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focusedfire wrote: I think that quote is from GW's deposition or testimony in the CHS lawsuit.
It's in the highly entertaining "Business Model" section of the report:
Spoiler:
Business model
We are vertically integrated. We design, manufacture and distribute ourselves; we have our own stores and web store.
With the sole, and rapidly declining, exception of products from Tolkien's books we use only our own imaginary worlds. They are rich enough
and deep enough to accommodate anything we may want to make, and they remain our property.
We sell to third party retailers under closely controlled terms and conditions. Those terms and conditions mean that we are unlikely to be
attractive to heavy discounters, chains or mass-marketers. In other words, I doubt you'll find our products in Toys ‘R’ Us or Walmart.
We publish two magazines. A weekly (White Dwarf) that announces new products and events and a monthly (Warhammer Visions) that
glories in the aesthetics of our miniatures.
Our own stores attract a lot of attention, as they should, because they are the way we recruit the majority of new customers.
Their modal style is small (cheap), off the beaten track (cheap), and with only one member of staff, the store manager (cheaper than five staff, but
with our performance related pay scheme the managers are capable of earning far more than before). We require all our stores
to be profitable. In bad times as well as good. Our growth comes from geographic spread, led by these stores, so it would make no sense to
be growing less and less profitable as we went.
Our market is a niche market made up of people who want to collect our miniatures. They tend to be male, middle-class, discerning
teenagers and adults. We do no demographic research, we have no focus groups, we do not ask the market what it wants. These things
are otiose in a niche.
We control the business centrally. The big sales engines are: our own stores, split into three geographic areas (North Americ
a, Europe,Britain and Ireland), trade sales (sales to third parties) and our web store. Each store manager reports to the regional manager (Josh
Wimberly in North America, Elmes Duo in Europe and Grant Peacey in Britain and Ireland) and each of them reports to me qua CEO.
The trade sales manager (John Carter) reports to me, as does the web store manager (
Erik Mogensen). Design, manufacturing and distribution is in Nottingham and the manager of that division (Max Bottrill) reports to me as well.
Back office functions are run largely from Nottingham. They are Accounts (Tim Wilson), IT (Karen Lathbury), Personnel (Vicki King),
Lenton site (Dave Holmes), Legal and Compliance (Rachel Tongue), Projects (Helen Surgey) and they report to Kevin Rountree,
qua
COO.
Outliers are Australia and New Zealand (Ken Warton), Asia (Chris Harbor), and Forge World (Tony Cottre
ll) who all report to me,
Licensing (Andy Jones) who reports to Kevin and Black Library (Rik Cooper) who reports to George Mann in the main Citadel studio.
This message was edited 1 time. Last update was at 2014/07/29 07:52:53
BlaxicanX wrote: A young business man named Tom Kirby, who was a pupil of mine until he turned greedy, helped the capitalists hunt down and destroy the wargamers. He betrayed and murdered Games Workshop.
frozenwastes wrote: There's still just no plan at all to stop shrinking, let alone return to growth.
Just nothing but charge more and sell less. Their aggressive release schedule and a new edition of the game, combined with a big space marine and knights release and the end result is... sales down, profit down, earnings per share, down.
I especially like this line:
"We do no demographic research, we have no focus groups, we do not ask the market what it wants."
I guess slow withering of sales, market share and customers is what you get when you have no intention of meeting the needs of the market and instead think you can tell the market what it should want.
Interesting read of the Strategic Report.
As cited two things came to my mind: return of growth and no demographic research. They are pure amateurs.
Former moderator 40kOnline
Lanchester's square law - please obey in list building!
Illumini: "And thank you for not finishing your post with a "" I'm sorry, but after 7200 's that has to be the most annoying sign-off ever."
Ian Sturrock wrote: The leap to £30 a time codexes must have surely hurt sales. Certainly I went from "will try to pick up current editions of all codexes eventually" to "will think long and hard about adding a new army, even as allies, if the rules alone will cost an extra £30 for a 100-page book".
Yeah, this is a big issue, if you want to start the game you need to spend €100 before even getting a single mini. Of course you could always start with the Dark Vengeance, but even then you need the Codex, and if either of the starter armies won't interest you, well...
GW tries to go for the "premium" image with all the books being full-colour and hardcover, but it's just unnecessary excess. The old Codex format was just fine (well they could have been bit more durable). High cost of the printed books is dragging up digital editions as well.
As for the CEO change, as said it's unlikely to change anything. Things weren't different when Mark Wells was CEO.
As cited two things came to my mind: return of growth and no demographic research. They are pure amateurs.
