I'm going to be honest, this Sunday Sermon wasn't going to be about what I'm going to write about at first. I was still going to write this sermon, as I'd had a significant heads up about the information a few months back now. I just wasn't sure when Games Workshop was going to publish it's half yearly figures. So what am I talking about today? Well, us! Bloggers, forum dwellers, gamers. Or more specifically how we all form small mutually reinforcing networks. Just as in the big wide world we all tend to gravitate towards people who are similar to ourselves, and who enjoy the same things as we do... so we do with our digital selves, our online persona's. I like most people read mainly blogs by gamers who play certain products, because I'm interested in them, or have a certain take on the hobby. I hesitate to say people like me, because the hobby is only one facet of who we are, but certainly people with similar tastes.
In short those who have similar views to those that I have myself. I try to read hobby blogs that are not necessarily cogent to my own hobbying experience, if for no other reason than they keep me abreast of what's happening in other parts of the hobby I'm not interacting with. I don't just mean 40k and Fantasy blogs either. Nope I try keeping in touch with Flames of War bloggers, historical wargame bloggers and most recently a few blogs about 15mm sci-fi wargames. But I'm not going to lie to you, I read way more blogs about games that I do like and play than those I don't. It's only natural after all. So where am I heading with this rambling monologue? Good question. Well I'm heading towards discussing the state of the Games workshop hobby and Games Workshops business performance... yeah OK I'm sorry!
But hear me out. Over the last few months, lets say 6 to 12 to give it a firmer time frame, there has appeared to be a ground swell of opinion on the Internet. A slow bubbling undercurrent of malcontent with Games Workshop, not just as a business but also as a hobby. I've lost count of how many rants I've read about Finecast, price increases, Warhammer Fantasy 8th Edition, Grey Knight, Dark Lances, size of army required and the drudgery involved in painting them... you name it, I've read it. I have of course relatively famously added my own dissenting voice to the swirling nebulous digital milieu. Is it reality though? Well yes, it's our reality, our view of the hobbying world. But, is it representative of the wider community out there, on the streets buying and playing wargames? I've never been sure it is, just like I've never been sure that the myriad of online voices that put so much stock in the tournament scene are present in the wider community, in the same proportions as they appear to be on the Internet. And I'm going to discuss the reason why I think this.
I personally dedicate a lot of time to producing this blog. It's kept me sane over the last few months, as my desperate search for gainful employment has been fruitless. Would I blog as much as I do if I was in work? The answer to that is a definite no. It's become almost a full time job, albeit one I enjoy very much. If I could get paid for doing this I'd be chuffed to bits, but I can't. Writing a blog like this takes a serious amount of dedication on my part, and I'm sure it's the same for other bloggers out there too. It's a labour of love for us, we're the über geeks, the heavily invested and the diehards. How seriously invested or involved in the hobby do you have to be to write a blog? I'm going to say extremely invested, to the point that for some of us the hobby might have become all consuming. So are we, the blog writers representative of the wider community and hobby? We like to think we are, but I guess we're not.
And this is where Internet dwellers get slowly divorced from the wider reality. If I believed what I read on fellow blogs and message boards was reflective of the wider hobby it would be a very different beast from the one it appears to be to the wider public. Pretty much on a daily basis on the Internet I'm hearing of hobbyists switching their game systems of choice away from Games Workshops core product. I hear tales of woe with regards to the dwindling attendance of Warhammer Fantasy tournaments, and there appears to be some evidence to support that this is indeed the case. But here's the horrible truth everyone... we're the niche within the niche. Most of Games Workshops customers don't care their games are poorly balanced. They don't want to search out new games, better games. I often hear the idea banded around that the Internet will start playing its part in converting new people to the hobby...
