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Wednesday, January 22, 2014

The future of Games Days and Games Workshop - Part 10: The End is Nigh! (1)

The Future of Games Days and Games Workshop
Part 10: The End is Nigh! (1)

Dirty Socks and Dust Bunnies Blues

When it comes to our hobby, the last few days have been some sort of weird, wild emotional roller-coaster ride for many of us. I know they have been for me. 

I woke up at 5am this morning, finding myself wondering how the recent developments surrounding Games Workshop will affect our hobby and how we could turn the whole disaster into a  win for the community. Apparently, GW keeps me awake at night. It's either that or Mr. Bumpy, who seems to find a great habitat under my bed, keeps going 'bump' in the night. 

So with the luxury of being able to analyze the recent developments from the safe distance of a a couple of days, let's have a look at the "Future of Games Days and Games Workshop". 

Today I will take a look at the big picture as it presents itself to me. Again, since it's a complex matter, there's more words in this post than pictures. I understand not everyone likes that ;)
I fear there is an extremely high likelihood that not all will be well. At least not for GW. Most likely not for the hobby itself - and certainly for you - as you are in for another epic wall of text.

Sorry, there is no other way. :D

But first for something completely different - The Wamp 2013 Awards!

Before we get started, please allow us to take a little detour to say 'Thank you' to all of you!

We've been so busy working on our next DVD releases Season 1.2 ("Banners and Freehands" with Stephan Rath) and Season 1.3 ("Base Alchemy 1 - Earth" with Ben Komets and Matt Cexwish) that we completely forgot to activate our Bruddhahood to vote for us at the Wamp 2013 Awards

As a matter of fact, we were too busy to even tell you. And that makes winning 2x Bronze and 1x Gold even sweeter! :D

Best New Company 2013: Painting Buddha :)
We were nominated in three categories: Best Blog, Best Community Member and most importantly, Best New Company

With your help, we came in third in the categories 'Best Blog' and 'Best Community Member'. My personal favorites for both categories came in second: Our Bruddha Volomir's Blog for Best Blog and 'Goblin Aid' for Best Community Member

Our friends at Massive Voodoo snatched the first place for the Bloggers and Sally White took gold as Best Community Member.

Congratulations to all nominees & winners! Well deserved indeed!

The one category we really wanted to win after we got nominated was Best New Company

Our company goal is to strengthen the community, grow our hobby and make everyone a better painter in the process. All of this while applying our not-patented 42-42-16 rule: 42% of profits will be re-invested. 42% of profits will be invested in the community. 16% of profits will go to charity. 

And we are very proud that our company philosophy and the high quality of our products got your votes for Best New Company. 

THANK YOU ALL for your incredible support - without you, none of what we do would be possible. 

Season 1.2 and 1.3 are available for pre-order now at a special 'early beard bundle' price - and as a thank you for the Wamp Awards, we have decided to add a 'little something' to EVERY pre-order, including for the many of you who already pre-ordered ;) Again, thank you!

But now back to the Future of Games Day and Games Workshop 

This concerns all of us. Apparently, it doesn't concern GW. Much.

Over the last 5 days, over 110,000 of you read our epic collection of walls of text about the Future of Games Days and Games Workshops. Hundreds of you sent us messages, shared & enjoyed our articles on Facebook, Google+, forums or left comments on this blog. 

Most of you, but of course not everybody, agreed with the general conclusions and the general tone of these posts. And the fact that so many of you read and commented on them proves that this is a subject that is very important to all of us. I find all of the comments to be at least as interesting as the posts themselves - thank you for your enormous feedback! 

The downfall of GW - a year in retrospective

The series started almost a year ago, on February 20th, when we first reported on some pretty hard-to-believe rumors about GW cutting back on Games Days. This came at a time when GW was generating the highest sales and the highest profits ever.

Mark Wells left Games Workshop in January 2013
That makes him look even more clever than before.
Even more significantly, these rumors started to emerge just days after Mark Wells stepped down as CEO of GW, once again leaving Tom Kirby in charge. 

Actually, Tom Kirby left himself in charge as 'acting CEO'. Even if that is against the rules.

I always wondered why a CEO as successful as Mark Wells - a guy that turned a pile of struggling, under-performing ash into a high soaring phoenix again - would leave his post.

Five years of constant growth. Five years of growing profits. Five years of happy stock holders. 

Did he know that his policies reached the end of the line (chart)? Or was he unhappy with the situation he found at Games Workshop? 

