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Mauglum.
01-05-2011, 02:17 PM
Hi all,
Released this morning:


RNS Number : 9132Y

Games Workshop Group PLC

05 January 2011

Games Workshop Group PLC

("Games Workshop" or the "Group")

TRADING STATEMENT AND NOTICE OF RESULTS

For immediate release 5 January 2011

Games Workshop announces that pre-tax profits in respect of the year to 29 May 2011 are likely to be below current market expectations.

Sales were down 4% in the first half to 28 November 2010. Difficult trading conditions since that time mean that this shortfall is unlikely to be recovered by the year end. The Group's gross margin and costs remain under firm control and cash generation remains healthy. In addition, the outlook for royalties receivable in the current year remains good, although not as significant as in the year to 30 May 2010.

The Board of Games Workshop currently believes that, as a result of reduced volumes, pre-tax profits in respect of the year ending 29 May 2011 are unlikely to meet current market consensus estimates.

The Board will announce the Group's half-yearly results for the six months to 28 November 2010 on 25 January 2011.


I have high-lighted the reference to drop in sales volumes.(Share prices have dropped too!)

Its taken a while but I belive GW have finaly passed the point of being able to use price risies to compensate for a shrinking customer base.

TTFN.

Denzark
01-05-2011, 05:49 PM
This comes after a time in which the financial section of the London Evening Standard was recommending GW shares!

A couple of thoughts:

1. A profit warning (to me, semantically - I'm no expert) means they won't make as much as expected. Doesn't mean there will be a loss automatically.

2. All the reasons the internet people put up, particularly our US colonial cousins who can't believe a service industry pays so little attention to its customers, will not be the sole reason for this - ie its not just because bubba had to wait for his codex or faq, and warmachine players don't. Actually it will be a combination of all things.

I don't think they will automatically put down prices to have small profits, quick gains. The bricks and mortar stores also won't disappear - this is geared as I have said many times, to be a one stop shop for parents to go with the christmas list thoughtfully provided by GW and get little timmy a 'hobby in one' (said parents probably don't trust buying online and feel stupid googling for space monsters.)

What I do hope for:

a. Sideline LOTR.
b. Stop aiming at preteens + - lets have a wargame with brain melting lead content citadel miniatures that say 'not for under 14s', not all this 'toy soldier' rubbish. Remember when you got Space Crusade and then tried to work out 2ed rules to join in the with the older gamers? We managed, didn't we? So can they.
c. Don't think 'bitz' and 'collectors' pieces will make us buy more for conversion - open up your old 'cast any part at all' business and see if we can stick it to ebay.
d. GW to remember to stop letting the so-called 'business gurus' in charge influence game design - let the geeks run things.

DarkLink
01-05-2011, 06:08 PM
d. GW to remember to stop letting the so-called 'business gurus' in charge influence game design - let the geeks run things.

GW is a publicly traded company. This wont, and cant, happen.

Reikou
01-05-2011, 06:23 PM
GW is a publicly traded company. This wont, and cant, happen.

Not so much this. More like Geeks don't know how to make money. If geeks ran things, GW would be bankrupt.

Rapture
01-05-2011, 06:45 PM
My GW purchases decline a little each year. I love building new kits, but I am not a fan of the frequent price rises. I remember when land raiders were $50. I know that some people remember when 50 marines were $5, but I only got back into the hobby a few years ago.

DarkLink
01-05-2011, 07:25 PM
Not so much this. More like Geeks don't know how to make money. If geeks ran things, GW would be bankrupt.

I believe that's the point I was trying to make:p

Lockark
01-05-2011, 07:46 PM
GW is a publicly traded company. This wont, and cant, happen.

Um.... Did you read what your quoted?




d. GW to remember to stop letting the so-called 'business gurus' in charge influence game design - let the geeks run things.

As in. Let the Geeks write the rules and make a good game. Let the Business Gurus concentrate on running the company/Marketing/pricing/schedules/ect.

The Business heads arguably shouldnot have there hands in game design, no more then the geek have there hand in the business planning.

Reikou
01-05-2011, 08:17 PM
As in. Let the Geeks write the rules and make a good game. Let the Business Gurus concentrate on running the company/Marketing/pricing/schedules/ect.

The Business heads arguably shouldnot have there hands in game design, no more then the geek have there hand in the business planning.

You're implying that they are mutually exclusive things. They are not. Designing a game that won't sell, simply won't sell, no matter what kind of business strategy you have, nor how great of business advisors you have.

Rain
01-05-2011, 08:36 PM
GW flubbed pretty badly in their attempt to market the game to kids. Although the idea that they can make good money on kids that will be in and out of the hobby in under a year while still keeping all of us hopeless addicts buying is not a bad one, the way they went about it it awful.

The problem is that in order to sell to kids they greatly simplified army rules, removing variant lists, armories, and funky options. The idea was certainly to make the rules more accessible for younger players, but what they forgot was that most kids make up rules as they go along anyway. In other words, kids would just ignore rules that were too "complicated" or make up new rules, but with their "streamlining" they alienated a lot of their older players that really liked the individuality the era of Andy Chambers allowed them to have.

Then to add injury to insult they essentially told Andy to take a hike when he wanted to create a deeper 5th edition instead of just redoing 4th edition with a run rule and transports that people actually bother to put units it. They brought this on themselves, trying to take the geeky complexity out of Warhammer is like taking the naked lady pictures out of Playboy.

TheBitzBarn
01-05-2011, 09:00 PM
Not so much this. More like Geeks don't know how to make money. If geeks ran things, GW would be bankrupt.

Could not BE more right

This is due to the BASIC FACT

This game and sales were hurt by a GLOBAL ECONOMIC SLOWDOWN

ONE SIMPLE REASON people lets not all go Crazy and lose our heads.

If you are scared you will lose your job or you have or your hours were cut you spend less on things not need to in the basic 1. Shelter, 2. Food 3. Utilities . If you are struggling to pay those you do not buy little army soldiers

Have a DAY

LoverzCry
01-06-2011, 01:12 AM
Actually, here in the States the economy is starting to look up, so logically their sales would be marginally higher than expected. If their prices were lower, and they stopped hiking them up and lowering their store hours, odds are they'd sell more minis. Hell, if minis cost less I'd buy a hell of a lot more of them. Odds are, as a whole I'd probably end up spending even MORE money at GW than before :U

Edit: And if their stores were open longer, they'd probably sell more as well. Many of the players I know spend their time testing new models and whatnot in-store, and then chunking/buying new ones. Experimentation aside, just the general elongated exposure to the minis would produce a greater amount of sales.

eldargal
01-06-2011, 01:31 AM
Any company that draws the majority of its income from UK sales has been hit hard, the weather over the past few months has hit the retail industry hard. Its not just GW. I have friends in a company that make boutique dresses, they have had the worst sales in the past quarter that they have ever had for this same period. Not only could their customers not get to their stores, sometimes they couldn't even open their stores. Their online store did well for a while, but then they had trouble getting to the warhouse to package orders, on top of that the postal issues meant that they were lucky if the courier could get there to collect the orders. When they did, it took weeks longer for orders to arrive. :(

LoverzCry, for all we know US sales did go up, they haven't released a breakdown of sales region by region as they do in their annual reports. If the UK and Europe were hit hard enough it would more than compensate for any rise there. Its worth noting the decline in European sales over the past few years of the financial crisis and debt concerns have largely been responsible for GWs mythical 'sales decline'.

Rain
01-06-2011, 02:04 AM
I somehow really doubt that the "financial crisis" has very much to do with GW's problems with sales volume, at least in the States. I'm fairly certain that the people that were buying GW product in the first place are neither the low earners that suffered the most job loss, nor the urban professionals whose precious mindless 10% tanked along with Lehman and pals. In other words, all of the unemployment hooplah we hear about is mostly among groups that traditionally have higher unemployment anyway, teenagers, minorities, and those without a useful college degree, none of which are really people that GW was probably depending on, as the kids/teenagers retained their employed college educated parents.

The other side of the coin is that of course a lot of people lost money they had invested in various index funds, mutual funds, portfolios, etc. but again, I would imagine that most 40k players do not keep portfolios and so the crash would not have done much to em. That said, I don't know enough about the European economy to comment on what happened in merry old England, but in the States, I really doubt it was a factor.

Anyway, I'm pretty sure the problem has to do with GW underestimating just how much money their employed adult fans were dumping into their coffers when they murdered Chaos Marines (the 2nd best seller in 3rd edition) along with Dark Angels, and dragged their feet on updating a slew of other armies, causing people to quit. Hell, I pretty much stopped playing with the Gavdex in 2007 and buying any GW product up until DE launched and I am far from the only case.

eldargal
01-06-2011, 02:12 AM
The general sales decline has been in Europe, and its not just GW, its the entire luxury goods industry. This profit warning is most likely prompted by the terrible Christmas retail conditions, particularly in Britain. The US wing of GW has its own problems, but sales haven't been too bad its true.

