2007: Games Workshop's Worst Year EXPLAINED (by Rick Priestley, not me)

[N1SB]

Happy New Year, Brothers and Sororitas.  People do an end-of-year review, but due to recent revelations, I'll do one of 2007.

 

Games Workshop has faced major crises in the past.  It's not just like their prices are too damn high; that's not a crisis, that's a constant!  I've seen people say it's because of incidental things like Gorkamorka (the Ork skirmish game) or Pokemon.  We've previously looked at the financial data, like we found Pokemon cards from the US really hurt UK GW stores at the turn of the millennium, but at the same time GW was competing in the US; it was like 2 40k armies contesting each other's home objectives, everyone felt they were losing.  2007 was not like that.

 

GW was making losses in 2007, negative profits, they were in the red.  They were so burned it directly lead to a decade of decline.  That was when GW, to stay afloat, did mass closures of GW stores, and even those they kept, went from 4-man stores to 1-man stores.  It wasn't until 2016 when things start turning around.

 

What happened?  Rick Priestley, the great granddaddy of Warhammer, explained it just in the course of talking about other things.

 

All credit goes to him, Filmdeg Miniatures and my friend Timperial Guard for these insights, BUT a very special thanks to Brother Corvus, whom I recently found would help out B&C by going to Reddit and actually advertise our discussions on GW's financial results, he's bringing in more players...a point very apropos to THIS discussion.

 

 

+++ Yes, I'm using this graph again +++

 

 

Actually, I think I only put this together this year?  Finally found really old financial data, like bitz from a 1st ed mini I finally assembled.

 

 

This shows GW's revenue and profits, just remember their years begin in June (thus big summer launches) and end in May.

 

GW had a "management buyout" and basically got a huge influx of investment in 1992, which allowed them to breakthrough in 1993 with 40k as an actual box set, making it a lot more accessible to players.  Before then, 40k rules were actually spread over White Dwarf magazines; they'd be collected in Compilations and Compendiums.  40k 2nd ed as a boxed set, with the awesome Blood Angel on the cover and a cardboard Ork Dreadnought, was like a game changer.  It included things like an Index for all the miniatures they had released at that point.

 

Things were swell until Pokemon arrived at the turn of the millennium, and GW took a hit, but soon after GW was boosted by one thing...

 

 

+++ One Ring +++

 

 

...or should I say, One Ring?  The Lord of the Rings film trilogy was just coming out, from 2002 to 2004.  Rick Priestley and Andy Jones started a licensing discussion with New Line Cinema and Weta for GW to make The Lord of the Rings miniatures game.  I've been meaning to test it with my Dead Men of Dunharrow.

 

LotR was THE pop culture franchise of the time.  It has 17 Oscars, only topped by DC (7), Marvel (4) AND Star Wars (7) IF you combined them all together.  A new film in 2001, 2002 and 2003, I remember it as almost a Christmas tradition  GW's best decision up to that point, doubled their business.

 

By that, I mean, GW's revenue went from from £78 million before LotR to £152 million after Return of the King.  Like, srsly.

 

New Line Cinema and Weta, who now licenses the Warhammer IP to make their own products, were totally supportive of GW's miniature games.  I bought the special collector's edition of the LotR trilogy, they had extra DVDs where they showed the actors their miniatures.  I remember Liv Tyler didn't recognise hers (I don't blame her.)

 

 

Everything was good.  It wasn't like Hollywood producers were screwing GW, then a small British company, out of money.  What happened?

 

 

+++ Rick Priestley Explains All +++

 

 

Remember that Rick Priestley was not only the head designer of Warhammer 40,000: Rogue Trader, but he is business savvy.  When I hear him talk I can tell he's a great salesman, because he his every bit as jaded in private as every great salesman I know.  Rick Priestley was also an executive director on the GW board.

 

 

In case it's unclear, he's drawing a rising trend line with his hand, increasing revenue with the LotR product revenue.  The new LotR miniatures games were going to bring in fans of the films.  That was EXACTLY what happened, but even he probably didn't anticipate such success.

 

This next bit is important.  GW's plan was: bring new fans into GW stores with LotR, then keep them there with Warhammer (fantasy or 40k).

