Wednesday, December 28

If I was GW CEO: Part 1, SWOT


Well, a while back I promised to do a series on GW business practices titled "If I were GW CEO,"  Now I am doing it.  Essentially I want to look at this as if I was just asked to take over at the company. I want to take this from the business perspective, not just a player perspective.  We all know that it is hard to take out the consumer, but Ill try.  Anyhow, onward and upward.




My qualifications: I don't want to say I'm more qualified than anyone else, but this way you know I'm not talking out my rear.
 - MBA (finance and accounting), CFA, CPA (in progress), BS in Business admin, series 7, series 66, 10+ years private equity/ finance/ institutional investment management. I have also been on my share of advisory councils and boards.

What is a SWOT analysis?
S- Strengths: Characteristics that are INTERNAL to the company that provide an advantage.
W- Weaknesses: Characteristics that are INTERNAL that provide a disadvantage.
O- Opportunities: EXTERNAL areas to improve the company.
T- Threats: EXTERNAL elements that can prove to be problems for the venture.

*note: This is not supposed to be the end all list of the company's attributes, it is just supposed to give us an idea of where the company is.  Because the list is not exhaustive there will be some points not made and some may even fit into multiple areas. For example, weak marketing could be a weakness and a threat if it is in comparison to another company.

The Company:

Before we talk about how to improve/ maintain a company we must first know what it is.

Structure: Publicly traded Company (Listed), PLC (British LLC)

Owners: Though it is public, the company is tightly held.  The single largest (non-institutional) shareholder is Tom Kirby at 6.2%.  Most shares are owned by institutional firms and pensions.  Employees hold a minority of the shares.

Customers: Mostly males 18-45, Above average income and students 12-17 with no income.

Strengths:
- The IP is unassailable.  The fictional worlds created by this company are second to none.  The stories and characters are large leaders towards continued sales.  Model manufacturing is also second to none, the models produced by GW are of very high quality and are seen among many as the top in their class.  Strong distributions channels throughout the world in the form of independent retailers pushes a lot of the costs of physical stores off of the GW books.  The line employees are some of the best in the business, they can get someone excited in starting a new product better than a large portion of independent retailers.  GW also has many income channels open to it besides the models (e.g. royalties). A consistent release schedule (quarterly) is helping to increase customer relations and sales.


Weaknesses:
- The company has taken a dogmatic approach to the rest of the gaming world, feeling that they cannot be taken off of their high perch.  The company has also distanced itself from the customer base by constantly increasing prices well beyond any CPI (Inflation) or COGS (Cost of Goods Sold) numbers.  Its approach to news releases has also served to distance itself from the customer base.  From an employee standpoint there is (reportedly) an infamous 'glass celling,' for anyone who isn't from England. This can create a sort of tension in employees who feel it is pointless to carry on excelling if they are cannot be rewarded. Because it is tightly held it means there is generally less extreme pressure from new shareholders and sometimes a tightly held company can suffer from group think, or will bow to the will of a single personable large shareholder, or officer of the company (CEO, COO, etc).

Opportunities:
- Many peripheral industries are mentioning interest in the Games Workshop IP.  Everything from Video games, to Movies.  With many new entrants into the field of table top wargaming GW has an opportunity to assert their strength.  There is a growing Independent GT circuit that is beginning to get its footing around the world, GW could greatly change public image but putting strong support behind those events they feel deserve it. The target market of the company usually has disposable income to spend on their hobby. With a large focus on marketing there could be a strong response from the target market.


Threats:
- Third party manufactures are ever encroaching their IP and GW is currently in a deep legal battle to defend themselves.  Many new game manufactures are coming into the arena, while their main line system (Warhammer 40k) is not threatened as much their smaller systems are.  Game designers from GW are leaving to join other companies.  Video games are always a large draw for time for GW target customers.  Tom Kirby is approaching 70 years of age where British Law will force him to step down as chairman, unless the company issues a special exception (likely).


Well, folks that is it for now.  Im sure you will have comments.  All in all I don't think GW is a horrible company, they have many things going for them but I think that there are a few areas that are opportunities and some internal weaknesses that are not being addressed. In future posts I'll go more into detail about how I would go about enhancing the strengths and taking advantage of opportunities as well as limiting threats and weaknesses.

What would you add to this SWOT analysis?


Duke

57 comments:

  1. GW's biggest weakness is it licensing department, which is infamously out of touch with the mainstream. This can be seen in everything from their limited # of external licenses, to their taking years to get any sort of theatrical product released (and then releasing a mediocre product that failed to engage the core audience) to the simple lack of t-shirts and posters for the fans to buy. The licensing department is hard to work with and holding the company back.

    Secondly, the exodus of most of the key employees to Battlefront and other gaming companies left the company at the mercy of the suits who simply do not understand the gamers. Tom Kirby's 20% bonus to himself in a year when they are cutting employees and not rewarding their best US employees is typical of corporate greed.

    I could go on....

    Alec
    Apocalypse40K.com

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  2. @Alec: agreed, their licensing dept. could use a complete paradigm shift. While I agree that it is ridiculous for Kirby to get the bonus I am hoping it is preparatory to his retirement, since retirement would be based of that income. One can hope, eh?

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  3. A little off topic, but here is the typical gamer sentiment about GW over teh last few years. You NEVER heard this 10 years ago. And shows how GW has screwed their own reputation.

    "GW has been doing it's letter best to f**k their customers over with increasing intensity over the last couple years. It's a bloated dinosaur company that is still living in the early nineties thinking it can do what it wants.

    They are failing to realize that their customers are fed up with their BS and that there are plenty of other gaming options out there now, many of which offer superior products. It will take time but if their current apathy towards their customers continues they will end up losing their grip on the market and maybe even fail all together."

