Jan 2023: GW Half-Yearly Financial Report, I had made a mistake, HH 2.0 overestimated

[N1SB]

Disclaimer: please do not take this as investment advice or an endorsement of Games Workshop.  I have no professional ties with them and hold no stock.

 

As required by laws and by-laws, GW has released its Half-Yearly Report.  The period it covers is from last June to end of November, right after the release of HH 2.0:

 

https://investor.games-workshop.com/wp-content/uploads/2023/01/2022-23-half-year-report-final.pdf

 

I just want a moment to digest this.  It'll be a very telling snapshot of HH 2.0's adoption, whether it's more like a new 40k increase (huge growth) or AoS (small bump).

 

1st Edit - thanks for your patience.  I've more I want to go through, but I wanted to post this before I get some much-needed sleep.  I'm excited.

 

2nd Edit - adding a disclaimer not to take my words alone as investment advice.  Then an addition to Warhammer+ profitability GROWTH.

 

3rd Edit - shortened everything, added a graphic to illustrate how I am thinking of GW's now 3 flagship products...you'll know it when you see it.

 

 

Executive Summary

 

 

Edit - Analysts are likely overlooking 1 story of GW's performance this half-yearly, they're not missing the forest for the trees; they're missing an important tree in the forest.

 

That tree is the popularity of the Horus Heresy as a game.  Beyond Bolter & Chainsword's interest in hot Marine-On-Marine action, this has real significance to GW overall.

 

40k is GW's clear flagship leader.  When our Hollywood Brother, Henry Cavill, announce he'd act/produce a Warhammer series, did anyone even for a split-second muse he'd play...an Age of Sigmar Stormcast?  No, (aside from he plays Custodes and Iron Warriors), everyone assumes 40k as it's what people think of Warhammer.

 

How would 30k compare?  Would it be AoS or just a Specialist Game?  Remember HH 1.0 was quite a niche product, even though popular here on Bolter & Chainsword.

 

I say that not to defend GW as a corporation; I hold no shares, I'm a 30k and 40k player first, last, all over.  What I care about is the state of Warhammer, and it is strong.

 

 

A Picture Worth 10,000 Years...or at least 17

 

 

Before going into more than a hundred centuries the Emperor has sat immobile on the Golden Throne, a recap of 17 years of GW's history...and its personality.

 

 

The 2 lines are literally the Top Line and Bottom Line, Revenue and Profit.  Reading these 2 lines and everything in-between tell you everything about GW.

 

In 2007, Profit-wise GW had a traumatic year...it was loss-making year, leading to painful cost-cutting measures, good people laid off, one-man Warhammer Stores being not just the norm but their business big bet idea.  They had to do it to just survive.  Then it lead to 10 years of stagnation, like the Imperium itself, a lost decade.

 

There are other trends.  Generally, new 40k editions (like 5th ed and 6th ed) would drive Revenue growth...then it'd level off and shrink after Warhammer Fantasy Battle releases.  While I consider the ending the Warhammer Fantasy Battle GW's biggest misstep...I can understand how it went down that wrong road.

 

(I don't say this to disparage Warhammer Fantasy or even Age of Sigmar, in fact, I'm sympathising with them, and look forward to The Old World.)

 

In 2017, there was the biggest business turnaround I've ever seen, bar none WITH...not Gathering Storm, actually.  It was...of all things...Age of Sigmar's General's Handbook.  This was when AoS brought back much-needed points values, BUT that's not the cause.  The cause was GW invested in just some marketing activities again.

 

Revenue shot up, and Profit followed, due to the strict cost-cutting from a decade earlier, basically parallel lines as it's been for years.

 

Consider this: GW says, "We are a miniatures company."  AoS miniatures had been out a year BEFORE this and no uptick, no uptake.  You've heard in Marketing 101 classes that it's not enough to build a better mousetrap, that you got to market it?  This was the case, marketing isn't just advertising, but building that whole market.

 

Such as an in-store Season of War official global campaign, where you earn points for winning special missions in-store, as well as building & painting AoS models (after buying them there, of course)!  Warhammer Community started around that time, then BOOM, things were happening in 40k with the return of a Loyalist Primarch.

 

Looking back at that time, you can see the growth was mainly happening at the FLGS and Warhammer Store level, because that's where you had to go to contribute to this official global campaign.  Then you see GW do all the stuff at stores, store celebrations with limited edition minis, Armies On Parade, free minis every month!

 

Since that worked, then came the Gathering Storm and 40k 8th ed, the same playbook as AoS with the Konor Campaign, and we were off to the races.

 

Revenue continues to grow at record levels, but in 2018 to 2020, Profit took a hit...because GW took this chance to expand now that it's got some money.  It was the right move to invest in its own future by building up the business infrastructure it couldn't in the past...but then Covid hit, then the effects of Brexit, now the war in Ukraine.

