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View Full Version : It's that time again: GW 2012 Financials



Trasvi
31-07-2012, 06:27
GW has announced their results for the 2011-2012 financial year.
The document can be found here (http://investor.games-workshop.com/wp-content/uploads/2012/07/Preliminary-announcement-2012-final.pdf).

Highlights:


Games Workshop Group PLC (“Games Workshop” or the “Group”) announces its preliminary
results for the 53 weeks ended 3 June 2012.
Highlights
Revenue
- Revenue at £131.0m (2011: £123.1m)
- Revenue at constant currency* at £130.8m (2011: £123.1m)
Profit
- Operating profit pre-royalties receivable at £15.6m (2011: £12.8m)
- Operating profit at £19.1m (2011: £15.2m)
- Pre-tax profit at £19.5m (2011: £15.3m)

 Earnings per share of 46.8p (2011: 36.0p)
 Cash generated from operations of £28.0m (2011: £25.8m)
 Dividends per share declared in the year of 63p (2011: 45p)

Mark Wells, CEO of Games Workshop, said:
“Games Workshop has had a good year. We have launched some great new products
including the new Citadel paint range. We have made good progress on all our major
initiatives. This has resulted in an encouraging level of volume growth. We have a strong
management team and excellent staff who are committed to delivering a healthy return on
capital. We have honoured our commitment to distribute genuinely surplus cash to our
shareholders.



Quick reading notes:
This is the first time in a while that GW has said 'this was a good year'. And they're right, it was a good year. Revenue increased in all sectors. Profit increased in UK, EU, US and Asia, though Asia is still a loss maker.
However, Australia became even less profitable, despite an increase in revenue.

We have some interesting new numbers from reading through the preamble:
* GW web store has grown to represent 10% of sales over the last 4 years. We should expect a change to their web store.
* Wells attributes some of the increase in sales to the rumour clampdown.
* Similarly, the rumour clampdown has led to increased White Dwarf sales.
* Finecast has seen quality and efficiency improvements
* The new paint range was a raging success, boosting sales and also delivering a significant saving per unit.
* Black Library and Forgeworld continue to perform excellently.
* 'Unusual'(ly high) income from THQ royalties on Space Marine.

Narf
31-07-2012, 07:09
doh!, wish i still had the shares i bought at £2, i sold them at about £4 a while back, divi would have been nice!

shelfunit.
31-07-2012, 07:14
One odd thing is they are on a 53 week year. 1 week a year works out to almost 2% (average) of total revenue income. That in itself is equivalent to about £2.5m of addtional revenue - from a posted increase of £6.9m, take away £2.5m of that and overall it seems less good. (+£4.4m). Take out the £1.1m additional royalty income and you have £3.3m, and take out theone off £2.75m in a single month panic buying of the new paints and you have £575k of actual sales growth.

EDIT: What I am finding incredible is despite the increase in sales revenue (itself incredible) in Aus, the losses have increased to nearly £750k. For every additional £ they sold in Aus, they lost 33p on it - that cannot be sustainable.

EDIT 2 : These are just the preliminaries - the actual full year report is here (http://investor.games-workshop.com/2012/07/31/annual-report-2011-2012/)

Trasvi
31-07-2012, 08:03
One odd thing is they are on a 53 week year. 1 week a year works out to almost 2% (average) of total revenue income. That in itself is equivalent to about £2.5m of addtional revenue - from a posted increase of £6.9m, take away £2.5m of that and overall it seems less good. (+£4.4m). Take out the £1.1m additional royalty income and you have £3.3m, and take out theone off £2.75m in a single month panic buying of the new paints and you have £575k of actual sales growth.

EDIT: What I am finding incredible is despite the increase in sales revenue (itself incredible) in Aus, the losses have increased to nearly £750k. For every additional £ they sold in Aus, they lost 33p on it - that cannot be sustainable.

EDIT 2 : These are just the preliminaries - the actual full year report is here (http://investor.games-workshop.com/2012/07/31/annual-report-2011-2012/)

Agreed. The Australia stuff is just weird. They've opened a fourth GW store in my city (of ~1.8M people) despite their past results in Australia. It's just...
On the other hand, this is only their second year of making relatively minor losses in only a single region. Its possible they can find a way to turn it around.

Does anyone remember/have info of the major price increases across all product lines in the last 12 months?

Wintertooth
31-07-2012, 08:19
1 week a year works out to almost 2% (average) of total revenue income.

Highly unlikely. A week in the run-up to xmas is probably worth vastly more than an odd extra week based on where the end of May happens to fall, for example.

You're also subtracting the same money twice (revenue includes royalties). And discounting an entire major product launch is obviously moronic under any circumstances.

shelfunit.
31-07-2012, 08:34
Highly unlikely. A week in the run-up to xmas is probably worth vastly more than an odd extra week based on where the end of May happens to fall, for example.

That's why I said on average. To be honest, the end of may is far more likely to have a high sales volume as this is the week everyone buys more before the annual price hikes hit.


You're also subtracting the same money twice (revenue includes royalties). And discounting an entire major product launch is obviously moronic under any circumstances.

If we are going to go into minute details then... £1.1m extra royalties, £2.75m paint = £3.85m. £130m - £3.85m = £126.15m. £126.15m/53 = £2.38m. £2.38m + £1.1 + £2.75m = £6.23m. £6.9m (reported growth) - £6.23m = £0.67m, or £670k actual growth - huge difference there :rolleyes:
Discounting a major release (like this) is perfectly acceptable as is will not be repeated next year, and almost certainly not on a 4 year basis like the core game re-releases. This is not new people buying their first paint - this is existing customers buying new paint (some of which will have gotten rid of their entire previous paint collection as they will believe it is now useless :rolleyes:).

EDIT: On a side note about the paint - I noticed they claim to have made a 15% saving per unit on cost. I hope they try and pass this onto the customer by not increasing prices on them soon...

zoggin-eck
31-07-2012, 08:58
While I don't really care about this sort of thing, and I can't stand the armchair business experts that suddenly appear, I really do think GW deserve to have had the new paint range succeed, and the same goes for Black Library and Forgeworld/WH Forge.

shelfunit.
31-07-2012, 09:23
While I don't really care about this sort of thing, and I can't stand the armchair business experts that suddenly appear, I really do think GW deserve to have had the new paint range succeed, and the same goes for Black Library and Forgeworld/WH Forge.

Nobody is saying they don't "deserve" it to succeed - just that having a single month boosting annual income on a single new release that is unlikely to happen again in the next decade by £2.75m should not be taken as a sign of sustainable "growth". Interesting to note though that Forgeworld/BL provided an additional £1.75m to the profit from last year and contributed a total of £12.1m (nearly 10% of total income) in overall sales.

Commandojimbob
31-07-2012, 09:34
Nobody is saying they don't "deserve" it to succeed - just that having a single month boosting annual income on a single new release that is unlikely to happen again in the next decade by £2.75m should not be taken as a sign of sustainable "growth". Interesting to note though that Forgeworld/BL provided an additional £1.75m to the profit from last year and contributed a total of £12.1m (nearly 10% of total income) in overall sales.

Strip out the one off exceptionally good new release and it is still a great year. As a chartered Man. Accountant / FP&A type of guy I could spend a few hours analysing the results but its GW, they will get my money almost what ever, but even more so with 2011 and so far 2012 showing that they are releasing more and more quality products, tightening their codices, improving their game systems and generally making the hobbyist in my very very happy.

It is nice to see the summary of the result is strong and I shall leave it at that - I just look at Revenue ^, Profit^, strong cash and no debt = GW will be around for a long while yet doom mongerers !

2ndCompanyVeterans
31-07-2012, 10:03
Yup GW releases are getting better and better volume sales are up which means people are voting with their wallets.

EmperorNorton
31-07-2012, 10:33
Taking out the revenue for the extra week and the additional royalties what is left amounts to an increase in revenue of 3.5% (I'm not taking out the one off increase in paint sales, because although they won't be able to repeat that particular thing any time soon, they have comparable one off increases every year).
Have the prices increased by more than 3.5% on average? I am fairly sure they have (just think of the 10+% increases on Finecast, 30% increases on LotR and the regular annual increase - a link (http://www.brueckenkopf-online.com/?p=36299) to the € price increases [in German, but you'll figure it out]).
From my perspective the trend seems to continue that on the surface everything looks good, but there are underlying problems that they need to adress.

Vazalaar
31-07-2012, 10:51
Taking out the revenue for the extra week and the additional royalties what is left amounts to an increase in revenue of 3.5% (I'm not taking out the one off increase in paint sales, because although they won't be able to repeat that particular thing any time soon, they have comparable one off increases every year).
Have the prices increased by more than 3.5% on average? I am fairly sure they have (just think of the 10+% increases on Finecast, 30% increases on LotR and the regular annual increase - a link (http://www.brueckenkopf-online.com/?p=36299) to the € price increases [in German, but you'll figure it out]).
From my perspective the trend seems to continue that on the surface everything looks good, but there are underlying problems that they need to adress.

I am happy GW is doing the great this moment. Nobody knows what it will be in ten years. The same can be said about our future.;)
The figures cleary state this year was good for GW.

I do think some of you are quite harsh and critical and think no business would pass your criteria.;)

My feeling is that GW will outlive most of it's competitors and maybe outlive us.... .

jack da greenskin
31-07-2012, 11:04
"We have also ensured that each of the paints has a
trademark protected name to prevent anyone else from mimicking our colour palette"

... -.-

Hendarion
31-07-2012, 11:05
EDIT: On a side note about the paint - I noticed they claim to have made a 15% saving per unit on cost. I hope they try and pass this onto the customer by not increasing prices on them soon...
You serious? They don't increase costs of their stuff because they must, but because they can. As long as they still make more profit from raising the prices instead of losing profits, they will and should increase the prices. That is what a good company has to do - find the optimum of what you can charge. They aren't our friends or something, that was 20 years ago. They are a simple and normal company like any other.

shelfunit.
31-07-2012, 11:16
You serious? They don't increase costs of their stuff because they must, but because they can. As long as they still make more profit from raising the prices instead of losing profits, they will and should increase the prices. That is what a good company has to do - find the optimum of what you can charge. They aren't our friends or something, that was 20 years ago. They are a simple and normal company like any other.

It was more a dream than an actual expectation... That they will do (and continue to do) so as you say is absolutely certain.

Hendarion
31-07-2012, 11:20
Well, yea, I also hope sometimes, we all fall for it. :)
(hoping for new eldar-boxes not be insanely expensive - although, 33€ for swooping hawks feels like fraud)

Baragash
31-07-2012, 11:34
Strip out the one off exceptionally good new release and it is still a great year. As a chartered Man. Accountant / FP&A type of guy I could spend a few hours analysing the results but its GW, they will get my money almost what ever, but even more so with 2011 and so far 2012 showing that they are releasing more and more quality products, tightening their codices, improving their game systems and generally making the hobbyist in my very very happy.

It is nice to see the summary of the result is strong and I shall leave it at that - I just look at Revenue ^, Profit^, strong cash and no debt = GW will be around for a long while yet doom mongerers !

As someone that spent 8 years writing retail management accounts for the UK highstreet and doing store and product profitability, it pains me to see your love of GW overcome your professional sense.

shelfunit.
31-07-2012, 11:52
In addition, Mrs K Kirby received £38,815 during the year from the Group for her work as an IT consultant.

Nice to see they're keeping it in the family.

Commandojimbob
31-07-2012, 12:07
As someone that spent 8 years writing retail management accounts for the UK highstreet and doing store and product profitability, it pains me to see your love of GW overcome your professional sense.

Now now Bara, we have had this kind of debate before - my love of the Hobby DOES cloud my professional sense because as far as I am concern, GW are doing everything I want from them. All I will look at is the summary of my hobbies company because all i want to know is are they going to continue to support my hobby in the next 12 months - this set of results = A most definate yes ! You have long gone past the love of GW and have of course resorted to sceptism and reality - I like my optimism and fantasy thank you very much :p

Sai-Lauren
31-07-2012, 12:10
Nobody is saying they don't "deserve" it to succeed
Give it half an hour, I'm sure someone will start... ;)

Seems like people like the figures though, their shares started the day at 577, and they're currently up to 587.5 (up 1.8%, whilst the FTSE is slightly down).



Interesting to note though that Forgeworld/BL provided an additional £1.75m to the profit from last year and contributed a total of £12.1m (nearly 10% of total income) in overall sales.

As it was the main release in the time period, it just goes to show they should do more Eldar books in the Imperial Armour series then. ;)

Although, what's the betting for Forgeworld's overall sales for next year with the Heresy books and model range starting - £15M?

shelfunit.
31-07-2012, 12:29
Give it half an hour, I'm sure someone will start... ;)

Don't worry - I probably started that this thread - "deserve" was in quotation marks as no (or at least very few) products "deserve" to succeed - success has to be earnt.


As it was the main release in the time period, it just goes to show they should do more Eldar books in the Imperial Armour series then. ;)

Although, what's the betting for Forgeworld's overall sales for next year with the Heresy books and model range starting - £15M?

Tough to even think about predicting. The FW/BL combo income grew by nearly 20% - far higher than any other section of the business (except royalties) and their profits were up over 60%.

Vos
31-07-2012, 12:47
They've made even more profit. Looks like the price increase startegy is working! Expect more of this to come........
Still, I'm glad they're not going to go under or anything, like a minority of doom mongers have been predicting.

Not that this really effects me much as I don't buy much from GW anymore.

Vos

MalusCalibur
31-07-2012, 12:58
Personally, I'd wait for someone who really knows what they're talking about (Reinholt) to comment before making any blanket statements about 'doom mongerers' being unutterably wrong and about how great GW is. Their financials are always delivered to appear positive even while their underlying problems continue to escalate.

AGC
31-07-2012, 13:19
Personally, I'd wait for someone who really knows what they're talking about (Reinholt) to comment before making any blanket statements about 'doom mongerers' being unutterably wrong and about how great GW is. Their financials are always delivered to appear positive even while their underlying problems continue to escalate.

This time round though they are actually saying their sales volumes are back in growth, which is something that's been absent for a very long time. The only obvious bad news in the report is Australia which some how managed to increase it's losses.


Couple of other points of interest:-

The success of the one man stores, they state unequivically that these have proven to be the most profitable way of breaking into new markets.

No mention of the "Warhammer Relaunch". They say all initiatives did well and led to a growth in sales so I am assuming it worked, but given that they went into so much detail last year about how Warhammer fantasy sales were not justifying the investment in it I am surprised that they have not said anything this time round but they did talk about paint and finecast.

Ebon
31-07-2012, 13:20
They've made even more profit. Looks like the price increase startegy is working! Expect more of this to come........

Which is what I find mildly depressing. They're going to see this as an indication that they can keep raising prices willy-nilly. That said, knowing GW, they'd interpret a fall in revenue as a reason to raise prices too. I can easily find things to praise about GW but for everything they do right, they get something horribly wrong. I want to see GW lose money to force them to rethink their policies.

Commandojimbob
31-07-2012, 13:38
Personally, I'd wait for someone who really knows what they're talking about (Reinholt) to comment before making any blanket statements about 'doom mongerers' being unutterably wrong and about how great GW is. Their financials are always delivered to appear positive even while their underlying problems continue to escalate.

That is why one really good indicator is to see in a snap shot what a lot of analysts think - usually combining into a share price :

http://img100.imageshack.us/img100/2813/gwshares.jpg (http://imageshack.us/photo/my-images/100/gwshares.jpg/)

The 3 year trend is very interesting and the current response from market on results is positive

de Selby
31-07-2012, 14:11
Have I understood this right? They've actually sold more stuff this year than last?

If so that's impressive. I can believe it. Despite the increasing list of things I'm reluctant to buy for value-for-money reasons (finecast, books, and I haven't tried the new paints yet) I've bought quite a lot of plastic in the last year what with the character singles, the out-of-cylce releases and the new fliers (plus the incentive of getting in under the price rise on a few things). It seems they get us coming and going :D

Jim30
31-07-2012, 14:24
An interesting report - comments on Games Day were interesting, and also the gentle nod towards the hobbyists who read the reports by saying 'no chance of any product news'!

australia nearly doubled its operating losses from £406,000 to £735,000 while sales remained fairly flat. Clearly the embargo and prices down there have hurt their sales at full RRP.

Max Jet
31-07-2012, 14:26
They've made even more profit. Looks like the price increase startegy is working! Expect more of this to come........


This.

The report is a green light for more price increases.

MiyamatoMusashi
31-07-2012, 14:31
Sad but true I fear.

Enough people are continuing to buy that price rises are working for them. It's difficult to dispute.

Unfortunately this means GW will continue to get an absolute minimum of my money (BL and FW only)... but they are probably unperturbed by that, as enough people are still buying that losing my custom is not damaging them at all.

Sean_OBrien
31-07-2012, 14:59
Have I understood this right? They've actually sold more stuff this year than last?

No - not more stuff...more pounds worth of stuff.

The 2011 price increase ranged from 1-25% pretty much across the board. The average increase was in the high teens. Discounting the royalty income, the revenue increase was about 6%. If they sold more stuff - the revenue increase should have been in line with the average price increase. The actual sales volume is down year for year, while the revenue is up.

That is the source of most of the soothsayers doubts in the management. You can only sustain these financial reports so long with price increases, inventory reductions and other cost saving measures (like paints which are 15% cheaper to produce - but retail for the same or more as the old ones). Eventually a point is reached where you have eroded good will with consumers, priced your product so high or otherwise reduced your core market to the point where things fall off rather dramatically. At that point, it becomes Australia everywhere.

EmperorNorton
31-07-2012, 15:14
No - not more stuff...more pounds worth of stuff.

They may very well have sold more stuff.
They've had major releases of new things people were eager to try out, namely Finecast and the new paints.
Sellings a million pots of paints will have made an impact on sales volume. It's just not the same as selling a million plastic kits, though.

Sean_OBrien
31-07-2012, 15:39
2 million pots of paint (according to the report) figure half went to wholesale at 40% discount (probably less than half in reality though - especially given that 145,000 were sold direct as part of the paint set). Comes to around £3.7 million from those (of which £2.75 million was sold in a single month).

However, to your point - if they sold more stuff (which most of the stuff was more or less the same stuff as last year, or at least reasonable comparisons to last years stuff in terms of sizes and configurations) you should see an increase in revenue which matches your increase in price.

For example, if I sold 100 widgets in 2010 for $1 each - my revenue would be $100. If I increased the price for 2011 to $1.10 - I should have a revenue of $110 if I sold the same number of widgets. However, my revenue for 2011 was $105.60. I still increased my revenue year over year - however I ended up selling 4 fewer widgets than I did the previous year. While there might have been jumps in one area or another (selling more paints then the previous year, or selling more Dark Eldar than the previous year) the overall units sold are a general loss. That is while they might have sold more Dark Eldar - they probably sold fewer Eldar or Tau instead of actually maintaining sales volumes and adding to them.

Dryaktylus
31-07-2012, 15:49
Tom Kirby: You will also get, if such is your desire, a foaming pint of Bugman’s best in our famous bar. No, shareholders do not get a discount on beer. We don’t do discounts, not even for you.

:D

All people are equal before GW or in GW's sight.

paddyalexander
31-07-2012, 15:56
No - not more stuff...more pounds worth of stuff.

The 2011 price increase ranged from 1-25% pretty much across the board. The average increase was in the high teens.

The average price increase across the range worked out somewhere between 12%-13% across the board. Paints didn't recieve any price increases, terrain was up by 33% and the battlefield accessory kit by 75%. There are other kits that proberbly went up by more considering the finecast bubble tax and/or reboxings plus the anual price increase... sorry "adjustment". Unless revenue has increased to equal or more than this (removing factors that don't come from in store retail such as revenue from video games) then actual unit sales are still static to falling.

