Annual Report 2022 - 2023

[Sothalor]

So... GW are now expected to continue growing revenue and profits year over year.

 

They're not going to do so by expanding production capacity.

 

Ergo... massive price hikes ahoy! Time to milk the whales harder! 

[Scribe]

32 minutes ago, Sothalor said:

So... GW are now expected to continue growing revenue and profits year over year.

 

They're not going to do so by expanding production capacity.

 

Ergo... massive price hikes ahoy! Time to milk the whales harder! 

 

It is concerning, unless they can find some pretty dramatic efficiencies in terms of delivering product.

 

I've been complaining about things being out of stock for months on end. If I cannot spend the cash burning a hole in my account on Titanicus/Epic soon, I'm going to just find something else to waste it on.

 

There has to be some real lost revenue in there somewhere at this point for GW.

[Nova-V]

1 hour ago, Halandaar said:

 

Basic napkin-maths example:

500 Lion El'Jonsons & 500 Farsights produced in USA as well as 500 Lion El'Jonsons & 500 Farsights produced in UK - Total boxes produced 2000, total factories needed: 2, total machines needed: 2, total molds needed: 4

VS

1000 Lion El'Jonsons & 1000 Farsights produced in UK - Total boxes produced 2000, total factories needed: 1 total machines needed: 2, total molds needed: 2

 

 

It's even worse then that (not to disparage your point which was well made).  Companies rarely make more then one mold unless something is to be made on a truly gragantuan scale.  On GWs scale they would not have more than on mold per kit it's just not cost effective.  So if you split production you either have to start shipping molds around or you make some lines in one place and others in another. 

 

Molds are big and heavy, shipping them is an expensive and risky business.  Expensive for obvious reason but also risky due to their uniqueness.  As they are so expensive to cut re-cutting one is a serious issue.  So loosing a mold in transit is a big issue and not unheard of.  When Hornby bought Airifx at least two molds are known to have gone missing and that was just moving from Hull to Margate.  Those kits are now lost to time as re-cuttimg isn't economical.  Now from a GW perspective loosing a Rhino mold it will definitely be re-cut but a low volume seller is unlikely to get the same treatment.  So keeping production in one place solves cost and loss.

 

So the other solution is to say make all 40K in the UK and then all AoS abroad.  Cut the molds needed locally to the factory.  In that case you are loosing all the economies of having foreign production.  AoS stuff need to be shipped to the UK and vice versa.  Much better to just make it all in one place and distribute from there.

 

Much bigger companies (Lego springs to mind) have the volume to make production in multiple countries work (4 I think currently). GW are not even close to being in that position.

[Zeratil]

2 hours ago, Rusted Boltgun said:

It has been said before, GW is quite risk averse. 

Investment in a further manufacturing plants, especially one abroad, comes at a cost. For one on home soil, there is the site, the facility and staffing. 

 

GW is indeed very risk averse with high sunk-cost investment decisions, and to be fair they've been burnt before with the original retail expansion into America and Europe in the 1990s that massively over-extended and then failed. Uprooting/moving/creating production elsewhere also means leaving behind all the industry advantages GW enjoys in Nottinghamshire, which quite probably has the largest concentration of wargaming miniature production anywhere in the world (along with a whole host of game design companies). Nottingham isn't a big city (certainly by American standards) but GW, Mantic, Warlord Games and Perry are all based in and around here. There's a lot of design expertise and the import/export infrastructure they need is already there. Setting up elsewhere would be a massive operation for a small-ish company like GW if they wanted to continue like they have - centralising production of minis, paints and design materials around an HQ-like location. I'm sure one of the reasons they're set up that way now is that they like the fact the designers and producers can get up and walk across the street to the factory that makes all the stuff they design. I suspect there's also a lot of loyalty to the UK and Nottingham specifically, as well as GW themselves seeing Warhammer as very "British" brand and ip, making it unlikely they'll make any dramatic shifts while the current group are in charge. It's not like they're struggling and while GW definitely loves money, I don't think they have much of a desire for either All The Money (like the video game industry these days) or Profit At All Cost. Or we'd already have seen them sell out to somewhere like Hasbro and move production to Asia like Airfix did.

