After all of the rumours I decided to find the truth. Here is a link to their report which makes for (some) very interesting reading. Includes their business strategy and how they are dealing with a 25% fall on profits

I must say I believe their store opening programme is a bad idea, stores mean overheads and who pays for those?them? no- we do!

I have learned a lot about the GW structure and strategy from perusing this document, and it has already laid a few rumours to bed. I recommend a browse

http://investor.games-workshop.com/wp-c ... leased.pdf

I look forward to their next statement which should be in July

Interesting, the statement that the materials are costing less is as I suspected. Also profit wise they have taken a tremendous hit!

I was surprised that US sales were on par with UK sales, I would have thought US sales would have dwarfed Uk sales. Profits are going to take a hit with the prices they are charging, people can not afford to buy multiple items, I mean £15 EACH for Tauriel and Legolas is appalling and as much as I want those models I refuse to pay that price, the result is a lose lose situation, I lose out on a model I want, they lose out on my custom. I have already turned to perry brothers

There's a school of thought that the increased prices are in response to the fall in sales- an attempt to maintain the same profit margin at a lower sales volume. In other words, all the people that moan that they can't afford the hobby any more, and drop out of their sales picture are collateral damage. They know they're loosing you. They think that the increase in unit margin will make up for the loss of your sales.
They have a responsibility to their shareholders to maintain a similar level of profit to previous years, in order to keep the price of their stock stable (as well as giving a reasonable return, which is connected). The question then arises as to how long they can maintain this strategy, or to put it a cruder way, how far they can push their luck.

They are a multi-million pound corporation. Despite what many people like to think, they are not idiots. They make mistakes, certainly, but I think it's pretty difficult to properly analyse their management decisions without inside information at best, or at the least a good understanding of business on that level.

A lot of people (myself included) slate their business decisions, but really know very little about the reality of their situation.

At this stage I suppose I'd better remind people of the one-ring.co.uk "No Games Workshop Bashing" policy, as my post could potentially send this conversation in that sort of direction.

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Quite right!

My concern is that we will see the hobby damaged as the kids starting the hobby will be priced out, which long term is damaging!

Luckily there are many, MANY independent companies, a dizzying selection of games with more new games being released every year, and wonderful ranges of models which are far superior to the majority of stuff GW turn out.

The hobby isn't shrinking, it's just that GW is becoming a smaller and smaller part of it. I know GW likes to refer to themselves as "the Hobby", but the wargaming industry as a whole is bigger than they are, and growing stronger and stronger with each price hike.

I love Lord of the Rings, so I'm here. However, with the exception of the SBG, which is the rare unity of a fantastic franchise with a great and well designed game, I have no interest in any GW game published after 1995.

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They are still not cutting the overhead thinking they need presence to create sales. Oh well.

I am with you Mertaal, I am only here for LOTR. Gw is not the most expensive model company nor game to play, I think playing the Batman game would set a person back quite a bit, and playing new consoles and games are expensive to maintain. Teenagers dropping $400 bucks plus $60 for a game to play Xbox One or PS4 and not gain any skills from it yet be just as much an introvert as many hobbyists, well Maybe GW thought they could do that too.

I think as the smaller companies grow, they would have similar problems GW has with stock, distribution, and maintaining that many products in supply even when demand is low (like GW stocking OLD LOTR models when most of us will never buy them again or get them from ebay).

GW has gotten a bad rep because they made price hikes they had to make which caused people to stop buying which forced GW to make more price hikes and create a snowball effect. I still think closing stores and cutting off the magazines, drop all old products that are not top sellers, and put more work in supporting RT stores that will do the work for GW, they could get those prices down and make everyone happy again. Fingers crossed. But I am sure most of us will be done with GW when the Hobbit is over, there will be no reason to care what they do after that.

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They genuinely believe that their stores are the starting point for most of the hobbyists out there. I think that used to be true. I'm less certain it's still true now. Conventional wisdom says that unless you sell very cheap products with mass appeal (primark) then manufacturers are better off selling through a third party who can take on the financial risks associated with sales related premises and staff while your product finds its way to the customer organically.

However, I stand by my earlier statement- as much as it's easy to sit on the sidelines being a pundit, I don't have access to the same information/research/business education that the board of directors does, so my opinion deserves a large fistful of salt.

