ounce of cash as dividends to keep the investors happy and to fund Kirby's retirement.

Given Kirby's wealth and how the current arrangement benefits him so much, things won't change from that plan until he's retired. And then the ingrained yes-man culture might make change really, really hard even after he's gone.


Automatically Appended Next Post:

 Bolognesus wrote:
Might be an issue of different continents, though, But no, certainly not every company is for sale. There's a surprisingly large group of folks who don't give a damn about more money once they have enough of it

That's why you talk with them and find out. You approach the owner and express interest and attempt to start negotiations. If they say no, then it's exactly the same as if you never approached them at all: no loss. And it actually can be beneficial once word gets out that you are looking to acquire talent, even if many people are not interested. You might get contacted by an owner who you thought would never sell. The general market participants would see your company as expanding and acquiring new divisions. You can become a growth story on the stock market again.

 Bolognesus wrote:
Funny, I've seen (and heard of) enough guys refuse ridiculously high offers because the company was earning more than enough for them to live comfortably (and then some) and they loved doing what they did there.

Might be an issue of different continents, though, But no, certainly not every company is for sale. There's a surprisingly large group of folks who don't give a damn about more money once they have enough of it

This is a great point! Sorry, I get so American capitalist in these conversations. Most of the folks I've met who build businesses build them and when the offer is right they sell, then they go off to do it again. Entrepreneurial addiction maybe?

It's true that not every company is for sale. Just as its true that there are no absolutes. The price could be totally right, but the terms of the sale might not be worthwhile. Such as not entering the market for 5 years or firing a portion of the staff as they are redundant. I know I've turned down a couple offers on my company this past year for similar reasons. Although, given the "right" offer I would sell.

That said, I think the worst thing GW could do right now is buy up the competition. Competition is a healthy thing. GW essentially had very little of that for too long, now that its here expect them to lose a bit of market share then rethink their strategy. That's just the way I works. Market dominators always grow complacent until the little guys innovate and make headway. The dominator then begins to innovate themselves by changing price models and products.

So I'm glad GW's financials are "ok". I'm equally glad the competition is making at least some headway. Because in the end we, as gamers, will win.

clively wrote:
That said, I think the worst thing GW could do right now is buy up the competition. Competition is a healthy thing. GW essentially had very little of that for too long, now that its here expect them to lose a bit of market share then rethink their strategy. That's just the way I works. Market dominators always grow complacent until the little guys innovate and make headway. The dominator then begins to innovate themselves by changing price models and products.

So I'm glad GW's financials are "ok". I'm equally glad the competition is making at least some headway. Because in the end we, as gamers, will win.

I think there are a couple of things here with regards to the annual report that are important to consider.

1. GW buying up a competitor/small independent studio would be good for them potentially, but maybe not for us the consumer.
2. Competition is a healthy thing unless you are the one with whom they are competing.
3. Dominators don't necessarily ever innovate.

1. We might lament this, but bringing in a fresh creative direction for a creative industry might be really good for GW. However, Kirby has said that won't be happen, because in a nutshell, "We are GW. No one in the industry is as big as us, therefore we are the only ones who know how to do miniatures at this scale of production." He may have a point, but this kind of closed-mindedness at the top of management is something that kills companies. Never poo-poo the locals, but never assume you have all of the knowledge in the world to do what you do. There's always a different way that can be good for you.

2. Competition...some companies (Microsoft being chief in my mind.) keeps chugging along while trying to deal with competition. Their internal culture won't let them compete and whenever it does, it just reinforces their awful culture. They make plenty of money that Ballmer seems to never be in danger of being unseated, and yet they fail to innovate and grow new product lines. Arguably this is because their culture won't let them. (I think this annual report is indicative of an analog culture of stagnation.)

3. See 2. Some companies are incapable of innovation even as they are the biggest movers in a given industry.

This annual report isn't so much a "death knell" as it is for me a "head scratch." I can't understand an upper management team this lazy. I've seen it before, but it always confounds me. You live in an adversarial relationship with your employees? You settle for inflation-matching grow? Your brick-and-mortar presence is stagnant and you blame the rent prices? (Rent prices in commercial real estate are high when an area commands a certain price. That means that if the rent is high it's because the retail market generally determines the space better for retail (traffic patterns of both feet, cars and public.) If your customer is middle class, then you need to be in commercial areas they frequent. Sitting next to a Gap in the new outdoor mall in the yuppie part of town costs money, but your principal consumer spends GW money!!! JEepers...)

There is so much off in this report... GW isn't going anywhere, but who would want to work for such a passion-less management team?

Unless you work under the assumption of.

"I want to keep the company in short gain standing for the next 3 years, until I retire with a big fat paycheck, pension and sold shares."