 

TL;DR - GW had a really bad 2007 that keeps it very frugal, then a turnaround when they restarted their marketing engine back up.

 

 

What We Suspected About Trade Prices Was So Spot On That It's Actually Kinda Dumb

 

 

Recently, we heard the bad news that at the Trade, i.e. FLGS wholesale price level (where they buy the minis to sell to us), GW announced a head of time an increase of 5.8%.  Just a humble reminder that the actual retail price they sell at might not be at that same amount, but yeah, it sucks, for us, even more so for these small businesses.

 

There was a thread about it and I assumed it was about increases to fuel costs impacting gross profit margin, which go into plastic raw materials and electricity.  

 

 

It's mostly fuel prices, then stuff I didn't anticipate.  It's plastic (materials increases for a petrol-based byproduct), carriage cost (transportation...well, that's petrol, literally fuel prices), increased staff costs (hey, new sculptors, sweet), incremental cost of new facilities (more electricity, i.e. fuel prices), inventory (minis made, stockpiling in warehouses).

 

So you see a lot of numbers there...down 4.5%, materials increases 1.9% of core sales, etc.  All you need to know is 1 number: 70%

 

70% is the target gross profit margin that GW set for itself, from its many previous reports.  The term just means, for every $100 it makes from you, it wants $70 in profit on something it made for $30.  Gross profit margin matters to manufacturers, to make stuff they can sell without losing money.  This COMPLETELY explains the 5.8% Trade price increase.

 

GW's current gross profit margin is 64.1%.  The Trade price increase is 5.8%.  64.1% + 5.8% = 69.9%...or almost exactly 70%.

 

(Btw, you know what other company has 70% gross profit margin?  LVMH.  What does that stand for?  Luis-Vuitton fashion, Moet champagne, Hennessy cognac.)

 

 

On a More Serious, Sensitive Note To Our UK-based Brothers

 

 

This isn't political, just mentioning countries, because many of our Brothers here don't live in the UK or in Europe.  Their economic meta is different.

 

Even before that thread about 5.8% increase in Trade prices, I was looking at OECD forecasts for Europe.  It's like...sports scores for a game that affects us all.

 

The OECD reports are basically the Metawatch for economics.  In this Covid era (just when you think it was over, China is opening up from its Zero Covid policy), they were trying to gauge which countries would get out of the pandemic-induced recession best:

 

• France was the clear leader (I thought it was bias, as OECD is based in Paris)
• The UK and Germany were the clear losers

 

Initially I reckoned it was about Brexit, then I saw another report based on something else, it was about the environment and renewable energy, sustainability and stuff:

 

• France has a glut of nuclear power plants for its population size*
• The UK and Germany were the most dependent on Russian natural gas, now affected by sanctions

 

* Note: so my Warhammer/D&D friend, ControllEric (so named because he played a Controller Wizard in D&D, and plays a Financial Controller in real life), explained to me the French government built nuclear power plants after the '70s energy crisis.  Guess that really paid off for them after 50 years.

 

GW's problems are just a microcosm in the midst of all this, so it's worth seeing the big picture.  On that note, while we complain about Warhammer prices, as is our God-Emperor-given right, dammit...but somewhere in Europe real people are dying in the cold, in a war.  Not political, just perspective.

 

MAJOR EDIT, pre-Christmas 2023: I previously made an error with the following.  HH 2.0 launch period NOT as successful as previously thought because it was inflated by currency issues.  It happened this Half-Yearly Financial Report happened just after a very short-lived mini-budget in the UK that crashed the currency.  Low British Pound (£) value artificially made GW's Revenue look bigger than it was.  Easier to show than explain:

 

 

So notice here there's a few "revenue"-related terms, but the important one is "Revenue at constant currency."  GW arranged this to present a real pretty picture.  Core revenue is The Hobby, the miniatures and books and what we consider Warhammer, that grew like 10%.  Licensing revenue is like GW's royalties from Warhammer-branded video games, which fell a bit and is perfectly normal because that's dependent on other video game developers.  But when you look at "Revenue at constant currency"...it's unchanged.

 

Like three quarters of GW's business is outside the UK now, using other currencies like US dollars.  When the British Pound fell precipitously, those other currencies looked much more valuable in comparison...that actually bloated up GW's revenue figures, see.  HH 2.0 clearly did grow things a little bit (to make up for lower licensing revenue), but it was not a huge performer.

 

We're about 2 weeks away from the Half-Yearly Financial Report for 40k 10th ed.  I'll be on the lookout for this...I actually imagine 10th ed to have grown a bit more than HH 2.0, and I definitely think the supply bottleneck of GW being limited to its Nottingham plant has capped out its growth.  Not hyperbole or gloom & doom, just the reality of so many things "Not currently available".

