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 Howard A Treesong wrote:

 MrFlutterPie wrote:
I also want to add that I am worried about the stock review thing. As a sister player that kind of talk worries me.

Perhaps we will be martyred to the Emperor soon after all...

Or

They could get rid the metal models so they didn't have to bother with metal at all and reboot us with new plastics.

Faith...I must have faith...

They won't give any warning though. Just like when they pulled the plug on specialist games and there was a panic as the stock suddenly dried up overnight. The lesson is that if you want something you should get it now and not keep putting it off, as you'll get no warning when it goes. Just another of those 'communication' things GW doesn't do.

With the risk of being squatted hanging over my head I think the last thing I would want to do is to buy more models from that army.

I suspect change is coming down the pipeline in some shape for form and the best way to weather it is to buy nothing. I have a ton painting to catch up on so I can still be busy the next several months as everything pans out.

 TheAuldGrump wrote:

 kronk wrote:

Marlov wrote:
I am disappointed. They seem to have done ok in 2015 on their 40k releases, and I was hoping, PRAYING that this would be burnout for 40k buyers. I guess enough elder players went to buy scatbikes to pull GW through the year.

Still hoping GW dies and dies fast!

Why?

What have they done to you, personally?

What do you gain if they fail?

If you don't like them, play something else.

I can get not liking a company, but to PRAY that they fail? That's just sick, man.

You just don't understand religion, that's all.

I druther they straighten up and get things back on a friendly footing, but barring that....

I am not sure which is worse, a slow decline and fall that drags out for another decade, or a fast decline that is brutal, but allows another to take over the properties before they lose all value.

I really think that half a quarter of the problems that GW has stem from them seriously overvaluing their IP.

It is not as unique as they feel, nor is it nearly as much of a moat and castle as they have claimed - if the Chapterhouse case proved nothing else, people can legally make compatible products.

The Auld Grump

Think of it like this:

• You have an iron spike that has been driven through your chest in an accident at a train station. The spike is about 2" around, and is 2' long, going through your right chest, right above your lung, and through the muscles of your pectorals and trapezius in the front/back.

It hurts terribly.

The doctors go to remove it, without anesthetic. They can either:

- Quickly drive the spike through you, and then close the wound.
- Slowly pull it through, while stopping every now and then to keep you from trashing around.

• You have an abscessed tooth. But you are on a desert island. You can either:

- Knock the tooth out with an ice-skate that has washed up on shore
- Leave it to fester, hoping you do not die of an infection in the process, or starve to death because you are unable to eat.

• You trapped beneath a rock. The only way to get you out is to amputate your leg. You can either:

- Chop the leg off at one go with a big axe.
- Cut it slowly off with the saw blade from your swiss army knife.


...........................................

I think these are the choices people feel they are facing with GW. While the issue with GW is not nearly as dire as a possibly mortal wound, it can be agonizing just the same, to watch something you love die a slow death (like a pet with cancer, you can either watch it linger, starving to death and suffering, or you can put it quickly and painlessly out of its misery).

What GW are doing is certainly a mystery.

MB

@BeAfraid - how about this analogy?

You work 40-60 hours a week, have a family and a little spare time and extra money. So you go and buy $50-$100 boxes of toys every week or so and gleefully assemble and model them when you can, and then get together with friends and play a game and have a good time.

What GW is doing isn't a mystery at all. It's targeting this described demographic, and believe it or not, there are a lot of people like this. From dentists to mechanics to police officers.

Combine this report and last report they still posted a sales decline of 15.465 million pounds, a sales decline is still a sales decline.

 Achaylus72 wrote:
Combine this report and last report they still posted a sales decline of 15.465 million pounds, a sales decline is still a sales decline.

How do you figure that? This report is for the *whole year* (12 months), and includes the last half-year (6 months) report, so you can't add them together.

In the 12 month period, their sales decline unadjusted for currency is GBP 4.4 million, and at the half-year mark it was closer to 10 million, which means the second half of the year was quite good.

The adjusted currency revenue is 123.1 versus 123.5 million, or GBP 400k -- which is literally not even a rounding error -- it is 0.3%

In terms of operating profit, they're at GBP 16.5m, and that's after investing something like GBP 25m+ on tooling new molds and stuff (I saw someone say that above; I didn't pull it from the statements myself) -- which means TONS of new products in the pipeline for 2015/2016.

