[DISCUSSION] GW 2024 Financial Annual Report (Prices, Production, FTSE 100)

[templargdt]

I don't think roof solar panels in the UK is really going to make a huge dent I. That electricity bill.

[Focslain]

On 8/4/2024 at 9:51 AM, templargdt said:

I don't think roof solar panels in the UK is really going to make a huge dent I. That electricity bill.

That kind of depends on the generation they have.

 

Personally I have a 24 panel system on my home and it generated 8654 Kw/h (avg 380.6 each) last year. I did a rough count on the panels ontop of Warhammer World, it seems that at the time the sat pict was taken they had not installed any ontop of Factory 2 or 3. But just on the first building there are about 1500 panels. Even taking classic english weather and just dropping them to an average of 300 kwh per panel per year, that is a decent 450K kwh they don't have to pay for.

 

Will they be able to go off grid with solar, frak no. But that was a good move to lower their overall operating costs and help the environment as a bonus. I'm sure that if they paneled all their buildings in the complex they could hit 1 mil kwh of self generation easy. Which if they are going to build another sprue factory they are going to need the extra juice buffer.

 

Also while I doubt they mentioned it in their report this time, seems that the GW/Amazon deal is in trouble as the two are butting head over how much creative control the other has. Which after the success of Fallout Amazon should just let GW take the reins. Betheda had a high control over the series and it did gang busters.

[Emperor Ming]

Build a dyson sphere, all problems solved?

[Oxydo]

On 8/4/2024 at 3:51 PM, templargdt said:

I don't think roof solar panels in the UK is really going to make a huge dent I. That electricity bill.

 

Solar panels usually pay themselves off in 10-15 years and after that it's free power. Takes a bit of load off the power grid too. It's a very sensible investment both as a company as a private individual.

[RWJP]

6 hours ago, Focslain said:

Also while I doubt they mentioned it in their report this time, seems that the GW/Amazon deal is in trouble as the two are butting head over how much creative control the other has. Which after the success of Fallout Amazon should just let GW take the reins. Betheda had a high control over the series and it did gang busters.

There is absolutely no evidence of this that I have seen whatsoever. This is all just based on a misreading and misunderstanding of what GW has said.

GW has said they entered into an agreement with Amazon to spend 12 months (starting December 2023) negotiating with them on what would be produced and the creative guidelines to be followed. That's it.

Now, people are jumping to the assumption that because we haven't heard anything yet and because December 2024 is approaching it must all be going wrong. There is absolutely no evidence to support that though. We don't know what GW and Amazon have or haven't agreed to by this point. Hell, we don't even know if they'll just extend the negotiation period.

Many of the "influencers" and Youtubers posting that the whole thing is in trouble are the same people who spread the baseless rumour that Cavill was pissed off about female Custodes and was going to walk away etc... And then for some reason news websites keep picking up on them. I would suggest ignoring them because they're mostly ragebaiting grifters.

[DemonGSides]

59 minutes ago, RWJP said:

Many of the "influencers" and Youtubers posting that the whole thing is in trouble are the same people who spread the baseless rumour that Cavill was pissed off about female Custodes and was going to walk away etc... And then for some reason news websites keep picking up on them. I would suggest ignoring them because they're mostly ragebaiting grifters.

 

Yep. Always worth taking a look at WHO is saying things, not just what they're saying.

 

Plenty of outrage grifters who loooooooooove the slightest controversy, especially if they're the ones making it up. 

[ThaneOfTas]

2 hours ago, RWJP said:

There is absolutely no evidence of this that I have seen whatsoever. This is all just based on a misreading and misunderstanding of what GW has said.

Yeah this recent trend of fear about the project isnt based on anything other than IGN having a slow news day, and youtubers needing controversy like oxygen.

 

If we get to mid December and theres still no news then MAYBE there might be cause for concern, but honestly anyone who tells you that its because Amazon want to make it "Woke" or because Henry Cavill is pissed about lore changes or something is lying to you in order to make money. Or they're really dumb. I honestly don't see a third option.

