Annual Report 2022 - 2023

[N1SB]

6 hours ago, Marshal Rohr said:

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

 

I believe Horus Heresy wasn't the success we (or GW) thought it'd be because way fewer than expected people bought it.

 

See, I agree that Power Armour is popular, so why wasn't it selling more?  People would buy Power Armour, bad economic conditions be damned, and they're buying Leviathan now.  Ironically, HH 2.0 looks good because the rest of the UK economy looks so bad.  Someone in FW is trying to figure this out, as we are.

 

I showed that Revenue at constant currency figure because it's not the stock market, it's not currency number games, that's a real reflection.

[Cactus]

HH2 would sell better if more of the units people want were available. Breachers, assault squads, something that isn't mark VI etc.

 

I can believe Battlefleet Heresy is in the works but if it launches next year it won't be because of anything that's reflected in this annual report. The lead times are too long.

[OttoVonAwesome]

23 hours 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?

I'm already there man. My philosophy used to be if they don't make it I'll print it now after the recent nuking of half my tournement list and my latest trip to the webstore and seeing 90% of the Space Marine line up out of stock well my new mantra is if I can print it I will.

 

Been saying for awhile now they need to start offering stl's to those customers that are interested in them and especially now that they can't keep up with customer demand in the slightest they had better start or others will fill that gap and despite constant waves of copyright strikes they will never win that fight without competing directly. The tournement players in my area all had 3-d printed Lionel Jhonson's when the botched that release so it's already been effecting thier bottomline.

 

If I were a stakeholder I would not be happy at all about this report and as a customer seeing pretty clear evidence that production capacity is effecting rules support I'm even less happy. I'm more excited these days about new stl's than I am GW's releases cuase I know I'll have to play whack a mole in the webstore or go on a scavenger hunt across town to find anything. I rarely set foot in a gamesworkshop  cuase most of thier stock is kept online now and there's only a handful of the most basic kits available and they are usually out of stock as well. I can't even buy the terrain needed to get my tournement board set up to the new standard cuase it just doesn't exist anymore even. How do they keep releasing major new games in the midst of massive production shortages and not increase production it's absolutely mind boggling. 

 

9 hours ago, Cactus said:

HH2 would sell better if more of the units people want were available. Breachers, assault squads, something that isn't mark VI etc.

This right here. The line is in transition it's very difficult to make the army you want without 3-d printing and 3rd party. Even if production wasn't focused on tanks before anything else it won't gain any real steam until there's more variety available and that includes armies available in plastic like Mechanicum and Solar Auxilia. Old World is going to have the exact same problem especially if much of the line relies on very old kits so we better hope GW realizes that these are sleeper products and gives them the time to actually grow given the very limited means they have to expand them.

[Black Cohort]

I also think MkVI was a weird armour mark for a HH starter set.  In my experience HH players are, on average, much bigger on making a force to represent their interpretation of a legion, and that often involves being picky about armour Mk, and lots of upgrade kits and conversions.  In my opinion, except for a few legions, MkVI is behind MkII through MkV for use in the heresy.  Maybe not MkII, but certainly the rest.  I realize they did MkIII and MkIV in plastic relatively recently, but I think it still impacted sales.

 

And I agree with the people saying too many units are still lacking.

[Marshal Rohr]

It’s anecdotal but I know at least three new players who don’t like 40K, got all the old black books on the high seas, and are waiting to do anything until they get Mark 2 and 3. They got some dreads and a few tanks, but don’t really wanna invest until the armors and special units like Breachers are plastic 

[MegaVolt87]

10 hours ago, Marshal Rohr said:

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. 

 

Competition has lessened for sure. Privateer Press has written itself out of the race and battlefront minitures has had its lunch eaten by Warlord/ bolt action. 

 

Production wise, I think it's an inevitably there will be production in the US. Texas has incentives as I understand it for companies going to the state? Wildcard- setup production in Mexico, ship back over the boarder to the US. 

 

Stock availability, the staples appear to be regularly topped up, same with starter type products, new releases seem to be the production priority along with the staples/ starter class products. If you want to dodge the stock issues for new releases, pre-order from GW direct. Hasn't failed me once. I shop around at independent LGS for the rest/ low priority purchases. 

 

Edit- GW also left money on the table by not cross selling HH products in 40k, the firstborn great replacement is in gear again. 