[Arkhanist]

7 hours ago, N1SB said:

 

Games Workshop has "decided not to expand our manufacturing footprint further during the year."  It's what I was afraid of, but I don't blame the CEO:

 

• Sooner rather than later Games Workshop will really need to expand its manufacturing footprint or it can't grow
• But I'd have made the exact same decision if I was in the CEO's position...now's the wrong time for expansion

 

Thanks for your in-depth and on-point analysis, bar slightly on this bit (I'm from the IT side, not the finance side, so bow to your knowledge entirely in that area!). As I understand it from looking at previous reports, they've been expanding their number of plastic moulding machines significantly over the last couple of years. The rumours, and side comments from their reports, are that the primary limitation they've been facing for a while now are not on how fast they can make sprues per se, but

a] getting and storing enough components and materials on time, e.g. raw plastic, boxing and papers etc

b] how quickly they can get them boxed up and distributed out (particularly the latter)

c] where to physically put the boxes when they're building up stock for large-scale launches

 

All of which are down to their old and cramped eurohub, partly tied into their long-delayed ERP replacement - trying to get the new warehouse to interface with their legacy ERP setup in particular. The plan for a while was to move all distribution to a new, much larger hub warehouse (to supply the UK, Europe and the two subsidary warehouses in Memphis, US and Australia), while the existing eurohub could be converted to a materials and components store, basically because it's very close to their factories. Plus they've been rejiggering space with the new factory, so paint could have more space etc. I understand there have also been quite a lot of IT issues at the Memphis warehouse.

 

They originally planned to have the new UK EMG hub done by autumn 22, that slipped to spring 23 in the last half year report, and it's still not quite finished in the latest!

 

"Finally, after a few teething problems (classic understatement from GW here!) the EMG facility took on fulfilment of all UK and European retail, trade and international shipping.
Operations for all but our UK and European online order fulfilment have now been running out of EMG for a number of months with all relevant operational staff transitioned from our Lenton site. Our Eurohub warehouse is being converted to become our dedicated materials and component warehouse. The close proximity to the factories makes this the ideal site to offer a more just-in-time service to our three factories. At the time of writing, the component and material operation is transitioning from EMG to the Eurohub component warehouse,
this should be completed by the end of the summer. Online fulfilment is making the reverse transition heading towards EMG. We are anticipating a few final teething issues."

 

This is no doubt related to the recent notice on the GW site, specifically the transition of website fulfillment to EMG.

 

 

If they can *finally* get to use the new EMG space and much better distribution to its full potential, taking over all distribution, while also giving themselves the space to store materials much closer to the factories for 'just-in-time' supply, that should make a substantial difference to how much they can actually make, store and ship in timely fashion, and uncap their limit on growth, somewhat, you've described because of their long lasting 'out of stock' problems.

 

They will however continue to be limited by the remaining parts of their legacy ERP; further (expensive) migration was put on hold until they could sort out their IT group as a whole, with the new director Lam, which is still ongoing. As I've mentioned a few times, ERP upgrades are the absolutely worst and most complex IT upgrade any company can ever do, and getting them right is *really really hard*, as understanding how your people actually use your current ERP, and how that will transition to the new system is always drastically underestimated.

 

Also, WRT to games-workshop.com:

 

"We are at the final stages of completing the first phase of upgrading our online store, putting it on a stable IT platform. This project has been more complex than the original review, and to be honest, it has not been delivered in our normal joined up team Games Workshop way. The team have regrouped and it is being delivered now in phases, the go live date of phase 1 is under review, currently scheduled for January 2024."

 

I think this is 2 years late now? I wish em luck this time!