[Joe]

To be honest, I could genuinely see news dropping as late as the 24th December - as a lot of UK businesses and schools (GW included) work up until Christmas Eve.

Edited August 6 by Joe

[ZeroWolf]

3 hours ago, Joe said:

To be honest, I could genuinely see news dropping as late as the 24th December - as a lot of UK businesses and schools (GW included) work up until Christmas Eve.

I could see them doing that anyway to match the original announcement as that happened in the few days run up to Xmas.

[Focslain]

15 hours ago, RWJP said:

There is absolutely no evidence of this that I have seen whatsoever. This is all just based on a misreading and misunderstanding of what GW has said.

GW has said they entered into an agreement with Amazon to spend 12 months (starting December 2023) negotiating with them on what would be produced and the creative guidelines to be followed. That's it.

Now, people are jumping to the assumption that because we haven't heard anything yet and because December 2024 is approaching it must all be going wrong. There is absolutely no evidence to support that though. We don't know what GW and Amazon have or haven't agreed to by this point. Hell, we don't even know if they'll just extend the negotiation period.

Roger that, and sorry. 

[templargdt]

On 8/5/2024 at 2:37 PM, Oxydo said:

 

Solar panels usually pay themselves off in 10-15 years and after that it's free power. Takes a bit of load off the power grid too. It's a very sensible investment both as a company as a private individual.

Not my experience at all with solar.  I've done several bids for roof solar on our house and the break even point with the 30% tax break was over 20 years, coincidently about the lifetime of the panels. I was highly unimpressed. 

[Craig]

Not worth it's own thread but here's an article on GWs record profits and their future. Much of it is probably from the financial report.

https://www.nottinghampost.com/news/business/games-workshop-delighted-200m-profit-9460036

[N1SB]

Brothers and Sisters, I'm back, just been busy.  Sorry for the late reply.  Edit - fixing some terminology to match GW jargon.

 

Our Warhammer Store's anniversary's this month, Crusade next month.  Btw, GW's revenue is about 100x when they went public.  But the purpose of these threads has never been so much about GW's revenue as it is a barometer for the state of the Hobby, and the more I read, the more confident I am of its strength.

 

 

This report, and my accessing ALL available previous one since Games Workshop's "MBO" or Management Buyout, presents a history of GW.  Like a top McKinsey consultant who's a History PhD once admonished me, "I'm a historian.  Don't give me a data point, I want to see the trend."  Welp, I present to you the trend.

 

Remember, GW's fiscal calendar starts in the summer, around new editions come out (so no new AoS new edition here):

 

• 1999: POKEMON hits Warhammer hard...in the UK, but Warhammer also hit the U.S.!  Balanced out
• 2001-2004: LORD OF THE RINGS.  Every year a film came out GW grew ~20%...then slumped after that
• 2007: GW makes NEGATIVE profit.  Major cost-cutting, single-man stores, lasts for a decade until...
• 2015: AGE OF SIGMAR!  New fantasy range, yet growth was flat, until General's Handbook came out*
• 2018: 8TH ED 40k (w/ Plague Marines**) and GW really picks up momentum, grew 40% in a year
• 2020: 9TH ED 40k (w/ Necrons**) and 40k really seems to be the main driver, grew 31% in a year
• 2022: HEAD OF LETTUCE is not a political point, but just marks a UK government action that I won't go into here that so disrupted the market that it actually dramatically inflated GW's performance.  It's because the £GBP dropped so much that GW, whose biggest sales region is North America, made those $USD and $CAN look so much more valuable.  This trend is important as it's followed by...
• 2023: 10TH ED 40k (w/ Tyranids**) and GW grew...only 12% in a year?