Edited July 27, 2023 by MegaVolt87

[Nephaston]

So we need to revisit the Heresy numbers once Mk3 (and jumpy Mk6) drops this year and the roster gets filled out, because for some units I can absolutely see that even geedubs wants them with a specific armour mark in mind (like breachers and mk3).

[Marshal Rohr]

I don’t think you will see real engagement with the Heresy until there are more armor marks for basic troops and the more popular specialists like Breachers and Destroyers, even if they come as upgrade sprues. So much of the appeal of Heresy is “dressing up” your models how you want. While I feel bad that whoever thought Mark 6 would milk nostalgia didn’t see that pan out, I am glad the Mark 3 indicates they are at least going to try to do the other suits. I think there will be a lot of people who don’t wanna go all in on Primaris dabble with Heresy, the game has been out for a decade. Resin aside, oldmarine players who like oldmarines wouldve joined the Heresy before now. I think LI, Titanicus, and Necromunda will be the last refuge for people who want to stick with 40K as a hobby but have no interest in 40K itself. We won’t see that impact all at once, but if they stay profitable overtime, that’s likely the core consumer. 

Edited July 27, 2023 by Marshal Rohr

[SkimaskMohawk]

Yea, as everyone is chiming in to say, a parade of vehicles and then a couple resin consuls/vehicle upgrades really dampened the appeal of buying into it. Especially when the majority of the legions are melee focussed and the majority of vehicles suck. 

 

Speaking of balance, maybe launching without all the factions was another critical error. You went from marines, blackshields, mechanicum, Custodes, daemons, solar aux, and militia to...marines. We're still waiting on daemons and blackshields over a year after the game releases, and the power levels are also horrifically skewed; 40k 10th has had deeper bakance passes and FAQs so far than HH 2nd.

 

 

 

[N1SB]

Ya, back in HH 1.0, I made a point of using only Mk III armour.  To use Mk VI and VII was like what's even the point of playing 30k.

 

I played Shattered Xth so I used our Breachers, the Immortals, with their big Iron Hands logo shields, to denote my Sergeants in Artificer Armour.

 

Good times.  I think you guys are onto something here.  You give me those Mk VIs, I'm more likely to do a Badab War army than 30k.

[MegaVolt87]

2 hours ago, N1SB said:

Ya, back in HH 1.0, I made a point of using only Mk III armour.  To use Mk VI and VII was like what's even the point of playing 30k.

 

I played Shattered Xth so I used our Breachers, the Immortals, with their big Iron Hands logo shields, to denote my Sergeants in Artificer Armour.

 

Good times.  I think you guys are onto something here.  You give me those Mk VIs, I'm more likely to do a Badab War army than 30k.

 

Vouching for this. All my IW power armoured Sarge's use converted resin IH tactical squad from FW. 

[Bung]

5 hours ago, MegaVolt87 said:

 

Production wise, I think it's an inevitably there will be production in the US. Texas has incentives as I understand it for companies going to the state? Wildcard- setup production in Mexico, ship back over the boarder to the US. 

 

Stock availability, the staples appear to be regularly topped up, same with starter type products, new releases seem to be the production priority along with the staples/ starter class products. If you want to dodge the stock issues for new releases, pre-order from GW direct. Hasn't failed me once. I shop around at independent LGS for the rest/ low priority purchases. 

 

I doubt GW will do an US production facility.

The only companies doing an US factory did that for 2 reasons.

Import taxes or their customer demands Just in Time Delivery.

There isnt enough pressure or value for GW to do that.

It probably would be cheaper to do a factory in east Europe and still ship the stuff to the US as long as GW doesnt have to pay high Import taxes.

 

[depthcharge12]

14 hours ago, N1SB said:

 

I believe Horus Heresy wasn't the success we (or GW) thought it'd be because way fewer than expected people bought it.

 

See, I agree that Power Armour is popular, so why wasn't it selling more?  People would buy Power Armour, bad economic conditions be damned, and they're buying Leviathan now.  Ironically, HH 2.0 looks good because the rest of the UK economy looks so bad.  Someone in FW is trying to figure this out, as we are.

 

I showed that Revenue at constant currency figure because it's not the stock market, it's not currency number games, that's a real reflection.

I know it is verboten here, but I suspect that this is due to heresy gamers buying recasts and doing their own 3d prints. Many of the guys I game with have fully non FW/GW armies. Their main reasoning: cost.

