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alphaecho wrote:

 Howard A Treesong wrote:

You can quite comfortably play games with just the starter set, but it can get a bit dull for the rebel player with only a single ship. What many people (including myself) do is buy a starter set each, giving you both a set of rules, plenty of dice and a 2 X-Wing Vs 4 Tie-Fighter line-up which gives some more options. Since each starter costs the same as a Taurox, it's not a big leap.

I'm trying to avoid branching out into collecting other games I'd rarely have time to play. You're not helping.

Without having to paint or assemble them, and with a dozen page rulebook, you can be up and playing your first game in 10 minutes, with small games only taking 20 or 30 minutes.

Come one, join the dark side (literally).


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 Kilkrazy wrote:
I don't think the Limited Edition not selling is a sign of fundamental decline. I think it is a sign of GW having priced the LE far higher than the market would bear.

The key thing is how many people buy the standard 7th edition because (A) that gives an immediate boost to the bottom line and (B) anyone who doesn't are likely to drop out of The HHHobby and won't buy any more codexes or models either.

If a lot of vets drop out, then GW need new recruits to make up the numbers.

It used to be that anything LE was snapped up, and the price is only about 30% higher than the last one but the reduction of sales is far more than 30%. Now that could be because it's just too high for anyone to want (the percentage of buyers will to pay that much has dropped), or it could be that less people are interested in it in general (the total pool of buyers has dropped, so that percentage is an even smaller amount), or more likely a combination of both.

It's definitely not a sign of the company doing well.

Edit: Sales of the regular edition (in standard, starter and mini formats) will be most telling. However we'll never get any good numbers on that whilst GW's made it fairly clear how many of the LE's have sold.

 Kilkrazy wrote:
I don't think the Limited Edition not selling is a sign of fundamental decline. I think it is a sign of GW having priced the LE far higher than the market would bear.

The key thing is how many people buy the standard 7th edition because (A) that gives an immediate boost to the bottom line and (B) anyone who doesn't are likely to drop out of The HHHobby and won't buy any more codexes or models either.

If a lot of vets drop out, then GW need new recruits to make up the numbers.

Not looking at it in isolation, yes. But coupled with all the other factors, it is not looking good at the moment.

As for the LE itself, it may be a matter of it priced to the stratosphere - but it is still a cost to the organization in manufacturing a product that is not moving, and thus taking away from the overall margin of the production.


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Herzlos wrote:
It used to be that anything LE was snapped up, and the price is only about 30% higher than the last one but the reduction of sales is far more than 30%. Now that could be because it's just too high for anyone to want (the percentage of buyers will to pay that much has dropped), or it could be that less people are interested in it in general (the total pool of buyers has dropped, so that percentage is an even smaller amount), or more likely a combination of both.

I think GW knew overall sales would be less, thus a total print run of 60% less than 6th edition LE as well. Accounting for both those factors just shows that GW has, without a doubt, reached a tipping point. The question is have they reached it because they have finally crossed the price barrier existing customers are not willing to go to; or crossed it because they have lost a ton of customers over the last year.

Again, next period financials will be really telling.

 Wayshuba wrote:
And since the release of 7th, complete collections of armies going for dirt cheap have skyrocketed on ebay. Just prior to 7th edition being known, when I sold three of my 40k armies, the search for "warhammer 40k armies" turned up just under 7,000 results. Today, that same search turns up almost 50,000 results. The spike coincided with the release of 7th edition. In short, there are quite a few signs that 7th edition is NOT performing well at all and is more likely causing a lot of former customers to abandon GW.

Wow. That's an astounding observation. Not a good time to sell my GW models then, eh?

I think it will be the interim report at the end of the year that will be telling. I think the year end report now in preparation will look a lot better than expected because it will contain the sales from two weekends of 7th edition rulebooks.

However if the initial momentum cannot be maintained, then the six month report will look poor as it did last December. GW would then need to find another magic bullet for spring of 2015.