Actually, this is one thing I agree with them. Last thing GW needs is some expensive consult keeping PowerPoint presentations about how "strong, modern female characters in Space Marines range is likely to bring in 14 to 25 year old female demographics". It's that crap which has ruined Hollywood and computer games industry.
This message was edited 1 time. Last update was at 2014/07/29 07:52:07
focusedfire wrote: I think that quote is from GW's deposition or testimony in the CHS lawsuit.
It's in the highly entertaining "Business Model" section of the report:
Spoiler:
Business model
We are vertically integrated. We design, manufacture and distribute ourselves; we have our own stores and web store.
With the sole,
and rapidly declining, exception of products from Tolkien's books we use only our own imaginary worlds. They are rich enough
and deep
enough to accommodate anything we may want to make, and they remain our property.
We sell to third party
retailers under closely controlled terms and conditions. Those terms and conditions mean that we are unlikely to be
attractive to heavy discounters, chains or mass
-
marketers. In other words, I doubt you'll find our products in Toys ‘R’ Us or Walmart.
We p
ublish two magazines. A weekly (White Dwarf) that announces new products and events and a monthly (Warhammer Visions) that
glories in the aesthetics of our miniatures.
Our own stores attract a lot of attention, as they should, because they are the way we recruit the majority of new customers.
Their modal
style is small (cheap), off the beaten track (cheap), and with only one member of staff, the store manager (cheaper th an five staff, but
with our performance related pay scheme the managers are capable of earning far more than before). We require all our stores
to be
profitable. In bad times as well as good. Our growth comes from geographic spread, led by these stores, so
it would make no sense to
be growing less and less profitable as we went.
Our market is a niche market made up of people who want to collect our miniatures. They tend to be male, middle
-
class, discerning
teenagers and adults. We do no demographic research, we have no focus groups, we do not ask the market what it wants. These things
are otiose in a niche. We control the business centrally. The big sales engines are: our own stores, split into three geographic areas (North Americ
a, Europe,
Britain and Ireland), trade sales (sales to third parties) and our web store. Each store ma
nager reports to the regional manager (Josh
Wimberly in North America, Elmes Duo in Europe and Grant Peacey in Britain and Ireland) and each of them reports to me
qua
CEO.
The trade sales manager (John Carter) reports to me, as does the web store manager (
Erik Mogensen). Design, manufacturing and
distribution is in Nottingham and the manager of that division (Max Bottrill) reports to me as well.
Back office functions are run largely from Nottingham. They are Accounts (Tim Wilson), IT (Karen Lathbury), Pers
onnel (Vicki King),
Lenton site (Dave Holmes), Legal and Compliance (Rachel Tongue), Projects (Helen Surgey) and they report to Kevin Rountree,
qua
COO.
Outliers are Australia and New Zealand (Ken Warton), Asia (Chris Harbor), and Forge World (Tony Cottre
ll) who all report to me,
Licensing (Andy Jones) who reports to Kevin and Black Library (Rik Cooper) who reports to George Mann in the main Citadel stu
dio.
Thanks for the correction, though I believe something along the same lines was said during the aforementioned lawsuit.
As to there stated bisness model.....wow. just wow.
I love the part where they state that due to the geographic spread of their stores "It would make no sense to be growing less and less profitable"... Is GW trolling there investors or is this just delicious irony?
Later,
ff
This message was edited 1 time. Last update was at 2014/07/29 08:15:33
Officially elevated by St. God of Yams to the rank of Scholar of the Church of the Children of the Eternal Turtle Pie at 11:42:36 PM 05/01/09
If they are too stupid to live, why make them?
In the immortal words of Socrates, I drank what??!
frozenwastes wrote: There's still just no plan at all to stop shrinking, let alone return to growth.
Just nothing but charge more and sell less. Their aggressive release schedule and a new edition of the game, combined with a big space marine and knights release and the end result is... sales down, profit down, earnings per share, down.
I especially like this line:
"We do no demographic research, we have no focus groups, we do not ask the market what it wants."
I guess slow withering of sales, market share and customers is what you get when you have no intention of meeting the needs of the market and instead think you can tell the market what it should want.
I want to say I'm surprised by this, but this is after all the same company that thinks Facebook / The Internet in general is some black magic voodoo...
Automatically Appended Next Post:
wuestenfux wrote: I think there is nothing wrong with the business model itself.
The problem is the implementation.
When you not only don't know, but ARE PROUD of the fact that you don't know who the people you are selling your products to are or what they want, something is VERY wrong with your business model...