 

* The AoS General's Handbook included unit points values, which the game didn't have until then.  Despite GW always proclaiming itself to be a miniatures company, apparently people really need to be able to play with them in a fair way before they would buy them.  Thus, I continue to say, GW is a Hobby company; ppl buy minis, they sell a Hobby.

 

** I use Plague Marines, Necrons and Tyranids as an easy way to identify editions, like from y'know the starter sets.  Icons borrowed from our friends at Goonhammer.

 

 

I'm really grateful for the older annual reports to be available, to see the clear effect of The Lord of the Rings trilogy compared to recent times.  Remember LotR wasn't just a great film franchise, it was a cultural phenomenon.  It won 17, SEVENTEEN, Oscars altogether.  All of Star Wars combined with all the Marvel films won 11.

 

Since the AoS 1st ed's General's Handbook, the Hobby grew faster than the bump that even LotR brought it, and I realised it thanks to...

 

 

 

 

I'm curious which line you found that stood out. Personally, I was struck by the following: "My advice is please don’t judge us on quarters. We do not manage the business to that rhythm: we monitor 12 month moving annual trends…i.e. reviewing whether we are heading in the right direction or not. It’s very difficult to change our new release schedule live in any year, it is set in stone. " (emphasis mine)

 

 

Remember how the fiscal year starts with a new edition of 40k, AoS and now, 30k?  That's what they mean, and it's fair for them to say so.

 

Some smarmy young MBA at an investment bank, like how I used to be, would ask something stupid like, "Why can't you do a major release every quarter?"  I honestly wonder if Balance Dataslates coming out every 3 months is meant to address that.  As a player, I feel minimum an edition should last 3 years, I can't relearn the rules every year much less every quarter.  Seriously, even a knowledgeable investment banker would be like, "Well, why don't you do a major Space Marine release every quarter, Ultramarines in September, Space Wolves in December, Dark Angels in March, Blood Angels in June?"  They're just trying to show off to their banker bosses, but GW does face this pressure.

 

If you've seen video games get rushed out, it's because their publishers are trying to meet these quarterly milestones.  It's like another unrelated title is not as popular as they had hoped, they try to stick another game just to plug the gap...and it usually backfires, because that rushed game fails to meet expectations due to bugs.

 

Why do new editions come out in the summer?  I remember as a kid, schoooool's...out, for, the summer!  GW can't change that, it's set in stone.

 

In thinking about your question, you helped me realise, GW doesn't work in 3 month cycles, not even annual cycles, but 3 YEAR cycles.

 

40k is, just objectively, the leading flagship product line.  So 8th ed coincided with 40%, 9th ed 31%, but 10th ed only 12%?  Is it slowing down?

 

It's the Head of Lettuce year's inflated figures that this year-on-year's growth figure.  So let's NOT use year-on-year.  Let's use 40k-on-40k.

 

<eyebrow waggle>...mmmm...hot 40k on 40k action...</eyebrow waggle>

 

By that, I mean let's look at the revenues of 40k edition release years, nothing lewd that's prohibited on BBC I mean B&C:

 

• 7th ed: released in 2014, 2015 revenue was £119.1m
• 8th ed: released in 2017, 2018 revenue was £221.3m, increase of about £100m+
• 9th ed: released in 2020, 2021 revenue was £353.2m, increase of about £130m+
• 10th ed: released in 2023, 2024 revenue was £525.7m, increase of about £172.5m+

 

8th ed was like the sudden acceleration, but 10th ed is actually faster than 9th.  That surprised me.  Partly, that's price increases for sure, but what gets my cog is my friends and I myself keep hitting TEMPORARILY OUT OF STOCK on mission critical items that halt entire projects.

 

I was just in the Warhammer Store this weekend.  Redshirt said he got 10 new guys on a Monday because of Space Marine II.  There's going to be so much in terms of cross-promotion from this point onwards that we won't get a clear reading of how healthy the Hobby is by itself.