Business Lingo vs. No Bull

Well, let's play Sherlock & Watson for a moment and dissect this press release issued by GW back then: 
"For the past five years, Games Workshop has had the best CEO it has ever had. Under Mark Wells’ leadership we have become better organised, clearer thinking and commercially more robust.
The needs of the business over the last few years has meant there has been a gradual overlapping of the roles of Chairman and CEO. Recently this has become so complete that, after discussions together, Mark and Tom have agreed that the CEO’s role, as it stands, is redundant.
Tom will incorporate the role of Acting CEO into his position as Chairman and, whilst it will undoubtedly come as something of a surprise, Mark has decided to leave the business."
Political correctness and fuzzy language at its best!
Do you really think that this accurately describes what happened at GW?

Let me give you my personal, as far as I am concerned likely more accurate translation into 'no bull'. 

All of this is conjecture, of course. 
"For the past five years Games Workshop had the best CEO it ever had. Under Mark Wells' leadership we have become better organized, clearer thinking and financially more robust. We lost some fans as collateral damage, but oh well.
Over the last few years, the chairman has increasingly interfered with the area of responsibility of the CEO. Recently it has gotten so bad that, after several heated arguments, Mark slammed the door, yelling "If you think you can do this better than me, do it yourself!
Even though it is against GW's own rules and a simple Google search would have revealed that combining the role of CEO and Chairman is generally considered a pretty stoopid idea, Tom decided he knows it best. Despite his usual clairvoyance, it came to his total surprise when Mark told him to 'not call him when everything went FUBAR' as he slammed the door one last time."
Old kid on the block - the return of the Kirby.

So Mark Wells is or was great or something. 

Well, he really was great when it came to making GW profitable again and pleasing the shareholders. I wrote in Part 1 and Part 2 that GW has done pretty well - at least from a purely financial perspective. You know, the stuff that is cool with shareholders.

Unbeknownst by Games Workshop - even to this day - however, his era unfortunately also ushered in today's strategic problems for Games Workshop. Somewhere along the way, Games Workshop forgot the fans, the retailers and in general the market - or as some call it 'the customer'. By default, other miniature companies do not exist. Ooops. (see Part 3-9)

Anyways, Mark Wells made success look so easy. Cut costs drastically, and made big profits. Surely, Tom Kirby could do that even better. So almost exactly 1 year ago on this day, Tom Kirby put his rightful crown on his head again. By himself. The king is dead, long live the king. It's really good to be king!

And here we are - not even 12 months later. (You should really read this sentence twice. Well, not this, the one at the beginning of this paragraph!) Yes, not even 12 months later, Games Workshop has lost 12% of sales, 30% of profits and 24% of its market value. Kirby's fault? Of course not!
Hitting the news, Bilbo style.

A year ago, in his first half-year report as responsible CEO and chairman, Kirby emphasized that "Games Workshop's core business model remains strong. The initiatives we have implemented are designed to lead to growth whilst maintaining the hard won efficiencies" (source)

That, my most esteemed nerds, was a mere year ago. 

This year's half-year report seems somewhat less bold: 
"Our costs are well under control and margins remain strong. Cash management is good and our capital expenditure continues as planned. Following the implementation of the structural changes just announced we expect to benefit from the more focused selling operation across all channels against the background of a materially lower cost base.”
The 'No Bull' strikes again

Now let's look at these two statements again. A year ago, 'initiatives' have been implemented, 'designed to lead to growth'. 

Now, I am not entirely certain which initiatives they refer to. Was it the shutting down of 'free advertising' sites such as Faeit 212 that led to growth? Was it the great press you got from legal maneuvers like GW vs Chapterhouse? Or was it the systematic killing of community events such as Games Days that were focused on generating more sales? Are you FRAKKING kidding me? You can't be serious!

GW's glorious sales initiatives where trying to sell more product at higher prices. Because if quantity x price = sales then higher price x higher quantities = higher sales... D'oh! It's math, stupid!

Oh noes, wait! -12% sales! Why is the market not responding to basic math? DAFUQ? Let's find a culprit... Oh, cool! The half year 'highlights' list TWO, maybe even three of these suckers!

It's all the store's fault
"During the first half, the rapid transition from multi-man stores to one-man stores and the reduction of trading hours across the Group caused disruption in our retail chain."
Oh! The cost saving move to one-man-store has lead to 'disruptions' in GW's retail chain? How strange is that? This is so surprising, too! Who in a right mind would have expected that!

