GW EOY 2014 Investor Statements

[Caitsidhe]

Outsiders - you mean like independantly verified books, which is a requirement of UK law yes? Oh of course, how silly of me. Let's not bring irritating facts to pop bizarre little theories.

You and I both know that presentation is everything. There are the books and there are the books. Simple accounting tricks (and all very legal) are utilized to spin things. A good example is an odd announcement like we got last year to try and soften the blow of reduced profits. That was an example of poorly done spin. This year we have an example of well-done spin. Attempting to link yet another drop in profits to currency exchange.

You want to know more about how GW is run - buy some shares. They're publically traded.

First, you assume I don't have some shares. Second, you are being cagey again because both you and I know that owning some shares doesn't automatically make you privy to everything.

And is it more insular? Or is it a case of right person for the right job? Have you seen the new people's CVs and covering letters? Or those of the others who went for the roles? Because if you have, please do enlighten us.

It isn't a case of the right person for the job. This is a company whose profits are falling. Most businesses in a situation like this bring in new blood. They do this for a very good reason, i.e. business culture tends to get stuck in feedback loops. It becomes bubble culture. It is the business version of inbreeding. It has the same long term effects. This isn't a question of qualifications. It is a question of perception, both internal and external. Games Workshop is going against the grain of well-known practices used to deal with these kinds of problems.

[Mr Mystery]

So are you saying GW are cooking the books? If so - why, and based on what evidence?

Keep buying shares, buy out company. You get the shareholders report I assume? The same one that is also independently verified yes, to prevent shenanigans? Profit warnings - again a legal requirement here in the UK when you won't be hitting forecasts (forecasts which are also, I believe, indepdently reviewed to make sure you're not over egging the pudding).

Are the people moving to new positions therefore unqualified? Or is there perhaps just a chance GW might know more about how they're run than you do, and thus you might be talking a load of mince dressed up as business acumen? Again.

[Caitsidhe]

Which isn't far from my point.

Yes and no. I see some validity in some of your points, but your argument is still weak.

Many accuse GW of muscling out the little man - when they have little reason or capacity to actually do so.

This is an example of a glittering generality. Define who these "many" are please? Are you talking about nameless, faceless voices quacking on the internet (like our own)? While I agree that Games Workshop has little ability to muscle out gaming stores in the United States, that isn't what they have been accused of doing at all. What most people have accused them of doing is attempting to use and abuse local gaming stores to funnels sales past the independents to themselves:

1. Reduce the things available to independent to a smaller selection, whereby a great deal will ultimately only be accessible through Games Workshop. This turns independents, more or less against their will, as samplers for Games Workshop without the ability to make long term profits on said product.

2. To carry any any Games Workshop product the independents are required to buy a minimum amount (and often of certain things) or not carry it at all. In other words, "if you won't be our sampler you won't get anything."

Ultimately, for a local gaming store to carry Games Workshop products, it must make long term profits by doing so. Games Workshop has a tricky problem. They would prefer, ultimately, to sell all their own products directly and cut the independents out. They can't afford to do that yet. They see it as a process of weaning people off the independents and bringing them into those "loss leaders" over time. The process has not gone well so far. In America, at least, it is simply irritating the independent stores who aren't actually all run by morons. Most of them know exactly what is going on. It also irritates American customers who LIKE their local gaming stores and support them out of loyalty. American gamers are not brand loyal. They are business loyal. Again, if Games Workshop doesn't care about the American market... i.e. considers them an acceptable loss... their current course of actions make perfect sense.

[40kGamer]

When you compare GW's books vs other gaming companies, are you talking about book quality or rule quality? If it is book quality, which company are you comparing them against?

Off the top of my head I find the book quality for Infinity, Eden and Dark Age to be comparable in print quality. GW used to win the artwork by a landslide but the new codex format is pimping models through crappy photos rather than concept art so I'm no longer impressed... and for rules quality you can truly take your pick.

[Caitsidhe]

So are you saying GW are cooking the books? If so - why, and based on what evidence?

I said they are spinning the information and I suggested they are doing it through entirely legal means. Legal and ethical aren't the same thing, and for that matter it isn't wise either. They will only be able to fire so many people, cut so many corners, and spin things for so long. It is like kiting a check. Eventually that back building wave of trouble becomes a tsunami. As to my "evidence" I have never claimed to have looked at the books. I have never claimed to do anything but give my opinion based on the evidence we see, i.e. reading between the lines. There is nothing particularly difficult here to detect either. You know that as well as I do. Countless businesses have been down this road. We have seen it time and time again. The telltale signs are well known. I suppose it is "possible" that Games Workshop is somehow not going through the same things we have seen other companies displaying these symptoms before. I just consider that unlikely. I play the odds. When you see certain indicators, it is wise to bet with them rather than against them.

Keep buying shares, buy out company. You get the shareholders report I assume? The same one that is also independently verified yes, to prevent shenanigans? Profit warnings - again a legal requirement here in the UK when you won't be hitting forecasts (forecasts which are also, I believe, indepdently reviewed to make sure you're not over egging the pudding).

The shareholder's report is no more useful than a damn brochure from a travel agent. It isn't about what they tell you, it is about how they present it. Working within the letter of the law and remaining outside the spirit of it is common practice.

Are the people moving to new positions therefore unqualified? Or is there perhaps just a chance GW might know more about how they're run than you do, and thus you might be talking a load of mince dressed up as business acumen? Again.

