Is it time the Games Workshop split itself in two?

Well after yesterday's tough love (and it was love) for Games Workshop, today I try and offer what I think would be a sensible way forward for them. You see I've been thinking now, pretty much for years that Games Workshop was a really bad business model, not necessarily in the sense of purely making money, it seems OK at that right now, but I always felt it might have a tendency to go stale or be susceptible to shocks. I thought it was weak in other areas when I worked part time for them while I was paying my way through university and I've continued to think it to this very day. Yesterday as I said I posted a blog about whether the Imperium was becoming a metaphor for the Games Workshop itself and indeed whether the Imperium was Games Workshops ultimate destiny. I'm not going to go over old ground again because you can read it all here, plus I think it upset a few people so why try and upset them some more?

Lets be clear though, Games Workshop must be doing something right otherwise we wouldn't all be talking about them and we wouldn't have purchased their products in the first place now would we? However that's not to say their isn't room for improvement; in any business there is always room for improvement. So today I want to pick apart why it is that I think Games Workshops various wings and departments are quite frankly getting in each others way and screwing each other over and suggest ways in which the various parts of the company should be split up and broken down into its constituent parts. Then re-modeled and reshaped to do their individual functions far better than they are currently doing them right now and maybe even get them thriving again. Maybe what you're about to read are the ramblings of a nutcase, but this nutcase is quite good at systems analysis and right now looking at the Games Workshop as a system its clear to see that at some points its broken and has got itself into a toxic cycle.

Retail

Often cited by those close to the company as the 'drain on resources', or 'the problem'. I don't see it that way entirely and although I think there are problems with Games Workshops retail department and model I think there are bigger issues at play. Its often said that the retail arm of the Games Workshop struggles to support it's three core game systems and I hold my hands up, I've been guilty of this blisteringly dumb oversimplification myself at times. I think if you look at it as a rational system it can't be true that retail is struggling to support the core game systems. Just think about it for a second, when a business struggles, auditors never say 'well HMV was struggling to support DVD sales and console sales' do you? Its farcical, no the product range is unable to support the retail business and its structures.



So its the other way round, HMV is in the wrong business, its selling the wrong things, or just not enough of them to be able to afford its current structures. So there are two ways of looking at the problem, either find a way to shift more product, either the same stuff or different things or reduce your structure costs. There's another UK retail chain I'll come back to to prove another point later on, but for now I think I'll stick with the point that its not normally the job of a retail arm to support a product's existence, its the other way round. For a sales based business to work the product has to support the retail business otherwise you're just left with dead shelf space and a load of product you can't shift and a doomed shop or business. Its really not a difficult concept, Lord of the Rings, Warhammer Fantasy Battle and Warhammer 40k are not good enough to support the current retail chain the Games Workshop has. They know this and its one of reasons they moved to single man stores, but that didn't remove the biggest cost, the rent or the business rates in some places, it also initially hit profits if this report is to be believed I guess we'll see at the end of this fiscal year if it was a blip. Is the size of the retail chain an issue? Its part of it but not the whole story.

Now to solve this problem I think Games Workshop needs to grasp the nettle here and accept that there are two things that need doing:

1. The one man stores don't work, they're pointless and quite frankly too expensive and the idea that you can somehow maintain market dominance in this day and age through high street presence alone is utterly dumb. Especially if your manager is off sick that day and there's no way to cover the store opening. Games Workshop need to focus their retail chain down into a smaller number of better staffed and stocked stores. Closing the periphery stores down and focusing on providing a good level of service in larger stores in major towns and cities. Here in the West midlands conurbation alone we have 6 Games Workshops, why not focus that down onto two really big stores that can do a much better individual job? Retaining most of the staff as well to support those stores, people will still travel if they're in good central locations. You see I strongly believe that all they've done by opening so many new stores is dilute the customer spend between more stores meaning turnover has stayed stagnant and costs have risen.
2. This second point is a more radical... Games Workshop stores can not continue to survive only selling Games Workshop product. In all honesty the biggest waste within Games Workshop as a business is that they are not using their high street presence to snaffle up the majority of growth in Malifaux, Infinity or HoMachine. Shops are there to make profit and the decision to sell only the Design Studio's products is hampering the retail arms ability to realise its profit earning potential. In other retail or sales lead businesses the team doing the selling gets to pick the product they want to sell to their consumers, taking this choice away from Games Workshops retail arm is crippling them. They should start stocking other peoples products again like they used too when they were system agnostic, its what made them successful in the first place. Yes I realise the decision to go exclusively home grown product is what gave the Design Team the opportunity and time to make Warhammer Fantasy Battle and 40k awesome in the first place... but I think that job has been done now, it's time to see if they can ride the bike without the stabilisers!!!