IS GW REALLY SAYING that opening hours of stores that only have one person working are LESS than of stores with more than one person? Are one-manager-stores really not open 7 days a week? THIS IS AN OUTRAGE! 

Is GW maybe insinuating that a one-person store may not have as much time for the customers, for test games, for making awesome gaming tables, for acquiring more customers or to make sure the inventories are in line as mayhaps a multip-person store? Maybe - and I am almost afraid to write this out loud - they might not even be as effective in selling STARTER BOXES? Oh, the KPIs! I am agawk, I am aghast! 

No, one-man-stores don't lead to increased sales. Of course not. How could they. (Yes, I understand that you can open a hand-full of stores with the saved money, I still stick to my estimation that this is not going to significantly increase sales).

Getting rid of multi-person stores has the same reason as firing your HQs worldwide. It is a solid way of lowering the highest cost of doing business: Manpower. Or personpower. Or beingpower, to be Universally correct. 

And frankly, from a pure financial perspective, I have absolutely no problems with that - even if it sounds heartless. If short term profit maximization is your goal, this is EXACTLY how you do it. I wouldn't do it this way, but as we have seen during the reign of Mark Wells, the stock markets applaud these actions. The one thing it is not is sustainable. That means it does not offer a long term perspective. Especially not for increasing sales.

Whether the scheduled 7 new stores (1.6% of 420) are able to make +12% in sales remains to be seen. One-man or not, I find this questionable at best.

It's all the HQ's fault 

Don't be fooled. Closing HQs won't increase sales. It only saves cost. And don't for a second think that we won't feel a difference - because we all will. 

With the closing of a HQ, Games Days in that country are effectively dead. Read my lips. No more Games Days. 

No more GD France, Spain, Italy or Germany. USA hangs in the balance right now. So in the grim darkness of our community's future, there is only GD UK. And if you saw our report from last year, someone will have to drag me there - because my idea of a fun event is somewhat different. Well, let's give them the chance to make it fun again.

Closing HQs means centralization. And don't get me wrong, it is a valid strategy, mostly designed to minimize cost. I am not a big fan of it, as I don't think it's fit to maximize sales. I personally believe in decentralization and in giving more autonomy to countries HQs, but what do I know. At least I can see that this is a trend GW is consistently continuing to follow. 

And on a side note - we are talking about quite a few fired people here. Many of them have been with GW for a very long time. Many of them are hardcore GW nerds, too. I feel bad for them as they were sacrificed on the altar of failed leadership. 

The only comforting news for me was that two of them told me that being let go was "actually a relief. At least we don't have to deal with that nonsense anymore. It got really old". 

It's all the stockist's fault
"We also experienced some decline in sales through independent stockists." 
I can literally visualize the surprise on some analyst's face as he got the Independent Stockist KPI in. On first and second glance, it appeared to be lower than before! 

Immediately, the analyst tried turning the report upside down, but that didn't help - it just made him dizzy. 

Then he hesitantly assembled the big shots for an emergency meeting: "Hey guys, we've been screwing the independent retailers over year after year and made sure that we make their lives as difficult as possible. We even send our Inquisition to check on their books. How the frak can sales be down? Wasn't this one of the many initiatives we implemented to increase sales growth?"

In the long run, we are all dead

As Keynes said, in the long run we are all dead. No surprise to find Games Workshop not really thinking about the long run at all. 

Let's see if they have a general problem with declining sales in their stores and with independent stockists: 

Disturbance in the force there is.
"We view these as short-term issues and expect to see growth return in both channels"

Nope. No problems here. A fluke. It's only a flesh wound!

A short term disturbance in the Force... Carry on!

GW, I sincerely hope you are right! As I have tried to show in now 10 epic walls of text posts, I beg to differ. Personally, I think you are not totally screwed at best. And that only in the short run.

GW really believes that these are short-term issues. The same way as they believed one year ago that the 'initiatives' they implemented would 'result in growth'. Problem is they didn't. 

Surely, this time their prognosis must be correct...

As correct as Keynes. In the long run we are all dead. Games Workshop, too. I have the feeling that there is a chance that some of us will live to see that day. Maybe most of us.

Supernatural powers & Crystal Balls

Well, while we are at it, let's see how Games Workshop themselves sees their prospects: 
"Our costs are well under control and margins remain strong. Cash management is good and our capital expenditure continues as planned.
The principal risks and uncertainties for the rest of the financial year relate to sales and the implementation of the structural changes we have just announced.
Whilst profit will remain under pressure during the implementation of the structural changes mentioned above, the board remains confident in the future growth and profitability of the Group"
Basically what this remark says is: "Our costs are low, everything else is sketchy, but we feel pretty good about ourselves."