 

 

HH 2.0 Off To a Better Start Than I Expected

 

 

As before, GW's full Fiscal-Year starts in June, so this Half-Yearly covers the HH 2.0 launch, not Christmas, no Arks of Omen, no Rogal Dorn tanks, etc.

 

HH 2.0's success wasn't guaranteed.  We're Bolter & Chainsword, so we gotta Check Our Priors on our feelings, emotions, hype around HH 2.0.

 

Do you remember how small HH 1.0 was?  Sure, we were excited when Lady Atia, Brother Mr. Parker, Brother Valrak and others went to a HH Weekender.  But outside of our little bubble, HH 1.0 was a very niche thing.  GW does not (likely by design) break down its revenue by product lines, but they sometimes slip up like this back in 2016's Financial Report:

 

 

(I want to apologise to our Brother who worked this out properly, I only remember how I did it with a back-of-napkins math.  We lost his post in the forum reshuffle.)

 

2016 was right before GW's meteoric rise, so it was making excuses for a Revenue drop in Mail Order, saying how FW's growth compensated for a decline with their normal plastic (Citadel) range.  Back-of-napkin, for FW's 28% increase to offset a 12% decrease, that means FW was around 30%, and Citadel about 70% of Mail Order.

 

2016 was also before the new Blood Bowl, Newcromunda, etc., so FW really meant HH 1.0.  For those that played AoD, this was around Book VI: Retribution, focusing on the Shattered Legions.  Mail Order was around 21% of GW's overall Revenue.  30% of 21% means HH 1.0 was only roughly 6% of GW's total business.

 

30k players would say, "That's ridiculous, my AoD army cost 10x times than my 40k one!"  You're right...HH 1.0 was much more expensive, which only means the number of actual players was even smaller than that; we weren't even 6% of the population, maybe just 0.6% that spends 10x more.  We were a tiny, yet very passionate, minority.

 

So before reading this half-yearly report, I was hoping, HOPING, we'd be close to AoS levels of popularity.  30k's a niche game, a spin-off.  So I looked at the half-yearly Revenue periods associated with edition launches, just as an indicator, understanding obviously not all sales were tied to launch titles, but still useful comparison points:

 

• When AoS GHB came out, half-yearly grew £15.6 mil more than the previous HY
• Then 40k 8th ed came out, HY grew £38.0 mil more than that period
• And AoS 2nd ed came out, HY grew £15.3 mil more than 40k 8th ed
• But 40k 9th ed came out, HY grew £38.4 mil more than the previous HY
• Then AoS 3rd ed came out, HY only grew...£4.7 mil?  I just checked...this was bad

 

A Finance professor would never teach this shorthand, but you see the common sense pattern, right?  Usually, an AoS edition grows Revenue from the last comparable period by ~£15 mil.  40k is the star player, every time it appears, add ~£38 mil, more than double AoS's gains.  So where does HH 2.0 rank?

 

• Now HH 2.0 has come out, HY grew £20.8*, or even MORE than any AoS ed

 

* Note: to compare like-to-like, I've omitted Licensing revenue, as that's quite big now, focusing only on Core (i.e. miniatures) Revenue.

 

 

What I said above is very back-of-napkin maths, but imagine this.  GW's Revenue growth is like a mountain, going higher and higher.  There's always some background sales of everything, like growing piles of snow.  On top of this stand the product launches (Primaris representing 40k, Stormcast for AoS, Beakie for 30k).  Well, they're on a slope, they're standing on snow, and I'm trying to gauge their height and it's not perfect...but you get a pretty good idea one's bigger than the other, etc.  Thus, a 40k launch isn't £38 mil of its various Starter Boxes, but it's like £30-something + a few million pounds of all of GW's other products, but whatever it is, it's BIG.  It's only useful for eyeballing relative sizes.

 

In terms of game rankings, 40k is still top dog, then 30k, then AoS.  We weren't close to AoS, we exceeded past them.  This is honestly impressive to me.

 

But here's why HH 2.0's success is more than just about 30k, AoD, the HH novel series, Primarchs in a movie, etc.  Investors honestly should appreciate this...

 

 

Don't Think Business, Think "Devastator Doctrine"

 

 

HH 2.0 is the missing piece of GW's release schedule.  They have 3-year flagship product life cycles now: 40k, then AoS, then...blank.  HH 2.0 fills the blank.

 

To compare, the recent Balance Dataslate allowed Adeptus Astartes armies to keep the Devastator Doctrine beyond Turn 1, often the best one for, say, Iron Hands.  Well, what if the opponent keeps his army in reserve?  That crucial Turn 1 you got nothing to shoot at, you just wasted your best turn.  You want constant IH Dev Doctrine.

 

I'll pull up the Jan 2023 chart again...I really can tell GW's whole story with this one picture:

 

 

Despite what movies and cartoons show, Wall Street hates spiky graphs; they want a straight upward line, like when every year is a good year, not great years followed by bad.  You know how when Power Fists went from d3 Damage to a flat 2 Damage?  It's less vulnerable to risk, something you can plan around.

