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I actually don't think GW jacks up the prices (in the UK and US at least.)

Their net profit/revenue/cost of sales relationship illustrates exactly how much they're spending on stuff outside of making and designing new product.

They charge what they charge because they've been poorly managed and their business model is overly reliant on a high overhead retail chain which barely breaks even.

They charge what they charge because it is easier to keep on keeping on with the same pricing structure than risk the company on something more radical. Even if they could close the stores tomorrow and even if not a single sale a GW store generated transferred to a third party channel, it would be essentially a zero sum game.

Bandai do what they do best, which is design and make kits, they don't try and run a chain of shops to sell their stuff in and consequently don't have that overhead to meet. As well as selling vastly more volume and having a much lower margin per unit requirement to make money.

As the customer, that's not my problem. Their prices are my problem. I've cut back my GW spending dramatically since way back when they started the yearly price hikes, and if GW wants my custom they can sell me items at reasonable prices again.

xraytango wrote:Most of their core product's molds have many times over recouped any R&D costs. The economy of scale should mean that these products cost less to produce due to amortization.
There is no reason at all why we can't see GW products next to Revell, Testors, and Lindburgh in large chain hobby stores (Michaels, A.C. Moore, Hobby Lobby, Pat Catan's, etc.)

Oh wait isn't that what Battle for Vedros was supposed to be, and there are what like three places actually selling it and they're all in Tennessee!

GW used a third party for distribution on those, someone dropped the ball. GW needs to go back to what works and get on the blower and start tootin'.

They actually used third party sales people, but maintained tight control of the distribution. With the same silly rules banning online sales and discounting/clearance sales. The problem with using independent toy sales people like they did is that Vedros was just one product among many a given sales person is trying to get into a region's department, hobby and hardware stores and the like. And given the relatively low ticket of a vedros retail display, I imagine the commissions for these sales people just were not worth the effort compared to just concentrating on selling water guns and balls in the summer. When you're doing business to business sales, you don't go after $50 in commission for convincing them to order a Vedros retail end cap stand, you go for the $500 you'll make stocking an entire shelf with seasonal items. I bet most sales people took a pamphlet or something with them to their already established contacts and said "I can also get this warhammer vedros thing for you if you want." And that's as far as the effort went. It's just not worth it in terms of commission.

If they wanted Vedros to actually succeed, they needed to let other distribution channels really do the work for them. Store owners for things like hobby and hardware stores don't want to increase their vendors, they often try to streamline and cut vendors and go for those who can support multiple product lines and give a volume discount. if in a given month I send 10 $1000 orders to ten different vendors, I have no bargaining clout. But if I send two orders of $6000 and $4000, I can make something happen.

The next thing they needed to do was mass marketing. Youtube ads. Perhaps one of those DeAgonstini magazine runs. Maybe ads in comic books or something. I'm not sure where you best target ads for 10-17 year old boys, but that's where you go with your marketing. Then the customers go and ask the local stores if they have it and then stores find out their distributors already carry it and no problem, a sale is made and stock starts being put on the shelf.

Exactly how GW built their US and Canada based business back in the 90s.

 Azreal13 wrote:
I actually don't think GW jacks up the prices (in the UK and US at least.)

Their net profit/revenue/cost of sales relationship illustrates exactly how much they're spending on stuff outside of making and designing new product.

They charge what they charge because they've been poorly managed and their business model is overly reliant on a high overhead retail chain which barely breaks even.

They charge what they charge because it is easier to keep on keeping on with the same pricing structure than risk the company on something more radical. Even if they could close the stores tomorrow and even if not a single sale a GW store generated transferred to a third party channel, it would be essentially a zero sum game.

Bandai do what they do best, which is design and make kits, they don't try and run a chain of shops to sell their stuff in and consequently don't have that overhead to meet. As well as selling vastly more volume and having a much lower margin per unit requirement to make money.

That's the issue though every price hike drives more away and those customers are not being replaced, continuing this course sees them dead as a company.

They are bleeding out and a band aid isn't going to cut it.

Can you describe how you see GW bleeding out? Their latest press release indicates anything but.

You also note one thing that I definitely do not agree with; GW not generating new customers? There is no metric for this and the continued existence (expansion?) of GW stores would indicate that they continue to do what they do best and that is generate more GW customers. It's their primary function after all.

 notprop wrote:
Can you describe how you see GW bleeding out? Their latest press release indicates anything but.

You also note one thing that I definitely do not agree with; GW not generating new customers? There is no metric for this and the continued existence (expansion?) of GW stores would indicate that they continue to do what they do best and that is generate more GW customers. It's their primary function after all.

Having the same revenue with increasing prices usually means you move less stuff.

But that is not an uncommon trading condition, quite normal in the cycle of things.

 notprop wrote:
Can you describe how you see GW bleeding out? Their latest press release indicates anything but.

