Games Workshop Pricing Feedback Thread

[Misfratz]

One thing I'm often asking myself is: are GW at the end of the market? Is there actually room for them to grow further? No other wargames companies have grown to their size; is that for the simple reason that their size is perhaps unsustainable, or at least un-expandable? Are there enough people out there who are interested in wargaming for GW to grow any further?

Years ago, when GW were still enjoying consistent turnover growth, they used to publish a chart in their financial report that compared per capita turnover in the UK with per capita turnover in the US and continental Europe. The implication was that there was the clear potential for them to massively grow their turnover if they managed to increase their per capita US and continental European turnover to the same level as in the UK.

I am also confused by the GW strategy, which seems to be based around a high volume future - plastics, large fixed costs in a retail chain, increasing size of each game (eg Apocalypse) - but the pricing seems directed to a low volume.

Business can, and do, make a success of either strategy, and to an extent as a niche hobby GW will never reach the high volumes and low prices of some parts of the economy, but it's odd that their strategy seems to be self-contradictory.

[andyc]

Hi

Our club has around 15-20 members and what we are seeing is no new projects being started with GW products, in fact I am seeing projects being dropped and armies going on ebay. Lately there has been a growth in Dystopian Wars, with nearly a third of the tables at our meetings running that game, and our efforts to get members into Warhammer Fantasy when 8th Edition was released largely failed simply because members said it was too expensive. We are due to start a Fantasy Escalation league to try and get it going again but with this latest price increase members are now considering dropping 40k which was the only game played at our club 3 years ago, so I doubt we will get any new Fantasy players. I myself have now started Infinity and find it to be a great game, and only £30 to get started, as I am waiting to see what the new 40k book will do to the game, and also considering which of my 7 armies to sell on ebay to finance Infinity. I'm sure that Fantasy had about a month or so of PR before it was released, and it was so effective we had a contingent of 10 members head down to Warhammer World for the launch, which was a great day, and about 6 of us became Fantasy players. With the news lockdown there is little interest in the 40k release which is rumoured to be happening in July. Everyone already plays 40k, already has armies, and now only complains about the prices, with some members proxying models like land raiders because they are too expensive. Those that dropped it will not come back now as they are having fun with other games and those games are cheaper to get into and maintain. I am sure that GW must understand that once someone drops their game for another it will be near impossible to persuade them to come back.

Our local GW store is Hull and I used to visit every month on average to check out the new releases and see them in the flesh, picking up paints, brushes, and maybe the odd blister too. It used to be a busy store with plenty going on but now it seems to be just empty and devoid of any atmosphere, with what appears to be high turnover of staff. Since GW stopped showing the models which were coming out and leaving product announcements to the last minute there has been little reason to go unless I need something specific. The massive reduction in stock has also meant that I go to ebay first for those items which are direct only whereas before I would wait until I got the chance to visit.

Even the Whats New blog has deteriorated into a pattern of flickr pics and then a pregnant pause before announcing the new stuff, and then spending a week repeating everything they announced, and then back to flickr again. Looking at the posts about the flyers was just terrible with the launch post and then 3 days where they simply put a 360 pic up for each of the flyers in turn. It is now starting to feel like GW are a pushy salesman you want to get rid of, rather than the friendly hobbyist you start talking to and then spend twice as much as you thought but leave happy.

Is it just me or is this happening for others?

Andy

[Ceodoc]

Revenue / Expenses / Profit by sector ('000 GBP):

UK	30839	14301	4805
Continental Europe	35147	18978	2095
North America	30250	13891	3120
Australia	10630	6081	(406)
Emerging/Japan/Scandinavia	7818	3322	1025
All other Sales	8368	3816	3215
Product and Supply	?	8801	21260
Misc Other costs: service, licensing, web	?	12785	?

I am so happy to see per capita us Brits are way ahead in the geek stakes!

When I was at secondary school I recall my cousin and I sending a self addressed envelope off to a small company, that sold Ral Partha fantasy figures in their hand printed A4 loose leaf catalogue.
We were interested in this for the RP game we had just discovered.
I would'nt mind betting that some of the folk who replied by hand written mail and probably packaged some of those parcels we ordered back in the day, are now major shareholders in a multi million pound turnover organisation, good luck to them cashing in, you need more than a tape measure to check the length of a yacht moored up in St Tropez my friends.
*wink*

Doc

[Omniassiah]

I don't think these numbers show that their UK business is making a loss, but I'm not an accountant so I could be wrong.

Where the problem is when you take the Operating expense cost of the UK into perspective. almost 40-45% of the stores GW owns are in the UK. that means your looking at close to 35-40,000 ('000 GBP to keep with the table) as being their operating costs which is above the amount they brought in by quite a bit.

