GW Annual Financial Report dropping this week [Archive] - BoLS Lounge : Wargames, Warhammer & Miniatures Forum

Flammenwerfer13

07-28-2014, 07:11 AM

Just an FYI to the community! Games Workshop HAS to release their Financial Report by no later than Thursday (31 July 2014).

Hopefully we can get a glimpse of what is going on behind the curtain so we can confirm/deny if they're going down the "everything allowed" for profits or desperation.

~Mod edit:

Chairman's Preamble 2014 (http://investor.games-workshop.com/wp-content/uploads/2014/07/Chairmans-Preamble-2014.pdf)
Begins with this:

"Games Workshop has had a really good year.

If your measure of 'good' is the current financial year's numbers, you may not agree. But if your measure is the long-term survivability of a great cash generating business that still has a lot of potential growth, then you will agree."

Games Workshop Annual Report 2014 - Press Announcement (http://investor.games-workshop.com/wp-content/uploads/2014/07/2013-14-Press-statement-final-website.pdf)

Annual Report 2014 (Full Report) (http://investor.games-workshop.com/wp-content/uploads/2014/07/Games-Workshop-Group-14-combined-FINAL.pdf)

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Wolfshade

07-28-2014, 07:37 AM

This is not 40k news.

GW releases their accounts in accordance with UK law, they are allowed to defer it for certain reasons but there is no reason to claim that. They have been regularly releasing their annual and half year results on clockwork for years.

The results won't show you what you are looking for as they will not show sales volume only revenue.

- - - Updated - - -

Indeed, we can do better and annouce:

•29 July 2014 – Announcement of full year results
•17 September 2014 – Annual general meeting

Though how much of a news something that has been written down on a publically available calendar is I don't know

http://investor.games-workshop.com/financial-calendar/

- - - Updated - - -

Also, everything that they do is "for profits" after all that is the legal responsibility of ever publically listed company.

Mr Mystery

07-28-2014, 09:00 AM

CoffeeGrunt

07-28-2014, 09:06 AM

Well this was a non-event of a thread.

Wolfshade

07-28-2014, 09:08 AM

My thoughts exactly.

But then most of them are concerning GW finance and stocks

Mr Mystery

07-28-2014, 09:21 AM

Nonsense! Everyone knows it is the job of the community to complain endlessly and bend facts and figures to suit their own wildly paranoid theories about how GW is losing money hand over fist despite actually being in profit!

(no, really. Dakka goon claimed GW are cooking the books, because clearly his baseless assertion they were making massive losses).

Path Walker

07-28-2014, 09:31 AM

Where are the usual voices decrying GWs practises and thinking they know how to run the business better?

Its almost like they only show their faces when the company has a downturn but when its doing well, they're no where to be seen.

Mr Mystery

07-28-2014, 10:22 AM

We won't know how they're doing until tomorrow.

Also worth noting that the 6 month results, whilst disappointing, didn't require a profit warning....

Bigred

07-28-2014, 11:24 AM

Chairman's Preamble 2014 (http://investor.games-workshop.com/wp-content/uploads/2014/07/Chairmans-Preamble-2014.pdf)
Begins with this:

"Games Workshop has had a really good year.

If your measure of 'good' is the current financial year's numbers, you may not agree. But if your measure is the long-term survivability of a great cash generating business that still has a lot of potential growth, then you will agree."

Some choice quotes:

...In the technological world we occupy there is constant debate over who 'innovates' and who merely copies. We have, this last year, spent an indecent amount of your money trying to stop someone stealing our ideas and images. It is a very difficult thing to do when it is done through a legal system designed to prevent people stealing hogs from one another. Our experience has probably been typical of most – far too much money spent on far too little gain. The argument is that we have to do this or we will, bit by bit, lose everything that we hold dear, everything that keeps the business going. Our crops will wither, our children will die piteous deaths and the sun will be swept from the sky. But is it true?

...All of our great new miniatures come from Citadel. It is possible that one day we will sell them direct via 3-D printers to grateful hobbyists around the world. That will not happen in the next few years (or, in City-speak, 'forever') but if and when it does it will just mean that we can cut yet more cost out of the supply chain and be making good margins selling Citadel 3-D printers.

...On the first of January next year I will be stepping down as CEO of Games Workshop. I intend staying on as non-executive Chairman (if the board will have me), so those of you who want to see an end to these preambles (rhymes with rambles), don't get your hopes up just yet.

...The board has prepared a job specification for CEO, and the consequential advertisement. The ad. will be published the day after our AGM (September 18th). If you apply, we require that you write a letter saying why you want the job. No letter, no interview. The interviews will take place on November 7th and will be at Nottingham. An announcement will be made the following week. We have not decided what will happen if no suitable candidate is found but I suspect my wife will be livid.

Wolfshade

07-28-2014, 12:29 PM

Mr Mystery

07-28-2014, 01:02 PM

With regard to 7th Ed being launched, would that not hit in the next 6 monthly report, rather than this one?

Preamble is certainly setting out the stall for the report - sounds like they're still in profit, but less than some might expect due to extensive infrastructure spending (well, I say extensive. I can't really quantify that in comparison to similarly sized companies!).

3D Printing is also more or less what I expected. Technology just isn't there yet, but it does sound like GW have good experience with them already, putting them in a good position to exploit any sudden developments (and who knows when those might happen!)

Interested to see the figures tomorrow.

Wolfshade

07-28-2014, 01:09 PM

Possibly, 2nd half is Dec to May IIRC

Mr Mystery

07-28-2014, 01:10 PM

Would depend upon the cut off then.

Ghostofman

07-28-2014, 01:20 PM

Sounds like the jist is gonna be "We didn't make a ton of money, but we aren't going out of business and we did a bunch of stuff we think might possibly make us money next year. Also Chapterhouse is a bunch of thieving jerks. Also we hear '3D printer' is a good buzzword and it's actually something we know a little bit about, but we don't want to go there until we can have a DRM system so you have to buy the printer, plastic, and the model plans from GW, and it'll have some kind of pay-per-print system so you can't just dump a pile of Marines out tomorrow."

I'm a little cynical, but I actually do hope the 3D printer thing works out for em without being a money pit for the end user. Would mean then end of OOP models, and potentially make more model types (like IG regiments) more viable.

Elhi'Ahcolee

07-28-2014, 01:21 PM

I'm amazed that their new webstore design cost them £4 million, and I wouldn't say it's more efficient for people who aren't using a tablet.

HsojVvad

07-28-2014, 01:33 PM

Like Elhi'Achcolee said, 4 million pounds is what 6 or 7 million dollars Canadian just to run a website? Is that normal?

Also I have a hard time believing this was real. I mean it looks so unprofessional coming from a CEO, Chairman or what ever position he holds.

Wolfshade

07-28-2014, 01:38 PM

It does seem a little steep, one must imagine that there is more back office stuff to the website, like a whole ordering and warehousing suite behind it with various reporting tools.

I would be very surprised if any other firm in the sector would spend £4m on a website. It seems a little steep.

Kirby's pre-ambles have always been this informal.

Mr Mystery

07-28-2014, 01:42 PM

Indeed. It's a chance for him to have his say.

And he's stepping down.

Erik Setzer

07-28-2014, 02:20 PM

I quite like Kirby's preamble. I do like his assessment of 3D technology, it seems to mirror my own views, so must be right ;)

But, moreover, one must assume that Kirby has seen EoY figures, even if they aren't final. So it would suggest that GW did not make massive profits. So that may be of concern, the trouble is that you would expect with a new edition the figures to be higher than last year, and on a par with when 6th came out.

But it sounds like there have been a lot of back office transformations which might be profitable long term, unfortunately, all major transformation projects are expensive and often massively over budget. So the seeds might have been planted but will they bear fruit? Probably won't see until next year.

Might just have to apply for the CEO role ;)

The thing that troubles me is that they used such an excuse for the disappointing revenues last year, where they claimed that their move to one-man stores would put them in a better position for the future but in the short term meant less sales because the stores were open shorter hours. It felt like a cop-out. They're likely using a similar excuse again to try to mask the issue that they just shoved out a lot of stuff that should have gotten gamers to part with hundreds of dollars and it didn't reflect an uptick in profits. Heck, the change to White Dwarf was done to make it cost them a stupidly low amount to make the magazines while getting more money from people. They've done all kinds of stuff to lower costs while pushing things that should be raking in money. If they didn't see notable growth, something's up. If they saw diminishing revenues again, then there's a serious problem.

We'll just have to wait and see those numbers, but it is a little disturbing when he comes out of the gate and tries to cover up any concern over diminishing revenues.

- - - Updated - - -

Like Elhi'Achcolee said, 4 million pounds is what 6 or 7 million dollars Canadian just to run a website? Is that normal?

No, it's not. Not for something like their site. Which is all fine and well, but still has some issues. It's pretty simple overall, so much so that you could really actually build it with a lot of the available off-the-shelf ecommerce systems, though I imagine they wanted to make an in-house setup just so it'd be "theirs." (That's not a knock on GW, some other companies do it when they could save money.) You'd have to have an expensive staff to be putting that much money into the website, and be buying a bunch of new equipment that's super-expensive. Maybe they dropped some serious cash on the equipment. But if it was in-house, it shouldn't cost *that* much, and if they farmed out the job, they likely went for a reasonable bidder.

The company I used to work for could do a site like that and charge someone $50,000. If we went nuts and built it from scratch, it might end up $100,000, but that's because of time to build and the guy I worked for being able to get serious cash from people (he might not have known how the sites worked, but he knew how to sell websites).

Geez, I'd love to see a breakdown of that website's cost...

- - - Updated - - -

I've hacked the stock exchange, and many boffins died to bring us this information, which honestly isn't you know, completely publically availbale on account it has to be being a publically listed company (http://uk.moneycentral.msn.com/investor/quotes/quotes.aspx?symbol=GB%3aGAW)

Bit of a jump, with the results coming shortly.

And if you look at a longer-term chart:

http://investing.businessweek.com/research/stocks/charts/charts.asp?ticker=GAW:LN

So it had a bit of a bump today... but is coming down off the high it had around the time 7th edition came out. It needs more than a one-day bump to look like thinks are smelling rosey. Maybe if it keeps it up. But this could just be some people looking at it and thinking, "Oh, he says long-term is healthy, well, maybe it's a reasonable investment still."

We'll have to see later in the week.

Wolfshade

07-28-2014, 02:44 PM

Tomorrow. We see tomorrow.

jonsgot

07-28-2014, 05:47 PM

GW's biggest threats are entry costs (putting of new gamers), going too far with their prices (putting of existing gamers), X wing, and putting all their eggs in one 40k basket. 3d printer will hurt them. But they will be used by some of the people who already torrent rule books and buy models from knock off companies and only some because these people want things cheap, which 3d printing isn't. I'm not sure I agree they will never be detailed and cheap. Technology leaps do happen. As someone who has ended up with non GW resin models, by mistake. I can say I'll be sticking with their products come 3d printing or high water. And moaning my head off if they do ever replace plastic with 3d printers.

daboarder

07-28-2014, 06:36 PM

The results won't show you what you are looking for as they will not show sales volume only revenue.