Given than the recently stepped back (I won't say stepped down) CEO says he doesn't even look at resumes and consider attitude far more important than anything on paper... I consider it a pretty LOW chance that Games Workshop knows what they are doing here. Well, they know what they are doing in that they don't want outside voices or opinions. That is the entire point I was making. They have decided to "double down" on the insular.

[40kGamer]

It all comes down to use. When CDs first came out (and DVDs later) sales of them did not take off until they dropped the price of the players through the floor. Then the format exploded. If you want to sell models, you need cheap, effective rules. That's the golden ticket. They need to make a tight rules set (not spam books) and effectively make it a loss leader. They need to get back into Tournament support and sponsorship, and thereby put themselves in the driver's seat to say that only their own product gets used.

While I agree with this sentiment, GW has decided they want to be the Tamiya of Fantasy/SciFi models. Why? Other than Kirby having delusions of grandeur I have no frakking idea!

[40kGamer]

This analogy only works for new players though. If the price point for the rules is too high, that dissuades the person from the initial investment. I usually try to encourage other hobbies/companies to people that can't afford the initial investment. Everything (not just gaming) is so expensive now. I hate to see people saddle themselves with debt for a hobby.

For the older players, the rules might be the only purchase they make in a year. For them, it's a different situation. It becomes an internal debate about how important the hobby is to them vs how much they have invested. For the person that has invested 2K+ in this hobby, a expensive rule book is just the cost of doing business. GW has been counting on this fact for a long time.

It's hard to pick the winning lottery numbers for what pushes models. IMO GW is passing on new players because they don't have 'any' cheap entry game into their universe. People can hop into X-wing and Infinity for pennies... then after you get hooked on the game play you can easily (and I mean easily) spend some real dollars... but you can spend dollars as you go along rather than up front. I tell new people that if they aren't willing to drop ~$1,000 US and around 1000 hours for assembly and painting then GW is NOT for them. Not to mention that after you have invested the time and money you are still going to be playing with rules that are only adequate. As an added bonus you are also now a customer of a company whose management could not care less about you.

[40kGamer]

Outsiders - you mean like independantly verified books, which is a requirement of UK law yes?

Oh of course, how silly of me. Let's not bring irritating facts to pop bizarre little theories.

You want to know more about how GW is run - buy some shares. They're publically traded.

And is it more insular? Or is it a case of right person for the right job? Have you seen the new people's CVs and covering letters? Or those of the others who went for the roles? Because if you have, please do enlighten us.

I have been an independent auditor of company books in the US and now work independently for companies as their liaison with these external auditors. Unless the UK is different, and if you look at IFRS and other common accounting practices it likely isn't, then having these external rubber stampers is not as big a deal as you may think. Some of us are paid a tremendous amount of money to make sure the outside world only knows the minimum required by law.

A lot of companies promote from inside as it eliminates the learning curve. The downside of this is it yields little to no innovation. It's great if your business is on the upswing and life is full of nothing but cute and fuzzy bunnies but not so much if you need to take a hard look at what you are doing.

[Psychosplodge]

My understanding is an account that signs off on fraudulent/in correct books can serve time if and when the inland revenue catchers up with the company. (I know the accountants refused to sign off our books this year until they were adjusted)

[40kGamer]

Which isn't far from my point.

Many accuse GW of muscling out the little man - when they have little reason or capacity to actually do so.

Well run FLGS, like any well run business, and barring any disasters (flooding and insurance welching on you, that kind of thing) won't be damaged over much by competition. Particularly FLGS, because they can offer stuff a GW store can't.

GW stores however, for the wider company, can be used a sort of loss leader. In the right places, they help people see about the hobby. I don't know much about the US, mostly because I don't live there, so can't comment much further with any accuracy.

If GW moves to town, and your FLGS goes under, don't go blaming GW for it. If you don't have customer loyalty in any business, you don't have much business.

Having looked at the contracts GW requires of the US FLGS, their market behavior and the way they limit stock to them I have to disagree.

First off let me say that in my market there was absolutely no reason for GW to open a store. There are two FLGS that have been up and running for 20+ years (and they move a lot of stock) as well as a few other smaller, newer hobby centers. According to the GW rep, they told the manager of one of these stores that they moved the most GW product in this state. So a skeptical person has to ask, why would GW bother opening a closet store here when this market is already very well served? Also is it a coincidence that GW suddenly started limiting a lot of stock to the FLGS after their own shop opened?

There is enough anecdotal evidence to suggest that GW does not willingly support FLGS and the game store managers all know this. That is why they offer GW product but they absolutely do not push it. Why would you pimp goods for a company that will happily slice your throat if the opportunity arises?

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My understanding is an account that signs off on fraudulent/in correct books can serve time if and when the inland revenue catchers up with the company. (I know the accountants refused to sign off our books this year until they were adjusted)

They absolutely would go to jail if they sign off on something that breaks the law, but the law is not as restrictive as the average citizen may think. That's why accounting is 50% science and 50% art. There are enough completely legal ways to 'work' the numbers. if there wasn't companies could hire any old accounting graduate to run their books, but the big dollars goes to those who can make the books sing and dance while staying completely within the boundaries of the law. It's actually a lot of fun... it sure beats tax accounting which just makes you want to shoot yourself!