    Of course, GW relies on NEW gamers,not veterans to sustain growth. So much of GW mgmt won't care about what the vets say.

    Alec

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  4. Additions to the SWOT:
    Strengths
    1) Strong manufacturing skills - capable of creating miniatures others cannot, using materials others cannot.
    2) Large installed base of customers and models
    3) Excellent new game materials (e.g. Codex)
    Weakness
    1) Finecast has quality problems that have to be sorted out
    2) Deep library of older miniatures that are not available leading to secondary market that reduces sales by GW
    3) New store model has reduced the ability to introduce players to the hobby
    4) Tools, paints and accessory market now flooded with better products
    Threats:
    1) Environmental regulations on manufacturing
    2) Eroding hobby dollars in core market ( stagnation in wages for technical males)
    3) Strong marketing organizations emerging in some competitors
    4) Potential licensing by SF Authors of equally rich environments for gaming
    Opportunities:
    1) Emerging markets in BRIC countries which GW has mostly ignored
    2) Emerging markets in Eastern Europe which GW has mostly ignored
    3) Ability to revitalize a series of prior "specialist games" which still have a core audience

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  5. First of all i think you have to reasses the tool you are using, generally speeking a swot analyses is a summary of other tools like a macro micro or meso analyses. You think you have knowledge but were is the proof , like expanding to bric countries why? What analyses tells you this is a good idea.

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  6. Thanks Duke. Been looking forward to reading this thread for some time.

    Nice intro. Interesting comments. Sorry i have nothing to add at this stage.

    To be continued.

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  7. I got one for you, how about let me buy your stuff!

    I dont know what the connection between GW and Forge World is, who owns who. Some kind of brother/sister/crazy uncle thing.

    But realy tell me why there are only 3 stores in the US that sell FW?
    Then if you can justify that tell me why they are not allowed to ship to people in the US?

    I love Starbucks, too bad they only sell it in NY, LA and Chicago. No problen I will just order some beans on line...wait they wont even ship them to me.

    That sounds stupid right.
    What am I not getting here?

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  8. I think an opportunity that hasn't been tapped yet is selling the starter sets in stores like Barnes and Noble. Not only are large, chain bookstores selling nerdy, complicated, expensive games now, but the branding would be there on a shelf for more potential customers to see. The VAAAAAAST majority of GW customers are brought in by referrals and the lions share of the remainder were random walk-ins to GW stores. Imagine what having something on the shelves of a more commonly frequented store would do.

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  9. CrimsonTurkey has a great point about reaching out through other stores. I originally got into Warhammer because the Barnes & Noble on my block somehow (I think through a purchasing accident or something) got a shipment of White Dwarf one month. It was next to my usual magazines (Dragon/Dungeon) and it looked cool and was only 6 bucks, so I bought it.

    That was issues 310, November 2005. The battle reports, the painting tutorials, I was hooked on it all. I pestered the B&N about next month's magazine, but they never got any more, so I took it upon myself to hunt down the closest GW store and take up Warhammer with the hundred-and-some-odd dollars I had in savings as a teenager.

    THAT is the kind of exposure GW needs.

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  10. I think GWs weaknesses also extend to their regional support/international business model. IN Australia, GW experienced -10% growth last year due to the increased anger that Australian (and New Zealand) customers feel towards GW setting local RRPs at 2.5-3x the US/UK/Canada prices, even taking into account currency conversion. Accordingly, many customers were ordering from third party sellers in the UK and the US to pay a fair price. GW then went and placed an export embargo on some of these sellers, ensuring that their nice little stranglehold on their southern hemisphere customers was attempted to be retained.

    This backfired, and there is now a Facebook community of 1800+ customers who have lobbied against GW. This resulted in Mark Wells coming out to Australia to address some concerns with the creator of the Facebook group, and this meeting pretty much resulted in a case of 'too bad' for customers, with the excuse being that customers had to pay higher prices to support their unsustainable retail model of having 10+ stores in each Australian city.

    Frankly, the biggest threat to GW is internal; I have a feeling that the executive board's penchant to 'rest on their laurels' and simply convince themselves that 'GW = the entire hobby' will be the company's undoing, unless there is a change of business plan and leadership within the management cohort.

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  11. I have to totally agree GW is terrible at branching out with its universe into other ventures (video game, movies, t-shirts, comics, etc). I know at least half the gamers out there would be pumped to play 40K video games or evenn just simply buy 40K posters and t-shirts, but this stuff basically isn't available.

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  12. GW also does a very good job of alienating veteran/experienced gamers by not updating rules, not creating models for new units, not adressing "codex creep", etc. If they did a better job of using FAQ's and updates to balance armies out over time, I know many people personally that would still be playing GW games.

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  13. We have 3 Stores in Perth, WA and they are an hour and a half away. If that's enough to demand high prices for us.... someone's bonkers.

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  14. Games Workshop's biggest problem is declining sales. Their response to this is to hike prices. It is the fallacy of 'whatever the market will bear' as a monopoly.

    As a youngster I remember going into GW with my £15 of saved - often months worth of saved - and looking around at the things I could buy for my army. These days that doesn't go very far, which is only going to put kids off. No younger players means no new players.

    Screwing Australia/NZ was simply offensive. It was the action of a bully desperate to hike prices. As for emerging markets: they're not interested. Apart from the obvious that those areas cannot afford the prices, the cost of getting into the regions is huge. Why would they bother when there's a home grown market to milk?

    It is the same problem that government has. If you see tax revenue fall, instead of looking at why, you simply hike all taxes. The eventual conclusion is recession and economic collapse. This is where GW are heading. The company has gone from being the best to destroying themselves in the naked pursuit of raw greed.