Automatically Appended Next Post:

Herzlos wrote:

 Rayvon wrote:
Seems pretty much standard for a UK based business in this climate, It shows nothing to worry about as far as I am concerned.

How do you explain the growth of, well, everyone else in the gaming industry (including Warlord/Perry/Mantic/Renedra who are all local to Nottingham)?

How much have they grown? People say this but since they are private companies, how do we know (a) how much they've grown and (b) how much they sell and (c) how profitable they are?

 Talys wrote:

 Achaylus72 wrote:
Combine this report and last report they still posted a sales decline of 15.465 million pounds, a sales decline is still a sales decline.

How do you figure that? This report is for the *whole year* (12 months), and includes the last half-year (6 months) report, so you can't add them together.

In the 12 month period, their sales decline unadjusted for currency is GBP 4.4 million, and at the half-year mark it was closer to 10 million, which means the second half of the year was quite good.

The adjusted currency revenue is 123.1 versus 123.5 million, or GBP 400k -- which is literally not even a rounding error -- it is 0.3%

In terms of operating profit, they're at GBP 16.5m, and that's after investing something like GBP 25m+ on tooling new molds and stuff (I saw someone say that above; I didn't pull it from the statements myself) -- which means TONS of new products in the pipeline for 2015/2016.

Automatically Appended Next Post:

Herzlos wrote:

 Rayvon wrote:
Seems pretty much standard for a UK based business in this climate, It shows nothing to worry about as far as I am concerned.

How do you explain the growth of, well, everyone else in the gaming industry (including Warlord/Perry/Mantic/Renedra who are all local to Nottingham)?

How much have they grown? People say this but since they are private companies, how do we know (a) how much they've grown and (b) how much they sell and (c) how profitable they are?

Why is it so hard for folks to understand, take the FULL YEAR REPORT 2013/14 and ADD IT to the FULL YEAR REPORT 2014/15 and it ADDS UP TO 15.465 Million Pounds SALES DECLINE.

Also there is a difference between sales revenue and operational profit, did you know that.

I'd suggest anyone who is gleefully assembling miniatures from any manufacturer may be suffering some form of mania.

 Achaylus72 wrote:
Why is it so hard for folks to understand, take the FULL YEAR REPORT 2013/14 and ADD IT to the FULL YEAR REPORT 2014/15 and it ADDS UP TO 15.465 Million Pounds SALES DECLINE.

Also there is a difference between sales revenue and operational profit, did you know that.

Because that isn't meaningful.

No more so than if you added up 10 good years and say, 'wow, sales went up 80 million!!!'

Comparing the revenue from 2012, 2013, 2014, 2015 is meaningful. Comparing profits or losses and the reasons why is even more meaningful.

Revenues without the context of profit or long term investments is meaningless. Is a $100 million in profit good? Not if the sales are $30 billion. Spectacular if the sales are $200 million. Is $100 million in revenue good? Not if it took $150 million to make. Usually.


Automatically Appended Next Post:

Joyboozer wrote:
I'd suggest anyone who is gleefully assembling miniatures from any manufacturer may be suffering some form of mania.

You may be on the wrong website then The homepage and the pages of miniatures there might have been a giveaway.

Assembling and painting miniatures is perhaps the most gleeful part of my day!

 Azreal13 wrote:
I believe it's now been officially downgraded to a hedge, according to the latest report.

Just a hedge? Not even a hedgerow? (Hmmm, what kind of bustle would there be in Games Workshop's hedgerow? Something to be alarmed about, I'm certain.)

Forge World mail order store. To protect our sales we are building a new Forge World mail order store on the same platform
and hosting environment as our Citadel mail order store and migrating all products and imagery. It is on track with a
scheduled go live date in the summer of 2015. It will cost £1.1 million.

Have a look through the thread but 30 pages is a bit to go through,

Thoughts on this being good solid ground from where all the GW will sell FW through their stores?

On the other hand, just moving it to the same hosting environment to link some things in like accounts etc. and migrating all of it to this platform may be all they mean, Id expect the word integrate if it were getting folded the games workshop website.