 

Ah, the joys of corporate IT upgrades, massively oversold by the contractor's sales people directly to the directors for a nice fat commission, then when it all goes tits up, in-house IT - who always knew it was going to be an underfunded, massively over-ambitious disaster, but were ignored  - are left holding the bag. Just speculating on that bit, of course...

 

Edited July 26, 2023 by Arkhanist

[Marshal Rohr]

Asking the British to utilize the Americas for cheap labor and land is not as far fetched as you’d believe. Historically. 
 

 

[Orion]

I say keep it in the UK.

It's one of the good parts about GW as a company.

[Nephaston]

3 minutes ago, JayJapanB said:

I say keep it in the UK.

It's one of the good parts about GW as a company.

Not to mention it's one of the good parts about the UK.

[kamedake88]

None of this is all that surprising to me. The writing is on the wall for what is heading down the pipe for the world's economies and many organizations are battening down the hatches. GW being risk adverse is like the ground hog that always see the shadow, sure winter goes on forever but at least it keeps its head. We'll see in 3 years how things have shaken out and how many of us are left being able to afford the hobby or food for that matter. Long story short is the business is healthy as it can be.

[chapter master 454]

Curious stuff...

 

Mayhaps GW suddenly hitting a bit of a problem with now becoming far more recognised and popular, and possibly faster than they could reasonably expand. As fraters mention, it ain't cheap to expand production for this and you can't expand it suddenly without possibly being crushed by say...unstable economy...

 

Not like GW want to have "Out of Stock Online" plastered everyone, it just looks bad for them in general and the worst part is it is lost money they could of got. While sold out stock sold and made money, it is bad business to not be able to continue to sell product people want; bad because customers want it and aren't happy they didn't get it and bad because the company wants to sell it and aren't happy because they can't get that money.

Both sides I feel would agree this ain't great, but seems like at least unlike their rules team they have some sense of ability at this!

[tinpact]

Now, there are absolutely other reasons not to set up US production, but, I mean, I operated injection molding machines as one of my first jobs out of school as a temp. With the exception of these really awful dog toys that had to finish curing outside of the machine and stank to hell, the most hands-on the job got was changing the filter and lubricating the mold every so many cycles.

[Jukkiz]

my feeling about marine line cut-ups was them basically throwing older moulds to the bin instead of repairing/mainting them. Thus making more machines ready for primarinde wave OR horus heresy tun-up.

It might not be that pretty, but they been doing something like this for quite awhile.

[Waaagh?]

12 hours ago, NovemberIX said:

Which strikes me as very silly, you would think that they'd build production capacity to handle the Americas. I've been idly thinking about what if they opened a facility in one of the new Mexican industrial parks they've been building. I'm sure they could get some sweet tax incentives, among other labor cost savings with space to integrate production for printing boxes and books or other accessories.

 

One thing I have been sitting and kinda considering when it comes to 40K and it's possible mainstream debut, there's a lack of good merch, and everything is kinda a mess where it all sorta contradicts each other and you never get a feeling of, "oh, this is definitively 40K". What I mean is, everything is sort of always an abstraction of something else. Marines on the table are not the ones in the books, and those are not the marines of the PC games. So when Ole' Jimmy starts watching The Cavill show, how does that turn him into a GW customer? Models seem too tedious, the books too many to decide where to enter, the PC games a smattering of good B-tier projects with a lot of chaff to get through. Like I said, idle thoughts.

And also untrue, they've been manufacturing scenery and the occasional Underworlds Gang in China for years. 

[unrealchamp88]

Another factor to the specific question of 'If/when will GW open a facility in the States' might well be this; how much impact is the stock shortfall hurting their bottom line? Not only may customers decide that not being able to get hold of items means investing in another wargame (GW's competitor) where there is no struggle to get hold of the desired items, they may spend more money on 3rd party items or even invest in a 3D printer to take access to miniatures into their own hands. 

