GW profits

[Matcap86]

23 minutes ago, phandaal said:

 

Main thing is, it is cheaper to start playing MTG than to start playing Warhammer. We can come up with a bunch of exceptions, but the basic truth is the same. It is a weird thing to derail a thread over, and attempting to split hairs over it is just embarrassing.

 

Meh no attempt here, I just saw someone positing that people are avoiding GW due to costs but jumping in on Magic, but my experience has been the other way around. 

 

Other than that the usual GW = overpriced spiel plays out as it always does. 

 

49 minutes ago, Special Officer Doofy said:

 

You can't play the game with a few marines. The hobby for most people involves playing the game. 2000 is what most people strive for, but the rules start at 1000 points in the core rules. And 1000 points is alot more than $50 even without paints or anything.

 

 

Your post here also seems like your implying it's more expensive to get into magic than Warhammer 40k because of financial reasons and your friend can't get anyone to join because if it. Magic outsells Warhammer and far more people play it. Alot of it has to do with money and cost of entry (the other half is time).

 

My point was that "the game" isn't the end all and be all of the hobby. And you can spend plenty of time with a relatively low budget on painting and building minis. Which I think is a not inconsiderate amount of GWs customer base.

 

Edit: I even seem to recall some old rumours floating around that the majority of GW customers didn't really interact with the game all that much. 

 

Edit2: By golly I even found where that rumour came from: https://www.escapistmagazine.com/gamers-only-20-percent-of-games-workshops-customers/

Edited December 8, 2023 by matcap86

[Doghouse]

56 minutes ago, N1SB said:

Special thanks to Brother Doghouse for my new forum profile pic.  I love it because it is awesome.  It just cracks me up.

 

You are more than welcome, your posts are always a pleasure to read and extremely insightful. I actually burst out full on belly laughing when I saw you had changed your forum avatar, that was a genuine genius checkmate move response and I doff my cap to you.  

 

You might not be the data-analyst we asked for but you are the data-analyst we need.

[DemonGSides]

25 minutes ago, matcap86 said:

 

Meh no attempt here, I just saw someone positing that people are avoiding GW due to costs but jumping in on Magic, but my experience has been the other way around. 

 

Other than that the usual GW = overpriced spiel plays out as it always does. 

 

 

My point was that "the game" isn't the end all and be all of the hobby. And you can spend plenty of time with a relatively low budget on painting and building minis. Which I think is a not inconsiderate amount of GWs customer base.

 

Edit: I even seem to recall some old rumours floating around that the majority of GW customers didn't really interact with the game all that much. 

 

Edit2: By golly I even found where that rumour came from: https://www.escapistmagazine.com/gamers-only-20-percent-of-games-workshops-customers/

 

Hey, the original point was that it was cheaper to start playing magic that it was to start playing in the 40k sandbox.

 

That's true, and has nothing to do with the hobby.  I'm not sure why you're yammering on about this. No one was discussing the introduction to hobbyin, because MTG isn't about hobbyin, it's about gameplay, collecting, and more grossly, financials.

 

You're comparing different things and edge casing. It's weird.

[Matcap86]

On 12/8/2023 at 4:24 PM, DemonGSides said:

 

Hey, the original point was that it was cheaper to start playing magic that it was to start playing in the 40k sandbox.

 

That's true, and has nothing to do with the hobby.  I'm not sure why you're yammering on about this. No one was discussing the introduction to hobbyin, because MTG isn't about hobbyin, it's about gameplay, collecting, and more grossly, financials.

 

You're comparing different things and edge casing. It's weird.

 

 

The original point was why people start with those different hobbies and me and another frater comparing anecdotal experiences on that front. Nobody is debating whether a card pack is cheaper than minis.

 

I'm not comparing different things, I tried to compare starting points of buying into the ecosystems of these 2 products. Magic is cheaper, of course. But GW isn't as expensive to start as you made it out to be.

 

Hence my point of people around me not buying in to Magic because while the start might be cheap. For some it's quite an investment to get fulfilment out of that hobby. Whereas the reverse might be true for some GW customers.  