Also, everything that they do is "for profits" after all that is the legal responsibility of ever publically listed company.

Two things
1) The results WILL show the change in sales volume as a % +/-. IE: -20% sales in Australia. Yes this is a revenue value, but given it is intrinsically linked to the volume of stock being moved this is not an issue.

2) You are far to oversimplifying the legal obligation the board of directors has to a company, they do not have the right or the responsibility to make profit, they have the responsibility to maximize the return for investors both short and long term. To ensure that they are acting in the company and its owners best interest.

NO ONE, on either side should be drawing conclusions until the report is released, we can all stick our noses out and say I told you so by cherry picking data in a few days.

Bigred

07-29-2014, 01:20 AM

Games Workshop Annual Report 2014 - Press Announcement (http://investor.games-workshop.com/wp-content/uploads/2014/07/2013-14-Press-statement-final-website.pdf)

Annual Report 2014 (Full Report) (http://investor.games-workshop.com/wp-content/uploads/2014/07/Games-Workshop-Group-14-combined-FINAL.pdf)

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Wolfshade

07-29-2014, 01:36 AM

Two things
1) The results WILL show the change in sales volume as a % +/-. IE: -20% sales in Australia. Yes this is a revenue value, but given it is intrinsically linked to the volume of stock being moved this is not an issue.

No it wo'n't. If GW posts $40 of sales, we don't know if that is several boxes of grotz or one larger kit. It gives no indication of the number of units sold. Given price rises an increase in revenue it could mean less kits sold but at a higher cost. We just don't know.

- - - Updated - - -

Having not read the report:
http://dilbert.com/dyn/str_strip/000000000/00000000/0000000/200000/20000/6000/000/226093/226093.strip.gif

daboarder

07-29-2014, 01:53 AM

games workshop annual report 2014 - press announcement (http://investor.games-workshop.com/wp-content/uploads/2014/07/2013-14-press-statement-final-website.pdf)

annual report 2014 (full report) (http://investor.games-workshop.com/wp-content/uploads/2014/07/games-workshop-group-14-combined-final.pdf)

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holy ****!

reported sales fell by 8.2% to £123.5 million for the year. On a constant currency basis, sales were down by 6.5% from £134.6 million to
£125.9 million; progress was achieved in other sales businesses (+20.9%) and export (+2.7%) while sales in uk (-7.1%), continental europe
(-10.6%), north america (-7.5%), australia (-9.4%) and asia (-3.3%) were in decline.

wow, that is painful, very painful.......

In typical corporate septicemia, Kirby has awarded himself 2,641 shares. (Technically he awarded himself the option to by that many shares at 20% less than the market value, he then exercised those shares) so basically he gave them to himself for a 20% discount

Pre-exceptional core business operating profit (operating profit before royalty income) fell by £4.9 million to £15.4 million (2013: £20.2
million). On a constant currency basis, core business operating profit fell by £3.6 million to £16.7 million. This result was driven by an £8.7
million sales decline, on a constant currency basis, as a direct result of lower volumes and a decline in gross margin.

Operating expenses (excluding exceptional items) fell by £6.2 million; £3.1 million due to a reduction in retail store costs, £1.1 million
employee profit share not incurred in the year and £0.3 million reduction in legal costs. Savings of £0.7 million from the continental
european reorganisation have been realised. Costs remain a key area of focus.

Yes, GW Made a profit, but the point is they made LESS profit, roughly 25% LESS profit, thats scary

Wolfshade

07-29-2014, 01:58 AM

Summaries from the report for those who think it is too long

Revenue £123.5m a drop of 8% on last year
Pre-tax profit £12.4m a drop of a staggering 42%

Even taking into account "Exceptional costs" and adding it into the pre-tax profit that would still be a 21% drop.

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.

The reorganisation closed 4 European offices, relocation functions to Nottingham or a new tiny office in Dusseldorf (presumably where the cost of £0.6m comes from)
and removed middle management.

Sales in the last quarter are up on their equivalent quarter and costs are down - though this isn't described in the figures so we have to take their word for it.

Having said that overall "Reported sales fell by 8.2% to £123.5 million for the year. On a constant currency basis, sales were down by 6.5% from £134.6 million to £125.9 million; progress was achieved in Other sales businesses (+20.9%) and Export (+2.7%) while sales in UK (-7.1%), Continental Europe (-10.6%), North America (-7.5%), Australia (-9.4%) and Asia (-3.3%) were in decline."

It seems that the new strucutre will decrease costs of the sales which might result in increased profitability.

Somre more sales news, 42% through GW stores, 36% FLGS and 13% mail order, which is broadly similiar to last year. So it would seem to suggest that sales have taken a hit across the board rather than just being in a specific place.

A further £1.3m was lost in operating revenue owing to the strength of the £ vs $s, €.

GW are keen to expand their stores in Germany and North America and they believe that this is still key to their growth. They are targeting "single digit growth" which given the size of GW is more realistic.

A final word of confidence in his brand Kirby closes with "...I expect to see dividends. I am not planning to sell any of my shares."

I should probably condense and refine this at some point.

- - - Updated - - -

While they are doing work to address their profitability, the falling sales volumes should be of concern. Maybe now would be a great time to get out their and start marketing the brand and engaging the customers digitally rather than just face to face.

daboarder

07-29-2014, 02:00 AM

While they are doing work to address their profitability, the falling sales volumes should be of concern. Maybe now would be a great time to get out their and start marketing the brand and engaging the customers digitally rather than just face to face.
They need to stop fighting their own customers

Wolfshade

07-29-2014, 02:03 AM

I am very tempted to write to GW with my proposal of digital engagement. At least that way I can say I tried everything...

daboarder

07-29-2014, 02:04 AM

I am very tempted to write to GW with my proposal of digital engagement. At least that way I can say I tried everything...

Given the way they handled Eddy and the BL digital FB page I think they dont want to know

Wolfshade

07-29-2014, 02:17 AM

Given the way they handled Eddy and the BL digital FB page I think they dont want to know
I fear that that is the case.

Eddy for all its flaws was a great idea. The difficulty will be riding the hate for the first X months. Once that is out then you can go on and start to do stuff.

daboarder

07-29-2014, 02:25 AM

its all about attitude and communication and GW goes out of their way to shut down that communication.

Even just posting the designers notes for rules and miniatures, explaining why they make half the choices they do would go a long way to addressing these issues,

Caitsidhe

07-29-2014, 02:27 AM

The numbers are about what I expected. I'll be interested in the next report because I intend to compare the massive reduction in sales bump from a new edition as compared to new editions int he past. Unlike some, I try to be very specific in my prognostications. This report is within the exact same margin of error of my predictions of the outcome of the Chapterhouse legal affair. My personal suggestions for Games Workshop are:

1. Hire for SKILL and not for attitude.
2. Recognize that one approach for different countries (i.e. different markets) is being dressed for failure.
3. Remember the golden rule, "the customers, on the whole, are always right".

Whatever mid-life crisis the company is going through, they need to get over it.

Wolfshade

07-29-2014, 02:40 AM

No, the golden rule is "Once you have their money, never give it back" the Ferengi have tought us well.

#2 is something Dab, DL and others have discussed many times and I do agree.

spaceman91

07-29-2014, 03:53 AM

As much as I love 40k/Fantasy it does not surprise me to see numbers down.
I think they might have gone over the line of how much can they charge. When ever I hear I mum/dad/grandparent its always this " that's nice... O god look at that price ". Its a luxury item and hence cost more then normal ( I'm ok with that ) but I think its gone a tad too high.

My 2 pence.

Psychosplodge

07-29-2014, 04:24 AM

3. Remember the golden rule, "the customers, on the whole, are always right".
.

Having worked retail when I was younger, just no. no no no no no.
nooooooooooooooooooooooooooooooooooooooooooooooooo

Cap'nSmurfs

07-29-2014, 05:44 AM

The next year's accounts will be the interesting ones; those which include the new website, the new 40k edition and supporting materials, etc. They're still in profit, but the question is whether changing their business practices will arrest the downturn. This might be a blip, might be something more serious. We need a few in a row to see.

Psychosplodge

07-29-2014, 05:48 AM

Also if they're making people redundant that's potentially expensive if they've been there a while.

eldargal

07-29-2014, 05:54 AM

Having worked retail when I was younger, just no. no no no no no.
nooooooooooooooooooooooooooooooooooooooooooooooooo

Yup, toxic American bull**** that I hope never catches on here.

Mr Mystery

07-29-2014, 05:56 AM

Yup, toxic American bull**** that I hope never catches on here.

The customer is usually on completely the wrong end of the stick, and barking up the wrong tree.

Psychosplodge

07-29-2014, 05:57 AM

Exactly.
Its widely acknowledged that the customer is in fact a ****ing idiot

Mr Mystery

07-29-2014, 06:00 AM

Yup.

Once sold a pair of specs to the Dad of 'Combat Barbie'. And he wanted a discount because his daughter had a medal.

No, he didn't get one. The price is the price. I don't care who your daughter is, or what she does. Because you're the speccyblindo wanting the discount, not her. If she asked for a discount on her specs, I'd have spoken with my manager. If she asked for a discount on her specs in the way you had sir, I'd have told her to bog off and all.

Wolfshade

07-29-2014, 06:00 AM

It is for this reason why I am very rarely allowed to respond to customer complaints.

CoffeeGrunt

07-29-2014, 06:01 AM

Having worked retail when I was younger, just no. no no no no no.
nooooooooooooooooooooooooooooooooooooooooooooooooo

This right here.

Psychosplodge

07-29-2014, 06:03 AM

I used to draw a map to our competitors with see you in twenty minutes written on it because their prices were a good 50% higher and a slower service.

Mr Mystery

07-29-2014, 06:04 AM

It is for this reason why I am very rarely allowed to respond to customer complaints.

Oh I am, but generally it's where we have actually stuffed up.

However I am noted for be rather adept at, ahem managing expectations. All balanced off by moving hell and high water when it is all our fault and we've got nowhere to hide!

Wolfshade

07-29-2014, 06:12 AM

It is never my fault. It is the general public being stupid.

Mr Mystery

07-29-2014, 06:20 AM

It is never my fault. It is the general public being stupid.

You'd be amazed how much the complainant is settled down by the frank 'yep. We stuffed up. Sorry'. Even if I can't do much about it, just that admission seems to satisfy them. Possibly a symptom of a world where it's always the next person's fault?

Wolfshade

07-29-2014, 06:32 AM

It might do, but I am not going to say it was my or our fault when the issue is the complainers stupidity.

CoffeeGrunt

07-29-2014, 06:32 AM

I used to work in selling domestic electricals. TVs, Blu-rays, all that sorta thing. The worst type of customer was the one who came in claiming to know everything and regurgitating internet rumours, and who was there just to show off what he knew and waste your time.