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I think the reason GW do not do as well in the USA is there are still so many independent store there. When I started this hobby in the early 80's there were only a handful of GW stores and they sold all products from Citadel to Ral Partha. When GW went solely to their own products they opened up lots of store in the uk and alot of the independant stores either closed down or went in to different lines (Such as Comic or video games). By doing this GW cornered a huge market in the uk and without the internet back then they did not have the competition. I have been into GW store only a handful of times in the past 30 years so never bought into there's being the only product. When the independant stores closed where I lived I simply stopped gaming and it wasn't until around 2002 that I started collecting again but with the internet I still haven't been in many GW stores. The ability to buy so many different game now easily and quickly means much more competition for them.

I personally pine for the old days when a gaming store sold everything and I wish GW would go back to that! (Look I just saw a flying pig)

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The product is more expensive in the US than the UK (where it is already considered quite expensive), and the local competition of the Privateer Press games has taken a large chunk of the market share too.

I'm not sure wargaming in the USA has ever been as big as it is in the UK, and it's worth remembering that the UK is the home of Games Workshop. I'd also be interested to see the USA/Canada divide in sales. Traditionally war-games, board games and computer games do better in countries or areas with cold climates and dark evenings.

I'd be REALLY interested to see the direct sales vs 3rd party sales, and to see the direct divided up in to store sales vs web sales.

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In all honestly, this report is evidence for only one thing... The fact that GW is attracting 25% less custom than previously. We can speculate for years on why this is, or what would return that loss, but frankly, this would be pointless. We know GW is a quarter less popular than it once was, this report is merely statistical proof of that. Judging the current wargaming market, the numerous competitors and the rapid rise in 3D scanning/printing, I would not be at all surprised if GW either undergoes a drastic overhaul or even completely disappears within the next decade.

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I am wondering, and have wondered for a long time, how well the Hobbit range specifically is doing, and what sort of effect it has had on GW business. I never have data on it--only anecdotes.

I think that's because solid data doesn't exist. They don't publish information about how particular ranges are selling, to my knowledge.

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I don't think it's so bad that they're opening new stores. The amount of people at GW Watford who come in and buy their first miniatures and get into the hobby 'just because the shop caught their eye' is astonishing. Much more than I thought, but then most of them wanted to play 40k

Yeah, I guess they wouldn't publish it. But the data may exist somewhere, in some form--there's always mention of the rumor that 40K reputedly outsells WHFB and LotR--and Space Marines alone sell more than all of WHFB. There's also the [logical] rumor that the LotR range took a sharp drop after the film buzz.

I must admit, I also came to this hobby after wandering aimlessly into the shop in Newcastle looking for the larger LOTR figures. I never even new this hobby existed until that moment. I have since acquired 1000s of models. So I suppose their is some logic in their want to be a high street brand, however the same effect can be achieved by simply advertising!

Also: Internet age. Nuff said.

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Australia is 1/3 of the population of UK, but is 1/3 of the sales (therefore equal) yet we get told we are insignificant (through words and actions). I don't see why business must always be growing profit - there are down slumps for everything in life, trying to keep the numbers equal is setting yourself up for failure. Accept small losses, review the company to make sure there isn't wastage, then move on and do something to build confidence in your brand (maybe instead of reducing trading, increasing prices etc.)

I think GW needs to accept and embrace the internet age and the increase in alternative hobbies and use it as motivation to provide better service, products and events - I can't think of anything particularly exciting in recent years, unless you count digital books and apocalypse, which are pretty small ideas to me. Do something more to promote long term relations?

Surely it is possible to communicate to shareholders that the strategies that should be in place are going towards making a reliable, long term investment, obviously with dividend growth.

Anyway, there is no reason to think that the hobbit range should be reduced or not see its commitment out.

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GW's shareholders are (generally) big institutionals such as mega pension plans. They sell themselves as a utility, as in an evergreen, in constant demand, product. Just as the local electricity company will always have customers, so GW has described itself to investors.

What that means is that GW has to be posting similar, or improved, dividends all the time. These dividends don't have to be super high, but they have to be reliable. It's an odd business model, but it seems to work. Other companies can and will issue reports saying: our profits are down this year because raw materials are up, or sales in key demographics are down because of some reason, but we're taking steps to rectify this. That's something that companies do all the time. It's not something GW can do.

Other companies in GW's specific situation might say: we have noticed our brand has become an elite luxury brand, with high brand value and profitability in key ABC demographics, but we are losing sales in lower income demographics, thus we will make a cheaper range. But GW cannot do that either.

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I feel that GWs recent free warhammer figure with orders of over £60 was a desparate attempt to boost short term revenue in time for their next financial report. I have to admit I placed £500 worth of £60 orders to receive the free figure, on average I have sold a couple of the free figures for around £30 meaning I got my orders half price. I believe from GW staff that the response to this free figure was exceptional, so it may become gimmick they emply more often when sales are poor.