Games Workshop Share Discussion Threads

[nod] 22/8/2018 11:35

GAW had a rule that an independent could not sell our products online unless they had a physical store. Is this still the rule, or has it been relaxed?

[robinnicolson] 22/8/2018 10:07

From the annual report 2018 reporting on online sales:

"Sales of our Forge World range grew by 4% and our Citadel range by 52%". Quite a difference in sales performance.

As GW does not set a RRP, I notice that some indie stores are offering discounts on GW products. An example: "Great Unclean One" retails for £85 on the GW site but £68 on the Goblin Gaming online site. What is the incentive for a young hobbyist to spend their pocket money on the official GW online site when it can be picked up at a 20% discount elsewhere?

I calculated that last financial year GW achieved an operating profit of £8,000 per indie outlet, with an operating margin of c.34%. That compares with an operating profit of c. £14,700 per GW store, with an operating margin of c 9%. GW online store margins are c.64%.

I wonder what percentage of indie outlets are 100% online as opposed to brick and mortar stores? The store finder on the GW website gives a good impression on how much 'white space' there is before the company achieves 'Global Domination'. Understandably the UK has fairly comprehensive coverage, with even small towns having an indie outlet. How long before saturation point is reached?

[robinnicolson] 22/8/2018 09:50

Follow up on painting.

From GW conditions of sale: "GW does not permit Trade Accounts to sell pre painted Products. Trade Accounts are however permitted to offer painting services provided after the point of purchase".

[nod] 22/8/2018 00:19

For shareholders on here who don't frequent any stores, it's worth reminding that there are many more independent stores (aka Trade) than GW stores. A ratio of about 8 to 1 and Trade has been growing at a faster rate. The total revenues though are not far apart. A key difference is that Indie stores sell non-GW products of a similar ilk, relating to tabletop games and models. These products are competing for our customers' money. When other products and games come into vogue some of our money is directed to a 'competitor'. This is a reason for own stores even though they have high operational costs. Our stores focus 100% on our products and recruiting our new customers.

[scotch broth] 21/8/2018 21:28

What about all the money we are making. Should we order the Astons?

[nod] 20/8/2018 22:08

Painting is a fundamental part of the hobby. Top quality painting is very time-consuming but satisfying. There were regular model competitions which the stores ran to attract and retain customers. My son missed out on the #1 prize but would get placings for his model painting. He was regularly asked to paint for others. Another hobby angle was the creative element where hobbyists would modify models and build their own unique terrain. Modified models would be judged by peers and awarded points above the unmodified model.It seemed that customers who didn't enjoy the painting side would drop out of the hobby earlier. They liked the tabletop gaming but the deep satisfaction of playing with your own hand-painted creations was missing for them.

[santr0] 20/8/2018 14:15

Answering the question about large models, the answer is usually yes. It was especially true during the 7th edition of 40k where we had a huge arms race between each new codex. For example, during that edition, new Imperial Knights were extremely powerful (not so much now), 3+ knights allowed to make a separate, relatively cheap, but very powerful army, that is partially a reason why they were selling so well.
If we go forward to 8th edition, the good example is Imperial Guard's Baneblade variants. If you play competitively, it is very likely that you have at least 1 in your army.

[santr0] 20/8/2018 14:07

Painting is a very expensive service (especially on eBay) because it takes a very long time to paint and assemble these armies. Even a small sized army would take a few dozen hours to be properly painted, considering that it is a specialised service, the price tag is accordingly high, so there is no surprise in price tags in 1000s for middle-sized properly painted armies.
The demand for it is very limited, just ask some players in your local store about who painted their minis and usually the answer is themselves. Therefore I don't think that there is a solid reason for GW to provide painting services as it won't be able to compete effectively with specialised painting studios who accept orders for any minis and therefore able to keep the prices low (GW is well known for its ridiculous price levels).

[epo001] 20/8/2018 12:43

I just had a look at ebay, many of the expensive auctions are offering painting services, i.e. for people who wish to commission a custom painted army.

There is obviously money floating about. Perhaps GAW could cut out the middlemen and hire an army of people to paint on a piecework rate and sell direct.

[robinnicolson] 20/8/2018 12:29

Whilst I can understand the obvious advantage for GW gamers in having large armies, is there also a strategic advantage in owning the more expensive, larger models? Do the latter provide more 'military power' and a greater chance of winning the GW tournaments? I presume Games Workshop have provided an added incentive for hobbyists to spend more in the retail stores and online.

[snew] 20/8/2018 10:21

Large buy of over £400k went through after 10:00. Someone is confident this will go higher? Moving towards resistance at £35. But this is on my chart, and what do I know?

[nod] 19/8/2018 23:13

My son sold his LOTR models and magazines around four years ago. There were a few bidders and he set the reserve quite high, not knowing if there was any demand in New Zealand. The interest in WH was picking up around then - he had been watching the WH auctions for a year or two, waiting for the right time. He was very pleased with the cash raised. The metal models fetched good prices. I would imagine some models would increase in value over time if they are no longer produced by GW. I think he kept a few metal ones that he thought may become valuable.A guy who picked some up was an eccentric looking chap and very friendly. Around 50 years old and still participated in the hobby. Looked like a young Gandalf.

[robinnicolson] 19/8/2018 08:54

Thanks Nod. I had a glance at eBay...astonishing prices. £5,000 for a large army! Presumably there are some people who only have an interest in the collecting aspect and are happy to buy models built and painted by others. Are there some very rare, limited edition, GW models? I noticed that a model retailing for over £1000 has sold out on the GW online store, so people will obviously pay big money.