 

Where you picked a combat patrol as a starting point, and me trying to point out that having a gaming ready army for a lot of people isn't the starting point of becoming a GW customer. 

Edited December 15, 2023 by TrawlingCleaner
Removed confrontational parts

[Valkyrion]

Comparisons between MtG and 40k are redundant, just like comparing Diablo 4 to Mortal Kombat would be, but blanket statements along the lines of GW are too expensive and the barrier to entry is too high are unhelpful and inaccurate.

[DemonGSides]

On 12/8/2023 at 4:32 PM, matcap86 said:

 

 

The original point was why people start with those different hobbies and me and another frater comparing anecdotal experiences on that front. Nobody is debating whether a card pack is cheaper than minis.

 

I'm not comparing different things, I tried to compare starting points of buying into the ecosystems of these 2 products. Magic is cheaper, of course. But GW isn't as expensive to start as you made it out to be.

 

Hence my point of people around me not buying in to Magic because while the start might be cheap. For some it's quite an investment to get fulfilment out of that hobby. Whereas the reverse might be true for some GW customers.  

 

Where you picked a combat patrol as a starting point, and me trying to point out that having a gaming ready army for a lot of people isn't the starting point of becoming a GW customer. 

 

Entry products was what was being discussed.

 

Your response to the guy saying 40k was expensive was directly about what it takes to play the game.

 

Is it about being able to play the game or not?  Cuz if it is, then Combat Patrol IS the cheapest way in. Just like the cheapest way to play MTG is a preconstructed deck, somewhere between $30-50, so still cheaper than even just trying to start the HOBBY of 40k.

Edited December 15, 2023 by TrawlingCleaner
Removed confrontational parts

[Halandaar]

It's also completely not the point of the thread. Like a few posts about it seemed valid (and obviously I contributed so I'll take my share of the flak) but how are we still banging on about pointless comparisons between very different hobbies a full page later? 

[Matcap86]

It'll be interesting to see when, as N1SB stated, the inability to meet demand of customers will start to impact their bottom line more. I feel like that's a problem that will have some severe impacts in the future for GW. 

 

Stuff like a lot of people being turned off by the delays and inability to buy LI means a lot less return customers on that product down the line as people look elsewhere.

 

I worry that might mean GW consolidating their product line in the future and we get less excursions into new games, which are imho some of GWs best stuff nowadays.

[Scribe]

16 minutes ago, matcap86 said:

I worry that might mean GW consolidating their product line in the future and we get less excursions into new games, which are imho some of GWs best stuff nowadays.

 

I think there is a worthwhile discussion here. I dont think there is a point in the last 2, maybe 3 years, where I have not looked at the site, and seen "Out of Stock" on something in some faction, or god forbid, a boxed game as they were categorized.

 

There has been plenty of money I have not spent, because things are simply not available.

 

How long were Chaos War Dogs out of stock? Essentially since immediately after release? Its a joke.

[Matcap86]

4 minutes ago, Scribe said:

 

I think there is a worthwhile discussion here. I dont think there is a point in the last 2, maybe 3 years, where I have not looked at the site, and seen "Out of Stock" on something in some faction, or god forbid, a boxed game as they were categorized.

 

There has been plenty of money I have not spent, because things are simply not available.

 

How long were Chaos War Dogs out of stock? Essentially since immediately after release? Its a joke.

 

Ditto. Because of this I also have a very much all or nothing mentality with purchases nowadays. I either manage to get what I want and go all in, or miss out on stuff and just discard the project entirely as there's no telling when stuff gets back in stock. Which results in me purchasing less throughout the year and investing in less side projects.

[phandaal]

18 minutes ago, Scribe said:

 

I think there is a worthwhile discussion here. I dont think there is a point in the last 2, maybe 3 years, where I have not looked at the site, and seen "Out of Stock" on something in some faction, or god forbid, a boxed game as they were categorized.

 

There has been plenty of money I have not spent, because things are simply not available.

 

How long were Chaos War Dogs out of stock? Essentially since immediately after release? Its a joke.