 

The hobby being expensive comes at a surprise to no one, but it’s hit that tipping point of people finding alternatives instead of buying the flagship product. I don’t have an inside cost accounting perspective into GW to say whether their price structure is “fair,” but that doesn’t matter either way as the crowd would rather find alternatives.

 

Ironically, I find the only way GW might be able to generate more sales is newer units/models that give them a lead time before the 3d modelers and recasters have a chance to catch up. I think even the most penny pinching of the heresy crowd will shell out for a FW/GW new unit if it has enough allure.

 

TLDR: Make the dang Isstvaan drop legion praetors already :P it’s been 10 years.

[Firedrake Cordova]

=][=   Friendly reminder not to veer into the the pros and cons of American/British production again, and to stay on the topic of the financial news. =][=

[Petitioner's City]

13 hours ago, Black Cohort said:

I also think MkVI was a weird armour mark for a HH starter set.  In my experience HH players are, on average, much bigger on making a force to represent their interpretation of a legion, and that often involves being picky about armour Mk, and lots of upgrade kits and conversions.  In my opinion, except for a few legions, MkVI is behind MkII through MkV for use in the heresy.  Maybe not MkII, but certainly the rest.  I realize they did MkIII and MkIV in plastic relatively recently, but I think it still impacted sales.

 

And I agree with the people saying too many units are still lacking.

 

I sometimes wonder if it had been a "one of each" sprue, it would have been better? With 5 marines on a sprue, we could have had one of each major mark (2, 3, 4, 5, 6) - then with 40 marines in the starter, that would be 8 of each mark, with the capacity of helmets to hide the MkVI as MKV, or hide MkII as III, or MkIV as MkV, etc. I know it would have been a weird one, but I really wish there had been something like that - a true universal heresy sprue.

 

Edit - Heck it could have had even a MkVII inclusion as a special Terra thing.

Edited July 27, 2023 by Petitioner's City

[RikuEru]

On 7/25/2023 at 7:16 PM, N1SB said:

I bow my red-robed head most deeply in humility, especially since I made a mistake last time (that I've since been rectifying).

 

My knowhow comes from me being a Hobbyist 1st, a Techpriest 2nd and...way at the end of the list, a former investment banker.

 

So let's talk about you.  Let's talk about me.  Let's talk about this thing we share we call The Hobby.

 

 

+++ My Long Debate With a Fellow Hobbyist Who Was a CFO +++

 

 

I've a friend, ControllEric.  Aside from being a Regional Financial Controller (basically the CFO for a continent), he actually played Controller Wizards in Dungeons & Dragons, thus his nickname.  We met over a D&D campaign and, naturally, I got him into Warhammer...and of course he's a better player than me now.

 

He and I have had this, until recently, an unresolvable disagreement about how far Warhammer can grow.  With both of our backgrounds in finance, we look at Games Workshop's revenue just as an indicator of How Many Players x How Much Money They Spend.  We follow the same stream of thought, but diverge here:

• ControllEric: Warhammer is a niche thing, thus it will cap out because there are only so many potential players
• Me: in the history of everything that is mainstream, there was a time when it was considered a niche thing

He moved back home a year back, but he visited just 2 weeks ago, and we decided we were BOTH WRONG.  Here's the real limitation (and will be for awhile):

 

 

ControllEric was noticing things like Brother Henry Cavill discussing this niche thing we do on mainstream talk shows, an Amazon deal, but niche vs. mainstream isn't as big a deal as demand vs. supply.  What neither of us foresaw was how demand was outstripping supply with all the Temporarily out of stock Online.

 

You remember how Games Workshop said they're putting everything on creating Leviathan sets so everyone who wants one will get one.  If there was no such production limitation, they wouldn't have to say something like that; they want to sell more Leviathan AND everything else.

 

Then limited Lion El Johnson and Commander Farsight models.  I went to the Games Workshop site the other day and saw a timer to order those.  It's like buying those minis is harder than getting tickets to Elton John's last concert.

 

Put more simply, let's say Warhammer explodes with an Amazon streaming show, more people will be interested in it than ever before!  Yet it won't matter to The Hobby or Games Workshop or its investors if they've got no more miniatures to sell them.  Even with an amazing TV show, this will be the showstopper.