 

The longer stocking issues persist and the more advanced/accessible 3D printing becomes (plus its resultant market including independent miniature lines), then more of GW's customers will move away. Not all of course, but will it be a significant enough amount?

 

Maybe the Amazon deal and resultant products garner a large mainstream following and thus a large enough amount of the kind of customer that is casually interested and won't consider 3rd party or 3D printing. They just want to buy a box off a shelf, then build, paint play.

 

On another note, I wonder if GW will eventually decide to produce an even more simplified range of miniatures i.e. whole miniatures as opposed to mono-pose kits, to appeal to an even broader customer base of people?

[Mogger351]

48 minutes ago, unrealchamp88 said:

Another factor to the specific question of 'If/when will GW open a facility in the States' might well be this; how much impact is the stock shortfall hurting their bottom line? Not only may customers decide that not being able to get hold of items means investing in another wargame (GW's competitor) where there is no struggle to get hold of the desired items, they may spend more money on 3rd party items or even invest in a 3D printer to take access to miniatures into their own hands. 

 

The longer stocking issues persist and the more advanced/accessible 3D printing becomes (plus its resultant market including independent miniature lines), then more of GW's customers will move away. Not all of course, but will it be a significant enough amount?

 

Maybe the Amazon deal and resultant products garner a large mainstream following and thus a large enough amount of the kind of customer that is casually interested and won't consider 3rd party or 3D printing. They just want to buy a box off a shelf, then build, paint play.

 

On another note, I wonder if GW will eventually decide to produce an even more simplified range of miniatures i.e. whole miniatures as opposed to mono-pose kits, to appeal to an even broader customer base of people?

I can't honestly see a justification for duplicating their production facilities over in the states, as per the games designer thread on Dakka, it becomes apparent that US workers demand a higher base salary than a UK worker comparatively so not only will they need to duplicate the moulds but then pay the staff more to do it, alongside the hassle of potentially relocating or seconding UK staff to train and supervise. I aren't sure the benefits would outweigh the logistics cost.

[Matcap86]

There's also maybe not that much opportunity loss from stuff being out of stock? Sure people might go off and spend their money on something else, but for many first time customers, the more niche stuff that's out of stock, which sucks for us die-hards, is hardly the first thing that they're buying. With starters sets, hobby supplies and space marine minis being readily available I'm doubting the supply issues are a big factor in that. Consumers are getting used to the idea of stuff being harder to get, out of stock and long wait times. 

If I was starting in the hobby, no way would I begin by investing in 3d printing with it's own learning curve, hazardous materials and space requirments. When coming back I just bought Dark Vengeance, some brushes and 5 basic paints and that was me set for a few months. 

[Tyriks]

=][=   This thread is NOT about the pros and cons of American/British production. Keep things on the topic of the actual financial news. =][=

[N1SB]

19 hours ago, Captain Idaho said:

What does that mean for the previous analysis? And what does they mean for the future of both AoS and HH as mainline game systems?

 

Is the release of Epic and Warhammer Fantasy a test so to speak to see if they can replace the flagging HH and AoS systems with a more efficient model system to increase sales margins?

 

Good point making no assumptions, taking nothing for granted.  I'll share what I see.  Brother Idaho, please note from your astute questions I can tell you already know most of the following, I'm just repeating this for the sake of everyone else just joining the conversation.

 

Remember that I love 30k.  This is the preamble from the Half-Year Report BACK in January, which is interesting to us because it represents the launch window.  If you remember during that time, all the attention was on HH 2.0, the refreshed World Eaters only came afterwards.

 

 

HH 2.0 was indeed "launched successfully in the period reported", meaning it arrived on schedule, so it's technically true!  It was "enthusiastically received by" those that bought it!  But just looking a bit closer, remembering "in the period reported" the British pound plummeted, we see a whole different story:

 

 

Games Workshop, who's been growing 30% to even 40% year-on-year growth...stayed flat when looking at Revenue at constant currency, from £211.6m to £211.7m.  At the time, I said I could see the size of HH 2.0 being bigger than that of AoS, but it turned out it was inflated by a weak British pound.