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  15. stopped playing the main game after they went from 'our money grubbing brits' to 'those bastards'

    there hasnt been any major support here for anybody wanting to play a gw game. Even 40k has dropped off the radar due to unplayable army lists models that have no use outside of a looks cool aspect. Prior to the price hike summer (our local firebase switched out price tags no less than four times over the summer prior to finecast being announced and promptly falling on its ass) we had 40+ players every weekend who would show up to play constantly and dropping 100+ dollars on product, to virtually no players by the time winter came around. This was before the economy tanked mind you. Now boxed sets which were supposed to be affordable means of getting into the games jumped in price, starter sets went from 80 dollars to 120 dollars. Which means you cant drop a franklin on Black Reach and get one codex for what army you wanted to play. Its a massive joke and we are watching them slowly falling on their own sword

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  16. I believe the worst part of their price hiking is the codexes and rulebooks themselves. even in Britain a codex is £20 and the rulebook is about £35! Who would spend that amount if money just coming into the game on dull rules which you then need to download and FAQ for to use properly. I am running a school club and the hardest part of getting the new kids into the hobby properly is geting them to buy their own rulebooks.

    Whats annoying is that they make a small copy of the main rulebook which you cannot buy individually besides online from eBay or something. Such a wasted oppertunity. Making it easy for kids to buy the rules means they are one big step closer to being hooked.

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  17. I think GW is going a wrong way as may people state it before.

    FW is certainly more expensive but also offer an alternative with :
    - Always the best quality (Books and mini)
    - very characterfull army rules
    - deep background
    - more connexion with their ground customers

    I'm bored of GW policy always making news edition with only better army while they don't have any respect for gaming balance because its a good reason to stop the bad army and buy the other !!!

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  18. I agree with all the posters here. Gw has problems to numerous to list here. And a glaring issue in my opinion is that they completely ignored the last 20 years of digital revolution. No rulebook's in .pdf ,no automatic FAQ patching for books you own?
    I know that they would just cry piracy, but Paizo does pdfs for pathfinder and they have become one of the most popular rpg companies out there.
    Meanwhile other companies are giving their rule sets away for free and have constant updates through their website.
    As for websites GWs is a joke its outdated and difficult to navigate and antiquated. Its the exact same site i browsed when i started playing back in WFB 5th ed.
    Speaking of back in the old days, then i could say with confidence that GW made the best models you could buy. And as for games there just were none ...at all! But thats just not the case anymore. There are many games and model line out there that are as good if not better.

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  19. I think the SWOT analysis is quite complete now. It's just funny to see that at the beginning it was just a SWOT and then it turn to be a show of unhappiness about GW.

    Anyway just to answer Xenos and proud about the codices price which is quite high, but it also has to be compared with other gaming industries prices on rulebook and supplement. Take a look to all the RPG base as in the game industries they are selling Tons of Rulebook and supplement. Even if RPG is quite different from Wargaming I still believe that there are some ties (fictionnal universe, original Warhammer was Mass Combat Fantasy Roleplay etc..) The average price is around 45 GBP for a rulebook and 30 for a supplement.

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  20. What I never realy understood is the lack of options when it comes to starter sets.
    Lets look at Magic The Gathering. Someone who is interested can get a preconstructed deck for ~20 € and is ready to play, he can even chose which theme he likes.
    So why no small starter boxes for more than one race? This would drive more players to currently less played races maybe and it would provide a cheap intro to the game. What parents would want to spend 80+ € on a starter set (granted,its for two players but you need someone to share the cost with) just because their kid wants to start play a game?

    Make 20-30€ boxes for each race, balanced in point costs. Each has a simplified rulebook to get started. Couple of troop soldiers, 1 HQ.
    They would be ready for action (once assembled) in short time and it would give a base to expand the army on.

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  21. Not to throw too much of a downer on the ranting going on here, but GW did license T-shirts and posters, and sold them in their stores for years, they didn't sell so GW dropped them. You can't expect a company to throw more money at something that has been shown to be a bad business move in the past with no indication that it'll be any better this time round.

    GW can't license to a movie/tv studio in order to get their brand into mainstream because the rules regarding ratings in every country in which they would release the movie/series/mini-series would exclude their core audience (top tip, if you're over 16, you aren't their "core" demographic).

    Now, I agree they could use a serious price reassessment, and a LOT more proof-reading and play-testing of their product. An an attitude readjustment for their store staff and as has been mentioned a nod towards the 20th century (one step at a time, we;ll get them to the 21st century eventually) by making their website more user-friendly and actually be worth visiting for something other than the bi-annual FAQ updates.

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  22. The Weaknesses, Opportunities and Threats you have layed out are quite subjective and don't have have any basis in fact.

    Lots of people seem to think they know the ins and outs of GW's buisness but it couldn't be further from the truth.

    Games designers aren't leaving, sales aren't declining and Australia is in growth

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  23. One thing I want to achieve with this series of articles is not to just bully-bash GW over and over. I want the hobby to thrive and for customers to be 100% loyal to GW.

    This series of articles is going to be about how GW can achieve that. I know we all have greviences that we could level against the company, but lest be honest... At least they haven't pulled a Netflix, lol.

    So, long story short lets get the laundry Los of complaints out of our collective systems and try to focus on HOW they can be the company we wan them to be. Just remember that there are certain instances where customers an corporations are at natural odds (ex. Price).

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  24. The company needs to go Ltd, It would work sooo much better with out shareholders dictating practices, rather have the practices dictated by customers. IE cut prices to a point where profit is maintained but also the prices arnt eye watering

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  25. Australia's in growth, huh? Let's wait and see the next FY reports, post one-man store rationalisation, post Finecast-embargo-price hike triumvirate.