Is it really the Golden Age of Gaming? Well yes it is, I do believe all of these things are happening to some extent, possibly even more so than ever before. But, I don't think they're as widespread as us Internet dwellers would believe. Why? Because the facts and figures honestly don't support this narrative claim. What's happening with diehard hobbyists or those who are heavily invested is not born out in Games Workshops own financial figures. So, some seriously hardcore tournament attendees are unhappy with some aspects of both 40k and Warhammer Fanatasy. Well guess what, Games Workshops half year fiscal results tell you just how big a chunk of the market you really are. Here's a hint, not very big! This isn't a surprise to me in any way shape or form. I've seen figures that suggest that what I'd call the hardcore wargamer makes up a very exceedingly small slice of the overall gaming pie. It's just that they make up a far larger proportion of the Internet chatter, and because they're so heavily invested in the hobby are way more likely to be vocal about it.
I'm guessing that by now many of you have had sight of the performance figures. They've been very widely published. Half year pre-tax profits up by 40% to £9.5m, a none too shabby performance in the current economic climate for a niche industry. This on a revenue increase of only 5% to £62.7m. This isn't bad performance at all. So where has this pretty darn good performance come from? Well the two clear places appear to be increased revenue from license fees, thanks to THQ and the Space Marine computer game and increased profit margins on it's line of miniatures. That will be Finecast. Turns out it really is cheap as chips to produce all those miniatures in a polyurethane resin, go figure! From a purely fiscal point of view it has been an undeniable success. So those of you who want to see the back of the stuff, sorry but like I said months ago, I think it's here to stay. Black Library and Forge World have also both started contributing more to the parent company too. They've had bumper half years the both of them.
Obviously the figures as published themselves are only part of the 'truth'. Every company likes to put a positive spin on their figures, to aid their stocks performance on the market. For instance just how much of these pre-tax profits are down to THQ's license fees? We don't know, Games Workshop are wisely refusing to say. How much is down to the increased margin on Finecast? By the looks of things a fair old amount. Have overall unit sales gone down as some have claimed, but yields per unit shot up due to the use of cheaper material? Honestly I don't know as those facts or data weren't released with the figures. But does it matter? Yes and no. But, certainly not in the way that many people would imagine. If Games Workshops individual units sold have actually gone down as some have claimed, yet they have increased turnover then as a rational observer I have to say their business model is in rude health. They have former customers out there who were heavily invested, who might have brought less this year for one reason or another. that gives them potentially quick, or easy wins in growth terms. Get those people back and they'll increase turnover yet again, through simple marketing methods aimed at the already 'converted'.
So it's all looking pretty rosy then? Well yes actually it is. Sure there are some slightly negative stories in there. There has been a quite sharp decline in sales in most of continental Europe's markets. Is this due to unfavourable exchange rates with the Euro? Possibly but Holland and Italy bucked the trend, and given the later's counties quite dodgy economic climate that's a surprise. Obviously there have been dips in overall sales in Australia and New Zealand, but hardly the collapse many have predicted, indeed they've made more money out of Australia this year, even if they are doing smaller volumes. Meanwhile in the USA they continue to grow their business, a lot! The United States remains a market they feel is largely untapped and I'd have to agree. It does seem that things are going well for the Lenton Lane company. Sure some of the growth in pre-tax profits are down to some pretty fortuitous exchange rates right now, nearly £1m of them to be precise. That's obviously out of Games Workshops control and how long that will last is anyone's guess. But the underlying truth remains that fundamentally Games Workshop are getting more out of their core business and also maximising the profitability of their IP, even if it is via partnership ventures.
Interestingly though, even after all those cost cutting exercises Games Workshop's operating costs rose by a fair old chunk this year. That will be inflation for you! So I guess we'll see yet another annual price hike to account for 'adjusted' inflation predictions. My ball park guesstimation figure is that we'll see around about a 7.5% hike in prices. But, we'll see if that actually happens. I'm sure there will be those out there who'll try and come up with conspiracy theories or wild explanations as to what all this means. They will try to make sense of the data in a way that matches up with their world view. I have to be honest I very nearly fell into that trap, and might yet. It'll all be guess work though without the actual key internal figures I'd wager. When the simplest explanation seems the most plausible, Games Workshop have had a very good year, in comparison to their recent past. I know some of you won't believe it and will be sitting there scratching your heads slowly rocking backwards and forwards, muttering things like 'this can't be happening' or 'it's all lies, lies I tell you'. But here's the deal, it is happening. What's more I don't think it's a bad thing.