Different websites with the same ability to ship to stores / buy at stores. Same payment processing?

Very interested in all this...

Hoping region based gouging doesn't make Forge World even more price prohibitive than it is now.

 Talys wrote:

 Achaylus72 wrote:
Why is it so hard for folks to understand, take the FULL YEAR REPORT 2013/14 and ADD IT to the FULL YEAR REPORT 2014/15 and it ADDS UP TO 15.465 Million Pounds SALES DECLINE.

Also there is a difference between sales revenue and operational profit, did you know that.

Because that isn't meaningful.

No more so than if you added up 10 good years and say, 'wow, sales went up 80 million!!!'

Comparing the revenue from 2012, 2013, 2014, 2015 is meaningful. Comparing profits or losses and the reasons why is even more meaningful.

Revenues without the context of profit or long term investments is meaningless. Is a $100 million in profit good? Not if the sales are $30 billion. Spectacular if the sales are $200 million. Is $100 million in revenue good? Not if it took $150 million to make. Usually.

Ok I get where you are coming from, and you are correct.

Cheers

 Eldarain wrote:
Hoping region based gouging doesn't make Forge World even more price prohibitive than it is now.

This is my biggest fear.

RandomNoob wrote:

Forge World mail order store. To protect our sales we are building a new Forge World mail order store on the same platform
and hosting environment as our Citadel mail order store and migrating all products and imagery. It is on track with a
scheduled go live date in the summer of 2015. It will cost £1.1 million.

Have a look through the thread but 30 pages is a bit to go through,

Thoughts on this being good solid ground from where all the GW will sell FW through their stores?

On the other hand, just moving it to the same hosting environment to link some things in like accounts etc. and migrating all of it to this platform may be all they mean, Id expect the word integrate if it were getting folded the games workshop website.

Different websites with the same ability to ship to stores / buy at stores. Same payment processing?

Very interested in all this...

GW doesn't even sell all their own products in stores anymore. I doubt they'll start stocking all of FW's line. They want all their stores to only have commonly sold items, and send people to online ordering for anything else. FW is a niche within a niche.

 argonak wrote:
GW doesn't even sell all their own products in stores anymore. I doubt they'll start stocking all of FW's line. They want all their stores to only have commonly sold items, and send people to online ordering for anything else. FW is a niche within a niche.

The big thing is that you'll be able to order it to a store without paying shipping. You can also look at a kit, and say, "No" or return it physically at a store because you don't like the quality of the cast or whatever.

5 of the 6 people in our group don't buy FW because you must mail order it, the P&P is ridiculously high, and ship time is even longer. That would change, at least to some degree, if it's available locally. Besides, a lot of people all want the same stuff. Sicaran battle tank. Knight Castigator. Imperial Armor. Revenant Titan. etc.

Talys wrote:@BeAfraid - how about this analogy?

You work 40-60 hours a week, have a family and a little spare time and extra money. So you go and buy $50-$100 boxes of toys every week or so and gleefully assemble and model them when you can, and then get together with friends and play a game and have a good time.

What GW is doing isn't a mystery at all. It's targeting this described demographic, and believe it or not, there are a lot of people like this. From dentists to mechanics to police officers.

I believe this is the case and GW is simply failing to reach them at a rate that would return them to growth. Relying on word if mouth and a sparse retail presence is insufficient to reach tthis demographic. If this and 14 year old boys are their ttwo major targets, the 14 year olds have a built in social situation called school for the word of mouth to work while the working adult does not and likely has a much smaller pool of potential peers.

3% price hike + decline in sales = further withering of products sold and number of people sold to. This means less word of mouth advertising and this social factor has been compounding against GW for quite some time. Each year less people buy less product and tell less people about GWs products.

GWs only plan seems to be open more stores and try to sell to stockists even harder! Do more of what hasn't been working.

So I think we'll see sixth months from now an uptick in revenue from AoS (it is an edition launch and those are proven money makers for GW) but the slow grind into irrelevancy will continue as GW continues to segregate itself from the larger hobby gaming industry by shifting more and more revenue onto direct ssales while talking about a plan to boost trade sales that goes nowhere.