 

Now, there was MORE licensing revenue the previous half-year, so it's like HH 2.0 had to make up that difference a bit, of about £6m.  But for a company that's been growing 30% to 40% pretty regularly, the fact that I have to split hairs over £6m shows HH 2.0 was less impactful than I had hoped.

 

Now this is where it gets interesting about what Brother Idaho mentioned.  The below is closer to what a stockbroker sees if he did his due diligence:

 

 

This graph should seem similar to many Frateri here on Bolter & Chainsword.  Top line is Revenue, sales, amount of players x how much they bought, in British pounds as Games Workshop is a British company.  The trend has generally been a growth spike with a new edition of 40k, then leveling off.

 

With the latest 2023 full year Revenue numbers, at British pounds, 30k looks like a whole new 40k in terms of growth!  But also notice Operating Profit is flattening out despite another year of seeming record Revenue growth.  Profit is ultimately the real Victory Points, and that would concern the CEO.

 

Btw, this is the only reason I even mentioned Memphis, Tennessee before, because they already have a warehouse there for their biggest and fastest growing market: North America.  I'm honestly surprised you guys took more interest in that than a potential Battlefleet Gothic: Horus Heresy.  The significance of that is:

 

 

Games Workshop, a thoroughly British company, is twice as big in North America than it is in the UK, and growing faster  So GW is taking that sweet, sweet American petrodollar currency and converting it into a weakening British pound.  This trend will probably continue and will be propping up GW for awhile.

 

It's like 30k caught a lucky break coming out at a time when any net exporter out of the UK would look particularly good.

 

Thus, my answer to Brother Idaho's questions:

 

I think AoS and 30k will remain flagship products alongside 40k.  As players, we think in terms of product lines: AoS, 30k and 40k, the latter being the golden goose.  I think of Epic and even The Old World as supplementary things.  GW doesn't want 1 to replace another, if only because they want you to buy them all.

 

If production capabilities continue to be limited and if, say, Epic turns out to be a higher gross profit margin item...AND it was better received than AoS or actual 30k...then GW honestly may consider turning Epic into a flagship item.  Keeping in mind Revenue shot up but Profit was flat this year...very intersting idea.

 

(I don't think necessarily that'll happen, but I really like that sort of creative thinking, open to all possibilities.)

 

But to an investor, he wouldn't think in terms of AoS/30k/40k, he would more likely think in terms of UK, Europe, North America...with North America being the golden goose.  He wouldn't ask, "What new Marines are you going to release?"  Tbh, he'd be like, "What are your plans for expanding even faster in North America?"

 

13 hours ago, Nephaston said:

Not to mention it's one of the good parts about the UK.

 

Brother Nephaston, believe it or not, you might have just described GW CEO's strategy.  He looks so good in comparison to other UK CEOs by virtue of Made in Nottingham, But Sold Elsewhere.  As long as he keeps taking in US dollars, paying his staff their salaries and investors their dividends in British pounds, he looks golden.

 

If anything, I'm afraid that'll make GW rest on its laurels and stagnate again like before.  As you can see above, it's an easy trap to fall into.

 

Brother @Arkhanist, ControllEric had this hilarious catchphrase.  He's like, "The most importance finance skill I look for in a new hire is SAP."  ERP experience is what this CFO values.  I always found that hilarious.  Also, I've been wondering what is going on with this neverending ERP project at GW.

 

[Scribe]

7 minutes ago, N1SB said:

Btw, this is the only reason I even mentioned Memphis, Tennessee before, because they already have a warehouse there for their biggest and fastest growing market: North America.  I'm honestly surprised you guys took more interest in that than a potential Battlefleet Gothic: Horus Heresy.

 

Speaking only for myself, any new release is unfortunately less of a concern than the delivery side, because for a long time now we cant even buy the products we want.