Col.Gravis
01-06-2011, 05:04 AM
Aye this is a European issue or more specifically a British one, down to the economic situation. The US Market stable or not contributes less to GWs sales then say the UK.

Aldramelech
01-06-2011, 05:18 AM
I have stopped buying GW models and have no plans to buy anymore. They are now far too expensive. I have moved to other systems where the models are more realistically priced. I am also in the process of replacing all of my paint from GW to Vallejo, not so much because of price but because I do not like the new pots at all. I never got my brushes from or glue from GW anyway.

So over a year I have gone from being a regular customer, to only buying spray paint.

How many others are there out there like me?

eldargal
01-06-2011, 06:43 AM
A fair few, probably, Aldy. But most of them just buy from online discounters and eBay and then think they are 'sticking it to the man'.:rolleyes: At least you are putting your money where your mouth is so to speak. If you think GW products are overpriced, don't buy them. If enough people do that, prices will fall if they want to survive. But instead, most people just buy at above the wholesale price GW sets to keep the company profitable and think they are having the same affect.

weeble1000
01-06-2011, 07:31 AM
I'd like to preface this barrage of facts and opinions by quoting GW CEO's commentary in the 2009-2010 financial report, "We are not significantly affected by economic factors, as recent results show. Performance shortfalls in the past have been down to the quality of management and decision making." (CEO's Comments, 2009-2010 Financial report, pg 7, emphasis added)

While this is going on, Tom Kirby is making almost $800,000.00 per year in salary and benefits. This is a salary increase over last year and it does not take into account the value of Kirby's stock which, even considering the 18 percent drop, is worth something like 350 dollars per share. Kirby has nearly two million shares! Also consider the fact that Games workshop paid stock dividends this year to the tune of 25 pence per share. Admittedly, GW has been under pressure from shareholders to pay dividends, but in Kirby's case, and others of the top GW brass, that decision clearly had personal benefits. At about 40 cents per share, Kirby alone was paid almost $800,000.00 in dividends, which brings the total amount of cash he's sucked out of GW this year alone well over a million dollars and closer to two.

This is going on while GW's sales are decreasing, its profit margin is struggling to remain stable, and when it has little more than 17 million dollars in cash.

GW's response to falling sales was to jack up the price of it's products and cheerfully suggest to shareholders that this was because, "We know that, for a niche like ours, people who are interested in collecting fantasy miniatures will choose the best quality and be prepared to pay what they are worth." (CEO's Comments, 2009-2010 Financial report, pg 3, emphasis added) In other words, GW is trying to keep itself afloat by bleeding its customers. And let's face it, part of that blood-letting is paying Tom Kirby's outlandishly fat salary. Oh and by the way, Kirby's salary went up in spite of the fact that, "We set ourselves the objective to pay off our borrowings this year and we asked staff to accept a salary freeze to allow us to do that." (CEO's Comments, 2009-2010 Financial report, pg 4, emphasis added)

Now, Mr. Kirby's salary went up this year due to his "extra" responsibilities in coming to America to develop the market here. I should add here that this invariably involved paying to relocate him as he's in the states 40 weeks out of the year. Plus, he's being paid in pounds but spending in dollars, giving him the best of both worlds from his fat stacks of cash.

Considering this, let's not forget the ongoing GW v Chapterhouse litigation. Apparently, one of Mr. Kirby's extra responsibilities here in America has been to hire an awesomely expensive law firm to attack a small American business that is ostensibly adding value to the company's own products. We can forget, for the moment, the fact that GW's complaint (parts of it likely drafted by Kirby considering the descriptions of GW fluff) is full of boundless accusations that barely meet the prima facie requirement. We can also forget that the complaint is an intimidation tactic designed to frighten Chapterhouse into going under and terrify the rest of the legitimate small model company market (It was filed on December 21st with a 20 day period to respond even though the attorneys were unavailable until the end of this week).

Forgetting that, we can focus on the fact that this suit is the second pillar of GW's business strategy next to raising prices! "Our continual investment in product quality, using our defendable intellectual property, provides us with a considerable barrier to entry for potential competitors: it is our Fortress Wall." (CEO's Comments, 2009-2010 Financial report, pg 3) That's code for, we're increasing prices to account for fewer sales and we're suing the crap out of anybody that could conceivably compete with us in order to make our IP seem fictitiously invincible, so don't worry investors.

What does all of this boil down to? Games Workshop is attacking its customers and we are paying for them to do it. GW's business model assumes that its remaining loyal customers will happily pay artificially inflated prices and they are using that money to pay ridiculous management salaries and fund overly expensive lawsuits that attack the very community that they are depending on to accept price increase after price increase.

This not a healthy business model and I, for one, don't appreciate being squeezed by some British company in order to pay a corporate manager's fat salary and terrorize the hobby community. GW's customers need to send a message to GW that this behavior is not acceptable.

Winter12
01-06-2011, 07:31 AM
To be honest I think the sales problems are more to do with staffing issues than everything else. The retail chain in the UK lost about 60% of it's staff in the last year or so. Not all of them have been replaced. I also think the one man store idea is still to show if it's viable or not. If I had to critique their business strategy at all, I would say that in order to recruit new customers they need available staff to recruit them, so cutting costs by cutting retail staff was not necessarily the best way to go. And the UK retail chain is still the big money maker for GW, so if the UK suffers problems, then GW suffers problems.

But then again, as an ex-retail manager for GW I'm slightly (read: very) biased.

Aldramelech
01-06-2011, 09:52 AM
I'd like to preface this barrage of facts and opinions by quoting GW CEO's commentary in the 2009-2010 financial report, "We are not significantly affected by economic factors, as recent results show. Performance shortfalls in the past have been down to the quality of management and decision making." (CEO's Comments, 2009-2010 Financial report, pg 7, emphasis added)

While this is going on, Tom Kirby is making almost $800,000.00 per year in salary and benefits. This is a salary increase over last year and it does not take into account the value of Kirby's stock which, even considering the 18 percent drop, is worth something like 350 dollars per share. Kirby has nearly two million shares! Also consider the fact that Games workshop paid stock dividends this year to the tune of 25 pence per share. Admittedly, GW has been under pressure from shareholders to pay dividends, but in Kirby's case, and others of the top GW brass, that decision clearly had personal benefits. At about 40 cents per share, Kirby alone was paid almost $800,000.00 in dividends, which brings the total amount of cash he's sucked out of GW this year alone well over a million dollars and closer to two.

This is going on while GW's sales are decreasing, its profit margin is struggling to remain stable, and when it has little more than 17 million dollars in cash.

GW's response to falling sales was to jack up the price of it's products and cheerfully suggest to shareholders that this was because, "We know that, for a niche like ours, people who are interested in collecting fantasy miniatures will choose the best quality and be prepared to pay what they are worth." (CEO's Comments, 2009-2010 Financial report, pg 3, emphasis added) In other words, GW is trying to keep itself afloat by bleeding its customers. And let's face it, part of that blood-letting is paying Tom Kirby's outlandishly fat salary. Oh and by the way, Kirby's salary went up in spite of the fact that, "We set ourselves the objective to pay off our borrowings this year and we asked staff to accept a salary freeze to allow us to do that." (CEO's Comments, 2009-2010 Financial report, pg 4, emphasis added)

Now, Mr. Kirby's salary went up this year due to his "extra" responsibilities in coming to America to develop the market here. I should add here that this invariably involved paying to relocate him as he's in the states 40 weeks out of the year. Plus, he's being paid in pounds but spending in dollars, giving him the best of both worlds from his fat stacks of cash.

Considering this, let's not forget the ongoing GW v Chapterhouse litigation. Apparently, one of Mr. Kirby's extra responsibilities here in America has been to hire an awesomely expensive law firm to attack a small American business that is ostensibly adding value to the company's own products. We can forget, for the moment, the fact that GW's complaint (parts of it likely drafted by Kirby considering the descriptions of GW fluff) is full of boundless accusations that barely meet the prima facie requirement. We can also forget that the complaint is an intimidation tactic designed to frighten Chapterhouse into going under and terrify the rest of the legitimate small model company market (It was filed on December 21st with an 20 day period to respond even though the attorneys were unavailable until the end of this week).

