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GW's Half Yearly Report


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I'm not economically minded, so I am sure that there are a number of useful bits of information that can be teased out of this document by the right mind. However, what I did find interesting, was that the increased Nottingham factory capacity has not yet come online, something that I thought had been concluded a little while ago (I should probably read investor reports more carefully across the board...).

I am not aware of Games Workshop routinely selling out of things, other than limited releases, so I wonder if this would have an impact on the types and variety of releases that we see in the future. Perhaps we will see more new armies, with a wider variety of kits released once this additional capacity arrives, or perhaps it will just allow for an increase in production, allowing them to increase their ability to sell to other retailers, etc.

(Hopeful) Speculation on my part: I love the brand new armies and hope that the increased production ability, directly translates in this direction.

Anyway, the report is here for those interested:

https://s19485.pcdn.co/wp-content/uploads/2019/01/2018-19-half-year-report.pdf

 

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As I recall they only bought the land and setup construction last year so its no shock that the new factory isn't online yet.

A few things I picked up from it that are of interest:
Realisation of some "major investments" to come this year. Things like the new factory but also this strongly hints are more mould production adn thus more new models for the game - ties well with a big AoS release year potential. 

Foregeworld and Black Library sales down, but not by a vast amount (£4.6 instead of £5.2 million for both). Unless they split the values in the numbers that come at the end they didn't specify which was lagging, though we could assume that the FW sales were the most down after the international price changes (potentially though this isn't mentioned in the report)

Australia and New Zealand are not growing in sales and were the only territories like this. No surprise considering that the price of GW models is its highest there, almost to be expected. If this pattern continues it might make GW revise their trading agreements and pricing structure there if nowhere else; but that could take a long time. It might also not just be price but market exposure; GW might have tapped into the entire market within those two countries within its current architecture and needs to expand stores to new regions to tap into new markets. 

 

 

Overall the report sounds very positive, most things are on the up and the current last years policy has done well to boost sales overall. There's mention of Brexit, but in general its in the "keep an eye on it and keep the ship stable" area; which basically reflects many companies who are still waiting for the final verdict. It doesn't sound like GW has to stockpile any resources from EU traders (I'm aware some companies are stockpiling just to help overcome any period of instability or trade shut down that might take place in the short term - at least if they rely on imports from EU countries). If anything GW would be on the opposite end of things and more likely to end up with a surplus of production if there were trading issues. 

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Forge World is likely non-existential in Aus + NZ post the price increases. $48 AUD for cadian environmental helmets? The squad costs $41.

The Black Library one is interesting as Black Library are starting to outsource to third party companies like Audible and such. Maybe they don't include said sales?

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It might also be that Black Library sales are fine and that they've lumped them with Foregeworld to mask the big drop from international sales. Or it could indeed be that they've split direct and 3rd party sales and that Amazon/Audible sales are picking up the slack on the BL website direct. 

 

I have noticed that GW now has a BL page tab on their main store so might be they are pushing BL direct more heavily. 

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24 minutes ago, Carnelian said:

I always intend to buy ebooks directly from blacklibrary.com rather than amazon as I'd prefer to cut out the middle man and have all my money go to gw but then I usually forget... Also its so convenient to buy books on my kindle

This happens to me too - although I will say that direct from Black Library isn't bad. They don't even use a complicated DRM system either (theres a little bit at the end about not sharing but otherwise its not copy protected or such). For me its mostly that I tend to finish a book and then end up browsing on the kindle for the "next" book. 

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2 hours ago, Carnelian said:

I always intend to buy ebooks directly from blacklibrary.com rather than amazon as I'd prefer to cut out the middle man and have all my money go to gw but then I usually forget... Also its so convenient to buy books on my kindle

I switched back to hard/paper back versions because I got fed up of Amazon charging more for Kindle editions than the physical versions. This also kick started me to buy back from BL direct. 

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On 1/15/2019 at 10:34 PM, Overread said:

Australia and New Zealand are not growing in sales and were the only territories like this. No surprise considering that the price of GW models is its highest there, almost to be expected. If this pattern continues it might make GW revise their trading agreements and pricing structure there if nowhere else; but that could take a long time. It might also not just be price but market exposure; GW might have tapped into the entire market within those two countries within its current architecture and needs to expand stores to new regions to tap into new markets. 