Let me give you my personal 'prospect': 

Costs will remain low. Personnel cost will not be lower by the next full year report as terminating tons of people unfortunately also incurs a lot of cost, such as severance pay and so on. Centralizing some functions in UK will also cost a nice stash of coins. That is what GW refers to 'principal risks [relating the] implementation of structural changes'. 

Sales. That is the big one. 'The principal risks and uncertainties for the rest of the financial year relate to sales.' THAT is at the core of the half-year report and nothing else. Sales are down. And that is scary, because shareholders don't like it (as we have seen with the 24% drop at the stock market). 

Profits will remain under pressure and I expect them to go down further. But not because of the 'implementation of the structural changes mentioned above'. No. Profits will remain under pressure because sales will not recover.

At the end of the day, the yearly report for 2013-2014 will not look better than the half year report. Personally, I fear it is going to be worse. GW will remain profitable, but I would not be surprised if we saw another big chunk of GW's stock value disappear in a puff of disbelief.

Good thing I own no stock. Nor do I plan to acquire any. If I ever did, I'd buy 51% of them. And I'm sure they won't cost me 545 pence a pop :P

OH, and my final prediction, of course, is that the Board will remain confident, no matter what.

Bigger Bubble Boys

Sales broken? No shit!
With the centralization of its operation, GW is withdrawing further and further back into their bubble. It's nice and cozy inside the bubble, you don't hear the screaming fans, the crying retailers or have to actually look at and acknowledge the existence of other market players. On the inside, snow remains as black as the board remains confident.

Inside the Bubble there is only GW. And there are two buttons. One labeled 'cost' and the other one labeled 'sales'. One of them is not working and the other one becomes less and less effective.

End of part (1) of The End is Nigh 

In part 2 I will take an admittedly deep and very fuzzy glance at one of my personal crystal balls and tell you how I expect the market to develop over the next five to ten years, how this will influence our hobby (for better and unfortunately for much worse) and whether we should try to do something about it... Stay tuned!

What do you think?

I would really like to know how you all feel about this. After all, I might be the only one who feels this gloomily about GW's sales. 

So let me ask you: Given all the 'sales initiatives' that GW implements, do you expect

a) more sales
b) equal sales
c) less sales

in GW's future? Please vote and leave a comment below! 

A word from the Painting Buddha board².

We are considering to buy out Games Workshop. We estimate we need to raise about 500 million of a currently undisclosed currency to be able to buy out GW. We have put initiatives into effect that should result in us raising this amount in the short term.

Our plan involves selling 10 million copies of our new Season 1.2 and 1.3 DVD set. We apologize for the unexpected and apparent high quality and value of this product. 

The Painting Buddha board members are confident in their ability to buy out GW in the next 42 days and the board remains certain about the sanity of its bored members.

² Dear GW legal department. We don't mean this seriously. Please consider it satire. Just sayin', cause it is. 



  1. So, assuming 10 million hobbyists in Europe - which should be there, and with enough cash - buy those DVDs, and leave you with enough money - can we count on you to pull through with your plan, and shoulder the responsibilities that come therewith? ;)

    Semi-seriousness aside, I expect sales to go down. Because the general customer is, IMO, fickle, and rage-quit potential is gut-based. Gut-reactions need no well-informedness. They just need some instigatory information, and the internet has those in spades (and hearts, and diamonds, and clubs).

    Internet-ragings and doomsayings may likely cascade into further sales reduction, I think.

    1. HAHAH, yeah if 10 million people buy our DVDs we might just buy the whole of Sherwood Forrest :D

      But yes, I agree with sales going down.

  2. They are asking you to join the HQ :

    1. Thanks for that link. In a way it's hilarious!

      All they need to do is google their name and they'll find all the stones have already been turned around ^^

  3. I think the sales depend on the new releases. If they are crappy, they won't sell them. Closing down stores, firing people and misstreating retailers might lower their costs, but it will also shrink the hobby. Less people to play with, less stores, less good and relaxed atmosphere. Less people get attracted to the hobby and the ones who are in get rejected. If they close stores in the first half of the year I think the sales are going down, if they keep their stores and invest in the community the sales might be constant. I just can't see a way how they are going to raise sales.