In the unfortunate event that some fire completely destroys GW HQ in Nottingham, we'll read Talys here saying it's good news since now they can build a new, shiny and way more structurally efficient HQ building

No hard feelings Talys, it's just that extreme optimism ends up looking a bit like blindness when faced with constant and endless bad news. A drop in sales and revenue can never, ever, be a good thing. Companies are expected to slightly grow in terms of revenue each year just to cope with inflation.

The full year report, although a bit better than what some of us were expecting, says GW keeps shrinking despite all their cost-cutting measures, price hikes and new expensive shiny releases.

@Korinov - I think the way to look at it is that 2H 2014 was a weak half year; and 1H 2015 is a strong half year. They average each other out (and this is not unusual), leaving GW essentially flat with 2013-2014.

Would GW shareholders prefer growth? Of course! But is this terrible news? I don't think so.

If GW can keep up their performance of 1H 2015 for a few more half-years, they'll be on great footing and be headed in the right direction. If they slip back into the pattern of the several half-years before that, they'll need to re-evaluate and make adjustments, and perhaps do things that they don't really want to do.

Either way, it won't be a crowning triumph or an unmitigated disaster, the former because the market is too mature for GW to explode with growth, and the latter because GW has a pretty strong core of dedicated customers.

Is that fair?

 Talys wrote:
@Korinov - I think the way to look at it is that 2H 2014 was a weak half year; and 1H 2015 is a strong half year. They average each other out (and this is not unusual), leaving GW essentially flat with 2013-2014.

Would GW shareholders prefer growth? Of course! But is this terrible news? I don't think so.

If GW can keep up their performance of 1H 2015 for a few more half-years, they'll be on great footing and be headed in the right direction. If they slip back into the pattern of the several half-years before that, they'll need to re-evaluate and make adjustments, and perhaps do things that they don't really want to do.

Either way, it won't be a crowning triumph or an unmitigated disaster, the former because the market is too mature for GW to explode with growth, and the latter because GW has a pretty strong core of dedicated customers.

Is that fair?

GW sales had been growing since its boom year of 2008/09 when it made a whopping 15.4 million pounds increase from the previous year rising each year (except 2010/11) until it reached its zenith in 2012/13 with 134.6 million pounds sales revenue, however
we have seen consecutive sales decline of 11.009 million pounds (2013/14) and a further 4.465 million pounds (for 2014/15) and now it posted 119.1 million pounds. GW is in a state of decline

We will see if AoS is the saving grace GW has its hopes pinned on, we'll see this in the half yearly report of 2015 in November.

@Achaylus72 - Three things worth mentioning.

First, it's only fair to adjust for the LoTR boom, because that has little to do with their core businesses, and was destined to fade with the movies.

Second, it's worth mentioning that when people who don't like GW look at the 2014 results, they like to cite the 12m profits, not taking into account the 4.5m in exceptional charges, as a way to say "look how much GW lost!". Then, when looking at 2015 , they like to look at the 2014 as 16.5m as a measuring stick and say, "look GW made less money!". Either view is fine with me, as long as the reader picks one and sticks with it.

Third, there's only a sales decline when revenues aren't adjusted for currency, and such an adjustment for revenue is a standard practice for comparative purposes when a significant portion of the company's business is not conducted in its home currency. For instance, if I sell $50m in USD in both Year 1 and Year 2, but GBP is worth 2.0USD in year 1 and GBP is worth 1.8USD in year 2, my revenues haven't changed at all for comparative purposes of "did I sell more or less stuff?", despite that on my financial statements, as stated in GBP, will be lower in year 2. It's particularly important in a company like GW's case, because GW doesn't adjust its prices for home currency fluctuation. When GBP is weak, it doesn't charge more in USD for its product, or the reverse when it's strong.

With the currency adjustment, revenues suffer a decline of something like 0.3%, which is not a significant figure (likewise, if it increased by 0.3%, that would also mean revenues were flat). Obviously, the market accepts the company narrative, as GAW has had an uptick since the release of the financials.

In my view, the most important takeaway for GW is that they appear to have at least short term success doing what they want to do. From a personal perspective, I like most of what they do so I'm happy about this: I want them to keep launching lots of new models and books at their current cadence (ie something to look forward to weekly); I like (love) the 2015 40k releases; I like model upgrades; and I like narrative-focused gaming. While I am price sensitive, I'm comfortable with the current prices, and I buy a pretty substantial amount of product. I really enjoy the hobby AND the gaming aspects, though I put a higher emphasis on the quality of the models than the quality of the games.