Yeah that's right I'm advocating people being able to walk into their local Games Workshop, pick up an Oniwaban, maybe a new Malifaux gang and grab the latest Horus Heresy novel from the Black Library. Am I mad? No I don't think so, its what they used to do and the reason they became so popular is because their shops were so welcoming and friendly. More importantly though this would actually give the Design Studio an idea about what products people like genuinely, rather than those they are force fed via the stores. They'd have to become leaner and smarter about the product they developed. Will it happen? Probably not because they're so wedded to the idea of the current set up, lets be blunt up until now its served them well. Thing is past performance isn't always a guarantee of future success and they need people at the top of the company who are willing to take bold steps to get the various divisions of the company back on track. Retail needs more than just the three core games it seems to support them, surely bringing in some of the Fantasy Flight Games 40k and Fantasy themed product would be a good start though?

However if they were product agnostic as a retail chain again it would solve some of the short sharp shocks they have had in the past. Anyone who worked for the company during the Pokemon craze will remember with dread and fear what the hell that was like. Literally over night the kids we usually saw in store on Saturday and Sunday disappeared and it suddenly became really apparent to many of us that aiming the core games at young kids was a very risky business. You see, yeah its easier to sell products in many ways to children, so sometimes you can get a lot of quick wins with that market. However conversely its also pretty darn easy for someone else to come along and steal that revenue stream away from you as Pokemon did... but if they were product agnostic they could have sold Pokemon cards themselves briefly, and ridden that wave. they'd have still had people coming into their stores spending their money with them, and they could then sell them their other wares too, because getting the customers through that door is the first major hurdle and once you've achieved that its nearly battle won! Maybe I'm being too simplistic about it, but it seems a plausible business direction to me.

One of my favourite miniatures ever

Design Studio

So its these idiots with their rubbish games then causing all the problems, right! Right? Well no its not their fault either. You see its a symbiotic relationship that they could well do without as well right now. Because the fact that the product they produce is having to support this huge high street retail presence the company has all on their own is colouring very much the sorts of product the Design Studio is producing. They're not necessarily designing product we as consumers want, they're designing product the retail chain needs to make the business plan stack up and seem viable. Its like a vicious cycle as far as I'm concerned because what we have is a Design Studio whose product is predominantly sold by the retail chain, their biggest customer if you will, without them they would struggle to exist. Killing off all of those independents doesn't seem so wise now does it? I think that's a fair comment. So what we have is a Design Studio that is in the business of making games that mean their retail chain can pay for itself and the rest of the business, a very big ask. When I say Design Studio I mean Citadel, the games design and probably White Dwarf too, the part of the business responsible for developing the product if you will.

Yeah I hate it on the table but it looks cool

To my mind that's why we've seen a scaling up of both Fantasy and 40k, the retail chains need us all to buy more miniatures and stuff to make it all work and pay out some profit too. They needed us to do bigger armies. Did they ask anybody whether or not we wanted bigger games of Fantasy and 40k? They've never asked me and I've been hanging around the hobby scene a long time. This argument could be taken further to explain the phenomenon known as codex creep (perceived or real you decide), or just why the hell they thought a Dark Elf War Hydra is only worth 175 points... perhaps they were afraid they wouldn't sell enough if it was pointed fairly!!! You could make that argument and it might be plausible, but realistically without being at Lenton Lane when the decisions were taken you'll never know for certain and its just conjecture. You could easily make the contrary argument that they do these things without realising and they would never intentionally make something more powerful because that would harm sales of current product... except of course you might already own that current product. So they might be making it necessary for you to buy their new toys. Look its complex topic and I'm not going to try and go through all of the possible permutations there are, it'd fry my tiny little brain. However its fair to say I have my suspicions.

I love a good cup of tea (I'm British)

So now I'm going to bring in Whittard Teas, OK look, to my American readers I'm sorry, it's a British thing. We love our tea and I personally love my Whittards teas. In many respects the Whittards model is very similar to the Games Workshop model insofar that the only real place you could get Whittards teas was from their own stores and indeed the only things they sold were Whittard products. Whittards used to have a very small number of shops here in the UK and then during the late nineties and  early naughties they decided to expand their retail chain to every city and town in the UK and to be honest it looked to be working for a while. However it became apparent a few years back that the expansion had either gone too far or that the product itself wasn't good enough to support the retail chain. To combat this Whittards initially stopped selling some of its product via other sources such as Supermarkets so people could only buy Whittards teas from their shops. Next they started opening smaller stores everywhere, with fewer staff to try and increase their exposure to the marketplace. Its not a perfect analogy for Games Workshop but there are parallels to what the Games Workshop management are doing now.