Forgetting that, we can focus on the fact that this suit is the second pillar of GW's business strategy next to raising prices! "Our continual investment in product quality, using our defendable intellectual property, provides us with a considerable barrier to entry for potential competitors: it is our Fortress Wall." (CEO's Comments, 2009-2010 Financial report, pg 3) That's code for, we're increasing prices to account for fewer sales and we're suing the crap out of anybody that could conceivably compete with us in order to make our IP seem fictitiously invincible, so don't worry investors.

What does all of this boil down to? Games Workshop is attacking its customers and we are paying for them to do it. GW's business model assumes that its remaining loyal customers will happily pay artificially inflated prices and they are using that money to pay ridiculous management salaries and fund overly expensive lawsuits that attack the very community that they are depending on to accept price increase after price increase.

This not a healthy business model and I, for one, don't appreciate being squeezed by some British company in order to pay a corporate manager's fat salary and terrorize the hobby community. GW's customers need to send a message to GW that this behavior is not acceptable.

An excellent post! Very informative. TBH my walking away from GW was all about price (as I stated above) but after reading that I think I may well stay away on moral grounds.

Further to my own post lets take my club as another example. The club I belong to has 15-20 members and all own WFB armies, some people own several as you'd expect. How many bought an 8th edition rule book?
ONE, yes thats right, out of all those people only one of us bought the book. The club runs a league every year and last years used 7th and as the situation has not changed I reckon this years will too.

On a site like this which is largely about GW games I expect the vast majority bought into 8th but how many clubs up and down the country (Wargames Clubs who's primary focus is NOT GW) felt the same way?
General Wargamers must surely make up a sizable proportion of sales in the UK and yet I feel GW has alienated them. Many Wargamers I know (not just from my club) are increasingly turned off by GW's attitude in general toward "The Hobby". We do not like being dictated to, whether through price or what models can or cannot be used and the rash of legal action over the last year is viewed with disdain.

No one company rules this hobby or is bigger then the hobby and GW are not the hobby however much they like to think they are.

Mauglum.
01-06-2011, 10:53 AM
Hi Winter12.
The sales problems are due to GW NOT offering value for money.(Compared to other companies products that compete for GWs POTENTIAL customers.)

It doesnt matter how good the sales man is,if the customer can not justify spending money on a product they wont.
£200+ on a load of plastic bits glue paint and rules -army book, and in a month or two, you MAY be able to squabble with a stroppy teenager in the middle of a cramped shop...:rolleyes:

Or pick up a games console that works straight away , and you can just use it at home...and game with any one in the world on the internet.

When GW priced its products in its B&M stores 'for convenience' eg 150% to 200% of the price of similar products.
The store staff could just emphisise the 'endless crativity and fun of the hobby' to justify the higher price.
When the shop is full of customers armies and has several games running ,(some run by the vets helping the store staff...) Its easier to sell the' long term value' of the products.

GW saw the B&M stores as recruitment centres more than retail outlets back then.

However, since Tom Kirby decided GW was 'in the buisness of 'selling toy soldiers to kiddes', GW have just alienated the long term customers.
Its made the sales staff job a lot harder!
And increasing prices 100% above inflation rate for the last decade has not helped at all!

A prime example of effectivley discouraging the vets is the relase of WHFB 8th ed.
NOT the rules changes.

But ONLY selling a 'rules only book' in the boxed game .
OR a Rule book with 400 pages of fluff and prety pictures.
Both of these appeal to new customers.

BUT the vets have to pay an extra £30 for fluff or minatures they may not want.

WHY not sell a 'Rules Only' book for £15 to £20?ALL the existing players would have a cheap upgrade alternative , to keep them interested in GW.

How many existing WHFB players have picked up alternative rule sets or kept using 7th ed rules and minatures?

GW continue to lose customers , and all they can think to do is raise prices .It NEEDs more than that .
GW HAS to adress its primary problems, at some point .
Maybe not under its current manegment though...:D

TTFN

SandWyrm
01-06-2011, 02:35 PM
This game and sales were hurt by a GLOBAL ECONOMIC SLOWDOWN

ONE SIMPLE REASON people lets not all go Crazy and lose our heads.

Slowdowns (or more properly, recessions) don't excuse bad business decisions. If the economy is down, then a business had better not be raising prices. In fact it had better find a way to lower them or at least keep them steady. Most people still have money to spend on their hobbies. It's just not as much as we had before. So GW's rules, armies, and miniatures had better adjust to that fact, because this recession is systemic and isn't going away anytime soon.

From a design standpoint, they need to start working on lowering the minimum model count of a typical 40K game. That means balancing out the rules at the 500, 1000, 1500, 1750, and 2000 levels. Right now the game is balanced the best at 1500 - 2000, and is almost unplayable below 750. That drives away new players and discourages older players from starting new armies. Because coming to the table at 1500 requires at least a $450.00 investment, even for Marines. That's too much even for me, and I'm doing much better than most people out there in this economy.

From a model standpoint they need to start reducing the complexity (and therefore the development/mould cost) of new sets. They also need to start considering more budget options for large armies like Guard. Things like more 2-piece infantry kits. Space Hulk shows how well they can put out nice models that are easier to assemble and cheaper to produce.

Thirdly, they need to revive their specialist games. Because this is how most people in the 90's found the hobby. The price of entry to the 40K universe needs to come down.

Denzark
01-06-2011, 02:54 PM
GW flubbed pretty badly in their attempt to market the game to kids. Although the idea that they can make good money on kids that will be in and out of the hobby in under a year while still keeping all of us hopeless addicts buying is not a bad one, the way they went about it it awful.

The problem is that in order to sell to kids they greatly simplified army rules, removing variant lists, armories, and funky options. The idea was certainly to make the rules more accessible for younger players, but what they forgot was that most kids make up rules as they go along anyway. In other words, kids would just ignore rules that were too "complicated" or make up new rules, but with their "streamlining" they alienated a lot of their older players that really liked the individuality the era of Andy Chambers allowed them to have.

Then to add injury to insult they essentially told Andy to take a hike when he wanted to create a deeper 5th edition instead of just redoing 4th edition with a run rule and transports that people actually bother to put units it. They brought this on themselves, trying to take the geeky complexity out of Warhammer is like taking the naked lady pictures out of Playboy.

This Mr Rain, is the truth!


Could not BE more right

This is due to the BASIC FACT

This game and sales were hurt by a GLOBAL ECONOMIC SLOWDOWN

ONE SIMPLE REASON people lets not all go Crazy and lose our heads.

If you are scared you will lose your job or you have or your hours were cut you spend less on things not need to in the basic 1. Shelter, 2. Food 3. Utilities . If you are struggling to pay those you do not buy little army soldiers

Have a DAY

Fair Mr Barn, no money woney, no mini-winis. I like it, Y'all have a day too.


Actually, here in the States the economy is starting to look up, so logically their sales would be marginally higher than expected. If their prices were lower, and they stopped hiking them up and lowering their store hours, odds are they'd sell more minis. Hell, if minis cost less I'd buy a hell of a lot more of them. Odds are, as a whole I'd probably end up spending even MORE money at GW than before :U

Edit: And if their stores were open longer, they'd probably sell more as well. Many of the players I know spend their time testing new models and whatnot in-store, and then chunking/buying new ones. Experimentation aside, just the general elongated exposure to the minis would produce a greater amount of sales.

This makes no sense to me. If you spend $200 a month on minis, you spend that amount. Why would cheaper minis automatically make you spend more?


I somehow really doubt that the "financial crisis" has very much to do with GW's problems with sales volume, at least in the States. I'm fairly certain that the people that were buying GW product in the first place are neither the low earners that suffered the most job loss, nor the urban professionals whose precious mindless 10% tanked along with Lehman and pals. In other words, all of the unemployment hooplah we hear about is mostly among groups that traditionally have higher unemployment anyway, teenagers, minorities, and those without a useful college degree, none of which are really people that GW was probably depending on, as the kids/teenagers retained their employed college educated parents.

The other side of the coin is that of course a lot of people lost money they had invested in various index funds, mutual funds, portfolios, etc. but again, I would imagine that most 40k players do not keep portfolios and so the crash would not have done much to em. That said, I don't know enough about the European economy to comment on what happened in merry old England, but in the States, I really doubt it was a factor.

Anyway, I'm pretty sure the problem has to do with GW underestimating just how much money their employed adult fans were dumping into their coffers when they murdered Chaos Marines (the 2nd best seller in 3rd edition) along with Dark Angels, and dragged their feet on updating a slew of other armies, causing people to quit. Hell, I pretty much stopped playing with the Gavdex in 2007 and buying any GW product up until DE launched and I am far from the only case.

Again we are in accord, although, I miss my pure Khorne with Bloodletters, but have had success with this codex.