  4. Can we buy GW using 500m Vietnamese Dong? I reckon I could raise the funds from just selling a few of the minis from my own grey mountain... ;)

    1. I think it would be worth a try ;)

      Hey, GW, would you accept my Dong for payment? No, I am not dicking around, I am cereal! :D

    2. 500 million? Sure, let me get my Dong out...
      If they don't "take" Dong, I could stretch to Turkmenistan Manat, but I might have to sell a donkey or two...

  5. Ultimately the end of metal and the hobbit bubble is the killer. GW management are in a mitigation exercise. Sale would always have fallen, unless we all decide plastic is the most beautiful material to make models from and snow is black.

  6. It would take a new game system and pre 2010 prices for sales to turn around.

  7. Frankly, unless GW is willing to make some SERIOUS changes in how it deals with customers, I will not be purchasing their product again. The only conceivable exception would be low volumes of Forge World models in the mid-future (FW makes some kickass products)- core GW will not be getting my business. Period.

    They have some serious problems, clearly. The most serious, in my eyes, is their customer-relations DISASTER. If this were not an issue, I'd probably still be a low-volume customer. I'm not. I haven't purchased a GW model in over two years, and have shifted to Battletech. (Catalyst Game Labs, the Battletech developer, is actually customer-friendly and not reminiscent of an evil empire. It's a nice transition.)

    GW needs to fix their sales problems, obviously. But the road to doing so must include rebuilding consumer trust. Sure, they could lower prices- at this point, I think that would kill them.

    1. I've never really seen GW as an 'evil empire'; they're more like incompetent neutrals. They'd be good if they could, but they just don't know what they should be doing. Poor things.

    2. I agree wholeheartedly. GW is not evil. 'Incompetent neutrals' seems to be a great term. ;)

      Like Generals deciding that 'friendly fire' is a pretty good idea.

  8. Unfortunately for GW (but fortunately for me) there are plenty other games companies out there to buy good fun games from and great miniatures to paint. Until GW stop being a model company and start being a games company again and inject the fun back into their games, treat their community as friends rather than drones to be fleeced of money I'm playing other games and painting other models.

    1. Yeah. Removing games completely from Games Days, thus rendering those only 'Days' makes little sense in this context ;)

  9. It's almost surreal. It's just like when Blackberry and Nokia didn't realize that the smartphones were the future and made many mistakes in their policies and products.
    Still, I don't know if GW is Nokia or Samsung (that kept going even though the headstart of Apple).

  10. With your acumen, can you see if the hobbit did anything for GW? All the restrictive advertising, clamp downs on blogs were all to preserve their franchise contract. The trouble is that no one really seemed to care about the hobbit or the desolation of smaug. The original three films certainly brought in customers, but what about this time? GW should be pushing this as a fun game where you can re-create the best bits of the films (sell me the core box plus the add-ons!). Instead, we got the woefully poor and lazy nids codex (won't rage-quit GW - did rage-quit nids!)

    1. The Hobbit seems to have been one big disaster. You can still buy limited editition boxes in our local stores...

      I was surprised that after what they experienced with LotR they went into The hobbit this much. I don't think it's a loss, though, possibly a wash (at best).

  11. If they continue along the current lines, they'll see even less sales, and get even more desperate (as they really don't seem to notice that they themselves are the problem here).

    As it stands for myself, I'm quite invested in Darklands by Mierce now (lovely resin, but quite costly, although not so much compared to some of GWs recent stuff, and given the size of some of the models) and am expecting Kingdom Death: Monster too in the next 6 months.

    I'm currently experimenting with a little GW stuff (as nobody plays anything else in these parts) by experimenting with potentially fluffy necrons (a list consisting almost entirely of Canoptek constructs, and very limited numbers of actual necrons) and trying out some more advanced metal effect techniques, but that's a low speed project, Darklands and KD:M are much more on my mind. It's been quite some time since I last made any major purchases of GW products.

  12. "Finally, comparing the 6 months at the end of 2013 with the 6 months at the end of 2012 is completely unfair and frankly asinine to anyone who knows the company and the product. 2012, you have the launch of 6th edition, and the Dark Vengeance box set. 2013, from July to December, you have Apocalypse and Codex: Space Marines. So you go from 2012 where you have a new BRB, which every player buys, and an introductory box set, which a lot of people buy, and a lot of people buy multiples of, to a fringe rulebook in 2013, and a very popular Codex, which was likely bought by half of the players. Personally, I’m shocked sales were only down 12% between these two periods."

    1. I disagree. Of course, if you narrow the discussion to: 6th edition + Dark Vengeance vs Space Marines, you might be right. But don't forget the masses of releases, the many limited edition rule books and items. And the 'measures' implemented for growth.

