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Games Workshop Stocks Drop Over 24% Today

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Games Worskhop Drop Stock

Today – January 16th, 2014 – was a black day in Nottingham. Games Workshop released their half-year financial report, listing their performance as a business for the six months leading up to December 1st, 2013.

Across the world, sales, revenues and profits have plummeted – at about 12% on average. Stock Markets immediately punished the poor results as GW shares drop of over 24%.

#1 – Games Workshop January 2014 Half-Year Report

Games Workshop Half Year Results

Games Workshop has been in an odd spot for a while now. It’s hardly news that blogs, forums and customers everywhere have argued that Games Workshop’s practice of constant price-hikes, poorly written rules, heavy-handed legal disputes and a host of other things are all, at the end of the day, bad business for Games Workshop as a business in the long run.

Not just the long run, it appears.

Today, Games Workshop released their half-year financial statement for the six months leading up to December 1st, 2013 (that is, roughly from the Eldar Codex over Apocalypse and Space Marines, up to the Dark Elves overhaul). Compared to the same six months in the year before (which, admittedly, included the release of Warhammer 40K 6th Edition), the results are devastating.

Overall, Games Workshop seem to dropped about 12% worth of sales (so probably more than that in miniatures, given higher prices, more books, etc..). The problem appears to be spread evenly across all regions. Europe, North America, Australia, etc…, as well as GW’s UK home market, all felt the squeeze.

#2 – The Shareholders Feel It Now

If there is (possibly) one “good” thing about the affair, it’s the fact that customers are no longer the only ones feeling the pain. Games Workshop’s shareholders aren’t happy. Games Workshop’s stocks dropped nearly 24% today. The company is worth ¼ less than it was yesterday.

It is as official as it gets, I suppose, the giant of the miniature wargaming industry is gravely ill.

I really, really, really, really hope that somebody at Games Workshop will be drawing the right conclusions. To save Games Workshop, Games Workshop will have to make better games.

The fire (?) sale of odd products over Christmas, Dataslates-pushing-Riptides-plus-Escalation feels, with hindsight, a bit like desperation. The temptation will be there to do something crazy/stupid in the next few months (i.e. before June 1st, 2014?) to get the annual results back on track.

I hope Games Workshop will be able to resist that particular temptation.

#3 – The Endgame?

What do you think about the bleak state of the company?

Well deserved? Unwarranted? Overdue?

What should, in your opinion, Games Workshop due to get back to success?

Let me know what you think and leave a comment!

Z.

Zweischneid

Zweischneid

I am Zweischneid. Wargame Addict. Hopeless painter and founder of Pins of War. I hope you enjoyed this article. Don't forget to share your favourite miniature pictures and wargaming videos at www.pinsofwar.net.
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  • Michael Bartels

    Yo, Zweischneid :)

    Yeah, I guess we all saw this coming. Everyone – including the GW guys in the trenches shake their heads at GW’s senior management. And the hectic sales initiatives of the last couple of months have been obviously desperate.

    But wait – if only half of what i heard about the big black-shirt meet-up in Nottingham in February is true, we have not even seen half of these desperate measures! I can only tell you this much: Nothing I heard will turn things around. I don’t even think that whatever they plan will dampen the current nosedive of sales.

    Even US, the cash-cow of recent days is down by 3 million compared to the 2012 half year! Unfortunately we can’t see how many stores GW opened in the US from the financial report, but I am convinced it’s more than they are closed. And still 3 million down. 1-man-stores save cost for sure. But doesn’t seem to help sales now, does it…

    GW needs a new management. From the outside. And they need it now. I would totally do it just to show them how I think they should operate :D
    Would you? :P

    SHARE & ENJOY ^^

    • http://pinsofwar.net/ Zweischneid

      I can only hope they pass you the job!

      Zaphod for CEO!

    • http://pinsofwar.net/ Zweischneid

      And yes, they do need a new Management. More importantly, I think, (implemented by a new management, possibly), they need to start make good games (leveraged by the still powerful Warhammer & Warhammer 40K brands).

      They also need to make “gaming” miniatures again. The odd Wraithknight is great to show-off, but for your average game, it’s a bit daft.

    • Elrik

      If anyone knows anything about business when you want your P&L to look better than last year you lower payroll, make your management hourly, and push sales to your warehouse. And that’s what they did, but in the process they also shut down the community in their stores. The only marketing they have. So with the price increases to push out the younger kids and the older players not buying as much this is where we are. Most people are not happy with prices or the current direction of the game. I still play both and have a large collection of games and models from GW. I a gamer and a collector but with the prices lately I have only been buying what I need. So open less hours, less marketing, no gaming community, higher prices and a staff that has been told not to worry about gaming tables, paint bars just get the sale is why GW is in trouble.