    I would like to see GW clutch in more to the online market by making GW online a viable place to buy models (ie cheaper - at present there is no incentive to use it at all) which could reduce the necessity to have as many GW bricks-and-mortar stores. Rather than many one man shops, you could have fewer stores but bigger, which would encourage more gaming and allow more staff to be employed there - so that some could achieve Mark Wells' stated aim of growing the hobby in that store (hard to grow the hobby as a solo employee in a store...you're mid conversation, a new customer walks in, you've got to break off or ignore the new arrival).

    Further, it's time GW adapted its model a little. Other retail chains - heck, almost any customer-service oriented business - offer loyalty schemes with associated discounts etc. I for one would be far more willing to drop more dollars on GW product (as indeed I used to do!) if I knew that I would get some free swag, or a discount, or whatever, down the line.

    I have currently dialled my spending on GW right back in protest over the situation in Australia, but I don't hate the company, I love its products, and I would like to be able to once again get right into collecting (as well as painting and playing) without having to take out a mortgage to do it. Particularly when my brother and sister hobbyists in the UK pay half the price I do for the same stuff.

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  26. Australia is not in growth. 93' Veteran here, and I remember the days when I imported an Eldar Avatar (wouldn't you know it, it's the same model!) through my local games store for AUS$14.

    I am not going to boast but my wife and I are on 250k a year combined. When I told her about buying a $90 tank, she lost her mind. We went into an Aus GW store, and she was mortified at the prices on offer. To top this off, I heard a father say to his young son while we were walking out, 'I'm sorry mate, but it's too expensive.'

    According to stats, my salary is in the top 4% of wage earners in the country. For me to literally say 'no, this hobby is too expensive' is a telling factor. I have always paid the prices, but in light of the recent 30-40% price increase in Aus due to the trade embargo, Finecast (lol) and the price rise, I can't afford to continue the hobby.

    THAT is the threat to GW, they can't market to their veterans anymore, and hence they will continue to lose money in Australia and New Zealand.

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  27. Hi Duke,

    Assume you will be doing an analysis on the balance sheet and cash flows soon. One thing I have tried to understand is the relationship between GWs price increases, revenue growth, and profitability. Here I see a company that, other than the LOTR movie bump, has generally shown consistent revenue growth and price increases that are above CPI and COGS, yet they have struggled with profitability. I don't have their financial past the latest reports posted and they are not in EDGAR, but it seems to me the only way they have been profitable for the last two years is because of licensing.

    My background is manufacturing, technology management, and operations. When I see a company that is not turning a profit on continuing manufacturing operations I really start to wonder. Like everyone else they seem to be moving low complexity, high volume manufacturing off shore (print material made in China). But as you say in strengths the real core competency of GW is miniature IP, design, and manufacturing. What GW can do with injection molding is impressive and no one in my experience can match it. I think they still develop all the tools and dies for this in England and still have a significant capability to develop not just new miniatures, but also manufacturing processes. Fine cast being a prime example. Fine cast is having it's issues, but that will likely get resolved in time as they get more run time on with the material. Still it is an impressive achievement from a manufacturing stand point. So, why do they need the IP revenue boost from licensing to stay in the black? If I am getting a premium on my price increases, and get a 50M revenue bump from licensing and make less than 50M in profit (before special charges and taxes) where are my costs that are pulling down my financial performance?

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  28. @anon 8:51 am. I did an analysis on their previous year ('10-'11). I will. Do another full review and Y/Y comparison when those new numbers come out.

    @sigh...said... I honestly appreciate counter-discussion. Please provide me with some specific points. Any SWOT analysis from outside the company is inherently going to have subjectivity because I don't have to privilege of direct company input. Even still, there is nothing saying that SWOT should only be objective and if you ask me I think it is implied that subjectivity is included in the analysis.

    Duke

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  29. For the person who said they should sell in Barnes & Noble: no.

    With book sellers, if the retailer doesn't sell a product, they tear off the cover, pulp the rest and send the covers back to the publisher for a nearly full refund (the publisher gets a tax break for this). This is where the term ""If you purchased this book without a cover, it has been reported to the publisher as 'unsold and destroyed', and neither author nor publisher have received payment for this book." message in old books from the 80s and 90s come from.

    This is what killed TSR (the guys who made D&D). They sold a LOT of hardcover product to B&N and Borders in the mid-late 90's, spent all the money (on new product development) then suddenly got back a massive stack of torn off covers and a demand for a refund from the bookstores. TSR couldn't afford to pay them back and folded (and was eventually bought out by WotC).

    GW starter kits are too expensive to sell in

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  30. Sarge...What R U talking about? You can order FW just fine int eh U.S. I just placed a $1,000 order yesterday from the U.S.

    That said the truth is that be it this year or the next, GW will be sold or go into bankruptcy as a result of sells numbers and profits that are down dramatically. MIniature sells are down more than 50% since Fine Cast was started and the company is now in deep deep trouble.

    I do not know what kind of protections are available to companies under U.K. law but mark my words GW will be needing them soon.

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  31. Another weakness not directly addressed is the current GW dogma about releases. They seem fixated on 'only release a revised list with a full miniature line' and 'rules don't matter that much' ideas. I know that GW is a minis company first and a rules company second, but I really believe that their determination to drive mini sales with rules is hurting the condition of the game.

    It's this thinking that has lead to codexi potentially older than the player, to 3rd and early 4th ED lists played at the end of 5th/start of 6th. It's better, but not required, to have new minis. But keeping the rules up to date is also important.

