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 azreal13 wrote:
Let's just clarify that a ~10% down turn in profits year on year is significant, but to try and parley that into "closing shop by the end of the year" would take such a ridiculous swing in fortunes as to be totally absurd.

Yep. They aren't in any danger of going out of business and the fact they have been cost cutting is a good thing to insure their survival. We can also be pretty confident that their numbers are real since they aren't manipulating their revenue so earnings quality isn't in question.

 azreal13 wrote:
GW are not going anywhere in the short to medium term, the best outcome we can hope for from the recent financials is an attempt to re-focus in order to turn things around, and that the attempt to re-focus brings them back to a place where they start to act with more respect for their whole customer base, and don't just treat it as a resource to be exploited.

I would still argue that most of the primary threat to their survival is the global economy. The US is now officially 1 quarter away from being in a recession, China has contracted for 5 consecutive months* and Europe makes those situations look good by comparison. Needless to say, those are pretty major headwinds. Whether it be by luck or by design, I think they are making the right decisions to survive.

All macro economic arguments aside, people even during a recession/depression find ways to spend money on entertainment. Look back at the Great Depresion and you will find the rise of the board game (see MONOPOLY) for a great example.

In short you can't blame the bad economies of the world for GW's issues. They are bringing the vast majority of it on themselves.

A company that only offers 2 major and 1 minor product lines and somehow tries to parlay that into an international chain of retail stores is asking for a rude awakening.

I owned GW stock until an auto-sell left me with a tidy sum in January when the stock tanked. I don't think that they will go belly-up at any moment but neither do I buy that there is any more cost-cutting to be had. You can only trim so much fat before the corporate body begins to feed upon itself to the detriment of the company as a whole and I think GW's about reached that point. One man operations are not efficient in supplying an open retail outlet to consumers, that's why no serious businesses do it (to my knowledge).

 agnosto wrote:
A company that only offers 2 major and 1 minor product lines and somehow tries to parlay that into an international chain of retail stores is asking for a rude awakening.

I owned GW stock until an auto-sell left me with a tidy sum in January when the stock tanked. I don't think that they will go belly-up at any moment but neither do I buy that there is any more cost-cutting to be had. You can only trim so much fat before the corporate body begins to feed upon itself to the detriment of the company as a whole and I think GW's about reached that point. One man operations are not efficient in supplying an open retail outlet to consumers, that's why no serious businesses do it (to my knowledge).

GW suffering from Anorexia related problems

dereksatkinson wrote:

 azreal13 wrote:
GW are not going anywhere in the short to medium term, the best outcome we can hope for from the recent financials is an attempt to re-focus in order to turn things around, and that the attempt to re-focus brings them back to a place where they start to act with more respect for their whole customer base, and don't just treat it as a resource to be exploited.

I would still argue that most of the primary threat to their survival is the global economy. The US is now officially 1 quarter away from being in a recession, China has contracted for 5 consecutive months* and Europe makes those situations look good by comparison. Needless to say, those are pretty major headwinds. Whether it be by luck or by design, I think they are making the right decisions to survive.

Of course you would. I'm pretty sure you'd argue that for reasons why your milk had gone off.

 darefsky wrote:
All macro economic arguments aside, people even during a recession/depression find ways to spend money on entertainment. Look back at the Great Depresion and you will find the rise of the board game (see MONOPOLY) for a great example.

Of course people will have disposable income during a recession. A recession isn't a complete collapse and neither is a depression. The difference is that people will have less disposable income and will be more selective about where they spend money. If your budget for wargaming drops by 50%, that doesn't mean you'll not buy models, it just means you'll buy less. From a business' perspective, during a business cycle you simply don't expand going into a recession. Smart companies prepare for it. They consolidate their resources and reduce their liabilities and close non-performing stores/product lines. To me, that is exactly what GW is doing while their competition is going crazy over expanding trying to steal market share. If the economy flounders (which it looks like is actually happening) their competition will have a lower return on their investment and in many cases, be unable to pay creditors.

This isn't something new.. It's happened many times over the years because the niche gaming sector is highly cyclical and volatile. Back in 05-06 it was "confrontation is going to surpass 40k!".. What happened there? Oh that's right.. 08 happened..

 darefsky wrote:
In short you can't blame the bad economies of the world for GW's issues. They are bringing the vast majority of it on themselves.

I'm not saying GW doesn't have company specific problems. I'm just stating that the main risk to the company isn't some upstart company trying to steal market share. I think the global economy is going to play a much bigger role in their earnings than how they operate a facebook page.




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 azreal13 wrote:
Of course you would. I'm pretty sure you'd argue that for reasons why your milk had gone off.

Well.. you have to admit that I was saying the economy was slowing before any of this data was released. That discussion was all the way back in January before all the GDP, ISM and retail sales figures came out.