 

40k, starting with 8th ed, is like an IH army using its Devastator Doctrine, it scores the most Revenue.  Then it's forced to move off it to AoS which, like the Tactical Doctrine that follows, is ok, I guess.  After that there was a filler year, let's sell some new Contrast paints, that's kinda like the Assault Doctrine, wasted on IH.

 

It was you guys that showed me how to talk about this.  A company has to pay its bills and employees regularly, because we have to pay our own bills, our own rent regularly.  A GW employee doesn't suddenly eat twice as much on a 40k launch year, then just fast during a filler year.  IH Devastator Doctrine, every turn, every year.

 

Anticipating the question, wouldn't 30k cannibalise some 40k business, and wouldn't that be an issue?  Maybe, but it's not a problem, and you may want that.  So GW has had sold out minis, sets, etc.  That's because it has too much demand at 1 time, exactly the type of risk I'm talking about.  They can spread it out, smooth out that line.

 

So you already know 40k 10th ed is launching later this year.  I think next year is AoS + The Old World, because AoS needs a bit of help to straighten that line, what with HH 2.0 outperforming it.  Then year after that it's HH 3.0.  Btw, if Wall Street understood any of what I said, it'd ask, "Hey, GW, can't you launch a new 40k ed EVERY year?  Why not?"

 

 

Warhammer+ Numbers Were (Not) a Surprise

 

 

 

I remember we were collectively trying to figure out Warhammer+ subscription numbers last year, around this very time.  We concluded: around 100k subscribers.

 

Note - I actually found my post about it, but there was a longer discussion before this.  Sorry about the formatting, it was from before the forum revamp.  The TL;DR is, either by views ÷ number of videos or revenue from an odd line item that represented only 3 of 12 months of subscription, we sussed out the 100k number together!

 

 

So the actual number being 115k is not a surprise...yet it is.  After a whole year, Warhammer+ grew only around 15% (or not at all, if we guessed too low last year)?

 

The Revenue is nice.  Another Brother already pointed it out, £3 mil in 6 months is £6 mil a year, which would be a really great Licensing deal (£14.3 mil this HY, £28.6 FY).  The difference is that Warhammer+ should be more reliable, it's a subscription, it's kinda already banked in, whereas GW's Licensing team has to chase every deal.

 

But Revenue growth isn't just about money; it's also a measure of more people being interested in Warhammer, the Hobby, to the point they'll subscribe to a streaming service.  Not every potential fan can build a model or paint it, but most people can watch streaming videos.  Have we already reached everyone that we could?

 

Edit - Profit-wise...it's curious, £2.4 mil cost for £3.0 mil back, that's like 20% gross profit margin.  I just did a song and dance saying GW wants a 70% gross profit margin like LVMH.  Of course, this is a fixed cost issue; if GW paid £2.4 mil and got 1 million subscribers worth £30 mil, that's worth it and that's the attraction of digital content, it's all profit.  However, as Hobbyists, I expect and I saw you guys talk about wanting more content...but how can GW create that without having to pay even more, without a clear increase in subscriber base?  Netflix was running a loss for a long, long time, and just in the last year laid off a lot of staff.

 

I've raised similar concerns with Black Library revenue.  It's a very consistent number, meaning it's the same core of hardcore readers year in, year out.

 

 

I'll Look At GW's US Growth Later

 

 

I may edit this later to share what I've learned.  My concern is probably same as the financial analysts: as with Warhammer+, what if we already peaked in the US?

 

Speaking of America, even though it's not directly 40k related except for 1 licensed collectible card game, you probably heard about this...

 

 

Wizards of the Coast (Dungeons & Dragons, Magic: the Gathering) Investor Call

 

 

Brothers Triszin PLEASE do not delete this bit, WotC is making 40k: the Gathering Commander Decks, it's relevant!  Also, GW started out by selling D&D.

 

Edit - I've also shortened this significantly, because I asked the mods not to, but I feel a lot of it is off-point now.  Recently D&D made a lot of (negative) headlines.  

 

Brother Schlitzaf kindly DM'd me a month ago on a UBS Investor Call, an informal but informative affair.  It wasn't technically about WotC, but they were the focus.

 

Have you ever wondered how Warhammer compared to D&D, or M:tG, or Pokemon Cards?  Here's some easy to remember rules of thumb:

 

• D&D Revenue is only (heh, "only") about $100 to $150 mil (or around where GW used to be in the past)
• GW in comparison is £400 mil going to £450 mil, and growing
• WotC, through M:tG and Pokemon cards, is about $1 billion (including the D&D bit)

 

Again, this is just to put things into perspective, like comparing points values between units.  GW isn't the evil empire that WotC can be.

 

D&D has the most insane yet obvious example of the 20/80 rule ever, where 20% of customers make up 80% of Revenue or Profit.