This message was edited 4 times. Last update was at 2014/07/29 08:05:33
GW: "We do no demographic research, we have no focus groups, we do not ask the market what it wants"
wuestenfux wrote: I think there is nothing wrong with the business model itself.
The problem is the implementation.
When you not only don't know, but ARE PROUD of the fact that you don't know who the people you are selling your products to are or what they want, something is VERY wrong with your business model...
For me its an implementational issue.
Former moderator 40kOnline
Lanchester's square law - please obey in list building!
Illumini: "And thank you for not finishing your post with a "" I'm sorry, but after 7200 's that has to be the most annoying sign-off ever."
wuestenfux wrote: I think there is nothing wrong with the business model itself.
The problem is the implementation.
When you not only don't know, but ARE PROUD of the fact that you don't know who the people you are selling your products to are or what they want, something is VERY wrong with your business model...
For me its an implementational issue.
I would very much like to read to your explanation.
GW: "We do no demographic research, we have no focus groups, we do not ask the market what it wants"
@Backfire.
Proper marketing asks actual customers what they want.(Like the old letters to WD .)
Not just assume everyone is a 13 year old boy with rich parents who has £500 per week to spend on toy soldiers.
Actual proper market research would prove people who play the game think the rules are more important than the GW sales department do.
And plastic minatures are sold for a fraction of the price GW charge by other companies.
People like the WHFB /40k settings, or they do not, irrespective of gender or age.
Poor perceived value for money is the primary reason GW products do not sell.
While I agree that GW will indeed continue for quite some time, I believe that there will be some serious tough times ahead. Since Kirby has a penchant for comparisons to Apple I think that it would be good to make a further comparison.
Some of you younger folks may not remember how big Apple was in it's earlier days conversely you also don't remember how far it fell holding on to its (then current) business model. Apple spent years in the doldrums of irrelevancy before making serious changes and coming back on the scene with the iMac. The rest is history, as they branched out from that success and created a company that was unrecognizable from the old. A similar thing has occurred with other companies as well, Harley Davidson also comes to mind.
There is no telling where this downturn in the company will take it, but I predict that in five years time, we will see a different company entirely. Be it a complete tank and bankruptcy (unlikely), a takeover and restructuring from innovative investors (maybe), or a purchase of the company by a larger company in the business (most likely as that is one profitable and diverse IP).
But there will have to be a greater fall before those things occur, be prepared.
This message was edited 1 time. Last update was at 2014/07/29 08:19:01
Idolator wrote: Annual report is up. £11 million decrease in revenue from last year. All is woe.
£9 million decrease in profit. That's an almost 50% decrease in profitability. All is woe.
Considering the amount of product being churned out. Especially 6.5 rule set. This is woe indeed.
Well What can you say. You can polish a turd.... but it is still a turd.
Their business model does not work. This BS about their marketing research is so double speak that it is laughable.
But then again I only laugh at all of those fanbois seeing their precious game become more and more a niche/ hole in the wall type game where the trolls live.
Adam's Motto: Paint, Create, Play, but above all, have fun. -and for something silly below-
"We are the Ultramodrines, And We Shall Fear No Trolls. bear this USR with pride".
Also, how does one apply to be a member of the Ultramodrines? Are harsh trials involved, ones that would test my faith as a wargamer and resolve as a geek?
You must recite every rule of Dakka Dakka. BACKWARDS.
When you not only don't know, but ARE PROUD of the fact that you don't know who the people you are selling your products to are or what they want, something is VERY wrong with your business model...
No, in principle it's a great thing. Because it shows that you do it as an art or passion, not merely as a business. There is nothing interesting in sleek corporate design, made by professional market researchers to appeal as broad sample of customers as possible. As I said, that is why most Hollywood blockbusters suck.
Of course, GW reality, where they have been increasingly acting like a big nasty corporation, is pretty far removed from that vision of "passion".
Just for kicks, here's GW's last six half-year revenues:
Autumn 2011: £62.7
Spring 2012: £68.3
Autumn 2012: £67.5
Spring 2013: £67.1
Autumn 2013: £60.5
Spring 2014: £63
If one wants to tie them to major GW events,
-2011....umm...can't remember anything really notable?
-Spring 2012, new paint range came out
-Autumn 2012, 6th edition 40k & Dark Vengeance
-Spring 2013, massively popular Tau release, selling out remaining Specialist games stock
-Autumn 2013, Space Marines 6th edition
-Spring 2014, Knights, 7th edition 40k out (barely)
If the new 7 / 6.5 rules were supposed to get people out in droves and purchase 5 riptides or 10 imperial knights for their Unbound Armies, looks like that plan failed miserably...