    As for SWOT analysis, it is always subjective. Most any analysis not testable by experimental procedures are. This one seems as accurate as can be made without info not accessible to us (or at least in line with my biases). Sales breakdown by age and player experience would be what I'd most like info on, though.

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  32. My (completely business ignorant) changes to the Australian GW problems:

    1) If the stores cost too much get rid of them.

    2) Discounts, sales and promotions use to work really well (at least they use to make me buy lots), use them again!

    3) Show the customers that you value them.

    Oh and I’m happy for 'sigh...and...' to ignore that there is any problems in Australia. GW models were my whole life. Every cent that I could spare went to GW. Now I buy nothing and no mother could afford to buy her kid what I use to spend!

    Ramble 1. I get that this comment will be poo poo-ed by many, but I simply can't understand why we need any GW stores in Australia. Ok BIG call, I know. When I got into the hobby there weren't any GW stores. I got my original stuff from independent retailers then at some point I switched to on line purchases. I like the guys at the GW stores and all. But they don't justify higher prices. Its gamers that get others into the game NOT sales staff.

    IF it really is that the stores mean that we have to pay SOOO much more than everyone else. Down scale them! At the very least let us buy stuff from the source in the UK!

    Ramble 2. Around the time I started to buy online, a store opened up in Adelaide, 50km from my home. The Australian GW mail order dudes kept sending me surveys with each order asking me why I didn't go to the store. AND they included a 10% off voucher when I completed the survey. I was a kid that had just dropped a few hundred dollars or so on stuff THEN got given a 10% discount voucher. What did I do? Bug my parents to help me use the voucher and get more stuff! Also the back of the codex always had special offers that would get me every time.

    Sales and special offers work- every now and then through one in!

    And finally, care about your customers. Once I felt that GW did. Now I feel that they don't. And that is the big reason why I don't buy GW anymore. There was a time when the gamers felt involved in what the company did. I for one flew from Australia to the UK to go to one of the games days to meet the designers, and I came home with stacks of free stuff. That would NEVER, NEVER happen today.

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  33. The licensing department of GW is the one that is easiest to fix and could be a rich source of income for the company.

    Two years ago, I had the good fortune to visit the UK on a business trip. I extended the trip and headed to Nottingham to visit Warhammer World. It was fantastic. However, I was stunned that there was nothing there I couldn't buy at any other GW location. There were no T-shirts, hats, trinkets, or souvenir memorabilia of any kind. Maybe it's just because I'm from the U.S. that I would expect that sort of thing. But I went there expressly to buy said trinkets, T-shirts, etc...

    They've also dropped the ball on the tie-in market. With the Space Marine video game launch and the Dawn of War releases there were some perfect opportunities to do so. THQ released specific DLC depending on where you bought the game. GW could have had some tie-in sales and introduced new players to the hobby by saying something like, "If you get the game at Best Buy (or Gamespot or whatever) you get an exclusing Captain Titus collectible miniature." Don't want to package the miniatures with the game, then offer a voucher and a way to redeem it. Heck you'd have had TT gamers trying to get vouchers just to get the mini, and you might introduce a few video gamers to the table top.

    They could easily partner with Creative Assembly (or have THQ...though they have their own problems) to produce a Total War version of the warhammer properties. All this would bring in more revenue and grow the IP. But I fear GW just isn't interested in making as much money as they could.

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  34. That is a gold idea! 1 free model would hook so may youngsters. Then they would get one more, then one more... and it would all start.

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  35. I agree with what Troy said - they need to get and keep the rules up to date. Using the rules solely to push models is a short-sighted approach. It works for the first rush of models, but what you really want is regular sales in the long term. If you make a good, balanced game, people are going to naturally want to keep expanding their collection to experience all the varied ways the game can be played.

    If I were in charge of GW, then starting with sixth edition, firstly I'd make White Dwarf the primary means of releasing new models & associated rules. New models would be released as they were ready, rather than holding them back to release them in spurts. This would also have the side effect of increasing White Dwarf sales.

    Secondly, starting the new year after the 6th edition release, I'd push writers to balance the codices, and start re-releasing all of them regularly. Annually as the shortest interval, but otherwise as needed. These codices wouldn't need to change drastically, but would incorporate all the new releases originally done through White Dwarf, web-released FAQs, and any balance tweaks needed. Doing this would let the company stay on top of the metagame and keep things balanced. It also means more sales as the codices are bought more often, but still with enough time in between that most people won't notice how much more money they're giving GW.

    I'd try to see a Megacodex released each year, which would just be exactly what it sounds like - all the codices in one big fat hardcover. This would be for the enthusiasts, so we can charge more, but frankly it probably wouldn't matter if it were sold at a loss. If the game balance guys are doing a good job, it'll help drive sales as customers see all the cool stuff that other armies have. But since that's targetting the more affluent, it can probably still be sold for $100-$150 and do all the work it needs to.

    One other thing I think GW should do is reach out to the Army Builder folks. There's some bad blood there now because of breakdowns in previous negotiations, but I think it's partly because GW managment really doesn't understand just how much they stand to gain from a deal with them. GW should offer early access and their distribution network for Army Builder CDs, and in return get as big a cut of the sales as they can, and if possible negotiate as much exclusivity as they can - as evil as it sounds, it's better to try to cut out the competition from Army Builder as much as they can get away with.

    The point of the Army Builder deal wouldn't really be GW's cut of the sales, though. It should be viewed as a potential loss leader - any money they get directly from the deal is just a bonus. The real point is to get that software in customer's hands, so they start playing around with army builds, find a dozen that they want to play with, and then feel the need to go out the 6000 points worth of models to run each of the builds they discovered playing with Army Builder. Everyone I know who bought Army Builder wound up doing pretty much exactly that, so it makes sense for GW to want as many people as possible doing that also.