Might be better to dump them before they get even less valuable

 Kilkrazy wrote:
I think it will be the interim report at the end of the year that will be telling. I think the year end report now in preparation will look a lot better than expected because it will contain the sales from two weekends of 7th edition rulebooks.

However if the initial momentum cannot be maintained, then the six month report will look poor as it did last December. GW would then need to find another magic bullet for spring of 2015.

Presumably the next interim report will have a new 40k starter set which I suspect will be even more of a boost than regular 7th ed books, especially if it's a brand new set and not just Dark Vengeance. Of course if they don't put the full mini-rulebook in the starter set then it could flop as badly as the 7th LE books have. The next interim will also be comparing to the current interim report, so it's hard to believe that it won't be at least small YOY growth due to the tail end of the 7th ed release and new starter set, even if the underlying business is not doing well.

I've seen various rumours pointing to GW taking out a loan to finance a dividend of 20p? Does anyone have a source on those rumours and does anyone know what year it was that GW last did that?

Another of the problems GW have made for themselves is (at least where I live) was to alienate local stores by trying to press strict marketing rules.

The result have been that out of 5 stores that over the years previously sold their product only one sells them now and only in very limited stock, the rest have either closed as their revenue dropped from their sales of GW products or moved on to focusing on selling other games (including a nationwide fairly big chain of stores).

Thus there are no 40k intro games played in my town anymore, however if I want to start Warmachine the local press ganger is more than willing to help set up a test game.

Overall that means less proliferation of 40k while other games is more visible in the local shops leading to other games having a head start on 40k in terms of accessibility, popularity and overall starting.
There are still gaming clubs that plays 40k oc but there are only a handful left compared to when I started playing in the 80's, from more than 30+ active to less than 10 now.

If any of the major competitors makes some kind of commercial agreement (bulk sales discounts etc) with some of the big stores I don't believe 40k will be sellable at all in my area to new players, other than the odd miniature.

Herzlos wrote:
Might be better to dump them before they get even less valuable

Oh, who am I kidding. I don't get rid of models...

maybe they'll be useful one day...

eBay has stopped charging listing fees here...

At least for the first few items a month, and there's free listing weekends.

Another factor could be that people have been putting off selling stuff until the new edition dropped to try and get more for it. I considered doing the same thing when the new IG codex was coming.

 azreal13 wrote:

 Accolade wrote:

 azreal13 wrote:
How is that different?

I think the implication is that the other products are inferior.

Nah, can't be, else that would be a wildly unsubstantiated piece of subjective hyperbole.

Coming from GW seems rather... expected.

Seeing Kirby's notes in financial reports all seem to boil down to:

"Darn-it you geeks, just accept the fact we make it, therefore it is the best! Just because! C'mon!, buy them you idiots! Daddy needs a new pair of shoes (so I can walk away in comfort)! Minions! make more of that plastic stuff and write things so they MUST buy! Flying Monkeys! continue to fling poop at those who dare to copy or expand upon our fine original works! BTW independent gaming stores and re-sellers: we hate you."

I think I am getting even more juvenile with these snipes but it is feeling like a more accurate "state of the union" to me somehow.

One thing to remember about this financial report coming up is that not only does it have the potential cash influx of a new edition of their flagship game, but it's also the first period of reporting that will have the full effects of their cost saving closures of regional HQs and the transfer of administration duties to the UK.

In previous reports that showed their employees by department, their admin department was drastically bloated compared to their sales and manufacturing. Now their admin is going to be brought into line with the cuts that have already occurred elsewhere in the company.

I really don't see this report being for a loss making period. I think there will be flat revenue for the last six months (so slightly down for the whole year) and possibly their lowest costs of doing business in a long, long time.

 Daedleh wrote:

 Kilkrazy wrote:
I think it will be the interim report at the end of the year that will be telling. I think the year end report now in preparation will look a lot better than expected because it will contain the sales from two weekends of 7th edition rulebooks.