 

TL;DR - GW has reached a new peak, but is NOT plateauing.  The Hobby stands strong, by itself, even without Space Marine II or Amazon Prime or this or that.  Because like when dealing with those really tall miniatures such as a Knight Titan, you want it to have strength enough to stand alone...and it very, very clearly does.

 

(To be clear, nothing wrong with video games or films bringing in new players, all are welcome, but I don't want to have a dependency on them.)

 

 

+++ Production Issues +++

 

 

You know how the most exciting part of a Codex, to an actual player, isn't the fluff, it's all the numbers?  The unit & weapon profiles?  Here they are:

 

 

The land (£2.7m) and building Factory 4 (£9m), let's round it out that the whole thing costs around £10+m.  That's fascinating, because...

 

 

Property, plant and equipment represent all of the facilities that GW owns.  That's like their Nottingham Office, Warhammer World, the existing Factories 1, 2 and 3.  Warhammer Stores are mostly rented retail space, so that's counted somewhere else.  Altogether, it's worth £56.5m.  Upgrading those existing things cost £15.6m.  Factory 4 is just £10+m.

 

The point is this points to GW's strategy for future development.

 

Think about Factory 4 in terms of an army list.  GW wants a cheap unit to deploy quickly on the tabletop, because it's needed.  It's not some fancy Forgeworld Superheavy, it's something light and easy like a Scout Squad.  Factory 4 is like a Scout Squad, cheap enough not to worry about, Infiltrate them on the board.

 

That suggests to me the Scout will buy time for GW to plan some major Factory 5.  I'm seeing new technologies, not just 3D printing, but Prismacast.  Maybe it'll be later, Factory 6 or 7 or 8, but Factory 4 is meant for speed to deploy.  I do think that's the right strategy (because I'm sick of TEMPORARILY OUT OF STOCK).

 

It would've been nice if Factory 4 was already up and running, but I don't blame GW or the Nottingham civil servants.  I honestly don't think Nottingham expected any organisation there to expand this fast.  I'm happy to hear this as if I heard a new player just bought another needed Objective Capture unit instead of some sexy Elites.

 

The bit I didn't expect to hear from GW's CEO is how their cost of production is 5.2%, so let's round it to 5%, say.

 

You pay £40 for a box of minis, it cost GW £2 to make.  You paid $60?  Cost GW $3.  They mentioned core sales, that's GW jargon for their miniatures specifically really, and yeah paints and stuff, but mainly miniatures is what they focus on making.  That kinda hurts to know tbh omg lol.

 

We usually don't get THIS level of clarity...the sausage maker doesn't want you to know how cheap his ingredients are.  GW CEO just told us.

 

What we usually get is something for abstract that includes all other costs, to average it out, such as the Gross Profit Margin, which reminds me...

 

 

+++ Core gross margin (GW's term), GW trying NOT to increase prices +++

 

 

Edit - core gross margin is an interesting term, a little bit of GW's own personal jargon.  The normal term in manufacturing is Gross Profit Margin.  Licensing the Warhammer IP for games and potential streaming shows is a bigger part of GW's thing.  So they separate out CORE revenue as their traditional business, like making miniatures, paints, games, etc.  Core Gross Margin is basically how much they profit on stuff GW makes themselves.

 

 

Instead of sheer production costs, this is usually how companies present that info.  Includes carriage (i.e. shipping), warehousing, etc.

 

All this affects pricing.  It happens that this is usually how manufacturers price their products.  GW wants their core gross margin at 70%.

 

It's slightly lower than that, which is why they increased prices.  GW is finding all these efficiencies as NOT to increase prices again.

 

The weirdest part is tbh "Animation".  That's weird.  It shouldn't belong here.  There IS a place for it under another section, Operating Expenditures.

 

Yeah, I know it says producing content for Warhammer+, which should go on Operating Expenditures, along with things like legal retainership fees and stuff.  It gives an explanation, but can you guys see it's something completely different than Materials costs or Warehousing and logistics?  Like the sculptors salaries do NOT go here, either.