If Games Workshop is indeed targeting people like me (and my play group), and there are enough people like me to sustain that business, personally, I will be happy.

I would be even happier if Games Workshop could be inclusive, and appeal to other demographics too, as long as it doesn't take away from my fun. So, for example, I'm happy if they write more balanced rules (I wish they would!). But I'll be unhappy if they decide to go to 5 year codex releases. I'm happy if they don't increase the prices of kits; but I'll be unhappy if this means they don't refresh them.

I will go out on a limb and prognosticate: with Space Marines, Age of Sigmar, and potentially 30k and Forge World all crammed into 2H 2015, GW's next half-year will probably be pretty good. The question, really, is if there's lasting power for at least a couple of years after that.

 Talys wrote:
Third, there's only a sales decline when revenues aren't adjusted for currency, and such an adjustment for revenue is a standard practice for comparative purposes when a significant portion of the company's business is not conducted in its home currency. For instance, if I sell $50m in USD in both Year 1 and Year 2, but GBP is worth 2.0USD in year 1 and GBP is worth 1.8USD in year 2, my revenues haven't changed at all for comparative purposes of "did I sell more or less stuff?", despite that on my financial statements, as stated in GBP, will be lower in year 2. It's particularly important in a company like GW's case, because GW doesn't adjust its prices for home currency fluctuation. When GBP is weak, it doesn't charge more in USD for its product, or the reverse when it's strong.

With the currency adjustment, revenues suffer a decline of something like 0.3%, which is not a significant figure (likewise, if it increased by 0.3%, that would also mean revenues were flat). Obviously, the market accepts the company narrative, as GAW has had an uptick since the release of the financials.

Talys, that is the best description of the whole "constant currency thing" I've yet read.

The only financials that really matter to me is that I can no longer afford to be a customer. It was a deliberate business decision on the part of GW to exclude me from their hobby.

I was pushed out some time ago, and now I just keep an eye on things from the sidelines.

I guess if I wanted to I could afford the odd squad or so. But the value is simply not there. There are just too many better ways to drop $50. I think this is the problem they need to address. To convince enough people that their products are worth it.

Or to keep selling to the super fans who will buy everything at any price. Are there enough of them to sustain things?

I have to agree with Talys. Good, objective analysis there dude.

 Talys wrote:
@Korinov - I think the way to look at it is that 2H 2014 was a weak half year; and 1H 2015 is a strong half year. They average each other out (and this is not unusual), leaving GW essentially flat with 2013-2014.

Would GW shareholders prefer growth? Of course! But is this terrible news? I don't think so.

If GW can keep up their performance of 1H 2015 for a few more half-years, they'll be on great footing and be headed in the right direction. If they slip back into the pattern of the several half-years before that, they'll need to re-evaluate and make adjustments, and perhaps do things that they don't really want to do.

Either way, it won't be a crowning triumph or an unmitigated disaster, the former because the market is too mature for GW to explode with growth, and the latter because GW has a pretty strong core of dedicated customers.

Is that fair?

I'm not talking about shareholders' opinion here, just the health of the company.

First half of 2015 has probably been decent in terms of sales, it's allowed them to turn the tide in what seemed to be another highly disappointing fiscal exercise.

However I still don't see how the 2014-15 results can be something for GW to be proud of. Sales keep declining, and we've reached a point where they probably don't have many cost-cutting measures left to implement.

To be fair, I do agree with the notion that GW simply is in no position to grow and at the same time has a core of dedicated customers strong enough to keep surviving - and it's a 'core' because they've already lost the rest, either as a consequence of their management decisions or due to merely pricing them out.