 

Yeah. Not sure about demand getting "pulled forward." In my case, a lot of the time I don't even bother looking because who knows when the product will be available. I move on to things I can actually get ahold of and work for my hobby time and schedule.

[EverythingIsGreat]

6 hours ago, Halandaar said:

Absolute speculation on my part here but I feel like the reason investors expected to exceed expectations (absolutely deranged sentence) is because they don't understand the product cadence?

 

Not impossible, but unlikely. The people (usually stock analysts) that make predictions about a company's sales & profits, would normally make it their business to understand the company's products. The factor that most often moves the stock price is new news. The market expects the company to have an X amount of sales and Y amount of profits thanks to said analysts reports. If their analysis/prediction proves more or less correct, that's old news, and has already been factored into the stock price.

Once the actual results are out, people who made a short-term play on the stock cash out, as the old news panned out. Others, who hedged against the predictions have to correct their position as there was no new news (such as incorrect predictions). It is likely in this case the hedge was against the predictions being more conservative than they should have been. Investors would buy more stock of the company than the predictions would suggest. Once the news is out it is obvious they had previously overbought.

[N1SB]

19 hours ago, Marshal Rohr said:

Oooh, scandalous: Frontier fumbling the ball so hard on that Age of Sigmar Game might be the culprit for the stock drop. The main GW loss was licensing, maybe?

 

I'll tell you exactly how the trading AI reacts to this, because you're certainly not wrong.  I included those Royalty Receivables lines when I saw your post.

 

8 hours ago, N1SB said:

• 40k 8th ed, came out Summer 2017
  • Core revenue UP from £70.9m to £108.9m, +34%
  • Royalties receivable UP from £3.3m to £4.2m, +27%
  • Profit UP from £13.8 to £38.8m, +181%!!!
     
• 40k 9th ed, came out Summer 2020
  • Core revenue UP from £148.8m to £186.8m, +26%
  • Royalties receivable DOWN from £10.7m to £8.7m, -19%
  • Profit UP from £59.2m to £92.0m, +55%
• 
  40k 10th ed, came out Summer 2023
  • Core revenue UP from £212.3m to £235m, +11%
  • Royalties receivable DOWN from £14.3m to £12m, -16%
  • Profit UP from £83.6m to £94m, +12%

 

(To compare, UK's GDP, meaning on average, most UK companies, etc., kinda, statistically...will grow 0.5%.  GW's growing at double digits.)

 

9th ed also has a drop in royalties receivable, licensing, but it was still no big deal, there was no reaction, because of the overall profit.  The trading algorithms are like this hivemind AI, think of a hoard of MMORPG bots.  What it responds to is just that profit number.

 

Royalties receivable are pure profit.  It's a small portion of the big picture...generally around 10%, but it's ALL profit.  That skews the AI bots.  So it probably won't pick up details such as bad reviews on the AoS RTS game, it doesn't care.  It would just look at GW's overall profits, and licensing is very sensitive to that.

 

Now, without increasing production facilities, GW will probably try to grow via licensing.  More video games, Weta Workshop collabs, etc.  Reminder that licensing is the business GW has the least control over.  GW can make better minis, better rules...but not better video games.  And it's that it's been consistently that same 10%.

 

 

So This Is How I See the Big Picture

 

 

It's like how you guys talk about list building, don't worry about Flavour of the Month, focus on the core of your army.

 

Licensing is how I consider FotM things.  Some Dataslate made some unit OP.  You KNOW the Meta is going to change from that FotM, to the point of it becoming Fear Of Missing Out.  You'll see them in tourney lists.  That's just like how the market might see GW's licensing.

 

But the next Dataslate will balance it out, you can't count on that OP unit.  That's just like how GW has limited control over royalties receivable.

 

The best thing we can do is play our actual Codex/faction/core units.  FotM comes and goes.  It's a less sexy way to think, but it's what succeeds.

 

To conclude, GW correctly separates its core revenue (the minis, the books) from royalties receivables (licensing to video games).  But the popularity of the core IS what drives royalties receivable.  It's that consistent 10% of profits.  If Warhammer is popular, than 3rd parties want to license it.

 

It's really like GW's best strategy is what you guys tell players.  Keep your head down, focus on your core army, don't be swayed by the hype.