This is an angle I had not considered:

"Games Workshop’s U.S.-based outreach manager estimates that 20 to 25 percent of Games Workshop’s American customers are active members of the military. If you include veterans, she says, that number jumps to about 40 percent."

hxxp://www.slate.com/articles/life/gaming/2012/09/warhammer_40k_why_american_troops_love_to_play_a_game_featuring_orks_necrons_and_space_marines_.html?via=gdpr-consent

[nod] 18/8/2018 23:19

It would be very difficult to calculate the number of active customers. A couple of metrics are available: UK revenue is now a bit under 25% of global revenue. So, if there are 500k active customers in the UK there may be around 2 million active customers worldwide. This is just an example, I have no idea how many UK hobbyists there are. Around 80% of customers are hobbyists / collectors but don't play the games (a figure given in a WH magazine a few years ago). A very large percentage of people buy second-hand models on e-bay and other trading sites, some are collectors and some players. Some say they never buy new. Most 2nd hand transactions are invisible to GAW but will likely result in regular visitors to GAWs online sites. I would hazard a guess that the second-hand market is much larger in the long-established UK market than in the now bigger but relatively new USA market. People retain an interest in the products for many years after they stop buying them. This is like people watching football for many years after they stop playing football.

[robinnicolson] 18/8/2018 20:47

Private company Privateer Press, from what I could glean from a brief Google search, is only a minnow in comparison to GW. Annual revenues of approximately $6-10 million and 49 employees.
Over the past 15 years, GW has been able to achieve an average gross margin of 71%...an extremely strong consumer monopoly! Management themselves talk about their 'frontier wall' and 'frontier moat'. Any potential competitor now has to battle against an incumbent who has decades of experience and the ability to annually ship + 30 million high quality models around the world.

Does anyone know roughly how many GW hobbyists there are? In 2001 the estimate was 500,000, of which 300,000 were based in the UK. In the latest report, the CEO wrote about 5 million users of the Warhammer content online. I wonder how many of those actively buy GW merchandise?

[push n run] 18/8/2018 17:59

Yes, that case was pretty famous, although I believe it was under old management, who were also ridiculously over-protective on the licensing side as well. Things seem to have relaxed a little since.

[nod] 18/8/2018 01:09

GAW is well-known for actively protecting its IP through IP lawyers. This doesn't always go down well as they can stretch claims a little too far. The TM for Space Marines for example, when the name has been used as far back as 1930. A spat a few years ago portrayed a somewhat negative image of GW.



Maggie Hogarth won that spat.

[push n run] 17/8/2018 23:32

As that reddit post says, GW's moat is in the IP. Other companies may come up with similar or better games and models, but it's difficult to compete with decades of storytelling, characterisation and worldbuilding. Warhammer, Age of Sigmar & 40k are all ridiculously epic and over the top universes, which people fall in love with as kids.

These days, without wishing to generalise too much, a significant portion of those kids grow up to be computer programmers and finance professionals with plenty of disposable income, and "nerdy" activities are becoming more socially acceptable over time(e.g. comic book movies).

The strength of the worldbuilding also makes it easy to license out, and the licensing both generates profits and creates a feedback loop, as the computer games draw more people into the hobby.

Of course they will probably make missteps over time, but they've been around for over 40 years so far through thick and thin, they're not going anywhere.

[nod] 17/8/2018 22:22

One gamer's view:https://www.reddit.com/r/Warmachine/comments/7s007z/why_i_prefer_hordeswarmachine_over_warhammer40k/#thing_t1_dt1bcx0Given our sales in the USA in recent years, we may be winning that war.

[nod] 17/8/2018 22:06

There is a major competitor in the USA that has been around since 2000 named Privateer Press. They produce miniatures very similar to GAW. Their products Warmachine and Hordes are on sale in New Zealand. https://en.m.wikipedia.org/wiki/Privateer_PressI just did a Google and there are plenty of gamers who prefer Warmachine. Reddit is full of discussions between the two camps. Another product KoW is mentioned as a third alternative.

[robinnicolson] 17/8/2018 16:43

As long ago as 2004 Tom Kirby, (CEO and Chairman at the time), wrote that "the main source of risk remains management error"...a warning echoed by present management.
It must be extremely rare for a company not to be primarily worried about a serious competitive threat developing...especially over such a long time span.

Does anyone know of any potential rivals emerging, perhaps in the USA, or has Games Workshop dug an almost insurmountable moat?

[robinnicolson] 17/8/2018 15:22

Following on from the post above regarding the 'Buffettology' fund, I am absolutely certain there is no fund manager with a deeper knowledge of Games Workshop than Keith Ashworth-Lord of Sanford Deland. He was writing in-depth investment articles about GAW for 'Analyst' magazine more than twenty years ago.
He is still adding to his fund holding. According to Morningstar another 14,003 shares were bought in the period ending July 2018.

[nod] 17/8/2018 12:55

Rhomboid, I think the clue is in "net funds" at year end. This is above the para you posted.2016/17 year accounts:"there were net funds at the year end of £17.9 million (2016: £11.8 million)." ... 52% increase on prior year2017/18 accounts:"there were net funds at the year end of £28.5 million (2017: £17.9 million)."Around 10.6 million more this year end ... 59% increase on lastGAW distributes to shareholders cash it does not require.

[push n run] 17/8/2018 12:11

It's been proven that there's an inverse correlation between number of bulletin board posts and investor returns, so not a huge surprise that there's not much activity here!