You also note one thing that I definitely do not agree with; GW not generating new customers? There is no metric for this and the continued existence (expansion?) of GW stores would indicate that they continue to do what they do best and that is generate more GW customers. It's their primary function after all.

Have you been reading the annual stock holder reports for the last few years? I am not being snide or sarcastic. Please go and read them it will open up your eyes once you read between the lines and ignore all the 'stockholder language.' Usually Weeble and Reinholdt have some very good insights and comments on them.

Indeed I have. And there is nothing those reports that would indicate a failing company. Their capital held and ability to generate more makes GW demonstrably buoyant.

Can you tell me between which two lines I should be reading?

@notprop.
If GW had actually continued to open 'recruitment' stores' in high foot fall areas, with multiple staff and actual ability to run multiple game systems, tournaments, campaigns and painting events like they used to do.Then I would say the argument they are opening new stores to recruit new customers might be valid

But to just replace 'recruitment center stores' with 'poky one man stores in out of the way low rent areas'.Is doing very little to recruit new customer in real terms.
Compared to the effect sensible pricing and quality rules has on every other company in the same market.

Having to raise prices to cover stagnant or falling sales volumes , is the first part of a cycle of corrective action.
After the L.oT.R. bubble burst, Tom Kirby actually admitted that the GW corporate management had become '..fat and lazy on the back of easy success...'

So a couple of years increasing retail prices and cutting costs while the company Chairman/C.E.O did what was necessary to engage with their customer base in a more effective way, would be expected.
Serious market research to determine who actually makes up GWs actual customer base, and potential customer base for example.

But as Tom Kirby believes GW's core customers are '..socially inept , immature and easily manipulated into buying any GW product..'

After admitting the GW coprorate management was 'fat and lazy,' he just raised prices and cut costs,(to the detriment of promoting sales,) for another EIGHT YEARS.

Because the 'GW apologists' drowned out any genuine critic of GW business practices.Often any critique of GW backed up by logic and facts would be attacked GW apologists by slinging insults to lock the thread.

This simply lead to people just walking away from GW product and GW centric forums.

Thankfully , it seems even the most senior managers at GW realized that Kirby direction for GW was completely for his own personal gain, at the detriment to the long term future of GW.

Just a comparison..
If GW had kept the sales volumes it had at the height of the LoTR boom, adjusting for inflation, they would have a turn over in excess of £280M.
If GW had kept the sales volumes they had before the start of the LoTR boom, adjusting for inflation, they would have a turn over in excess of £160M.

If you add in the price rises over the rate of inflation for those periods, the figures grow to £350M and £230M.

So how do you equate a 50% to 70% drop in sales volumes, with new B&M stores recruiting enough players?

 notprop wrote:
Indeed I have. And there is nothing those reports that would indicate a failing company. Their capital held and ability to generate more makes GW demonstrably buoyant.

Can you tell me between which two lines I should be reading?

Sales are dropping every year, profits are down, they've cut staff to a minimum and frozen their pay what does that tell you?

Even dropping their former grip on their IP and licencing it to anyone that could pay still saw year on year performance drop even with the most intense release schedule they've ever had.

All the stops have been pulled and they continue to shrink in a sector experiencing a boom.

While the shops remain GW will.

The warning sign on the GW model is when the retail chain starts to shrink markedly.

Profits have remained stable and unit sales have dropped over previous years this is true. Indications are that NuGW (go on use it you know you want to) may be reversing this trend. Certainly their effort would deserve to be reflected in the figures by now.

But none of this is "bleeding out". An old wound stymied or healed might be better.

Re the IP licence, these are more tricky to comment on as it is entirely within GWs power on how this is reported. There could be a few dozen licences paying in and they could hold all that revenue back for later years in the licence or used to pay accruals in previous years taken against expected revenues. GW have indicated at least two ways of reporting these revenues in the past 5-6 years so this is definitely something that can not be anything but guessed at.

 notprop wrote:
While the shops remain GW will.

The warning sign on the GW model is when the retail chain starts to shrink markedly.

It has, in terms of resources at least, shrunk markedly.

By that I mean, there are still roughly the same number of physical stores, but they've gone from an average of about 3 staff, to 1. They've moved from high-rent-high-footfall areas to low-rent-low-footfall destination stores. They've generally had a significant reduction in floor space too.

They've been cutting costs to the bone, and increasing prices, and revenue isn't going up. So they can only be selling less, which in a social game that relies on a critical mass* is a bad thing.

They aren't going anywhere soon, things like WHQ and Blood Bowl will take care of that, but they are definitely not improving.

They are in a managed decline. They are still bleeding out, it's just they've managed to stem it to a trickle. They've got a few years left.