Then, suddenly the actions make some sort of twisted sense.

GW is Kirby's personal cash machine. Everything GW does makes so much more sense when you understand that the company is run for his benefit and not for the hobbyist or customer. Usually companies have a very strong value proposition for their customers, whereas GW is all about getting as much money from each customer as possible before they quit and are replaced by the next one recruited through the demo sales process or by a well meaning friend telling them about 40k.

Kirby even sees his own staff as a threat to his designs. In fact, he calls them the greatest risk to the company. The company isn't being run for the benefit of the hobbyist. Certainly not the employees who depend on it for their livelyhood. It's being run for the benefit of one man. To maximize every bit of money he can extract, even to the point of borrowing money to pay dividends like he has in the past, or this year, dipping into previous year's cash reserves.

Kirby and his ilk don't realise the most fundamental precept in Business. Without customers buying product the company goes bust, it is that simple.

 Achaylus72 wrote:
Kirby and his ilk don't realise the most fundamental precept in Business. Without customers buying product the company goes bust, it is that simple.

That's wildly inaccurate. Of course they realise this, I'm fairly sure I could outline the basic principles to my dog and she'd understand it.

The issue here is they aren't concerned with retention of business. Their whole model is based on inducting new customers, getting the initial purchase from them and then anything else is a bonus. The irritating thing is that seems to have worked for some time, but the data could suggest that we're over the hump on that particular approach.

If they have indeed made their hay, and now the skies are clouding over, if they really know their stuff, we may see a shift in focus to a different approach in the next year or two.

weeble1000 wrote:



Jes Goodwin ..... even if he has to compromise his morals to do it.

He's making army men, not Zyklon B.

 azreal13 wrote:
Their whole model is based on inducting new customers, getting the initial purchase from them and then anything else is a bonus.

Are we talking about the same GW with no advertising at all and a 125$ Hobbit starter box?
This doubling of prices strategy will only work another 2-3 years, until Kirby leaves the company. Coincidence?

 Kanluwen wrote:
Of course there is going to be creativity in a larger kit. There is more room for it.
How creative can you get with a new infantry unit? Or a tank?

I see no logical reason why creating a human sized model does not need creativity. Or less than creating a tank.
Even GW showed it with the Dark Eldar revamp.
If you are out of creativity, it doesn't matter whether you sculpt a mutilator or a Bulldozer of Hell.

 Kroothawk wrote:

 azreal13 wrote:
Their whole model is based on inducting new customers, getting the initial purchase from them and then anything else is a bonus.

Are we talking about the same GW with no advertising at all and a 125$ Hobbit starter box?
This doubling of prices strategy will only work another 2-3 years, until Kirby leaves the company. Coincidence?

No, saying "no advertising" is a misnomer. Their high street shops are their advertising, which are a perfect fit as they can pounce on unwary shops that wander in.

It's not good advertising, but it isn't no advertising.

 azreal13 wrote:
No, saying "no advertising" is a misnomer. Their high street shops are their advertising, which are a perfect fit as they can pounce on unwary shops that wander in.

It's not good advertising, but it isn't no advertising.

Ever been to USA or "the continent", trying to find a high street presence of GW there?
China has 2 shops currently

 azreal13 wrote:

 Kroothawk wrote:

 azreal13 wrote:
Their whole model is based on inducting new customers, getting the initial purchase from them and then anything else is a bonus.

Are we talking about the same GW with no advertising at all and a 125$ Hobbit starter box?
This doubling of prices strategy will only work another 2-3 years, until Kirby leaves the company. Coincidence?

No, saying "no advertising" is a misnomer. Their high street shops are their advertising, which are a perfect fit as they can pounce on unwary shops that wander in.

It's not good advertising, but it isn't no advertising.

Really wow

 loki old fart wrote:

 azreal13 wrote:

 Kroothawk wrote:

 azreal13 wrote:
Their whole model is based on inducting new customers, getting the initial purchase from them and then anything else is a bonus.

Are we talking about the same GW with no advertising at all and a 125$ Hobbit starter box?
This doubling of prices strategy will only work another 2-3 years, until Kirby leaves the company. Coincidence?

No, saying "no advertising" is a misnomer. Their high street shops are their advertising, which are a perfect fit as they can pounce on unwary shops that wander in.

It's not good advertising, but it isn't no advertising.

Really wow

Grumble, grumble...autocorrect..grumble.


Automatically Appended Next Post:

 Kroothawk wrote:

 azreal13 wrote:
No, saying "no advertising" is a misnomer. Their high street shops are their advertising, which are a perfect fit as they can pounce on unwary shops that wander in.

It's not good advertising, but it isn't no advertising.