So fewer people are buying the same or the same number of people are buying less. This is important because of the type of product that gwPLC produces. Continueing sales of its' products relies on there being a community of players to join when you enter the hobby. If you can't find anyone in your area that plays a game that requires two or more players then it is very unlikely that you will attract many new customers. This player base can be erroded for a time but eventualy it can hit a critical point, where it is easier to find opponents for other games systems and the game will typicly die out. 40ks' biggest strength is that regardless of where I go in the world I am more likely to find a community that plays that game than any other. Over the last couple of years that possition has been erroded, not destroyed but reduced in impact as I can easily find communities (usualy smaller) that play competing war games systems.

Recruitment and retention of a customer base is vital for a social hobby product like a wargame. gwPLC seem to be focused soley on recuitment but not on retention.

Inquisitor Engel
31-07-2012, 15:56
* 'Unusual'(ly high) income from THQ royalties on Space Marine.

THQ didn't want to drop the price on this for much longer than I expected them to, given the tail-end sales for the game. Everyone who bought this got it within 3-4 months of release and it doesn't sell particularly well now. Between Steam and GameStop PC Downloads, it's had pretty much all the cash it can get wrung out of it, wrung. DLC might be a different matter but ehh....

paddyalexander
31-07-2012, 16:06
I bought a new copy of it last week for €4 during a clearance sale at a local video store. Still in its plastic, will open and play it when there is nothing better to play, currently playing Zelda on the snes and am jonesing for Ocarnia of Time on the N64.

EmperorNorton
31-07-2012, 16:15
However, to your point - if they sold more stuff (which most of the stuff was more or less the same stuff as last year, or at least reasonable comparisons to last years stuff in terms of sizes and configurations) you should see an increase in revenue which matches your increase in price.
That's not my point at all.
My point is that they may very well have sold big quantities of things that are on the lower end of their pricing structure (like paints and Fincast blisters) so that their sales volume went up without the revenue going up the same way it would have if they had sold the same quantity of things on the higher end of their pricing structure.


The average price increase across the range worked out somewhere between 12%-13% across the board. Paints didn't recieve any price increases, terrain was up by 33% and the battlefield accessory kit by 75%.
That's this year's "price adjustment", which doesn't have any effect on this report. You'd have to look at last year's "price adjustment".

paddyalexander
31-07-2012, 16:29
That's this year's "price adjustment", which doesn't have any effect on this report. You'd have to look at last year's "price adjustment".

Sorry, serious lack of sleep and surplus stupidity on my part. The 2011 price increase averaged out to around 13% (13.2% to be exact).

Jobu
31-07-2012, 16:34
Could people be buying more metals in anticipation of a move to finecast ?

frozenwastes
31-07-2012, 18:00
I ran some numbers to get an accurate comparison with 2011. Removing a 53rd from the revenue to account for the extra week and removing royalty income to get at their miniature business only) and after inflation (2.84% for the UK with the latest data), GW saw a revenue growth of 0.86%.

And to celebrate their "success" (less than a percent after inflation) they again decided to pay out MORE than they made in dividends.

In the 2011 period, the average price increase was 13.2%. So if you calculate revenue growth compared to price increases, they again lost around 7-8% of their unit sales.

GW is continuing to stagnate. They've figureed out how to squeeze more money out of a declining pool of customers so they can pay their dividends at an unsustainable rate. I have no doubt the major players at GW (Kirby & Wells) will both retire very, very rich, regardless of what happens to GW in the long term.

So why should they change course? Expect another 10%+ price increase in 2013, more stock options exercised and more dividends beyond profit paid out. After inflation growth will probably again be around a percent while their unit sales will probably again fall 5%+.

GW's customer base is stagnating. Available opponents become less numerous with the passage of time. Less people are buying less product and paying more for it. If you're contemplating pouring $1000+ into a new army, perhaps the grass is greener somewhere else?

DarkLordBelial
31-07-2012, 18:11
You can't directly relate an average price increase to revenue increases - it takes no account of individual product volumes.

frozenwastes
31-07-2012, 18:27
Yes, I know. It's an average and an estimate.

But it is mathematically impossible to increase prices, have relatively flat revenue and not have your unit sales not decline.

I'd say the 5%+ estimate is likely quite reliable.

Why do you need to put an "opponets wanted" notice in your signature? 10 years ago, you'd have no trouble finding WFB players. What's changed? This decline year over year in customers.

Here in Canada (where we have to go hundreds of miles where someone in the UK has to go tens) I had no problems finding endless 40k and WFB opponents 10 years ago. Now, even with the internet, social networking, etc., I can't reliably find a game of WFB and 40k I'd have to hunt and schedule (but I'd still find one). What's happened? Year over year price increases with a decline in unit sales.

Less people are buying less but are paying more for it. That means less opponents. And this compounds like compound interest.

Every dollar put into a new army for a GW game is going to give you less opportunities to play than in previous years. GW knows this. Jervis told us that the majority of GW's customers are "craft hobbyists" that don't actually play any game. Fortunately GW's models are good in of themselves, even if they will deliver less and less in terms of participation in a wider gaming community as more and more customers are driven away.

Can GW get to the point where they can expand revenue without losing customers? And continue to increase prices by 10%+ a year?

Melkanador
31-07-2012, 18:29
You can't directly relate an average price increase to revenue increases - it takes no account of individual product volumes.

Surly not direct, but the way GW is heading is slow, but steady.

As history told us: an empire will fall slowly.

I thank GW for the sculpters, designers and other great people they gave a chance and got rid of, otherwise the wargaming hobby wouldn´t be so diverse.

I3uLLioN
31-07-2012, 18:29
:D Good on GW. Looks like the doomsayers are wrong for yet another year.

Melkanador
31-07-2012, 18:31
:D Good on GW. Looks like the doomsayers are wrong for yet another year.

Are they? All the so said doomsayers say is that GW´s customer basis/salesunits is/are shrinking which at some time will reach a tidal turning point.

Let´s see how it´s looking in 5-10 years.

I3uLLioN
31-07-2012, 18:39
Yes they are. Its funny to see them squirming when the report is good. Growth, profit, increased sales.. but yeah GW ARE FAILING!!!! hahahaha

Melkanador
31-07-2012, 18:48
To say whether GW fails or does not depends on the point of view one takes.

From the perspective of the shareholders and GW´s management GW is doing great as they increased the earnings, cut the costs, ... .

From the perspective of a customer who should be intrested in the long term development of GW, the report shows again, that GW is selling fewer items, so assuming the average customer buys the same amount then last year, this means there are less customers, so GW fails to keep up the players with a reasonable gamerbase.

Already one can read from time to time in this and other forums that it got harder to find some WHF/40k games due to the lack of players. And also it´s often reported that the number of GW games played in clubs have had a reducing trend.

I´ve been buying and playing GW games since the early ´90s, once I expected to play till retirement WHF/40k and I probably will, but it won´t be GW which will be selling it, which is sad to as I´d been working there for quite a time.

f2k
31-07-2012, 18:51
Yes they are. Its funny to see them squirming when the report is good. Growth, profit, increased sales.. but yeah GW ARE FAILING!!!! hahahaha

The thing is, having briefly scanned the report, Games Workshop is NOT growing. Their unit-sales are still going down and they’re basically being held afloat by cuts and royalties.

And this is what we “doomsayers” have been pointing out for years now. Games Workshops unit-sales are dropping, year after year, which means that fewer people are playing. And for a social hobby, that is very bad indeed. At some point Games Workshop will come to a tipping point where their customer base will start eroding very fast. And that’s when we’ll see them going into the red...

Companies seldom crash overnight – it takes time before they reach that point. Sadly, it seems that Games Workshop is either entirely oblivious, or simply don’t care, that they’re still heading in the wrong direction.

Skyth
31-07-2012, 18:53
Some points I noticed from the financial statements. First off, they had a change in accounting principle to move 1.7 million of revenues from the previous two years to this year. This means it isn't as profitable as they would make you believe. The second point is that they have tactily agreed that it's likely that they'll lose the lawsuit against Chapterhouse.

Volumes of sales are down (Even including making all the customers replace their paints), thus the customer base is shrinking plus giving out more dividends than you have profits (and combine with the revenue shifting they did to make it appear as if they had even more revenue than they did...) makes the long-term viability questionable.

I3uLLioN
31-07-2012, 18:57
the report shows again, that GW is selling fewer items, so assuming the average customer buys the same amount then last year, this means there are less customers, so GW fails to keep up the players with a reasonable gamerbase.

Erm... I must have read a different report from you as the one I read contains no such information.

Melkanador
31-07-2012, 19:07
Erm... I must have read a different report from you as the one I read contains no such information.

It does but it´s hidden. You need to compare the yearly price rise across all items and the rise of turnover leaving out things like FW/BL/royalties and then one starts to get an overall picture of GW´s real situation. Sure one can dig a lot deeper if one wants to.

And of course no CEO would announce in a report that their customer base is being reduced on a yearly basis, but I hope he knows about it and just foregoes it out of personal (retirement [my personal guess]) reasons.

frozenwastes
31-07-2012, 19:09
Revenue = price x units sold.

If you keep Revenue the same and increase price, units sold goes down.

Revenue has gone up a bit (about 3.5%) but price increases have been massive.

The math just adds up to faling unit sales.

Sorry. *shrugs*

EDIT:

GW has no reason to change directions at this point. Kirby and Wells are both going to retire super rich. So why not pay a dividend greater than the money you made? Why not shift previous years revenue into this year to justify paying yourself that larger dividend? Why stop raising prices? As long as bonuses and dividends can be justified, there's simply no reason for them not to continue to exercise their stock options and collect the dividends. Kirby has much, much more to gain by doing that than thinking long term. Wells is following in his footsteps.

Scaryscarymushroom
31-07-2012, 19:11
Erm... I must have read a different report from you as the one I read contains no such information.

The powers of deduction are a wonderful (and often dangerous) tool.


Games Workshops unit-sales are dropping, year after year, which means that fewer people are playing.

Strictly speaking, I don't think a drop in sales necessarily means less people play. A good indicator, sure... but there could be other explanations for why less people play. I mean, I still have +2k of sisters of battle that I could use to play games if I wanted to without making more purchases.

f2k
31-07-2012, 19:22
Strictly speaking, I don't think a drop in sales necessarily means less people play. A good indicator, sure... but there could be other explanations.

True. It could also be that the same amount of players is simply buying less. But, going by the dwindling amount of local players reported by the members of WarSeer, I would say that less players playing is a good bet.

In either case, it's bad news as it indicates that, at best, the number of players remain static and, at worst, is actually dropping with few new players and a bad retention rate.

I admit that this is probably a somewhat simplistic way of looking at it. But regardless of what the explanation might be, the fact is that unit-sales are going down and have been doing so for years.

Eldarin Hope
31-07-2012, 19:26
Revenue = price x units sold.

If you keep Revenue the same and increase price, units sold goes down.

Revenue has gone up a bit (about 3.5%) but price increases have been massive.

The math just adds up to faling unit sales.

Sorry. *shrugs*

EDIT:

GW has no reason to change directions at this point. Kirby and Wells are both going to retire super rich. So why not pay a dividend greater than the money you made? Why not shift previous years revenue into this year to justify paying yourself that larger dividend? Why stop raising prices? As long as bonuses and dividends can be justified, there's simply no reason for them not to continue to exercise their stock options and collect the dividends. Kirby has much, much more to gain by doing that than thinking long term. Wells is following in his footsteps.

What it doesn't automatically add up to is that the player base decreased by X amount.

There is no reason to presume that players are buying the same amount - if something increases in price and I still have the same disposable income then I'm buying less in terms of unit sales but my contribution to the player base remains at 1.

People are using presumptions to paint the numbers in the worst light.

I imagine we will see a boost next year due to the Hobbit

I3uLLioN
31-07-2012, 19:31
But GW doesnt sell only 1 type of product. If you were talking about a company that only sold one thing at a single price point and their revenue didnt increase at the same rate as their price increases, then it would make sense to say sales are dropping. That isnt the case with GW. People simply do not have the information to state that volume sales are dropping and the customer base is shrinking. They are twisting the numbers to fit their negative view of the company.

I could argue that existing players arent buying that much as they already have significant collections and that the vast majority of sales are to brand new players. That would mean that the player base is actually growing. I actually think this is more likely the case as most people would probably agree that people tend to spend more when they are just starting up. When you have several armies you tend to just make smaller puchases to keep things ticking along.

People also dont have a break down of what is selling and to who. Who knows if the vast majority of sales are made up of models at the lower end of the price scale. Again... this would mean that more people are being introduced to the hobby and the player base is growing.

Folk on Warseer always make the assumption about how the profits didnt go up relative to the price increase... Therefore the player base is shrinking. The simple fact of the matter is that that is a major assumption. Nothing more.

GW is a healthy company. It is more efficient, it is expanding into new areas, has no debt, good cash reserves with an IP that is becoming more well known. Its really sad to see people blinded by the thihgs they dont like about GW.

Private_SeeD
31-07-2012, 19:33
* 'Unusual'(ly high) income from THQ royalties on Space Marine.

I assume if that's true that GW will be looking into releasing other franchises if they're were such good money spinners?

Also I'm no expert and will ask my gf who is a charted account have a read of these documents but I might be naive here but with what Kirby and Wells are doing isn't there rules against that or are the board/share holders just blinded by the money and/or the BS being sold in these yearly reports?



Sent from my Omni tool via the Sol System Mass Relay

Skyth
31-07-2012, 19:43
I might be naive here but with what Kirby and Wells are doing isn't there rules against that or are the board/share holders just blinded by the money and/or the BS being sold in these yearly reports?

Nope. It's not against the rules at all. Financial statements are supposed to reflect what has happened and everything is disclosed. They fully disclosed how much money they're getting, their interest in the company, the profits, how the profits came about (Including shifting money from previous years) and the dividends paid.

The point of the rules about financial statements isn't that they insist that the company be run well, but rather that how the company is being run is disclosed for investors to make their own choices.

Vazalaar
31-07-2012, 19:46
Each year the critics say GW is falling. One year they will be right. As it's inevitable, because everything ends.. Anyway this year they are again wrong. Next year they can try again. ;)

Lord Dan
31-07-2012, 19:47
GW saw a revenue growth of 0.86%.

Thanks for breaking that down. Obviously there's some estimation involved there, however it's a far more accurate representation of growth than lumping in royalties and doing some division, as the GW accountants have done for us.

I can't add much that hasn't already been said, however it will be interesting to see where they sit at the end of this quarter. They'll have gotten some big releases in, and combining that with the huge price increases we saw just a few days after this report came out I think we'll get a real estimation of how they're going to be doing going forward.

I love that they brought in Kirby's wife for IT consulting.

Sean_OBrien
31-07-2012, 19:53
People also dont have a break down of what is selling and to who. Who knows if the vast majority of sales are made up of models at the lower end of the price scale. Again... this would mean that more people are being introduced to the hobby and the player base is growing.

Correct, we do not have a break down of the individual sales. However, you can make some educated guesses based on the price increases and the financial reports.

https://docs.google.com/spreadsheet/ccc?key=0An-qBba7fMe1dEl5dG9uUlVwbTZmUmt4cElqcWNEelE&pli=1#gid=0

That is the 2011 price increases. The ones which matter in relation to this report. If you consider what purchases a new player would make (starter sets, rulebooks, codices, army books, troops, battalions...) and then look at the price change on those items, if the majority of sales are going to new players...you should see a year over year revenue increase which is inline with the price increases.

If by chance, the majority of sales are based on paints, paint brushes and hobby tools - well then, I stand corrected. GW would be doing outstanding.

Scaryscarymushroom
31-07-2012, 20:04
Each year the critics say GW is falling. One year they will be right. As it's inevitable, because everything ends.. Anyway this year they are again wrong. Next year they can try again. ;)

And every year supporters do a little dance and then stick their tongues out and blow a big fat raspberry. But where is the victory? The numbers are obscure. Most of us can only speculate as to their real meaning.

Sgt John Keel
31-07-2012, 20:04
Not wanting to quibble over the financials, I'd just like to note that it is always interesting to see where Northern Europe will end up any given year.

Sean_OBrien
31-07-2012, 20:06
Not wanting to quibble over the financials, I'd just like to note that it is always interesting to see where Northern Europe will end up any given year.

Where ever they need to shoe horn you to make the books look better. I am guessing Australia next - they seem to need all the help they can get.

AGC
31-07-2012, 20:22
Some points I noticed from the financial statements. First off, they had a change in accounting principle to move 1.7 million of revenues from the previous two years to this year. This means it isn't as profitable as they would make you believe. The second point is that they have tactily agreed that it's likely that they'll lose the lawsuit against Chapterhouse.


I completely missed all of that when I skimmed the report, could you give a page reference please?

Skyth
31-07-2012, 20:28
I completely missed all of that when I skimmed the report, could you give a page reference please?

For the accounting change, it's page 40, note 10.

The Chapterhouse thing is because it's not listed on the report. If it is probable that you would win (or do win, but the case is ongoing) a lawsuit defending a copyright, the price paid to defend the copyright becomes an intangible asset (copyright) that is amoritized over a certain time. If you are not likely to win (or lose the case outright), all legal fees are expensed and counted against income. Since there is no intangible for copyright, they don't see it likely that they will win.

Scaryscarymushroom
31-07-2012, 20:35
For the accounting change, it's page 40, note 10.



GW saw a revenue growth of 0.86%.

Was that 1.7 million accounted for in your revenue growth calculation, frozenwastes?

Llew
31-07-2012, 20:37
Not wanting to quibble over the financials, I'd just like to note that it is always interesting to see where Northern Europe will end up any given year.

Apparently it is quite the flighty and inconstant region. ;)


I can't wait until I have a little time to delve into these later, and find comparisons with last year's numbers and the restated numbers used in this report as well.

Skyth
31-07-2012, 20:45
Was that 1.7 million accounted for in your revenue growth calculation, frozenwastes?

It was actually 1.8 million(My appologies for the incorrect number originally), and it was accounted for because it was from royalty income.

Reinholt
31-07-2012, 20:48
First, let me lead with a technical note...

1 - For a 53 week year, I'd make the numbers comparable by just multiplying everything by 52/53. There's no sense in attributing when extra weeks happen; averaging them is more sensible. Conversely, if they have a 51 week report, you have to scale it up.

2 - I'm going to ignore the $1.8mm of revenue they restated because it's just not that relevant, but adjusting for it would make things very slightly worse from GW's perpective.

Second, a few observations:

Good things - black library and forge world are doing very well, licensing income was strong (and they are not heavily diluting the brand by shotgunning it out everywhere), cash position remains strong as they are generating decent income off current operations.

Average things - continuing to pay a dividend; this is a mixed bag. Good they can do it, good they are returning the cash if they don't know how to invest it, bad that they are paying out a larger one than revenues really support, bad that they don't know how to invest it. Hence, average.

Bad things - same story, different day in terms of falling unit sales; I come up with a -5% number for year over year sales volumes based on a 10% increase in prices on average. Going back to 2010, you have a total drop of -16% (they lost more volume in 2011 than 2012, so yay for not sucking as badly?). Unless GW can arrest / reverse this trend, that is their long term problem, and it continues to manifest itself each year. Taken to the extreme, you get to the "one guy buying a 125mm pound space marine box" example, but the reality is the game falls off long before then. Given the gains the competition are making and the narrowing player base, this is GW's biggest probable threat.

So overall I don't see much change from the previous course. For reference, I see revenue growth as .69% in the UK, 13.77% in Europe, 9.05% in NA, 4.56% in Australia, for the core regions. When you factor in price increases, you're seeing falling sales volumes in the UK, not quite treading water in NA, gaining slight ground in Europe, and Australia... well, we hardly knew ye.