I have stopped buying GW models and have no plans to buy anymore. They are now far too expensive. I have moved to other systems where the models are more realistically priced. I am also in the process of replacing all of my paint from GW to Vallejo, not so much because of price but because I do not like the new pots at all. I never got my brushes from or glue from GW anyway.

So over a year I have gone from being a regular customer, to only buying spray paint.

How many others are there out there like me?

I am like you Mr A - my greenstuff is milliput, my paints are much humbrol. But it is not a morality thing more a budget.


I'd ...
What does all of this boil down to? Games Workshop is attacking its customers and we are paying for them to do it. GW's business model assumes that its remaining loyal customers will happily pay artificially inflated prices and they are using that money to pay ridiculous management salaries and fund overly expensive lawsuits that attack the very community that they are depending on to accept price increase after price increase.

This not a healthy business model and I, for one, don't appreciate being squeezed by some British company in order to pay a corporate manager's fat salary and terrorize the hobby community. GW's customers need to send a message to GW that this behavior is not acceptable.

Weeble you quote many facts. But I notice you only bring this up AFTER the profit warning - what, before you were happy to pay the price? Let's not jump on a bandwagon of making the evidence fit the facts - it has been a sound business model which has kept them in profit for recent years, and they still may profit this year - just less hence the warning. Another poster mentioned their stock has settled now so hardly a pervasive argument - you still pay for the plastic crack like a good junkie so don't pretend you're sticking it to the man because you blatantly lurk on a majority GW games-system website - methink the lady doth protest...


Slowdowns (or more properly, recessions) don't excuse bad business decisions. If the economy is down, then a business had better not be raising prices. In fact it had better find a way to lower them or at least keep them steady. Most people still have money to spend on their hobbies. It's just not as much as we had before. So GW's rules, armies, and miniatures had better adjust to that fact, because this recession is systemic and isn't going away anytime soon.

From a design standpoint, they need to start working on lowering the minimum model count of a typical 40K game. That means balancing out the rules at the 500, 1000, 1500, 1750, and 2000 levels. Right now the game is balanced the best at 1500 - 2000, and is almost unplayable below 750. That drives away new players and discourages older players from starting new armies. Because coming to the table at 1500 requires at least a $450.00 investment, even for Marines. That's too much even for me, and I'm doing much better than most people out there in this economy.

From a model standpoint they need to start reducing the complexity (and therefore the development/mould cost) of new sets. They also need to start considering more budget options for large armies like Guard. Things like more 2-piece infantry kits. Space Hulk shows how well they can put out nice models that are easier to assemble and cheaper to produce.

Thirdly, they need to revive their specialist games. Because this is how most people in the 90's found the hobby. The price of entry to the 40K universe needs to come down.

One profit warning after years of profit including DURING a recession in their home country, which is no longer in recession does not point to bad business to me, rather the opposite.

And I reckon most people got into it not through specialist games in the 90's, but Space Crusade/Heroquest.

SandWyrm
01-06-2011, 03:02 PM
I have stopped buying GW models and have no plans to buy anymore. They are now far too expensive. I have moved to other systems where the models are more realistically priced. I am also in the process of replacing all of my paint from GW to Vallejo, not so much because of price but because I do not like the new pots at all. I never got my brushes from or glue from GW anyway.

So over a year I have gone from being a regular customer, to only buying spray paint.

How many others are there out there like me?

This sounds exactly like me.

I've dropped over $1500 into my Guard army over the last 2.5 years, but I can't afford to do that again. My Blood Angels army, by contrast, cost me just a bit over $350. After it's painted I'll be unwilling to jump into any army that costs more than $250 to start. If the new GK codex doesn't let me use some IG units that I already have, then I'll be selling off my old GK models and trying out FOW instead. The system looks fun and there's all sorts of low-cost models you can use.

I also used to use GW's paints exclusively, but am now also transitioning to Vallejo. It's simply a better value. I've barely bought anything from GW since last summer.

weeble1000
01-06-2011, 04:24 PM
Weeble you quote many facts. But I notice you only bring this up AFTER the profit warning - what, before you were happy to pay the price? Let's not jump on a bandwagon of making the evidence fit the facts - it has been a sound business model which has kept them in profit for recent years, and they still may profit this year - just less hence the warning. Another poster mentioned their stock has settled now so hardly a pervasive argument - you still pay for the plastic crack like a good junkie so don't pretend you're sticking it to the man because you blatantly lurk on a majority GW games-system website - methink the lady doth protest...

I'm at work today, man. I didn't go sieving through GW's financials at 7:00 a.m. this morning pulling out quotes. I had them all nicely prepared in a file on my desktop that's been sitting around since GW sued Chapterhouse Studios. Honestly, that litigation was the last straw for me. I've complained about GW's litigation tactics for a while now. And you're right, I've been buying the odd GW product here and there. Just a few months ago I got myself two new Cadian Infantry Squads as part of my phase-out-the-old-metal-models initiative. I'm not going there anymore though. Just today I took my Christmas bonus cash and, much the chagrin of my wife, spent twice as much on a Cryx Box instead of the Cadian Command Squad that I've been thinking about getting. For the conceivable future my hobby dollars will be spent on home-made terrain and learning all about Warmachine and Flames of War.

I do not approve of the way that GW handles its business, I do not approve of the way GW treats its customers, and I most certainly do not approve of the way GW manipulates the legal system to egregiously intimidate hobby-minded competitors. As a result, I will be pointedly sending my money to Games-Workshop competitors and doing everything in my power to help those people selfless enough to stand up for the rights of any small business in a IP rich market.

I love Warhammer 40K and it wasn't easy to make the decision to not only boycott Games-Workshop but also spend money on models that I'm frankly skeptical about. This time Games-Workshop has gone too far with me and has officially lost my business until the company changes its tune. I hope that more of Games-Workshop's customers pull their support from the company and make their reasons very clear to Games-Workshop.

SandWyrm
01-06-2011, 04:25 PM
One profit warning after years of profit including DURING a recession in their home country, which is no longer in recession does not point to bad business to me, rather the opposite.

And I reckon most people got into it not through specialist games in the 90's, but Space Crusade/Heroquest.

Britain's out of recession? By who's measure?

You're also forgetting that GW's entire North American profit in 2008 was around $50K. Or that they borrowed themselves blind even when LOTR sales were huge. So it would be better to say that they have only had one good year ('09) out of the last 5-6.

Denzark
01-06-2011, 05:29 PM
Britain's out of recession? By who's measure?

You're also forgetting that GW's entire North American profit in 2008 was around $50K. Or that they borrowed themselves blind even when LOTR sales were huge. So it would be better to say that they have only had one good year ('09) out of the last 5-6.

Recession by British Government definition, is when there is negative financial growth for 2 or more consecutive quarters of the financial year. When that negative cycle becomes a positive, the recession is over.

So, by the government's measure - I believe most of the europeans use this measure too.

I can't argue with your figures of profits cos I don't claim to know them - its just that if their business plan was working well in 2009 (the figures were if I recall £8m profit worldwide) then their plan must have been good whilst other British high street companies were going down the pan.

Denzark
01-06-2011, 05:43 PM
This not a healthy business model and I, for one, don't appreciate being squeezed by some British company in order to pay a corporate manager's fat salary and terrorize the hobby community. GW's customers need to send a message to GW that this behavior is not acceptable.


I love Warhammer 40K and it wasn't easy to make the decision to not only boycott Games-Workshop but also spend money on models that I'm frankly skeptical about. This time Games-Workshop has gone too far with me and has officially lost my business until the company changes its tune. I hope that more of Games-Workshop's customers pull their support from the company and make their reasons very clear to Games-Workshop.[/QUOTE]

Weeble do you know what - I'm seeing most of they 'let's boycott the man' comments from my colonial cousins - you even mention the nationality of the company above.

I'm sure when a US company sticks it to the third world, well, hey, thats capitalism - they wanted democracy, here it is up the jacksie. Well there is obviously something about succesful Brit business that sticks in yank craw - President BO callin BP British Petroleum when they haven't gone by that name for years (the petroleum company formely known as British) is another example

So yes, I hope more GW customers from the US take your constructive advice and vote with their feet. Maybe the US market will no longer be viable. Because at some point in the past, GW started going truly global and it was then that the big corporate attitudes came in and all the problems stem from there. We'll stick to the best SF wargame fluff in the world, with quirky designs and in house jokes, you can have kill the spell caster (aka warmachine) and regular rules updates.


PS half of me is using the subtle art of english wit and sarcasm. The other half hopes that if the 'cut off own nose to spite ones face' crew do succeed to harm the company, that those people suffer with the rest of us.

Denzark
01-06-2011, 07:13 PM
Britain's out of recession? By who's measure?