 

 

To clarify this image, Rick Priestley is now breaking out a dance move, like on da skreets back in the '80s (Jervis Johnson would carry the boombox, Andy Chambers would be rapping JUST KIDDING Andy Chambers was a total metalhead and you know it).  Actually, what he's showing was GW's sales were supposed to flatten out, plateau.

 

That did NOT happen.  GW revenue did NOT hold steady, it declined, because GW did NOT hold onto the new LotR customers.  That would lead to 2007.

 

 

+++ Taking an Objective vs. Holding an Objective +++

 

 

You know how in 40k, there's units that are great at taking objectives, but bad at holding them?  I was thinking Genestealers because we got that awesome new mini, I wish all our miniatures were like that.  Genestealers have always been great at clearing an objective, but I don't want them standing around one, they'll just get shot up.

 

And that was the issue with LotR.  The trilogy was way better than other adaptations before.  They couldn't even recapture that with The Hobbit trilogy afterwards.  The problem was those films came out from 2002 to 2003, and that was it.  When the films were coming out, GW sales went up with it...but there were only 3 films.

 

The objective I was describing are customers; victory points are merely money (hehe, merely).  Anyone who had a customer-facing role, whether it's salespeople or hospitality or customer service, know the adage, "Customer 1st".  It does NOT mean the customer is always right (often, they're not, that's why they need your help) or customer is king (though many do think they are).  Your humble techpriest worked at a hotel concierge in his youth, and I had any number of responsibilities, but the guidance was, whatever it is, drop everything and deal with...the Customer 1st.  The customer is often times the solution to all other problems, and even when the customer himself IS the problem, you're better off playing preventive defense right away.

 

Imho, it's always better to start with the customer then work backwards to your product...if only because you can change a product, not a customer.

 

The built-in assumption GW had was they can convert LotR players into Warhammer players.  It turns out, LotR customers wanted LotR.  Big surprise.

 

 

+++ Now We Reach the Problem +++

 

 

Now we get to the crux of the issue and I bring in my friend, Timperial Guard.  I've mentioned him before, he's the one that worked in plastic mold injection manufacturing, was the one that told me the a huge part of the energy cost is constantly melting the plastic at 200°C to 400°C, now a head teacher in Design & Technology.

 

And Timperial Guard worked part-time at a GW store during this time.  He was hired due to the flood of LotR customers coming in.

 

He actually told me about his time as a redshirt long before this, but after hearing from Rick Priestley, it finally made sense.  Timperial Guard is a great painter, the type that would do actual paintings of like landscapes on the pauldrons of Imperial Knights.  He's like, "oh, for me, it's easier to paint a landscape than to apply a transfer," the bastard.

 

The story he tells is he just sat at their painting area, painting sample miniatures for the store, mentoring younger players with their own painting, doing the Duncan.  Never had to work the till, didn't have to sell.  The situation was the GW Store Manager was so busy selling to LotR customers he had Timperial Guard do paint stuff.

 

Anyone who's worked his way up into a managerial role, who's supposed to step back and train the young guys coming up, it's always easier to do the job yourself than to teach others.  That's what happened here.  All these new LotR players were coming in, the GW Store Manager never had time to train up Timperial Guard.

 

Rick Priestley gives this harsh criticism...an overly harsh critique, I think...of people like Timperial Guard, how they don't know how to sell, they don't know anything except painting some miniatures and demoing a few games.  I told Timperial Guard (he's actually a really good guy) about this and he's like, "Ya that was me!"

 

Anyone who's done sales, you know what he means, even if it is too harsh.  Timperial Guard absolutely knows stuff, he's a great painter, he's so good at demoing that he's the one who explains the rules to us to any new boardgame WE get (like he'll digest the rules for us), he's a head teacher at a top school...but he lacks salesmanship.

 

LotR created easy times for GW.  But selling is hard.  The guys who came up in the easy times of LotR MAY not have learned those hard lessons.

 

Once the LotR effect wore off, not only do you no longer have the benefits of LotR, but a lot of new GW Store staff that may lack experience.

 

Yet GW was running everything as if the LotR bump was still there, just expecting their their stores to sell like before.  It's not fair to anyone.