*Lots of people start, and stick with, GW systems because they were ubiquitous; you could take 40K/WHFB into any game store with open gaming and get a game. Everyone had at least 1 army, because everyone else had at least 1 army. Now in a lot of places it's easier to get a game of something else, so there's no incentive to even start with GW.

Herzlos wrote:
.....They aren't going anywhere soon, things like WHQ and Blood Bowl will take care of that, but they are definitely not improving

okay...

.... They are still bleeding out, it's just they've managed to stem it to a trickle. They've got a few years left.

Whoooow! Where'd that come from?

What do you mean?

Re. WHQ and BB - they are massive sellers to the nostalgia market, and will bring in a lot of money from ex gamers. But there's only so often you can re-release old repackaged games and have them still sell (like the Space Hulk re-re-run). Their new games don't seem to do well at all except as a method of selling figures a bit cheaper.

So whilst the specialist games are currently keeping GW afloat, that stream is going to run out eventually, and things won't be so rosy.

Re. the bleed out - I reckon they'll comfortably trundle along getting gradually worse for another 5-10 years and then sales will just fall off a cliff as they lose critical mass (or more importantly, someone else gains that critical mass. My money is on Warlord, at this stage). They'll never disappear, but they'll probably shed their retail chain and consolidate down to a single site in Nottingham and go back to the distributor model everyone else uses. They'll presumably remain big enough to keep Warhammer World, but they'll potentially lose the other design building(s) around it.

"Few" generally gives the impression of 3 or 4 rather than 5-10. I think that's probably what he was reacting to. I even think 5-10 is unlikely.

With pretty much no debt and a reasonable amount of cash on hands, there is simply no way they're gone in a few years. They can likely operate at a loss for nearly a decade while they try to correct the core issues. Even then, there's no sign of them making a loss in this reporting period and likely not the next either.

Their main costs are also in GBP so they now get extra revenue coming in thanks to the reduced pound. At the same time, they've been focusing their new store openings in the US, so they're positioned well to take advantage of the currency fluctuations.

Their operating costs are very high. A steady decline they can handle, but a sudden, sharp, dip a la a few years ago could pose them real issues. (Which is why I firmly believe 8th 40K will be the most crucial release in their history.)

They'd be in a position to borrow in the short-medium term, but it would really set the clock ticking on reversing the trend.

That said, unless 8th really sucks, I don't think it'll happen. Rountree hasn't done anything revolutionary, just implemented many of the long list of normal business practices that they inexplicably failed to adopt under Kirby, but it's probably enough to steady the ship. If 8th is actually any good, I'd expect a fairly strong return to growth, at least for a year or two.

Given recent examples I think we're looking at the 40k version of 9th age in our not so distant future, all talent left the design studio long ago.

There's no way to call that unless you are in a position to extract the demands of the accountants to sustain releases from what the studio may have done had they been given license.

I'd point to the fairly competent shepherding of the 30K element to suggest that there's at least a handful of decent designers still in the building.

 Azreal13 wrote:
There's no way to call that unless you are in a position to extract the demands of the accountants to sustain releases from what the studio may have done had they been given license.

I'd point to the fairly competent shepherding of the 30K element to suggest that there's at least a handful of decent designers still in the building.

At forge world sure but they are a separate entity if forge world devs were doing 8th I'd have more confidence, but it's not they'll be working on specialist games while GW devs do 8th.

Same company but different teams, it's why forge world stuff wasn't allowed in regular games for so long.

They've taken on a lot of extra designers to cover specialist games alongside the FW team.

Besides, they're in the same building, if you think they're somehow in a bunker isolated from everyone else, you're misguided.

It's a different mindset, more "it's ready when it's ready" and it is that, more than any significant difference in talent, that allows FW to do what it does.

I'm not touching the whole "FW in regular games" thing, otherwise the whole topic will spiral off at a tangent.

 Azreal13 wrote:
They've taken on a lot of extra designers to cover specialist games alongside the FW team.

Besides, they're in the same building, if you think they're somehow in a bunker isolated from everyone else, you're misguided.

It's a different mindset, more "it's ready when it's ready" and it is that, more than any significant difference in talent, that allows FW to do what it does.

I'm not touching the whole "FW in regular games" thing, otherwise the whole topic will spiral off at a tangent.

I sit in the same building as many different departments, but don't touch their projects.

GW design studio has none of the decent talent left. They all left and started putting out competing games.

IMO, it all went very wrong when the self perpetuating hubris of Tom Kirby became the business directive of GW plc.

Tom Kirby could not be bothered to explain/or understand , the importance of game development in the GW business to the share holders.
And so the '..we sell toy soldier to children..' replaced the '..games by gamer for gamers..' ethos at GW towers.

The very low opinion Tom Kirby has of GW customers,and GW staff (as detailed in the 'little red book' handed out to senior managers.)
Has lead to GW plc treating customers and staff with ignorance at best, and down right contempt at worst.