Blah blah blah you people predicting GW will die this year are wrong blah blah blah I'm totally not a GW employee blah blah blah

Can anyone actually find a quote to back this up that is recent on these forums where people are predicting GW's imminent demise? People keep claiming there are a ton of doomsayers out there, but I must miraculously avoid them somehow. At worst, you see things like what I say, which is that they have long-term issues. I think anyone who knows how companies work would realize GW, in the short term, is just fine from a cash flow perspective and isn't going anywhere (barring, I suppose, extreme events or a hostile takeover, but that's true of every public firm).


That is why one really good indicator is to see in a snap shot what a lot of analysts think - usually combining into a share price :

http://img100.imageshack.us/img100/2813/gwshares.jpg (http://imageshack.us/photo/my-images/100/gwshares.jpg/)

The 3 year trend is very interesting and the current response from market on results is positive

As previously stated, I can't find any analysts actually publishing research on GW. It's closely held by several small investment funds, and that's about it. You have very limited marginal trading value on which to set the price, which is of questionable value.

Also, 3yr looks good, I agree. 10yr, on the other hand, looks terrible. It all matters where you got in and what your holding period is. GW has been rangebound between 200-800 over time. I've repeatedly expressed I don't really have much of a view on GW as a stock; I'm far more concerned about GW as a long term business, and I've never firmly believed that super small cap stocks with no analyst coverage are efficiently priced. So the stock price, to me, is a sideshow. Both for good and bad; if it tanks, you won't see me on here crowing about their demise based on that either.

parthvader
31-07-2012, 21:06
And every year supporters do a little dance and then stick their tongues out and blow a big fat raspberry. But where is the victory? The numbers are obscure. Most of us can only speculate as to their real meaning.

The victory is the one that GW has won over the folks who continue to pay through their noses for inferior quality products (the same ones who are annoying you so much on this thread).

Has GW increased its sales? Yes it has!
Has it done so by increasing its prices? Yes, it has.
If you increase the price of your merchandise by 20% and continue to sell the same number of items, then your sales revenue will increase commensurately.

Therefore, the reality of this financial report is that GW has increased its profits and it has done so by charging its supporters higher prices for its products. As long as there are those who are naive enough to pay ridiculous prices for "quality", GW will go on making more and more profits.

This of course is a great accomplishment on the part of its management. It is also excellent news for its shareholders. As far as both management and shareholders are concerned, as long as there are enough suckers around to buy their products at sky-high prices (and continue to rationalise their behaviour by telling themselves that since GW is a publicly listed company, its purpose is to make profits for its shareholders, and that it is therefore perfectly okay for them to waste their money on shoddy GW products), GW will continue to rake in the profits.

So you shouldn't really be upset with the poor fools who continue to support GW. After all, if they want to flush their money down the toilet, its their problem, isn't it?

Scammel
31-07-2012, 21:13
So you shouldn't really be upset with the poor fools who have been supporting GW. If they want to throw their money down the toilet, its their problem, isn't it?

The vast majority of the entire forum says hi.

nosebiter
31-07-2012, 21:15
The vast majority of the entire forum says hi.

My thoughts exactly!

Inquisitor Engel
31-07-2012, 21:40
Provided I keep getting bigger and better plastic kits, excellent rules and brilliant background to explore the universe of, I'm happy to JUDICIOUSLY spend my money on things that deserve it.

Sean_OBrien
31-07-2012, 21:41
So overall I don't see much change from the previous course. For reference, I see revenue growth as .69% in the UK, 13.77% in Europe, 9.05% in NA, 4.56% in Australia, for the core regions. When you factor in price increases, you're seeing falling sales volumes in the UK, not quite treading water in NA, gaining slight ground in Europe, and Australia... well, we hardly knew ye.

Mostly just been looking at raw figures so far - but have you included in your various calculations the VAT changes which were performed in the UK during the past 3 or 4 years. Calender year 2008 had a VAT rate of 15%. Calendar year 2010 had a rate of 17.5% and from calendar year 2011 on the rate went back up to 20%. While it won't impact the actual revenue numbers directly, it will affect growth (or lack there of) calculations. Keeping 85% of a £50 sale versus keeping 80% of the same sale will mean more sales will need to be made at the same price in order to achieve the same revenue. Since the year being compared to (2010-2011) to this fiscal year (2011-2012) had a change which wasn't insignificant, it can have an impact on the performance for that particular market.

Also, you have average exchange rates which are within your estimates making them significant as well. The US dollar was up a couple points on the pound year over year. The Canadian dollar was up over 5% on the pound year for year. The Australian dollar was a few points up too. In that case of course it has the opposite effect when performing evaluations. Because the dollar (take your pick of the three) is worth more pounds during this fiscal year than the last - it takes fewer sales in those currencies to make the same revenue in pounds. Granted the Euro is down about 4% year over year - so their number should look even better (in terms of sales volume).

Vazalaar
31-07-2012, 22:00
And every year supporters do a little dance and then stick their tongues out and blow a big fat raspberry. But where is the victory? The numbers are obscure. Most of us can only speculate as to their real meaning.

Hehe:D Very true!

AlexHolker
31-07-2012, 22:14
So you shouldn't really be upset with the poor fools who continue to support GW. After all, if they want to flush their money down the toilet, its their problem, isn't it?
It's everybody's problem. GW's actions are bad for us - they're increasing the price of their products, and they have no desire to reinvest in the company. They could use some of that 19 million pound profit to fund more development and consequently more products to sell, but instead they pull another 8 million out of the coffers, declare it all "genuinely surplus cash" and give it to Wells & Co.

That the customer base is rewarding them for doing this is a bad thing - it means GW will continue to do things that are to the fanbase's detriment, and other businesses will see that it's working - at least in the short term - for GW, and may be tempted to follow suit.

The bearded one
31-07-2012, 22:40
licensing income was strong (and they are not heavily diluting the brand by shotgunning it out everywhere)

If anything I think GW ought to prod and poke THQ for Space Marine #2! #1 did very well, they can do better things that went wrong, and a product actually intended to be a single player will probably be better than an aborted MMO turned into single player (dark millenium).


Can anyone actually find a quote to back this up that is recent on these forums where people are predicting GW's imminent demise? People keep claiming there are a ton of doomsayers out there, but I must miraculously avoid them somehow. At worst, you see things like what I say, which is that they have long-term issues. I think anyone who knows how companies work would realize GW, in the short term, is just fine from a cash flow perspective and isn't going anywhere (barring, I suppose, extreme events or a hostile takeover, but that's true of every public firm).

What it is, is that the 'doomsayers' are not saying "GW will fail this year" (or next year, whatever), but "GW's revenue/profit increased, but sales dropped again this year. They better fix it or there'll be trouble down the line, mark my words!"

subtle difference, which the medium of the internet doesn't tend to translate very well ;)




I'm currently just wondering a bit, just to be sure; when we're accounting for inflation and 53rd week, etc, people also often pull out the royalties, as those are very variable on a year-to-year basis (depending on wether there is a strong new release to get royalties from). But we are also pulling the royalty earnings out of the profits of the previous year with which we are comparing it?

Reinholt
31-07-2012, 23:01
Mostly just been looking at raw figures so far - but have you included in your various calculations the VAT changes which were performed in the UK during the past 3 or 4 years. Calender year 2008 had a VAT rate of 15%. Calendar year 2010 had a rate of 17.5% and from calendar year 2011 on the rate went back up to 20%. While it won't impact the actual revenue numbers directly, it will affect growth (or lack there of) calculations. Keeping 85% of a £50 sale versus keeping 80% of the same sale will mean more sales will need to be made at the same price in order to achieve the same revenue. Since the year being compared to (2010-2011) to this fiscal year (2011-2012) had a change which wasn't insignificant, it can have an impact on the performance for that particular market.

Revenue is reported ex-VAT (or at least should be). So if we use only revenue for the constant unit sales it should be VAT agnostic. As, unless GW is not passing on the cost to the consumer (which I am guessing they are), it should be fine. They'd sell a box for 100 revenue plus 15% VAT or they'd sell a box for 100 revenue plus 20% VAT. If you mean paring out the price increase to account for the VAT component, then given my numbers were 2011 vs. 2010, the picture would be slightly less bad for GW if you assume they ate the 2.5% VAT. Still falling sales volumes, but not "as falling".


Also, you have average exchange rates which are within your estimates making them significant as well. The US dollar was up a couple points on the pound year over year. The Canadian dollar was up over 5% on the pound year for year. The Australian dollar was a few points up too. In that case of course it has the opposite effect when performing evaluations. Because the dollar (take your pick of the three) is worth more pounds during this fiscal year than the last - it takes fewer sales in those currencies to make the same revenue in pounds. Granted the Euro is down about 4% year over year - so their number should look even better (in terms of sales volume).

I did adjust for this in my revenue numbers.

On the topic of accounting for royalties, I don't look at them at all for comparing regional sales, as they aren't relevant on a per-region basis, so they should be a net no impact to sales volumes.

samiens
31-07-2012, 23:02
Parthvader- is it so hard to believe that people who still buy do so because they look at the products and decide its worth it at the price asked, or are you the sole arbiter of value for us all? Frankly were buying bits of plastic that make little sculptures, many would argue that at any price that's 'flushing money down the toilet'- its hardly a utilitarian use for it is it?

Lord Dan
31-07-2012, 23:07
But we are also pulling the royalty earnings out of the profits of the previous year with which we are comparing it?

I imagine so. If not, here's re-royalty profit for 2011 & 2012:

2011: 12.8 million pounds
2012: 15.6 million pounds

2011 Source (http://investor.games-workshop.com/wp-content/uploads/2011/07/2011-Full-Year-Report-and-Accounts-full-25-July.pdf)

Skyth
31-07-2012, 23:22
For purposes of year to year for growth/shrinkage of volume, the numbers for profits are useless.

Sean_OBrien
31-07-2012, 23:29
If you mean paring out the price increase to account for the VAT component, then given my numbers were 2011 vs. 2010, the picture would be slightly less bad for GW if you assume they ate the 2.5% VAT. Still falling sales volumes, but not "as falling".

This is what I meant (tried to be as clear as possible in my post - but rereading it it isn't quite as crystal as I could have made it). I am in agreement with your conclusions - I just hadn't done the hard math to see what the actual numbers would be yet. I know that that would be a straw which would be used to as evidence of accounting malpractice though for those who view the report in a different light.

Trasvi
01-08-2012, 01:02
RE: Sales Volume increase:


The other performance related pay scheme is for Hobby centre managers who deliver volume growth. The size of each award is 20% of sales growth achieved in his or her Hobby centre above Games Workshop price inflation. This year 207 managers received an award. The total amount of Hobby centre manager performance related pay was £652,000.

Ie, they had 3.2M in revenue *above GW price inflation* from about half of GW stores. Alternatively, half of GW stores did not increase sales above price inflation. (assuming 1 manager = 1 store).

frozenwastes
01-08-2012, 01:12
Was that 1.7 million accounted for in your revenue growth calculation, frozenwastes?

I just accepted their restated numbers and used them. I gave them the benefit of the doubt. Though wasn't it royalties that were restated, which I immediately subtracted out?

It's based on their restated earnings, their restated royalties and inflation data provided by the Bank of England (2.84% as off June 2012).

It is, however, missing taking out Black Library. I know Forgeworld is kicking ass, but that belongs in the calculation. How much Black Library belongs is a matter of debate, so I didn't worry about removing it.


Each year the critics say GW is falling. One year they will be right. As it's inevitable, because everything ends.. Anyway this year they are again wrong. Next year they can try again. ;)

Back this up if you're going to state it.

Almost everyone has been saying that they expect revenue to be flat-- slightly up, slightly down, whatever, and then declining unit sales and a shrinking customer base. This oculd theoretically go on for years and years. Where has anyone predicted anything immenent?

Trasvi
01-08-2012, 01:45
I just accepted their restated numbers and used them. I gave them the benefit of the doubt. Though wasn't it royalties that were restated, which I immediately subtracted out?

It's based on their restated earnings, their restated royalties and inflation data provided by the Bank of England (2.84% as off June 2012).

It is, however, missing taking out Black Library. I know Forgeworld is kicking ass, but that belongs in the calculation. How much Black Library belongs is a matter of debate, so I didn't worry about removing it.

In all fairness, I think 'removing' items is distorting the picture to fit your own views (though my views are the same as yours). Black Library and Forgeworld (and Warhammer Forge) are doing very well for GW. Good on them! They're GW business lines.
It is interesting to note how much of their increased revenue came through BL/FW, but removing it seems a bit biased.

frozenwastes
01-08-2012, 02:12
In all fairness, I think 'removing' items is distorting the picture to fit your own views (though my views are the same as yours). Black Library and Forgeworld (and Warhammer Forge) are doing very well for GW. Good on them! They're GW business lines.
It is interesting to note how much of their increased revenue came through BL/FW, but removing it seems a bit biased.

I kept it in.

The only reason I removed royalties is that they don't really tell us anything about what revenue is coming from GW's core business of making miniatures.

I can't see how removing video game revenue so you can get a better picture of the miniatures side of things is in any way biased.

GW is making money and paying a larger dividend than before. They'll likely continue to do this for a few years. I don't see how pointing out that their after-inflation growth is not as impressive as they make it out to be when they toot their own horn is "biased".

Lord Dan
01-08-2012, 02:15
For purposes of year to year for growth/shrinkage of volume, the numbers for profits are useless.

Sure, but that wasn't his question.

ExquisiteMonkey
01-08-2012, 03:03
Cheers to all for breaking down the data.

What I find interesting is there wasn't as a dramatic downturn in UK numbers to account for embargoed countries sales going offshore to their local regions. Any more educated thoughts behind that, particularly in relation to Aus?

Sean_OBrien
01-08-2012, 03:35
What I find interesting is there wasn't as a dramatic downturn in UK numbers to account for embargoed countries sales going offshore to their local regions. Any more educated thoughts behind that, particularly in relation to Aus?

Since those sales would be at wholesale discounts the base impact on revenue would be less significant to the financial report. I am not really all that certain how much volume was moving from the UK to Australia though, so what we are seeing might be all that there was there. A few hundred thousand pounds worth of goods at wholesale wouldn't nudge the numbers too much, however you would definitely hear a lot of noise when those goods are cut off from their customers.

Mastodon
01-08-2012, 06:05
Important to note that the average price increase for 2011/12 was 4.1%, not the 10 or 15 I've seen bandied about in this thread already. Yes, if you average what products went up it comes in at 13%, but you're not factoring in everything else that didnt go up in price, so to say GW raised their prices by 10-15% last year is false.

I only had a 4% rise in the price I sold GW stock for and up to this year I sold everything at rrp.


Cheers to all for breaking down the data.

What I find interesting is there wasn't as a dramatic downturn in UK numbers to account for embargoed countries sales going offshore to their local regions. Any more educated thoughts behind that, particularly in relation to Aus?

One could argue that the vocal majority on the internet forums that buy overseas are infact a tiny percentage of Australias customer base and thus the embargo had very little effect. What is a bit worrying is the cost of running stores in Australia soaring due to their economy going through the roof.

canberraguy
01-08-2012, 06:07
Nobody is saying they don't "deserve" it to succeed - just that having a single month boosting annual income on a single new release that is unlikely to happen again in the next decade by £2.75m should not be taken as a sign of sustainable "growth". Interesting to note though that Forgeworld/BL provided an additional £1.75m to the profit from last year and contributed a total of £12.1m (nearly 10% of total income) in overall sales.

I imagine that figure will grow this year as well, with FW getting more mainstream

Mastodon
01-08-2012, 06:15
One thing from that report I find very interesting.

Being that I have several friends that work for GW in their 'trainee manager scheme', the report states that every member of staff received a £475 profit share bonus. Not one of them got that, so I dont know who did.

Baragash
01-08-2012, 07:56
RE: Sales Volume increase:



Ie, they had 3.2M in revenue *above GW price inflation* from about half of GW stores. Alternatively, half of GW stores did not increase sales above price inflation. (assuming 1 manager = 1 store).

"Volume growth" = sales units, if it was £ it would be "revenue growth".

Hellebore
01-08-2012, 08:58
Provided I keep getting bigger and better plastic kits, excellent rules and brilliant background to explore the universe of, I'm happy to JUDICIOUSLY spend my money on things that deserve it.

Are you buying different codices to me? Because the background has been almost uniformly shallow pulpy UBERLEET!! since the 5th ed space marine codex. Changes for no reason, resurrecting characters from the dead, uberifying characters to silly levels (taken to its illogical extreme in draigo). I'd still be buying GW miniatures if their background hadn't fallen so far, damn the prices. But why would I want to when GW ignores half its armies in favour of the other half, and does everything they can to make that favoured half look better than the other.

Hellebore

t-tauri
01-08-2012, 11:21
A number of posts removed. Please post without resorting to offensive language or simple trolling.

Sean_OBrien
01-08-2012, 12:18
Important to note that the average price increase for 2011/12 was 4.1%, not the 10 or 15 I've seen bandied about in this thread already. Yes, if you average what products went up it comes in at 13%, but you're not factoring in everything else that didnt go up in price, so to say GW raised their prices by 10-15% last year is false.

Still on the back burner - but a cursory examination of the 2011 price increase shows that you are correct...but irrelevant. The question isn't so much what the average price increase is, but what the average price increase is on certain items. For example, the entire line of paints and hobby tools had no change in price. This large segment of stock numbers will hold down the overall average, but is largely irrelevant in judging the health of the market. Since many users by other products to fill those roles - or use paints and tools of friends and stores, they have a less significant impact. However if you look at the prices of core items (rule books, troops choices, vehicles, starter sets...) those prices went up substantially.

Given the target market (new, younger players) these items will form a larger portion of their sales than the smaller items which had little or no increase which will more often be sold to maintain the hobby for veteran players. Other items didn't have a price increase since they were relatively new and were released with the new - higher price target (Isle of Blood had no increase, but was already priced at the $99 level which they bumped Assault on Black Reach up to).

frozenwastes
01-08-2012, 12:47
"Volume growth" = sales units, if it was £ it would be "revenue growth".

If each pot of paint is one "unit" for those calculations and they touted massive paint sales, then that doesn't really tell us anything about how well miniature sales volume is doing.

Stores that sell their paint bought racks full of tiny pots of paint as a one time purchase to stock the paint range (in whole or in part). Then they buy individual pots to restock as needed.

The real issue is that the items that people buy to actually play the game (starters, codecies, squad boxes, vehicles, etc.,) had big price increases such that the current revenue doesn't support the claim that volume of that stuff went up.

Less players to form gaming communities this year than last. Less next year than this year, unless you cound LOTR players increasing from the Hobbit movies, but that won't help someone looking for a 40k opponent.

samiens
01-08-2012, 13:11
This is only one idea. I buy very little now (update my armies gw you know you want to) but i am still very much a player looking for games. People don't need to buy the same volume year on year to be available. All that falling volume shows is people buy less- it might man less people buying the same amount, more people buying much smaller amounts or somewhere in between. We shouldnt assume less players due to smaller volume of sales automatically

Baragash
01-08-2012, 13:52
If each pot of paint is one "unit" for those calculations and they touted massive paint sales, then that doesn't really tell us anything about how well miniature sales volume is doing.

Stores that sell their paint bought racks full of tiny pots of paint as a one time purchase to stock the paint range (in whole or in part). Then they buy individual pots to restock as needed.

The real issue is that the items that people buy to actually play the game (starters, codecies, squad boxes, vehicles, etc.,) had big price increases such that the current revenue doesn't support the claim that volume of that stuff went up.

Less players to form gaming communities this year than last. Less next year than this year, unless you cound LOTR players increasing from the Hobbit movies, but that won't help someone looking for a 40k opponent.

I appreciate that, I was pointing out that the quotee was making a mis-statement because he appeared to be calculating a revenue value from a volume growth becuase he didn't realise the difference.

