GW Annual Financial Report dropping this week

[Caitsidhe]

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

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

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

[40kGamer]

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

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

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

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

[Fanboy]

Hello,


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

[Mr Mystery]

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

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

[40kGamer]

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

[Caitsidhe]

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

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

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

[Mr Mystery]

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

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

[40kGamer]

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

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

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

[Wolfshade]

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

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

[Caitsidhe]

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

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

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

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

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