The most annoying part was when you had a group who brought along their Tech Guy. The Tech Guy was one such person who probably knew how to Ctrl-Alt-Del a Windows PC and was thus elevated to the grade of Techpriest Adept in their eyes. Tech Guy would often quite rudely point out how things were cons, and how the TV you were suggesting to them was overpriced and that dime-a-dozen brand next to it at half the price was exactly the same screen, despite one being Plasma and the other being LCD, as well as one being noticeably different - "you messed with the settings to make it look worse" - and it being of a crap brand we would have tonnes of returns on.

I am so, so very glad I don't work with the public anymore. It's not stupidity that's the problem, it's the illusion of knowledge.

Psychosplodge

07-29-2014, 06:58 AM

Ah you see I have issue with the average muppet trying to sell you electrical goods like when they told the psuedomother-in-law you must use alkaline batteries in your digital camera, so no matter how many times you tell her lithium work and last longer - but the man in the shop said use alkalines (because obviously the minimum wage sales clerk never has a battery sales target) the fact she was buying it from comet/currys in the first place already shows a lack of knowledge.
It's like you can excuse anyone buying their first PC from PC world but after that theirs no excuse...

CoffeeGrunt

07-29-2014, 07:06 AM

Sales targets are often more for general sundries. This is why people will push a Monster HDMI cable onto you. Don't buy these, people have replaced the cables with coathanger wire in tests and the customers still couldn't tell the difference. However, a £100 cable carries more profit than a £400 TV on average, especially if the TV is on sale. This makes them essential for keeping your Profit Margin targets afloat.

Comet thankfully don't exist, but Currys' aren't much better. I worked for a smaller company that only exists in East Anglia, and to be fair they did handle training extremely well, especially during refreshes of models every April and learning what new gubbins were all the rage. (When I was there it was 3D, which flopped, then Smart TV, which apparently held on despite the interface being generally horrible using a remote.)

Panasonic were probably my preferred brand, though Samsung were a close second in terms of straight quality. I can only dream of owning a Panasonic VT series Plasma, those things were gorgeous and are now rare as hell due to PS replacing all their lines with LED-LCD TVs. The only thing that could beat a Pioneer Plasma, IMO.

Psychosplodge

07-29-2014, 07:21 AM

Sounds like your place did it properly.

I'm definitely a fan of LG and and Samsung LED TVs.
Both from a design and picture standpoint.

Well HDMI is digital so you either have signal or you don't. It's not like when buying low oxide copper speaker cable for an analogue system, as long as you have an electrically conductive connection you won't see a difference.

CoffeeGrunt

07-29-2014, 07:25 AM

Gold-plated connectors.

Can we take a moment to laugh collectively at people buying these? We always sold these under force to people, as they'd demand them for the...*ahem*..."quality."

Wolfshade

07-29-2014, 07:29 AM

I demand Yttrium barium copper oxide plated connectors!

Psychosplodge

07-29-2014, 07:45 AM

yeah why not? :D

Mr Mystery

07-29-2014, 07:56 AM

40kGamer

07-29-2014, 08:08 AM

As the CFO of a similar sized company I am always fascinated to read through GW’s annual report. I wish more of our beloved hobby companies had publicly available information, but they are either too small or too smart to have their business scrutinized.

Overall I would say GW had a solid, though not spectacular year. If you look at Operating profit pre Royalties and Exceptional items for the last 5 years as a Percentage of Revenue you see the following trend from 2010 to 2014:

10% / 10% / 12% / 15%/ 12%

So while 2014 was definitely a drop, base profitability is as good as, or better than other years except for 2013. If we are honest GW’s management faces a ton of challenges.

1) They make a luxury product
2) There are many substitutes for their product
3) The market for WFB and 40k is completely saturated

In my opinion, the company has addressed shrinking sales volume through higher than inflationary price increases for many years. I saw the exact same behavior when I ran the budget for a billion dollar hospital here in the US (Since hospitals here behave as profit seeking companies rather than caregivers).

While I expect GW can maintain their position for years, at this point I do not believe they can actually grow sales volume through their existing games alone. At some point they will need to return to their creative roots and innovate. Finding a way to open meaningful two way communication with customers would also be a pleasant change.

CoffeeGrunt

07-29-2014, 09:03 AM

I find I tend to get ignored when buying technology.

Take my TV. Got me inheritance through, and needed a new telly. So on my lunch break, bank card in hand, saunter down to Currys ready to pony up there and then for a spangly set. Found a nice 3D, 32" Sony Bravia set. Around £850.00.......

40 minutes. 40 sodding minutes I was stood there, looking for some purple shirted goon to notice the affluent young man ready to spend the cashmonies. I'd try to grab one, and from the basic grunting, ooking and eeking of their primitive tongue, deduced they couldn't possibly serve me, because they were going on their lunch. One bloke on the floor throughout, desperately trying to sell some cable or other to a baffled pair of old biddies.

So I nicked off back to work, having noted the set model, and ordered it off Amamazon. For around £200 less. And free delivery.

We had a rule where you had to acknowledge customers within 30 seconds of them entering, and approach them within a few minutes. Not for a hard sell per se, more just to ask if they'd like any help or are looking for anything in particular. It helped that they had smaller stores rather than the warehouses most people set up in, so you could place yourself to approach people browsing areas in a few steps, rather than walking halfway across a warehouse where people can see you coming a mile off and it seems more confrontational.

I've went shopping with friends at Currys' before, and the staff there literally just rambled and had no idea what they were talking about. One kid tried to tell me that the 3D TVs used two separate screens laid on top of each other to make the image, and that LED was best for it because it has a higher refresh rate, (no and no.) Not to mention we were just looking for a basic 32" for his bedroom XBox, and so we left there empty-handed.

I once went there on my own looking for a 37-40" TV to replace my one in my bedroom, and it's really hard not to belittle them when you both know they're making stuff up on the spot with the intent of fobbing something off on you. Given that where I worked, the salesperson also dealt with all their returns and queries, I really grew to dislike "fire and forget" sales where you took their money and fobbed something off on them, hoping it wouldn't drop back on you. I think that's a healthy system to have, because less time spent dealing with customer complaints over the swill you tried to sell them means more time on the floor making deals and hitting your targets.

Eldar_Atog

07-29-2014, 11:13 AM

When I look at these numbers, I start wondering how much worse they would have been if 7th hadn't been released during this time frame. I've always assumed that the 40k BRB release is always one of their best ways to generate quick cash.

Are there any big releases coming for the later half of the year? Fantasy BRB update perhaps? If not, those numbers are probably going to look worse. They have already cut their brick and mortar stores down to the minimum. To cut more expenses, they'd have to shut down their stores all together.

Defenestratus

07-29-2014, 11:39 AM

When I look at these numbers, I start wondering how much worse they would have been if 7th hadn't been released during this time frame. I've always assumed that the 40k BRB release is always one of their best ways to generate quick cash.

Violating my self-imposed banning to post this...

7th release wouldn't be included in this report.

Also...

Yup, toxic American bull**** that I hope never catches on here.

Seems to be cultural - "we know what the customer wants, so lets not bother listening to them when they cry out and tell us that we're doing something stupid."

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.

Thats what's meant by "The customer is always right." We're not talking about some kind of customer service type BS that this thread has devolved into (Hey uber-mods, where's the week-long banning for all of those "of topic" posts up there?). Its a figure of speech that indicates that if you aren't listening to what your customers are saying and asking for, then they won't be your customers very long. They are *always* right in *what* they want to buy. If you aren't listening to them, and therefore not offering that product or service, then they won't be your customers. This is what makes Kirby's comment hilarious. Claiming that asking what the market wants is futile is the very definition of an ostrich with his head in the sand.

Path Walker

07-29-2014, 11:53 AM

Also if they're making people redundant that's potentially expensive if they've been there a while.

Especially when they do it as badly as they did at my local store, choosing the part timer because he was part time and then had to negotiate away from an employment tribunal.

Eldar_Atog

07-29-2014, 12:04 PM

Violating my self-imposed banning to post this...

7th release wouldn't be included in this report.

Thanks. I thought this report was inclusive of all their sales from Jan 1 - July 1. Perhaps the news isn't quite as dire as I was thinking. Though having a CEO step down is usually not a good sign.

Psychosplodge

07-29-2014, 12:28 PM

(Hey uber-mods, where's the week-long banning for all of those "of topic" posts up there?).
Can it wait till next week when I'm away?
To be fair it was relevant tangentially and never devolved into personnel insults...
Also self imposed banning? :eek:

Especially when they do it as badly as they did at my local store, choosing the part timer because he was part time and then had to negotiate away from an employment tribunal.

I wasn't even considering tribunals, they can add up if they have loads.

Mr Mystery

07-29-2014, 12:39 PM

Thanks. I thought this report was inclusive of all their sales from Jan 1 - July 1. Perhaps the news isn't quite as dire as I was thinking. Though having a CEO step down is usually not a good sign.

Given the dude's age, this is more likely retirement.

After all, he stood down before to put Mark Wells (think that was the bloke) in charge, and Mark Wells went home the other year.

40kGamer

07-29-2014, 12:47 PM

Given the dude's age, this is more likely retirement.

After all, he stood down before to put Mark Wells (think that was the bloke) in charge, and Mark Wells went home the other year.

Companies need new leadership every now and again as the same old same old leads to stagnation. Hopefully whoever lands the gig has a love of their games as well as a good head for business.

Bigred

07-29-2014, 12:52 PM

via The Telegragh

Fantasy figures: Games Workshop’s CEO takes alternative view of 'good' (http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/10997611/Fantasy-figures-Games-Workshops-CEO-takes-alternative-view-of-good.html)

You can rely on Tom Kirby to enliven his company's results with a few interesting quotes

Here’s a new way to judge a company’s performance: totally ignore the numbers.

Games Workshop (LSE: GAW.L - news) , which makes miniature figurines and fantasy games played out in alternative universes, today reported that its pre-tax profits for the year fell 42.1pc, or £9m, to £12.3m as revenues slumped from £134.6m in 2013 to £123.5m this year.

Read the whole thing...

Mr Mystery

07-29-2014, 12:56 PM

I see the stock finished up on the day. Dunno if that means much, but it's probably better than a drop I'd imagine.

Wolfshade

07-29-2014, 03:41 PM

Stock is a bit lis leading by this measure.
GW consistently pays dividends, yes they are not massive payouts but they do continually pay out and will do so so are a "safe" option. Indeed, the stocks pay for themselves within a few years of dividend payouts.

CoffeeGrunt

07-29-2014, 03:51 PM

Kirby seems highly entertaining, I should look up his other preambles...

daboarder

07-29-2014, 03:53 PM

Wolfshade

07-29-2014, 03:59 PM

And people say he is out of touch with gamers:

On The Lord of the Rings (January 2007):
Quote Personally I preferred the book. But I suppose I shouldn't say that.

Psychosplodge

07-30-2014, 01:31 AM

First sensible thing I've seen him say...

MarneusCalgar

07-30-2014, 02:28 AM

Well, they have 42% less profit this year, yes, ok, it´s bad...

But they still have profit.

So don´t bury GW yet

Mr Mystery

07-30-2014, 03:44 AM

Well, they have 42% less profit this year, yes, ok, it´s bad...

But they still have profit.

So don´t bury GW yet

Indeed. Says something about the effectiveness of their cost cutting overall.