 

There's a bit of lead-lag time before disaster struck.  Return of the King came out in December 2003, GW sales kept going up to May 2004.  By 2006, GW reverted back to almost pre-LotR levels, but it was NOT business-as-usual.  To accommodate this LotR influx, GW had expanded, and maintained costs with that expansion.

 

Edit - re-reading this, I think it had less to even to do with the quality of GW Store staff than Rick Priestley said, it's just GW hired more people, expanded faster than they should, with the hype of LotR driving them.  Even with the best salespeople, outcome would have been similar, because I think LotR players were their own thing.

 

It was when those costs caught up with GW that lead to 2007.  Then GW slashed & burned themselves for a decade to survive.

 

 

+++ Conclusion +++

 

 

TL;DR - LotR brought GW lots more revenue, GW increased costs to meet LotR demand, but even when LotR ended, GW kept the costs to go into the red.

 

People mistakenly blame Pokemon or even Gorkamorka, like saying they were driving GW to bankruptcy.  Untrue.  It was ironically the success of LotR.

 

LotR was NOT to blame.  LotR fans were NOT to blame.  NEITHER were New Line Cinema NOR Weta to be blamed, they're so supportive they continue to partner with GW NOW.  Liv Tyler was NOT to blame, that was a lousy sculpt of her!  Timperial Guard was NOT to blame, nor were the other young hires.  His manager was NOT to blame, he was dealing the situation the best he could.  But what about GW's upper management, the CEO, etc.?

 

I'd be very careful about blaming GW's executive board, because they were trying to keep all their people employed.  They'd brought in all these guys riding the high of LotR, if they laid them off right away we'd accuse them of corporate greed, putting profits over people, etc.  They held on to these new hires for as long as they could, and that's what's actually backfired.  Rick Priestley does kinda blame them, but I really wanted to remind him, he himself was a board member, he'd be implicated, too!

 

The thing about the One Ring is, yes, it is evil, infused with Sauron's essence.  But it's not all the One Ring's fault.  The desire of people around it is an evil in itself, independent of the One Ring.  They may believe they're doing the right thing, like Boromir wanting to use the weapon of the enemy against himself, it is a gift.

 

2007 is a long time ago, but those lessons might still be relevant now.  Back then, it was LotR, New Line Cinema, Weta, Sir Christopher Lee, Sir Ian McKellen, John Rhys Davies, Sean Bean, Cate Blanchett, Hugo Weaving, all them Hobbits, and also Viggo Mortenson and Orlando Bloom and Andy Serkis and Karl Urban whose careers were launched AND YES EVEN LIV TYLER.

 

2025 and onwards will be totally different, NOT the same.  Now it's Amazon, Henry Cavill, Hollywood, mainstream, Space Marine II...oh...wait.

 

I kid, I kid, LotR and Warhammer are very different.  For example, people who would go to a Warhammer Store because of a Warhammer Amazon series...I mean, it's a Warhammer Store.  That would be a good Objective Holding unit right there, they'd have OC of at least 2.  But never forget the Hollywood lesson from the original King Kong to the remakes...

 

It was Beauty killed the Beast.  It always is, and it always will be.

 

 

+++ Sources +++

 

 

All public GW's financial documents: https://find-and-update.company-information.service.gov.uk/company/02670969

 

Filmdeg LotR with Rick Priestley: 

 

 

 

Edited December 31, 2024 by N1SB

[ZeroWolf]

Insightful as always. Love reading your breakdowns. Seems like the CEOs ended up doing bad while trying to do good. In hindsight, they probably should have had a slower growing period or looked ahead enough to factor in the possibility that they weren't going to retain those that came in through LotR.

[Pacific81]

Really interesting article, thanks for taking the time to write it.

 

I will say working as a staffer (UK) around that time it was as ugly as hell. You had gone from boxes leaving the shelves almost as soon as they came in, while the buzz from the films was ongoing, to management (I will say middle/regional management) almost directly blaming shop staff for those levels of sales not continuing. Or at least it seemed like that, I think at the time I just about held on from my end of day phone call (reporting lack of sales) not telling the guy on the other end to do something unmentionable with those unsold minis. Looking back, they were probably under a lot of stress too.

 

Anyone with half an ounce of sense knew that the wave would end (the dvd releases were only ever going to lead to a small increase) but there seemed to be this massive group-think of management that just absolutely refused to acknowledge it. I wonder if people working at places like Blockbuster went through something similar..