You're also forgetting that GW's entire North American profit in 2008 was around $50K. Or that they borrowed themselves blind even when LOTR sales were huge. So it would be better to say that they have only had one good year ('09) out of the last 5-6.

While we're on the subject check this, courtesy of a Bigred post:

http://investor.games-workshop.com/downloads/results/results2010/2009-10_FinalFullYearReport.pdf

Page five -shows growth - admittedly small, but growth, for the last 3 years - not bad during a worldwide financial crisis.

Denzark
01-06-2011, 07:30 PM
While this is going on, Tom Kirby is making almost $800,000.00 per year in salary and benefits. This is a salary increase over last year and it does not take into account the value of Kirby's stock which, even considering the 18 percent drop, is worth something like 350 dollars per share. Kirby has nearly two million shares! Also consider the fact that Games workshop paid stock dividends this year to the tune of 25 pence per share. Admittedly, GW has been under pressure from shareholders to pay dividends, but in Kirby's case, and others of the top GW brass, that decision clearly had personal benefits. At about 40 cents per share, Kirby alone was paid almost $800,000.00 in dividends, which brings the total amount of cash he's sucked out of GW this year alone well over a million dollars and closer to two. .

Funny. Check this posted by Bigred:

http://investor.games-workshop.com/downloads/results/results2010/2009-10_FinalFullYearReport.pdf

P20 shows T Kirby total emoluments as £403000 in last financial year. At todays price of about $1.5471 (google provided) - £1 that makes $623481.3 - you're only exagerating by a factor of around 300% but hey, whats a mill or two between friends?

weeble1000
01-06-2011, 07:47 PM
I don't really want to get into a flame war with you, Denzark, but you only took salary into account. There are other factors to consider when totaling income. Admittedly, the exact number is certainly less than 800,000, but it's around 770,000, so I rounded up and said that it was close to 800,000. For example, I get a bonus, health care, retirement, etc. All of that should be taken into account when considering the income I receive per year and the same goes for Mr. Kirby.

But even if you only took salary into account, the man is making more than 600,000 dollars. Plus he's got about 1.9 million shares that each returned roughly 38 cents in dividends. Any way you slice it he's making a ton of money considering that the company is not doing well financially and has not been doing well for some time now. And his salary increased in spite of a supposed salary freeze.

Denzark
01-07-2011, 03:33 AM
I don't really want to get into a flame war with you, Denzark, but you only took salary into account. There are other factors to consider when totaling income. Admittedly, the exact number is certainly less than 800,000, but it's around 770,000, so I rounded up and said that it was close to 800,000. For example, I get a bonus, health care, retirement, etc. All of that should be taken into account when considering the income I receive per year and the same goes for Mr. Kirby.

But even if you only took salary into account, the man is making more than 600,000 dollars. Plus he's got about 1.9 million shares that each returned roughly 38 cents in dividends. Any way you slice it he's making a ton of money considering that the company is not doing well financially and has not been doing well for some time now. And his salary increased in spite of a supposed salary freeze.

I don't get where the 'not doing well' comment comes from, as if you read through the financial report you'll see growth in the last 3 years - small admittedly but growth. Not bad against the backdrop of global downturn, and I don't recalll you commenting thus in years 1-3 of this period - its year 4 before you started yapping...

But, this shall be the last I debate on the subject, as I don't want to get in a flame war either. Quite simply, on another thread Eldargal and Fuzz pointed out an internet truth - that things happening in a very small amount of places get magnified into a world ending doom.

What pisses me off is that although you can just vote with your feet, like Aldramelech, becasue the prices are extortionate, you are trying to turn it into some morale crusade and actively harm a company whose products I use.

As Eldargal et al identified, you are not the forefront of some great horde who will recapture the esential spirit of GW with your outrage, you are just one of the more vocal geeks suffering nerd rage which, on this subject I shall endeavour not to get dragged into again.

Fin.

SandWyrm
01-07-2011, 10:03 AM
Recession by British Government definition, is when there is negative financial growth for 2 or more consecutive quarters of the financial year. When that negative cycle becomes a positive, the recession is over.

That may be the definition, but who's in charge of the numbers?

Any cursory examination of the data and methodology changes over time will expose fraud for political gain. I'm not intimately familiar with the situation in Britain, but I know the statistical fraud that my own Government (US) is guilty of. Unemployment, for instance, is not quite double the reported rate if you go by early 1980's methodology instead of current. Our inflation numbers exclude fuel and food rises by various slights of hand. Our industrial production numbers give US companies credit for a total product, even if they only assemble pieces imported from abroad.

So be skeptical.


I can't argue with your figures of profits cos I don't claim to know them - its just that if their business plan was working well in 2009 (the figures were if I recall £8m profit worldwide) then their plan must have been good whilst other British high street companies were going down the pan.

As I understand it from reading previous reports, GW's North American division is break even at best, even though revenues here are high. Most of the actual profits come from Britain and the European mainland. Revenue-wise, GW's best years were when the LOTR movies were in theaters. But they squandered most of that money and borrowed more to pay large dividends, much of which ended up in executive pockets.

They've been turning things around lately, but their financial position is still weak. Made worse by some very questionable decisions, such as purchasing the rights to the upcoming Hobbit film. So they don't have the pricing flexibility that they should, because there's all sorts of other costs to consider besides mould production and materials costs. They're also majority-owned by 3 hedge funds, which demand performance.

weeble1000
01-07-2011, 10:48 AM
The reason I believe Games-Workshop isn't doing well has to do with the company's small profit margin and diminishing market share. The company's own Chairperson and CEO admit that the company has not been doing well financially. The fact that the company's revenue remained stable while sales dropped indicates that a price hike was keeping the company on an even keel. That's not sustainable because the company cannot continue to increase prices as sales continue to drop. Additionally, firing employees is a quick way to cut costs in the short term, but generally has negative consequences in the long term.

Overall, I believe that Games-Workshop has not been cultivating the customers that should be driving the majority of its sales. One of the significant indications of this has been the way that Games-Workshop has handled the defense of its intellectual property over the past several years. Instead of working with passionate and talented hobbyists to develop amiable agreements that serve to tangibly strengthen its intellectual property, such as negotiating license agreements, Games-Workshop has instead manipulated the legal system to intimidate small, hobby-focused business, such as Chapterhouse Studios, and foster an environment of fear and doubt that infects even individual hobbyists that aren't selling or distributing their work. Not only is this practice an amoral abuse of the American legal system that very well might expose Games-Workshop to affirmative litigation, but it makes very poor business sense.

The Chapterhouse Studios case is a convenient example for a few reasons. First, out of the complaints that Games-Workshop has filed in the past three years, the Chapterhouse complaint is particularly egregious. Second, Chapterhouse Studios very well might attempt to defend itself, which is an effective contrast to the results that Games-Workshop expects to achieve with this type of litigation and has in fact managed to achieve in the past. This allows one to clearly identify the negative, unjust, and amoral implications of Games-Workshop's legal strategy by comparing the Chaterhouse case to those that the company has filed in the past. Finally, Games-Workshop is attempting to cast a very broad net with the Chapterhouse complaint and is in fact using this litigation to attack many aspects of the wargaming industry. For example, the complaint alleges that the term "bits" is a distinctly British term that Chapterhouse uses to underscore its connection to Games-Workshop (paragraph 38 of the complaint).

Right now is the perfect time to effect change in Games-Workshop's business and legal strategies. The company is not doing well financially, whatever some people might say about it. The company is beset by increasingly strong and viable competitors that are chewing away at its market share. The company has exposed itself to considerable risk by overextending its reach with the Chapterhouse Studios lawsuit. Games-Workshop's vulnerable position means that the company's management should be in a position to take customer feedback and criticism more seriously than it has been in the recent past.

This is significant because the company's management has made their position vis a vis the customers quite clear. They expect to be able to remain viable by continuing to charge overly inflated prices because the customers are loyal and "willing to pay." This position takes the goodwill of customers for granted even though Games-Workshop has done little to cultivate that goodwill. I think it is important to let Games-Workshop know that the goodwill of its customers is not something that should be taken for granted. An effective way to do that is with a boycott, even if it is a very small boycott, such as a single model in a line, or even a single purchase, as long as customers who make that choice communicate the reasons for it to Games-Workshop.

The Chapterhouse litigation is a separate but related issue. It is emblematic of the way that Games-Workshop has victimized its hobbyist customers, but it is also a deplorably anti-competitive legal tactic. Because I vehemently disapprove of this type of legal action, I intend to support whatever defense Chapterhouse Studios choses to make. I also encourage others to support Chapterhouse if they feel the same way.

Denzark
01-07-2011, 11:56 AM
That may be the definition, but who's in charge of the numbers?