 

I just find it fascinating.  You know GW's licensing team is aggressive.  They're not held back by things like the bottleneck in GW's manufacturing.  Yet they seem to still be bound to the destiny of overall Warhammer hobby...but of course they are, it's the same IP.  But it's like your army won't be saved by FotM.

Edited December 8, 2023 by N1SB

[N1SB]

8 hours ago, Halandaar said:

Absolute speculation on my part here but I feel like the reason investors expected to exceed expectations (absolutely deranged sentence) is because they don't understand the product cadence?

 

1 hour ago, EverythingIsGreat said:

Not impossible, but unlikely. The people (usually stock analysts) that make predictions about a company's sales & profits, would normally make it their business to understand the company's products. The factor that most often moves the stock price is new news. The market expects the company to have an X amount of sales and Y amount of profits thanks to said analysts reports. If their analysis/prediction proves more or less correct, that's old news, and has already been factored into the stock price.

 

The truism goes, "A little knowledge is a dangerous thing."  A Wisconsin farmer once admonished me, "You're just smart enough to be stupid and mouthy."

 

You guys actually are agreeing on the same thing.  Analysts, even CEOs, may only have a conversational level of understanding of their own businesses.

 

I was considered an expert in aerospace, including military, and Internet companies.  I knew exactly revenue, profits, Compound Annual Growth Rate which is average growth of those numbers, what it says in the About Us on their website...and understanding absolutely nothing about the business.  When I had to, you know, do real work in Big Tech, I finally learned stuff.  Cadence is exactly right.  It's like the rhythm of business (we actually used that term in Big Tech), the nuances.

 

 

When I Said Stupid and Mouthy, I Meant Me...and Those Like Me

 

 

And I reflect back to when I worked in a very prominent investment bank.  I was EXACTLY smart enough to be stupid and mouthy.  It's dangerous.

 

You know how dangerous?  I nearly made the following unfunny joke in my big post, what an analyst would ask a GW CEO:

 

"40k is your most successful product line.  So why don't you just do a new 40k every 3 MONTHS (instead of every 3 years)?"

 

It's not just me, I've sat in enough AGM calls to hear these facedesking levels of stupid mouthiness.  And the dude is so proud of himself.

 

The scariest thing is that, I'm starting to realise, they might be already doing that.  QUARTERLY Balance Dataslates, SEASONAL Kill Teams.

 

 

What This Article Shows Is That Time Pressure

 

 

It used to be, at the turn of the millennium, there's this quaint notion that you give a company a year to try a new thing.  We look at the Annual Report, a company announces a thing, we wait until next year's Annual Report, judge if that new thing worked.  Nowadays, that's almost quaint...results in 3 months or die.

 

Here's all these people were reacting to.  GW doesn't release Quarterly Reports, just regular, responsible trading updates, I'll literally show it to you:

 

 

^ This, right here, is the extent of their knowledge, to support exactly the points you're making.  That's all GW's released.  The world rests on eggshells.

 

But I'm actually a little bit shook that maybe GW has been under this pressure for awhile now.  Quartley Balance Dataslates and Seasonal Kill Teams exactly fit the tempo that the stock market expects, just because.  I only realised that listening to our Frateri talking about it, thanks for that dialogue, guys.

[N1SB]

7 hours ago, Valkyrion said:

Comparisons between MtG and 40k are redundant, just like comparing Diablo 4 to Mortal Kombat would be, but blanket statements along the lines of GW are too expensive and the barrier to entry is too high are unhelpful and inaccurate.

 

BUT if you guys really DO want to compare, I got some numbers for ya:
 

• D&D Revenue: about £100m
• GW Revenue: about £470m
• MtG (and I guess Pokemon) Revenue: about £1000m

 

Oh gosh, okay, I was just talking about analysts being exactly smart enough to be stupid and mouthy.  I was listening in on a conference call between the Hasbro CEO, the WotC President (she's the standout, smart lady), and an analyst.  I'm paraphrasing, but this was the type of stupid, mouthy question an analyst spouted:

 

"Wouldn't printing more MtG cards cause monetary inflation in the MtG trading market (thus drag down your profits)?"