[Marshal Rohr]

Great breakdown, N1SB!

[darkhorse0607]

Solid writeup as always.

 

The entire time I was thinking "Oh so that's not a new issue" and was, at least, semi validated during the wrap up

 

I'll be interested to see how the Warhammer bubble transforms over time (especially with the potential economic changes in one of their largest markets that could happen early next year), and I'll be looking forwards to these breakdowns as always

Edited December 31, 2024 by darkhorse0607

[Norman Paperman]

Nice write up! 
 

Expanding to meet a surge in demand but failing to solidify that market or create long term customers is a business story as old as time. Maybe some better sales tactics would have turned those LotR fans into 40K or Fantasy fans, but people tend to want what they want. 
 

I often wonder about the future of the LotR game and models. My FLGS has barely any shelf space for them and they hardly get any releases. Despite the Adeptus Amizonius’ best efforts, LotR fans seem to remain focused on the books and Jackson trilogy. GW will undoubtedly want to hold on to the license and fans they do have, but I’d bet they produced only a tiny handful of those new War of the Rohirrim models and sold even fewer. 

Edited December 31, 2024 by Norman Paperman

[TopToffee]

Having only just come back to the community properly for the first time in a long, long time…

 

what happened in 2016 that triggered the upturn?

[Scribe]

1 hour ago, TopToffee said:

Having only just come back to the community properly for the first time in a long, long time…

 

what happened in 2016 that triggered the upturn?

 

I'm not sure when Warhammer Community started, but AoS rebooting Fantasy was also a thing.

[firestorm40k]

1 hour ago, TopToffee said:

what happened in 2016 that triggered the upturn?

I believe it was the publication of the first Age of Sigmar General's Handbook - the introduction of points values that meant tournament play could take off for that game 

[Robbienw]

I think it was probably more to do with a set of great long awaited 40k releases in 2015 through 2016, and the first 2 sets of heresy plastics, plus a variety of other changes implemented by Kevin Roundtree

when he took over in 2015.  Realeases like the genestealers cults, mechanicus, harlequins etc and improved community engagement brought a lot of lapsed collectors/players back.

Edited December 31, 2024 by Robbienw

[Pacific81]

Also a lot of Specialist games coming back at or around that time. It meant you could get into the hobby and wargaming without needing to spend £200-£300+ for an army and rulebooks. (Of course then you do go on to spend that money, but the point is you've already been hooked by that cheaper intro).

 

I think that was one of the greatest failings of the Kirby era, where the company seemed to be flying in ever decreasing circles.

[Karhedron]

Around 2016 also coincided with GW unfreezing the plot of 40K after more than a decade. Ever since the end of 3rd edition, the narrative had been stuck at the culmination of the 13th Black Crusade with Abaddon about to destroy Cadia. At the end of 7th edition, they finally bit the bullet and resolved the storyline. While the introduction of Primaris Marines was not well handled from a lore perspective, advancing the narrative allowed them to bring in new centrepiece models like the Primarchs revamp Marines in a better scale. 8th edition in 2017 solidified their strategy and has been copied for the last 2 editions. 

[Scribe]

1 hour ago, Robbienw said:

I think it was probably more to do with a set of great long awaited 40k releases in 2015 through 2016, and the first 2 sets of heresy plastics, plus a variety of other changes implemented by Kevin Roundtree

when he took over in 2015.  Realeases like the genestealers cults, mechanicus, harlequins etc and improved community engagement brought a lot of lapsed collectors/players back.

 

Yes, the shift from 'we hate our customers' to 'lets actually engage with the people and nostalgia that kept us alive' sure seemed to do wonders.

[Robbienw]

It’s true.  There was a very notable shift away from the aloofness and contempt vibe when Kirby left.

[N1SB]

Everybody here is correct to this question:

 

9 hours ago, TopToffee said:

Having only just come back to the community properly for the first time in a long, long time…

 

what happened in 2016 that triggered the upturn?

 

We'll start broad, then zoom in, and in fact, YOU are a major part of the strategic shift.  I should've talked more about this.