[AGC]

...our efforts to get members into Warhammer Fantasy when 8th Edition was released largely failed simply because members said it was too expensive. We are due to start a Fantasy Escalation league to try and get it going again but with this latest price increase members are now considering dropping 40k which was the only game played at our club 3 years ago, so I doubt we will get any new Fantasy players.

Andy

General point:-
It'll be interesting to see if the next annual report makes mention of the success of the "Warhmmer Re-launch" they mentioned in the last one. If it worked all well and good but if not then I would expect to see them cutting investment in WHFB back to "sustainable" levels.


Specific question:-
I'm curious to know why you felt it was up to you to try and recruit people into systems which have, as part of their cost, entire stores devoted to recruiting new players?

[Reinholt]

Andyc,

Seeing the same trend in the states. The GW store in NYC has been hollowing out lately, and it's not due to the staff. No matter how good your staff are, when your prices are too high, they can't sell things. If you had some of the best salesmen in the world, they still couldn't sell cans of coca-cola for $20 out of a store. GW has pushed themselves into the same area.

My gaming group has been playing some Malifaux, fantasy flight board games, uncharted seas, and a few other things as of late. Privateer is not huge here but picking up; flames of war is MIA but I have heard of people picking it up elsewhere.

However GW is dying. There are many people who still play, but I can count the number of people I know who have started totally new GW products or armies lately on one hand. With fingers to spare.

Basically, GW has priced themselves through the high end of the market for us. For reference, the group I play with is decently well off - graphics designers, bankers, business owners, lawyers, doctors, etc. We could all afford the GW prices if we wanted to.

We just don't want to.

[andyc]

Specific question:-
I'm curious to know why you felt it was up to you to try and recruit people into systems which have, as part of their cost, entire stores devoted to recruiting new players?

I don't think its a matter of feeling any obligation, more the fact that the more fantasy players we have in the club, the more games you get, and as a bonus there is a wider variety of armies to play against. Every member of the club at that time played 40k, and now there are 4 members who don't play GW at all and now play Dystopian Wars, and they have recruited 2 members to play Dystopian Wars alongside their other games, one of which is selling a 40k army to fund the move.

Andy

[AGC]

I don't think its a matter of feeling any obligation, more the fact that the more fantasy players we have in the club, the more games you get, and as a bonus there is a wider variety of armies to play against. Every member of the club at that time played 40k, and now there are 4 members who don't play GW at all and now play Dystopian Wars, and they have recruited 2 members to play Dystopian Wars alongside their other games, one of which is selling a 40k army to fund the move.

Andy

Sorry I was a bit too subtle, what I meant was that if a game system is more expensive than compeititors because part of the cost goes towards recruitment, yet players of that system are having to do recruitment themselves because they can''t find players, doesn't that imply something is seriously awry with the business model?

[dtjunkie19]

Andyc,

Seeing the same trend in the states. The GW store in NYC has been hollowing out lately, and it's not due to the staff. No matter how good your staff are, when your prices are too high, they can't sell things. If you had some of the best salesmen in the world, they still couldn't sell cans of coca-cola for $20 out of a store. GW has pushed themselves into the same area.

My gaming group has been playing some Malifaux, fantasy flight board games, uncharted seas, and a few other things as of late. Privateer is not huge here but picking up; flames of war is MIA but I have heard of people picking it up elsewhere.

However GW is dying. There are many people who still play, but I can count the number of people I know who have started totally new GW products or armies lately on one hand. With fingers to spare.

Basically, GW has priced themselves through the high end of the market for us. For reference, the group I play with is decently well off - graphics designers, bankers, business owners, lawyers, doctors, etc. We could all afford the GW prices if we wanted to.

We just don't want to.

Agree 100% with Reinholt here. Over the past month or so the NYC GW has been a consistently more empty than usual. Considering it is 1 of only 2 wargaming stores on the island, that is saying something.

A lot of people are picking up Infinity too (including me). Now we just need places to play...

[iamfanboy]

Where the problem is when you take the Operating expense cost of the UK into perspective. almost 40-45% of the stores GW owns are in the UK. that means your looking at close to 35-40,000 ('000 GBP to keep with the table) as being their operating costs which is above the amount they brought in by quite a bit.

Yes, exactly.

Let's break this down in terms of gross margin - the amount of money they bring in every year overall, which hovers around 120m pounds.

50% of their stores being in the UK means that they have 50% of the store operating costs just in that one, tiny nation - a nation that only brings in 30% of their revenue, 30m annually on average. The British stores cost about 35% of their gross revenue to operate, or 40m.