Well, congratulations.

Still doesn't mean it's relevant to the topic.

An apparently more and increasingly dissatisfied customer base and an increasingly higher quality offering from multiple competitors vs economic slow down in China?

This is old ground, I have no intention of retreading it, but I know where my money is in terms of most immediate and telling factors on GW's finances.

Hint: It isn't China.

 azreal13 wrote:
An apparently more and increasingly dissatisfied customer base and an increasingly higher quality offering from multiple competitors vs economic slow down in China?

This is old ground, I have no intention of retreading it, but I know where my money is in terms of most immediate and telling factors on GW's finances.

Not just china. The US and Europe as well. The sector is highly sensitive to changes in disposable income.

dereksatkinson wrote:

 azreal13 wrote:
An apparently more and increasingly dissatisfied customer base and an increasingly higher quality offering from multiple competitors vs economic slow down in China?

This is old ground, I have no intention of retreading it, but I know where my money is in terms of most immediate and telling factors on GW's finances.

Not just china. The US and Europe as well. The sector is highly sensitive to changes in disposable income.

How are you not bored of talking about this?

We have been having the same conversation over and over for months, there has been no new information and we have already discussed how the UK, where I and GW are based, are not the US or even Europe.

I'm done, I guess I'll see you when the EOY report is published, perhaps try talking about some wargaming on this here wargaming site in the meantime huh?

 loki old fart wrote:

 agnosto wrote:
A company that only offers 2 major and 1 minor product lines and somehow tries to parlay that into an international chain of retail stores is asking for a rude awakening.

I owned GW stock until an auto-sell left me with a tidy sum in January when the stock tanked. I don't think that they will go belly-up at any moment but neither do I buy that there is any more cost-cutting to be had. You can only trim so much fat before the corporate body begins to feed upon itself to the detriment of the company as a whole and I think GW's about reached that point. One man operations are not efficient in supplying an open retail outlet to consumers, that's why no serious businesses do it (to my knowledge).

GW suffering from Anorexia related problems

That's funny yet oddly appropriate... The point here is that cost-cutting is something that many talking heads like to throw around as a good thing but there a numerous examples of how damaging it can be if taken too far. My opinion is that GW is there or very nearly so.

 azreal13 wrote:
We have been having the same conversation over and over for months, there has been no new information and we have already discussed how the UK, where I and GW are based, are not the US or even Europe.

Other than the fact the UK had to add hookers and blow to their most recent GDP calculation to massage economic numbers? The UK is all smoke and mirrors. I'd argue they are going to have it worse than most near the tail end of the next recession.

And the UK is the MOST financially interconnected country in the world accord to bloomberg research. Why? Because it has no industry other than finance at this point. What does the UK actually make nowadays?



as for Europe (which the UK is most dependent on)...

-The unemployment rate in the eurozone as a whole is still sitting at an all-time record high of 12.1 percent.

-It Italy, the unemployment rate has soared to a brand new all-time record high of 12.7 percent.

-The youth unemployment rate in Italy has jumped up to 41.6 percent.

-The level of poverty in Italy is now the highest that has ever been recorded.

-Many analysts expect major economic trouble in Italy over the next couple of years.  The President of Italy is openly warning of "widespread social tension and unrest" in his nation in 2014.

-Citigroup is projecting that Italy's debt to GDP ratio will surpass 140 percent by the year 2016.

-Citigroup is projecting that Greece's debt to GDP ratio will surpass 200 percent by the year 2016.

-Citigroup is projecting that the unemployment rate in Greece will reach 32 percent in 2015.

-The unemployment rate in Spain is still sitting at an all-time record high of 26.7 percent.

-The youth unemployment rate in Spain is now up to 57.7 percent - even higher than in Greece.

-The percentage of bad loans in Spain has risen for eight straight months and recently hit a brand new all-time record high of 13 percent.

-The number of mortgage applications in Spain has fallen by 90 percent since the peak of the housing boom.

-The unemployment rate in France has risen for 9 quarters in a row and recently soared to a new 16 year high.

-For 2013, car sales in Europe were on pace to hit the lowest yearly level ever recorded.

-Deutsche Bank, probably the most important bank in Germany, is the most highly leveraged bank in Europe (60 to 1) and it has approximately 70 trillion dollars worth of exposure to derivatives.

To get an idea of the level of desperation in Spain, check out the following anecdote from a recent NPR article...

But I digress.. Clearly you must have a facebook page in today's world or people wont buy stuff from you... Much more important than people having jobs and money to pay for your merchandise.

Cool story Derek

Now go back and relate all of that painstakingly researched post you've written to Games Workshop and their financial performance, and I will reward you with total apathy.

Seriously, just stop posting this stuff for my benefit, I'm so totally past having the same conversation with you again I don't even know how to express it.

