Saka Light Cavalry

Saka Light Cavalry

Thursday, 16 January 2014

Chatter Behind The Bike Sheds - Profits Are Down



Over at Trouble At T'Mill a nice little chatter has been prompted by Mike's reporting of Game Workshops reduced profits. It's fair to say that the majority of the comments are from people rather enjoying Games Workshops troubles. Lets face it though, how many Wargames Companies would give their back teeth to be as profitable as GW is now, never mind two years ago etc etc.?

Games Workshop remains an extremely successful company who has made millions on a business model that is as clever as it's ruthless. It's worked for decades and it's possible with a little tweaking it can run for a few more. The question though is the downturn in part, or even in total down to the recent tweaks? 

One Man stores for instance could be a major factor. Of course this does not mean that only one staff member is employed, rather it's ran with just one staff in at a time. Lots of issues here. First up security for both staff and product but also customers. Games Workshop sell mostly to younger customers, these tend to be cash rich and what's more too often it's ready cash. GW sell items at slightly (cough) inflated prices. These cash rich customers have until recently been coughing up the money no problem making the stores high on the cash holding side, perfect for the walk in and demand money by menace thieves. Why not, after all it's ONE member of staff and maybe a few kids, it's not going to be a tough job. Expect them getting hit as word spreads and I suspect it will.

Another bigger issue (for profits) is that less events can be ran, less interest from the now reduced staff who's morale will be dropping as holiday cover, illness cover and all the extra duties combine to lower the will to go that extra mile. Events and energised staff sell product, they have less of both now, maybe the same number of events but they will be worse ran.

Lets not be hasty and blame it all on the madness that is one man shops. How about that decision to limit who can sell GW products, including pulling the plug on your favourite hobby store when GW come to town? Or  stopping supplying the on-line store where you got those great discounts? Hell I know, whilst were at it lets have some products that you can only buy from us? Yes GW has always cared what it's customers think of them, well they would if they did not expect them to spend like crazy for 18 months before finding girls and giving up on the hobby.

Whilst were going down the road of looking ugly in the face, figure quality V price. Yes lets look ugly! As much as you would have stood on your historical high-ground and looked down on all that Fantasy malarkey you had to give it to GW they knew how to cast even if they also knew how to charge. Don't get me wrong they still make some excellent figures with excellent quality but boy do they produce some shit! Unfortunately the price tag remains the same. Finecast has been a big PR ball drop. Whilst other companies have amazed with what you can do with resin, GW seems to amaze with what they are willing to churn out. 

The only company that can have a price war with the rest of the hobby thinking that raising the prices at inflation dwarfing rates is the winner! Linked to quality issues you can see why gamers start to look elsewhere for other options for their figures.

All these things can and will contribute to their problems of the moment and all of them could be at least to a point reversed and a turn round in sales possible. However another reason has been that the target audience is turning their backs on tabletop games in favour of the digital. Really? Are you telling me something new has come onto the marketplace? I will except that it's possible a sliver of new punters have found it impossible to find the GW shops from the glow of their consol's but no I reject that's the real reason. Can anyone say Flames of War?

The new kid on the block rocks, what's more you can get into playing for a lot less than you need to spend for any of the GW options. Of course it also is a whole in the table that you can sink a fortune into and the new gamers are doing just this. I think Dad's will also encourage this direction over Space Marines etc. for the veneer of history and Dad's memories of Airfix.

It would be interesting to see Battlefronts profit return for the last six month's, I have a hunch it's all about growth. So will GW recover their market share? I have my doubts, how many clubs the kids go to are based in schools? I bet the school on learning about FoW would be more comfortable about a WWII game than one with Orcs and dark magic - well at least till the SS start being plonked on the table  ;-)

GW needs to start looking at ways to regain those new customers who are being drawn into FoW and try and retain the customers they do have. How many are starting with GW and then being drawn into this other cool game?

Expect GW to do something WWII related, maybe Woflestien style, of course it may be five or ten years time before they start suing Veteran Associations for copyright breach for them using their old regements names or numbers, but that my friends is another chat.

10 comments:

  1. Honestly for me GW's woes can be simply boiled down to two things.

    1. Increasingly overpriced products

    which causes the second thing which is

    2. lower units shifted.

    For years GW have propped up the bottom line with cut backs and by inflating the price of a single unit to compensate for shifting fewer. I have not bought a GW product for years but I do spend (probably) close to a grand a year on the hobby. If GW's individual unit prices were lower they might get a bite of my money, but as almost anything is cheaper than GW I simply won't give them the dosh.

    There business model is almost entirely short term gain orienteated and doesn't really keep the kids they reel in as adults. Because as adults we find the high prices more of a turn off.

    Oh and the increasing down turn in quality and the god awful switch from lead to resin can't have helped. It amazes me how poor quality some GW products are when much smaller firms with much less money are turning out such high quality kit.

    My two bits, :)

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    1. And those stores are very much one man operations, at least the one here in Denver is. Literally it is run by one man, no regular backup, although apparently he does have somebody that he can call if he is really sick, otherwise he is there everyday. The hours are not exactly normal either.

      Battlefront is built on the GW model, while you can't eliminate PzKfw IVs from the German army you can continue to make "new" versions and army books are constantly being changed, formations are modified and there are definitely people leaving the game. The dis-advantage of Battlefront is that WWII minis are WWII minis and if I decide to ditch FOW I can easily walk over to the shelf and grab a different WWII game.

      If there is a problem at Battlefront they should be able to react much quicker than GW can.

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    2. So what happens when he want's a holiday? Seems they do not care about staff or customers. I guess the arrogance of GW is tripping them up.

      Ian

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    3. Games Workshop had managed years and years of trade by keeping a big part of the customer base ignorant of other options. Helped a great deal by wargamers they came into contact with shunning any interest these younger gamers showed.

      Now the kids are being actively encouraged by one section of the games world

      Ian

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  2. Interesting comments. I wonder if FOW is really going as well as you suggest? Plastic Soldier Company must have been having an impact, judging by firstly Battlefront's concerns to use only their own models in competitions, and now their forays into plastic kits.

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    1. I think PSC and others have eaten into their profits but they still have the monopoly on the books. Their move to allow only their models caused a storm, mostly because they have a large adult following that would not accept such a GW style of move.

      Moving into plastic was always on the cards. I would not be buying much official stuff due to the higher prices

      Ian

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  3. I had not noticed FOW doing that well but I guess I never got into it so take very little notice. I think our hobby is in an odd phase in that we have more rules and figures available than ever before but very few new gamers arriving we are a very much aging hobby.
    Peace James

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    1. Oh I think they are, hell they even have their own monthly now. I would say they have a market that is growing and for some time they can keep the new formations and armies coming (supplements) however I don't think we will ever have another success like GW in the future measured in total sales, profit or long life.

      On the subject of an ageing hobby I don't buy that it total. We are ageing sure but a reasonable amount of young blood comes in and I think a larger amount of ex-GW followers will return to wargames once they hit the own kids growing up stage. I would say more money is being spent per year on historical wargaming than at any point in the past.

      Ian

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  4. My son and his friends had a brief period of enthusiasm for GW but now it seems to be Minecraft all the way. And by contrast, they only have to spend about £20 to get into Minecraft, the rest seems to be free. They will still occasionally play tabletope wargames, but it is a distant fourth behind online gaming, RPGs and board games.

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    1. I think the GW world is less interesting now and a more realistic world style is required, console games I believe are responsible for such a shift

      ian

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