In Oz they have in the last couple of years moved a lot of stores around in the big cities.

They have also gone from fairly large stores to tiny shoe box stores where in store gaming is almost non-existent. In my city, new management has come in and pushed most the regular players away with awful and unnecessary rules. An example was only letting people with a certain standard of painting play with their own models. It's poor customer relations and this is the biggest store in the state. 

It's also expensive as hell to play here. In Australian Dollars, a basic kit i.e. free guild handgunners costs us 22.78 Pounds when the GW UK website sells it for 15.50 Pounds. Our stores also only typically stock the most popular models. For examples only about 50% of the models produced can be bought in store unless you ring them up and order it in which isn't great. 

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The move in Australia to smaller stores, coupled with the now frankly ridiculous cost compared to everywhere else, is obviously having a huge impact. GW stores are stocking less and less of the range, and that coupled with the cost is reflecting in their figures.

The retail returns have tanked, however the trade figures have increased. 

More and more people in Australia are buying from 3rd party stores and independent stock, and with good reason. Prices are typically 10% less than what you can get direct from GW, more if you can find a bargain. GW aren't doing much to help themselves in this regard, which is  a shame.

FW, as mentioned, is practically non-existent due to the sheer costs - which is why Chinacast is flourishing (not to mention the quality is often as good as original).

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@Saxon It always surprises me when I hear of (mostly) overseas gamers having real issues with GW staff because in the UK they are very good bordering on exceptional in todays retail market. That is to say that most are very dedicated, keen gamers themselves (basically the only difference between them and a hobby gamer is that they get paid and have to game/work in the store). They typically don't have the really odd policies that appear to start up in other countries - eg banning players that are not up to standard in painting I don't think I've ever heard of in a UK GW store (not saying it might not have happened but it would be very abnormal to hear of it).

I think something in either GW's hiring or in the attitudes of staff attracted to work in their retail environment results in less than ideal staff overseas. I think it has been improving, but its a slow process and likely something GW has to tackle on a country by country basis. 

 

 

That said if GW is pulling back from Australia its no shock; them moving to smaller stores and fewer staff and closing stores sounds like they are under heavy pressure financially in those markets; and with a high markup price its no surprise. They might well end up pulling out entirely and relying fully on the 3rd party stores. 

Also don't think that the UK is awash with Forgeworld - by and large its still rarer to see; however online you tend to get a lot more of your more dedicated gamers which tends to result in a big spiked increase in the apparent commonness of FW ownership. That said over the last years I think FW has in general become more common than it was. I think a combination of more online buying in general and also the creeping up of GW prices. I remember when £30 or there abouts was a Dreadnought or a dragon and that was THE most expensive thing you could buy from a GW store. Now we've models that are not only a LOT bigger, but a lot more in cost direct from GW. It's made that gap to the £60 or £100 model from FW seem a lot smaller.

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25 minutes ago, Exarch Thomo said:

The move in Australia to smaller stores, coupled with the now frankly ridiculous cost compared to everywhere else, is obviously having a huge impact. GW stores are stocking less and less of the range, and that coupled with the cost is reflecting in their figures.

The retail returns have tanked, however the trade figures have increased. 

More and more people in Australia are buying from 3rd party stores and independent stock, and with good reason. Prices are typically 10% less than what you can get direct from GW, more if you can find a bargain. GW aren't doing much to help themselves in this regard, which is  a shame.

FW, as mentioned, is practically non-existent due to the sheer costs - which is why Chinacast is flourishing (not to mention the quality is often as good as original).

This is very true. I do recall our government putting up import taxes some time ago but from memory, GW kits haven't gone up in price for quite some time. I was playing 40k last time the prices went up but I don't believe there has been another increase for years. 

I buy a lot of models from facebook pages where people abandon projects to try and reduce my overall investment in the game. It's an expensive hobby. 

Honestly, I tried to be a purist and buy GW only. The problem being that its $60 AUD for 100 25mm bases when I bought 450 3D printed ones for the same price. 

I work very close to a 3rd party store which has a very loyal following and excellent service, so good that you almost can't escape the store without describing your army and last 10 battles to them in detail haha! The guys who run the store also stock the full range of products. Its actually annoying that GW doesn't sell basing supplies other than skulls and PVA glue. I feel like if they sold a reasonable range of basing supplies to provide the full cycle of requirements for the hobby could help them improve overall sales. 