I think the comment on volume-related bonuses is GW trying to say "look our store strategy is working", when the reality is a significant amount of that volume growth is going to be as a result of the paint bonanza, so in reality it isn't relevant - that's going to be well over a million pots of paint for the relaunch (spread over the various sales channels).

arkirk246
01-08-2012, 13:53
im no business expert but could this years healthy turnover be anything to do with Finecast? i mean its a much much cheaper material!!!! so they must be saving a good amount on not buying metal????

Llew
01-08-2012, 14:11
Turnover isn't related to cost savings.

I'm sure their ongoing attention to controlling costs (or however it was phrased) covers things like the switch away from metal to the resin. The more interesting part is to look at the revenue side of the miniatures business to get an idea of how GW's core business is going. At least they can say they didn't take a hit like they did last year, but it doesn't seem as rosy as they're painting it. If they're smart, the royalty revenue should get them looking at other ways to exploit the IP, since it costs them virtually nothing to make money off it.

f2k
01-08-2012, 14:13
im no business expert but could this years healthy turnover be anything to do with Finecast? i mean its a much much cheaper material!!!! so they must be saving a good amount on not buying metal????

On the other hand, I wonder just how much they lost in miscast models that cannot be melted down and reused...?

Trasvi
01-08-2012, 16:04
We can tell at a very rough level their savings in COGS:
30118/131009 = 0.229
28288/1230521 = 0.229
... ie, negligible difference year on year.
Of course, i am not an accountant so i could be completely wrong...

Skyth
01-08-2012, 17:22
We can tell at a very rough level their savings in COGS:
30118/131009 = 0.229
28288/1230521 = 0.229
... ie, negligible difference year on year.
Of course, i am not an accountant so i could be completely wrong...

Depends on if they use FIFO or LIFO. (I'd have to check the reports). If they use FIFO, you're looking at goods that were produced/bought last year possibly. LIFO matches costs with revenue better. I believe (Might be wrong) that IFRS requires use of FIFO?

Also, you should probably take out Royalty income from the figure as COGS doesn't interact with that.

Private_SeeD
01-08-2012, 17:32
im no business expert but could this years healthy turnover be anything to do with Finecast? i mean its a much much cheaper material!!!! so they must be saving a good amount on not buying metal????

I thought someone previously had pointed out the the figures showed that Finecast doesn't seem to be such a cost saver as first thought it would be

Skyth
01-08-2012, 17:57
Okay, looking at revenue minus royalties,
Revenue COGS Ratio
2012: 127,472 30,118 0.2363
2011: 120,597 28,288 0.2346

In 2012, Cost of Goods sold per pound of revenue increased by 0.73% as compared to 2011.

Now, that includes revenues and cost of goods sold from Black Library and Forgeworld. It doesn't just mean kits, but the books that they sell as well (Rules books, codexes, novels, etc) plus packaging. I don't believe they manufacture those themselves, so there might be higher costs involved with that.

Also, the mix of revenue might be different. Even assuming the same part, revenues from trade sales will be less than revenues from a direct sale (Via store or website). So it's hard to make an educated guess as to how all that factors into the cost of goods sold relative to revenue.

xxRavenxx
01-08-2012, 18:04
I thought someone previously had pointed out the the figures showed that Finecast doesn't seem to be such a cost saver as first thought it would be

I don't believe GW ever said/thought it would be. It was due to the spiralling cost of metal, which in a few years time would have dragged cost up more. It was a precaution, not a solution.

loveless
01-08-2012, 18:32
I don't believe GW ever said/thought it would be. It was due to the spiralling cost of metal, which in a few years time would have dragged cost up more. It was a precaution, not a solution.

Yet they continue to increase the SRP of Finecast products.

I'm not saying you're wrong, Raven - I agree with you, in fact. I just find it a further slap in the face to use the resin to avoid metal cost increases and then proceed to increase the prices of the product anyway.

Is the report showing any benefit to Finecast? You'd think COGS would be going down...

Sean_OBrien
01-08-2012, 18:42
Now, that includes revenues and cost of goods sold from Black Library and Forgeworld. It doesn't just mean kits, but the books that they sell as well (Rules books, codexes, novels, etc) plus packaging. I don't believe they manufacture those themselves, so there might be higher costs involved with that.

Also, the mix of revenue might be different. Even assuming the same part, revenues from trade sales will be less than revenues from a direct sale (Via store or website). So it's hard to make an educated guess as to how all that factors into the cost of goods sold relative to revenue.

Most of that is actually in the report (granted not the direct/wholesale breakdown). If you take a look at the back half - Forgeworld and Blacklibrary are in their own market "segment". Starts to get into the breakdown in Section 3 (pg 34). While it doesn't give you detailed information on those two, it does provide enough information to isolate normal business (40K, LotR and WHFB games) from those two.

Lord Dan
01-08-2012, 18:47
I don't believe GW ever said/thought it would be. It was due to the spiralling cost of metal, which in a few years time would have dragged cost up more. It was a precaution, not a solution.

You're right. Here's a segment of Mark Well's comments from the 2011 report:



With the seemingly inexorable rise in the commodity price of metal, combined with the experience we have gained from making Forge
World kits and the obvious benefits to customers of resin miniatures, our manufacturing team have spent the last two years looking at the
possibility of converting Games Workshop’s metal range of miniatures and kits to resin. That is what Games Workshop has now done with
Citadel Finecast.

In fact he even goes on to say that Finecast is, overall, more expensive than metals:


However, manufacturing in resin is a very labour intensive process which involves mixing chemicals in flexible moulds that can deteriorate
after a small number of casts. Quality control has to be 100% as the potential for miscasts is much higher than for metal or plastic
miniatures. As a consequence the price of each kit is necessarily somewhat higher than the former metal versions and production runs are
small to ensure that quality standards are maintained.

Way to pass on that cost, guys!

Orrinocco
01-08-2012, 20:06
Depends on if they use FIFO or LIFO. (I'd have to check the reports). If they use FIFO, you're looking at goods that were produced/bought last year possibly. LIFO matches costs with revenue better. I believe (Might be wrong) that IFRS requires use of FIFO?



I'm pretty sure its more that IFRS specifically excludes the use of LIFO. but the effect is the same

Llew
01-08-2012, 21:24
One thing that I found borderline fascinating: the CEO points out that the United States did not experience the LOTR bubble they saw in many other places. The U.S. also didn't have the DiAgostini (sp?) piecework program either. And GW supposedly has sworn off the pieceworks ever again. But they're expecting a boost in sales due to the Hobbit movie.

Does anyone else wonder if perhaps, the lack of a piecework and the lack of a boost in the U.S. correspond for a reason?

If so, it puts GW in a bad position if they're hoping to see a rise off the movies. They're in a much better position now if that doesn't come through, but I have to think they're really hoping to see an increase in sales during the movies' lifespan.

EmperorNorton
01-08-2012, 21:56
One thing that I found borderline fascinating: the CEO points out that the United States did not experience the LOTR bubble they saw in many other places. The U.S. also didn't have the DiAgostini (sp?) piecework program either. And GW supposedly has sworn off the pieceworks ever again. But they're expecting a boost in sales due to the Hobbit movie.

Does anyone else wonder if perhaps, the lack of a piecework and the lack of a boost in the U.S. correspond for a reason?

If so, it puts GW in a bad position if they're hoping to see a rise off the movies. They're in a much better position now if that doesn't come through, but I have to think they're really hoping to see an increase in sales during the movies' lifespan.

I think they will see an increase in sales, but it will be miniscule compared to LotR.
When I read about the lack of a LotR bubble in the US I had the same thought you are describing here.
Not only were the DeAgostini magazines available in thousands more stores than GW's products usually are (every news agent sold them), they were advertised on TV. They reached many, many people GW usually doesn't reach.
If they are going for their usual marketing with the Hobbit - release something and hope people stumble upon it - I don't think it will have much of an impact.

Lord Dan
01-08-2012, 22:06
Remember too that the cost of entry for LoTR is now much higher than it was 5 years ago.

Autumn Leaves
01-08-2012, 22:09
3 hobbit movies is good news for GW, it doesn't matter which way you cut it, GW will make money off the back of those 3 movies.

Lord Dan
01-08-2012, 22:12
I thought there would only be two?

EmperorNorton
01-08-2012, 22:17
Remember too that the cost of entry for LoTR is now much higher than it was 5 years ago.
We don't know what the entry cost for The Hobbit will be, though. When the prices for LotR were increased earlier this year there was a rumour that the game would be changed significantly and that you'd need less miniatures.


I thought there would only be two?
Yeah well, now it's three.

paddyalexander
01-08-2012, 22:37
Remember too that the cost of entry for LoTR is now much higher than it was 5 years ago.

The plastic infantry boxes saw a 20% increase in the 2011 price adjustment and then saw an additional 33% increase trough repackaging (halving) of the box contents.

This makes me think that a 10%-13% average price increase for the year is being very generous in favor of gwPLC. It is only taking into account the annual price rise and not the finecast tax, increases trough repackagings and the minor price increases that happen a few times a year "to bring prices of similer kits in line with the rest of the range".

The Hobbit being expanded to three films is good news for gwPLC, but only if they can take advantage of it. The simple fact is that historicly their key products that expanded their customer base have been successful because of the involvement of the companies involved, DeAgostini for LotRs and Milton Bradley for Hero Quest. What they brought to the equation has been television advertising and a broader market for the product. Right now there are no plans announced for another partnership like the above (that we know about) so it will be interesting to see to what extent gwPLC can repeat their past success.

A repeat of the LotR bubble can be beneficial to the customer, at least in the short term. It might be nostalgia but I can remember that during the last bubble the prices were very stable, with only infrequent minor price increases to the product line over that time.

Omniassiah
02-08-2012, 02:46
One thing that I found borderline fascinating: the CEO points out that the United States did not experience the LOTR bubble they saw in many other places. The U.S. also didn't have the DiAgostini (sp?) piecework program either. And GW supposedly has sworn off the pieceworks ever again. But they're expecting a boost in sales due to the Hobbit movie.

Does anyone else wonder if perhaps, the lack of a piecework and the lack of a boost in the U.S. correspond for a reason?

I know that in the case of my area it was the game not being that great. When you have a hero fighting 2-3 monsters for 7-8 turns with nothing happening it didn't encourage many to pick it up. By the time WotR came out the damage to LotR game system was already done.

Llew
02-08-2012, 03:54
I know that in the case of my area it was the game not being that great. When you have a hero fighting 2-3 monsters for 7-8 turns with nothing happening it didn't encourage many to pick it up. By the time WotR came out the damage to LotR game system was already done.

So your argument would be that people in Europe and the U.K. just have a higher tolerance for dull games, or an inability to spot rules flaws?

I'm arguing that in the U.S., we were exposed to the game in a dramatically different manner. We had to react to it based off of regular retail support. If you had a store that didn't like it, you weren't going to be exposed much, and if you did, it was going to be with a healthy dose of negativism. A magazine that gave you small units over time, and for a really good price would have been a borderline brilliant marketing program for a company trying to grow its business. You might even be willing to overlook it.

But overall, I still found the game fun -- its biggest obstacle for me was that I was more interested in mass games, not skirmish.

Lord Dan
02-08-2012, 05:16
I steered away from it mainly because I felt like if I wasn't building and painting the models to look exactly how they did in the movies, that I was doing it wrong. Irrational, perhaps, however when no one else seemed interested it was easy to move on.

Iskandar
02-08-2012, 09:41
A big point of interest in this report lies in the sales figures. Bearing in mind this is before the spike of 6th ed:

UK and Continental Europe seems to be fairly level, both seeing a slight increase at ~600k. Was this as a result of price rises or more sales? Without a further breakdown it's difficult to say. Strangely the figures quoted for 2011 for both the UK and EU are more, sometime significantly more, than those in the 2011 Annual report

UK 2011 external sales figures:
2012 AR - 31,006k
2011 AR - 30,839k

EU 2011 external sales figures:
2012 AR - 40,157k
2011 AR - 35,147k

Ok so a 200k discrepancy can probably be accounted for in the UK figures, but 5 mil discrepancy for the EU?

Meanwhile North America and Australia's figures are spot on. Interestingly they have increased: 3.25mil for the US and 600k for Oz. Again whether this is due to rising sales or GW killing the golden goose will remain to be seen. That said, don't expect it to occur next year when the spike due to 6th and starter sets will manifest.

As a general caveat, as the report ended on the 3rd of June, the spike in demand is unlikely to figure this year. Expect 2013 to be a glowing year for GW however (and thus an excuse to hike the price and test the elasticity of their products).

Trasvi
02-08-2012, 11:03
UK and Continental Europe seems to be fairly level, both seeing a slight increase at ~600k. Was this as a result of price rises or more sales? Without a further breakdown it's difficult to say. Strangely the figures quoted for 2011 for both the UK and EU are more, sometime significantly more, than those in the 2011 Annual report

EU 2011 external sales figures:
2012 AR - 40,157k
2011 AR - 35,147k

Ok so a 200k discrepancy can probably be accounted for in the UK figures, but 5 mil discrepancy for the EU?

In the annual financial report lottery, Northern Europe and Scandinavia ended up in Europe, with attending 5M revenue and 1.5M profit. (They've previously been part of Europe, UK, and Asia)...

Omniassiah
02-08-2012, 11:50
So your argument would be that people in Europe and the U.K. just have a higher tolerance for dull games, or an inability to spot rules flaws?

I'm arguing that in the U.S., we were exposed to the game in a dramatically different manner. We had to react to it based off of regular retail support. If you had a store that didn't like it, you weren't going to be exposed much, and if you did, it was going to be with a healthy dose of negativism. A magazine that gave you small units over time, and for a really good price would have been a borderline brilliant marketing program for a company trying to grow its business. You might even be willing to overlook it.

But overall, I still found the game fun -- its biggest obstacle for me was that I was more interested in mass games, not skirmish.
From my experience Europeans have a bit more interest in LotR then Americans do. It was hard to find someone over there that played 40k/fantasy that wasn't a fan of the books while over here in my local area there just wasn't the fanatic interest in it. Most that read the books did it because of the movies not before hand. That combined with a game that most of us didn't like or found just "meh" meant that we didn't pursue it. Also it had the same issue that starship troopers had, Okay I have to buy 1 box and you need to buy 4-5 and we really need to have different forces or the game is kind of silly.

paddyalexander
02-08-2012, 16:27
The 200k discrepancy might be the Republic of Ireland being moved between regions as well as year by year we are shuffeled between being part of Europe, North Europe or the UK.

Lord Dan
02-08-2012, 16:33
The 200k discrepancy might be the Republic of Ireland being moved between regions as well as year by year we are shuffeled between being part of Europe, North Europe or the UK.

Er...from an accounting standpoint that sounds morally ambiguous at best.

paddyalexander
02-08-2012, 16:39
Sorry I don't think I was clear. I didn't mean being part of three different regions at the same time but rather being moved between them, from one to another over the years. I doubt we generate much revenue given a population of only about 4 million and there is one gwPLC store and a handful of indies in the entire country.

Skyth
02-08-2012, 16:55
Sorry I don't think I was clear. I didn't mean being part of three different regions at the same time but rather being moved between them, from one to another over the years. I doubt we generate much revenue given a population of only about 4 million and there is one gwPLC store and a handful of indies in the entire country.

It's still a bit morally ambiguous, as you can't compare like to like for previous years then.

Lord Dan
02-08-2012, 17:08
It's still a bit morally ambiguous, as you can't compare like to like for previous years then.

Exactly. Bad year for North Europe and a great year for Europe? Germany is now part of North Europe. Look, investors, we're hitting all of our targets!

Inquisitor Engel
02-08-2012, 17:59
I steered away from it mainly because I felt like if I wasn't building and painting the models to look exactly how they did in the movies, that I was doing it wrong. Irrational, perhaps, however when no one else seemed interested it was easy to move on.

This is exactly how I felt. Sure I'm supposed to paint my Imperial Fists a certain way, but do I have to? No.

Skyth
02-08-2012, 18:24
This is exactly how I felt. Sure I'm supposed to paint my Imperial Fists a certain way, but do I have to? No.

Funny, there's a significantly loud portion of the gaming populace that insists that you do :P

Inquisitor Engel
02-08-2012, 18:56
Funny, there's a significantly loud portion of the gaming populace that insists that you do :P

I've always found those that ignore "official" paint schemes and play fast and loose with it tend to have armies painted to a quality where the naysayers shut up. Unless it's on the Phalanx forums, which suck. I'm not saying mine are jaw dropping, but plenty of others who don't follow the "Red Skulls for Sergeants, red helmets for vets" pattern have armies that make me weak at the knees. Same goes for Blood Angels ("His helmet should be yellow, but damn that looks amazing") Space Wolves ("Since they're not in Ragnar's company, they shouldn't have his symbol, but WOW!") and pretty much any other army you go for.

Orrinocco
02-08-2012, 18:58
It's still a bit morally ambiguous, as you can't compare like to like for previous years then.

That'll be why they've requoted the 2011 figures for comparison, and we are seeing the differences. Within each report, you are comparing like with like.

What it of course does do is to make it nigh-on impossible to compare multiple years between different reports, so you can't see any obvious trends. It's shifty practice usually only done if you have something you want to hide within the numbers...

Skyth
02-08-2012, 20:50
Oh I know...Change in accounting principles=restate all numbers in report. However, most people only look at the current year's numbers, so all is well as far as they're concerned. And that is why companies do it.

Iskandar
02-08-2012, 23:44
Honestly it's the 5mil discrepancy which doesn't add up (no pun intended). If they have to rejig the 5.2 mil it doesn't exactly scream confidence for their own performance. Rather it gives the impression that there's something to hide.

Lord Dan
03-08-2012, 00:10
Honestly it's the 5mil discrepancy which doesn't add up (no pun intended). Even if some regions were shunted around you're still off by at least a couple of mil or so.

Also if they have to rejig the figures it doesn't exactly scream confidence for their own performance.

The analysis a page or two back indicating the fact that their payout-per-share didn't reflect their true performance surprised me as well. That is, of course, until I discovered their secret plot...

Conspiracy Theory: Kirby and Wells, the evil masterminds of the plot, have been intentionally driving the company into the ground, knowing that short term profits that left them rich were worth sacrificing the company in the long term. The low-ball yearly price hikes, however, were not enough. Soon they began outrageous price increases in upwards of 50% to hasten the process. Seeing that these actions actually led to losses, they financially shifted Ireland to another continent and, with the help of Batman's now-dormant super computer (which gained access to the GW servers through Ms. Kirby's "IT consulting" gig), added a mysterious 5 million pounds of profit on the top. Coupling this success with the fact that the company is now "done expanding and doesn't need the money", they allowed themselves to pay out huge per-share dividends on top of their yearly performance bonuses and salaries, leaving them filthy rich.

The secret? "Kirby" and "Wells" are actually one person: Brian Snoddy, founder of Privateer Press, and known more famously by his former secret agent name of "Sky Ribwell". The goal? With the demise of GW and the huge sums of money gained from it's downfall, Brian would allow Privateer Press to buy the country of Luxembourg and create a real-world version of his gaming vision.

Iskandar
03-08-2012, 00:19
I tend to find the more mundane explanations more interesting and closer to the truth like GW feasts on orphan souls.

I3uLLioN
03-08-2012, 00:30
Lord Dan... that is ridiculous... he is going to buy Denmark.

The bearded one
03-08-2012, 13:43
The analysis a page or two back indicating the fact that their payout-per-share didn't reflect their true performance surprised me as well. That is, of course, until I discovered their secret plot...

Conspiracy Theory: Kirby and Wells, the evil masterminds of the plot, have been intentionally driving the company into the ground, knowing that short term profits that left them rich were worth sacrificing the company in the long term. The low-ball yearly price hikes, however, were not enough. Soon they began outrageous price increases in upwards of 50% to hasten the process. Seeing that these actions actually led to losses, they financially shifted Ireland to another continent and, with the help of Batman's now-dormant super computer (which gained access to the GW servers through Ms. Kirby's "IT consulting" gig), added a mysterious 5 million pounds of profit on the top. Coupling this success with the fact that the company is now "done expanding and doesn't need the money", they allowed themselves to pay out huge per-share dividends on top of their yearly performance bonuses and salaries, leaving them filthy rich.