  • Wolfgard

    In all honesty, this has been the case for several years now. First they cut costs at the production/manufacturing end. Then they cut costs on the retail end. Then they changed how they counted royalties in their accounting. Then they started paying dividends to keep shareholders invested. All the while revenue has been staying flat or dropping. It is just showing in profits now because there is no where else to cut. In order to increase revenue, they have to increase the market size. That means drawing completely new players in and competing with other game companies that are siphoning their playerbase off. This probably means dropping the facade of being a ‘miniatures company that also sells a game’ and a complete reworking of their gaming system to be more balanced.

  • Matt Chapman

    The issue GW has, i think, is once you have bought a model you may never have to
    buy another one. For instance, if I had bought the box of 30 marines for
    £9.99 (RTB01) I could still use them in games now 20 years later. How
    do GW make you buy more of the same model? I know people will say they
    are losing money because of their high prices but you have to remember
    that model you buy may be the only time you buy one over the next 10
    years and so they have to try and recoup their costings from that one
    purchase. Short of a massive overhall of the game I dont know what GW
    can do :/ I already have 30 tactical marines what incentive do I have to
    buy any more?

    • Erich Eisenmenger

      That argument would hold true if you played Space Marines and had no interest to play other armies. I dont know a single person who has been playing for over a 6 months and only has one kind of army. I dont know what GW can do, they have dug themselves such a deep hole it will be impossible to pull themselves out without suffering horribly. I just hope that whomever buys GW treats the fans better than the old boss did.

      • Luke

        Hi, my name is Luke. You know me now. I have played Ultramarines only for just under 25 years… Bigger army than when I began. I sold all my rogue trader figures as I got better at painting and could no longer stand crummy paint work. Still always the boys in blue…

        • Erich Eisenmenger

          Do you still plan on buying more marines?

          • Luke

            Yes, definitely as long as new models / interesting rules come out. E.g. over the last c. 12 months Stormravens, Stormtalons, Centurions + Land Speeder Storms becoming dedicated transports changed the composition of my army. Army also grew rapidly over the last couple of years due to an Apocalypse arms race. E.g. a friend added a Titan so I added Combi-Melta Sternguard and Drop Pods.

    • Steven Groom

      I respectfully disagree with the notion that once you buy a GW model you don’t have to buy new ones. Aside from the fact that GW often invalidates models that were previously usable in the last edition of the game or Codex, other companies which specifically market the fact that their models won’t be rendered obsolete are doing just fine.

      The problem isn’t with people not needing to buy new models, it’s almost entirely the fault of GW appearing to not care about its own reputation or its customer base through things like nuisance lawsuits and annual price increases.

    • Knight_of_Infinite_Resignation

      the real issue is not with players using minis for 20 years, as players are always expanding their armies. The problem for GW is that those minis will keep surfacing on ebay for years afterwards and the massive back catalogue of their old minis eats away at new sales, especially when their high prices keep the value of second hand minis buoyant.

  • Martin

    I was employed by GW in the days of Pokemon, 13 years ago. The share price then dropped to exactly 1 pound. The only attraction of GW shares to the city is diffident. If no diffident is offered, the share is dropped, end of discussion. They do not sit on future jaw dropping technology and there are no prospects of conquering consumer markets in the far east in a meaningful way money wise in the next 3 years. As far as the money men are concerned they make totally unnessary products. It’s nice for as long as it lasts but the party could be over any time. So I would not read too much into that share price. They have been there before and much worse. It is a cash rich company and they still make millions of profit. Their intellectual property is their real estate, they just have to find new ways of turning it into money.

  • Josh

    If the last 9 months (since Tau were released) has shown anything, there is clearly too much of a focus on getting customers to by the big models, and the game is moving from army against army to almost a Pacific Rim style monster-mash game (with Escalation and Apocalypse). There is also the issue of better competition: where companies like Corvus Belli and Mantic freely publish rules for their games and sell optional books for collectors, GW charges for every new book, supplement, and add-on, and charges as much as it used to charge for a battle force (intended as the starter set for armies). I’ve watched interviews of execs and designers with those companies where they talk about meeting the average customer and playing games with their patrons, taking feedback with them that influenced decision making. I recently applied to work for GW as a retail manager, and when I was trying to convey that I thought the community was as important as the sales, the recruiter kept repeating to me that sales trumped every other motivation. As long as the managers hit their sales goals, that’s all that matters (the manager at my local GW has never even played the games). GW’s main issue, then, is the lack of focus on the customer, and too much focus on the bottom line. It’s too much push for people who consider this a hobby (in economics, a “luxury”) to keep investing in.