 

That was "Street" Smart, meaning Wall Street Smart, meaning silly.  She was superimposing her world view of capital markets, where WotC was like the Federal Reserve that prints cards instead of money, affecting the economy of MtG traders.  I could hear the WotC President gritting her teeth, "No ma'am, that's not how it works..."

 

So I agree with Brother Valkyrion, some analogies are better than others.  But don't feel bad...even the pros are SO MUCH worse than this.

 

Btw, I'm using Shang Tsung from Mortal Kombat as inspiration for my 30k Fury of the Ancients Contemptor Warlord.  Better work on that.

Edited December 9, 2023 by N1SB

[Scribe]

9 minutes ago, N1SB said:

"Wouldn't printing more MtG cards cause monetary inflation in the MtG trading market (thus drag down your profits)?"

 

To be fair, there has been a question of what the fire hose of releases is doing to the MTG secondary market, and consumer...

[DemonGSides]

44 minutes ago, Scribe said:

 

To be fair, there has been a question of what the fire hose of releases is doing to the MTG secondary market, and consumer...

 

Yep, it's part of what got me out of that hobby.  Between the lack of reprints for so long, which caused stupid speculative markets to develop, to the the inundation with product, it became unsustainable.

Thankfully the chase in WH is so much less, so even as prices go up, I can still find stuff to buy that feels worthwhile.  It is trending the wrong way, though, to keep that true over the long term.

Impulsors being $80 just feels insane, if they want it to be the Razorback/Rhino replacement.

[EverythingIsGreat]

I find it hard to believe that the market would be unaware of such fundamentals as production bottlenecks and/or structural problems in ramping up production to meet demand (including the required financing). On the other hand, I don't know who follows GW, what the institutional interest is, or how ownership is distributed. In the past it was a closely held company, with a lot of equity in the hands of veteran insiders. Daily trading of its shares was minimal. The question was about the stock price fluctuation following the latest results. I am grateful about N1SB's extensive overview, but I thought the particular question could be answered in an admittedly narrow fashion.

[N1SB]

4 hours ago, EverythingIsGreat said:

I find it hard to believe that the market would be unaware of such fundamentals as production bottlenecks and/or structural problems in ramping up production to meet demand (including the required financing). On the other hand, I don't know who follows GW, what the institutional interest is, or how ownership is distributed. In the past it was a closely held company, with a lot of equity in the hands of veteran insiders. Daily trading of its shares was minimal. The question was about the stock price fluctuation following the latest results. I am grateful about N1SB's extensive overview, but I thought the particular question could be answered in an admittedly narrow fashion.

 

I hear you.  I'll share how this has ended up being the case.  So a standard line item is "property, plant and equipment".  That was my little chart.

 

(I'm also glad you noticed that.  That's exactly why I made it.  It's exactly where your attention should be, not non-news on Amazon streaming.)

 

Plain to see, standard line item, BUT if you're a software company, some app company...you have minimal property, plant and equipment.

 

Since those low physical asset, high profitability, high growth companies are now the heart of the economy...it's become quaint to look at PPE.

 

Instead, they INDIRECTLY notice that...because Revenue and Profit will flatten out when a company can't make more to sell.  THERE it's captured.

 

So they only care about, yes, The Bottom Line.  These details WILL lead to The Bottom Line.  They're quite bad at how things get there.

 

Edit - so why do I note things like PPE?  Because I came up at a time when companies generally still made their own stuff in-house.  So you can see what I said about demand exceeding supply capacity is a real thing through your own Warhammer purchases.  There's been many articles and TV clips talking about Games Workshop.  They interview analysts.  Have you ever heard them talk about this issue?  But ya, I'm just outing how old I am.

 

 

It's Like How We Talk About Weapons vs. GEQ, MEQ, TEQ

 

 

So sometimes we talk which, say, cannon turret on a tank kills kills X Guardsmen and Y Marines and Z Terminators, etc.

 

It's like a banker would know EXACTLY those X/Y/Z killed numbers...but may never, ever even look at the weapon profile.