The secret? "Kirby" and "Wells" are actually one person: Brian Snoddy, founder of Privateer Press, and known more famously by his former secret agent name of "Sky Ribwell". The goal? With the demise of GW and the huge sums of money gained from it's downfall, Brian would allow Privateer Press to buy the country of Luxembourg and create a real-world version of his gaming vision.


Lord Dan, that's just hilarious.


And yet nobody wants to buy the Netherlands, do they? :p

Reinholt
03-08-2012, 15:10
Lord Dan, that's just hilarious.


And yet nobody wants to buy the Netherlands, do they? :p

There's only two things in this world I hate. People who are intolerant of other people's cultures, and the dutch.

Lord Dan
03-08-2012, 15:55
And yet nobody wants to buy the Netherlands, do they? :p
From what I've seen of the Dutch on these forums, they couldn't afford to buy the Netherlands.


There's only two things in this world I hate. People who are intolerant of other people's cultures, and the dutch.
Nigel, behave.

C-Coen
03-08-2012, 16:00
There's only two things in this world I hate. People who are intolerant of other people's cultures, and the dutch.

You might just want to change your text colour. Dutch people rather like orange...

On a slightly more serious note, if they want to buy Luxembourg, expect some more price rises over the next few years. (You already were? Oh, good.) If they settle for Greece however... I heard it's on sale at the moment. Wait a while, and it may come free with some other Mediterranean country... (or even the Netherlands, if the next government will be as stupid as the last one)

Aaaaanyway, I too doubt the Hobbit movies will bring in as many profit as they seem to be expecting. 80% of the people I know who play LotR, started because of those Battle Games in Middle-earth magazines. Because of those, they were exposed to it, and it provided a relatively cheap way to enter. When you knew how much fun etc it all was, you wouldn't mind paying the then-slightly higher prices at GW. Now that plastics have doubled in price for normal plastic infantry (an army I started back then would've costed me 2*17.50 for plastics, 10 for the command and 35 for a rulebook. Total: 80 euros. These days? 3*19.50 for plastics (receiving 3/4ths of the amount of models too), 31 for command (twice the models though), 22 for an 'armybook' and then 52 for the main rules. That's 163,50 for a playable army with rules. Over twice the cost of entering it would've been just 8 years ago), nearly tripled compared to the prices you paid in the DeAgostini series, coupled with the still-existing blind hate many GW staff have for the 'intruder', I can't imagine a lot of people starting it. We'll see.

Wintermute
03-08-2012, 17:46
Has anyone spotted a mention of Dreadfleet in the report? :shifty:

Lord Dan
03-08-2012, 17:50
Nope.

I suppose the absence of its mention indicates something about its performance...

The bearded one
03-08-2012, 17:57
Did space hulk get a mention? (It probably did, but I'm just wondering how noteworthy a mention).



There's only two things in this world I hate. People who are intolerant of other people's cultures, and the dutch.

147103

Lord Dan
03-08-2012, 18:15
Did space hulk get a mention? (It probably did, but I'm just wondering how noteworthy a mention).

I just looked, and didn't see it in either the 2008-2009 report or the 2009-2010 report. I should also note that the former was super difficult to read, as the paragraphs were hardly broken and the headers weren't separated from the text, so I could have easily missed something.

Black-Tooth
03-08-2012, 19:54
Is it possible that GW isn't going to do a Hobbit version of the DeAgostini Battle Games in Middle-Earth because with the price rises of the standard GW LOTR box sets DiAgostini can't justify selling their magazine at such a inflated price to cover the cost of GW's miniatures?

It's interesting to see that GW still aren't really addressing the issue of losing customers. I wonder why...

Finnigan2004
03-08-2012, 19:54
Has anyone spotted a mention of Dreadfleet in the report? :shifty:

The first rule of dreadfleet is that we don't talk about dreadfleet. The second rule of dreadfleet is that we don't talk about dreadfleet...

Mastodon
03-08-2012, 20:24
Is it possible that GW isn't going to do a Hobbit version of the DeAgostini Battle Games in Middle-Earth because with the price rises of the standard GW LOTR box sets DiAgostini can't justify selling their magazine at such a inflated price to cover the cost of GW's miniatures?

It's interesting to see that GW still aren't really addressing the issue of losing customers. I wonder why...

GW arent doing another magazine because it nearly killed their business. They're idiotic at times but they wont willingly suffer another 4 years of terrible failure because of the magazine again.

paddyalexander
03-08-2012, 20:38
GW arent doing another magazine because it nearly killed their business. They're idiotic at times but they wont willingly suffer another 4 years of terrible failure because of the magazine again.

All available evidence points to the Battles in Middle Earth series being a huge factor in the creation of the Lord of the Rings bubble for gwPLC. It was widely available in super markets, drug stores & news agents and was advertised on tv :eek:. It introduced thousands of customers to gwPLC & their products who would have otherwise never heard of war gaming, let alone games workshop. Um... so my question is how did all of that nearly kill their business?

EmperorNorton
03-08-2012, 20:46
All available evidence points to the Battles in Middle Earth series being a huge factor in the creation of the Lord of the Rings bubble for gwPLC. It was widely available in super markets, drug stores & news agents and was advertised on tv :eek:. It introduced thousands of customers to gwPLC & their products who would have otherwise never heard of war gaming, let alone games workshop. Um... so my question is how did all of that nearly kill their business?

I believe the problem was that the bubble was just that - a bubble.
They were not expecting that level of success and they certainly were not ready for it stopping again suddenly.
So instead of trying to deal with that they decided not to risk having the same level of success again.

As they say, it's better to never have loved than to have lost. :rolleyes:

Brandir
03-08-2012, 20:56
Mr Kirby warned about the LOTR bubble. But admitted that, despite his warnings, GW became 'lazy'. They could do no wrong making oodles of money from LOTR and that was detrimental to business for a couple of years afterwards. This is a rather simplistic précis but I hope it helps in the discussion.

The Hobbit will create a two-year bubble, 2013 to 2014:

14 Dec 2012 - first film released
???June 2013 - DVD of film 1
13 Dec 2013 - film 2
???Mar 2014 - dvd film 2
???Summer 2014 - film 3
???Dec 2014 - dvd 3.

Hopefully GW will have learnt their lesson.

Max Jet
03-08-2012, 21:05
All available evidence points to the Battles in Middle Earth series being a huge factor in the creation of the Lord of the Rings bubble for gwPLC. It was widely available in super markets, drug stores & news agents and was advertised on tv :eek:. It introduced thousands of customers to gwPLC & their products who would have otherwise never heard of war gaming, let alone games workshop. Um... so my question is how did all of that nearly kill their business?

I'm curious so I second that question.

The bearded one
03-08-2012, 21:25
I got into this hobby due to that very magazine.

Brandir
03-08-2012, 21:27
I got into this hobby due to that very magazine.

You were one of the very few who did - an issue with BGinME was the hoped for transfer to 40K/Warhammer was virtually nil.

shelfunit.
03-08-2012, 21:30
All available evidence points to the Battles in Middle Earth series being a huge factor in the creation of the Lord of the Rings bubble for gwPLC. It was widely available in super markets, drug stores & news agents and was advertised on tv :eek:. It introduced thousands of customers to gwPLC & their products who would have otherwise never heard of war gaming, let alone games workshop. Um... so my question is how did all of that nearly kill their business?

I believe Mastadon may have been being a "bit" sarcastic there (at least I hope so :p )


You were one of the very few who did - an issue with BGinME was the hoped for transfer to 40K/Warhammer was virtually nil.

Ahhh, but the transfer of non-wargamers to LotR gamers was huge - without it GW would probably have struggled to let the general public know they had anything to do with LotR.

paddyalexander
04-08-2012, 00:17
You were one of the very few who did - an issue with BGinME was the hoped for transfer to 40K/Warhammer was virtually nil.

I know about a dozen people who got into 40k & fantasy trough that publication. It might vary from region to region but the impression I have always gotten was that BGiME was the Hero Quest of its day. It introduced many people to the war gaming hobby who would of otherwise never been aware of its existance. I'm a war gamer because when I was a kid I saw an advert on tv for Hero Quest and my parents bought it for me for x-mass from a local super market. My nieghbours son kevin is a war gamer because when he was a kid he saw an advert for Battle Games on tv and his parents bought him the magizine from a local super market.

The bubble bursting and the small turn over to gwPLCs' other games systems speaks more of the utter failure on gwPLCs' part to capitilise on the success of the publication and not a flaw in the product itself.

Time will tell if gwPLC can repeat the growth in profits that was generated by the LotRs without such a widely available gate way and visible advertising.

Private_SeeD
04-08-2012, 04:25
Does anyone know who GW currently use to do their auditing?

Lord Dan
04-08-2012, 05:52
Does anyone know who GW currently use to do their auditing?

Games Workshop.

Havarel
04-08-2012, 08:41
PriceWaterHouseCooper (pwc) if I remember rightly, although might have changed in the last few years.

Brandir
04-08-2012, 09:14
I know about a dozen people who got into 40k & fantasy trough that publication. It might vary from region to region but the impression I have always gotten was that BGiME was the Hero Quest of its day...........

There will always be exceptions, such as you describe, but from a global perspective the move on to other GW products was essentially nil.

I can't remember the figures exactly (can anyone help?) but a few years ago GW worked on some basic premise that their average gamer was mid teens and played for 2 or so years before finding beer and women/men.

This two year or so model does work well for GW. It seems fairly settled in the UK and Northern Europe.

The one and only reason for GW's existence in its present form in 2012 and beyond is simply a vehicle to sell widgets to make money and keep investors happy. It does this extremely well. As a shareholder since 1994 I am happy with the returns on my investment. I used to view the GW shares in my portfolio for nostalgic reasons; they remain there as they give me a good return.

However, as a hobbyist I would prefer GW to be a social enterprise, such as like John Lewis.

As an aside I wonder how well GW's competitors are doing? A previous rival, Rackham, was quoted on one of Paris' stock markets with sales circa €12 million in 2006. They had about 50 staff and made profits of some €200,000. Of course, they went bust. But at the time I seem to remember Rackham having a similar market penetration that Privateer Press has now.

Chaos and Evil
04-08-2012, 10:45
I can't remember the figures exactly (can anyone help?) but a few years ago GW worked on some basic premise that their average gamer was mid teens and played for 2 or so years before finding beer and women/men.
GW works on the assumption that at any moment, half of their players have been playing for one year or less.

angora
04-08-2012, 22:56
A previous rival, Rackham, was quoted on one of Paris' stock markets with sales circa €12 million in 2006. They had about 50 staff and made profits of some €200,000. Of course, they went bust. But at the time I seem to remember Rackham having a similar market penetration that Privateer Press has now.

Rackham went bust through sheer stupidity, arrogance and not understanding their market niche. GW could probably be accused of arrogance but I don't put them down as stupid or unaware of what their market is. I know that for many of us what GW does seems odd but I firmly believe they know their market - how that aligns with the needs of veteran players is another thing entirely.

ModelCalamity
05-08-2012, 03:36
Rackham went bust through sheer stupidity, arrogance and not understanding their market niche. GW could probably be accused of arrogance but I don't put them down as stupid or unaware of what their market is. I know that for many of us what GW does seems odd but I firmly believe they know their market - how that aligns with the needs of veteran players is another thing entirely.

I totally agree with this. This years numbers show that they don't do everything wrong. They got volume growth for the first time in a long time. Despite what people say the price increase was not 13.2%
Yes amongst all the items that went up the average was 13.2%. However only a quarter of he total products went up in price. The rest stayed the same. I know from my old days in GW that prices would be set based on the inflation index. A quarter of 13.2 is very close to that number.

What I do see as interesting is he distinct role FW seems to be getting. FW is marketing itself in a way that some of the people here are saying GW should be doing business. They announce models and rules in advance. They change rules more frequent than GW and they market via inet,

To me it seems the more GW focuses and adjust its strategy to get their target customers into their store. The more FW takes a role to pick up the veteran gamers. Wether this is intentional or not I can't say. However it seems like a great way to hedge your risk. Keep in mind that the total turnover from FW is more than most other companies out there.

paddyalexander
05-08-2012, 06:32
Despite what people say the price increase was not 13.2%

You're right. The 2011 May/June price increase was 13.2%, it does not factor in the addittional price increases that happened trough out the rest of the year when gwPLC:

Switches a model from metal to finecast

Repackages poduct so you are getting half the content for two thirds the price

Makes several minor increases to the range of about 1% to 5% several times troughout the year

Some of these increases are very large. The entire LotRs plastic infantry box sets were repackaged for an equivalent price increase of 33% on top of the 20% price increase they had already recieved in the May/June. Everytime a model gets switched to finecast it recieves a 10%-50% price bump as well as still recieving the May/June love from gwPLC.

So saying that the price increased only by 13.2% for the year is in fact being pretty conservitive.

shelfunit.
05-08-2012, 06:52
They got volume growth for the first time in a long time.

Not hard to do when your major release are 144 new paints completely replacing the previous line - every shop had to buy them, that's a lot of paint pots to a lot of shops. That is the one and only reason "volume" sales went up.


What I do see as interesting is he distinct role FW seems to be getting. FW is marketing itself in a way that some of the people here are saying GW should be doing business. They announce models and rules in advance. They change rules more frequent than GW and they market via inet,

This is true, but the main reason FW is getting a huge boost in income is the combination of releasing a whole new section for Warhammer, and the fact that they are now price competative with GW "proper" in large parts of the world now.


Keep in mind that the total turnover from FW is more than most other companies out there.

As they don't split the BL/FW/WHW figures we have no way of determining if this is the case.

ModelCalamity
05-08-2012, 07:01
You're right. The 2011 May/June price increase was 13.2%, it does not factor in the addittional price increases that happened trough out the rest of the year when gwPLC:

Switches a model from metal to finecast

Repackages poduct so you are getting half the content for two thirds the price

Makes several minor increases to the range of about 1% to 5% several times troughout the year

Some of these increases are very large. The entire LotRs plastic infantry box sets were repackaged for an equivalent price increase of 33% on top of the 20% price increase they had already recieved in the May/June. Everytime a model gets switched to finecast it recieves a 10%-50% price bump as well as still recieving the May/June love from gwPLC.

So saying that the price increased only by 13.2% for the year is in fact being pretty conservitive.

Sigh,

If you are so hell bent on repeating a point that is wrong, be my guest. I remember LoTR to be only 10% of GW's sales mix about 5 years ago. I doubt that number has gone up. I suspect that it went down a lot as many of my old colleagues tell me both WFB and 40k have seen great increases. The paint range went up as a percentage for certain as it is specifically mentioned in the report. So let's for the sake of argument say it is only 5% of GW's sales

So if we take the LOTR range of which a line of 20 odd boxes went up by 33%. The net effect it would have on the total price increase would be 1.65%. Here we assume the entire range was increased by 33%. It didn't though so we would need to adjust for what part of the total LOTR sales the plastic boxes would be. As most armies needed 2 boxes. (max 50 models in a game take into account) the actual product value of an army would be around 50%. So that would mean the effect of the total price increase would be closer to 0.825%. now we need to account for the fact that this price increase only affected sales after january.

GW having stated in previous announcements that 2/3 of its sales are made in the first half of the year. With the main reason for that being Xmas making them the lions share. So we could argue that the price rise for last year for LOTR was only 0.275%.

Now I know many of these numbers are based on assumptions. But my experience in GW and some of he things mentioned lead me to believe they are not plucked out of the air.

People are free to share their comments and beliefs on how they think GW is performing. But I do think statements like "13.2% hikes" need to be addressed if they are based on wrong assumptions.


Not hard to do when your major release are 144 new paints completely replacing the previous line - every shop had to buy them, that's a lot of paint pots to a lot of shops. That is the one and only reason "volume" sales went up.

Well around me the paints have been received very well. So if re-releasing a good product that made up a sizeable chunk of their sales to begin with is giving them sales growth is a bad idea then I don't know what would classify as a good one. But I suspect it is not the only reason it created volume growth. WFB seems to be received very well too.



This is true, but the main reason FW is getting a huge boost in income is the combination of releasing a whole new section for Warhammer, and the fact that they are now price competitive with GW "proper" in large parts of the world now.

Again these are strategies many of the doom mongers stated GW should go towards. The way I see this, is a very clever way o segregate the two customer bases. It makes it possible to create different strategies for two different target groups. The HH releases will go a long way to make this even better. FW needs to be more price competitive as it is not providing real service. Hence it's vulnerable to competition on pricing.

What I suspect GW is doing is trying to change the way service is perceived by their customers. Hence the last three years statements focusing so much on Retail standards and now this year on Trade standards. I think tis is the right way to go. And not just for a GW retails business. The more inet purchasing becomes accepted. The more retailers will have to step up their experiences and after services.



As they don't split the BL/FW/WHW figures we have no way of determining if this is the case.

That's true and I made an assumption. However there has been a time when they did post their sales split. And since then they have been showing their growth numbers. I can't remember when it was but quite some time ago (10 years maybe?) there was a big fuss about FW breaking a million. So if you would go through the annual revenue increases since then you can make out what it is they're making now.

Btw your argument can be used against your first point here. We don't know the sales split for paints either ;)

shelfunit.
05-08-2012, 07:46
Well around me the paints have been received very well. So if re-releasing a good product that made up a sizeable chunk of their sales to begin with is giving them sales growth is a bad idea then I don't know what would classify as a good one. But I suspect it is not the only reason it created volume growth. WFB seems to be received very well too.

Don't get me wrong - the new paint range (names & some changes aside) is a good thing. It is just that heralding increased volume sales as a sign everything is going spectacularly well whilst ignoring the fact that they were boosted by this one event alone is naive at best.


Again these are strategies many of the doom mongers stated GW should go towards. The way I see this, is a very clever way o segregate the two customer bases. It makes it possible to create different strategies for two different target groups. The HH releases will go a long way to make this even better. FW needs to be more price competitive as it is not providing real service. Hence it's vulnerable to competition on pricing.

I pointed out 2 things, the first - introducing a line of Warhammer products into FW is a goods thing, and a number of the pieces are both very good and decent value. That last bit however leads onto the second of my points - FW (or WHF) is now, in financial terms, a competitor to GW "core" lines in getting on for a quarter of their sales territories. This is a terrible thing and noone in their right mind would have (or has) suggested this is the way to go. In fact there are only 3 options that GW have to redress this - 1) GW lower prices in the non-Europe/non-US areas, which, despite being the sensible option, will never happen 2) They increase the cost of FW/WHF products at a faster rate than the ROW prices, again a terrible idea as this will heavily reduce both "home" and "ROW" sales, or 3) They open country specific FW/WHF websites where the ROW pays ROW equivalent prices for FW/WHF products whilst the rest of us pay the current price. Personally I expect (if they do change) it will be to option 3.


That's true and I made an assumption. However there has been a time when they did post their sales split. And since then they have been showing their growth numbers. I can't remember when it was but quite some time ago (10 years maybe?) there was a big fuss about FW breaking a million. So if you would go through the annual revenue increases since then you can make out what it is they're making now.

Not a terrible assumption though - I expect you are right.


Btw your argument can be used against your first point here. We don't know the sales split for paints either ;)

In the chairmans/CEO spiel TK (I think) made a big deal of saying they sold £2.75m in paints in April alone, this clearly shows that the vast majority (if not all and then some) of the increased sales volume came from the new paints.

paddyalexander
05-08-2012, 07:48
The lord of the rings is only be used as an example of the reboxing price increase policy. The 13.2% incease was worked out shortly after the 2011 price increase was put into effect. It was worked out this document https://docs.google.com/spreadsheet/ccc?key=0An-qBba7fMe1dEl5dG9uUlVwbTZmUmt4cElqcWNEelE&pli=1#gid=0.