I don't think that's a very promising picture in the context of a growing market. If I had to make a prediction, I believe GW's sales and profit numbers will keep declining slowly during the next years. Not a debacle yeah, just a moderate shrink. I don't even believe the second half of this year is going to be that great, it's true Space Marines are the usual strong sellers but their 6th edition codex (which introduced true new kits to the game, like Centurions) failed to make a big impact in the big scheme of things, so I don't think the 7th edition one will make a big difference. Actually I'd bet something the Mechanicum releases in these past months have probably made a bigger difference than what spess mehreens will do for the first half of 2015-16. The AoS starter set will probably produce good figures, but I don't think the game will go much further than that, the rest of the range has outrageous prices (5 sigmarines for 40€ lol, easily some of the models with the absolute worst price/quality ratio in the whole market) and at the same time they're losing virtually all the sales Fantasy provided them. In fact, I wouldn't rule out the possibility that some kind of Fantasy buying spree (get 'em while they last!) has also helped GW to have a good first half of 2015.

In short, come december, I wouldn't be surprised to find another 5% drop in both revenue and profits in the official report.

This pretty simple:

Revenue down 4% - bad
Profit is flat - not good
Cost down 5% - good

GW is still not that far away from breaking even as they are only making 16% margin.

Someone would need to show how many more products were released in 2015 vs. 2014 to see how much of the revenue was due to the fast pace of releases. They released several items that have been sought after for decades and can't really go back to that well again next year.

Talys wrote:First, it's only fair to adjust for the LoTR boom, because that has little to do with their core businesses, and was destined to fade with the movies.

Actually GW was completely caught off guard from the LOTR bubble popping. They even went so far as to sustain their dividend by borrowing money to pay it. They didn't understand the full nature of the shift until after they started losing money. You don't borrow money to sustain a dividend if you think sales are going to continue to drop and you'll have to embark on year after year of endless (and expensive) cost cutting and restructuring. Kirby even went so far as to describe their behavior in the face of this change as having become fat and lazy. They were not on the ball at all in terms of reacting to the decline of LOTR. It was the only loss making time in company history and I think their shock at such a turn of events has lead to their hawkish watching of costs and protection of their margins through high prices.

With the currency adjustment, revenues suffer a decline of something like 0.3%, which is not a significant figure (likewise, if it increased by 0.3%, that would also mean revenues were flat). Obviously, the market accepts the company narrative, as GAW has had an uptick since the release of the financials.

I actually think this is one time where the currency fluctuations have been large enough and quick enough that it should be considered as you have. Prices up with inflation but no revenue growth = shrinking in real terms regardless of currency. Not a huge retraction and more than offset by cost cutting.

In my view, the most important takeaway for GW is that they appear to have at least short term success doing what they want to do.

My only concern is that they seem to be planning on shrinking more. Converting more customers to direct to capture more margins, raising prices with each new release and selling less product to make the same amount of money. All their return to growth talk in this report is the same as in previous ones. Just vague statements about doing better selling people on the product in the form of opening more stores and trying to get more trade accounts. Nothing actually changes though.

I will go out on a limb and prognosticate: with Space Marines, Age of Sigmar, and potentially 30k and Forge World all crammed into 2H 2015, GW's next half-year will probably be pretty good. The question, really, is if there's lasting power for at least a couple of years after that.

This matches my predictions as well. AoS and plastic 30k (Warhammer: Age of Heresy?) and the resetting of the product line might mean they have a good future in terms of getting that greater amount of money from a smaller number of customers that they seem to have been concentrating their business on over the last 6 years.

--

Barfolomew wrote:GW is still not that far away from breaking even as they are only making 16% margin.

Someone would need to show how many more products were released in 2015 vs. 2014 to see how much of the revenue was due to the fast pace of releases. They released several items that have been sought after for decades and can't really go back to that well again next year.

A little bizarre Either they are breaking even or making a profit. If they're making a profit, they are doing better than breaking even Unless you mean, revenues stabilizing?

There are many, many more wells for GW to draw on. Sisters of Battle and Inquisition come to mind. The entire 30k line, revamps of many popular kits (for instance on the SM side -- scouts, command, captain, a better standard bike kit). If they fix terminators and sell a new kit with a new weapon (grav terminators! better cyclones!) that will give them a huge sales boost. If they drop aspect warriors in plastic, Eldar players will go crazy.