And again, interesting that no profit warning was issued - I'm under the impression that such things have to be done if profits are well under expectation? There was certainly one with the LOTR bubble burst.

Caitsidhe

07-30-2014, 03:44 AM

Well, they have 42% less profit this year, yes, ok, it´s bad...

But they still have profit.

So don´t bury GW yet

The real problem, which nobody is talking about, is that they remained in the black only by gutting their entire operation. They don't have anything left to cut. Unless they can create real turnaround, the next report wil be harder to offset.

Psychosplodge

07-30-2014, 03:47 AM

I'm not sure they've cut enough for that to be the only reason they're in the black, it might have affected the final figure, but I can't imagine to that extent.

Mr Mystery

07-30-2014, 04:10 AM

Indeed.

There's also quite a lot of 'possible cause myopia' at play here. Without figures on their competitors, who knows what shape the general wargaming hobby is in? All we've got is a collection of loose anecdotes about who seems to be playing what, based entirely on tournament and in store gaming, which misses the home market.

Is it all GW's fault? Are there things beyond the control of a single company at play? Frankly, none of us have anything like enough knowledge or info to draw any kind of conclusion.

All we know is that profits are down, but still there, and they have been working on their infrastructure to ensure they run as efficiently as possible.

eldargal

07-30-2014, 04:15 AM

Seems to be cultural - "we know what the customer wants, so lets not bother listening to them when they cry out and tell us that we're doing something stupid."

Yes, we have a cultural aversion to toxic bull**** which encourages the bullying of retail workers by customers who know they will get away with it because the company values the pittance they will spend over the welfare of their workers.

CoffeeGrunt

07-30-2014, 04:26 AM

Plus there's the fact that The Customer Is Always Right just results in them buying whatever crappy device they think will be great, then spending the next couple of years convincing themselves it's top of the line to save pride. People who listen to salespeople that know the products and deal with them day-in, day-out will get an actually good product into the bargain.

Skullcandies spring to mind as a brand everyone is convinced is great but are actually terrible.

Mr Mystery

07-30-2014, 04:39 AM

CoffeeGrunt

07-30-2014, 05:58 AM

I have yet to meet someone that didn't break their Skullcandies. The funniest part is that they answer it by immediately buying another pair and breaking them again a few months later. :/

That said, I save up for headphones for a while and hold onto them for at least a year. Since I use mine constantly, I aim to pay a little more to make it worthwhile. Sadly my Bose OE2s recently died in one ear after two years, though, so I'm debating the next pair now.

40kGamer

07-30-2014, 06:47 AM

Defenestratus

07-30-2014, 07:13 AM

Yes, we have a cultural aversion to toxic bull**** which encourages the bullying of retail workers by customers who know they will get away with it because the company values the pittance they will spend over the welfare of their workers.

Way to totally miss the point.

I wasn't even *talking* about retail workers.

So here's a good response to the report from a gamer-finance-business perspective.
http://theback40k.blogspot.com/2014/07/gw-financials-rains-of-cash-still-here.html

eldargal

07-30-2014, 07:20 AM

Well we were discussing retail workers and how the 'the customer is always right' is a toxic idea that facilitates workplace bullying, and you quotes my comment about that so...

Defenestratus

07-30-2014, 07:50 AM

Well we were discussing retail workers and how the 'the customer is always right' is a toxic idea that facilitates workplace bullying, and you quotes my comment about that so...

But my post was about how what you guys were talking about (How people are ****ty to retail workers) isn't what "The customer is always right" is *actually about*.

But nevermind.

I don't want to get banned for another week just for trying to explain another off topic post in the thread.

Psychosplodge

07-30-2014, 07:53 AM

oh is that what you meant by self imposed ban?

eldargal

07-30-2014, 07:54 AM

Except it is, that is what the culture creates. You have a culture that says the customer is right you end up with companies prioritising placating morons over the wellfare of their staff.

Mr Mystery

07-30-2014, 08:51 AM

Yup. Undermines the staff something rotten.

'What's that consumer? You got what you actually ordered, but managed to order the wrong thing? Well, that's clearly this spotty little herbert's fault entirely, and not yours'.

Encourages people to be utter, utter arses to employees in shops.

Caitsidhe

07-30-2014, 09:36 AM

I suspect that some of you are reading way too much into the my comment on the notion about customers. What I said (had anyone read closely) was "the customer, on the whole, is always right." What that means is you, as a business, give your customers what they ask for. If you don't, someone else will. I am not talking about catering to mouth breathers having a fit in the store. This could be a cultural thing, and if so, there is no way around it and Games Workshop is doomed in the United States. That will be quite a loss for their stock in time as the United States a huge market. But let me put it into perspective for you:

1. Games Workshop stores in their present form in the United States are a non-starter. They cannot compete with the local gaming stores that provide more gaming space, more selection, and cater to players. Customers in the United States, right or wrong, are used to that level of pampering and someone else offering less will continue to lose out.

2. Americans are bargain hunters. We feel that we do Merchants a favor by giving them custom, not the other way around. Right or wrong, we view the world as a buyer's market and no amount of trying to suggest otherwise will change that fact. Why? Because in America, merchants understand that and fight for our custom. The fact that Games Workshop doesn't want to do that will simply lead to more other people stepping in to provide the option.

3. Americans don't see the hobby as being Games Workshop. There is no patriotism in this for us. War gaming has been huge off/on in the United States for well over a Century. Games Workshop seems to think they reinvented the wheel, but in the United States we have cycles of war gaming that come and go. Games Workshop just started back up at the top of a new cycle. Fantasy/Sci Fi are hip now but war gaming itself is the hobby to us and we have no brand loyalty.

So when I say "the customer, on the whole, is always right," I am referring to the American market in a very specific way. If Games Workshop wants to dominate the American market they have to deal with the American sensibility. It is just business. If they don't intend to do what it takes to dominate this market, they are better off writing it off entirely as they are just going to end up throwing good money after bad. They aren't going to convert the American mindset. All they are going to do is spend a lot of money to create a market in the United States (which they have already done) which other merchants and vendors will flock to take advantage of of because they, unlike Games Workshop, understand Americans.

Psychosplodge

07-30-2014, 09:38 AM

Did they have Americans running the US arm to your Knowledge? Or was it done from Nottingham?

Caitsidhe

07-30-2014, 09:40 AM

Did they have Americans running the US arm to your Knowledge? Or was it done from Nottingham?

They recently fired... hrm... replaced the American management with one more pleasing to Nottingham, and Kirby's recent letter makes it clear that they intend to run ALL locations around the globe directly from Nottingham shortly. :D

Eldar_Atog

07-30-2014, 09:50 AM

Just to play devil's advocate but you want a "customer is always right" approach at a business. It's your only defense against the business/employees abusing you. Anyone who has had a bad encounter with a monopoly can easily vouch for this. Comcast empitomizes "The customer is always wrong" approach.

You pay for rotten service. You pay if they make mistakes. You can either put up with their rotten service or you can do without cable/internet.

CoffeeGrunt

07-30-2014, 09:56 AM

Caitsidhe

07-30-2014, 10:07 AM

Why don't you take your custom elsewhere if America is oriented around Some Other Guy offering cheaper/better service?

That actually explains why Privateer Press seems to be everyone's darling in America but not so much over here. Being Americans, they probably just understand the mindset better.

I do play Warmachine/Hordes, and several other games besides. I no longer play Warhammer Fantasy because my friends largely gave up on it. I play 40K because I have models (most of which I earned free in prize support, through barter, or bargain hunting), and some of my friends still play it. Americans play the games their friends play. :D We actually have to have a community or we toss a game. If things don't turn around, I won't be playing 40k much longer either simply because there wont' be enough people to make it worth my while. It is already near impossible to just get pick up games in a reliable way. Americans like to be able to walk into a gaming store and look around and say, "hey you want a game" and the dice commence to roll. During 5th Edition that was possible, but sadly that is no longer the case.

Privateer Press does seem to understand the American market and what drives Americans slightly better. That is why they are keen on having a low barrier to entry, very tight, competitive rules, and had a business model that allowed them (from the start) to release individual models over time rather than entire books. It is why they started from no where and have consistently grown. I can, in fact, get pick up games pretty regularly for Warmachine/Hordes. Gaming nights set aside for it at the local store always have a solid turn out, while nights set aside for 40K are getting pretty thin. About the only time I see a turnout for 40K is a tournament, which is also ironic since Games Workshop seems to despise them.

The thing is that Americans can play 40K without giving Games Workshop a dime. The market is SATURATED with official 40K stuff and knock-offs. When I decide I want something I can just post on Facebook and nine times out of ten someone has one and will give it to me for free or for next to nothing. Our local group trades and sells entire armies back and forth. The average going rate is 50% of retail for an assembled and often painted army. Think about that. We all know that there is a certain Chinese website that will sell us things at wonderful prices if we wish to use it. There are bits bins. There is Ebay. There is Barter Town. The secondary and tertiary market is huge. Because there is ZERO collector's value in these overpriced "luxury" items, they get passed around. Games Workshop has only themselves to thank for that.

If you are going to sell models as a luxury item, you have to find some way for them to HOLD their value. That is the lesson here.

CoffeeGrunt

07-30-2014, 10:23 AM

Needing other players to play a mutliplayer game is not a trait solely owned by Americans. ;)

American's seem very oriented around tournament style play in general, judging by MAgic, 40K and WMH.

Gamgee

07-30-2014, 10:24 AM

10 pages about workers.. wtf is this topic about? I thought it was for the financial report.

40kGamer

07-30-2014, 10:55 AM

10 pages about workers.. wtf is this topic about? I thought it was for the financial report.

:)

Caitsidhe

07-30-2014, 10:58 AM

Needing other players to play a mutliplayer game is not a trait solely owned by Americans. ;)

American's seem very oriented around tournament style play in general, judging by MAgic, 40K and WMH.

Yes. I've talked about this before too, but I left it off since we are more in the business aspect in this thread. Americans like competitive games. There are always exceptions of course and it is dangerous to generalize, but in general Americans play competitive games. Not being British, I don't know if the same is true over there, but is very true here. Our childhood games are not cooperative.

40kGamer

07-30-2014, 11:04 AM

Yes. I've talked about this before too, but I left it off since we are more in the business aspect in this thread. Americans like competitive games. There are always exceptions of course and it is dangerous to generalize, but in general Americans play competitive games. Not being British, I don't know if the same is true over there, but is very true here. Our childhood games are not cooperative.

At the risk of adding to the thread derailment.... NOTHING in our culture is cooperative. Nuff said.

Mr Mystery

07-30-2014, 12:22 PM

Yup. It's the taking part and doing your best that counts. There's merits to both methods, and flaws too.

Caitsidhe

07-30-2014, 01:09 PM

At the risk of adding to the thread derailment.... NOTHING in our culture is cooperative. Nuff said.