 

That said...I'll happily take it, because it makes the core gross margin look higher, thus GW won't increase prices again.

 

But we will have to look to GW's Half-Year Report after the New Year.  GW's last price increases happened in February and May, I now realise they take stock from their Half-Year report to see if they need to adjust prices then, it just seems to be part of their business cycle.  The weird inclusion of things like animation in the equation is like a way of them trying to keep prices lower, actually...that's kinda interesting.

 

 

+++ Oh, Amazon +++

 

 

I made a joke like GW'll have a meeting with Amazon to arrange a conference call to arrange another meeting, etc.

 

 

Ah, GW's agreeing to the agreement to make a future agreement.  I see.  I think they said this last time already.

 

Again, nothing at all against this.  I saw Brother Henry Caville in an awesome cameo, that was hilarious, brilliant, genius.  But I treat this like one of those rumour mills, I'll get hyped when I can actually see something.  I'm happy for everyone who's already binged the Amazon Warhammer series, but I haven't watched it yet.

 

 

+++ Summary +++

 

 

The Hobby is strong, stronger than ever, even standing alone, not waning.  Slight bump from price increases, but solid.

 

Its limitation is production, and Factory 4 seems to be designed to deploy lightly and quickly, like Scouts.

 

GW seems to be going out of its way to avoid any price increases, at the risk of some janky maths that hurts itself to do so.

 

GW agrees to continue agreeing with Amazon until they can agree on a further agreement, with more agreements for Fantasy maybe.

 

Brothers, Sisters. now I got Yuval Noah Harari's new book about the Internet and AI.  I might not be back awhile, but my cog is always with you.

Edited September 25 by N1SB

[Joe]

Wasn't it Warhammer Fantasy, not Age of Sigmar, that Amazon had the option to expand the agreement to?

[ZeroWolf]

You've done the Emperor's work, N1SB. I don't know how you can break all that down into a way that doesn't make my head spin, but I'm glad you do it.

 

 

Wasn't it Warhammer Fantasy, not Age of Sigmar, that Amazon had the option to expand the agreement to?

I thought it was both via a vague "fantasy" properties clause, thus allowing for both Old World and AoS.

[Cactus]

Thanks as always for the educated analysis. What struck me is the commentary for Core Gross Margin. GW are spending less on holding stock in the warehouse because everything sells so quickly. So when you see that 'temporarily unavailable' project blocking message remember that your sacrifice is helping to keep the cost of products down for everyone else.

[N1SB]

 

Wasn't it Warhammer Fantasy, not Age of Sigmar, that Amazon had the option to expand the agreement to?

 

Thanks for the catch, you're right, I've edited my post, we'll just stick to their terminology.

 

But GW giving Amazon the option to further license...is like GW giving me the option to buy more minis.  Oh, I can buy Old World minis or AoS minis alongside my 40k ones?  Why thank you GW!  Would you like me to sign a Memorandum of Understanding?  Tbh I really shouldn't mock because everything I want to buy is TEMPORARILY OUT OF STOCK.

 

Srsly, do you see how much of a non-statement that is?  It's so like "we've had a productive meeting that was mutually beneficial."

[Captain Idaho]

The success of GW, from my own meagre interpretation and seemingly confirmed by greater minds here, hinges on 40K by an ever increasing margin. Of that, I dread to think how much of that relates directly to Space Marines.

 

As a public trading company, this leads me to a question I'm not sure can be answered but I'll ask anyway - is there not a chance that evil money men in charge of the company will seek to slash and cut everything bar the big sellers?

 

Speaking as a Blood Bowl, Legions Imperialis, Adeptus Titanicus (RIP?), Necromunda and Old World fan... someone who won't touch 40K anymore... is this not a genuine concern? I mean, what reason to focus on these for nostalgic reasons when they can just sell MOAR MAHRINES?