Ever been to USA or "the continent", trying to find a high street presence of GW there?
China has 2 shops currently

They're a UK company, they are apparently decidedly UK focused, look at RoW pricing!

 azreal13 wrote:
They're a UK company, they are apparently decidedly UK focused, look at RoW pricing!

Following that argument, they must be a Bahrain based company

 azreal13 wrote:
They're a UK company, they are apparently decidedly UK focused, look at RoW pricing!

And this is why GW's management are incompetent idiots. If you're getting huge percentages of your sales from other countries you don't just blindly assume that the same strategy works everywhere, you find someone who understands each different market and run them independently. But apparently GW would rather keep pushing ahead with empty retail stores in the middle of nowhere as their only 'advertising' because that's what works in the UK.

frozenwastes wrote:GW is Kirby's personal cash machine. Everything GW does makes so much more sense when you understand that the company is run for his benefit and not for the hobbyist or customer. Usually companies have a very strong value proposition for their customers, whereas GW is all about getting as much money from each customer as possible before they quit and are replaced by the next one recruited through the demo sales process or by a well meaning friend telling them about 40k.

azreal13 wrote:
The issue here is they aren't concerned with retention of business. Their whole model is based on inducting new customers, getting the initial purchase from them and then anything else is a bonus.

Peregrine wrote:
And this is why GW's management are incompetent idiots.

...to me it really looks more like the idiots are the ones who are supporting this flawed business model - the customers. Is the IP really that addictive?! Because there are far better designed and playtested rulesets out there, there are better and cheaper models out there, and there are more player friendly companies out there - so that only leaves the IP.

Certainly, anyone who criticises GW's behaviour while continuing to chuck money their way is hypocritical to some extent. Personally, I've never boycotted them, why should I when I still enjoy a game? But I do make very different buying decisions now on where I buy a much larger percentage of my models and paint, and have branched out into non GW games.

All I can speculate is there are still enough people plugged into their particular Matrix who aren't aware of what choice is available these days, or others who simply don't care/have enough impulse control to put their money where their mouth is.

I will buy the new SM book, I will buy some of the new kits (from a discounter) if I like them, and I honestly don't see me spending any more cash with GW until 7th hits.

Another thing is that GW's soft styrene plastic kits are fun to put together. While other companies like Dreamforge, Perry, Warlord, Fireforge (and many others) also offer kits in that material, not everyone knows about them. And other than Dreamforge and maybe Mantic, there's not a lot of sci-fi stuff available in a soft, easy to work with styrene.

And by soft, I mean compared to the hard styrene you'll find in a lot of injection moulded historical model kits or perhaps gundam kits.

God, I love Perry Plastic kits. I don't even play historical wargames, but Perry kits are just top notch. Perfect for conversions, excellent prices, good selection of bits and options...anyway, yes, I agree about the material.

However, use of that material is democratizing quickly. The world is changing! Of course, if I was making more than a million dollars in dividend payments every year, would I want to rock the boat, especially if that boat was full of sycophantic yes men and my position was unalterably secure?

Alabaster.clown wrote:

...to me it really looks more like the idiots are the ones who are supporting this flawed business model - the customers.

Careful there...

... Is the IP really that addictive?! Because there are far better designed and playtested rulesets out there, there are better and cheaper models out there, and there are more player friendly companies out there - so that only leaves the IP.

Yep, pretty much. That's what happens when you have 25 years of history and an incredibly productive publishing arm.

As much as it pains me to have to be the one to point it out, the threads hit the limit I think (all we're missing is the ward references in terms of the same old arguments). Like it or not, whether or not you think "They'll go out of business soon" or "kirby will spend another year or two lining is pockets and then gut the place", well those same sentiments crop up every 6 months, and they're around to say. Complain about "lack of growth" or not if you want, but the bottom line is they can sell their product in sufficient numbers to scrape by, and likely will do till we're all teaching our kids/grandkids to roll dice. Carrying onthe same old arguments like that is like saying "this next government will be 100% more trustworthy than the current one once they get ran out."

 Peregrine wrote:

 azreal13 wrote:
They're a UK company, they are apparently decidedly UK focused, look at RoW pricing!

And this is why GW's management are incompetent idiots. If you're getting huge percentages of your sales from other countries you don't just blindly assume that the same strategy works everywhere, you find someone who understands each different market and run them independently. But apparently GW would rather keep pushing ahead with empty retail stores in the middle of nowhere as their only 'advertising' because that's what works in the UK.

Strange it seems to be working in the US though. They are increasing sales in the US and the number of stores year on year.

This follows GWs change of tack in the US a few years ago.

It seem they have a plan for the US that works.

So be a dear and keep buying the Exchequer needs a new Rolex.