GW: "We do no demographic research, we have no focus groups, we do not ask the market what it wants"
Shandara wrote: Those 4.5 mill exceptional expenses would be the CHS trail costs I assume?
Some, but it appears that 3 mill was on personnel. 0.6 million on property and 0.9 million on "other".
They "flattened" their retail structure by eliminating ALL middle management! Having worked in retail for a decade, all of it in the middle management area, I think that this is absolutely insane. It would be like your local post office and everyone else's reporting directly to the White House. Whew!
This message was edited 1 time. Last update was at 2014/07/29 08:35:25
Ferrum_Sanguinis wrote: If the new 7 / 6.5 rules were supposed to get people out in droves and purchase 5 riptides or 10 imperial knights for their Unbound Armies, looks like that plan failed miserably...
It was the only thing preventing an actual loss probably. With severe damage to long term sales.
I think I understand what you are trying to say, that its better to be loud and proud and unique than a company that tries to appeal to everyone, only to end up alienating everyone for different reasons.
But, I think they're hopelessly out of touch with their customer base and instead of admitting it and addressing plans to recruit new customers they're trying to keep a stiff upper lip and display bravado. It seems really foolish to me.
I can't think of a single person in the hobby who hasn't at one time or another felt like they've been given the finger by GW. Its really, really thin ice they're on.
VanHallan wrote: I think I understand what you are trying to say, that its better to be loud and proud and unique than a company that tries to appeal to everyone, only to end up alienating everyone for different reasons.
But, I think they're hopelessly out of touch with their customer base and instead of admitting it and addressing plans to recruit new customers they're trying to keep a stiff upper lip and display bravado. It seems really foolish to me.
I can't think of a single person in the hobby who hasn't at one time or another felt like they've been given the finger by GW. Its really, really thin ice they're on.
I felt that exact way 6 months ago when the abomination that was the Nid codex came out.
GW: "We do no demographic research, we have no focus groups, we do not ask the market what it wants"
How much are sales down taking into account price increases and averaging the unit cost for new releases going up? (what percentage would be a new release)?
Though if sales numbers go down, unit sales have undoubtedly fallen further.
VanHallan wrote: I think I understand what you are trying to say, that its better to be loud and proud and unique than a company that tries to appeal to everyone, only to end up alienating everyone for different reasons.
But, I think they're hopelessly out of touch with their customer base and instead of admitting it and addressing plans to recruit new customers they're trying to keep a stiff upper lip and display bravado. It seems really foolish to me.
True, GW really seems to be stuck in a kind of limbo there: they like to present themselves as Mom's Friendly Miniature Company, selling Mom's Old-Fashioned Skull-Plated Miniatures. However they tend to act as a big nasty faceless conglomerate. It's bad place to be.
"Exceptional costs" mentioned in the report came from shutting down regional HQ's and laying off their staffs.
Tidbit about LOTR license: "With the sole, and rapidly declining, exception of products from Tolkien's books we use
only our own imaginary worlds."
Guess that range is going to way of the dodo once the release from the final movie is up.
Automatically Appended Next Post:
Daba wrote: How much are sales down taking into account price increases and averaging the unit cost for new releases going up? (what percentage would be a new release)?
That's hard to say: GW price increases were quite uneven, with some items having huge price hikes (like 30% in 2-3 years), some other items not increasing in price at all. But undoubtely it has had effect. GW has not had annual price hikes for two years now, however the prices of new releases keeps creeping up.
This message was edited 1 time. Last update was at 2014/07/29 08:47:24
xraytango wrote: I doubt that anything would happen to the lore, it has already been well established for the last 20+ years that the 41st millennium and its grimdark nature would actually change very little other than perhaps some minutiae. It would be the same universe with the same factions, nothing significant would change.
Well, let's just say that you don't know what I know and leave it at that. I can't really talk about it, and while the shift in attitude is something I'd welcome, I do wonder what else would change and that worries me more.
I'm guessing Merrett own something significant to 40k's background and would take his ball home with him if he ended up going via a bit of "involuntary redundancy".
Games Workshop Delenda Est.
Users on ignore- 53.
If you break apart my or anyone else's posts line by line I will not read them.
Tidbit about LOTR license: "With the sole, and rapidly declining, exception of products from Tolkien's books we use
only our own imaginary worlds."
Guess that range is going to way of the dodo once the release from the final movie is up.