      It is not like the sales of the last 5 years only went up when a 40K rulebook were releases. They went up every year. This is the first year they go down. And this quite significantly.

  13. Like all the others before assumed...Answer c...Sales will go down! How could they not? It is a pity and I am feeling sad for all the employees having been fired.

    Please GW, look at THIS Blog. Simply watch Painting Buddha and LEARN. This is EXACTLY what we nerds need and want. I want super fine casted minis in a lovely collectors box and some nice, well-thought features. Given that, I am really willing to spend hundreds of Euros in the past, now AND in the future...I promise.

    But, oh my, GW, I guess you won't do that for me, will you?...So you really force me to give my money to PB and Rivet Wars and Kingdom Death and Nocturna models and and and...Come on, watch these guys and LEARN. They show you how to grow sales! That's the way, ahu-aha, me liiiiikz it, ahu-aha...!!!

    Painting Buddha Season 1.2 and 1.3 PREORDERED...Let the SALES begin!

    Thank you so much to ALL the companies out there not trampling down our beloved hobby...Thank you for the possibility of being a miniature-painter and collector by heart...Thank you for giving me a really good feeling spending money for the thing I love...

    Best regards,
    Skyle (still hoping the best!)

    1. I think you were the first to sing in the comments ;)

  14. I'm afraid It has to be the c. It was a real pitty.

    There is no special reason to buy directly to GW nowadays. I don't do this anymore. Even if there arent discount retailers there, I will always buy to brick and mortar free store rather than GW online/store. If I do this there is more people who can earn his life, it is simply a more utilitarian action. And there are indeed discount retailers.

    I just can't afford the price increase. Plus, some of that are just silly... I have bought each codex sins 3rd edition... untill 6th has come to the world. That 15 extra € per codex just have pissed me off, and I have bought just CSM and Tyranid Codex, my two armies. I have usually spend an extra 60€ each 3 months (240 at year indeed)... last year I have spend like 80 € plus 1 codex... and at this tyranid release I have just bought the codex. And I'm planing to not spend more money in my tyranid army unless it comes from ebay or chinese Jack Sparrow.

    Also... I'm starting to look at other games... so this year I expect to spend between 30 and 80 € directly at him. I still spend 240 at year, even more... but it doesn't go to GW (even via discount retailers or brick and mortar stores).

    1. I find myself in the same situation. In 2013 I still spend about 3000€ on GW. In 2014 I might buy the new limited edition fantasy rulebook - if it comes - and that's that. Nothing else.

    2. "They "are not going to open a GW store in Compton.""

      Not all of us knows Compton but all of us knows a Compton. The attitude behind this statement is not lost on us.

      When I first encountered the association between the twirling of moustaches and GWHQ I was not sure what it meant. But I figured it might well allude to GW with its pricing policy attempting to take wargaming back to its roots. When wargames was something only the very wealthy could afford, the purview of men in tights and puffy shirts, constantly twirling their moustaches while hopping around and bowing, saying things like "Tis your turn, good sir!" and "Thank you very much, good sir!".

      Well, wargaming does in general require a fair amount of thinking. Some young wargamers will inevitably in time find employment where they can put their minds to good use and make a lot of money.

      Perhaps GW has in fact decided its target audience is the affluent, BMW +, "money-is-not-a-problem" crowd and their families. The top 5-10% earners to whom the last few years has been very good globally, people who still can afford whatever price GW decides to ask for their products.

      Anecdotal evidence taken from the comments of this series of articles would however seem to suggest that even customers which could afford to pay the price GW asks now decides against it. It may be the unbalanced rules, the degraded quality of models or simply tougher competition but they no longer seem to thinkg GW can deliver good value. Whatever the reason, this can not possibly be good news to Games Workshop.

    3. IF GW really thinks the affluent are their main audience, then, I fear, they will be in for a big surprise. The affluent understand the concept of 'value for money'. And many of the kickstarters are not cheap - they are just better ;)

  15. One thing that I think is a Bad Thing that has not been discussed within these Walls of Text is that the top 3 shareholders in GW for 2012 table have cut their share ownership percentage in the 2013 table by approximately 50% each (if the 4th did the same, it would disappear from the listing, which it did).

    Unless the share percentage dilution was due to an increase in the number of GW shares available on the market, which the math in the tables in part 2 shows is not possibly the case, this means that the big investors have sold significant amounts of their stock for either A) they think the company share price is near the maximum, or B) they want to cut their losses if (when) the price drops.