 

Do you guys play D&D?  I got a group of about 5 guys.  1 person is our Forever Dungeon Master.  He buys all the books.  The rest of us are Freeloaders.  I never thought of this before, yet it is true of every D&D group I've been part of.  The DM pays for EVERYTHING, we just show up to his place with Mountain Dew.

 

Thus, WotC is trying to sell a virtual online D&D service, One D&D, where not just the DM but every player is a subscriber.  They'll even offer heavily discounted or free adventure modules and campaign books (they already do this with their online Beyond D&D service, I just ran a free Spelljammer 4-session campaign...I'm not the 20%).

 

The point is, they'd rather gain low regular subscription Revenue each month rather a big purchase spike with just 1 customer.  Devastator Doctrine, every turn.

 

Here's where it ties into Warhammer.  80% of D&D players are Casual that can be grown to be Hardcore.  80% Warhammer players are all already Hardcore.

 

So when I see things like Warhammer+ not really growing, it's like, we've got no one left to convert.  It's not growing in North America, have we already reached every potential Hobbyist?  Is it that small a pool?  So even if we get an Amazon Prime Video series, will it not popularise The Hobby more than it already is?

 

 

Final Words For Now

 

 

Not the 1st time I've made these long post, but I should have always said this.  These financial reports are GW's.  The Hobby is ours.

 

I end where I began, Revenue and Profit.  Revenue is interesting to us because it happens to be a measure of Warhammer's popularity, how many players, how passionate they are.  Profit is important to GW because it is literally their Victory Points...that's their problem.  We neither need to cheerlead nor turbo-Karen GW.

 

HH 2.0's higher than (I) expected launch is imho a great sign for The Hobby for many reasons.  I do worry about the absence of uptick and uptake of Warhammer+.  It's not just about each product line/streaming service, it's that they're both indicators to something broader about The Hobby, the litmus tests.

Edited December 31, 2023 by N1SB

[Mechanicus Tech-Support]

Can't wait for the upcoming breakdown, I'll make the popcorn 

[spessmarine]

looking at revenue at constant currency, it appears to be more along the lines of a small bump
though, to be fair to gw, it hasn't exactly been a great year for everyone judging from all the recession forecasting and inflation

[Flaherty]

My big takeaway: Don't get your hopes too high on the Amazon partnership. "We have agreed, in principle, to explore opportunities to exploit our IP with Amazon Studios." Sure, things may happen, but it's at the earliest possible stage, at a moment where all of the streamers are retrenching in terms of budget for new content.

 

Other than that, it seems like they're going from strength to strength. They matched last year's record sales, though they noted that things had leveled off in the US. Worst case, this seems to suggest that Horus Heresy is at least on par with AoS in terms of selling power and should augur well for the future!

[Dark Shepherd]

From thisismoney

 

 Games Workshop shares dive as Warhammer maker misses sales target - but FTSE 250 firm's revenues surpass £200m for the first time  Games Workshop posted record sales for the six months to the end of November, but missed targets, sending shares falling 5 per cent.  The Warhammer figurine maker told investors that the 7 per cent increase in revenues to £226.6million 'isn't where we wanted to be, particularly in the US', where sales were flat on a constant currency basis against a record year last year.   Pre-tax profit fell 5.2 per cent to £83.6million, as it suffered from a fall in licensing profits, but this was before its blockbuster deal with Amazon announced in December. 

[WrathOfTheLion]

It'll be interesting to see how they address the US market. I've noticed they're a little less likely to push the prices here in recent years, so I'm wondering if they've hit a cap as far as their fantasy conversion rates go.

 

Even if HH just matches AoS, that's pretty significant, given that it didn't have a well developed range and they were plagued with supply issues on a lot of it throughout the year. I suspect they reached pretty close to the cap on how well it could have done.

[Dark Shepherd]

2 bits worth pointing out: they paid a record dividend but also again mentioning their IT upgrade problems

[twopounder]

Some interesting callouts.

 

