Games Workshop, the maker of the Warhammer 40,000 and Warhammer tabletop wargames, has posted losses for the last year and did not issue a dividend this quarter. I play Warhammer 40K and have purchased many of the supplemental materials and games in that science-fiction universe and I am not at all surprised by this news. The prices on the product available has risen to exorbitant rates but the product itself has also vastly improved in the fifteen years I have been playing these games.
I wonder if they have finally priced themselves out of the market. This also explains why they are shutting down the lower profit margin aspects (Specialist Games and Black Industries) of the umbrella company. The funny thing is that their main product (minis) have been getting better and better. Miniature quality and variety has been improving consistently throughout my experience with the hobby, with the notable exception of the Dark Eldar. The printed matter is more durable and much better looking than it was when I started playing in 1993. The art and flavor of the universe continues to amaze. I wonder if they just over-bloated themselves or if they are losing actual sales revenue.
“…£192,000 loss, compared with a £127,000 profit in the same period of 2006.”
That sentence indicates two things: either they grew too big too fast, which I have no data on, or they lost sales. Given my bias about their price gouging style of raising prices every year, I am inclined to side with the fact that the hobby has simply gotten too expensive for most of their market. I wonder how much they have lost on Apocalypse alone. It would be refreshing to see former head of sales Mark Wells take the salesman stance and drop prices. I have worked in a variety of sales environments and competition generally means lower prices for the same quality item, except in health care apparently.
For a long time, Games Workshop was operating in an era of unprecedented monopoly-through-no-competition. There simply was no other game or game company like them in the world and there still isn’t. But now that there are miniature based games and companies flourishing (seemingly everywhere on the internet) for a fraction of the price of GW’s materials, there may be actual competition, not from a single corporate entity, from all of the smaller games like Infinity, Confrontation, Ragnarok, Hordes, War Machine, the various Clix games, and even video games.
Another aspect of this situation could be the fragile and crumbling economy of the United States. In the last ten years, the US has come to dominate the consumption of this hobby. In White Dwarf magazine’s US and UK edition, the editors have stated repeatedly (if I remember correctly) that the US is the largest market for their product. The US does host a growing number of Games Days and Grand Tournaments every year. Perhaps the money is being saved for slightly rainier days expected in the future. Perhaps Moms and Dads just aren’t willing to finance the ever-expanding defense budget of Altair 7 either, despite how much Planetary Inquisitor-Governer Kevin really wants a phalanx of Battle Tanks and Super Heavy Titan Walkers.
I wonder if anyone has done any market research to see how many new players have been recruited by the Dawn of War video game and its expansions or the various novels from the Black Library. I wonder if anyone has seriously considered lowering prices. Why would I buy a Super Heavy Baneblade Tank (literally a foot or so across) for $95 when I could purchase $95 worth of plasticard and bits and make two or even three scratchbuilt models?* My limited economics education did teach me about price elasticity. I wonder if the people in charge of Games Workshop would consider lowering prices on some of their basic model kits in reaction to the losses. Given the history of the company, I doubt it.
*In all fairness, that sentence is totally unproven but I would be willing to try it out. There are numerous fan-made pdf templates for making your own scratch built baneblade and I could be convinced to find the time in February to try it. At the moment, I do not have the finances to spend on such a project.
January 30th, 2008 at 12:52 pm
I did not use any images in this post because GW has a habit of requesting that they be removed, frequently through the pointed barrel of a lawyer.
January 30th, 2008 at 11:59 pm
you could have made a drawing in MS paint to teach them a lesson.
January 31st, 2008 at 2:57 pm
All my hobby money is heating my house and gassing up the Subaru this winter.
February 7th, 2008 at 11:23 am
they need to get those Euro kids interested in minis. Life’s not all great beer and free health care, kiddos!!
February 8th, 2008 at 11:47 am
I heard an as yet unsubstantiated rumor that the US and UK sales had continued to rise in the last year, but the mainland Europe sales had dropped precipitously. Interesting.
A friend of mine thinks that people spend more money on hobbies during recessions because they do not go on vacations. I find this idea interesting.
March 20th, 2008 at 10:54 am
Where the hell are dEn and Fullie? Get your boy parts out of your girlfriends and blog!
Cornholz.
April 22nd, 2008 at 10:39 am
This is a nice blog. I will comment here often.