    Note that A and B are a "glass half full" and a "glass half empty" way of saying the same thing.

    Hell, maybe the companies that increased their percentage of ownership were obligated to do that through agreements with the companies dropping their shares, or under similar obligations to buy when a price change occurs to undisclosed parties via the many forms of stock options, derivative games, and other "dark" market mechanisms that dwarf the size the visible market as dark matter and energy dwarf visible matter and energy.
    (previous post deleted due to embarrassing grammatical errors)

    1. Very good point. I agree that the reason for the top shareholders to sell a big portion of their investment is that they made great profits up to that point. I am sure that they are keeping a very keen eye on GW's chart since about one quarter of their investment went up in smoke...

  16. One thing worrying is that the half year report has almost no mention of THQ and what impacts its closure had on GW. And you would think that they might have mentioned that. If nothing else it would be a perfect scapegoat for the profits hit. The sudden failure and bankruptcy of their major video games licensing publisher? If nothing else that was a lot of free money that effectively just disappeared overnight. With who knows how much still owed? EA also just pulled the plug on WAR, which is another revenue hit. Effectively gutting a good chunk of their licensing business above and beyond any sales drops. I suspect that their cash management may be a bit more tenuous than they are publicly admitting. And like their independent retail business, their video game licensing is more and more going to be a hard base to win back. GW has gotten a bit of a reputation in the games industry as being less than ideal to work with. The general consensus seems to be that Warhammer would be some fantastic video games IP if it didn't come bundled with GW.

    1. The hit GW took from THQ's bankruptcy was already fully taken in the 2012 full year report. If I remember correctly, royalties went down by about 75% (4 to 1 million). It is in one of my long walls of text :D

      There are a few successor games (like Space Hulk, a few tablet/iphone games), but frankly, they all suck. I guess you can't spell successor without suck.

  17. I have been playing with GW miniatures for over 25 years. I have seen much good, and some bad. The problem being that the bad has been largely concentrated in the past 5 years. I loved Battlefleet Gothic and played it for years. Then it was gone. I also played Epic and also gone. Blood Bowl is alive and kicking, despite GW trying to drown it in a bathtub. Warhammer Historicals also produced some great games, but again... they are gone. What made GW profitable was that their games were centered in a wealth of fluff and miniatures, with loads of games that kept players interested in their genre. In the solid center was Warhammer Fantasy and 40K. No longer do avid players have the following option that I enjoyed many years ago which was- "Hey it's Friday night do you guys want to play 40K?" and occasionally someone would reply, "Man we ALWAYS play 40K, can we do something else." Typically we would happily play BFG, Necromunda or BloodBowl to break the repetition. Players today don't have these options so they pick up different games, with different fluff, rules mechanics and genre... and they move out of the Gamesworkshop sphere of influence and not all of them return, and even among those that do return many have seen the other side of the mountain.

    1. GW thinks it's a reason for their current policies, I think it's a result of their past policies... GW concentrates on selling starter boxes to kiddies. Why? Because there is a large likelyhood that kids will spend 800pounds on further purchases in the year after they bought their starter kit. Simple as that.

      It just does not work like that long term...

  18. Fear not! I can imagine GW's leadin staff already gathered around the table trying to find creative ways to improve the situation.
    "Hey!... What if... We could reduce the number of miniatures in X box while maintaining or even increasing its price... Maybe sell 2 and a half Sternguard Veterans for 40 Euros!"
    "Hey! Thats brilliant! Why havent we done this before? Oh wait..."

    Jokes aside i fully expect them to keep shooting themselves in the foot as it seems they have no other commercial strategies than reducing the number of units and rising prices. I once read an article about the inflation rate of a single GW goblin trooper in the last 10 years and it was scary. You would say Earth is almost dry of metal and plastic is the new alternative to gold.

    I have been playing Warhammer and other GW games for around 20 years since i was a teenager. The awesome background of the game totally sucked me in. Ive collected several 40k and fantasy armies, other smaller games, a ton of related novels (again both 40k and fantasy)... so i think i have been a good supported of the company. But in the last 5 years or so i have to admit it has been a dissapointment for different reasons.

    - Company-customer relation. Especially this. The persecution of fan sites, the poor treatment of indepent retailers, the secrecy around releases, etc... One of my childhood friends opened a LGS and carrying GW products has been a nightmare. Absurd policies i tell you, like having to blind-order new releases, have seriously hurt the game. If LGS close, you lose a lot of customers. They are free advertising for your games and provide gamers with a place to meet and play. Fortunately there are many other good games nowadays out there and many stores do not have to relay on GW alone to keep themselves afloat.