  • Steven Groom

    My take on this is that GW has treated the market as if it were the only company within that market. They don’t acknowledge other company’s existence, let alone their competition. While GW has pushed larger scale games, larger models with higher price tags, and drastic revamps of armies with each edition change, other companies like Privateer Press have been eating up market share by offering much the opposite: no planned model obsolescence. Coherent and well resolved rules, supported by robust errata documents and official online presence. Even Privateer’s debut of Huge based models was more of an aesthetic one than a “must own this model to win games” one.

    GW has done a lot for the hobby I love, and it was difficult to quit their games back in 2008. I don’t see how they can win back the players that they’ve mistreated and I don’t see how they can continue to recruit new players with their constant price increases. Something has to give. I don’t want GW to go away, but I don’t want them to continue on as if nothing was wrong, either.

  • Noob

    As a 40k nub that was drawn to the IP by the likes of Relic’s Dawn of War 2 and Abnett/ADB’s fantastic work in the black library, I must say that my mind was totally blown when I first saw the prices GW charges for various components to play the tabletop game. It seems like they have a great business model in terms of high switching costs (if you’re invested in the game and the lore) and TONS of near-mandatory complementary products (models, paint, codex, missions, fluff, you name it) — but the flip side is of course that this is all incredibly daunting for new customers, which really limits the company’s ability to grow. I make six figures and spend hundreds on videogames a year and even my jaw dropped when I see something like $50 for a 5 man squad of tiny little grey knight terminators. What compounds the problem is this is a multiplayer game — not only does a new player have to drop a couple hundred dollars on an army on his own, he has to convince his friends to do the same just to play the game. What I’m really hoping to see is more licensing of the IP to boardgames, cardgames, toys, videogames, etc although it seems like GW is more interested in making casual mobile games these days — which I would imagine hardcore fans have limited interest in.

    • http://pinsofwar.net/ Zweischneid

      Games Workshop appears to have little interest in cardgames and boardgames. Most of those they’ve outsourced to Fantasy Flight Games (e.g. Space Hulk Cardgame, Warhammer Diskwars).

      It’s a bit odd. These type of games could surely be done by GW themselves (in contrast to computer games) and would give the game designers a bit more breath (and the company as a whole a stronger focus on games, and not “just” miniatures).

  • Old Gamer

    Having been in the business for a long time (32 years) and having met GAW several times I know they have a different view on many things. They were shocked when they saw the age of the average GAW gamer in the USA. They were used to their British customer base that would be in the game from 12 to 18 years old. Then about the time they drop out GAW started all over again with new customers and rules. Their pricing has always been high and seems to have gotten worse. But saying that, I am always amazed at how the players will pay the price. They only really have one maybe two successful game systems (40K and Fantasy). I thought when they switched to plastic for most miniatures that they were really trying to make it economical for the beginner. Then I saw the resin minis and their pricing and I was in shock. $20 dollars or more for a single figure just floors me.
    It was a blessing when they finally stopped forcing the independent retailers into having to order multiple packs of their metal blister packs that only a handful would sell. The stores got what we called Games Workshop Creep. taking up more and more space in a store with dead product.
    The lack of much future release notice for the retailers makes it hard for them (storeowners) to do preorders on the product. GAW basically drove the customer to their website in the hope of getting online sales. This turned off many independet stores which then stopped carrying the line. They have now cut advance release notice from a month to a week. I wonder how that helps a retailer in the US where most of their business is done through independent stores.
    And lastly being a historical gamer when a manufacturer makes a miniature they do not stop product after a couple of months. Years later you can still get that miniature which cuts down on the production start up cost. The rational of making a figure for a month just stuns me.

    • http://pinsofwar.net/ Zweischneid

      What do you mean by GAW exactly?

      Though while GW releases new miniatures every week, some of their range is decades old and most of it is available. Some of those miniatures date back to the early 1990s. I do not know any other company that still sells miniatures nearly as old, historical or not.

      • Minitrol

        Foundry, Black Tree Design, EM$ there you go that’s three for a start using models made originally in the eighties or nineties ;)