Any cursory examination of the data and methodology changes over time will expose fraud for political gain. I'm not intimately familiar with the situation in Britain, but I know the statistical fraud that my own Government (US) is guilty of. Unemployment, for instance, is not quite double the reported rate if you go by early 1980's methodology instead of current. Our inflation numbers exclude fuel and food rises by various slights of hand. Our industrial production numbers give US companies credit for a total product, even if they only assemble pieces imported from abroad.

So be skeptical.



As I understand it from reading previous reports, GW's North American division is break even at best, even though revenues here are high. Most of the actual profits come from Britain and the European mainland. Revenue-wise, GW's best years were when the LOTR movies were in theaters. But they squandered most of that money and borrowed more to pay large dividends, much of which ended up in executive pockets.

They've been turning things around lately, but their financial position is still weak. Made worse by some very questionable decisions, such as purchasing the rights to the upcoming Hobbit film. So they don't have the pricing flexibility that they should, because there's all sorts of other costs to consider besides mould production and materials costs. They're also majority-owned by 3 hedge funds, which demand performance.

Look fella, GW is a Brit company. I use Brit definitions of recession, and a Brit perspective that says, when Woolworths goes bust, and GW doesn't, they aren't doing bad. I know something like 65% of the US population thinks 96% of what the gubment tells them, is lies. Unemployment and inflation have nothing to do with the simple fact that the country (UK) in the last couple of quarters, grew by 0.2 of a percent or something similar. Tiny growth, but enough (and not having a minus in front of it) for HMG to say we are out of recession.

If they were lying that blatantly and publicly believe me the papers would tear them. Can't be arsed to google the UK Financial times to confirm it but believe me, we are no longer in recession - last year GW made £16m, £3m of which were royalties (Dawn of War etc) - when we WERE in recession. This is good.

Faultie
01-07-2011, 01:52 PM
Getting dragged back in.I thought you were going to get dragged back in. :p

Denzark
01-07-2011, 02:24 PM
I thought you were going to get dragged back in. :p

Faultie - saying I said things I never said... What are you, my wife???:D

PS its the weeble who won't drag me in - you know they wobble but don't fall down, right?

Duke
01-07-2011, 02:24 PM
Just did a post on gw corporate on my personal blog...

weeble1000
01-07-2011, 03:04 PM
Thanks for the link Duke. I like the article, and not just because it is somewhat critical of Wells and Kirby. I'm not a financial analyst, so reading those reports was like beating my head against a wall. And it was all in pounds. It's nice to have some analysis from a person more conversant in the topic area. I look forward to your next post about it, if you decide to do one.

Duke
01-07-2011, 03:18 PM
I think I will, it is just hard for me not to put people to sleep with all the numbers analysis and stuff. But if the people want it the duke will provide it,

Duke

Mauglum.
01-07-2011, 06:24 PM
Hi Duke.
Would you indulge me in looking at the figures for anual revenue vs price increases...

As I, (and a few others across the forums,) have been arguing simply upping retail prices in the face of falling sales volumes is JUST a short term fix.And that eventualy it reaches a point where the customers paying more can NOT make up for the customers leaving.

(I belive we may have reached this point now perhaps?)

Over the last 10 years ,apart from the LoTR ' blip' , and 2008-2009 licence revenue and currency fluctuations.
I belive GW revenue has stayed practicaly static in the face of over inflation price rises.
Therfore GW has effectivley lost HALF the customers it had in 2000.

TTFN

eldargal
01-07-2011, 06:54 PM
Someone already did that, factoring in inflation and increases in the cost of raw materials they found that the price increases were not high enough to be hiding a decline in sales volume. Couple this with the lack of any actual sales data from GW the assumption that sales volume is falling is erroneous (it is worth bearing in mind that sales in Europe have collapsed since the economic troubles hit a few years ago, which is wear I think the confusion is coming from. Sales are up inthe UK according to some store owners I've spoken with. Yes, anecdotal evidence.)

Duke
01-07-2011, 07:41 PM
Hi Duke.
Would you indulge me in looking at the figures for anual revenue vs price increases...

As I, (and a few others across the forums,) have been arguing simply upping retail prices in the face of falling sales volumes is JUST a short term fix.And that eventualy it reaches a point where the customers paying more can NOT make up for the customers leaving.

(I belive we may have reached this point now perhaps?)

Over the last 10 years ,apart from the LoTR ' blip' , and 2008-2009 licence revenue and currency fluctuations.
I belive GW revenue has stayed practicaly static in the face of over inflation price rises.
Therfore GW has effectivley lost HALF the customers it had in 2000.

TTFN

lets see here...

At the time of May, which is when GW reports earnings) the CPI (Consumer price index) was up 2%. At the same time GW had a total top line revenue change from 125,706 (2009) to 126,511(2010). which is That is including the price rises. Which is a raise of .64% Now admittedly, this number includes all operations including Black Library, Forgeworld and royalties from video games so take that into consideration.

So, 2%-.64%= (1.36) which means year over year they lost money to inflation. Obviously not a good business model to be in long term. But take into consideration that we are in the recovery of a recession so things will change for them when the economy get better (even though the CEO seems to think they aren't affected by the economy)

in other news, if you are a manufacturing company why do you promote the VP of sales to CEO? wouldn't you want the COO (Chief operations officer)? But then again, what do I know, lol

Duke

Mauglum.
01-08-2011, 06:14 AM
Hi folks.
I was refering to long term , eg revenue from 2000 compard to revenue 2010.
And then factor in inflation.

And then work out if the increse in retail price has resulted in a similar increse in revenue ABOVE inflation.

Maybe I was looking at it wrong...(I am not an expert!:))

Many people point out have been -are in a resession , and LOTS of retail chains are CURRENTLTY struggling.

However ,I belive GW plc have been using a flawed buisness plan for over a decade.This is a big enough period of time to smooth out the boom of LoTR and bust of the recession, maybe?

I was wondering if some one more knowledgable (Duke) would investigate for me?

And give us the 'laymans' guide to a decade of MR Kirby's effect on GW PLC.

TTFN

Mauglum.
01-08-2011, 06:41 PM
Hi all.
Back in 2000-2001 GW revenue was £92.600,000.
And its price for thier most popular product Space Marines.
10 man tactical boxed set.£10.

10 years later GW revenue is £126,511,000.
And its 10 man tactical boxed set is £23.

IF GWs revenue had incresed at the same rate as its price rises, it would have achived a revenue of £212,980,000.

As GW revenues has only achived 59% of the price increase, doesnt this mean that GW has lost 41% of its sales volume over the last 10 years?

Or are my sums wrong.(I am not an expert.):o

looking further back at revenue growth when GW was developing a wider range of games.....
Revenue growth...
1995 32.1 million to 1998 £ 64,8 million.(Over double in 3 years with only a 20% increase in prices.)

TTFN

eldargal
01-09-2011, 03:44 AM
No, because manufacturing costs and the cost of raw materials have both been rising outside of ordinary inflationary pressures. Even having books printed in China has doubled in price over the past few years.

Mauglum.
01-09-2011, 06:12 AM
Hi eldargal.
I agree I have not included the increased price of manufacture and retail.
Obviuosly the increae in these costs would reduce the lost sales volume ratio.

So out of the £86,469,000 difference ,(if all GW costs were in proportion to inflation,)how much is down to the increased cost of manufacture and retail, and how much is the actual lost sales volume?

Perhaps if we look at the operating profit?(Difference between revenue and operating costs and taxation etc, .)
Would this help?

I an not an expert, but I feel GWs constant price rises over inflation is having a negative effect on sales volume.

Perhaps Duke could help out?

TTFN

phoenix01
01-09-2011, 03:43 PM
Considering Forgeworld just increased their prices, it is safe to say it's business as usual at GW.

Denzark
01-14-2011, 01:50 PM
Considering Forgeworld just increased their prices, it is safe to say it's business as usual at GW.

In fairness, this is due to UK Government raising VAT sales tax from 17.5% to 20%.

Duke
01-14-2011, 02:16 PM
Ok, I just put a new post on my blog that covers a lot of the financials...

Duke

Mauglum.
01-14-2011, 02:41 PM
Hi Duke.
Very interesting stuff...
So without the currency fluctiations going in GWs favor, they would have lost revenue , compared to last year?

The 2% pa growth you quote 2006 to 2010.Is below inflation rate, and well below GW rrp price increases.

If the revenue is increasing at a slower rate than the RRP prices does this mean a drop in sales volume?

TTFN

Duke
01-15-2011, 06:10 PM
It would mean a big increase in sales volume. After taking in constant currenct and inflation affecting revenues you only have pure revenue, and if that is negative then sales are down, since things like royalties are accounted for in another line item not included in revenue.