Here's why. I truly believe that Games Workshop have done a great service to the wargames community and industry over the years. That might get people wanting to spit in my face or do even nastier things to me. I accept that, because a lot of you out there are rightly angry at the company for many reasons which, I won't go into now. However, ask yourselves how many of you started in the hobby because of Games Workshop? I'd wager a good old chunk of you. They recruit people to the hobby, I mean it's all they drill into their store managers, recruit, recruit, recruit! Why? Because they know that not everyone will stick at the hobby, some will walk away. Others will be happy with what they've got and not feel the need to buy stuff ever again. Some will become hardcore hobbyists, that's people like us I'm afraid. People for whom wargaming is their biggest hobby and arguably one of the most important things in their life... OK I'll say it, we're nerds!!!
|It's all about the starter baby|
Games Workshops business plan isn't designed to retain nerds, geeks or obsessive compulsives. No, it's designed to be a sausage factory, and no that isn't a gay euphemism. Games Workshop work on the principle that new hobbyists will spend more in the short term than long term hobbyists. Long term hobbyists will already have had that initial hit, or spending spike and have pretty much what they need. If they stay happy in the hobby great, but its not necessary for them to do so. But, if they do stay in the hobby, then on an edition change in a game they will encourage them to either have to re-shape what they already own, or buy an entirely new army. In short they know they can't run their business off of this sort of customer. Hence this drive to recruit new hobbyists all the time, this insatiable urge the company has to sell 'core games'. There are new tricks though, they have finally learned it seems that they can try to illicit more cash from their long term customers through supplements like Storm of Magic or standalone games like Dreadfleet, but lets not kid ourselves that this will become the focus of their business, it won't. It's just another fillip to stimulate increased turnover.
|No matter what people say, 40k is still massively popular|
So what do they do? Well they target every aspect of their core products at new hobbyists. Their paint range is designed to make painting for new hobbyists easy. They even provide easy to build scenery in their stores, hell possibly even the gaming table. Their games themselves are very simplified and easy to learn, nothing too taxing. They make entrance into the hobby far less daunting, they reduce the effort required, and in doing so possibly increase the likelihood that geeks like us will become disgruntled. Lets look at it dispassionately for a second if we can. If they continue to churn out disgruntled gamers at the end of their hobbying process then that's great for us surely? Each one of those gamers is an opportunity for us to grow the wider hobby. It's up to us to ensure they remain gamers and play some of these other great games out there. We need to make sure they don't just quit the hobby altogether, Games Workshop can continue doing their part and it's up to us to make sure we do ours, because other companies now produce the products we require to retain apathy and rage quitters.
So in summing up, what does this all mean? I'm not sure it means anything specific to me, I've always watched Games Workshop in a sense from afar, and I've always tried recruiting people to other game systems. I mean, I still don't like working with Finecast as a painter. Its a horrible substance more akin to the God awful rubbery miniatures you get in board games. Its not a pleasure to paint, although for 'kit bashers' I can see its appeal, note I didn't say converters! I also find using tweezers to pick bits of pink latex moulds out of recesses of Finecast miniatures destroys my will to live. I hate filling in all the air bubbles, and having to re-sculpt missing details, because it's now 'part of the product'. I still can't stand playing Warhammer Fantasy Battle 8th Edition, I hate it, hate it, hate it! In short everything I've said about Games Workshop remains true for me, and many of you I'm sure. I'll continue to play what I'm playing because I'm loving it, and I can see that these games are growing and gaining in popularity. I'm enjoying my hobby, I'm still enjoying blogging and so I'll continue to tell you what I think. My opinions. Because that's all they are, 'opinions' my view on the hobby. I hope I never present anything I say as 'fact', I certainly don't intend to. It's why my favourite phrases are things like 'I believe' or 'in my opinion' and one of the words I use most in my blog and comments on others blogs, right after dichotomy, is anecdotal. Just remember your truth is another mans lie, so don't get caught up in the hype. Enjoy your hobby how you see fit and don't give a flying fudge cake what anyone else says, sure go out and promote the hobby you love, just don't be a dick about it. Peace out!