We aren't really derailing the thread because we are talking about an issue to which corporate seems entirely blind. The attitude and practices upon which Games Workshop Inc. has doubled down upon are the very same that are causing them financial woes in the first place. It is one of the reasons I feel pretty comfortable in my prognostications. As an "armchair" general in this matter, my predictions have been pretty solid. All such commentary comes with a grain of salt, of course, but the issues are really very simple. I don't claim any great mental powers, nor do I delude myself into thinking I'm Steve Jobs.

Games Workshop is a big fish for a gaming company, but it is a small fry in the real world of business. The people running it have forgotten where they come from and have deluded themselves on their own importance. They are, all said and done, guys who sell toy soldiers to a niche audience to play with. That equation requires three things: models, rules, and players. The models and the rules need to be of equal quality. Build it and they will come.

40kGamer

07-30-2014, 01:44 PM

Games Workshop is a big fish for a gaming company, but it is a small fry in the real world of business. The people running it have forgotten where they come from and have deluded themselves on their own importance. They are, all said and done, guys who sell toy soldiers to a niche audience to play with. That equation requires three things: models, rules, and players. The models and the rules need to be of equal quality. Build it and they will come.

I totally agree with the sentiment. GW really is a small company... heck the startup I work with is closing in on their size after just 4 years, and my last position was with a $3 Billion company.

Overall the 100 or so gamers/hobbyists I regularly hang with really love the GW universe and the models but are constantly annoyed with random price hikes and clunky game mechanics. (Examples of random unjustifiable price hikes would be the Dire Avengers repackaging and the Flyer price hikes just before the rules dropped.) This type of behavior paints the company as opportunistic and predatory. The way GW interacts with independent retailers in the US is another sticky point. They manage to keep most store owners I work with so annoyed that these owners, as points of contact for the gaming community, paint a negative image of GW to their customers. Sometimes I think GW leadership has a goal of being disliked... not a winning strategy.

Luckily they are still making a profit and have a solid cash reserve and infrastructure. Hopefully a new CEO will infuse some energy into the company and move it in the right direction.... as long as Kirby doesn't plan on shadow managing as the Chair.

Fanboy

08-04-2014, 02:06 PM

Hello,

1. Kirby was an idiot, and it clearly showed with him devaluing to company, and the wonderful financial results.
2. Massive edition updates, and new rules every few weeks, and new kits, and new prices: Not appreciated by the market. Result: Loss of sales, Dreiving customer base away.
3. 40K accounts for a majority of all GW sales. A rule set (6/7th Ed) that is approx.. 200 pages long. How many 12 years are going to look at this, and dump it for another gaming system/PC game. No beginner/kid wants to wade through 200 pages of rules. Result: Few new start up gamers, poor sales. Stupid idea/strategy. Have a Basic rule set (40 pages), with additional optional and advanced rules (120 pages). Basic Rule set pulls in new/young gamers, and as they advance and gain gaming experience they 'add' optional and advance rules.....Once again the current rule set demonstrates GW lack of ability to address their target market.
4. Kirby was and is an idiot. No consideration for the target merket and customer. It would be really sad if he had to stay on........

Mr Mystery

08-04-2014, 02:09 PM

40kGamer

08-04-2014, 02:17 PM

Personally I think Kirby is just tired... most people burn out when they do something for a long time. It's a rare individual that can continually innovate and stay excited.

Caitsidhe

08-04-2014, 02:47 PM

Clearly an idiot. Having you know, grown the company from small beans to a big thing it's pond, the success of which has opened up gaming to the point other companies have also found success.....

Also, these figures don't appear to include 7th Ed 40k. Regular new products still drive sales. Much better than stagnation.

Past performance has no bearing on future success. History is full of men who built Empires and then proceeded to lose them or fritter them away. Whatever Kirby was in the past, the letter he wrote (that idiotic letter) demonstrates who he is now. That is kind of the problem. Games Workshop was born and rose to the top in a very different environment. They deserve credit for doing what had to be done. However, the world has moved on since then. Their obstinate belief in their own greatness and refusal to adapt is what is costing them, as it has so many before.

Mr Mystery

08-04-2014, 02:51 PM

40kGamer

08-04-2014, 03:04 PM

And we're comparing them to which other Wargames companies published figures?

We have no way to know the wider state of the market, beyond anecdotes. Who knows what is actually happening with PP and FFG etc? Is boom time for everyone except GW? What evidence do we actually have?

None whatsoever... and in some ways GW would be better off to be privately held. I believe they have lost market share but the sky is not falling. They have time to address their issues and this is arguably the most precious resource possible.

Wolfshade

08-04-2014, 03:26 PM

3. 40K accounts for a majority of all GW sales.

Please cite your sources. The only time a detailed breakdown was given of GW sales didn't show this. This was the CHS-GW court case.

Caitsidhe

08-04-2014, 05:25 PM

And we're comparing them to which other Wargames companies published figures?

Here is the thing, I'm not comparing them to any other game systems on the market. I think that is a specious argument and irrelevant. I am judging them by what they should be giving us based on the prices they charge us. I am judging them on the ever shrinking community, anecdotal evidence and what I see given by others doing the same. More than anything else, I'm judging them by their own falling numbers and very illustrative business practices. Firing most of your workforce and still coming up with plunging numbers indicates a desperation move, not a long term plan. What we do know is that they flushed a rather sizable amount of money down the toilet on legal fees (which some of us commented on and accurately predicted the outcome), they flushed another wad of cash down the toilet upgrading their website (and Kirby's wife happens to be in charge of that), and that their sales have been falling consistently despite a regular batch of new material since the release of 6th Edition. In short, management wasted an obscene amount of money, didn't generate increased sales, and did its best to cover this up in the short term by sacking lots of people. This won't make them more stable because it doesn't address the real problem.

I'm judging Games Workshop by Games Workshop. This isn't a popularity contest. They are merchants and we are consumers. They are either making the grade or they are not. I will be very interested to see the next report where more of the 7th Edition releases will be graded, but I already feel pretty confident that their sales have not been meeting expectations and that this newest release has failed to generate anywhere near the buzz or sales of previous releases. What is most interesting of all is that we have a vendor who doesn't have a good relationship with various stores that carry the product. This means, more and more, that Games Workshop itself will have to find ways to market directly to the consumer. In this they are woefully ill-equipped because it hasn't been their model. Their up and coming competitors, by contrast, have been using this model all along. What is certain is that Games Workshop needs a highly motivated CEO who will not be a puppet of the Board (Kirby) and will turn the company around.

We have no way to know the wider state of the market, beyond anecdotes. Who knows what is actually happening with PP and FFG etc? Is boom time for everyone except GW? What evidence do we actually have?

As I stated above, it doesn't matter how they are doing. Privateer Press is private and we don't get a look at her books. However, we see that they regularly produce product, make releases on time, and seem to have far fewer issues than Games Workshop. They also seem to have a far better relationship with stores and their customers. I don't know if they are in a feast or famine, but I do know that the number of people playing Warmachine/Hordes regularly is far more stable than my local 40K people. Anecdotal? Yes. Compelling? Yes. Ultimately, Games Workshop needs to get down to the basics and provide us with toys and rules that MORE people are willing to buy and feel that they got good value for their money. A game system without a community is on the downward slope. It doesn't matter if some of you do think it is a good value for the money. It doesn't matter if some of you are happy to pay those prices or feel that a hobby should be expensive. Most people don't feel that way and for a business like Games Workshop to continue forward into this new environment, they will have to reconcile themselves to that fact. Let me put it another way, public companies (like Games Workshop) whose stock has probably peaked and will stay flat or slowly drop always face a risk of being liquidated. The fact that Games Workshop doesn't carry much debt makes it particularly vulnerable because it means a successful takeover doesn't acquire any negatives, only assets to liquidate and make bank with as what are seen as the successful components are sold off to the highest bidder. To avoid such a fate, companies (like Games Workshop) have to continue to grow so that stockholders (and by these I mean the big ones) continue to see a long term value. There are quite a few players in the Games Workshop stock options game and several of them aren't sentimental. If their experts tell them Games Workshop has peaked, they will start looking for ways maximize profit. Letters (and behavior) like that demonstrated by Kirby will not be inspiring them with confidence. I suspect that we will see a very real proxy fight for control of that company, i.e. who chooses the new CEO. It is clear Kirby wants to retain control, but I would be shocked if he manages to do it. Most likely, the rest of the Board will pick the new CEO and make him holding on to his dignity by getting to keep the Chairman position contingent upon his agreement.

Mr Mystery

08-05-2014, 03:33 AM

Caitsidhe

08-05-2014, 06:31 AM

No, you're placing the blame squarely at GW's door, with absolutely no idea beyond anecdote about the health of the wider gaming industry. Who knows what is going on? Without those details on the other company, it's just mindless ramblings and baseless finger pointing.

Yes, I am. The buck stops with them because they are the ones with the plunging numbers. They are the ones who have managed to create such an awful relationship with stores and their own customers. Gremlins didn't put them in their current position. They did themselves.

As for buying out GW. Who? Who is going to do it? Typically, companies are bought out by bigger fish in the same pond. GW is the biggest fish in this particular pond. Sometimes it's done for asset stripping (so for instance, taking 40k background, burying everything else) other times to open yourself up to a ready made market. So who has the readies and reason to buy out GW?

I didn't say I think someone is going to buy them out. I suggested that they are under threat of takeover and liquidation. The two are not the same thing. Nobody has to buy Games Workshop to get effective control. They merely have to have to have the backing of enough of the shares to decide that it is time to start selling off component assets to the highest bidder. I assure you that there are companies out there that would love the some of the intellectual property but don't give a fig about the rest of the company or its model. All companies are made up of assets that can be liquidated. Companies with little to no debt are prime real estate for liquidators.

And for those claiming Kirby is somehow incompetent - compared to whom? I see him leading a company with little to no debt, which continues to expand it's retail space and has done for years, including global downturn years. How in the name of satan's 10' of throbbing red gristle is that incompetence? Seriously. How?

He is incompetent. That is why he is stepping down; stepping down is code for they are allowing me a modicrum of dignity. It is step down or be removed. Holding no debt isn't always a good thing. I won't go into the various issues it brings up because that is worth a thread itself, but it suffices to say that the only measure of a company is its sales growth. All the retail space in the world doesn't matter if nobody is buying the product which I stuff into it. The business world is very much a "what have you done for me lately" kind of place. Kirby hasn't done anything good for them lately.

Yes, the prices are high. But hey, unless you're a shareholder, company isn't run for you. Like any PLC type company out there, or indeed any company that isn't a charity, it's there to make money for someone.

Yes, but if the company stock flatlines or declines (caused by diminshing sales) it doesn't make money for anyone except the CEO (and his wife apparently) who pay themselves as the ship slowly sinks. A company wants to make money and to do that it builds a better mousetrap that people want to buy. If it stops making a better mousetrap, someone else will do it and the customers go somewhere else. The entire pyrmaid rests on the customers and right now the customers are not happy. It isn't the fault of the customers because they owe no merchant anything. That means failure rests on the company and thus those who lead it. They either produce or get off the pot.

And as for most people? Please, cite your sources. Because still kind of looks that with £12,000,000 in profit, most people are still happy to cough up, seeing as they made £12,000,000 in profit.