However if the initial momentum cannot be maintained, then the six month report will look poor as it did last December. GW would then need to find another magic bullet for spring of 2015.

Presumably the next interim report will have a new 40k starter set which I suspect will be even more of a boost than regular 7th ed books, especially if it's a brand new set and not just Dark Vengeance. Of course if they don't put the full mini-rulebook in the starter set then it could flop as badly as the 7th LE books have. The next interim will also be comparing to the current interim report, so it's hard to believe that it won't be at least small YOY growth due to the tail end of the 7th ed release and new starter set, even if the underlying business is not doing well.

I've seen various rumours pointing to GW taking out a loan to finance a dividend of 20p? Does anyone have a source on those rumours and does anyone know what year it was that GW last did that?

It was one of the years between 2005 and 2009 ish. There were two or three years they made a loss and in one of them they took a loan to help finance the dividend. It was paid back quite quickly though.

I used to have all this info at hand but my computer at work died and I lost it.

 Kilkrazy wrote:
If we accept the argument that GW prices have only increased at the rate of "real" inflation, how do we account for the prices of other wargame companies that haven't?

Is it because increasingly only the shrinking number of well-off people are buying GW stuff?

They sell their product for less so people buy it as a replacement good. I've seen people buy competitor products and proxy the models as imperial guard all the time. Sometimes it's because the person doesn't have the money to buy the IG version and sometimes it's because they like the way a specific model looks.

Those companies might do okay right now during a cyclical advance but the real question is how they will do when they aren't selling the same volume during a recession.

 Wayshuba wrote:
The market grew by 20% last year and 15% average over the last five years. That is M-A-R-K-E-T of which GW is a small part of.

You are correct about smaller companies. However, when you have hundreds, if not thousands of them, those small numbers add up very fast.

I am most certain Fantasy Flight, Privateer Press, Corvus Belli, Hawk Wargaming, Warlord Games, Wyrd Miniatures, Manic, and quite a few others are not $1,000 companies.

You might want to do a bit of reading on Kodak, Digital Equipment Corporation, Wang Computer Corporation, TSR, Lehman Brothers, and quite a few other business cases like this. The story is always about a series of smaller players picking apart the bigger complacent player until they collapse or become insignificant, and then from the ashes one of the smaller players starts to become the bigger player.

Why not mention Enron and Bear Sterns why you are at it. None of those situations are remotely relavent. Especially Lehman.. wtf? Does GW own a bunch of subprime loans we don't know about?

As I mentioned before, we really can't verify sales or accounting methods of private companies. I have no idea how reliable those 20% growth figures for the industry really are. Hell.. I'm not even sure what all is included in that.

 Wayshuba wrote:

First, I live in the mid-West of the USA.
....
So, I am a pretty bad example I guess.

Since 1994 Average home prices in the USA have increased around 120% (based on the 10 city average.. The 20 city average doesn't go back that far). Prior to the 08 blow up, it had increased over 195% over that period. http://www.economist.com/blogs/graphicdetail/2014/02/us-house-prices

So yeah.. if you were buying property in Detroit or Cleveland you probably aren't too happy. However.. Most people have seen real estate prices go up substantially more than their salary over the same period. Real estate is more expensive relative to the average salary even after the bubble popped.

Point is.. that costs of everything is going up relative to our salaries so everything is relatively more expensive.


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 Kilkrazy wrote:
It was one of the years between 2005 and 2009 ish. There were two or three years they made a loss and in one of them they took a loan to help finance the dividend. It was paid back quite quickly though.

I used to have all this info at hand but my computer at work died and I lost it.

At the same time.. this rumor a work of fiction in this case.. We haven't seen any sort of debt financing from GW.

Huh, last time I checked most people buy Perry miniatures for historical games. Not just as GW replacements.

dereksatkinson wrote:

 Kilkrazy wrote:
If we accept the argument that GW prices have only increased at the rate of "real" inflation, how do we account for the prices of other wargame companies that haven't?