This is part of the success of 40k -- the line is so broad and deep, and the players who enjoy that are always pining for new models, because GW isn't capable of keeping all bazillion kits up to date with their latest tooling methods concurrently.

frozenwastes wrote:Actually GW was completely caught off guard from the LOTR bubble popping. They even went so far as to sustain their dividend by borrowing money to pay it. They didn't understand the full nature of the shift until after they started losing money. You don't borrow money to sustain a dividend if you think sales are going to continue to drop and you'll have to embark on year after year of endless (and expensive) cost cutting and restructuring. Kirby even went so far as to describe their behavior in the face of this change as having become fat and lazy. They were not on the ball at all in terms of reacting to the decline of LOTR. It was the only loss making time in company history and I think their shock at such a turn of events has lead to their hawkish watching of costs and protection of their margins through high prices.

Sure, but my point was just that there WAS an LoTR bubble, as an explanation for a few incredibly good years.

frozenwastes wrote:My only concern is that they seem to be planning on shrinking more. Converting more customers to direct to capture more margins, raising prices with each new release and selling less product to make the same amount of money. All their return to growth talk in this report is the same as in previous ones. Just vague statements about doing better selling people on the product in the form of opening more stores and trying to get more trade accounts. Nothing actually changes though.
...
This matches my predictions as well. AoS and plastic 30k (Warhammer: Age of Heresy?) and the resetting of the product line might mean they have a good future in terms of getting that greater amount of money from a smaller number of customers that they seem to have been concentrating their business on over the last 6 years.

Right, and I've mentioned (perhaps elsewhere) that this is the most valid criticism of Games Workshop. It's not about them making more or less revenue, nor even profit; the criticism would be that they are willing to sacrifice their playerbase for profits; to reduce the breadth of their ecosystem to please the players who spend the most and who enjoy the hobby most like them. I think that the thought process is something like:

The 20% and 80% are just for argument's sake.
1. Let's look at the purchasing curve of our customers. Wow, 20% buy 80% of the product!
2. What do those 20% want?
3. Ok let's make that 20% really happy. The 80% will be pissed? Oh well, too bad.
4. Well, we gave the 20% what they want, but now that there are fewer players, the 20% will have to pay more, because we don't want to make less.
5. The 80% get even more mad and buy less stuff or quit
6. The 20% buy more stuff because they're happy

It happens that the 20% that are buying a lot of stuff enjoy the hobby in the same way that GW imagines that 100% of their customer base should. That is, models first, fluff second, game third. Large armies, large collections, narrative-based play, fluffy lists, elaborate setups over small games, quick pickup games, list-to-win, rapid setup and competitive play.

Inevitably, some of the 80% will cross over and do things "the GW way"; but a lot more will leave for something that is a better fit. In the long term (decades), this will either lead to a stable core of players that like things the way GW does and attract like-minded players, or it will leave 40k with an insufficient playerbase to attract new players, and the game will lose relevance (or become irrelevant).

Obviously, this is an oversimplification to some degree and just a hypothesis with no basis in fact.

I would be happier if GW were more inclusive, though I do not want to GW to do things that would take away from things I enjoy -- for instance, I love the rapid release cycle, and I'm happy with shorter cycle rules, two things that make a lot of people more casual to 40k angry. I don't mind meta shifts at all, and I want to see fresh new kits, and am willing to pay more for updates to kits, two more things that a lot of casual players don't like. Of course, like everyone else, I'd like cheaper models!

I think you're on to something with that 80/20 split. I think one of the main reasons people are (justifiably) negative towards GW is that they have basically been fired as GW customers and just haven't been explicitly told or realized it for themselves.

While I may think GW is better off embracing a variety of approaches, the management team Kirby has built feels differently. They see a certain utility in intentionally shrinking their customer base to concentrate on the 20% (or whatever it is). Imagine GWs revenue if they get to a point of growth in recruitment and everyone they recruit is one of the 20%.of their former customer base.

They just need to figure out how to get there. I know they've been doing what they can to find people for the one person store manager position and have been expanding trade sales, but with their terrible wwages and freeze on wages, I just don't see them attracting the necessary talent to make growth possible. I'm sure one of the advantages of hiring for attitude rather than skill is they can scrape the bottom of the barrel and get people who are happy with less money than a similar position in another industry. I'm sure the next report will mumble on about new stores and new trade accounts being the way forward just like the last several. At least hiring for attitude is cheaper in the short term so GW will keep its costs down as they flail about for tthe right combination of staff and retail locations.