We all know my sources. We all read them together. I never said they were broke. I said they are in decline. I pointed out that they managed to stay in the black only by gutting their own company. I pointed out that they have already cut to the bone. That is bleak situation Games Workshop now faces. They have done all the bloodletting possible. There is no more ballast to throw out of the balloon's basket and they are still slowly going down. This means they have to increase sales NOW. What exactly are they going to do if they can't increase sales? :D Are the few of you still buying the product going to be happy to take even greater price hikes?

Mr Mystery

08-05-2014, 06:35 AM

Caitsidhe

08-05-2014, 06:56 AM

A handful of people chatting on the internet does not 'most people' make.

How many registered users of BoLs regularly post? And how many of them complain about the prices?

Again, calling 'few'. Cite your sources, or admit that it's merely opinion.

My sources for this discussion are the last two reports released by Games Workshop and the preamble letter written by the "Acting CEO" and Chairman of the Board, Kirby. As you will recall, I predicted with absolute accuracy the results of the most recent reports. I commented on their making cuts in their own company and the portents of the same. Granted, when I gave my predictions, they were opinion. Those opinions have become facts. Since you want me to break down fact from opinion, I will glady do so:

1. Fact One: Games Workshop did not pay a dividend.
2. Fact Two: Sales have declined across the board.
3. Fact Three: Games Workshop has cut labor (and locations) to the absolute minimum to save money.
4. Fact Four: Games Workshop spent signifcant amount of money of legal issues none of which payed off.
5. Fact Five: Games Workshop expended a significant amount of money of IT upgrades and fees to carry Lord of the Rings merchandise.
6. Fact Six: Games Workshop is now changing the CEO position again within a short time for the business world.
7. Fact Seven: Games Workshop's CEO has publically admitted they do no market research.
8. Fact Eight: Games Workshop's CEO has publically admitted their hire for attitude not skills.
9. Fact Nine: Games Workshop altered their calendar and produced a new Edition (with few changes) before two years even passed.
10. Fact 10: The only thing put forward as a positive in preamble accompanying the report was "we fired a lot of people."

I could go on but I think those are the most important fact upon which we can all agree. Number ten is particularly sad because when they only thing you can think of to try and make the stockholders feel better is that we fired a whole lot of people to save you money, things are at a dire point. But let us move on to opinions:

1. Opinion 1: Kirby is not suited for the job. That is the nicest way I can say it.
2. Opinion 2: Games Workshop needs to increase sales, not prices.
3. Opinion 3: A game whose player base is declining is on the downward slope.
4. Opinion 4: Games Workshop is in real danger of a takeover (not being sold) and liquidated.
5. Opinion 5: Games Workshop has already cut to the bone and is in real trouble because there is no way to make the books less bad next report.
6. Opinion 6: Games Workshop needs a CEO who is not a puppet of the Board.
7. OPinion 7: Games Workshop needs to do market research.
8. Opinion 8: Games Workshop needs to repair is relationship with the stores which sell its product.
9. Opinion 9: Games Workshop needs to repair the public relations issues it has with its own customers.
10. Opinion 10: Games Workshop needs to beat its competitors (and pirates) by undercutting them, driving down the margin which allows them to exist.

I make no bones about which are my opinions and which are facts. I will, gladly, put the accuracy of my opinions (which became facts) up against any here. You have me on record as saying that I think that the release of the 7th Edition stuff will show up as a slight bump in slumping sales, but that it will be insufficient to create a real turnaround and that said bump will be far less than the bump created by the new editions of previous years. That is my newest, unequiviocated prediction. I will either eat crow with the next report or I will be "crowing" like Peter Pan.

Mr Mystery

08-05-2014, 07:05 AM

Dividend of 20p per share dude.....announced prior to the figures being released.

They've opened up more stores this year too. So that's two facts shot down.

CEO changing? I was always under the impression Kirby retaking the reins was only a temporary arrangement anyway.

Change in calender? Supposition. Nothing to support that. Yes it's earlier than expected, but that's all we can safely say.

Undercut, and people will whine they're bullying. How upset are the stores actually? From what I see about online contributors, there's as many hacked off as happy. Why are they hacked off? Who knows.

Wolfshade

08-05-2014, 07:31 AM

Tom Kirby is 64, he took GW from 1991 to well now, I think it would be fair to say GW is bigger now then then so by some measure he was effective. Now whether or not he could be more effective is another matter. Another thing to consider, teh guy will be 65 this year which will push him into retirement age, that could be quite a strong motivator to step down and be less involved.

Opinion 2: Games Workshop needs to increase sales not prices.

This isn't strictly true, they are making a profit, not massive, but they are profitable so they do not stictly need to increase their sales. But it would be good to increase sales. The prices are only important if they inhibit sales and/or profit.

Opion 3: A game whose player base is declining is on the downward slope.

This isn't opinion, this is a fact. What we don't know is whether or not this applies to GW.

Opinion 4: Games Workshop is in real danger of a takeover (not being sold) and liquidated.

This is either conjecture or the fact for any publically traded company. There have been no signals to buy however and the largest single share holder only owns 9.7% of the shares.

Opinion 5: Games Workshop has already cut to the bone and is in real trouble because there is no way to make the books less bad next report.

"He cuts off every branch in me that bears no fruit, while every branch that does bear fruit he prunes so that it will be even more fruitful." The question is whether this "streamlining"/"efficiency savings"/"cuts" actually reduces the cost of sales. If it does, then it will be good for GW, if it is not then it won't be.

Opinion 6: Games Workshop needs a CEO who is not a puppet of the Board

I think that this is a fair assessment of any company.

7. Opinion 7: Games Workshop needs to do market research.

I am not terribly sure that I agree with this one. Niche producers don't usually. I know two of the largest producers for a niche market and between them they own around 98% of the market internationally. They don't do market research as they have been producing the same service/items for the same customer base for centuries.
With specific regard to GW, they know their target demographic, and they have been servicing it for decades. I am not sure that any market research will tell them anything that they don't already know. Also, through their hobby centres they meet and greet and talk with their customers. That information goes somewhere.

8. Opinion 8: Games Workshop needs to repair is relationship with the stores which sell its product.

Why? GW would rather you buy from their stores. Indeed, I know of at least one store that GW has refused to sell to because that store has really crap customer service. That is for the benefit of those who use GW not the middle men.

9. Opinion 9: Games Workshop needs to repair the public relations issues it has with its own customers.

This I have some agreement with. Obviously, any brand needs customer loyalty. Though my opinion is that most customers have a good relationship with GW, however that is just pure anecdote.

10. Opinion 10: Games Workshop needs to beat its competitors (and pirates) by undercutting them, driving down the margin which allows them to exist.

No or at least not fully. Yes GW needs to beat its competitors, the last peice of market research showed that this was happening very effectively, indeed 95p in every £1 in the sector was spent with GW. What that "sector" was, and given that this was a few years ago would mean that this might have changed. But they cut the margin, by reducing the cost of sales, which is opposed to what you think they are doing in Opinion 5. They do not need to wipe out pirates and indeed can never compete with them toe to toe. Even in the video game market pirate games out number real ones in the order of 10 to 1. The trick is to make the customer feel that they owe the company money. That given teh quality of service they should pay for it.
At the moment GW's margin is about 10%, which is quite low for a luxury good. Even wiping this out I doubt it would get close to pirate prices.

40kGamer

08-05-2014, 07:32 AM

Yes, I am. The buck stops with them because they are the ones with the plunging numbers. They are the ones who have managed to create such an awful relationship with stores and their own customers. Gremlins didn't put them in their current position. They did themselves.

I agree there is a bad environment. Some of it is GW’s fault, some of it is the fact that people are whiny, entitled little ****s. In the end it is GW’s mess to manage this situation and they have not approached it in a sensible way in recent years. The ostrich approach is not a solid management strategy. :)

Personally I am still baffled with their stance that they are a model company that makes rules rather than a game company that makes models but whatever. I am also baffled by some of their business decisions like FW not being readily available in the US and limiting how much independent retailers can purchase of certain products every month in a heavy handed effort to force people into their stores.

I didn't say I think someone is going to buy them out. I suggested that they are under threat of takeover and liquidation.

IMO anyone with the money to buy them out has no real reason or interest in doing so. Wargaming is such a niche market that I just don’t see the upside of raiding their assets. There are so many other companies where this would be more profitable.

The business world is very much a "what have you done for me lately" kind of place. Kirby hasn't done anything good for them lately.

Well… I’m not sure if ‘what have you done for me lately’ is a universal truth but it is definitely the overall attitude in America. I would argue that this short sighted system is ultimately counterproductive as you trade short term profits for long term health.

There is no more ballast to throw out of the balloon's basket and they are still slowly going down.

There’s always more ballast. :)

A handful of people chatting on the internet does not 'most people' make. How many registered users of BoLs regularly post? And how many of them complain about the prices? Again, calling 'few'. Cite your sources, or admit that it's merely opinion.

I work with a pretty wide base of game stores in my region and they have experienced overall growth while seeing a decline in the sale of GW products for the last two years. This is regional data (just a few states here in the US) but their decline in GW sales correlates very well with the overall report. This is compelling evidence that GW has lost actual market share here which is concerning but still isn't any reason to start etching their tombstone. In the end as long as GW is successful and continues to push the industry forward I'll be happy. :)

Mr Mystery

08-05-2014, 07:47 AM

Still largely anecdotal evidence on that one. Are the people not buying GW at all? Are GW gamers mostly house bound groups of friends?

And yes, with a wider choice of games, the big fish are inevitably going to give up some market share. But as Wolfie pointed out, the last independent review seemed to show GW owning 95% of the market. Which means every other company is splitting the remaining 5%. Now to be honest, that figure just doesn't sit right with me. In the UK? Yeah, absolutely. GW are undisputed king here. Overseas? Not so much.

But a massive majority share they still have.

And back to the main point - with GW being the only PLC in the market, we have no idea whatsoever how the other companies are doing. Sales might be ok, but that doesn't mean they're in profit. Take PP - They've switched to a cheaper (and according to some, nastier) material than metal, and switched to production in China. So they've been cost cutting to. Why? Dunno, we don't have access to their figures.

FFG - Appear to be doing well, constantly diversifying their ranges. Ace! As long as their income is covering the production costs....

All we can say for certain is that, at present, GW have experienced a wobble, but remain in a pretty healthy profit. That's it. That is the only firm conclusion. Everything else is speculation, usually based off a biased opinion (such as Kirby not knowing what he's doing etc).

Share price also seems fairly stable - so one can assume the investors, as in those who really matter, are happy there's life in the old dog yet.

40kGamer

08-05-2014, 07:53 AM

Opinion 1: Kirby is not suited for the job.

Every CEO needs to move along at some point. He's done this for a long time and could very well be bored or sick of it. I would be.

Opinion 2: Games Workshop needs to increase sales, not prices.

Meh. Two models of business - Lots of cheap (low margin) crap to lots of people, Expensive (high margin) stuff to a few people. Luxury companies by nature fall into the second one. I do agree that to stay healthy long term they need to keep hooking new blood into the hobby and maintain or increase their customer base.