You two are like an old married couple.

 agnosto wrote:

That's funny yet oddly appropriate... The point here is that cost-cotting is something that many talking heads like to throw around as a good thing but there a numerous examples of how damaging it can be if taken too far. My opinion is that GW is there or very nearly so.

Naturally it's circumstantial. The question is where do they cut the costs without harming their earnings. Just because a specific store is generating $ for them, doesn't mean having that store there is necessary to drive sales. It could be more profitable in the long term to have 3rd party vendors make fewer sales than operating a brick and mortar store that has overhead.

As for marketing online.. I think a vast majority of the marketing they need already exists for free from communities like this. Not sure how much more money they could make from constant communication with their customers. I don't think they should aim to please everyone because a vast majority of the people whining still buy their product.

See, i have the distinct feeling that your last paragraph is similar to whats being trotted around the office up in Nottingham every quarter. Every decision they've made has purely been financial, the player base be dammed.

In other news, GW won't be doing an across the board price increase this year, though anything that gets repackaged will be brought inline with the current trend.

 azreal13 wrote:
Cool story Derek

Now go back and relate all of that painstakingly researched post you've written to Games Workshop and their financial performance, and I will reward you with total apathy.

Seriously, just stop posting this stuff for my benefit, I'm so totally past having the same conversation with you again I don't even know how to express it.

I'm not making this personal or trying to convince you. You keep prompting me for a response so I respond in kind..

The issue at hand here is that you seem to believe that GW's sales are not determined by discretionary income.

So there is no confusion... This is what I mean by discretionary incomes..

The amount of an individual's income that is left for spending, investing or saving after taxes and personal necessities (such as food, shelter, and clothing) have been paid. Discretionary income includes money spent on luxury items, vacations and non-essential goods and services.

If you and I can agree that it's a discretionary item, you have no choice that to admit the following..

Aggregate discretionary income levels for an economy will fluctuate over time, typically in line with business cycle activity. When economic output is strong (as measured by GDP or other gross measure), discretionary income levels tend to be high as well. If inflation occurs in the price of life's necessities, then discretionary income will fall, assuming that wages and taxes remain relatively constant.

Discretionary spending is an important part of a healthy economy - people will only spend money on things like travel, movies and consumer electronics if they have the funds to do so. Some people will use credit cards to purchase discretionary goods, but increasing personal debt is not the same as having discretionary income.

It is without question in my mind that GW products are discretionary items. By extension, they are most certainly cyclical and their business model reflects that. In fact, a niche discretionary item is the most sensitive to changes in discretionary income. If GW doesn't fit that description, i don't know what would...

Now.. I'd love to actually see someone explain to me why it's not cyclical. Aside from a CEO talking up his stock price ofcourse.

Seriously, your responses are so repetitive you're like a spam bot.

You are having the exact same conversation again, and it doesn't appear that anything I say is stopping you!

 Warboss Gubbinz wrote:
Every decision they've made has purely been financial, the player base be dammed.

I don't think they have the attitude of "players be damned". If you are referring to the price increases, I think they are fair considering how much prices have increased in general. The biggest issue is that wages haven't increased at the same rate as everything else has but that's an entirely different topic.

Maybe i'm a bit naive but I haven't heard nearly as many complaints about this edition of 40k than I did for 4th, 5th or 6th edition.


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 azreal13 wrote:
Seriously, your responses are so repetitive you're like a spam bot.

You are having the exact same conversation again, and it doesn't appear that anything I say is stopping you!

You aren't saying anything. You are saying they are "special" because they aren't impacted by the business cycle.

I would like to know why you think they aren't cyclical.

Purple dinosaur, pineapple, plinth.

Looking like its time to let this thread sleep with the fishes.

dereksatkinson wrote:

 azreal13 wrote:
We have been having the same conversation over and over for months, there has been no new information and we have already discussed how the UK, where I and GW are based, are not the US or even Europe.

Other than the fact the UK had to add hookers and blow to their most recent GDP calculation to massage economic numbers? The UK is all smoke and mirrors. I'd argue they are going to have it worse than most near the tail end of the next recession.

And the UK is the MOST financially interconnected country in the world accord to bloomberg research. Why? Because it has no industry other than finance at this point. What does the UK actually make nowadays?

Pharmaceuticals, computer chips, aerospace components, high-tech auto engines, cars, computer games, pop music, films, musicals, weapons, and in terms of service industries graphics, advertising, higher education and tourism.

Back in the mid-2000s when the world economy was booming GW was suffering several years of bad revenues and actual losses.

 Kilkrazy wrote:

Pharmaceuticals, computer chips, aerospace components, high-tech auto engines, cars, computer games, pop music, films, musicals, weapons, and in terms of service industries graphics, advertising, higher education and tourism.

78% of the economy is service based.