What I am saying is that the number does not show the actual increase for the year because of things like the LotR reboxings, yes it was only 22 products but those are 22 products whose price increased by 53% over the year, not the 20% that was used to calculate the 13.2% figure.

ModelCalamity
05-08-2012, 09:03
Your link doesn't work. And I have seen internal calculations and statements that rebuke a claim at 13.2% being the average.

My above calculations also are just an example. The actual volumes of sales for each product should be reflected in these calculations too. A 5 percent increase on the top 1 selling item has more impact than a 30% increase on the least selling one.

Lord Dan
05-08-2012, 19:57
It works for me. In fact it even seems to be to GW's benefit, as it averages in the 0% increase for each individual pot of paint in the 2011 range. I wouldn't have done that.

shelfunit.
05-08-2012, 21:14
Your link doesn't work.

Works for me too.

EDIT: I use Firefox as my browser.

Kaptajn_Congoboy
06-08-2012, 07:29
And for me. I guess he has some sort of issue with google docs.

paddyalexander
06-08-2012, 15:16
If you are going to dismiss the calculation of the average price rise being 13.2% then can you at least provide some evidence or source apart from some internal document you saw once? Try opening the document in chrome or firefox, I've had problems with google documents in IE before myself. Yes the calculation counted paint pots as individual products which is very favorable to gwPLC. Paints prices are typicly raised outside of the annual price adjustment TM when they are.

Highlights of last years price increases included:

10-12% increases on all of the core rule books, codices and army books.

10-12% increases on the plastic space marine boxes

17% increases on the battle forces

11% increases on space marine vehicle kits

17% increase on the ork boyz mob plastic infantry kit

13% increase on Eldar Dire Avenger plastic infantry kit.

20% increase on IG Sentinels.

17% increase on the Cadian Shocktrooper plastic infantry kit (which came shortly after a 33% increase per model by repackaging).

So a lot of items that a person begining in the gwPLC hobby TM went up by about 10%. Space Marine stuff (the best selling gwPLC product line) increase by about 10%. The rule books, army books/codices and battle forces all saw significant increases. Many battle boxes like the Cadian Imperial Guard, the Orks and the Tyranids also saw the value of the contents drop trough change of contents.

xxRavenxx
07-08-2012, 06:48
Not hard to do when your major release are 144 new paints completely replacing the previous line - every shop had to buy them, that's a lot of paint pots to a lot of shops. That is the one and only reason "volume" sales went up.

I can only speak for my own store, but volume of paint sales has increased very healthily this year. I don't think its just the initial order that has upped sales. I don't know how they break down items, but also my initial paint order was 1 item. "hobby rack with paint".



Anyway, much as people will hate my next comment, lets get it out there:

People are claiming that a 33% price rise is the only reason GW are making money. Ignoring the silly number, So what? If a 33% price caused them to drop a negligable volume of sales (assuming the paint comment is true) and gain several million in profit. Good work Public Company! You're doing your job right... :p

shelfunit.
07-08-2012, 07:13
Anyway, much as people will hate my next comment, lets get it out there:

People are claiming that a 33% price rise is the only reason GW are making money. Ignoring the silly number, So what? If a 33% price caused them to drop a negligable volume of sales (assuming the paint comment is true) and gain several million in profit. Good work Public Company! You're doing your job right... :p

We will probably "hate" it because it is something you just made up :wtf: The only oft-repeated number used in conjuction with their price rises is 13.2%, not the bizzare 33% you seem to have pulled from imagination land... On top of that it has not been said this is the only reason they are "making money", just that this is the reason they are treading water and not showing any growth. Their profit gain has been through a combination of increased royalties, including an additional week of income and the vast increase in profits posted by the FW/BL combo. The "core business" is static at best.

xxRavenxx
07-08-2012, 07:28
We will probably "hate" it because it is something you just made up :wtf: The only oft-repeated number used in conjuction with their price rises is 13.2%, not the bizzare 33% you seem to have pulled from imagination land... On top of that it has not been said this is the only reason they are "making money", just that this is the reason they are treading water and not showing any growth. Their profit gain has been through a combination of increased royalties, including an additional week of income and the vast increase in profits posted by the FW/BL combo. The "core business" is static at best.

The person DIRECTLY above my post mentioned 33%, for an example. Several other people have alluded to the reboxing price increases as though they effect the entirety of sales.

And I'm sorry if you don't think GW are making money. (I assume "making money" means you don't see it as actual profit.) I look at their numbers and see them going up. It just seems like a good thing. My sales profits going up about 50% in the last year seemed like a good thing too. I'm probably mistaken though. It was probably a bad thing, right?

AlexHolker
07-08-2012, 08:12
Anyway, much as people will hate my next comment, lets get it out there:

People are claiming that a 33% price rise is the only reason GW are making money. Ignoring the silly number, So what? If a 33% price caused them to drop a negligable volume of sales (assuming the paint comment is true) and gain several million in profit. Good work Public Company! You're doing your job right... :p
It should be trivially obvious: profit gained from price rises are a zero-sum game. If GW makes more money by providing the customer with a superior product or product range, everyone wins. If GW makes more money by increasing prices, they only win because the customer loses.

In addition: the lower GW's sales figures, the less valuable their product. If GW chooses to emphasise profit margin over quantity this makes it harder for people to find opponents, and makes their purchases less effective as a form of entertainment.

shelfunit.
07-08-2012, 08:14
The person DIRECTLY above my post mentioned 33%, for an example. Several other people have alluded to the reboxing price increases as though they effect the entirety of sales.

On the packaging of a single model. Some of GW's plastic kits have increased by (over) 33% over the last year, but your original post implied this was a figure that applied across the whole range, when many times it has been stated this is bot hnot the case and the lower % figure was used as an average across the range, not the 33%.


And I'm sorry if you don't think GW are making money. (I assume "making money" means you don't see it as actual profit.)

The only you should be sorry about is deliberately mis-reprisenting what other people are saying in an attempt to stir up argument. I never said they were not "making money" and have never allude to or implied it. They quite obviously are making money - infact I really don't know what you are saying here other than trying to provoke an argument.



I look at their numbers and see them going up. It just seems like a good thing. My sales profits going up about 50% in the last year seemed like a good thing too. I'm probably mistaken though. It was probably a bad thing, right?

But you don't seem to look at why their numbers are going up. Your profits are going up - well done, you are selling more, and I would never wish for you to not do so, but the bigger picture is that GW as a whole are not selling more (demonstrably either treading water or losing sales) and that is the problem.
Please don't see this as "hate" or hoping that they fail - it really isn't - otherwise the posts would be full of joy and happyness - as it is they are downbeat and annoyed, for seeing the company that introduced the vast majoirty of us here into wargaming being mugged for all it has by those in charge (over £14m of the profit is going to shareholders pockets [remember Mr Kirby has over 3% of them], not being ploughed back into the company to improve it) and having that which made it great ridden roughshod over (HE's being allowed to ally with daemons, Marines & Necrons lovein etc, etc) just to sell more.

f2k
07-08-2012, 08:17
And I'm sorry if you don't think GW are making money. (I assume "making money" means you don't see it as actual profit.) I look at their numbers and see them going up. It just seems like a good thing. My sales profits going up about 50% in the last year seemed like a good thing too. I'm probably mistaken though. It was probably a bad thing, right?

As several of us have pointed out, growing profits is bad if it comes at the cost of shrinking the player base. And that seems to be what’s happening here.

shelfunit.
07-08-2012, 08:47
The person DIRECTLY above my post mentioned 33%, for an example. Several other people have alluded to the reboxing price increases as though they effect the entirety of sales.

On the packaging of a single model. Some of GW's plastic kits have increased by (over) 33% over the last year, but your original post implied this was a figure that applied across the whole range, when many times it has been stated this is bot hnot the case and the lower % figure was used as an average across the range, not the 33%.


And I'm sorry if you don't think GW are making money. (I assume "making money" means you don't see it as actual profit.)

The only you should be sorry about is deliberately mis-reprisenting what other people are saying in an attempt to stir up argument. I never said they were not "making money" and have never allude to or implied it. They quite obviously are making money - infact I really don't know what you are saying here other than trying to provoke an argument.



I look at their numbers and see them going up. It just seems like a good thing. My sales profits going up about 50% in the last year seemed like a good thing too. I'm probably mistaken though. It was probably a bad thing, right?

But you don't seem to look at why their numbers are going up. Your profits are going up - well done, you are selling more, and I would never wish for you to not do so, but the bigger picture is that GW as a whole are not selling more (demonstrably either treading water or losing sales) and that is the problem.
Please don't see this as "hate" or hoping that they fail - it really isn't - otherwise the posts would be full of joy and happyness - as it is they are downbeat and annoyed, for seeing the company that introduced the vast majoirty of us here into wargaming being mugged for all it has by those in charge (over £14m of the profit is going to shareholders pockets [remember Mr Kirby has over 3% of them], not being ploughed back into the company to improve it) and having that which made it great ridden roughshod over (HE's being allowed to ally with daemons, Marines & Necrons lovein etc, etc) just to sell more.

Trasvi
07-08-2012, 10:17
As several of us have pointed out, growing profits is bad if it comes at the cost of shrinking the player base. And that seems to be what’s happening here.

Note: bad = potentially bad for the players, and potentially bad for GW if the sales volume drops too low in the long term.
Amongst my gaming groups, I'm noticing a decrease in new spending on GW products by veteran players, nearly all of which is then transferred to other games systems. However, the veterans are still buying the rule books and codices, enough to keep playing. Presumably this has always been happening, and eventually there will be not enough new blood into the system to sustain it. But GW's player base currently is enough that for the moment, the loss of individual players does not have an enormous impact on GW.


And I'm sorry if you don't think GW are making money. (I assume "making money" means you don't see it as actual profit.) I look at their numbers and see them going up. It just seems like a good thing. My sales profits going up about 50% in the last year seemed like a good thing too. I'm probably mistaken though. It was probably a bad thing, right?
I'm not totally convinced they're doing 'badly'. This did seem like a good year for them: its much easier to infer the badness in the years where they haven't had such otherwise positive results. It seems intuitive though that since their stated target audience is new players, and the majority of prices on starter products was raised considerably and sales revenue on miniatures only appears to have raised slightly, that sales volume of miniatures has stayed relatively level or fallen.
I'd like to address one thing in your post though: Your "sales profits going up about 50%". I assume you mean revenue, rather than profit? Is that sales on GW products only, and do you have a further breakdown of which particular product lines performed well that you would care to share with us?

paddyalexander
07-08-2012, 10:41
The person DIRECTLY above my post mentioned 33%, for an example. Several other people have alluded to the reboxing price increases as though they effect the entirety of sales.


I'm that person. I never said the average price increase was 33%. I even went so far as to post a link to the document that the average price rise I've been quoting was calculated from.

Let me try to clarify what I've been saying. People have been using the May/June 2011 average price increase of between 10-13% as a guideline when working out if gwPLCs' sales volumes have actually increased or not. The point I was trying to raise is that by using this sole price increase will lead to figures that are actually more in gwPLCs' favour than reality because of price increases that happen outside of the annual adjustment.

The example I gave was the LotR plastic boxes, which saw a 20% in the annual price rise but then saw a further 33% price rise trough reboxing. And I aggree with Model Calamity that this would lead to only a 1%-2% increase on the final figure because of how much that product line contributes to the final number but that was not the only extra price increase. But that supports the point I've been raising. That the average yearly price increase is larger than 13.2%, now between 14.2%-15.2% just accounting for the LotR repackaging.

Plastic vehicle kits went up in price by an additional 2%-5% over the course of the year as has any model that has been moved to finecast by between 10%-55%. I slight increase on the vehicle kits, especialy ones in the space marine & imperial guard ranges would have a notable impact on the final figure.

I haven't done the maths, mainly because I don't have a list of every minor price increase that happened over the year but I'd geusstimate the final figure looking somewhere around the 18% mark.

gwPLC are currently making money. But they are loosing custumers (or they are expanding their customer base but everybody is buying significantly less). For a wargame company this is bad news because of the social nature of the product; the more people playing your game the more likely it is for new players to choose it when starting. 40ks' biggest strength was that regardless of where I traveled in the world it was the game I most likely to find opponents for. A shrinking community is detrimental to this type of product because if you cannot find someone to play against then you are unlikely to buy more.

So as has been said before by others gwPLC in the short term looks good but in the long term not so much.

Reinholt
07-08-2012, 13:00
Anyway, much as people will hate my next comment, lets get it out there:

People are claiming that a 33% price rise is the only reason GW are making money. Ignoring the silly number, So what? If a 33% price caused them to drop a negligable volume of sales (assuming the paint comment is true) and gain several million in profit. Good work Public Company! You're doing your job right... :p

So to take a few things apart:

Profit, which should be more accurately called Net Income (as there are times when it can go negative), is not directly related to revenue or sales volumes. A company which is profitable may have any number of things going on under the hood. To give two directly opposed examples, Apple is a fantastically profitable company which also happens to be growing sales volumes and maintaining strong margins year after year after year, while Lehman Brothers was a fantastically profitable investment bank right up until the year it wasn't, at which point it pretty much exploded in spectacular fashion. I can accurately say Lehman never had an unprofitable full year of business operations after the tech bubble; it went bankrupt before it finished its final year!

So profit is a useful but incomplete measure. In most cases, you'd prefer a profitable business to an unprofitable one. However, there are a lot of profitable businesses out there, and if you are going to evaluate the operations of one, or invest in it, you should have answers to a few questions about exactly how profitable it is, how those profits are generated, and how long those profits can be sustained.

In absolute terms, if we take a very simple return on capital measure (Profits after tax / [Enterprise Value - Cash]), you get about a 7.5% ROC for GW. That's neither terrible nor world beating, so in that sense, they are a very average business. In the question of how the profits are generated, the main driver remains the production of models, though increasingly there are contributions from licensing, black library, and so on that have started to filter into the results and appear to have a significantly lower cost than the core business of model production. Thus, although they are small from a revenue perspective, they are more notable from a return on capital perspective. Ultimately if you look at those two items, GW appears to be a pretty average company in the grand scheme of things.

Which brings us to the third question: how long can they keep this up? This is why people (such as myself) keep harping on the fact that they are losing sales volumes and customers. You can't run a business with zero customers, and more so, in a business that thrives based on network effects (as Paddy Alexander pointed out, one of the big strengths of 40k is the ability to get a game anywhere; if that goes away, one of the main reasons to pick it over Privateer, Wyrd, etc. has now vanished), you really need to be careful about blowing out too many customers. So if GW were to hold ground where they are, or gently dial back some of their pricing policies, they are probably in very good shape if they can figure out how to start growing again (I'll get to that later). If they insist on continuing their march towards margin nirvana / customer oblivion, they are going to annihilate their company. This, by the way, is a very common problem, amusingly enough. Financial history is littered with stories of small to mid size companies that priced themselves out of their own market and were subsequently devoured by their competition.

Or, to just throw the punch line out there, you aren't going to be selling many Storm Ravens at $152 bucks a pop (the price with 13% annual increases for 5 years from current) when global inflation is running at roughly low single digit percentages. If you want to do the math with 10%, you get a similarly nonsensical number of $133. I would suggest neither of those are workable when the cost of starting an entire new game is going to be roughly that same amount.

In plain terms, at some point you just **** most people off and they stop buying your stuff and go to your competitors if your strategy is "always increase prices beyond inflation". You get into the territory where compounding rapidly pushes your prices beyond reasonable based on what people see in the rest of the economy for price changes, and your elasticity of demand changes because your customers start to perceive your actions as adverse to them, which causes them to devalue your product, which causes your demand curve projections to be too optimistic, which causes your prices to be too high, even relative to your own internal past projections, much less what your customers think about you. That's also the point at which your core customers who would have stayed are going to need to swallow hard, realize that they don't have any/many others around them using those products, and decide if they want to continue in relative isolation or defect to another firm (the network effect problem).

So in public company terms, problem number one is that GW has growing revenue but falling sales volumes. At some point that trend ends at bankruptcy if not reversed. Yes, it is true that at any point GW can stop raising prices. Let us, in fact, assume they stop doing this and stay where they are. This brings up my next question:

Where is growth going to come from? GW hasn't had a compelling answer to that since before the LotR bubble. They don't seem to understand, at the core, how to expand their business in a way that doesn't crush their margins; they certainly don't know how to advertise/market/provide customer service for anything other than shipping/packing/ordering.

Or, again, to cut to the punch line, GW has lost money for investors from 2003 onward. If we take an average stock price of 800 pence in 2003, and bring that to the current level of 630 pence, over a 9 year period GW has delivered you a return of -21.25% (ignoring dividends, but I'm ignoring that for the comparison as well, so fair is fair. If we want to be generous we could assume they've only lost a little of your money you gave them in 2003, instead of a decent chunk of it). Over that same period, if you held the FTSE 100 (to stay with the same currency), you'd have gone from ~4000 to 5822, which is about a 45% gain. I don't think anyone could say with a straight face that GW has been a good public company based on that. In fact, they might not even have done well enough to qualify as merely bad.

So to turn this around, why is GW a dog, even after the FTSE got crushed in 2008 because it contained a ton of financials?

Problem one: is their current business sustainable? (and this is the one I pick on, because they have to solve this first)
Problem two: even if it is, so what? Where is growth going to come from? (this, which I've hit on before, would require a genuine re-engineering of product offerings, retail strategy ex-UK, and marketing/advertising/customer relations, as they have competition which are doing some of these things at least well enough that GW can't just ignore them anymore)

TLDR version: no, GW is not a good public company over the past long-term. Quite the opposite.

Jobu
07-08-2012, 13:32
TLDR version: no, GW is not a good public company over the past long-term. Quite the opposite.

Thanks Reinholt, that really brings insight into this discussion for me. Since earning discussion/theory/analysis/buisness is, as we say, a "non-hospital job" it falls outside my area of expertise but this helped tremendously.

f2k
07-08-2012, 13:41
Note: bad = potentially bad for the players, and potentially bad for GW if the sales volume drops too low in the long term.
Amongst my gaming groups, I'm noticing a decrease in new spending on GW products by veteran players, nearly all of which is then transferred to other games systems. However, the veterans are still buying the rule books and codices, enough to keep playing. Presumably this has always been happening, and eventually there will be not enough new blood into the system to sustain it. But GW's player base currently is enough that for the moment, the loss of individual players does not have an enormous impact on GW.

In my local area, the veterans seem to have dropped out years ago. We used to have a thriving community supported by local clubs and hobby stores. In fact, even the bookstores carried Games Workshop products.

Now, all but one of those stores has shut down and the remaining clubs are struggling. Yes, there is a small hardcore group of players left, but that’s it. The rest are long gone.
Warhammer and 40K used to be pretty big – now Fantasy is all but dead and 40K is on life-support.

As far as I’m concerned, Games Workshop is way past the tipping point – at least in my local area. They’ve lost so many players that I’m no longer sure that they can bounce back. The community is effectively dead, having either left wargamming for good or moved on to other games.

xxRavenxx
08-08-2012, 08:35
I'd like to address one thing in your post though: Your "sales profits going up about 50%". I assume you mean revenue, rather than profit? Is that sales on GW products only, and do you have a further breakdown of which particular product lines performed well that you would care to share with us?

Certainly. It beats arguing pointlessly with the other people for a start :p Profit/Revenue/whatever for this last year was probably about 85% GW, 5% Card games, and 10% other tabletop and board games. (Nearly entirely tabletop.) I can't really break it down much more.

What has succeeded fairly well, is introducing "mini ranges" to the store, to excite players about "new" things. Ie. Bring in malifaux starters, everyone buys one. A few months later, bring in bushido. And so on. I expect in future years, I'll see less money from those splash games because they are no longer new. (new in store, not newly released). All these things are supplimental.