Opinion 3: A game whose player base is declining is on the downward slope.

Can't be sure the player base is declining for GW or globally for the hobby. Wargaming budgets are quick to go when peoples free cash declines.

Opinion 4: Games Workshop is in real danger of a takeover (not being sold) and liquidated.

Not sure anyone with the $ to take them over cares.

Opinion 5: Games Workshop has already cut to the bone and is in real trouble because there is no way to make the books less bad next report.

They've wiped out the low hanging fruit for sure but I'm sure there is more to cut.

Opinion 6: Games Workshop needs a CEO who is not a puppet of the Board.

True for all companies.

Opinion 7: Games Workshop needs to do market research.

Regardless of Kirby's weird preamble I have to believe that GW has at least a passive data collection system for their market.

Opinion 8: Games Workshop needs to repair is relationship with the stores which sell its product.

I think this is more prominent in the US vs other parts of the world. Their is a weird dynamic I've noticed here where the community has a weird passive aggressive anti-corporate sentiment. Buying GW from the FLGS just feels different then going to the actual GW store.

Opinion 9: Games Workshop needs to repair the public relations issues it has with its own customers.

This I agree with. They definitely need to work on PR.

Opinion 10: Games Workshop needs to beat its competitors (and pirates) by undercutting them, driving down the margin which allows them to exist.

Absolutely no way that they can undercut pirates. If they cut price back too much they would also cripple or kill a lot of other companies that do not have their efficiencies. I don't believe this would be good for the industry or community.

I'll add one though:

Opinion 11: Gw needs to tap it's creative roots and actually innovate again. Rehashing and re-releasing the same things over and over will only take you so far. :)

Wolfshade

08-05-2014, 07:55 AM

I'll add one though:

Opinion 11: Gw needs to tap it's creative roots and actually innovate again. Rehashing and re-releasing the same things over and over will only take you so far. :)

Are you sure that shouldn't read:

Option 11: Re-release Squats

Mr Mystery

08-05-2014, 07:58 AM

Opinion 3: A game whose player base is declining is on the downward slope.

Can't be sure the player base is declining for GW or globally for the hobby. Wargaming budgets are quick to go when peoples free cash declines.

Interestingly, Hobbies tend to buck this trend for the most part. When money is tight, hobbies can offer better value for money than many other things.

But, now the economy is recovering (UK doing well, US picking up speed etc. Heck, even the Eurozone is getting there)? People feel more secure in their jobs, and more likely to go on holiday somewhere nice, which is expensive. That could be contributing to this. Nice new cars being bought, home repairs/improvements put off for the best part of decade being gotten round to.

Is it having an impact? I dunno. But it's not something one can rule out without a degree in economics and looking into the available trends and that.

Wolfshade

08-05-2014, 08:04 AM

Aren't you supposed to be crying out "Cost of living crisis!"

Mr Mystery

08-05-2014, 08:13 AM

Who sir, me sir? Not I sir. I'm soon to be on roughly £1,000 a month disposable. More when I flat share with my mate :p

40kGamer

08-05-2014, 08:13 AM

Still largely anecdotal evidence on that one. Are the people not buying GW at all? Are GW gamers mostly house bound groups of friends?

Definitely.. it would take a massive amount of data to draw any real conclusions. Actually the GW community in my region is pretty stable. The decline in sales comes from the community being ‘mature’ which leads to people not needing to buy much when GW ultimately recycles their armies. This is why I think they need a dose of innovation to push more sales.

And yes, with a wider choice of games, the big fish are inevitably going to give up some market share. But as Wolfie pointed out, the last independent review seemed to show GW owning 95% of the market. Which means every other company is splitting the remaining 5%. Now to be honest, that figure just doesn't sit right with me. In the UK? Yeah, absolutely. GW are undisputed king here. Overseas? Not so much.

But a massive majority share they still have.

GW definitely has a massive market share. The breakdown for all of the regional data I work with is roughly:

GW 33%
Magic 33%
All Other 33%

I would expect Magic would not be included in any independent review as card games are distinctly different from miniature games but this is still a substitute product that GW has to be mindful of. All other is a huge list of companies.

GW’s biggest strength is that no one with the capital to give them a real run for their money has any interest in the miniatures market. The only ‘competition’ GW has, using the word loosely, tends to be fanboy startups with limited business background and even more limited funding. I fully expect GW to be around for many many moons.

All we can say for certain is that, at present, GW have experienced a wobble, but remain in a pretty healthy profit. That's it. That is the only firm conclusion. Everything else is speculation, usually based off a biased opinion (such as Kirby not knowing what he's doing etc).

Share price also seems fairly stable - so one can assume the investors, as in those who really matter, are happy there's life in the old dog yet.

Honestly not even much of a wobble. Saying the sky is falling after a year to year downtick stinks of sensationalism.

Mr Mystery

08-05-2014, 08:17 AM

40kGamer

08-05-2014, 08:18 AM

Are you sure that shouldn't read:

Option 11: Re-release Squats

Ha! I spewed my coffee when I read this! I should know better than to drink while I scroll through... :D

I have an Uncle Sam inspired banner design for my Squats that reads "If you don't know us... you don't know SQUAT!" I still love the cheeky little *******s! I also still stick with the Dark Angels drawing their recruits from Native American cultures. I hate mindless fluff changes!!!

Wolfshade

08-05-2014, 08:21 AM

Ha! I spewed my coffee when I read this! I should know better than to drink while I scroll through... :D

Another vicitim....

40kGamer

08-05-2014, 08:22 AM

There's so much unknown in this, I do find the doomsaying amusing.

I mean, I'm a certified fanboi, and proud of it (after all, not going to spend money on something I don't like now I am. Like wine. I'll have beer ta). Yet only this month did GW get serious 'more than the latest Codex/Army Book' moolah out of me. The beginnings of my first new army in...ooh.....year and half, two years? Nothing to do with the price. Just been living it up in other ways and having a laugh!

I go so far beyond fanboy... :p I can pretty much field every army for every miniature game that GW has ever issued. I do like to debate theoretical numbers and the state of the hobby because it has an entertainment value all of it's own. :D

Mr Mystery

08-05-2014, 08:31 AM

You have raised an interesting point though, about existing gamers and the proclivity to just add the new stuff.

There is indeed that. Though I've found (anecdotal before anyone tries to cry double standard) that as soon as one player in a group starts a whole new army, their buddies soon follow suit when they see the fun their mate is having working with something new. Like a geek pack mentality.

Same with X-Wing. Local club had a couple of gamers. I got involved, and numbers have grown. And I reckon we'll see some new armies once I get my Orks down there (having a silly amount of disposable income often sees me take the initial plunge, rather than being some kind of hip cat trend setter, Daddio)

Caitsidhe

08-05-2014, 09:36 AM

I'm still digesting the various comments and I don't take any major issue with them (not even those of Mr. Mystery) but I still stand by my predictions for the upcoming report. :D I don't think anyone outside will want to buy them out, but rather there is likely (particularly following another bad report) to be a movement among certain shareholders to get a return on their investment. In other words, if they come to feel the stock has peaked and will remain flat or decline, it is better for their own pocketbooks to find ways to liquidate assets for profit. We aren't there yet, but I expect we will be should the next report turn out grave (and I'm predicting that it won't be great). It is my opinion that they have shot their wad so to speak with 7th Edition and all this new stuff hammered out one right after another and that the response has been tepid. I think the bump it will provide will be moderate at best and far below expectations. I think the third time is the charm and a third report which is below expectations will cause seismic repercussions in that company. I am content to wait and see and stand by my views. We don't even have that long to wait.

I will grant, however, that much of my anecdotal information is based on the market in the United States. That being said, can Games Workshop really afford to cede that market? Is there enough growth left in the old U.K. and Europe without the players over here? When I say I think they need to do market research, I'm deadly serious. They keep applying a one-size fits all approach to their product and markets when it is crystal clear that there are severe differences between the target audience in the United States and in Europe.

Mr Mystery

08-05-2014, 09:52 AM

40kGamer

08-05-2014, 10:00 AM

I'm still digesting the various comments and I don't take any major issue with them (not even those of Mr. Mystery) but I still stand by my predictions for the upcoming report… (and I'm predicting that it won't be great).
I think it’s actually a pretty safe bet that the next report won’t be great. With this being a transition year for their CEO I’ll be surprised if we even see a major shift in the full year report.

I will grant, however, that much of my anecdotal information is based on the market in the United States. That being said, can Games Workshop really afford to cede that market? Is there enough growth left in the old U.K. and Europe without the players over here? When I say I think they need to do market research, I'm deadly serious. They keep applying a one-size fits all approach to their product and markets when it is crystal clear that there are severe differences between the target audience in the United States and in Europe.
I’m 100% behind this sentiment. This excerpt from the 2014 annual report indicates that as a company they believe North America still has a lot of potential.

“The future

Next year, internally, there will be some disruption remaining from the big reorganisation we have just made and from the one man store programme. Nevertheless I, and all the rest of Games Workshop, still believe we should be growing by opening new stores; particularly in North America and Germany. “

While I totally agree that North America offers a lot of growth potential I’m not sure GW has the right approach to pull it off. There is an inherent fallacy in believing that what works so well in their core markets will work in North America. I still think they are very lucky to have no meaningful competition.

Caitsidhe

08-05-2014, 10:00 AM

They're also trying to expand into the emerging eastern markets, China in particular with its burgeoning middle class are worth a punt. And GW's strategy of branded stores is a solid if expensive way to get into those markets.

Whether they'll bite or not, who knows!

Hrm. It is my opinion that their strategy of branded stores, particularly in the format they have now, are DOA in the United States. Whether we are whiny, entitled little jerks or not, we have an expectation of a certain amount of services which the aformentioned branded stores do not provide. It si also my opinion that their approach will also be DOA in China. There are many cultural reasons for this, not the least of which is that EVERYTHING we get is available there cheaper. They are ground zero for piracy and that isn't going to change in the next 2-3 decades. Hell, most of the best knock-off Games Workshop/Forge World stuff comes from China (with free shipping no less). If they are already selling us 50% off Games Workshop (with free shipping) you better believe they are getting it even cheaper there. It is the same situation for our movies, music, and so on. How exactly is Games Workshop going to compete with their own product produced and sold cheaper than they make it back home? :D

There are other intersting cultural differences too, not the least of which is their style of gaming. I won't go into all that, but it suffices to say if they are diving into the Far East, they DAMN WELL better be doing some market research. :D

Arkhan Land

08-05-2014, 10:48 AM

Maybe there's a reason behind this new "knight sized" focus

Caitsidhe

08-05-2014, 10:58 AM

Maybe there's a reason behind this new "knight sized" focus

That is hard to say. I won't even venture a guess. I do know that the larger models are even easier for people to create knock-offs for. You can get three Knights now for the cost of one +$20.00 right now. Oddly enough it is harder on the pirates to do the small models than the big ones. :D

Asymmetrical Xeno

08-05-2014, 11:14 AM

That is hard to say. I won't even venture a guess. I do know that the larger models are even easier for people to create knock-offs for. You can get three Knights now for the cost of one +$20.00 right now. Oddly enough it is harder on the pirates to do the small models than the big ones. :D

Is this because larger models have more flat surfaces and larger parts? Smaller models tend to have smaller parts and are harder to cast in my experience, and is why i outsource to someone that knows what they are doing - and I should add so there is no mistunderstanding, by experience I am refering to sculpts I've made for my own game that have nothing at all to do with 40k.

