It's that time again: GW 2012 Financials

[Mastodon]

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.]

... 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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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.

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
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 ).

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]

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]

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]

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]

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]

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]

[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]

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]

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.