    Anyway, that's my couple thoughts on this matter. As much as I like GW's IPs, their actions are to me increasingly frustrating, and I hope they get their act together before I become so turned off they lose me as a customer. Warmachine keeps looking more and more attractive...

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  36. As already stated being a publicly traded company is a weakness for GW. Since most of their shareholders are investment companies there is huge pressure to maximize profits then transfer those profits out of the company. The shareholders do not care abut the long term health of GW, if profitability of their investment drops the will just sell the stock. Or worse, I heard a rumor that the roughly 50% increase in dividends (from the forecast) was in response to threats from shareholders to sell the company to one of the big toy manufacturers.

    Licensing Dept. is also a weakness. At present GW does not license anything that could support or enhance their games. Their hostile attitude to any third party conversion bits, plus their treatment of previous licensees Armorcast/ Epicast/ Forgeworld (not the current one), prevents GW from cashing in on these products. Instead these third parties dance along the edges of the law and keep all the profits. Their licensing history, even if they reversed policy, would make any company think twice of making a licensed product. Why make a conversion bit or model and prove there is a market for it if you have to wory that GW will revoke the license and make their own version.

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  37. This comment made me laugh: 1) Strong manufacturing skills - capable of creating miniatures others cannot, using materials others cannot.

    Sorry, GW has never been in this position. Tamiya has been doing the same thing (and better) way before Nuns with Guns were a twinkle in young Bryan Ansell's wet dreams.

    As for "other materials" - Finecast is just another 2-part resin. It's nothing new and there are plenty of manufacturers using better resins.

    GW is a poorly-managed company (what do you expect when the stock boy is in charge?) with zero vision. Whatever creativity was there (or should I say - ability to steal from others' IP - Star Wars, Tolkein, 2000AD, Aliens, etc.) is long gone.

    The winds of change are blowing. Announcements like from Beasts of War and Wayland about their new retail network, companies like Privateer Press, Mantic, Spartan, Defiance...games like Infinity, Tomorrows War, Gruntz, Dystopian Wars. GW's continuing mismanagement and lack of vision beyond a quarterly statement - are all the final nails in the coffin. GW won't go away, but the "glory days" are long gone.

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  38. Many good points have been raised above.


    On GW releasing other merchandise – Yeah it would be great to see all number of merchandise and collectables available (most of what it is available is only through Bugmans Bar though) :

    - Action Figures : Say by Neca or Mcfarlane – a market of collectors not catered for who will most likely have heard or collected GW stuff who buy Halo, Gears of War and other IP related figures at £15 to £20 on average.

    - Posters/canvas pictures : Some are available at Warhammer World for £25ish if I remember rightly but only at WW and a limited run. Cant see why GW cant offer an online ‘buy your own Canvas print’ type web store where you can browse through a number of pictures (lets say 50% of the old artwork back catalogue all digitally scanned), get it printed at your own specific size and its shipped to you either rolled or on a frame via courier) – would love to own an several large prints of old artwork

    - Soundtracks and Audio books : These sometimes sell well but overall not so great. Black library has a core fan base and your average young gamer really isn’t interested in spending what money they have on books and CD’s when they can buy miniatures and tanks

    - Art books : Again these can sell but its very hit and miss – Black Library try to put these out but the Horus Heresy art books were the only ones I know of which sold in huge quantities vs the standard 40K and fantasy art books. A shame really as there is so much older art work which can be so inspiring which doesn’t see the life of day very often – Take the new 2012 GD model for example coming from the 2nd ed 40K box art. How many would love to model more miniatures and armies from the older artwork and draw inspiration from it in creating new armies and themes

    - T-shirts and tops : Black Library do run a small selection of tops and hoodies etc but as they are not widely available the sales don’t tend to be so great and often very overpriced – mainly due to lack of knowledge and advertising along with it being online only most of the time and limited run raising the costs. Other t-shirts have been available in store, 25th anniversary of Fantasy springs to mind but they come in strange sizes and I remember parents complaining that all they had were large and extra large

    - Computer Games : These do sell very well and a great royalty payment from TNQ and other companies to GW each year, Space Marine is a great example along with Dawn of War and its multiple incarnations. Best part of games in my opp is seeing more of the world than you can on the tabletop and which the artwork only hints at…Giant Titan hangers, huge forge world trains and massive expansive cities from the ground up. Would be so good to see more of these and game within these environments, alas the cost is too high!


    Continues....

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  39. Continued...



    - Statues : A huge fan of the Sideshow space marine Statues. They go for a high price now on ebay. It was a limited run of 5000 units per model which would have sold much better if sold through store or the GW website. More statues etc should have been produced as with action figures its another market space GW can offer product to which has collectors who pay anything up to £300 a statue and have often heard of GW, space marines and played the game.


    On a side note something I was sad to see go at Warhammer World was the giant life size displays which were really cool and something unique and special to go and see there – no highstreet store could offer this. Was really fantastic and moody from the music and smoke, the Space Hulk corridor, Ork torture chamber, Blood Angels, Chaos Marine attack and Imperial Guard trench along with various artefacts in separate displays scattered around: Scorpion Helmet, Storm bolter, various books etc.

    Time was that this exhibition was to be expanded and to feature Fantasy and other IP related displays. A shame really its all gone and been replaced with the miniature hall – almost like a down sizing of the whole thing and making it more ‘it’s a miniatures thing and that’s all it will ever be!’

    The whole Marketing thing does need a rethink and proper advertising and though going into the process. I’m not saying GW should just sell out and produce lunch boxes and bed cover sheets but more though is needed and like the above former life size displays etc it should be an experience playing and investing in GW IP.