Denzark

08-05-2014, 12:05 PM

Here is the thing, I'm not comparing them to any other game systems on the market. I think that is a specious argument and irrelevant. I am judging them by what they should be giving us based on the prices they charge us.

'What they should be giving us based on the prices they charge us' is entirely a subjective argument. And not one that can be argued by someone who still actively buys from GW - because I can't see how you can remain a paying customer handing over cash for something you don't think is worth it - unless you are lazy, foolish, have too much money or a mixture of the three. And if you are not a paying customer your input to such a subjective argument would be a bit silly because someone clearly finds them value for money.

As I stated above, it doesn't matter how they are doing. Privateer Press is private and we don't get a look at her books. However, we see that they regularly produce product, make releases on time,

Can you please show me anything that indicates how often and when releases of this non-essential luxury product should be made, and what law governs this, and how GW are contravening this? I fail to see again how 'regularly' or 'on time' is anything other than subjective.

Caitsidhe

08-05-2014, 12:24 PM

Can you please show me anything that indicates how often and when releases of this non-essential luxury product should be made, and what law governs this, and how GW are contravening this? I fail to see again how 'regularly' or 'on time' is anything other than subjective.

The only law that applies is supply and demand. Can I show you anything that indicates something? Sure. We can look at the same numbers and reports of sales. There is nothing subjective about their numbers going down. What people want and what they are willing to pay for it is the law of the land. You do bring something up that I think should be stressed, although not for the reasons you appear to think. Games Workshop produces a non-essential product which by default is a luxury item. That means the moment they ceased to be the only merchant making the product it became a BUYER'S market. Their methods worked fine while they were pretty much the only show in town. That gave them the luxury of having a SELLER'S market. The world has moved on since then.

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Is this because larger models have more flat surfaces and larger parts? Smaller models tend to have smaller parts and are harder to cast in my experience, and is why i outsource to someone that knows what they are doing - and I should add so there is no mistunderstanding, by experience I am refering to sculpts I've made for my own game that have nothing at all to do with 40k.

I would presume so but since I don't do any casting myself, I'm not 100% certain. What I do know is that the larger models are available in far greater number and at the greatest discounts. That leads me to believe they are simply, as you say, easier to cast.

Denzark

08-05-2014, 01:02 PM

There are only a few places I can go for like for like product. GW, for brand new. Indy stockists, for brand new with discount. GW must be happy with the margin they get from indies against not needing the support costs - or they wouldn't supply them. Ebay for Second hand. China etc for knock offs. If you think other games offer the same proportion of backstory/universe, quality of miniatures and sheer amount of rules (as opposed to 'tightness') so as to be compared like for like and debate a buyers/sellers market, we will have to agree to disagree.

I think a large body of people (possibly split by the Atlantic) seem to think the fortunes of GW are in a direct and inverse proportion to how GW interacts with customers compared to its competitors. This in turn prevents an objective look at the company. The question should not be 'could they be doing better' as nothing is perfect the answer to this is always yes - but 'are they doing sufficiently well in terms of risk versus reward and given the current financial climate'.

When they make an actual loss as against a reduced profit, then we will have a better idea.

40kGamer

08-05-2014, 01:11 PM

I would presume so but since I don't do any casting myself, I'm not 100% certain. What I do know is that the larger models are available in far greater number and at the greatest discounts. That leads me to believe they are simply, as you say, easier to cast.

Given the cost and time of molding I think they get more bang for their buck with the larger models.

Caitsidhe

08-05-2014, 01:32 PM

When they make an actual loss as against a reduced profit, then we will have a better idea.

Except that by business standards they did take a loss. Corporations are either growing, holding the line, or in decline. Games Workshop had to gut itself from the inside out just to stay in the black. In short, they maintained a slight profit not by increasing sales (those clearly fell across the board) but by firing people. You do that when you have to do it. It is never a choice. The cost to hire people back and rebuild infrastructure is always twice (if not more) what you gained in eliminating it.

If Games Workshop does not significantly increase sales, she will be in the red quite soon because there remains very little to cut. They can close more of the stores (now one-man operations) and save those salaries and the rent on those locations. What few they actually own they can sell. They can fire the people who they used to fire others. After all, who needs them anymore when most of the people they were brought in to manage are gone. Cannibalism only works for so long before you are eating your own foot. :D

Their sales have to increase. That is the long and the short of it. That means they either have to hit the market with stuff that just everyone is dying to have (and so far that has not been the case for what is normally their best sellers), or you have to somehow lure people back in with pricing. A lot of you seem adamant about this notion that simply making the best looking models is enough. For a niche market with no competition that might be true. Corporations, however, have to grow to survive. There is competition now, however small and only up and coming. Technology is moving fast too. Hell, a large portion of the people who CREATED the 40K universe are now working somewhere else or starting their own games. We are looking at a landscape where there are up and coming companies that know the business. Let's not kid ourselves here.

40kGamer

08-05-2014, 01:53 PM

Except that by business standards they did take a loss. Corporations are either growing, holding the line, or in decline.

Reduced profits is still a long ways from a loss. Even if sales stagnate they can pace inflation and go on indefinitely.

If Games Workshop does not significantly increase sales, she will be in the red quite solidly soon because there remains very little to cut. Their sales have to increase. That is the long and the short of it.

This is a reach as it implicitly assumes that sales will continue to decline or not pace expense inflation.

That means they either have to hit the market with stuff that just everyone is dying to have (and so far that has not been the case for what is normally their best sellers), or you have to somehow lure people back in with pricing.

They still have a gold mine's worth of product to mine... just remains to be seen how much they will capitalize on it.

A lot of you seem adamant about this notion that simply making the best looking models is enough. For a niche market with no competition that might be true. There is competition now, however small and only up and coming. Technology is moving fast too. Hell, a large portion of the people who CREATED the 40K universe are now working somewhere else or starting their own games. We are looking at a landscape where there are up and coming companies that know the business. Let's not kid ourselves here.

Here I'm in full agreement. Making the best looking models is not enough anymore. IMO there are many companies that already match GW on quality models. The big hole other companies still need to fill is backstory... The future will be interesting as their competition grows and builds capita. I'm very interested to see if Mr. Priestly can get his new venture up and running.

Arkhan Land

08-05-2014, 02:30 PM

Given the cost and time of molding I think they get more bang for their buck with the larger models.

my other thought on the matter was actualy pertaining to the wild popularity of the Big Robot franchises like Transformers/Gundam/etc. that are ongoing right now in china following the most recent transformers movies

40kGamer

08-05-2014, 02:33 PM

my other thought on the matter was actualy pertaining to the wild popularity of the Big Robot franchises like Transformers/Gundam/etc. that are ongoing right now in china following the most recent transformers movies

Hadn't thought of that but it's a solid point. Lots of interest in big robots at the moment. They've even green lighted Pacific Rim 2. :)

Caitsidhe

08-05-2014, 02:47 PM

Reduced profits is still a long ways from a loss. Even if sales stagnate they can pace inflation and go on indefinitely.

I would agree if they hadn't had to downsize so significantly. I will defer the point to you that they can pedal along indefinitely if they sell just enough product to cover costs, but that does not a healthy Corporation make. Private companies handle that better because the owners generally get paid out of the overhead. Stockholders only get dividends and ultimatley hope to sell their stock for higher than they paid for it. A stagnated Corp. isn't going to get a whole lot of new investors nor great enthusiasm or love from those already invested.

This is a reach as it implicitly assumes that sales will continue to decline or not pace expense inflation.

I agree; I am making a prediction.

They still have a gold mine's worth of product to mine... just remains to be seen how much they will capitalize on it.

I agree with you on this 100%. I just think they need a new hand on the wheel.

Denzark

08-05-2014, 02:54 PM

Caitsidhe

08-05-2014, 06:12 PM

I don't think the niche market is '28mm tabletop wargames' I think it is '28mm gothic sci-fi wargames with distinct rules and models for fortifications, planetary assaults, urban warfare and super heavy sized units/vehicles'.

That is pretty niche and they still lead on every metric of that niche.

We can agree to disagree. I see the hobby as wargaming, period. I have the benefit of living smack dab in the middle of two major cities both of which have their own flavor and distinct META (San Antonio and Austin). I get to hang out with and play against lots of different people, some hardcore, die hard fans of Games Workshop and some that don't care what they are playing as long as they are playing. My experiences have taught me that the majority of players just like to game and they will go with whatever system provides them a good time with their pals with the least issues. Some of my friend, who introduced me to 40K and WFB, have started to drift away. These are guys who I would never have thought would give up the ghost. They have always thought I am too cheap or too negative, and yet I'm the one still playing. Most of them have already shifted to playing Bolt Action and Infinity far more often than pulling out one of their 40K armies. When your die hards aren't mustering enough interest to play and are recruiting people for new games, there is a problem.

The truth is that I am cheap. I don't care which game I play, but I prefer to use what I already have. I have never cared a bit about the setting and backgrounds. I know I'm going to sound like a Philistine but I rarely read it unless there is a damn good reason. I flip straight to the rules. Why? I don't think it is written very well. I don't think it is very interesting. To me it always comes across like some weird science fiction version of WWF Wrestling over here in the States. I have never been able to understand how the economy works or how they avoid collapse in the "grimdark" of endless war. I also find everything painfully derivative. I grew up reading all the authors from whom most of the setting and races have been pilfered. Thus, to me it doesn't ever come across as a this cool place; it comes across to me as this crazy quilt. So, since I'm not there for that stuff, I just care about the rules and how good a story me and my pals are going to generate together.

The ironic thing is, as I said before, is that I am still playing whereas many of the people who for years sounded like some of the most loyal fans are not. They aren't getting what they need. The scary thing for Games Workshop is unlike me these people favor the kinds of things Games Workshop says they care about and are selling. These players are all about the setting, the narrative, and are not nearly as competitive as I am. This means that they just aren't getting what they want anymore. As some people have alluded, "Fonzi has jumped the shark." So if Games Workshop isn't keeping guys like me happy (poor rules set) and it isn't keeping guys like them happy (setting and narrative guys) and the price point is really too high for new people to break in, who exactly is going to be buying their products? I'm not trying to be a jerk. While I would take a certain selfish, egotistical glee in continuing to be correct in my predictions, the truth is I don't want Games Workshop to fail. I am invested in them and as I said before... I AM CHEAP. I already have the models I like and plenty of stuff to build more of the kinds of things I like. It will be rather pointless to me if the games continue to dry up. It means that I will be following my friends, yet again, into new games. Right now it is looking like Bolt Action. I will have a good time. To me the game is always the same. It doesn't matter what toys we use. I would rather not have wasted my time. On a good note, some of my metal IG are the right scale and can pass for Germans.