    - Prices. Prices on their products have gone up way over normal inflation. I have a good job and i could easily afford current prices but i just cant justify them. The perceived value of the kits (not all, but many many) for me, isnt that high. The price of codex is also step. A low budget (colorless) version for young ppl would be great as not everyone can ditch that amount of money to start gaming.

    - Rules. Im more a collector than a gamer, but theres a serious issue with rules nowadays. So many digital releases that its hard to keep up with the latest rules. On top of that i find individual codex poorly tested, the best example being redundant units that are made useless by better suited units of the same codex. I wont talk about balance cause we all know they dont really care much about that.
    Also, the emphasis on increasing model count (and thus income) in their games has made playing logistics more difficult. "Hey lets play a game of 40K! Sure... /me glances the several shelves of miniatures and vehicles that have to be packed and loaded to the game store or said friend's house... /me shivers".

    So... At the moment i barely make any purchases, and id love to collect some other armies, but these things keep me from doing so. And im not sure what can they do to correct the situation they are in. Dunno if the can afford to open forums, lower prices, etc. I hope the future is not too gloomy for them as im at least enjoying the HH novel series and would love to read it to its final conclusion.

    Note: English is not my native tongue so i apologyze for any grammatical mistakes or typos. Love your blog!

    1. I think what you wrote pretty much summarizes it well for all of us that are collector nerds and gamers for 20+ years. I can fully subscribe to this :)

  19. I find myself agreeing with most of the previous comments. As a long term collector of GW I love the history, back story of the 40k universe. I know my sales have dropped given the proce hikes. I still have a £50 box of ravenwing (now £75 and only x years on).

    However I do feel we are part of our own problem. I obly buy from gw or a local store. Not off the internetz. As even if I get a discount I think the lower margins for GW can only be a bad thing. (see earlier parts of the blog).

    As for GW employees, I can only say that things are great. Even with the KPIS in my experience they still love the hobby. And I excuse them for doing the "sell" on the latest box set. The stores have improved beyond belief in the past 5 or so years.

    Anyway, I see a major issue in the profit loss from the internet independent sales. The 30% increase in the ravenwing set kinda matches with my own view of 60 /v30 split, beteween independents and gw. So of we all brought from Wayland they would have to shift 1.5 as many units to make the same profit. Hence the price rises.

    Pessimism over, looking forward to the new white dwarf if they take it back to a hobby magazine then it's a good sign. Otherwise a weekly sales pitch is the death of them.

    1. I agree. As I mentioned on several occasions, GW's staff is great. Real nerds that love what they are doing!

      And yes, the low margin due to internet wild west is one of the main reasons why prices are where they are imo. It took them 10 years to finally come up with a system that they should have developed in a week. Slugs are faster than that :D

  20. They will continue to lose sales and customers as they continue to screw over independent retailers and gouge their customer base. Companies like Privateer Press, Battlefront and Wyrd (to name a mere few) will continue to pick up disgruntled GW fans and reap the lost sales. Of course, this year will see the return of the annual GW "Price Adjustment"....
    The end times are upon us..

  21. I have actual 3rd hand gossip but it seems approved. I am from small market west of Germany and GW actualy cancelled general distribution to our and neighbouring country. However sort of agreement has been reached with old distributor. All of GW products suddenly increased price /and protecting steps of our national bank have another influence/. So not even eshops are not able to keep prices simillar to other EU countries, including postal.

    It will definetely not help buying new armies and finding new players.
    So they realy our improving margings, however they are not helping stockists in smaller countries. For them it is realy harsh and they feel no obligation to support such an idiotic movement. So if the close it means no support for the hobbyist and if no support?WTF?

    If u would like to start with SM army with basic rules you have to throw away 1/4 of average monthly sallary.

    This is for the first time that we realy have succesfull growth of other wargaming games sales and it seems it will withstand and will not be :seasonal:
    Its quite opposing what PP or CB do...

    Well why the Patton does not kick Eisenhowers arse and not gone to PRG faster then the heroic soviet soldiers :-D There will be better economy here... Of course just Kiddin' :-D

  22. Hey guys, do a kickstarter for buying GW, I will pledge you some money on that !!

  23. Hello there hope every body enjoying while playing the awesome kinds of the games like the online games of the type ben 10 games.

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