 

Regarding profit squeezing out of us pips; 70% (approximately) is obscenely over priced yet GW feels the need to operate with a mind to not letting it drop, but I have to ask - why? Why is there this need to artificially maintain such a disproportionate profit when you compare to other companies, successful other companies at that?

 

It hints at a need for it year on year as if they are looking to sell to someone at the end of a time period? Or something is coming that they expect to cause losses, like a looming threat of 3D printing or something?

 

Thanks in advance if you have time to address these questions based on your summary. 

[Emperor Ming]

Meanwhile at GW HQ

 

 

[ZeroWolf]

If I remember from one of N1SB's other informative posts, that 70% goes to funding a safety net in case of emergencies where they can fully fund the company for three months while they try to fix things. So it's a sort of rainy day fund

[Captain Idaho]

 

If I remember from one of N1SB's other informative posts, that 70% goes to funding a safety net in case of emergencies where they can fully fund the company for three months while they try to fix things. So it's a sort of rainy day fund

 

That would imply they store it all as capital hidden away in a bank somewhere, which i don't believe is true? Otherwise it just grants them time as stocks drop which is kinda what I think they're doing yes. But then why? I mean, what are they anticipating that the rest of the free world market doesn't seem to be doing?

 

Colour me a confused panda.

[ZeroWolf]

No idea there I'm afraid  I normally leave these matters to smarter people and just build/paint cool minis.

[Captain Idaho]

 

No idea there I'm afraid  I normally leave these matters to smarter people and just build/paint cool minis.

 

Same:

 

[Cactus]

IIRC the GW McDuck money pool also funds expansion. The factory upgrades are paid for with cash, not debt. This looks like it supports their stated strategy for long-term security and not being beholden to slash-and-cut accountants. Of course it only takes one ill-advised CEO to destroy the model but if the shareholders understand the strategy (they should, it's in the reports) they should prevent that.

[Toxichobbit]

 

The success of GW, from my own meagre interpretation and seemingly confirmed by greater minds here, hinges on 40K by an ever increasing margin. Of that, I dread to think how much of that relates directly to Space Marines.

 

As a public trading company, this leads me to a question I'm not sure can be answered but I'll ask anyway - is there not a chance that evil money men in charge of the company will seek to slash and cut everything bar the big sellers?

 

Speaking as a Blood Bowl, Legions Imperialis, Adeptus Titanicus (RIP?), Necromunda and Old World fan... someone who won't touch 40K anymore... is this not a genuine concern? I mean, what reason to focus on these for nostalgic reasons when they can just sell MOAR MAHRINES?

 

Regarding profit squeezing out of us pips; 70% (approximately) is obscenely over priced yet GW feels the need to operate with a mind to not letting it drop, but I have to ask - why? Why is there this need to artificially maintain such a disproportionate profit when you compare to other companies, successful other companies at that?

 

It hints at a need for it year on year as if they are looking to sell to someone at the end of a time period? Or something is coming that they expect to cause losses, like a looming threat of 3D printing or something?

 

Thanks in advance if you have time to address these questions based on your summary. 

 

When I owned an LGS, one of the things that we were advised early on (about RPG books, but you can expand it to other lines) is that you need the stuff that rarely sells to sell the  stuff that regularly sells. If all your stock is the popular stuff that everyone buys, then people are less interested because a limited amount of options is boring. If you stock lots of stuff, people are interested by all the cool things you have, even if 99% of the time they just buy the popular stuff. I'd imagine GW know that if all they did was sell Marines, they'd quickly crumble as people got bored. With a wide product catalogue, there's lots of enticing stuff to get people interested, before those people go off and buy more Marines anyway. 

 

Basically, making your product lines look varied is more appealing to consumers, plus it gives you a wider customer base. I don't know if this is GW's reasoning or if the theory scales from a single LGS to a multinational, but it's a possible explanation.