• Russia only brought in about £2m annually in second half and is now listed as lost revenue.
• Horus Heresy is considered to be successful and sold well.
• 10.9% revenue increase
• New webstore in Summer 2023 (if they make the new deadline). Seems to elude to some advanced functionality
• New systems/processes in NA (Memphis) to increase logistical efficiency
• New warehouse to service UK and Europe is open, with all accounts switched in Spring 2023
• Warehousing is about £12.2
• 8 New injection machines for plastics
• New factory dedicated to producing paint
• Still having significant issues with IT Infrastructure
• Acknowledged spike in customer service requests due to delayed orders
• Warhammer Community -100k+ hits daily
• 1.9 Million estimated subscribers across all social media types
• My Warhammer has about 718k accounts
• Just under 1m email subscribers - considered one of their strongest marketing tools
• Total capital investment of £5.1m (Tooling, facilities, equipment, warehousing and IT equipment)
• Emphasizing focus on 3rd parting licensing
• No contract with Amazon - only agreement in principle to explore possible opportunity. Nothing is actually confirmed or signed
• Darktide was a "particular launch of note" in relation to revenue.
• Decrease in licensing revenue by £5.8m (to £14.3m) - about a 25% loss. They appear to use guarantee income and then adjust for actual performance.
• 83% of license revenue comes from PC games. 7% from mobile and 10% from other
• Their risks are interesting
  • IT remains a major weakness and they are keeping their IT team structure "under review"
  • Concern with preventing media from harming their core business and representation of the IP "is approved, correct and consistant". Mentions involving lawyers if needed. (I'm guessing this is directly about the Amazon announcement and concerns around shows that created a lot of controversy in regards to liberties taken with the IP).
  • "Do not intend greenwash." Plan in place for climate change, diversity and equality and a plan to make progress forever.

I'll let others dig through very specific financials, but those are some of the interesting points I pulled out at a glance. Make of them what you will.

 

Edited Russia to half-year. Was tired when doing this and I'm used to the US method of quarterly earnings calls and looking at year end totals in December/January. However, the lost revenue comment stands, as this is specifically from the report under "External factors impacting the delivery of our commercial plan":

 

Quote

War in Ukraine - half year c.£2 million lost in net revenue from trade sales in Russia.

 

 

Edited January 12, 2023 by twopounder

[Omega-soul]

2 hours ago, twopounder said:

Some interesting callouts.

 

• Russia only brought in about £2m annually and is now listed as lost revenue.

 

It's a half-year lost, not annual "half year c.£2 million lost in net revenue from trade sales in Russia." 

But I think it not a "lost" revenue - it's just re-routed cash flow to neighbourgh countries (like "unusual sale spikes" in Poland, Finland, Kazakhstan etc.)

[Arbedark]

3 hours ago, spessmarine said:

looking at revenue at constant currency, it appears to be more along the lines of a small bump
though, to be fair to gw, it hasn't exactly been a great year for everyone judging from all the recession forecasting and inflation

 

The fact that revenues are stable year-on-year, given the massive growth in recent years and the cost of living crisis is honestly pretty insane. 

 

3 hours ago, WrathOfTheLion said:

It'll be interesting to see how they address the US market. I've noticed they're a little less likely to push the prices here in recent years, so I'm wondering if they've hit a cap as far as their fantasy conversion rates go.

 

Even if HH just matches AoS, that's pretty significant, given that it didn't have a well developed range and they were plagued with supply issues on a lot of it throughout the year. I suspect they reached pretty close to the cap on how well it could have done.

 

I have never seen another company get anywhere near as many comments on regional pricing or "fantasy conversion rates" as GW do. 

 

According to the mac index an iPhone 14 512gb list price in the US is $1,099 vs (based on exchange rate) $1,435 in the UK, but this doesn't garner a fraction of the outrage that GW do for their regional pricing, and it honestly baffles me why. Do Warhammer fans not understand why regional pricing is a thing? Do they expect prices to be adjusted on a daily/weekly basis to reflect conversion rates? Is it just because the UK get the favourable prices that it's an issue? 

[Burni]

IT underperforming and you want to launch a new webstore during the same period as launching a new version of your main money making game? Sure, seems like a good idea…

[Bung]

1 hour ago, Arbedark said:

 

The fact that revenues are stable year-on-year, given the massive growth in recent years and the cost of living crisis is honestly pretty insane. 

 

 

I have never seen another company get anywhere near as many comments on regional pricing or "fantasy conversion rates" as GW do. 

 

According to the mac index an iPhone 14 512gb list price in the US is $1,099 vs (based on exchange rate) $1,435 in the UK, but this doesn't garner a fraction of the outrage that GW do for their regional pricing, and it honestly baffles me why. Do Warhammer fans not understand why regional pricing is a thing? Do they expect prices to be adjusted on a daily/weekly basis to reflect conversion rates? Is it just because the UK get the favourable prices that it's an issue? 

 

I wouldnt use Apple as an example. Their Fans are something else. 800+€ for 4 wheels for a Desktop PC as an example.

 

The Problem with GW exchange Rates is, it feels more GW trying to squeeze some extra profit from its customers.

[dickyelsdon]

8 minutes ago, Bung said:

 

I wouldnt use Apple as an example. Their Fans are something else. 800+€ for 4 wheels for a Desktop PC as an example.

 

The Problem with GW exchange Rates is, it feels more GW trying to squeeze some extra profit from its customers.

 

Take any niche product and its the same thing tho. Costs incurred in dealing with other countries have to be offset somewhere. Cycling is my other hobby and any USA made item is big markup in the UK, and UK made items are higher price in USA. Used to order plenty of stuff direct for the USA or through friends family there to ship to the UK. Even if you pay VAT on arrival its still often cheaper to import.