    On a final note I loved the idea of the exclusive Space Marine Captain Titus Miniature. A fine example of what SHOULD have been done!

    Maybe a claim form in the box of the game…’pop into your local GW for a free intro game to Warhammer 40,000 – present this flier and leave with your exclusive first special miniature’ or something.

    Also GW in store DLC for games – buy the space marine codex or tactical squad in store and get inside your free Space Marine DLC weapon or squad, character skin etc.

    Basically a tie in from Console/PC to table top and vice versa thus ensuring more people come to store and pulled in deeper to the IP and GW brand which is what all the merchandising should do.

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  40. One of the opportunities that I have noticed is a possibility to consolidate the business plan in different countries. Here in Sweden, there are a lot of tournaments and gaming groups that get money from the government to be able to continue their activity. Many independent stores are working together with their local gaming clubs as the clubs already have the place to be as well as terrain and tables. But GW is rather slow to increase the interest of these gaming clubs and seems to go for the "in-store club" which many times fails here. I'm not sure how such a plan would be but the fact that there are hundreds of gaming clubs that are economically independent and open for new members seems like a perfect opportunity for GW.

    I have noticed that the stores that focus more on GW-stuff and has a good relationship with the local club also make sure there are less non-GW-related games. I e they take larger shares of the local club's activities.

    Also, I would like to change the usage of the FAQ to update and change point costs whenever a new army comes out. I believe a more balanced game overall is much better in the long run for the company, instead of making sure that the new codex, with the many new models people must buy, is stupidly overpowered against other armies. When we play apocalypse battles, Grey knights are always allied with daemones, Chaos marines and tyranids. And that is fitting... This is a weakness as well as a threat as other gaming companies either don't bother with game balance that much and are open with it or aim for better balance in the games (and in my opinion often succeed).

    Another opportunity is to use blogs from GW staff to increase the interest of the games. With one simple blog post they could give small, controlled rumours every week, embedded in other type of articles. White dwarf has to much time from first written article until the printing to be effective in this but a blog from GW would be effective.

    Another opportunity is the usage of tournaments. The games aren't balanced but tournaments are most likely the best commercial for GW ever existed. A better balance would enable GW to use tournaments better in their business plan.

    Looking forward to more posts about this, Duke!

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  41. Interesting idea on te DLC content, it wouldn't create a ton of buzz by itself, but this type of "out of the box," thinking could d o
    A lot for the company if applied in several areas.

    Duke

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  42. Lane (2:06) I really agree with you on shareholders being a big problem for GW and would like to hear Dukes thoughts on this matter.

    But I also see this as an opportunity for the hobbyists. It would definitely take a lot of money to buy enough shares to be heard among share holders but then again there are a lot of hobbyists. Could this be a viable way to get GW back on track? If so how could it be done? Could hobbyists get shared representatives in shareholder meetings or some such.

    I have no business training my self.

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  43. Nice Article. You're missing a huge threat though. Which is the advent of cheap 3D printing.

    http://theback40k.blogspot.com/2011/12/lifting-of-veil.html

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  44. @sandwyrm: good point, though I didn't specifically point it out it was one of the things I was thinking of when I mentioned "third party manufacturers."

    To be honest though 3D printing is very cool tech, but still in its infancy. I wouldn't consider it a big threat to GW just yet, but it would be smart of the. Implant to be Ahead of that curve.

    Duke

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  45. Gw is a labor of love for those that do it. They won't change anything. Even if it is a good idea.

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  46. Id slash the price of battleforces down to £50 again.

    These were a great price at the time and more in line with computer game costs which parents are more likely to go for.

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  47. To let you know where this analysis is coming from, I am a career military officer and am currently working as a program manager overseeing three different contractors. For education, I have a Master’s of Science in Administration (think an MBA without the math, and more organizational theory).

    Strengths:
    -A vibrant, active, loyal, world-wide fan base.
    -Their own chain of stores around the world to continue to sell their product while independent retailer stores continue to close.
    -The company secured the rights to “The Hobbit.”

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  48. continued...

    Weaknesses:
    -Potential for strong organizational resistance/misbehavior to necessary changes. This can stem from multiple different areas, for example: fear that the risks outweigh the benefits (probably a big one right now), fear or belief that they have no input in the changes, fear of any change at all, or disagreement with how the changes are being made. I could go on and on about this, I wrote my Master’s thesis on this topic actually. Suffice it to say that many within GW have been with the company for many years and/or are very passionate about it. While this has many benefits, it also has many drawbacks, especially when trying to make big organizational changes. In my opinion, this is probably what has prevented the company from making many of the changes it needs to make, that is, the fear that fixing something that at least for now isn’t broke (the company is still profitable), and then if you attempt to fix it you could ruin the company. No one wants to make the change that kills this company. Also, there is a natural human tendency to deal with problems only when it becomes an emergency. That also hasn’t happened yet, and probably won’t until the company has been unprofitable for more than a few years.
    - Many of the shareholders are pension funds. That means a higher demand for dividends, and less of those dividends being rolled back in to the company.
    -High prices in a very weak global economy.