Duke

Mauglum.
01-16-2011, 06:35 AM
Hi Duke.
Sory for being a bit of a dunce.:o

But if the retail price is going up faster than the revenue, doesnt that mean less stuff is being sold?
And therfore sales volumes are down?

From 2006 to 2010 GW RRP have increased by 25% appx.

Therfore if the same amount of product was sold wouldnt revenue be 25% higher , rather than just 9%?
(And without currency fluctuations only 6% !.)

And as next years revenue is predicted to be about £115 million. I belive the price elasticity of GW customers has been passed. And any increse in prices will result in a greater loss of sales volume.

Do you agree with this basic analasis, , and could you please explain what have I mis understood.

Thanks
Mauglum.

eldargal
01-17-2011, 08:25 AM
That matches up exactly with what I've heard from some people within GW.


It would mean a big increase in sales volume. After taking in constant currenct and inflation affecting revenues you only have pure revenue, and if that is negative then sales are down, since things like royalties are accounted for in another line item not included in revenue.

Duke

Duke
01-17-2011, 11:47 PM
Actually, your not being a dunce... Your spot on! The problem with GW is that they are running like people have to buy their product, but we all know we don't. Major problems happen when you think your product is inelastic and it is infact elastic...

In my next post on my blog I'll be goin over what I would do if I were CEO, and not from a gamers perspective, but from a business side of things. I hope it is as good as I think it will be, lol

Duke


Hi Duke.
Sory for being a bit of a dunce.:o

But if the retail price is going up faster than the revenue, doesnt that mean less stuff is being sold?
And therfore sales volumes are down?

From 2006 to 2010 GW RRP have increased by 25% appx.

Therfore if the same amount of product was sold wouldnt revenue be 25% higher , rather than just 9%?
(And without currency fluctuations only 6% !.)

And as next years revenue is predicted to be about £115 million. I belive the price elasticity of GW customers has been passed. And any increse in prices will result in a greater loss of sales volume.

Do you agree with this basic analasis, , and could you please explain what have I mis understood.

Thanks
Mauglum.

Mauglum.
01-21-2011, 10:21 AM
Hi Duke,
Thanks for clearing that up, I thought I was missing somthing...;)

I look forward to you next healthy dose of informed common sense , spread over the chrome of GW corperate spin...:D

TTFN

Porty1119
01-24-2011, 04:53 PM
Things that work for business in theory (staggered releases, periodic price hikes, etc. to keep sales/profits up) do not really take into account the rapidly-shrinking budgets of many consumers, nor their frustration when 'business sense' delays something for which they have been waiting years. GW focuses a tad too much on profit for a company that, to keep consumer attitude in its favor, should be a bit friendlier. It's an overall conflict of interest that may be taking the company downhill. I'd be sad to see the company's great products go away, but their business practices would not be missed by the community as a whole.

Mauglum.
01-25-2011, 07:26 AM
Hi all.
I do Hope Kirby and Wells blame the 'incresed competition in the wargames market' for the down turn in revenue, in thier next financial statment.

As this proves spending over half thier pre tax profits on a chain of B&M store to insulate them from the rest of the wargame market doesnt work!
And that most of the 'competition' is from EX GW staff who were not listened to by the corperate managment, so put thier good ideas in to practice for themselves...:D

The other companies in the wargames market HAVE to provide good quality game play and value for money.
Why GW thinks it doesnt need to do either of these things is beyond me...

TTFN

Col.Gravis
01-27-2011, 06:20 AM
Hi all.
As this proves spending over half thier pre tax profits on a chain of B&M store to insulate them from the rest of the wargame market doesnt work!


Hmmm circumstancial at best perhaps, but I don't know anyone personally (i.e. actual acquaintences rather then people online) who did'nt get into the hobby (regardless of whether they still play GW games, other games or at all) except through the B&M GW stores. The UK does'nt have a large indy B&M store presense.

In the UK at least I think it's arguable not only does it insulate them from competitors, but it actively creates a good portion of the market, i.e. the presense of the stores is the reason many UK gamers are there at all.

lattd
01-27-2011, 07:53 AM
Britain's out of recession? By who's measure? .

By the measure of every economist in the world. A recession in two terms of negative growth up until last quarter UK had grown and the poor weather had a major effect on sales in the UK. Even HMV one of the ftse 100 firms struggled.

But lets look at the figures £6.7 million pre tax profit is rather a tidy amount.

weeble1000
01-27-2011, 08:17 AM
Hmmm circumstancial at best perhaps, but I don't know anyone personally (i.e. actual acquaintences rather then people online) who did'nt get into the hobby (regardless of whether they still play GW games, other games or at all) except through the B&M GW stores.

This doesn't really mean much as it's just anecdotal, but now that you mentioned how people get into the wargame, I thought it was a little bit amusing considering my opinions about Games-Workshop.

I actually got into the wargame by playing the Vassal 40K mod. I was very much into 40K for a long time before then with the novels, rpgs, etc. but I didn't think that I would enjoy the wargame until I gave it a no commitment try on Vassal.

DrLove42
01-27-2011, 08:35 AM
Even HMV one of the ftse 100 firms struggled.



Think struggled is an understatment...they were like 40% down this time last year! They're being forced to close about 600 stores nationwide!

The only company thats done overly well is apple, who made $6 billion profit in the 3 months before christmas...

Aldramelech
01-27-2011, 10:08 AM
Hmmm circumstancial at best perhaps, but I don't know anyone personally (i.e. actual acquaintences rather then people online) who did'nt get into the hobby (regardless of whether they still play GW games, other games or at all) except through the B&M GW stores. The UK does'nt have a large indy B&M store presense.

In the UK at least I think it's arguable not only does it insulate them from competitors, but it actively creates a good portion of the market, i.e. the presense of the stores is the reason many UK gamers are there at all.

Well you've met me:p

I started wargaming playing 15mm Medieval:D

Col.Gravis
01-27-2011, 01:15 PM
This doesn't really mean much as it's just anecdotal, but now that you mentioned how people get into the wargame, I thought it was a little bit amusing considering my opinions about Games-Workshop.

I actually got into the wargame by playing the Vassal 40K mod. I was very much into 40K for a long time before then with the novels, rpgs, etc. but I didn't think that I would enjoy the wargame until I gave it a no commitment try on Vassal.

I do recognise it's anecdotal, but I think some people do fail to recognise that a without GW's store presense GW would'nt be such a big fish in the hobby industry. Remove the B&M stores in the UK and what exposure is there left?

It's not something you can view from our perspective, you need to be average joe blogs who has no idea about the hobby, and is probably a teen.


Well you've met me:p

I started wargaming playing 15mm Medieval:D

Yep Aldramelech, you are the exception to every rule! ;)

weeble1000
01-27-2011, 04:03 PM
I don't live in England, but I have trouble imagining that in this day and age GW needs to maintain brick and mortar stores to draw new customers into the hobby. I've lived in several major metropolitan areas in the US and I've never seen a GW hobby center, much less gone into one. It also doesn't seem like that's the way kids are going to start playing Warhammer.

Wouldn't the internet and easy entry, youth-oriented products like Monsterpocolypse be a better way to draw younger customers into the hobby? I also expect that getting products on the shelves of more commonly patronized stores like Barnes and Noble would be an effective way to increase brand recognition. WotC has D&D all over places like Barnes and Noble and they produce collectible click games, simple board games, card games, and low cost box sets to target a younger crowd. It also seems like the 4th ed artistic style is geared towards being accessible to a younger demographic.

Brick and mortar hobby centers may have been a great idea in 1990, but there's got to be a host of less expensive and more accessible options in today's market. It also seems to me that embracing competition is healthy. GW hobby centers exclude the wider wargaming hobby and those closely associated with it in a way that local gaming stores don't. I'd think that you'd want to have the kids playing Magic sitting at a table next to folks playing 40K or Flames of War. Having a retail location that is exclusive to your products sounds like a fine idea because people there won't be looking at a competitor's products, but you also don't have your competitor's customers being exposed to your products. I guess it's logical to be worried about Privater Press drawing away your customers, but wouldn't you want Privateer Press's customers to branch out into your products?

Col.Gravis
01-28-2011, 06:11 AM
The internet is an option for exposure, but is seeing some pictures of product - assuming you either actively search them out (unlikely unless it's something your already aware of) or are presented with them in a suitable way - going to compare to seeing some nicely painted models, and then being offered a demo game in store when your under 18? The net is definately cheaper, but I'd question whether it would attract as many as B&M's do without something else.