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16 minutes ago, Overread said:

@Saxon It always surprises me when I hear of (mostly) overseas gamers having real issues with GW staff because in the UK they are very good bordering on exceptional in todays retail market. That is to say that most are very dedicated, keen gamers themselves (basically the only difference between them and a hobby gamer is that they get paid and have to game/work in the store). They typically don't have the really odd policies that appear to start up in other countries - eg banning players that are not up to standard in painting I don't think I've ever heard of in a UK GW store (not saying it might not have happened but it would be very abnormal to hear of it).

I think something in either GW's hiring or in the attitudes of staff attracted to work in their retail environment results in less than ideal staff overseas. I think it has been improving, but its a slow process and likely something GW has to tackle on a country by country basis. 

 

 

That said if GW is pulling back from Australia its no shock; them moving to smaller stores and fewer staff and closing stores sounds like they are under heavy pressure financially in those markets; and with a high markup price its no surprise. They might well end up pulling out entirely and relying fully on the 3rd party stores. 

Also don't think that the UK is awash with Forgeworld - by and large its still rarer to see; however online you tend to get a lot more of your more dedicated gamers which tends to result in a big spiked increase in the apparent commonness of FW ownership. That said over the last years I think FW has in general become more common than it was. I think a combination of more online buying in general and also the creeping up of GW prices. I remember when £30 or there abouts was a Dreadnought or a dragon and that was THE most expensive thing you could buy from a GW store. Now we've models that are not only a LOT bigger, but a lot more in cost direct from GW. It's made that gap to the £60 or £100 model from FW seem a lot smaller.

I think the managers they bring in just try to put a personal stamp on their stores and sometimes while the intention might be good they really go the wrong way about it and put a lot of people off. I would hope that those who are put off go back to online or 3rd party stores for the minis so GW at least still makes money but who knows. 

Generally the staff are extremely helpful. A friend got into nighthaunt and the staff member at GW wrote him a complete list of the hobby supplies and paints he required to get his army painted. He was great. But GW, like any retail store does get the odd staff member who thinks they know everything and is too precious to deal with new uninformed gamers and will treat them poorly. I think it's unavoidable. 

Financial pressures in our big cities have never been higher. We have terribly high rents and a current housing bubble so real estate is out of control. The 3rd party stores and online sales I do think would still be quite good. 

In the warhammer facebook community sales pages i'm a part of, Forgeworld models are far more common than i ever throught they would be. Maybe 1 in 10 sales on those pages are FW models. I thought it would be far less common due to the cost given that we Aussies get about 60c on the dollar verus the pound sterling. 

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2 minutes ago, Nos said:

It’s worth mentioning within a wider context as well that the past year has seen many retail chains post their worst profits in a decade or more in the UK, which makes GW’s success in that area even more notable. 

I think a lot of this is because people are buying less and less on the highstreet and its more and more expensive to run shops on the highstreet. Amazon makes it so easy to buy and order online now and with music and TV added to their prime membership and their own delivery fleet the prime membership is very attractive to have. 

With a lot of highstreet stores stocking less on the shelf; with internet prices cheaper; with generations used to buying online and with banks giving quite a bit of protection now - its put a lot of pressure on the highstreet shop. Shops which have seen rents and rates go up and up and up along with wages and energy costs for heating and the like.

 

So the highstreet retail chain is stuck. It's got dwindling customers walking in the front door with pressure to have their own online store; whilst their retail store is also costing them more and more to run. GW I think bucks the trend because their stores are not just to sell from but also a gaming outlet. So people might internet buy normally, but they are in the GW store to model or paint or play and they see that pot of paint they need; and that brush and that model etc.... and the ease of buying trumps the cost saving. Plus they've already paid to be in town for fuel and parking etc... 

 

The UK government did announce that they were going to introduce rate reductions for small highstreet businesses; but its years too late and many have closed up already; and it does nothing for chain or larger stores. It's funny to think that once a highstreet shop coudl support itself comfortably on footfall and now has to have an online store bolted onto it and trade nationally and compete nationally in order to just keep ahead. 