 

 

Here's a pic of ControllEric when he came back.  I miss him.  He's way smarter and more experienced than me.  I feel like the Joker without Batman.  On this topic, he went online, then to Japan, trying to get a Lion El Johnson mini.  I got him one as a present moments before this photo.

 

So what does this icebreaker of a story have to do with Games Workshop's annual report released just hours ago?  It's this:

 

 

+++ Here's What I Was Afraid Of (But GW CEO Is Not Wrong) +++

 

 

 

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

The problem is the UK economy right now is very unstable.  It's like when we got the 1st Indices for 10th ed and we're like "they're going to nerf this thing with Deathwatch's Devastating Wounds, right?"  We didn't leap to buy anything, we're like "yeah...I'll just play with the armies I got while things settle."

 

And I think that's how Games Workshop feels right now.  Our Brothers in the UK already know this, but for those outside the UK, there's a lot of discussion about Interest Rates about to go up.  The UK uses Variable Mortgages, meaning the house payments might shoot up, beyond people's means to pay them.

 

So in the same way it's a really bad time to think about buying a house in the UK, it's a bad time for Games Workshop to buy another factory.

 

(If anything, I'd be thinking of building a factory in Memphis, Tennessee, USA, to diversify.  But it's equally bad for Games Workshop at this moment.)

 

Both Timperial Guard in my meta and Brother Green Scorpion here, who have 1st-hand experience, told me there have been advances in mould injection technology to do more with less, but based on how many things are Temporarily out of stock Online, empirical evidence suggests it's not enough.

 

In the meantime, it really sucks!  What am I going to do with my Aeronautica Imperialis squadron that I've got a 90%+ win rate with?  But at least we got Epic, right?  I'll return to this later, but in the meantime, just something more interesting for here on Bolter & Chainsword...

 

 

+++ We Totally Accurately Estimated Warhammer+ Subscriptions +++

 

 

 

We actually calculated out that Warhammer+ had about 100,00 players.  I remember we came from both directions:

• A previous report mentioned how many views there were, and you guys figured it out via content x user views
• I just looked at a line item I thought was the Warhammer+ revenue and divided it up by the time period

See?  Revenue isn't really about money, it's really about people.  The real skill is to never lose sight of that.  Great job, everyone, we totally saw through it.

 

 

+++ As For the Actual Earnings Report +++

 

 

 

Reminder that Games Workshop's financial calendar begins in June.  This means 2023 includes the period from Horus Heresy 2.0, but NOT 10th ed 40k.

 

So I mentioned I made a mistake and how I was rectifying it, let me show you where so you can avoid my same mistake.  Revenue is called the Top Line because it's literally the top line, £445.4m from £368.8m sounds awesome, right?  That's like 20% growth, which is amazing, and typical for Games Workshop in recent years.

 

However, with the UK economy in turmoil, the real numbers are Revenue at constant currency, £447.3 from £414.8, which sounds less awesome.  That's like 8% actual growth.  However, the UK's Gross Domestic Product is expected to grow a measly 0.3% this year, so Games Workshop is doing decently considering.

 

For comparison's sake, Dungeons & Dragons the game is estimated to be about £100m, while Magic: the Gathering is closer to £1 billion.

 

Where did I screw up?  Last Half-Year Report that reflected the release window for Horus Heresy 2.0 looked really good at 1st, but only because it was due to a political situation that crashed the UK economy, making the British pound plummet.  With Games Workshop using US dollars as its currency, it inflated their Revenue.

 

What it meant was the Horus Heresy 2.0, which I love, I've changed to a World Eater Fury of the Ancients List now, just kept actual, real money Revenue flat.  Games Workshop hasn't had that lack of growth since before Age of Sigmar 1st edition General's Handbook.  I was more upset about the state of 30k than my error.

 

I also mentioned before, and I still believe, that Horus Heresy 2.0 doesn't YET have the same magic as when the Black Books came out, and I'd come to this board to hear what Mr. Parker, Lady Atia, Brother Valrak share what happened at the latest Horus Heresy Weekender.  But that can change, I have genuine hope for 30k.

 

What I don't have hope for is the above no more factory expansion situation.  That's an honest to cog limitation.

 

I am sincerely concerned that Games Workshop will just rely on further price increases beyond the recent ones to grow.  However, Games Workshop seems to have some sensitivity towards their UK home-base customers if nothing else, talking about the inflating cost of living, so that may stay their hand.