Even in the UK, though, their stores only generate 60% of their gross revenue from that given area, so 18m on average comes from their stores. 18m from stores that it costs them 40m to run.

On an overall scale, their stores only bring in 50% of their gross revenue (about 60-70m pounds on average). Their stores cost around 60% of their gross revenue to run (about 80m year on year). That other 10m has to be covered by other income sources, usually direct sales from their webstore (that account for about 10-15% of their gross income.)

The rest of their gross income, the stuff that actually generates a profit? From independents.

[andyc]

Sorry I was a bit too subtle, what I meant was that if a game system is more expensive than compeititors because part of the cost goes towards recruitment, yet players of that system are having to do recruitment themselves because they can''t find players, doesn't that imply something is seriously awry with the business model?

I do think something is seriously wrong with the company, and I think they are getting their pricing wrong. As was said by an earlier poster, they have a volume manufacturing operation, based on a large up front cost and then a small variable cost of manufacture.

What I think is that despite the company line that GW are recession proof I am seeing significantly reduced volumes of purchases made from our own club members, and the GW store in Hull definitely seems less busy than it used to, so I would not be surprised to see less volume sales there too. Less sales volume means less activity and then less conversations and less word of mouth, so GW also has to spend more on advertising (devote more space in White Dwarf, less fun posts on the blog) to maintain a kind of status quo, and the larger release waves will appear more frequently as they ramp up design and production to bring out the ever bigger releases so they always have something new to hit you over the head with, and spend less time discussing what they like to call 'the hobby', and this pricing policy combined with the need to have a sales thrust each and every month is pushing our club members to other systems.

Andy

[Reinholt]

50% of their stores being in the UK means that they have 50% of the store operating costs just in that one, tiny nation - a nation that only brings in 30% of their revenue, 30m annually on average. The British stores cost about 35% of their gross revenue to operate, or 40m.

Even in the UK, though, their stores only generate 60% of their gross revenue from that given area, so 18m on average comes from their stores. 18m from stores that it costs them 40m to run.

IIRC, these don't tie with the numbers I recall... what are your sources on them? And are we sure we aren't lumping the HQ costs in with the store operating costs for the UK?

I do think something is seriously wrong with the company, and I think they are getting their pricing wrong. As was said by an earlier poster, they have a volume manufacturing operation, based on a large up front cost and then a small variable cost of manufacture.

What I think is that despite the company line that GW are recession proof I am seeing significantly reduced volumes of purchases made from our own club members, and the GW store in Hull definitely seems less busy than it used to, so I would not be surprised to see less volume sales there too. Less sales volume means less activity and then less conversations and less word of mouth, so GW also has to spend more on advertising (devote more space in White Dwarf, less fun posts on the blog) to maintain a kind of status quo, and the larger release waves will appear more frequently as they ramp up design and production to bring out the ever bigger releases so they always have something new to hit you over the head with, and spend less time discussing what they like to call 'the hobby', and this pricing policy combined with the need to have a sales thrust each and every month is pushing our club members to other systems.

Andy

This is pretty much what I have been warning about for a while.

1 - Pricing and production out of whack? Check.
2 - Loss of sales volumes leading to stall-outs in sales as you don't have critical mass to play or promote? Check.
3 - People going to competitors as they are disengaged from the GW experience due to ham-fisted management? Check.

The path of a (very slowly) dying company is often the same. This will neither be the first nor the last time I see this if GW doesn't turn around.

[iamfanboy]

Sorry, Reinholt, when I described those I was averaging the numbers from 2008-2011, using the 'retail/direct/independent' sales data from the last year they provided it (2009). It was 51% retail, 14% direct, 35% independent as of 2009 (and I don't see why they would have taken that graph out if it had favored GW's business plan of retail stores, so that split is probably being very generous!)

The number of stores in 'the UK' fluctuates depending on whether or not they include the Northern Europe stores in that category; two years they did and two years they didn't. In Great Britain the number of stores is only about 35-40% per year (I think this year it's about 40%), but that deliberate obfuscation makes it hard to make a long-term graph of the numbers. I just said, "Hell with it" and lumped the NE stores in overall.

As far as the admin costs being borne by the UK... I really don't have a personal issue with amortizing their general admin costs across their entire income, because it's separate from the retail chain issue and that money comes off the top anyway. Wouldn't matter if they had a ton of stores or not in paying that money to their factory workers and shipping department - and CEO! If you did, though, it would be even worse for the UK - probably about 60% of their admin costs alone are in the UK. (I think I read that number in one of the reports, but after about ten of them they all start to blur together!)

[Druchii Monkey]

I spent lunchtime wandering around my local GW.

The price rises are sobering.

£80 for that Space Marine Battleforce. Good grief.