 

 

And I Understand Your Credulity

 

 

What I reckon surprises you is, how can we as a society cede so much power to investment bankers, to Wall Street, to these "experts" who don't know anything?

 

What happened after 2008 in particular (earlier than that for a lot in the UK), the financial crisis caused the best and the brightest to leave and do other stuff.  Make their own companies, those guys would do their (bio)tech startups.  I left way earlier for a dot-com in that vein.  I did ok, so now I got time to paint.

 

Like probably how you're thinking, I just assumed they'd replace us with equally mission-oriented, take-care-with-people's-livelihoods, hard-working young turks.  They didn't; the next generation went straight to social media companies and wotnot.  What you're left are these attention-grabbing VC bro types.

 

I'm NOT trying to convince you, just that next time you watch the news, keep the above in mind.  What were celebrated tycoons mere months ago, aspirational figures even, presented as heroes advancing society in biotech, crypto, social media are going to jail, disgraced AND/OR disgracing themselves still.

 

Yes, there has been and always been Corruption.  It was offset by Competence.  So when the Corruption spills out into the open...

 

You notice I wasn't railing against corporate greed.  Greed isn't good, it simply is.  But you see the part, the missing part, is what worries me.

 

It's not just about GW.  But I do think any given Warhammer player, even a kid, who works at list-building, paints his army, takes ownership of his own project, would make a way better leader just with those...not even skills, but habits...are way better than the guys we see now.  That's why I talk about this stuff here.

 

5 hours ago, Scribe said:

 

To be fair, there has been a question of what the fire hose of releases is doing to the MTG secondary market, and consumer...

 

Then I may be mistaken, like in the longer term, you'll see the impact when players exit MtG entirely because they got so burned!

 

I can totally see the logic, even though WotC isn't involved in the 2ndary market, it WILL impact them at some point. Huh.

 

We should welcome these players with open arms into The Hobby.  Warhammer Underworld has a lot of cards.  I just like the minis.

Edited December 9, 2023 by N1SB

[Scribe]

45 minutes ago, N1SB said:

Then I may be mistaken, like in the longer term, you'll see the impact when players exit MtG entirely because they got so burned!

 

There was a very stable ecosystem, and while people complained (we are all gamers, we all complain) it was at least stable.

 

I and a lot of folks I knew got pushed out essentially with the mismanagement of the MTG ecosystem with the flood of high powered releases.

 

To bring it back to 40K, if there was an ongoing churn and power creep...well that too has driven people out of the hobby.

[Orion]

The most important fact is that MTG cards are boring bits of cardboard, innit?

[N1SB]

1 hour ago, Scribe said:

 

There was a very stable ecosystem, and while people complained (we are all gamers, we all complain) it was at least stable.

 

You literally changed my mind on this.  That analyst...and she's considered the expert in MtG and D&D, WotC's in her portfolio, knew her stuff.

 

The word you used is ecosystem.  That is my shazam.  That's like understanding not just your Codex, but the Meta as a whole, the real key.  At higher levels of Tech, we talk about this more, think more about the ecosystem (ironic, I know, since it's like a biology term) than we do software.  What we sell is a technological platform.

 

People do buy MtG cards, because the option to trade them is like part of the value.  Brother Schlitzaf also told me about it's impossible to keep up now.

 

Very interesting.  Thank you, Brother, as always.

[Scribe]

38 minutes ago, JayJapanB said:

The most important fact is that MTG cards are boring bits of cardboard, innit?

 

In the same way a model is an overpriced hunk of plastic, yes. ;)

[The Praetorian of Inwit]

I wonder when we will see production limitations start to really hit. It feels like everything is made in such small qualities. Just casually looking at the website (the old good one not the new crap one) it felt like at least half the entire product range was out of stock all the time. 

[Scribe]

30 minutes ago, The Praetorian of Inwit said:

I wonder when we will see production limitations start to really hit. It feels like everything is made in such small qualities. Just casually looking at the website (the old good one not the new crap one) it felt like at least half the entire product range was out of stock all the time. 

 

We are already there. They cannot keep everything in stock.