A store you might walk past, on any given day. In the UK by far a high proportion of significant population centers have GW stores, the largest more then one. I actually work in a school for students in the 11-18 age bracket, I have and do run lunchtime clubs for the students and they're entry point has always been through the GW store directly in the nearest city (about 8 miles away), most of them have no idea there is even an online community such as those on the big forums, few of them even buy online, though the majority are aware of the GW website (though not of competitors).

Would a product aimed more specifically at a younger age group help, quite possibly. To see the return of boxed games in the style of Necromunda or Mordheim, using rules based on the current editions of the core games so they could seamlessly progress to the full core games would be a great move in that respect IMHO. As would actual support and expansion of Space Hulk. That said I guess thats what the core game starters are intended for.

Such complete 'games in a box' would also lend better to other high street chains, where as simply stocking just a few boxes of GW product just does'nt work so well it would seem. Some high street and larger stores such as Hobbycraft do stock small amounts of GW, but usually it seems to be limited to a few core products, often boxes of Space Marines and a few Fantasy regiments, the stores don't give them shelf space. Incidently I'd note I've never seen any direct GW competitor (i.e. Privateer Press, Westwind etc) stocked in any shop that was'nt a dedicated hobby store in this country.

Regarding excluding the wider hobby in B&M stores, for our purposes it would be much better if GW stores stocked more. However if in the UK highstreet they have no visible competition (which they really don't) amongst the target customers in the high street, why risk introducing your customer to another product when as far as they are concerned what you sell is basically the ONLY product?

DrLove42
01-28-2011, 07:18 AM
Agree with everything Gravis has said there but i'll by comment to it

The internet alone, or boxes for sale on the shelves of a shop get people into the game.

The shops get people into the Hobby. From teaching people to play (a daunting task to an outsider, would be even worse if there weren't people paid to teach them), to teaching them to paint, introducing people to each other to play against, school holidays events....all that stuff the GW stores do above a standard shop.

That is why they're needed.

P.S As a Brit i've never even seen a Warmachine game player, model or game in my life. Didn't know existed until I came on here. But i do play games outside the standard 40K, with aeronautica and Space Hulk

Denzark
01-28-2011, 11:04 AM
So, here we are. After coming on this thread, and stating I didn't think a profit warning meant loss, just less profit, it turns out profits ARE down, to £6.7m (pretax) - but still a profit, and not bad going after the year we have had in the UK.

The given reason to paraphrase GW seems to be change in manning of US stores - it states that Europe did these changes last year and implies a growth in the first half as a result - the second order effect implied is that that manning model is successful and there is no reason why US stores should perform similarly.

I can now happily predict that price DROPS are unlikely as the current marketing strategy seems to be working reasonably well compared to the UK financial climate.

To all the doom-mongers out there, please disappear with your militias back to your underground bunkers in Ohio, normal service is resuming.

weeble1000
01-28-2011, 12:43 PM
What works in Britain isn't necessarily what is going to work in the US. My experience and Col. Gravis's experience seem to be polar opposites. I'm not used to seeing GW stores anywhere. A quick look at GW's website tells me why. Games-Workshop has 66 hobby centers in the US. Those 66 hobby centers are in 13 states and pretty much relegated to something like 12 major metropolitan areas.

California: 15 locations in San Francisco and LA
Delaware: 1 location
Illinois: 12 locations in the Chicago area
Maryland: 9 locations in the Baltimore area
Michigan: 2 locations outside Detroit
New Jersey: 1 location outside Philadelphia
New York: 1 location in New York City
Pennsylvania: 1 location
Tennessee: 1 location near Memphis
Texas: 9 locations in Dallas and Houston
Virginia: 3 locations near DC
Washington: 9 locations along I-5
Wisconsin: 2 locations, one near Milwaukee

It’s no wonder I haven't seen a GW hobby center. I've never lived in Chicago, Baltimore, San Francisco, Los Angeles, Dallas, or Houston.

Now if you look at the largest colleges in the US, you get a picture that doesn't exactly line up with the locations of GW hobby centers. New York State, University of Phoenix, Arizona State, Penn State, Florida State, Ohio State, University of Minnesota, and California State are all on the list of the largest colleges in the US. There's no hobby centers in Ohio, Arizona, Florida, or Minnesota. There's only one hobby center in New York City and only one in Pennsylvania. Where I live in Louisiana, I would have to drive at least 8 hours in any direction before I'd reach a GW hobby center.

This is why GW says that it has room to expand in the US. It doesn't have much market presence at all with its hobby centers. And GW is pulling what hobby centers it does have out of high traffic areas like shopping malls and into cheaper, out of the way locations. Unless you lived in one of the six cities I mentioned above, you would have to know where to find a GW hobby center in order to get to one.

If you’re already looking for one, the purpose of the hobby center is basically moot. Everything done at a GW hobby center in order to encourage participation in the hobby can and is done in most local gaming stores in the US. So what purpose are the GW hobby centers in the US serving? What makes a Games-Workshop hobby center in the US different from a local gaming store other than exclusively selling GW products, an inefficient single-employee management system, and a hard sell that focuses on 15 year olds and discourages dedicated veteran players?

I don’t think Games-Workshop is going to be able to turn the American market into a replica of the one its got in Britain, especially considering that its having trouble maintaining the hobby centers it does have in the US. I think the days of the GW hobby center are over, at least in America.

Denzark
01-28-2011, 04:26 PM
Weeble

It was better before the whole CHS issue brought you back in from the cold and turned you into a preacher who is 100% certain that GW is the devil and everything it does is wrong. I can't wait for the lawsuit to be disposed of in the hope that the amount of strychnine being drunk in here goes down.

Whilst your analysis may be very interesting, the point that what works this side of the pond may not over there, is slightly moot. The model referred to in the financial report regarding store manning, talks of Continental Europe - not Northern Europe which is I believe what GW brackets the UK market under.

Even if I am wrong, the model is more than just Britain.

At the end of the day the insight that what works in the UK doesn't necessarily work in the US, is probably a bit Shania Twain for the business suits responsible for the millions of profit making company GW - that won't impress them much.

Having declared to all and sundry that now is the time to hit GW when they are down by buying from competitors, it is pretty clear all you will do is take up position 180 degrees opposite from GW or anyone on here that types anything remotely positive about them.

So we might as well not post any more off topic stuff on this thread which, as I summed up, is a non-issue because the profit warning does not represent a company on its knees - I will revisit that opinion as soon as they start making actual losses as opposed to not making what they did the year before.

weeble1000
01-29-2011, 08:15 AM
Denzark,

Most posters in these threads have been very civil and respectful in spite of disagreements.

I understand your point, but the topic under discussion is GW's management decisions, specifically about the company's methods of attracting new customers. I've criticized those before. I've never thought that the hobby centers were a good idea.

Col. Gravis was talking about a type of experience with Games-Workshop that was relatively alien to me. I found that intriguing and decided to find out what might be the reason for the difference. The reason, it seems, is that the majority of GW hobby centers in the US are clustered around six major metropolitan areas. If, then, Games-Workshop's intention is to draw in new customers with a profusion of easily-located hobby centers in well-trafficed areas, that doesn't seem like a viable option in the states.

I think it would require opening many, many new hobby centers. One observation I made in the above post was that many of the large college towns around the US don't have any GW hobby centers. In my experience, a regular cycle of fresh 20-somethings is a great boon to a flourishing gaming culture and successful gaming stores. I've stated that opinion on these forums before.

From what I've heard, GW hobby centers have been moving out of high traffic areas like shopping malls. From Col. Gravis's description, that's something necessary to the function of GW hobby centers. I haven't observed any of this first hand, obviously, but I think it is reasonable to conclude that if Games-Workshop is having trouble staffing its extant US hobby centers and keeping them in locations necessary to their function as an initial point of contact for new customers, it is unlikely that increasing the number of hobby centers in the US is going to achieve the intended goal.

There's lots of things that I love about Games-Workshop. I think the sculpting is getting better and better with every new release. The customer service department is staffed with swiftly responding, courteous, and genial employees. I think that the company is starting to respond to customer demand by releasing FAQs more quickly and patching out of date codices. I like that the new codices coming out have been designed with flexibility in mind. I love the 40K universe. That's why I play the wargame.

The fact that I'm concerned about Games-Workshop's policies and management is an indication that I have an emotional investment in the company. I want GW to do well. But this doesn't mean that I have to approve of everything it does. These threads haven't been about talking about how much you love Games-Workshop or even about how much you love Games-Workshop's products. The board is called Wargames Corporate Discussion.

You're trying to nullify my opinions by arguing that I am taking positions adverse to Games-Workshop on principle. Essentially the same argument could be made about you. But in either case it's a gross generalization, not germane to the discussion, and disrespectful.