Obviously just because Whittards failed it doesn't mean that Games Workshop will follow suit. However I don't want the Design Studio coming up with their version of Whittard teas Liquorice and Peach tea. Yuk!!! Because here's the thing Whittards started producing more weird and wonderful teas that you could possibly ever drink in a desperate attempt to get us all to buy more tea... how many flavours of Space Marine do we have now? Here are the reasons why I think divorcing retail and the Design Team would be good for their products:

1. Break the link with retail, and make games that are designed to support just the games studio and allow the retail arm to find ways of supporting itself via more varied product. This would allow the Design Team to develop and mature their core systems without the fiscal pressures, explicit or implied of supporting the company as a whole. Allowing them to design products based on consumer desire.
2. Opened up to wider competition the design team would be able to see clearer what the marketplace actually wants and if they responded in a positive way to this challenge given their relative strength I have no doubts that the product they currently produce would be much better given fairer and more open competition.
3. Ironically it might actually allow them to start supporting or producing more specialist games. Free from the requirement to produce products that support the retail half of the business they could be free to produce products that fit with other retailers desires and needs. A return to Games Workshop board games like Warhammer Quest and Space Hulk might be better for the hobby as those products can be sold in a broader range of stores as they're self contained. Also without having to worry about the stores being able to support such specialist games via gaming and shelf space a direct mail order service for bespoke and specialist product could be developed.

because I've been WFB biased with pictures here's a pretty Dark Eldar

I think its fair to say that 40k is the biggest single wargame in the world today and that Fantasy isn't far behind it. I also think that the Design Team if given the chance to could design and support more product than it currently does as well. Because if it was sold via other retail channels and models than just their own stores it would open up other possibilities for them. I don't think Games Workshop should fear open competition I think they should welcome it with open arms because it'll only make them produce stronger product, which would be better for them and better for us.

I love it and I it very nearly got me hooked on spikey dwarves

Forge World

I'm a self confessed fan of Forge World, I love the miniatures they produce and most of the miniatures I like nowadays for 40k and Fantasy seem to be produced by Forge World. I was very nearly tempted into doing a Chaos Dwarf army as I love the look of that stuff... but I digress. I find it slightly odd that there seems to be a degree of separation between the core design team and Forge World. I think they should allow Forge World a greater degree of freedom in choosing what they develop for Games Workshops core games, with the simple remit of it being luxury products. Not too dissimilar to what they do now, excepting that I think they should be allowed to make versions of Citadel miniatures if they want to, meaning that as a consumer if I choose to spend say £30 on the top of the line Forge World version or £15 on the Citadel version there is a clear choice there and again this will help focus both the Design Studio with its Citadel line and help them understand what consumers want from their product line as opposed to what consumers want from a luxury line. Although to be fair I don't see much wrong with the current set up. I also think with the nature of the Specialist Games they produce being so niche, that the Forge World model of production based on demand is the perfect vehicle for supporting these sorts of line with smaller runs of miniature casting. Why shouldn't Forge World bring back Man-o-War, Necromunda, Mordheim and yes... Blood Bowl? Isn't that exactly what a small scale response producer is designed to achieve? More bespoke product?

The black Library

Who doesn't love the Black Library? I mean its the Black Library and its awesome. I love the stuff that they produce and as far as I'm concerned it should be left the way it is, getting good novelists in to write awesome back stories for the universes we love so much. So why change the one thing I think the vast majority of fans are happy with? Should it be a standalone company separate from the Design Studio? Nope I don't think it should, I actually think its should be more integral to their business because the rich and vibrant stories they produce only serve to enrich the worlds and settings for the wargames they produce.

Conclusion

You see I think the constituent parts of Games Workshop could all be damn fine individual businesses, each with a pretty vibrant and successful future if they just stopped arsing around and getting in each others way. Sure its a pretty good mix in terms of profits right now, but there is discontent out there, should they ignore it and carry on? Are my suggestions realistic or viable? Well I don't know unless I saw the books in their entirety and did some proper market research, but I think its plausible, if bloody unlikely. However the retail chain would have done a roaring trade when Pokemon became so popular and that would have brought fresh blood into their stores rather than taking customers away from them. Also conversely if individuals like myself decide I want to play other things, why shouldn't Games Workshops retail arm sell them to me and retain me as a customer? I mean I like their stores and staff. Also why should the Design Team carry around the extra burden of supporting the huge retail chain on its own? Look I know its pie in the sky but its how I'd do things, I'd create a small parent holdings company that retained controlling stakes in the two companies, possibly 3 if you sent Forge World off to float on its own and free them up to do what is best for their own individual business needs. Retail is hampered by only been able to sell one companies product and the studio is stunted creatively by having to come up with product that supports the retail arm. Yes together they're strong but divided I actually think they could be stronger. Peace out!