See, I think that argument makes no sense. You're assuming that only a small fraction of customers make up a majority of profits for a multinational corporation. You're assuming that ostracizing the vast majority of your customers will potentially improve the profitability of that small fraction. You're assuming that the 20% (in this example) are the casual, "I just like to paint and push models around over a beer" crowd, instead of the competitive tournament player that buys an entire new army every tournament season. So many assumptions, with nothing to back them up but a gut feeling.

Also, how many times do we have to repost the "We do not ask the market what it wants" quote from the frikkin chairman of the company before people take them at their word? Even if all of those wildly unsubstantiated claims were true, the whole strategy would still be a coincidence, because GW does no market research. They don't know and don't care what any of their customers want. They've publicly stated so in a legal document.

 Guildsman wrote:
See, I think that argument makes no sense. You're assuming that only a small fraction of customers make up a majority of profits for a multinational corporation. You're assuming that ostracizing the vast majority of your customers will potentially improve the profitability of that small fraction. You're assuming that the 20% (in this example) are the casual, "I just like to paint and push models around over a beer" crowd, instead of the competitive tournament player that buys an entire new army every tournament season. So many assumptions, with nothing to back them up but a gut feeling.

Also, how many times do we have to repost the "We do not ask the market what it wants" quote from the frikkin chairman of the company before people take them at their word? Even if all of those wildly unsubstantiated claims were true, the whole strategy would still be a coincidence, because GW does no market research. They don't know and don't care what any of their customers want. They've publicly stated so in a legal document.

First, I'm not crazy in knowing that there are superfans. It's not the way you characterize it. Out of the 6 in our group that play 40k, 4 are solidly superfans. We buy most Games Workshop releases related to 40k, with one fella buying mountains of Forge World. We take great pride in painting and modelling our armies, and we have a lot of fun playing them.

Most of our games are not competitive games in the sense of "My 1850 vs your 1850, FIGHT!". We construct interesting encounters with *tons* of terrain and fortifications, and create objectives beyond either "kill each other" or "run around and tag stuff for 6 turns". Often, the armies are purposely unbalanced, with other factors or objectives creating the fairness in the encounter. Very often, we rerun a scenario rebalanced after we discover that our theoryhammer was way off, and the game didn't work the way we thought it would. Since we have 3 tables set up in a private basement, we can leave scenarios to the next time we game, or keep stuff the way it s and just lay a poly sheet over it (to keep dust off the models); plus we have the benefit of not having to transport our large models and terrain.

It's not that the game isn't competitive (yes, I try to and want to win!), but the enjoyment comes from playing with cool models in an interesting scenario, and a loss is just as good as a win as long as it was fun.

I am certain we are not the only 6 people lie this in the world; in fact, I know that we aren't even the only 6 like this locally. How many people worldwide would it take to buy GBP 100,000,000 a year in product, if they were spending 5,000 GBP each? Well, that's easy. Only 20,000. That's a TINY number!

With respect to "We do not ask the market what it wants..." -- this is exactly what I was alluding to. My theory (unsubstantiated) is that GW would ideally like the market that is most compatible with its philosophy. It doesn't want to adapt its philosophy to the market. GW feels that the niche of players who fit its model is large enough to keep it in business. I hypothesize that, perhaps correctly, GW estimates that these core customers are willing to pay a higher price as long as they get what they want. That means more kits in the aesthetic that they want, with lots of cool detail and technical upgrades through the years and faster rules refresh cycles that update them to the 'latest and greatest GW idea' (like formations, Decurion, etc).

Again, two things are important here respecting my opinion:

1. It's only my opinion. It's unsubstantiated, though there is logic used to deduce what GW might be thinking, based on what it does and what choices it makes. But I could be 100% wrong; I freely admit that.

2. I'm not saying this is a good idea or a good path for GW. I criticize this all the time and would prefer a more inclusive ecosystem, because I think it's possible to make both the superfans and more average gamer "happy enough". All I'm just saying is: I *think* this is what is going through their heads.

Feel free to think I'm full of **** I take no offense. This is the kind of thing my gaming buddies and I BS about over pizza.