Is it because increasingly only the shrinking number of well-off people are buying GW stuff?

They sell their product for less so people buy it as a replacement good. I've seen people buy competitor products and proxy the models as imperial guard all the time. Sometimes it's because the person doesn't have the money to buy the IG version and sometimes it's because they like the way a specific model looks.

(emphasis mine)

Or sometimes it's because they have the money but get more value elsewhere, or just view the IG version as too expensive.

Not everything is a replacement either. Economics aside some people just prefer other games (I do).

dereksatkinson wrote:
We haven't seen any sort of debt financing from GW.

GW uses bank loans for their debt. Not the issuing of bonds or debentures.

As for old financials, you can find PDFs with a google search on GW's investor relations site, filetype set to PDF and the year in question.

Just an example:
http://investor.games-workshop.com/wp-content/uploads/2011/04/interim_results_to_2005-nov.pdf

Notice in the above period they did indeed borrow money to cover a dividend. Had they not issued the dividend, they wouldn't have needed to borrow money as their cash reserves would have covered their capital projects just fine for the period.

There's also a 3.9 million "bank overdraft" entry.

.

 heartserenade wrote:
Huh, last time I checked most people buy Perry miniatures for historical games. Not just as GW replacements.

And people play magic and videogames.. Not really direct competition.


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 frozenwastes wrote:
GW uses bank loans for their debt. Not the issuing of bonds or debentures.

Still has to be disclosed

It is for me. It's directly replaced my GW purchases and it's still in the miniature wargaming market. I get the Perry products from a retailer that also used to sell GW (and I can get them from a retailer that currently does sell GW). It's a direct competitor.

Herzlos wrote:
Or sometimes it's because they have the money but get more value elsewhere, or just view the IG version as too expensive.

Not everything is a replacement either. Economics aside some people just prefer other games (I do).

Not saying that isn't the case. The question is whether or not that crowd is large enough to sustain those companies.


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 frozenwastes wrote:
It is for me. It's directly replaced my GW purchases and it's still in the miniature wargaming market. I get the Perry products from a retailer that also used to sell GW (and I can get them from a retailer that currently does sell GW). It's a direct competitor.

historical isn't in direct competiton with 40k or fantasy.. very different groups of people play them. I'm actually looking at it from the business definition. I do understand what you are saying and acknowledge that from both of our perspectives, we are both right.

dereksatkinson wrote:

Still has to be disclosed

And they did.

Really what is your point? First it looked like you didn't believe that GW ever borrowed money to cover a dividend and when I clearly show that they have, you just say that?

You're either playing a game of shifting goal posts or you're doing a terrible job of communicating.

 frozenwastes wrote:
And they did.

Really what is your point? First it looked like you didn't believe that GW ever borrowed money to cover a dividend and when I clearly show that they have, you just say that?

You're either playing a game of shifting goal posts or you're doing a terrible job of communicating.

Never said that.. I just said that if they did end up borrowing to pay for this dividend, it will be disclosed. I never implied that they haven't done that in the past. The point I was making was that people are assuming that is the case even though they haven't done that for 8 years.

dereksatkinson wrote:

historical isn't in direct competiton with 40k or fantasy.. very different groups of people play them. I'm actually looking at it from the business definition. I do understand what you are saying and acknowledge that from both of our perspectives, we are both right.

And yet all sorts of historicals and sci-fi and fantasy miniatures are all present together at trade shows like GenCon and Salute. Including GW. And Perry.

I think your distinction is imaginary. And it was only made to avoid saying "good point" to someone pointing out that your replacement good theory of cheaper miniatures might not be the case for all products.

In may case, I didn't get Perry miniatures because I couldn't afford GW and they were my lower priced replacement. I got them because they're great miniatures. As products they directly compete for money that might go to GW and they beat GW for me in open competition. Not a cheaper replacement I wish was really GW.

 frozenwastes wrote:
You're either playing a game of shifting goal posts or you're doing a terrible job of communicating.