Perfect example. So, you get your hands on a once in a lifetime film franchise, and you mess that up. LOTR had the fan base built in to surpass everything GW had ever done. What happened to it?
By now it seems obvious that they pretty much just release stuff to get impulse buyers and then absolutely abandon the game players.
The decrease in revenue whilst putting out a new version of your biggest selling game (and does it also include the marine codex, the biggest selling range as well?) and more actual new product per month that at any time in the companies history at a much higher price point shows a significant drop in the customer base.
7th edition was out just for a week before the end of their financial year, it's very unlikely it had any meaningful impact to the numbers.
Which means that all the store purchases and pre-orders would count towards the 2013-2014 year, and the majority of sales are in the first few weeks. My local store alone bought in about £6000 (retail, so about £3600 trade) worth of 7th books (ignoring LE's and cards, etc), so there will have been a huge volume of 7th Ed stuff accounted for in this report.
2014/07/29 09:08:02
Subject: GW Annual Report is Up -- Preamble confirmed true.
GW did very well out of the original LoTR films in financial terms. The game was well designed and popular. The figures were ditto.
The mistake they made was to assume that all those new players would continue with the game or transfer to other GW games after the film buzz went away. They have also reportedly screwed up LoTR during the past few years by splitting the rules among lots of supplements in an attempt to sell more books.
IMO it was a mistake to make the film models true 25mm, making them incompatible with WHFB. It could have been a bridge from LoTR to WHFB if the two systems had compatible models.
It is not GW's fault that The Hobbit films have not been so popular. Their mistake with The Hobbit game is around pricing and contents of the starter sets. and lack of widespread promotion.
As cited two things came to my mind: return of growth and no demographic research. They are pure amateurs.
Actually, this is one thing I agree with them. Last thing GW needs is some expensive consult keeping PowerPoint presentations about how "strong, modern female characters in Space Marines range is likely to bring in 14 to 25 year old female demographics". It's that crap which has ruined Hollywood and computer games industry.
That's unlikely to be the case, because they already know the demographic they are most popular with.
What they could find out, through market research, is what will make the current customers spend more or why the customers are buying less (are they moving onto other things, finding the rules problematic, finding the value lacking?). They might find that all they need to regain profitability is to introduce a tournament back or run more interstore campaigns, or re-introduce more fun mini-games, or that every other customer wants to get back into Bloodbowl.
They "flattened" their retail structure by eliminating ALL middle management! Having worked in retail for a decade, all of it in the middle management area, I think that this is absolutely insane. It would be like your local post office and everyone else's reporting directly to the White House. Whew!
OTOH, often "middle management" is also a place which easily bloats up when people move there and meet the glass ceiling and they spend their days in cozy jobs moving papers. My pals were in Nokia during last years of cellphone business, and big factor for the downfall was constantly fattening middle management who micromanagered ever-shrinking base of actual project workers. One guy described how he saw a project where one programmer was led by 7 managers. Too many chieftains, not enough Indians.
Mr Vetock, give back my Multi-tracker!
2014/07/29 09:17:09
Subject: GW Annual Report is Up -- Preamble confirmed true.
Kilkrazy wrote: It is not GW's fault that The Hobbit films have not been so popular. Their mistake with The Hobbit game is around pricing and contents of the starter sets. and lack of widespread promotion.
The films and story doesn't really fit a wargame though, it'd make a good skirmish game though if the prices weren't nuts. Several times I've gone to buy The Hobbit box set, just for the Hobbit party to paint, but I just can't bring myself to pay that much for it. The same money will get me an entire new FoW army.
2014/07/29 09:20:16
Subject: GW Annual Report is Up -- Preamble confirmed true.
Their annual price increase drew attention. Now they disguise price increases by rolling the new releases with a price creep. Just sticking 10-20% on everything every June isn't exactly subtle. But it's not like halving the contents of boxes like the Dire Avengers went unnoticed either.
They're also trying to insist they own everything still, the preamble, and in the paragraph where they point out the dwindling exception of LotR. But as much as they call it 'stealing', their IP just isn't that robust and their claims of ownership are weak. It might cause concern especially if GW continue to pour money into fruitless legal cases, but I can't tell whether nvestors have the interest to follow the CHS case given that GW is just a tiny part of a portfolio to them.
" I'm sorry, but after 7200 's that has to be the most annoying sign-off ever." 
Officially elevated by St. God of Yams to the rank of Scholar of the Church of the Children of the Eternal Turtle Pie at 11:42:36 PM 05/01/09 
Order of the Red Mantle (
Grand (little) Army of Chaos, now painting! (