 

Example; A UK made Hope rear bike hub is £170rrp uk including VAT ($205 today). Current USA rrp is $250 without tax. 

[theSpirea]

19 minutes ago, Bung said:

 

I wouldnt use Apple as an example. Their Fans are something else. 800+€ for 4 wheels for a Desktop PC as an example.

 

The Problem with GW exchange Rates is, it feels more GW trying to squeeze some extra profit from its customers.

I'm honestly not sure who has crazier fans, whether Apple or GW. Prices people pay for plastic toys vs 4 wheels from Apple isn't really that different.

 

on topic: new webstore - I do hope they will finally address the fact BL.com only has ebooks and to this day since the change during the COVID, there's still no notification on the website physical books are only available via GW.com. I still see on various forums people asking where to get BL books because BL.com has only ebooks/audios. 

BL website needs a complete overhaul but I have very little confidence in their capability to deliver it.

[dickyelsdon]

4 minutes ago, theSpirea said:

BL website needs a complete overhaul but I have very little confidence in their capability to deliver it.

 

The complete lack of structure of the BL website is maddening, i cant imagine how much money they are losing through its terrible layout. Looking at a book its almost impossible to see where it sits within a series or setting. Ive missed whole sections of some collections as the site doesnt let you know there are other books to buy. 

[Burni]

8 minutes ago, dickyelsdon said:

 

The complete lack of structure of the BL website is maddening, i cant imagine how much money they are losing through its terrible layout. Looking at a book its almost impossible to see where it sits within a series or setting. Ive missed whole sections of some collections as the site doesnt let you know there are other books to buy. 

Yeah, it's bad isn't it.

 

I try to buy the ebooks from there so they are DRM free but sometimes I'm stuck on mobile and its so painful I just end up buying it from Amazon.

 

And as you say, the discovery of new or other books in a series is a disaster!

[lansalt]

3 minutes ago, Burni said:

And as you say, the discovery of new or other books in a series is a disaster!

 

Without Lexicanum and fan-made reading guides I would have given up long ago about trying to make sense of continuity in BL stories, or reading them.

[Arkhanist]

2 hours ago, Arbedark said:

 

I have never seen another company get anywhere near as many comments on regional pricing or "fantasy conversion rates" as GW do. 

 

According to the mac index an iPhone 14 512gb list price in the US is $1,099 vs (based on exchange rate) $1,435 in the UK, but this doesn't garner a fraction of the outrage that GW do for their regional pricing, and it honestly baffles me why. Do Warhammer fans not understand why regional pricing is a thing? Do they expect prices to be adjusted on a daily/weekly basis to reflect conversion rates? Is it just because the UK get the favourable prices that it's an issue? 

 

A good chunk of the difference is VAT. US list price is sans sales tax, while the UK price (as always) includes the 20% VAT. So like for like, i.e. applying VAT, the US price would be $1319, leaving a ~9% markup. (I don't know what import duties Apple pay in the UK, if any). Most people buy phones as part of a mobile contract, which also conceals the 'real' price anyway. And lastly, it's Apple - if you're price sensitive, you're probably not an Apple customer anyway.

 

GW regional pricing on the other hand makes Apple look like saints. Votann army box; list price of $200 in US, $120 in the UK. UK price includes VAT, so like for like as above, it's $240 (US inc VAT) vs $146 (UK price in dollars at £1=$1.21 current exchange rate). Or a 64% markup. That's so far beyond accounting for currency fluctuation/shipping/import taxes it's just not funny. And don't even start on Aus pricing, where it can literally be double the price.

[TrawlingCleaner]

=][= Thread moved to the Amicus =][=

[Joe]

Bit odd to move official publications about the investor reports - these have been a standard fixture of the NRBA board for years now. Hardly hot takes from a miscellaneous wargaming journal.

[Special Officer Doofy]

6 hours ago, Arbedark said:

I have never seen another company get anywhere near as many comments on regional pricing or "fantasy conversion rates" as GW do. 

 

According to the mac index an iPhone 14 512gb list price in the US is $1,099 vs (based on exchange rate) $1,435 in the UK, but this doesn't garner a fraction of the outrage that GW do for their regional pricing, and it honestly baffles me why. Do Warhammer fans not understand why regional pricing is a thing? Do they expect prices to be adjusted on a daily/weekly basis to reflect conversion rates? Is it just because the UK get the favourable prices that it's an issue? 

 

Maybe because you're on a forum for Warhammer people complain about it there? Just search "UK outrage over apple pricing", I did and there are alot of articles (from actual news outlets, not toy soldier forums) about people complaining and lawsuits. There's so much more complaining about Apple's pricing or business practices on the internet than GW. Apple is the largest company (by market share) in the world. GW isn't even 2% their size, what a terrible comparison. Quit using your own personal experience as fact.