 

If Epic is as hamstrung as other releases have been, I'm going to be quite upset.

[Misterduch]

1 hour ago, N1SB said:

 

Good point making no assumptions, taking nothing for granted.  I'll share what I see.  Brother Idaho, please note from your astute questions I can tell you already know most of the following, I'm just repeating this for the sake of everyone else just joining the conversation.

 

Remember that I love 30k.  This is the preamble from the Half-Year Report BACK in January, which is interesting to us because it represents the launch window.  If you remember during that time, all the attention was on HH 2.0, the refreshed World Eaters only came afterwards.

 

 

HH 2.0 was indeed "launched successfully in the period reported", meaning it arrived on schedule, so it's technically true!  It was "enthusiastically received by" those that bought it!  But just looking a bit closer, remembering "in the period reported" the British pound plummeted, we see a whole different story:

 

 

Games Workshop, who's been growing 30% to even 40% year-on-year growth...stayed flat when looking at Revenue at constant currency, from £211.6m to £211.7m.  At the time, I said I could see the size of HH 2.0 being bigger than that of AoS, but it turned out it was inflated by a weak British pound.

 

Now, there was MORE licensing revenue the previous half-year, so it's like HH 2.0 had to make up that difference a bit, of about £6m.  But for a company that's been growing 30% to 40% pretty regularly, the fact that I have to split hairs over £6m shows HH 2.0 was less impactful than I had hoped.

 

Now this is where it gets interesting about what Brother Idaho mentioned.  The below is closer to what a stockbroker sees if he did his due diligence:

 

 

This graph should seem similar to many Frateri here on Bolter & Chainsword.  Top line is Revenue, sales, amount of players x how much they bought, in British pounds as Games Workshop is a British company.  The trend has generally been a growth spike with a new edition of 40k, then leveling off.

 

With the latest 2023 full year Revenue numbers, at British pounds, 30k looks like a whole new 40k in terms of growth!  But also notice Operating Profit is flattening out despite another year of seeming record Revenue growth.  Profit is ultimately the real Victory Points, and that would concern the CEO.

 

Btw, this is the only reason I even mentioned Memphis, Tennessee before, because they already have a warehouse there for their biggest and fastest growing market: North America.  I'm honestly surprised you guys took more interest in that than a potential Battlefleet Gothic: Horus Heresy.  The significance of that is:

 

 

Games Workshop, a thoroughly British company, is twice as big in North America than it is in the UK, and growing faster  So GW is taking that sweet, sweet American petrodollar currency and converting it into a weakening British pound.  This trend will probably continue and will be propping up GW for awhile.

 

It's like 30k caught a lucky break coming out at a time when any net exporter out of the UK would look particularly good.

 

Thus, my answer to Brother Idaho's questions:

 

I think AoS and 30k will remain flagship products alongside 40k.  As players, we think in terms of product lines: AoS, 30k and 40k, the latter being the golden goose.  I think of Epic and even The Old World as supplementary things.  GW doesn't want 1 to replace another, if only because they want you to buy them all.

 

If production capabilities continue to be limited and if, say, Epic turns out to be a higher gross profit margin item...AND it was better received than AoS or actual 30k...then GW honestly may consider turning Epic into a flagship item.  Keeping in mind Revenue shot up but Profit was flat this year...very intersting idea.

 

(I don't think necessarily that'll happen, but I really like that sort of creative thinking, open to all possibilities.)

 

But to an investor, he wouldn't think in terms of AoS/30k/40k, he would more likely think in terms of UK, Europe, North America...with North America being the golden goose.  He wouldn't ask, "What new Marines are you going to release?"  Tbh, he'd be like, "What are your plans for expanding even faster in North America?"

 

 

Brother Nephaston, believe it or not, you might have just described GW CEO's strategy.  He looks so good in comparison to other UK CEOs by virtue of Made in Nottingham, But Sold Elsewhere.  As long as he keeps taking in US dollars, paying his staff their salaries and investors their dividends in British pounds, he looks golden.