 

 

+++ Leadership Change is more than about the Leader +++

 

 

A company's success is NEVER from 1 person, it is ALWAYS from a company, like a Space Marine Company, of people.  That said:

 

 

This is from Tom Kirby in 2015.  The person at the top isn't necessarily the best guy, but he does represent the top-down policy.

 

Tom Kirby was the CEO during the MBO, moved to become chairman, but he kept doing this cha-cha dance; he'd step back for a new CEO, the CEO leaves and he'd step back in, then step back for another new CEO.  And his Great Master Plan is essentially...cost-cutting (and paying shareholders, that's not greed, that's their actual job).

 

You cannot cut costs your way into success.  You absolutely can cut costs for survival.  Just changing from survival mode was a huge thing.

 

Here's the comparison I make.  Imagine a game with the old Imperial Guard gunline with Infantry in front of Leman Russ tanks, that's how all Guardsmen played back then.  They're holding-the-line in their deployment zone, just shooting, to mitigate losses...until the Nurgle horde finally reaches them and they get wiped out.  Timperial Guard used to play like this, his idea of success was how many Turns he could survive, how many points he could blow up before his inevitable defeat.

 

That's not how you win at 40k.  You got to push forward and TAKE Objectives.  Even if you fail, you push the fight.  Timperial Guard later on did exactly this, it was when Scions came out with their little schoolbuses.  He just wanted the models, but once he used them, he'd do the Reserves to Objective grab thing.  He started winning.

 

It was you guys, I think Brother Joe in particular, who showed me Tom Kirby did what he had to do, to make sure GW survived.

 

But he's long been the guy you call up for emergencies.  Even if he wanted to change, I think everyone in GW around him would be in fight-or-flight instinct mode.  Somebody new had to take over.  The new CEO Kevin Rountree came up with Black Library, Licensed Games, including Sabertooth Games.

 

Sabertooth Games is like this collectible card game company.  I played their Space Hulk card game.  It's pretty good.

 

To compare with the above, this is from Kevin Rountree.  It was 1 word I homed in on, take a look:

 

 

"LAPSED" customers...that's YOU, Brother Toffee.  That's me!  I fall back into The Hobby like a habit, relapsing into this addiction.

 

Up until this point, GW's worldview was there's New customers, they become Existing customers, and we just hold on to them.

 

Lapsed customers suggest there's a customer life cycle.  They were New, then Existing, then they leave The Hobby...but come back.

 

And THAT's Genestealer Cults, Specialist Games like Necromunda, the moving forward of the plot in 40k with the Fall of Cadia, etc.  Those are almost products catered towards Lapsed customers, they're not as meaningful to New or even the Existing customers at that time.  I'm just waiting for Horus Heresy: BATTLEFLEET GOTHIC.

 

People talk about marketing messaging, like slogans, hype, jargon.  All this is also a marketing message.  It says, "Welcome back.  Welcome home."

 

That's a HUGE shift of mindset.  Previously, The Great Master Plan was not losing anymore.  Now, it's win back what we lost.

 

 

+++ 2016 to 2017 +++

 

 

Special shoutout to this line-of-thought, because we're 40k players here, but let's not forget our fantasy Brothers for Age of Sigmar:

 

7 hours ago, firestorm40k said:

I believe it was the publication of the first Age of Sigmar General's Handbook - the introduction of points values that meant tournament play could take off for that game 

 

The question was the upturn from 2016 to 2017, and it was exactly this imho.  This was the trigger.  Games Workshop, to this day, continues to say they are a miniatures company, they make the best miniatures in the world, etc.  AoS came out in 2015, though...the miniatures were the same, but took a year to take off.

 

That coincided with the release what they called the General's Handbook.  When AoS came out, there were no points system.  We had Codices with unit profiles, but no points values.  Soon, people invented a Wounds system, like we had no points values, but our armies would match based on total Wounds our units had.

 

Except for our friend Tourney Tony in Toronto, we weren't even tourney players, but we'd try this and...we had no idea if we won or lost.  Like there were clearly more powerful units even with this janky Wounds balance mechanic.  We wanted to win, not just beat our opponent, who's our friend.  Totally unsatisfying.

 

When the General's Handbook came out, the selling point was finally, it had points values.  It was our Munitorum Field Manual as a paid product.