The CCGs are frankly dead in the water. There is a huge issue with deep discounting which is a cancer upon the market. People making a 1% profit margin on boxes is now a common thing. The makers of Yu-gi-oh are actively encouraging it (it increases their sales volumes, as players buy more. Sod the stores, what do they matter to the health of a game...)

This leaves GW. I can break down their customer base into three groups: New players. Ongoing players. Bitter veterans. (I'm sure I'll get plenty of flak for that...) New players are excited, normally drop about £100 in their first month, then settle down. I would suggest that 80% quit. Ongoing players are the 20% who didn't quit, and then another heap of people who quit, then grew up and wanted a hobby, and remembered GW from a few years ago. Very student heavy, very good spending power (student loan = free money, right?). And then, there are the bitter people. They occasionally spend, often never play, but lurk about to moan about how things have changed. They are disenfranchised and bored of their hobby, but insist on trying to convince everyone else not to like it too. Many times they find some obscure game and try to get people to play that instead.

To add to the demographics I have invented, there is also a noticable split, through all demographics, making two sub-groups. Those who cannot afford, and those who can. This one seems really important with regards to this/last years price rises. A small small percentage of customers declared they couldn't afford the game anymore. These people didn't spend much money anyway. The people who come in every week with £30+ of gaming money to spend didn't bat an eyelid. I'm sure at some small point they said to themselves "Its a shame I get a little less for my money" but to them it really is disposable income. I see these people just as often, and I'm pretty sure I see exactly the same cash from them as before.

So there you go. The opinion of someone running a healthy gamestore. Of cause its anecdotal, so must be ignored verbosely. *shrug* but hey, thats the internet for you eh? :)


As far as I’m concerned, Games Workshop is way past the tipping point – at least in my local area. They’ve lost so many players that I’m no longer sure that they can bounce back. The community is effectively dead, having either left wargamming for good or moved on to other games.

I would be interested to know if you mean that the clubs are gone, or that the GW stores themselves are empty? In the past I've noticed severe downturns in certain clubs local to me, while the gaming community as a whole trundles on without them, with them being oblivious to the fact that everything is fine. I'm not saying this is the case here, but I know it can be.

Trasvi
08-08-2012, 09:16
Profit/Revenue/whatever for this last year was probably about 85% GW, 5% Card games, and 10% other tabletop and board games. (Nearly entirely tabletop.) I can't really break it down much more.
Thats very interesting. I assume your store is in the UK? I've heard very different views from other games stores [here (http://blackdiamondgames.blogspot.com.au/2012/07/half-time-gut-check.html)]. Perhaps its to do with the prevalence of GW stores in the UK creating far more demand than in the US? Maybe you just like GW more than card games and promote them far more or better? And by treating games like Malifaux as a temporary range when by other accounts it is doing fantastically well, maybe you're setting yourself up for low % of sales on it? I'm not judging or saying you could do better or anything; its that that I've often thought about opening a games store and so have tried to do lots of research on what works for other people, so its interesting to see your experiences differing so much.


Many times they find some obscure game and try to get people to play that instead. Dear god thats me... Dust Warfare, Battlefleet Gothic and Dystopian Wars.

f2k
08-08-2012, 09:34
I would be interested to know if you mean that the clubs are gone, or that the GW stores themselves are empty? In the past I've noticed severe downturns in certain clubs local to me, while the gaming community as a whole trundles on without them, with them being oblivious to the fact that everything is fine. I'm not saying this is the case here, but I know it can be.

Both really...

Firstly, I think it’s important to point out that I have no Games Workshop brand-stores nearby – they’re all independent stores. Important because that makes them far more vulnerable to the ups and downs in the wargaming hobby as they don’t have GWplc to support them.

That out of the way...

The clubs went first. As the veterans drifted away from the game there were no longer adults around to run the clubs and so they started closing.

Then, without the income from the players having to have the newest and shiniest army, the stores started shutting down. There was no longer any viability in selling wargames. First they started getting more and more empty, then they started branching out with other products (which diluted their customer base and drove up their fixed costs as they had to maintain a bigger stock than when they were mono-product stores – Games Workshops new rules regarding the minimum stock and orders certainly didn’t help.), and finally they shut down.

The one surviving store is empty as a graveyard whenever I visit it. And the few customers I see are generally in the hardball section rather than in the Games Workshop section. Still, they seem to be keeping their head above the water for now...

The remaining clubs are also nearly deserted. Bad locations (no members = no money = cheap rent = bad location) and a lack of players is a recurring problem and most now survive due to people playing other games. There’s still a small group of hard-core 40K players but that’s all.

Although, in a sense, it’s a matter of chicken-and-egg. It’s all cause and effect. The stores and clubs survive in a synergy – both feeding on, and supporting, each other. Did the stores start declining before the clubs? Probably. I would suggest that the veterans probably kept on playing, but not buying, for a while before leaving. What really hurt, in my experience, was the loss of the newbs that the clubs (and their veterans) brought into the stores. With fewer veterans there were fewer new players. And with fewer players, the store had less income. As the stores started reducing their GW-stock and started with Starship Troopers, WarMachine/Hordes, boardsgames, etc., there was less exposure to the game and so there were fewer new members for the club.
And that’s how everything entered into a death-spiral where both stores and clubs went downwards pretty fast.

Keep in mind though, that this is just my version of what happened. While I freelanced for a couple of the stores for a while, I can’t claim to be deep into the economic situation and what really happened in the end, forcing the final closure of the stores. These are merely my experiences from hanging out in the store and seeing the decrease in customers.

Also, there is one influence that I’m not taking into account here: the rise of the online store. As the cost went up, the temptation to order from England also went up. Currently, I can save a fair bit on Games Workshop stuff by ordering from Maelstrom rather than at the local store. Disloyal? Perhaps, but the owner of that store has done very little to earn my loyalty (not interested in chatting about the hobby and rarely, if ever, offering discounts) and when Maelstrom has a sale on I can sometimes get my GW-fix at nearly two-thirds of the price asked locally. That saving is just too juicy to pass up on – how can a brick’n’mortar store compete with that?

My current boss is also the owner of a small hobby-store (in fact, that was where I met him years ago). Or rather, he was. The store is now on-line only. We’ve talked about getting a small store up and running again, hopefully luring people back into the hobby. However, no matter how we twist and turn the issue, we simply cannot see any way to make it viable as a brick’n’mortar store. Once again, there’s simply not enough money in it. And the discount he’s forced to give in order to compete with other on-line stores certainly doesn’t help...

Man, do I ramble on and on and on and on...

My point is probably that it’s a rather difficult problem to get to grips with. A combination of bad player retention, insane prices, loss of local stores and clubs, cheap discount on-line stores, etc., it all combines to create an incredible mess.

In truth, I have serious doubts as to the general viability of brick’n’mortar stores right now. They simply cannot compete with on-line discounts.

williamsond
08-08-2012, 10:08
very interesting thread, it's kind of what I've seen over my gaming life too. A good local store/club creates a lot of interest/sales once one folds the other suffers dramaticaly.

The online stuff must really be hurting the bricks and mortar stores its hard to pay full price when some one else will give you 10-20% off if you buy online. My local store offers 10% discount to soldiers and club members and this is the main reason I keep buying there.

Reinholt
08-08-2012, 12:12
Certainly. It beats arguing pointlessly with the other people for a start :p Profit/Revenue/whatever for this last year was probably about 85% GW, 5% Card games, and 10% other tabletop and board games.

I am going to go out on a limb and suggest you run a UK store?

It's interesting how much the gaming scene is diverging on both sides of the pond; in the US, I am seeing the reverse trend from several of the owners of stores that I know. GW is an ever-declining proportion of their sales in favor of board games and other miniatures games. One of the cities where I used to live has pretty much flipped from being GW-majority to being Privateer-majority over the previous year, with sales of Warmachine & Hordes outstripping sales of GW product as of my last discussion (~4 months ago). I've also noticed a growing surge of board games sales in the US, with FFG and others leading that charge.

What I haven't seen, other than maybe some of the online retailers, is growing GW sales. None of the owners I have talked with see it (most are treading water or slowly seeing people peel away into other games, and recruitment for GW has become very, very tough), and even the GW in NYC appears to be slowing down dramatically as of late. Maybe this also says something about the optimal price point for GW, as US prices are, on average, a bit higher than UK prices when you convert both to pounds.

I wonder if this also has something to do with the US being Privateer's home turf, as they seem to be GW's most credible competitor.

f2k
08-08-2012, 12:26
The sounds very much like my experience.

The brick’n’mortar strategy works (sorta) in England because of the saturation of brand-stores and the lack of competition on the high street. However, in places where Games Workshop has to rely on independent stores (i.e., the rest of the world), the sale is getting harder and harder.

Also, it should not be ignored that England, as far as I can understand, generally lacks clubs and people will instead meet in the store (though how that’s working with the downsized one-man stores...?), thus keeping them isolated from the competition. I’ve mostly played at my own home or at a club, and so I’m much more exposed to other systems. The day one of the local stores halved their Games Workshop section, replacing it with WarMachine, was a real eye-opener...

violenceha
08-08-2012, 12:35
xxRavenxx, how do your sales figures compare with other hobby shops in your area? Has your increase come as a result of others stores closing or loosing business to you, or are they experiencing similar growth?

Kaptajn_Congoboy
08-08-2012, 15:31
I still can't figure out how he can't move CCG's...they're raking in money on them in every game store I know of in Scandinavia....

Trasvi
08-08-2012, 15:35
I am going to go out on a limb and suggest you run a UK store?

It's interesting how much the gaming scene is diverging on both sides of the pond; in the US, I am seeing the reverse trend from several of the owners of stores that I know. GW is an ever-declining proportion of their sales ...

But isn't this observation in direct contraction with the financials (the evidence, what this thread is discussing) which seem to say that US has been their strongest source of growth?

Similarly, how does your analysis of GW vs FTSE stack up to GW's analysis on page 20 of their report, and why do you think yours is better?

Lord Dan
08-08-2012, 16:36
But isn't this observation in direct contraction with the financials (the evidence, what this thread is discussing) which seem to say that US has been their strongest source of growth?

Similarly, how does your analysis of GW vs FTSE stack up to GW's analysis on page 20 of their report, and why do you think yours is better?
I suspect it's because there's just a lot of us.

I've seen the exact same thing happening at my two FLGS. At one they make a majority of income through CCG sales, and at the other they sell nothing but Privateer Press, Specialist games, and board games. They both sold Games Workshop product last year, though the latter just liquidated their stock through a 50% sale on all GW product.

Reinholt
08-08-2012, 17:19
But isn't this observation in direct contraction with the financials (the evidence, what this thread is discussing) which seem to say that US has been their strongest source of growth?

Similarly, how does your analysis of GW vs FTSE stack up to GW's analysis on page 20 of their report, and why do you think yours is better?

To answer the first question, it's in a later paragraph in my post: I suspect most of GW's sales in the US are starting to be channeled either through GW-only retail stores (where they do not face competition from other products directly in front of the consumer) or, more likely, online discounters. I know outfits like The War Store must be doing a pretty brisk business in GW. In fact, to some extent, that's probably where a lot of the sales fleeing the local gaming markets are going... when GW gets more expensive, it becomes more relevant to buy it with a 20% discount.

Also, my math led to GW having static to falling unit sales in the US, not increases. That means less people playing. They had growth in revenue, they had a loss of players. Thus, my observations and the statements in their financials are not mutually exclusive (in fact, they are complementary); you could have less people playing and the game slowly being abandoned even while GW makes money on selling fewer but more expensive kits in the meantime (until sales decline past some point where people just stop). Selling 2 for $100 is the same as selling 1 for $200 in revenue terms, after all, but in the former case you had more buyers than in the latter, to put my point in numbers.

On the topic of the GW vs. FTSE chart, the analyses are actually identical. Only, theirs goes back to 2007 (the recent low of their stock), and mine extends back another four years to 2003 (one of their previous highs). Imagine taking their chart on page 20, and pulling the left point further left. That's all I've done; the data is identical.

Fear Ghoul
08-08-2012, 17:27
Or, again, to cut to the punch line, GW has lost money for investors from 2003 onward. If we take an average stock price of 800 pence in 2003, and bring that to the current level of 630 pence, over a 9 year period GW has delivered you a return of -21.25% (ignoring dividends, but I'm ignoring that for the comparison as well, so fair is fair. If we want to be generous we could assume they've only lost a little of your money you gave them in 2003, instead of a decent chunk of it). Over that same period, if you held the FTSE 100 (to stay with the same currency), you'd have gone from ~4000 to 5822, which is about a 45% gain. I don't think anyone could say with a straight face that GW has been a good public company based on that. In fact, they might not even have done well enough to qualify as merely bad.

While I agree with your overall sentiment, the statement above is flawed. GW lost money for its investors from 2003 until 2006/2007. The price of GW stock (GAW) has generally risen since then, so your average investor loss actually ignores the overall trend of the past several years. This is why averages have to be used carefully.

Mastodon
08-08-2012, 17:33
I would be interested to know if you mean that the clubs are gone, or that the GW stores themselves are empty? In the past I've noticed severe downturns in certain clubs local to me, while the gaming community as a whole trundles on without them, with them being oblivious to the fact that everything is fine. I'm not saying this is the case here, but I know it can be.

Your post is very similar to what I would type out except I dont carry CCG's at all due to it never being worth it once the popularity boom is gone. The gaming community thing is interesting to me though, since I've seen a marked trend in people playing at home with friends instead of coming to the store. Again anecdotal, but these are usually the bigger spenders who just come to the store to buy stuff. I spoke to one customer about why he preferred to play with just a few mates instead of at the local club in the town, or even in my store on the gaming night which he still occasionally comes to, and it was down to the 'bitter vets' you spoke about. Said he couldnt stand having his games interrupted by people telling him he was doing it wrong or had the wrong list etc etc.

There might be a marked downturn because people are playing away from organised venues a lot more.

I will say this though, I had a marked increase in people buying FoW stuff for about two months. It really took off and then died a death and I get almost no sales of it now. I guess a group had just started it, went mental because it was new and decided they didnt like it after all.

shelfunit.
08-08-2012, 17:47
... and it was down to the 'bitter vets' you spoke about. Said he couldnt stand having his games interrupted by people telling him he was doing it wrong or had the wrong list etc etc..

Those sound like WAAC gamers, and as far as I am aware they tend not to be vets (bitter or not).

6mmhero
08-08-2012, 20:20
I know plenty of gamers who have been in to playing games for a long time that are WAAC.

for some people it is just a game, for others it is a measure of their manhood for want of a better term.

I3uLLioN
08-08-2012, 22:44
People are still throwing around the (big assumption) that less people are buying. This is only an assumption. More people could be spending less. The fact of the matter is that people dont know... I wish they would stop posting as if they did.

We dont have access to that information. The old... "revenue is the same if 2x100=200 or 1x200=200" is getting tiring. Yeah thats true... but you dont know the numbers! I could just as easliy say "Wow the player base has grown by 10 times as much because 10x20=200" I dont... because I would be pulling it from my butt. Just like others are doing for the opposite.

Lord Dan
08-08-2012, 23:35
People are still throwing around the (big assumption) that less people are buying. This is only an assumption. More people could be spending less. The fact of the matter is that people dont know... I wish they would stop posting as if they did.

We dont have access to that information. The old... "revenue is the same if 2x100=200 or 1x200=200" is getting tiring. Yeah thats true... but you dont know the numbers! I could just as easliy say "Wow the player base has grown by 10 times as much because 10x20=200" I dont... because I would be pulling it from my butt. Just like others are doing for the opposite.

We're making educated guesses based on establish trends. The argument that "more people are in the hobby who are spending less" could be true, however is less likely for two reasons:

1) Those joining the hobby need to spend more lot to start up.
2) If there is cause for people to buy less within an activity (such as price gouging), generally fewer people will join that activity.

We don't have the numbers, however some people take enjoyment in speculation and some old-fashioned deduction. If you don't enjoy inferring buying trends from limited revenue information, then the GW financial thread likely isn't for you.

To your point, I don't think people are leaving the hobby in droves. People can stop buying Warhammer and still play Warhammer, after all. I do think that those who play Warhammer are buying less (or in my case, nothing at all) and those who would otherwise start playing are put off by the now overwhelming cost of entry.

I3uLLioN
08-08-2012, 23:42
This thread is for me... its just that I actually like GW and I think these reports are showing positive signs... unlike some people.

Lord Dan
09-08-2012, 00:18
We all like GW's products and the games they produce, which is why we're here. We don't like their long term pricing strategy or the general way in which they've been treating veteran customers as of late.

Mastodon
09-08-2012, 05:20
I've shifted more GW stuff this year than last, which shifted more than the year before that. So in my eyes, gw is growing, even after I lost a small bit of business to the australian market.

But thats just my experience from one store.

frozenwastes
09-08-2012, 05:40
I think the reasonable assumption to make when prices go up and revenue does not go up to the same degree is that there is some combination of less people and less purchases per person. This meshes with what people are also experiencing in terms of local GW player pools drying up in some places. GW will have exited the long post-LOTR down turn when their revenue goes up enough that even after price increases, there is no question that unit sales of core products also went up.

One area I partially disagree with Reinholt is in the network effect area. GW believes a majority of their customers never actually play their game (Jervis called them craft hobbyists). Their ability to find opponents is irrelevent and a decline in the number of other locals playing the rules is meaningless to them. GW's true core customers never play their games and likely quit within two years of their first purchase. As long as they can churn though new people with their demo sales process and get people collecting and painting, they'll keep having atleast some revenue. Though imagine if GW took the time to re-evaluate their customer experience and made a game that was so good everyone wanted to play it rather than being happy that a majority of their customers don't bother with their rules.

That said, having a majority of your customers being craft hobbyists is also a bad thing in that they don't necessarily do as much to contribute to word of mouth advertising. Someone who wants to play the game is far, far more likely to encourage other people to check it out.

So when the local player base declines enough to hit critical mass and finding a opponents goes from a given to an uncertainty, GW will have less people on the ground convincing their friends to check out the game. All the craft hobbyists in the world won't bring back dedicated gaming clubs that have moved on to other games.

ModelCalamity
09-08-2012, 06:13
If you are going to dismiss the calculation of the average price rise being 13.2% then can you at least provide some evidence or source apart from some internal document you saw once? Try opening the document in chrome or firefox, I've had problems with google documents in IE before myself. Yes the calculation counted paint pots as individual products which is very favorable to gwPLC. Paints prices are typicly raised outside of the annual price adjustment TM when they are.

Highlights of last years price increases included:

10-12% increases on all of the core rule books, codices and army books.

10-12% increases on the plastic space marine boxes

17% increases on the battle forces

11% increases on space marine vehicle kits

17% increase on the ork boyz mob plastic infantry kit

13% increase on Eldar Dire Avenger plastic infantry kit.

20% increase on IG Sentinels.

17% increase on the Cadian Shocktrooper plastic infantry kit (which came shortly after a 33% increase per model by repackaging).

So a lot of items that a person begining in the gwPLC hobby TM went up by about 10%. Space Marine stuff (the best selling gwPLC product line) increase by about 10%. The rule books, army books/codices and battle forces all saw significant increases. Many battle boxes like the Cadian Imperial Guard, the Orks and the Tyranids also saw the value of the contents drop trough change of contents.

I wouldn't touch IE with a ten foot pole! But seriously I use my phone/iPad mostly so it might be because of that.

I will rebuke the claim of 13.2%. I will however not share the source as doing so can put those people in trouble.

The thing is that unlike in previous annual reports there is a very specific mention that for the first time in a long time volume growth was achieved.

In the older reports when there was still profit increases and some total revenue increases; The CEO did not state they had volume growth.