 

If anything, I'm afraid that'll make GW rest on its laurels and stagnate again like before.  As you can see above, it's an easy trap to fall into.

 

Brother @Arkhanist, ControllEric had this hilarious catchphrase.  He's like, "The most importance finance skill I look for in a new hire is SAP."  ERP experience is what this CFO values.  I always found that hilarious.  Also, I've been wondering what is going on with this neverending ERP project at GW.

 

 

So TL:DR HH 2.0 wasn't as much of an success as we all wanted it to be, but its not in the red zone risking abandonment?

[Ahzek451]

1 hour ago, N1SB said:

 

Games Workshop, a thoroughly British company, is twice as big in North America than it is in the UK, and growing faster  So GW is taking that sweet, sweet American petrodollar currency and converting it into a weakening British pound.  This trend will probably continue and will be propping up GW for awhile.

 

Franky that would be the achilles heal to it all, a lot of talk of potential projected weakening of the petrodollar(talks of russia, china, and saudi in discussion of using a different currancy than the dollar for trading oil) in the not to distant future could throw a wrench into this. But in that case, warhammer would be a lot less of a concern to many. 

Edited July 26, 2023 by Ahzek451

[DemonGSides]

20 minutes ago, Misterduch said:

 

So TL:DR HH 2.0 wasn't as much of an success as we all wanted it to be, but its not in the red zone risking abandonment?

Pretty much.  If they had lost their profit margins during that time we should be concerned, but HH 2.0 releasing when it did just happened to be a terrible time due to the entire global market being slammed by inflation, and it still technically made money, so not the best possible showing, but also not a big fat dud.

People like power armor.  A lot.

[Redcomet]

Considering the cost of living crisis in Europe and UK in particular this last year, and Brexit really being felt, is anyone surprised that the numbers look the way they do? I wonder if there are any luxury product manufacturers that have had a year as good as the previous two. Also bear in mind that the missive Covid-work from home boost is over, things where bound to take a hit. And not to forget that the stock market is a petulant child at the best of times.

 

I think the real test over the next year is whether they can fix their supply chain issues, and actually have enough new products for people to buy. 
 

If Epic HH becomes a train wreck in this way, I can see many having this as the straw that broke the camels back, and just give up. 
 

GW also have more and more competition each year, that each nibble at its heals. Para Bellums Conquest and Star Wars Legion and Shatterpoint are all picking up steam. Shatterpoint in particular seem very popular. So popular in fact that I think GW would do good in looking at adopting a game similar. A new Inquisitor would fit well here. 4 man warbands, two pr side. 

6 minutes ago, DemonGSides said:

Pretty much.  If they had lost their profit margins during that time we should be concerned, but HH 2.0 releasing when it did just happened to be a terrible time due to the entire global market being slammed by inflation, and it still technically made money, so not the best possible showing, but also not a big fat dud.

People like power armor.  A lot.

Space Marines sell. And the HH mega fans are a very affluent lot, seeing that they have more or less kept FW afloat for years.

[Marshal Rohr]

Games Workshop is in no way threatened by or competing with Atomic Mass. They have revenue in the single digit millions. Just looked up the other companies under the Embracer/Asmodee umbrella, and in no way shape or form are those other games impacting GW financials dangerously. 

 

18 hours ago, N1SB said:

 

Good point making no assumptions, taking nothing for granted.  I'll share what I see.  Brother Idaho, please note from your astute questions I can tell you already know most of the following, I'm just repeating this for the sake of everyone else just joining the conversation.

 

Remember that I love 30k.  This is the preamble from the Half-Year Report BACK in January, which is interesting to us because it represents the launch window.  If you remember during that time, all the attention was on HH 2.0, the refreshed World Eaters only came afterwards.