Why not both?

dereksatkinson wrote:
Since 1994 Average home prices in the USA have increased around 120% (based on the 10 city average.. The 20 city average doesn't go back that far). Prior to the 08 blow up, it had increased over 195% over that period. http://www.economist.com/blogs/graphicdetail/2014/02/us-house-prices

Um yeah. We were talking about the last decade and you show statistics of real estate for the last 20 YEARS. Obviously if my real estate holdings are 30%-50% over the last ten, then 120% over 20 years sounds feasible.

Discussion was about last ten years not twenty.

I'm done with these pointless discussions.

Point is: Market is growing, GW is going the other way. None of the damn statistics of anything else in other markets, oil, or real estate make one iota of difference.

You seem to specialize in stocks, that is fine, I don't. But stocks have NOTHING to do with the reality of companies - especially in the last five years. My specialty happens to have been market analysis specifically for identifying troubled companies and determining if they can be turned around and how. With twenty five years of doing that before starting my own company, I think I have become okay at identifying trends of a troubled company.

We'll see who is eating crow at the end of July when the financials are published.

dereksatkinson wrote:
The point I was making was that people are assuming that is the case even though they haven't done that for 8 years.

They aren't assuming it's the case at all. It's right in their financials which you can find with a google search. The reason people are talking about it is because GW has done it. Will GW do this again? Probably. Especially if GW wants to both pay out a dividend and invest in some sort of plan to return to growth. The shortfall in cash flow will need to come from somewhere. They did it the last time their revenue declined. And just who was in charge back then and what was his job?

T H F Kirby
Chairman and Chief Executive
6 January 2006

Hmm. I seem to remember you making the case that GW's current management team is new or fresh rather than being entrenched. Looks like Kirby has held both positions at once in the past as well.

History doesn't repeat, but it does rhyme.

dereksatkinson wrote:

Herzlos wrote:
Or sometimes it's because they have the money but get more value elsewhere, or just view the IG version as too expensive.

Not everything is a replacement either. Economics aside some people just prefer other games (I do).

Not saying that isn't the case. The question is whether or not that crowd is large enough to sustain those companies.

Going by how the crowd is throwing money at these companies and the huge growth they are seeing over a sustained period, the crowd is large enough to sustain these companies.

You seem to be under the impression that GW's competitors are all garage manufacturers run by an elderly bloke at the weekends, but many of them have been around for decades already and have large staffs / real estate / distribution systems. A lot of them are also being run by some very competent staff (pretty much every named GW personality including studio heads, head designers, editors and high level managers now run these places).

Customers aren't buying stuff from competitors purely because GW is too expensive of them, so there's no reason that if these customers discretionary spending increased that they'd flock back to GW and not just spend the extra money on more competitors.

Also, that "The question is whether or not that crowd is large enough to sustain those companies" is a total shifting of the goal posts. You guys weren't talking about that. You were talking about replacement goods vs competing products being bought on their own merits.

Derek, instead of saying "not saying that isn't the case. but here's something unrelated that I hope might detract from your point anyway" why not just acknowledge the good point?

Why do have to throw in this canard about an alternative not having a sufficient audience to sustain them? it doesn't actually support your initial argument about replacement goods at all.

Here is another year in which the company made a loss, issued a dividend, and had to borrow.

http://investor.games-workshop.com/wp-content/uploads/2011/02/gw_year_end_07.pdf

 H.B.M.C. wrote:

 frozenwastes wrote:
You're either playing a game of shifting goal posts or you're doing a terrible job of communicating.

Why not both?

Quite.

I've been criticised for focusing too much on Derek's posts in this and similar threads, but I find his arguments are terrible outside of his particular sphere of knowledge, and consequently the conversation will be dragged back into that sphere at every opportunity if allowed.

I'm not prepared to allow it.

I mean, trying to argue a tabletop wargame isn't a valid comparison for another tabletop wargame? Sheesh!