So when people say that volumes did not increase as the they wrongly assume a price rise of 13.2%. What they are actually saying is that mark wells lied in his statement, despite the fact that lying would not have more benefit to him. (he could have just said we raise our prices because we can earn even more profits) never mind that he would commit a criminal act at the same time.

EmperorNorton
09-08-2012, 08:24
One area I partially disagree with Reinholt is in the network effect area. GW believes a majority of their customers never actually play their game (Jervis called them craft hobbyists). [...] That said, having a majority of your customers being craft hobbyists is also a bad thing in that they don't necessarily do as much to contribute to word of mouth advertising. Someone who wants to play the game is far, far more likely to encourage other people to check it out.
Someone who plays the game is probably a lot more loyal to the company than a craft hobbyist.
If my sole interest was to build and paint some pretty miniatures, why would I restrict myself to GW? There are more alternatives available than ever before and thanks to the internet they are far more accessible than ever before.



The thing is that unlike in previous annual reports there is a very specific mention that for the first time in a long time volume growth was achieved.

In the older reports when there was still profit increases and some total revenue increases; The CEO did not state they had volume growth.

So when people say that volumes did not increase as the they wrongly assume a price rise of 13.2%. What they are actually saying is that mark wells lied in his statement, despite the fact that lying would not have more benefit to him. (he could have just said we raise our prices because we can earn even more profits) never mind that he would commit a criminal act at the same time.
As has been said, they sold a vast amount of paint pots. That probably increased their sales volume.
Sadly for them it's not the same as selling vast amounts of Baneblades.

paddyalexander
09-08-2012, 09:54
I will rebuke the claim of 13.2%. I will however not share the source as doing so can put those people in trouble.

Can you look at this from my perspective. I provide the document, a list of all of gwPLCs' products and the price increases they recrieved from which the 13.2% number was calculated and you providing nothing other than a "that's wrong, trust me guys" & without even galncing at the provide list "rebuke it". All you do is keep saying that it is wrong with nothing to back your stance up. You can use the list I provided to prove or disprove the above figure (maybe the calculation was wrong) but what can the rest of us do in the face of a super secret source. :confused:


The thing is that unlike in previous annual reports there is a very specific mention that for the first time in a long time volume growth was achieved.

In the older reports when there was still profit increases and some total revenue increases; The CEO did not state they had volume growth.

So when people say that volumes did not increase as the they wrongly assume a price rise of 13.2%. What they are actually saying is that mark wells lied in his statement, despite the fact that lying would not have more benefit to him. (he could have just said we raise our prices because we can earn even more profits) never mind that he would commit a criminal act at the same time.

I believe there was volume growth. To provide false information in a financial report is illeagal. But all they need is a 0.1% growth in volume for it to be true. Shelf unit has done the calculations down bellow, taking into account that the financial report was for a 53 week year and removing the revenue generated by the new paint switch over (personaly I would have been happy to leave that in.



If we are going to go into minute details then... £1.1m extra royalties, £2.75m paint = £3.85m. £130m - £3.85m = £126.15m. £126.15m/53 = £2.38m. £2.38m + £1.1 + £2.75m = £6.23m. £6.9m (reported growth) - £6.23m = £0.67m, or £670k actual growth - huge difference there :rolleyes:
Discounting a major release (like this) is perfectly acceptable as is will not be repeated next year, and almost certainly not on a 4 year basis like the core game re-releases. This is not new people buying their first paint - this is existing customers buying new paint (some of which will have gotten rid of their entire previous paint collection as they will believe it is now useless :rolleyes:).

EDIT: On a side note about the paint - I noticed they claim to have made a 15% saving per unit on cost. I hope they try and pass this onto the customer by not increasing prices on them soon...

TL;DR: There is growth in volume sales but it is reletively tiny when compared to the massive inflation in pricing.

Omniassiah
09-08-2012, 11:22
I wouldn't touch IE with a ten foot pole! But seriously I use my phone/iPad mostly so it might be because of that.

I will rebuke the claim of 13.2%. I will however not share the source as doing so can put those people in trouble.

The thing is that unlike in previous annual reports there is a very specific mention that for the first time in a long time volume growth was achieved.

In the older reports when there was still profit increases and some total revenue increases; The CEO did not state they had volume growth.

So when people say that volumes did not increase as the they wrongly assume a price rise of 13.2%. What they are actually saying is that mark wells lied in his statement, despite the fact that lying would not have more benefit to him. (he could have just said we raise our prices because we can earn even more profits) never mind that he would commit a criminal act at the same time.

Volume growth is a worthless statistic when dealing with a company that provides a large range of products in multiple price brackets. If they would have used the letter price codes as brackets to list the volume sales growth or decline it would have been a useful stat. With that information we would see which price ranges were selling more and which were selling less, because as pointed out before you increase your sales volume by selling 2 Tac Marine boxes over 1 Stormraven but your looking at $15 in lost revenue.

Reinholt
09-08-2012, 12:21
Volume growth is a worthless statistic when dealing with a company that provides a large range of products in multiple price brackets. If they would have used the letter price codes as brackets to list the volume sales growth or decline it would have been a useful stat. With that information we would see which price ranges were selling more and which were selling less, because as pointed out before you increase your sales volume by selling 2 Tac Marine boxes over 1 Stormraven but your looking at $15 in lost revenue.

I disagree that it is a worthless statistic. It is an incomplete statistic, which can be in some ways useful and in some ways dangerous.

First, when adjusting for the 53 week year, I didn't come up with volume growth for GW; I came up with a slight decline. Thus, if they are saying they had volume growth year over year in their reports, this could mean one of a few things:

- They mean revenue growth. I don't have the exact wording in front of me from the annual report, but companies all the time rave about "sales growth" and mean revenue. I'll see if I have time to look at the wording later.
- They did have unit volume growth, but it's purely because of the extra week.
- They did have unit volume growth, but it's in cheaper products, because the constant price generic unit shows a decline.

For the record, I suspect either the first or the third option (paints!) is the real answer here. Any of those are also illuminating, if true, as to what is going on with the core business of GW. In fact, knowing the possibilities tells you something about what could be going on.


I've shifted more GW stuff this year than last, which shifted more than the year before that. So in my eyes, gw is growing, even after I lost a small bit of business to the australian market.

But thats just my experience from one store.

What country is your store in, out of curiosity? And are you primarily a brick & mortar, or an online retailer?

Max Jet
09-08-2012, 12:45
What country is your store in, out of curiosity? And are you primarily a brick & mortar, or an online retailer?

Forget that! I am still waiting for an explanation of his statement on page 8. Why did the magazine almost ruin everything?

ModelCalamity
10-08-2012, 04:19
Someone who plays the game is probably a lot more loyal to the company than a craft hobbyist.
If my sole interest was to build and paint some pretty miniatures, why would I restrict myself to GW? There are more alternatives available than ever before and thanks to the internet they are far more accessible than ever before.


And yet in my old store I noticed that this was not true. I think the assumption here is that craft hobbyists don't collect armies. But Many "craft hobbyists" I had in my store collected bigger armies than the so called gamers. that the never or seldom played a game with them didn't matter to them.

I also think you overestimate the amount of people buying from the Internet. The craft hobbyists were people that came in to spend their money but mostly their time "now". Internet purchases are never something you can do on the spot. There is always a wait before models arrive.

Craft hobbyists if treated and helped well. Where very rewarding customers. If we spend 5 minutes showing a painting technique or discussing a paint scheme, they almost always picked up a few paint pots. In a sense they where the ideal up-sellable customer. But they appreciated it at he same time and kept coming back. I put this down to practicing a real hobby. Which I define as an activity requiring time and effort to be a little bit better at it every time. The moment people felt stuck they would quit. But if they would have some guidance and overcome the first few hurdles they would buy in completely and "emotionally commit" when that happened it was almost impossible to lose them as customers.

It's this effect that make GW potentially very powerful. But until not that long ago all stores were focused 80% on the gaming aspect. And very little at the hobby aspect. Just look at your local GW store, most events are game related. How many are painting related?





As has been said, they sold a vast amount of paint pots. That probably increased their sales volume.
Sadly for them it's not the same as selling vast amounts of Baneblades.

Why is it not the same? Both are produced by GW themselves. So I suspect their margins are comparable. In such a case it really doesn't matter what they sell. As long as the customer spends his/her money it's all good.

ModelCalamity
10-08-2012, 04:32
I disagree that it is a worthless statistic. It is an incomplete statistic, which can be in some ways useful and in some ways dangerous.

First, when adjusting for the 53 week year, I didn't come up with volume growth for GW; I came up with a slight decline. Thus, if they are saying they had volume growth year over year in their reports, this could mean one of a few things:

- They mean revenue growth. I don't have the exact wording in front of me from the annual report, but companies all the time rave about "sales growth" and mean revenue. I'll see if I have time to look at the wording later.
- They did have unit volume growth, but it's purely because of the extra week.
- They did have unit volume growth, but it's in cheaper products, because the constant price generic unit shows a decline.

For the record, I suspect either the first or the third option (paints!) is the real answer here. Any of those are also illuminating, if true, as to what is going on with the core business of GW. In fact, knowing the possibilities tells you something about what could be going on.



What country is your store in, out of curiosity? And are you primarily a brick & mortar, or an online retailer?

How did you adjust for a 53rd week?

In my experience may or June were the smallest months of the year. So small that June would be only 1/5 the size of the bigger months. And about half the size of a normal month.

Mastodon
10-08-2012, 06:05
[color="Orange"]What country is your store in, out of curiosity? And are you primarily a brick & mortar, or an online retailer?

I'm in the UK, and I'm a B&M Store. I do sell a fair bit online but I dont discount anywhere near as heavily as other more well known stores so I dont get as much business from that.

And on the subject of the magazine. Yes it brought in shed loads of cash and customers. However once it finished, and the LoTR boom died, GW were left with billions of 9 year olds that in turn chased off all the older customers, too many staff and no idea how to run this new mega business they had on their hands.

If you talk to anyone who was working for GW during those times, they'll say the same thing. The magazine was good, but had some very very bad drawbacks.

f2k
10-08-2012, 06:41
I'm in the UK, and I'm a B&M Store. I do sell a fair bit online but I dont discount anywhere near as heavily as other more well known stores so I dont get as much business from that.

And on the subject of the magazine. Yes it brought in shed loads of cash and customers. However once it finished, and the LoTR boom died, GW were left with billions of 9 year olds that in turn chased off all the older customers, too many staff and no idea how to run this new mega business they had on their hands.

If you talk to anyone who was working for GW during those times, they'll say the same thing. The magazine was good, but had some very very bad drawbacks.

But surely that was the fault of the managment, not the magazines?

paddyalexander
10-08-2012, 06:42
And on the subject of the magazine. Yes it brought in shed loads of cash and customers. However once it finished, and the LoTR boom died, GW were left with billions of 9 year olds that in turn chased off all the older customers, too many staff and no idea how to run this new mega business they had on their hands.


All of those drawbacks were caused by gwPLC not taking advantage of a product/marketing campaign that was an amazing success, not because the product/marketing campaign was successful. In otherwords don't blame the LotR or the DeAgnostini magazine for gwPLCs' incompetence.

Baragash
10-08-2012, 06:43
How did you adjust for a 53rd week?

In my experience may or June were the smallest months of the year. So small that June would be only 1/5 the size of the bigger months. And about half the size of a normal month.

Multiply by 52/53, which is equivalent to removing an average week.

GW should have done it for us because it's good practise and the idea (yes, as an accountant I'm struggling to keep a straight face here) is to present a true and fair view.

@Mastadon: for many GW store staff (including myself) the experience was the opposite - regular WHF & 40k customers and staff attitude towards LotR drove players away from stores

Harry
10-08-2012, 06:46
.... but what can the rest of us do in the face of a super secret source. :confused: .Nothing ... But theres not much he can do to help you with that.
If it helps .... I can tell you he knows what he is talking about.
(But I can't give you any more proof of how I know that than he can. :D)


Forget that! I am still waiting for an explanation of his statement on page 8. Why did the magazine almost ruin everything?I'll give it a crack. :D

The short version is that they devoted a lot of their resources (and not just sculptors and hobby team) to LotR and specifically to that magazine and took their eye off their core business. the new, lotr costomers disappeared and the long term 40K customers (now suffering from withdrawl symptoms) were asking what had happened to their supply of Space Marines. :D

At the same time some of the HQ's grew out of all proportion to meet imagined growth in the core business and when this proved to be a mirage there was lots of folks standing around without much to do. :D


And yet in my old store I noticed that this was not true. I think the assumption here is that craft hobbyists don't collect armies. But Many "craft hobbyists" I had in my store collected bigger armies than the so called gamers. that the never or seldom played a game with them didn't matter to them. .I am one of those. I have collected almost all of their armies for all of their games , including all their specialist games.... I have HUGE armies. I hardly ever get a game in. (But when we do they are 20,000 point games. :D) But I am not just a collector of toy soldiers. I have spent lots of time reading the army books and building 'legal' armies ... It is all part of the fun of collecting.

There seems to be a lack of understanding at GW about who their best customers are....and why.

EmperorNorton
10-08-2012, 08:49
Why is it not the same? Both are produced by GW themselves. So I suspect their margins are comparable. In such a case it really doesn't matter what they sell. As long as the customer spends his/her money it's all good.
You are proposing that it is the same to GW whether they sell a million paint pots or a million Baneblades?

Reinholt
10-08-2012, 12:28
A couple of points...

1 - I am very strongly of the opinion GW botched the LotR bubble. There are two ways to have played this correctly, which would have been either adopting a strategy and enforcing it amongst the staff of LotR customer retention and, where possible, conversion (make the bubble as permanent as possible). The other would have been to treat the product as a temporary product, and not have increased permanent staff or cut focus on the core games in order to bowl full-force into the temporary thing, so either hire temporary staff to monetize it or just grab what you can without abandoning the core properties or letting them linger. GW did neither of these (and, in fact, adopted the worst aspects of both). The blame is on them for having either a permanent or temporary golden goose handed to them (depending on one's opinion of the long-term sustainability of a LotR crowd), and promptly dropping it and then rolling over it with a car repeatedly. Further to that point, if GW is worried about another LotR boom because of what a cluster<expletive deleted> the last one was, the correct thing to do is not avoid it. It's to fire the management who can't manage in that situation and replace them with better people. Accountability is a somewhat radical concept to most corporate management, however.

2 - On the topic of volume, there is a reason that constant unit volume is used to compare these things, and it's to account for the impact of selling a bunch of cheap stuff vs. a bunch of expensive stuff causing "slosh" in a volume number. For instance, if GW sells less tactical squads but more paints, they may gain volume in nominal terms as people turn over their collections, but on a constant year over year level, they may have lost equivalent volume compared to if the paint release had been the previous year. In short, what this means is picking an arbitrary (but constant) unit size for the first year of your example. I use 100 pounds because it's a nice, round number (the number you pick doesn't matter, just that it's constant). Then you estimate the price increases. For the sake of simplicity, let's assume 10% annual. So in year one, my constant volume item is 100 pounds. In year 2, it's 110 pounds. In year 3, it's 121 pounds. And so on.

Next, you divide each annual revenue number by the constant volume item. Exclude the revenue from royalties (not really relevant to core volume sales) in the case of GW. So if they had 100mm pounds of revenue year 1, 110mm pounds of revenue year 2, and 121mm pounds of revenue in year three, they would have constant unit sales... or, if they are gaining or losing on a unit basis, you can see this as well.

This tactic will fail in a few situations, so don't use it blindly. One would be where the product mix change for a company is permanent rather than temporary. For instance, if instead of releasing a new line of paints, GW stopped producing models and became a paint manufacturer, year over year comparisons as I listed above won't work. Similarly, if GW were to radically alter their games to require more/less models at different prices and customer behavior changed in response, we might also have a problem. Right now, the incremental year over year changes mean that using this method is probably as good as anything else to smooth out their product mix over time (everyone eventually needs models and paint). In other words, use some common sense, but right now, I feel comfortable with this approach for GW. So that end, as stated before, if they actually gained in sales volumes, it's because people are buying cheaper stuff or the extra week; they did not gain in constant unit terms.

3 - Harry makes a particularly important point: GW doesn't know who their best customers are or why they are their best customers. This relates to their issues with the LotR boom, with their increasing unpopularity as a firm in the gaming community, and why their retention numbers continue to nose dive outside of the UK. When a management doesn't understand it's customers, it can only succeed primarily through luck, as skill is off the table.

Trasvi
16-08-2012, 07:02
Reading through some documents on the GW vs CHS legal debate, I came across this:
http://ia700405.us.archive.org/18/items/gov.uscourts.ilnd.250791/gov.uscourts.ilnd.250791.208.32.pdf
pg 202.
Some legal discussion of GW's financial data.
On a quick glance, it seems to say that 40k accounts for 50% of GW's sales. :) Possibly more to come

shelfunit.
16-08-2012, 07:10
Reading through some documents on the GW vs CHS legal debate, I came across this:
http://ia700405.us.archive.org/18/items/gov.uscourts.ilnd.250791/gov.uscourts.ilnd.250791.208.32.pdf
pg 202.
Some legal discussion of GW's financial data.
On a quick glance, it seems to say that 40k accounts for 50% of GW's sales. :) Possibly more to come

Very interesting - 50.6% in 2009/2010. What seems odd (or maybe the answerer of the questions was not complete in his answers) is that they build their figures based on an "assumed trade discount of 35%" does that mean their total turnover is assumed to be sold at 35% lower than the published figures? Even the sales they get through their own stores?

EDIT: And the "page 202" refers to the document page 202, not the PDF page 202, so on the PDF go to pg 215/244.

EDIT 2: Got the bit where they "gross up" the numbers to eliminate the effect of trade discounts on the final figures.. (PDF pg219)

EDIT 3 - And on PDF pg 224 they explicitly state that "units" in sales terms "from our perspective, it means nothing"


Again, "unit" isn't very useful as a term for Games Workshop. Say Games Workshop sold let's say 100,000 or 200,000 units last year, then if that gets reported to our management the next question is: "What the hell does that mean? Do you mean you have sold 200,000 pots of paint or 200,000 Battle Forces."

Showing that even they think reporting an increase is unit sales is a waste of time.

de Selby
16-08-2012, 13:14
One would be where the product mix change for a company is permanent rather than temporary. For instance, if instead of releasing a new line of paints, GW stopped producing models and became a paint manufacturer, year over year comparisons as I listed above won't work. Similarly, if GW were to radically alter their games to require more/less models at different prices and customer behavior changed in response, we might also have a problem.

I suspect that the product mix is changing systematically, as everything slews towards more and more plastic for eveything year after year. That makes it possible to avoid buying the ever-more-expensive old metal/finecast models, as I try to do. In some sense I'm insulated from ridiculous £25 biovores if I can buy, say, a plastic Harpy instead. This is good for me and GW and stops things being as bad as they seem when you just think about the price/demand for existing items.

Reinholt
16-08-2012, 14:43
It does move towards more and more plastic, but that plastic also becomes more and more expensive. That's why I use average cost against a fixed starting unit cost over time. If we want to argue there is a systematic down-migration in GW products, then so be it, but I'm going to need to see some evidence of that when some of the most expensive kits out there (Storm Raven, Land Raider) are plastic and expensive already. I'm sure on the margin people are buying less biovores, but do those marginal purchases have more or less impact than the price of things like tactical squads going up?

I don't really find this argument convincing. Someone asked me about a related question in PMs earlier as well and the conclusion is similar, but boils down to this: you have to be moving a LOT cheaper in terms of what people buy to maintain constant volume if you raise prices ~10% per year. Is everyone really making armies out of paint pots and the three man box of tactical marines? No.

So while I agree there may be some skew, unless the skew is to vastly cheaper stuff (such as, say, buying models from other companies to use in GW games), it's hard to argue the player base is not contracting and/or less engaged from a sales perspective (and if they are, they aren't engaged with just GW).