 

This leads to the following thoughts...but there may be a silver lining to these coming storm clouds.

 

 

+++ My Very Optimistic But Logical Prediction +++

 

 

Did you guys wonder as I did why, after pushing Horus Heresy 2.0 so hard, they shoved so much of those products in 40k Legends?  Games Workshop finally released a plastic Leviathan Dreadnought as well as other 30k Vehicles, don't you want to sell more?  It's like 30k and 40k are competing against each other.

 

It made me think of what I observed working in Big Tech.  We didn't just have 1 monopoly, we had multiple monopolies...and I actually fought with my colleagues to sell my monopolistic product over theirs, we wasted more of our time fighting amongst ourselves than against our competitors.

 

I remember this incident when 2 Product Managers were fighting over who could print hundreds of basically brochures on the office printer.  A director had to settle that dispute by asking not just which would potentially make more money, but which deals were more certain.  Revenue vs. Opportunity Cost for damn pamphlets.

 

I imagine the equivalent happening in Nottingham right now.  Like some Main Studio manager and some FW manager are fighting for the limited mould injection machines, like the Recruit Edition version of the Leviathan set vs. the coming Epic scale Legions Imperialis starter set are competing against each other.

 

It's no longer about just how much Revenue, but how little Opportunity Cost.  So what's the optimal solution?  2 categories:

• Whatever they make, they want maxed out sales, meaning the most they can sell and with nothing left over
• They also want something that can fit on the fewest sprues possible, less factory time, more efficient use

Epic made perfect sense.  Fans clamoured for it, plus they can fit a lot of teeny weeny Mareens onto a sprue.  I mean, look at this:

 

 

I believe that was the sort of logic that brought back the 1st Specialist Game, Blood Bowl.  2 sprues was a whole team, it's low tier, but I'm still using the Nurgle Team.  It was licensed to become a computer game, they're coming with the 3rd one now.  Games Workshop is looking for these safe, cheap bets again.

 

Likewise, the popularity of Total War: Warhammer probably lead to The Old World Returns.  That'll be more than 2 sprues and I know that's Fantasy, but did you notice they're really just doing Bretonnians and Tomb Kings, than the rest they're like "buy the AoS range so we don't have to print more."

 

So what's a proven property that had a successful computer game adaptation, that fits on the minimum amount of sprues?  Spoiler tag:

 

  Reveal hidden contents

My prediction, which sounds crazy so I won't bet my life on it, but I honestly believe is what's next is that this time next year we'll see previews of:

 

BATTLEFLEET GOTHIC: THE HORUS HERESY

It's the 1 thing that's had already 2 computer games and you can make tiny spaceships on few sprues.  By setting it in the Horus Heresy, you can use the same models for both sides, the same logic behind Legions Imperialis.  They want something to tie them over until they can expand their factories, I think this is the best option.  There's still going to be a new AoS edition, this is on top of that, to at least push some growth.  Beyond that, I don't know, Imma go to bed now.  Hey Brother RikuEru, did you change your portrait?  Looks awesome.

 

 

It's getting late, sorry for the long post, no time to write a short one.  I don't think I'm wishlisting here, it's more like what I would do in the CEO's predicament.

 

THANK YOU FOR THAT!

That's what we've been waiting for.

 

It nestly wraps up what we all felt over the last few months, with various iterations of the Queue system, with some kits sold out within minutes and even unavailable since release.

(And let's not speak too much about Black Library releases and Limited Editions being scalped to Hell and back, else the Booklovers among the Frateri might have a breakdown...)

 

In regards to your "Prediction":

 

BATTLEFLEET HERESY!?! SPACESHIP!!! WARHAMMER SPACESHIPS! DUKING IT OUT!

YEAAAAH! You are throwing oil into my fire with that. 

...the old models still hold up REALLY WELL to this day.

It'll be amazing to see what's doable with modern 3D renders, precision moulds, etc.

(GW should look at some of the available well-produced 3D-printed modular battleships on the Third Party Market. Some amazing ideas there, even for individual modules - Frigatte Bays, Drop Pod hangars, TITAN Drop Pod Hangars, etc.)

 

...also reminded me of the model of the 20cm long Gloriana-Class "Hrafnkel" model I still have to paint...

 

Sidenote:

Yes, I changed my profile picture, to a Marine I drew myself. Thank you gor noticing :D