There is still game development talent at GW towers, its just the sales department has far too much influence in the release schedule, and the quality of the released products.

Hopefully if the lunacy of Tom Kirby has been dealt with once and for all.GW plc might be able to start changing direction to fully engage with customers and staff in more positive and productive ways again.

 frozenwastes wrote:
"Few" generally gives the impression of 3 or 4 rather than 5-10. I think that's probably what he was reacting to. I even think 5-10 is unlikely.

Yeah, I guess, I just meant "more than a couple". That said, I'm sure they'll still be a thing, just not the behemoth they are today.

With pretty much no debt and a reasonable amount of cash on hands, there is simply no way they're gone in a few years. They can likely operate at a loss for nearly a decade while they try to correct the core issues. Even then, there's no sign of them making a loss in this reporting period and likely not the next either.

The gap between black and red in GW's financials isn't huge in percentage terms, so if they continue shrinking at this rate without cutting their costs as fast, they'll start to encounter issues in a couple of years.

Their main costs are also in GBP so they now get extra revenue coming in thanks to the reduced pound.

Yeah, their UK staff wages and development stuff is all in GBP, but their raw materials (plastic, resin, pewter) and outsourced stuff (printing, bases, boxes) are all EU/China, so will go up.

At the same time, they've been focusing their new store openings in the US, so they're positioned well to take advantage of the currency fluctuations.

Last years burst of store openings lost them £100k, and as I said, the stores opening tend to all be 1-man stores* in the back of nowhere, bringing in minimal revenue.



*That reminds me; my biggest annoyance with them at the moment is their store opening times. I've gone past 2 of their stores about 4 times now for a browse and some paints, and every single time they've been closed. Either because they don't open until remarkably late (11am) or the single staffer has gone out to lunch (at 2pm on a Sunday - what I'd regard as absolute peak time).

 Fenrir Kitsune wrote:

 Azreal13 wrote:
They've taken on a lot of extra designers to cover specialist games alongside the FW team.

Besides, they're in the same building, if you think they're somehow in a bunker isolated from everyone else, you're misguided.

It's a different mindset, more "it's ready when it's ready" and it is that, more than any significant difference in talent, that allows FW to do what it does.

I'm not touching the whole "FW in regular games" thing, otherwise the whole topic will spiral off at a tangent.

I sit in the same building as many different departments, but don't touch their projects.

Congratulations?

GW design studio has none of the decent talent left. They all left and started putting out competing games.

Ohhhh, so basically if it isn't Chambers, Priestley or Calvatore, they don't count? Gotcha.

 Azreal13 wrote:

 Fenrir Kitsune wrote:

 Azreal13 wrote:
They've taken on a lot of extra designers to cover specialist games alongside the FW team.

Besides, they're in the same building, if you think they're somehow in a bunker isolated from everyone else, you're misguided.

It's a different mindset, more "it's ready when it's ready" and it is that, more than any significant difference in talent, that allows FW to do what it does.

I'm not touching the whole "FW in regular games" thing, otherwise the whole topic will spiral off at a tangent.

I sit in the same building as many different departments, but don't touch their projects.

Congratulations?

GW design studio has none of the decent talent left. They all left and started putting out competing games.

Ohhhh, so basically if it isn't Chambers, Priestley or Calvatore, they don't count? Gotcha.

More that GW has been moving to a 'Faceless Minion' rules studio - dropping the names of the developers from their games. (Though, given the quality of some of their games... that may not be a bad thing for the designers....)

Not so much that Chambers et ali are the only designers of note - but that GW isn't noting the designers. Good old Cubicle #5 - he makes such great rules!

The Auld Grump

So, by that logic, if we don't know who they are, we can't make any sound judgement of their actual ability vs the pressures put on them by the corporate element of the business?

Which was my original point. I mean, I'm probably what would be considered a half decent painter, but if someone handed me a tank and said "here, have this ready by lunchtime" I'm pretty sure I wouldn't be turning in anything representative of my real ability.

End result is the same, a tank that's not as good as it could be and a game that's not as good as it could be. Lots has been figured out in terms of running design studios in many industries and one thing holds true: you need to equip people to produce their best work. I'm not sure GW does that.

 TheAuldGrump wrote:
More that GW has been moving to a 'Faceless Minion' rules studio - dropping the names of the developers from their games. (Though, given the quality of some of their games... that may not be a bad thing for the designers....)

As someone who has his name in quite a number of 40K books, let me assure you being subsumed into some annonymous 'design team' would not sit well with me. Hell, the one time my name was left out of something my editor fell over himself apologising to me.

Not having writing credit is not cool, and if they changed it to avoid another "Mat Ward" situation then that just strikes me as a knee jerk reaction that robs writers of their proper credits.

Now you have me curious as to your true identity...