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  49. Opportunities:
    -Increasing use of e-reader and tablet machines in the target audience. This means that in the future there will be less reliance on physical copies of things like codexes and novels. For novels, this means that you can put out more, at lower prices, and titles that may not usually be published due to quality or quantity of titles waiting to be published. For codexes, this means that you can increase your release schedule without having to exhaust your supply of soon-to-be-obsolete product first. This will make codexes more responsive to changes in the game and the community. You can also lower the prices on these products, while increasing your profit margin since publishing and shipping costs will be completely eliminated. The decrease in cost could see sales increase as even players of different armies could afford the codex and want to study, and possibly even lead to an increase in sales of the miniatures themselves as the players are inspired by the codex.
    -The number of start-ups in the market place is actually an opportunity. First, these start-ups are competing with each other for whatever market share GW does not own, which in the end is very little. These start-ups are also taking all the risks with regards to developing new games, new rules, new miniatures, new paints, new manufacturing processes and facilities, and building fan bases. GW could step in and partner, merge, or even take over a successful or inventive company. Think of what GW could gain by partnering with Battlefront, and vice-versa? You could see Battlefront sold in GW stores, and GW could start manufacturing their products in Battlefront’s factories and then being able to sell them at a more reasonable cost to Australia. You could also see Battlefront’s customers trying GW games, and GW players trying Battlefront games. Think this is outside the realm of possibility? The two sell very different games, 28mm vs 15mm, historical vs fantasy/sci-fi. If I were in GW, I would certainly consider it, and if I was at Battlefront I would certainly consider it. But the same goes for companies like Mantic that are pioneering new ways to paint miniatures for the common gamer, and also produce miniatures at an affordable price. What about an Inquisitor-style “clicks” game? The possibilities are endless…
    -The ability to lower prices in the future. Right now, a lot of money is going in to Finecast and “The Hobbit” license. Once these investments become profitable, Games Workshop could actually lower prices. Even a small price reduction could do wonders for public relations, even 10%. Don’t believe me? How else do they have the ability to do “megaboxes” or “Apocalypse boxes” which draw in new players for different armies, or convince existing players to expand their armies (I got hooked by Christmas’ High Elves deal, along with IoB, I couldn’t pass it up). Alternately, they can leave prices high for individual boxes and increase the releases of the “megaboxes” or “Apocalypse boxes.” Once the world economy picks back up, you could see such a maneuver, assuming that there is not too much demand destruction that occurs between now and then with current prices.

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  50. and finally...

    Threats:
    -Weak economies
    -Surge of websites like Ebay where people can buy miniatures from others easily without buying new product
    -Changing demographics
    -Less expensive entertainment like MMORPGs and other video games that are less time-intensive (i.e. no painting/assembly of miniatures)
    -Loss of their customer base from negative publicity from fan sites ;-)

    GW has a lot going for them. They can also plod along for a long time before things become truly dire or irreversible, probably 10 years more. Hopefully they embrace some of these changes soon.

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  51. Zithaska said...

    "GW has a lot going for them. They can also plod along for a long time before things become truly dire or irreversible, probably 10 years more. Hopefully they embrace some of these changes soon"

    Yeah I'd agree - a decade to fix this or else the way of the dinosaur from GW.

    Unless there is a buy out from a toy company - Hasbro etc

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  52. One thing that bugs the heck out of me is the format for the starter boxes. 2-player starters are a great resource- but not great as the only starter resource. There's been discussion at Beasts of War (and I'm assuming other places) about the need for a single-player starter. Because people don't always get into Warhammer in pairs: often, someone who is already playing inspires someone else into the hobby.

    And that's not even bringing up the fights over who gets the rulebook in the two-player starter!

    Obviously, with the number of armies that GW games have, it would be intensive to have single-player starters for every army. But I believe that they could make it work with 2 or even 3 of each line. Look at the megaforces... they choose 2 armies of each line to make megaforces for at Christmastime. They could change up which (non-space marine) armies they are each edition release.

    They could actually have starter rules, instead of throwing the whole rulebook at people first thing! No one wants to sit and read the whole rulebook before playing, and in the absence of experienced friends or store employees, it is very hard to actually find a starting point to playing.

    I love playing GW games, and I enjoy selling them, but it can truly be a labour of love. That being said, I'm also starting to enjoy selling Privateer Press, and looking at bringing an even bigger selection of miniatures games in.

    It's not that the various companies don't have their own problems as well (I can list many with my few months' experience with PP), it's that GW has been the leader for so long, that many look to see what they're doing first purely out of habit.

    On the subject of Hasbro... hell no. I've heard that Wizards of the Coast was a friendly, helpful (though perhaps not successful) gaming company before Hasbro bought them out. I've had enough problems with their policies that I scarcely believe it.

    Speaking of THAT, what is it with gaming companies and shoddy programming?

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  53. "Customers: Mostly males 18-45, Above average income and students 12-17 with no income."

    INCORRECT

    THIS SHOULD READ:

    "Customers: Mostly males 11-15. Some males aged 16+ too."

    SOURCE: GAMES WORKSHOP GAMES DESIGNER ANDY HOARE

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  54. ADDENDUM:

    The customer demographic skews several years older in the US, largely due to geography (transport being required to access gaming stores & gaming clubs being comparatively rare).

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  55. @stucarius, I would love to know WHERE the store is that sells FW and shipps all over the US.

    If they are selling $1000 orders it sounds like a good deal. I gave up some time ago trying to get the stuff here due to the hard fact that they REFUSE to ship anything last time I was trying.

    You realize were talking US to US right, not paying out of country fees to ship.

    I still want to know why my LFGS cant order/stock FW.

    Time to investigate!

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  56. With THQ restructuring I think money could be made by simply asking Bioware to do for WFRP what they did for D&D. Translate WFRP into a moddable RPG with a killer storyline and the nerds will come in flocks.

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  57. As a Long time player 3rd ed. onward GW has now passed to a legacy support company in the way it operates, in that the entry cost to get into the game is so high now ($74 for rule book!) that I think there main profit pool is existing players. If GW can not bring new players to the game it can survive for quite a while but its not the best model. *see Star Fleet Battles for a albeit smaller game that grew dominated then stagnated the became a game played only by players that had invested a lot already.

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