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11 hours ago, Saxon said:

This is very true. I do recall our government putting up import taxes some time ago but from memory, GW kits haven't gone up in price for quite some time. I was playing 40k last time the prices went up but I don't believe there has been another increase for years. 

Just on this, felt it needs to be pointed out while there's not been a marked increase in existing kits, there has been a gradual increase as new kits have been introduced.

When the new assault marine kit was released, it was dearer than the veterans, and 1.5x the price of the old kit it replaced. Similar story with the tactical squads.

And then you look at the costs for primaris vs tacticals - both troop choices. Generally, a single box of troops in 40k averages around $45-$60. Intercessors come in at what, $98? So while there hasn't been an increase across the board (like they did when they went from $35 to $50), there has been a steady increase in new kits being released (this is most apparent when it comes to characters).

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1 minute ago, Ollie Grimwood said:

I wonder if Audible has caused a bit of a drop in the BL profits, I use the  credits and its much cheaper way getting books that way £6-£7 with the offers you get with membership 

On the other hand audiobooks were basically a super tiny niche until Audible came along. Most were far too expensive for people to justify purchasing over a book  and I'd wager GW actually had the more affordable ones (things like Lord of the Rings were super expensive). 

So whilst raw sales of audiobooks might not have increased the volume of users has likely skyrockted. So instead of making money through direct sales they might make more through Audible. Instead of 5 paying full price you've 500 paying a little bit each which amounts to way more in profit. 

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Just now, Overread said:

On the other hand audiobooks were basically a super tiny niche until Audible came along. Most were far too expensive for people to justify purchasing over a book  and I'd wager GW actually had the more affordable ones (things like Lord of the Rings were super expensive). 

So whilst raw sales of audiobooks might not have increased the volume of users has likely skyrockted. So instead of making money through direct sales they might make more through Audible. Instead of 5 paying full price you've 500 paying a little bit each which amounts to way more in profit. 

Certainly possible.  Would that be recorded as BL turnover or as licensing? I’ve not had a look at the report yet.  They’ve certainly upped the expenditure in terms of voice talent towards the end of the year with some big names it might take a while before that get the payback on that investment 

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Not sure and I don't know if that gets mentioned in the report. The report is detailed but its basically the summary of progress, a lot of very specific details like that don't always get mentioned in it since its a general financial health report rather than a detailed blow by blow of GW's full internal structure. 

Sometimes it can also depend how they want the numbers to look - eg its interesting that they bundle Black Library and Forgeworld profits together rather than separate so its hard to tell the variation in performance on each on their own. 

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15 hours ago, Exarch Thomo said:

Just on this, felt it needs to be pointed out while there's not been a marked increase in existing kits, there has been a gradual increase as new kits have been introduced.

When the new assault marine kit was released, it was dearer than the veterans, and 1.5x the price of the old kit it replaced. Similar story with the tactical squads.

And then you look at the costs for primaris vs tacticals - both troop choices. Generally, a single box of troops in 40k averages around $45-$60. Intercessors come in at what, $98? So while there hasn't been an increase across the board (like they did when they went from $35 to $50), there has been a steady increase in new kits being released (this is most apparent when it comes to characters).

Oh absolutely. When I saw what Stormcast cost for 5 models I was shocked.

I was just pointing out that with all the volatility, the old kits that have been around forever have been pretty stable in cost. Thats all. 

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17 hours ago, Exarch Thomo said:

And then you look at the costs for primaris vs tacticals - both troop choices. Generally, a single box of troops in 40k averages around $45-$60. Intercessors come in at what, $98? So while there hasn't been an increase across the board (like they did when they went from $35 to $50), there has been a steady increase in new kits being released (this is most apparent when it comes to characters).

All Primaris troop boxes in the US cost $60 each. 

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GW's price varies a lot in different areas, which confuses me up till now. The lowest price you could find on Earth is from the independent retailers either in China or in UK. For example, buying non-website exclusive stuffs from official gw stores in US, Japan and Australia will cost you twice as much as it cost you to buy the same thing from independent retailers in China or UK. 

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I used to read a lot of Black Library stuff then they upped the prices a LOT, at least in my area, some years ago.  I've also found the Age of Sigmar novels I've tried to read, mostly realm gate wars, to be, well really bad.  I've noticed that's shelf area at Barnes and Noble has shrunk dramatically.

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