 

Fact, more people complain about Apple's regional pricing than GW's.

 

Also fact, more people complain about GW's pricing on a website dedicated to one of their toy lines than they do Apple...

Edited January 11, 2023 by Special Officer Doofy

[Arbedark]

6 hours ago, Arkhanist said:

 

A good chunk of the difference is VAT. US list price is sans sales tax, while the UK price (as always) includes the 20% VAT. So like for like, i.e. applying VAT, the US price would be $1319, leaving a ~9% markup. (I don't know what import duties Apple pay in the UK, if any). Most people buy phones as part of a mobile contract, which also conceals the 'real' price anyway. And lastly, it's Apple - if you're price sensitive, you're probably not an Apple customer anyway.

 

GW regional pricing on the other hand makes Apple look like saints. Votann army box; list price of $200 in US, $120 in the UK. UK price includes VAT, so like for like as above, it's $240 (US inc VAT) vs $146 (UK price in dollars at £1=$1.21 current exchange rate). Or a 64% markup. That's so far beyond accounting for currency fluctuation/shipping/import taxes it's just not funny. And don't even start on Aus pricing, where it can literally be double the price.

 

I appreciate the added context, which is absolutely fair - I always forget that the US doesn't include sales tax in their prices.

 

I stand by the thrust of my comment, however, as regional pricing isn't a GW-exclusive approach to distribution, and the Apple example was just a quick and easy one to post in the morning before work (see the Big Mac Index as another example of how prices for the same product can vary between regions, for a variety of reasons: https://www.economist.com/big-mac-index). There are of course a significant range of factors which are often (always?) ignored when people comment on the 'fantasy GW conversion rate' or whatever other inane name they decide to give it, such as cost of labour, property costs (retail and domestic), disposable income, the cost of alternative entertainment, distribution cost, etc.

 

2 hours ago, Special Officer Doofy said:

 

Maybe because you're on a forum for Warhammer people complain about it there? Just search "UK outrage over apple pricing", I did and there are alot of articles (from actual news outlets, not toy soldier forums) about people complaining and lawsuits. There's so much more complaining about Apple's pricing or business practices on the internet than GW. Apple is the largest company (by market share) in the world. GW isn't even 2% their size, what a terrible comparison. Quit using your own personal experience as fact.

 

Fact, more people complain about Apple's regional pricing than GW's.

 

Also fact, more people complain about GW's pricing on a website dedicated to one of their toy lines than they do Apple...

 

Ah, yes. I can see how you would think my comment was specifically about why people don't complain about Apple products on GW-focused fora, rather than using the aforementioned Apple products as an example of regional pricing (which per @Arkhanist's post above actually isn't as good example as could have been used), and a personal comment on the frequency in which I, personally, see comments on such in a broader context...

 

[Bat33.1]

 Estimating exchange rates £ to $ must be a nightmare to predict anyway, we've had a near 20% swing in just the last few months when the £ almost hit parity with the $ but it's now settled around $1.20 imagine if it ever hit the heady heights of $2 - £1 again 

 

I wonder if GW have the mains power issue resolved for the extra injection machines they bought a few years ago then realised the local power grid couldn't handle the extra demand so required an upgrade?

[N1SB]

20 hours ago, spessmarine said:

looking at revenue at constant currency, it appears to be more along the lines of a small bump
though, to be fair to gw, it hasn't exactly been a great year for everyone judging from all the recession forecasting and inflation

 

My fellow Brother Spess Mareen, this was my initial assumption.  Moreover, even that small bump I assumed was Licensing revenue from video games.

 

It's not.  The Horus Heresy 2.0 is pulling its weight, faster than AoS even after it's had some time to build up momentum!  Imma brb, breakfast.

[N1SB]

23 hours ago, Dark Shepherd said:

From thisismoney

 

 Games Workshop shares dive as Warhammer maker misses sales target - but FTSE 250 firm's revenues surpass £200m for the first time  Games Workshop posted record sales for the six months to the end of November, but missed targets, sending shares falling 5 per cent.  The Warhammer figurine maker told investors that the 7 per cent increase in revenues to £226.6million 'isn't where we wanted to be, particularly in the US', where sales were flat on a constant currency basis against a record year last year.   Pre-tax profit fell 5.2 per cent to £83.6million, as it suffered from a fall in licensing profits, but this was before its blockbuster deal with Amazon announced in December. 

 

This is a great heads up.  Our American Brothers (I used to live in the States, East Coast, Midwest, West Coast), any insight?

 

Like, for example, this HY was very HH-focused...maybe HH isn't popular in the US?  That doesn't right either, though, I see a lot of American lore videos.

 

Also, I got to go to bed.  I think I've been up 24 hours straight.  If anyone asks, I've headed off to a customer meeting at their office.

Edited January 12, 2023 by N1SB