 

 

HH 2.0 was indeed "launched successfully in the period reported", meaning it arrived on schedule, so it's technically true!  It was "enthusiastically received by" those that bought it!  But just looking a bit closer, remembering "in the period reported" the British pound plummeted, we see a whole different story:

 

 

Games Workshop, who's been growing 30% to even 40% year-on-year growth...stayed flat when looking at Revenue at constant currency, from £211.6m to £211.7m.  At the time, I said I could see the size of HH 2.0 being bigger than that of AoS, but it turned out it was inflated by a weak British pound.

 

Now, there was MORE licensing revenue the previous half-year, so it's like HH 2.0 had to make up that difference a bit, of about £6m.  But for a company that's been growing 30% to 40% pretty regularly, the fact that I have to split hairs over £6m shows HH 2.0 was less impactful than I had hoped.

 

Now this is where it gets interesting about what Brother Idaho mentioned.  The below is closer to what a stockbroker sees if he did his due diligence:

 

 

This graph should seem similar to many Frateri here on Bolter & Chainsword.  Top line is Revenue, sales, amount of players x how much they bought, in British pounds as Games Workshop is a British company.  The trend has generally been a growth spike with a new edition of 40k, then leveling off.

 

With the latest 2023 full year Revenue numbers, at British pounds, 30k looks like a whole new 40k in terms of growth!  But also notice Operating Profit is flattening out despite another year of seeming record Revenue growth.  Profit is ultimately the real Victory Points, and that would concern the CEO.

 

Btw, this is the only reason I even mentioned Memphis, Tennessee before, because they already have a warehouse there for their biggest and fastest growing market: North America.  I'm honestly surprised you guys took more interest in that than a potential Battlefleet Gothic: Horus Heresy.  The significance of that is:

 

 

Games Workshop, a thoroughly British company, is twice as big in North America than it is in the UK, and growing faster  So GW is taking that sweet, sweet American petrodollar currency and converting it into a weakening British pound.  This trend will probably continue and will be propping up GW for awhile.

 

It's like 30k caught a lucky break coming out at a time when any net exporter out of the UK would look particularly good.

 

Thus, my answer to Brother Idaho's questions:

 

I think AoS and 30k will remain flagship products alongside 40k.  As players, we think in terms of product lines: AoS, 30k and 40k, the latter being the golden goose.  I think of Epic and even The Old World as supplementary things.  GW doesn't want 1 to replace another, if only because they want you to buy them all.

 

If production capabilities continue to be limited and if, say, Epic turns out to be a higher gross profit margin item...AND it was better received than AoS or actual 30k...then GW honestly may consider turning Epic into a flagship item.  Keeping in mind Revenue shot up but Profit was flat this year...very intersting idea.

 

(I don't think necessarily that'll happen, but I really like that sort of creative thinking, open to all possibilities.)

 

But to an investor, he wouldn't think in terms of AoS/30k/40k, he would more likely think in terms of UK, Europe, North America...with North America being the golden goose.  He wouldn't ask, "What new Marines are you going to release?"  Tbh, he'd be like, "What are your plans for expanding even faster in North America?"

 

 

Brother Nephaston, believe it or not, you might have just described GW CEO's strategy.  He looks so good in comparison to other UK CEOs by virtue of Made in Nottingham, But Sold Elsewhere.  As long as he keeps taking in US dollars, paying his staff their salaries and investors their dividends in British pounds, he looks golden.

 

If anything, I'm afraid that'll make GW rest on its laurels and stagnate again like before.  As you can see above, it's an easy trap to fall into.

 

Brother @Arkhanist, ControllEric had this hilarious catchphrase.  He's like, "The most importance finance skill I look for in a new hire is SAP."  ERP experience is what this CFO values.  I always found that hilarious.  Also, I've been wondering what is going on with this neverending ERP project at GW.

 

Just to clarify, are you saying the release of Horus Heresy wasn’t successful because of economic churn or because no one bought it?

Edited July 26, 2023 by Marshal Rohr

[Emperor Ming]

So they consider war+ a success then

 

But also