And the Cold One Knights at £20 - when i started back in the hobby two years ago these were £15.50, then they hopped to £18.50, and now £20.

[Commissar Merces]

Currently having the same problems with my GW and current gaming club. Every sunday we have warhammer 40k and warhammer open gaming on eight tables. I've been there the past three sundays (usually there are at least 4-5 people). Empty. Not a single soul. When I asked people, they said they were checking out other games (like warmachine etc) but would be back sometime to play.

Our local GW store has become a ghost town. I remember a couple weeks ago (around 6 pm, two hours before closing time) going into the shop and picking up a WD (I know a curse upon my house) and the manager telling me how excited he was to get his first sale of the day. I used to go there a lot because one of my friends went there but now it is a ghost town. Day in and day out. He constantly posts of Facebook, asking people where they are and if they would like to play a game or learn how to paint better etc. He has become a car salesman rather than a friendly presence. Worst part is, even if I wanted to go in and buy things, I don't have the money to just buy buy buy. If prices were even 10% or 5% cheaper, it would be so much easier to swallow.

Personally, I won't be returning to this GW probably ever. I will be buying from online stores, ebay, and my local hobby shop as I can get great deals on them for discounted prices. Sadly, i had a really bad experience with someone last night on ebay who was selling some models (which I suspect were stolen based on his replies to my questions about them) and verbally abused me in an email when i asked him if I won two or more of his auctions if he could combine shipping (a common practice). Needless to say, I am kind of burned out right now.

[Trasvi]

Yes, exactly.

Let's break this down in terms of gross margin - the amount of money they bring in every year overall, which hovers around 120m pounds.

50% of their stores being in the UK means that they have 50% of the store operating costs just in that one, tiny nation - a nation that only brings in 30% of their revenue, 30m annually on average. The British stores cost about 35% of their gross revenue to operate, or 40m.

That directly contradicts the data I just pulled from their financial statements. It clearly says that their operating expenses are 14.3M in the UK. It is also by far their most profitable region (4.8M, whereas US brings in 3.1M despite having nearly identical revenue. It actually seems that Forgeworld/BL are hugely profitable for them too.

They have about 12M in distributed operating expenses across their web, training, service centre and logistics divisions. (Although I'm not sure how the ~20M operating loss for the same divisions factors into that :/. Regardless, this should be regarded as distributed.

Further to that, UK has ~135 GW stores. Australia has 36. Yet Australia's operating costs are only roughly half the UK operating costs, rather than a quarter as would be the case if costs were evenly distributed. Obviously the cost per store varies hugely per country, and saying '50% of stores => 50% of costs' is a fallacy.

[Commissar Merces]

I spent lunchtime wandering around my local GW.

The price rises are sobering.

£80 for that Space Marine Battleforce. Good grief.

And the Cold One Knights at £20 - when i started back in the hobby two years ago these were £15.50, then they hopped to £18.50, and now £20.

Bloodknights being $100 was more than sobering. Thats $20 per model in that box set. W. T. F.

[Druchii Monkey]

Bloodknights being $100 was more than sobering. Thats $20 per model in that box set. W. T. F.

How can i justify buying direct from GW with these prices? They really are pushing people to buy from discounters. Also, i get many of my influxes of miniatures for birthday and Christmas. £15-£20 is the most i can ask for from friends and family when they ask me what i want - pretty generous of them if you ask me. It was nice to go this one is from so-and-so, and that one is from somebody else. Now it's like i'll be pooling up gift vouchers just to buy a couple of small boxes. Quite frankly from a cost/enjoyment point of view i'd rather they bought me a couple of pots of honey. Aaaargh. Cheesed off.

[Artinam]

On the good side, Specialist Games are getting more affordable, those 30 euro metal battleships seems like a steal

[iamfanboy]

That directly contradicts the data I just pulled from their financial statements. It clearly says that their operating expenses are 14.3M in the UK. It is also by far their most profitable region (4.8M, whereas US brings in 3.1M despite having nearly identical revenue. It actually seems that Forgeworld/BL are hugely profitable for them too.

They have about 12M in distributed operating expenses across their web, training, service centre and logistics divisions. (Although I'm not sure how the ~20M operating loss for the same divisions factors into that :/. Regardless, this should be regarded as distributed.

Further to that, UK has ~135 GW stores. Australia has 36. Yet Australia's operating costs are only roughly half the UK operating costs, rather than a quarter as would be the case if costs were evenly distributed. Obviously the cost per store varies hugely per country, and saying '50% of stores => 50% of costs' is a fallacy.

Oh, FFS... I did screw up in reading the 2010-2011 reports. Give me a minute to revise my numbers - or ten. Let me see how wrong I was. *shrug*