 Kilkrazy wrote:
Back in the mid-2000s when the world economy was booming GW was suffering several years of bad revenues and actual losses.

Yep.. it lead the way down and lead the way back up.

Starting in 05 IIRC.. Things bottomed out in July of 08 and rallied into September 2013..

Did the same thing in 1998.. bottomed in early 2000 ahead of the dot com disaster and rallied into 05..

There are leaders and there are laggards..

I really wouldn't describe 05-07 as a booming period. It's was entirely speculative and debt financed. We actually saw plenty of indicators the economy was slowing back in 06 and I was on the boards talking about it back then as well. On the surface things might look fine to most people today but if you are really paying attention, things are pretty crappy globally..

Didn't we already do the thread where we argued about whether GW's state was due to their game/management being lousy, or due to the global economy?

...and it got locked?

 Breotan wrote:
Looking like its time to let this thread sleep with the fishes.

What, just because Derek started spamming it? I put that guy on ignore. Problem solved long ago.

Every time I read Derek's comments on how the economy and only the economy is to blame for GW's financial woes, I think of Gordon Brown...

FFS Derek, just give it a rest and stop trying to get this thread locked with off topic spam.

WayneTheGame wrote:
And then points were cut in half for 3rd edition, and since then it's been slowly getting larger and larger to where we have what amounts to 28mm Epic 40k now.

I just pointed up my 5k point (the equivalent of 2000 points in 40K) Epic marine army using the current 40K marine codex, it came to 3325 points and if the terminators were replaced with tactical marines the points would be about 2750 ish. In other words we have nearly reached the point where an army comprised entirely of 6mm figures have nearly reached numerical parity with an army comprised of 28mm figures. That says a lot about the type of game that 40K has become.

 Palindrome wrote:
I just pointed up my 5k point (the equivalent of 2000 points in 40K) Epic marine army using the current 40K marine codex, it came to 3325 points and if the terminators were replaced with tactical marines the points would be about 2750 ish. In other words we have nearly reached the point where an army comprised entirely of 6mm figures have nearly reached numerical parity with an army comprised of 28mm figures. That says a lot about the type of game that 40K has become.

Wow.

They really do want to sell more miniatures and are willing to have a rules scope/scale/model count mismatch in order to do it.

I remember when 40k was about space marines and imperial guardsmen and tyranid warriors and the like and not about knights, wraith knights, riptides alongside huge tanks and flyers.

 frozenwastes wrote:

 Palindrome wrote:
I just pointed up my 5k point (the equivalent of 2000 points in 40K) Epic marine army using the current 40K marine codex, it came to 3325 points and if the terminators were replaced with tactical marines the points would be about 2750 ish. In other words we have nearly reached the point where an army comprised entirely of 6mm figures have nearly reached numerical parity with an army comprised of 28mm figures. That says a lot about the type of game that 40K has become.

Wow.

They really do want to sell more miniatures and are willing to have a rules scope/scale/model count mismatch in order to do it.

I remember when 40k was about space marines and imperial guardsmen and tyranid warriors and the like and not about knights, wraith knights, riptides alongside huge tanks and flyers.

Which was all fine for Apocalypse games, when players used their entire collections, or teams of players pooled their collections together for long epic games.

But now every game is an Apocalypse game, every game can have huge Titans and super heavy tanks.

As an aside part of the big breakdown in rules with 40k is that the rules are for a skirmish/company-level game, not a massive army. If they really want Epic 40k in 28mm, that's fine and dandy (but wallets everywhere have a look of horror...) but the rules of the game as they are now do not support such a thing. I get that they want to get some of the feel of Epic rather than "The big stuff is offscreen" that 2nd edition 40k mostly had, but you can't play a large-scale game with small-scale rules. The fact a typical 40k game takes like half a day to complete should be seen as a bad thing, not a good thing.

Epic's rules were streamlined for exactly that reason, due to the number of things you had on the board and nuances of a large-scale wargame. 40k needs to either throw the rules out and have 8th edition or whatever be a total revamp like 2nd to 3rd edition was, or they need to stop this nonsense of encouraging larger and larger collections.

As to Derek's thesis, I will say that there is a reverse correlation between GW's performance and larger economic factors. Miniature gaming and similar hobby pursuits seem to be the type of things people get more interested in during lean economic times. So I think he's exactly wrong and backwards on this. There are certain business and types of products that are relatively recession proof or even thrive during bad economic times.

The only way GW could force itself out of that market would be to price themselves out of it. To push themselves from being a high volume of entertainment per dollar proposition into a low value proposition.

With the economies of the world once again getting shakey, people should be more willing than ever to buy a GW kit and spend some time assembling and painting it up. Or getting a game in. Instead, GW is flat lining while similar products that offer high volume of entertainment per dollar are thriving.