My sense where this annual report is different is in the "employees as risk" language. Whatever guesses the community was making regarding the secret lives of Kirby, this report most explicitly describes the GW culture as many have imagined it: an inflexible and myopic executive team of "smartest men in the room."

Another piece I've found interesting is how weak the brick and mortar side of their business really seems to be along with their inability to find a formula that works in their physical stores.

I don't think they are going to die anytime soon, but I'm curious to see how "loose lips" Kirby starts getting in these reports. It's just a fascinating spectator sport. I'd love to see an MBA case study on this company.

I also found the open bashing of GW employees ("we hire them for attitude, not for skills") and 40k RPG licensees ("who heard about RPGs ... FFG is good at card and board games") surprisingly honest and dumb at the same time. But Kirby is in a position where he can insult his minions without any negative consequences.

 doc1234 wrote:
As much as it pains me to have to be the one to point it out, the threads hit the limit I think (all we're missing is the ward references in terms of the same old arguments). Like it or not, whether or not you think "They'll go out of business soon" or "kirby will spend another year or two lining is pockets and then gut the place", well those same sentiments crop up every 6 months...

Stop making caricatures of people's positions. No one is saying they'll go out of business soon or that Kirby will only continue with what he's doing for another couple years.

And it doesn't matter if you don't find the discussion interesting. That the beauty of Dakka Dakka-- not everyone has to participate in every thread if they're not interested. Some of us are interested in an ongoing discussion and have had our opinions changed dramatically year-in-year-out. The near total lack of predictions of GW's demise should be a pretty clear sign of this.

 frozenwastes wrote:

Kilkrazy wrote:

 cincydooley wrote:

I think I mispoke. I didn't mean stagnation, I meant that it's simply harder to show large growth the larger you get without significant increases in volume. Again, it's much easier to show a 3% increase on $1MM than on $140MM.

That's true in one sense, however bigger firms have more resources to invest in new products.

And here's the crux of the issue. I've bolded the important part.

GW has their in house tooling and in house production and studio and they're working at something near capacity. GW had loads of cash to invest into new products. But they didn't. Instead, they paid it all out to shareholders as dividends and then also went into the previous years cash reserves and paid that out as well.

You can grow a big company just fine (and GW is not a big company) but you have to reinvest. What Cincy is saying about it being easier for the little guys to grow is true only so far as the larger company does not reinvest. An established company has distribution channels, an existing customer base and a variety of other factors that would make an effort to grow easier, not harder. Being the little guy trying to break into the industry is way harder than leveraging your existing position to grow your business.

GW won't spend a dime to do it. Not a single part of their operation is apparently worth the reinvestment. Instead, it's slash costs more and more and pay out an overly large dividend.



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boyd wrote:

Its squeeky wheel syndrome. People who don't like something are more likely to say something than people who do like something.

This is also why GW's reliance on word of mouth and their disregard for customer retention is a really bad idea. GW now has an army of ex-customers poo-poo-ing what they do. And they created this anti-marketing force they now have to struggle against.

Customer retention and good will is so important.

First, just because they are larger doesn't mean they have more to invest. Most companies want to reinvest in their facilities. Better facilities usually means better models. GW is already on top when it comes to facilities. That is what separates them from PP and the rest. PP has some good models but they are in no way able to match the customization GW provides. When PP gets to that point where you can easily conver their models without hacking them to pieces and green stuffing the model they will be on par in terms of making models. That is GW's major strength compared to the other miniature companies. You as a customer can make your little toy soldier look different from everyone elses. Heck you can even buy other models and kit bash your own to make them even more unique. You can even go out and buy bits from FW to further that effort.

Also most small businesses tend to pay their owners heavily. Whether you're a sole proprietor or small public company, unless you've got something specific to invest in paying your owners typically is what they are looking for. Kirby is one of the largest investors but he couldn't make them pay dividends if the other investors didn't want them too. So if he gets $1MM in dividends, where did the other $19MM in dividends go? He only own 4-5% of the Company and cannot get the company to pay dividends single handedly. Besides the Company is not a growth stock. If thats what you're looking for you're a poor investor as this Company steadily pays dividends and pretty high dividends as well. Thats what you're buying, not that the potential share price will take off.

As far as an "army of ex-customers" if you're that jaded with the hobby, why haven't you moved on to a new one? I used to play M:TG back in middle school some 17 years ago - I have no desire to bash that game. I had fun but grew up and moved on. It was fun while it lasted and that was it. I wouldn't say anything positive or negative about it because I don't care. Why would you carry such a grudge? I would move on to greener pastures and not give it another thought. Good reviews and bad reviews are always news - I would be more worried if there were no reviews. Nobody caring would speak louder than the nay sayers.