 

It's quite horrible what we get as a free quarterly downloadable PDF used to be a paid product for AoS.  For 40k, it was Chapter Approved.

 

But even that wasn't enough.  To coincide with the General's Handbook, AoS had like a re-launch event, called Season of War.  GW knew it fumbled with AoS's initial launch, built a whole worldwide campaign of games, with the results from Warhammer Stores and FLGS collected.  Every week a new special game mission that was secret until we showed up; the FLGS guys would give us a single-page A4 printout.  One of them was so sophisticated Timperial Guard, Tourney Tony in Toronto and I, who all had masters' degrees, stood around trying to figure it out and we couldn't.  6 college degrees vs 1 page of GW rules, and 6 degrees lost, it was awesome.

 

For those of us who were here, my bold prediction at the time was 40k would come out the next year with its own similar event.  That was 8th ed and the Konor Campaign.  It was basically the exact same formula.  Another Warhammer friend, ControllEric (real life CFO) explained it best, "This is THE year."  Like top finance guys don't see the world like chasing sales, they look at this aggregate, macro trend, he had migrated from D&D to AoS to 40k and knew 40k was the lead hitter, you had to maintain the momentum from the Season of War with their best-selling product.

 

This is important because it is this weird proof of this philosophical question, is GW really a miniatures company like it says?  If it was a miniatures company, that hocky stick would have happened right when AoS minis came out, they were great new minis!  That didn't happen, it took a year until the General's Handbook made the game at least somewhat playable, so is GAMES Workshop really a game company?  If that's the case, they wouldn't need their Warhammer Stores or FLGSs, which seems critical to what they sell, The Hobby.

 

It's like GW is beyond a miniatures company, being a games company, it's a The Hobby company.

 

 

+++ So that's a review of 2016, but it's related to 2007 +++

 

 

A change in leadership matters, but it's not so much the person, but the perspective.  We went from the Grand Master Plan of cost-savings to let's win back customers.  And in particular, winning back customers meant this new segment that GW defined, Lapsed customers, like so many of us.

 

The weird thing is, like that Epic of Gilgamesh said, the dead outnumber the living, with GW in a sense.

 

Think about how people our age got into The Hobby.  I was 11 or 12, I kinda mostly painted, barely played at all, for 3 years or so, always had ragtag bands of projects instead of a full army.  30 years later I'm fully engaged, I start a new army each edition.  There are probably more Lapsed customers than active Existing ones.

 

There's a whole army of sleeper agents who wanted to be good at Warhammer, like painting a Marine like how it appeared in a White Dwarf, but set aside The Hobby when they had to go to university or starting a family.  They return to it in probably the safest, most reasonable mid-life crisis imaginable.

 

So Customer 1st here is this whole different needs system, different wants for the type of games.  GW recognises that now.  That had a huge impact.

 

Going forward, with all this talk of the Amazon partnership, if I had to predict, the biggest benefit is it would be a huge "welcome back" wake-up call to this army of sleeper agents.  People who were never interested in miniatures or tabletop games are much less likely to engage.  Like I thought a lot of those LotR miniatures game players, they must've played D&D some point in their lives, knew about the idea of miniatures, maybe owned some, but never painted.  They just needed a little push.

 

Understanding 2007 isn't like a criticism, it's a lesson learned.  It's literally like a friend pointing out there's a tank behind a piece of cover just when you were about to move your Elite units into its line-of-sight; as long as you know the trap is there, you're fine.  But this is why it's a great exercise.

 

2016, in comparison, is like the reverse?  2007 was a result of failing to understand LotR customers.  2016 was realising Lapsed customers.

 

Great exercise, everyone.  This is exactly why a forum exists, it's exactly those points.

Edited Wednesday at 03:34 AM by N1SB

[N1SB]

17 hours ago, Pacific81 said:

Really interesting article, thanks for taking the time to write it.

 

I will say working as a staffer (UK) around that time it was as ugly as hell. You had gone from boxes leaving the shelves almost as soon as they came in, while the buzz from the films was ongoing, to management (I will say middle/regional management) almost directly blaming shop staff for those levels of sales not continuing. Or at least it seemed like that, I think at the time I just about held on from my end of day phone call (reporting lack of sales) not telling the guy on the other end to do something unmentionable with those unsold minis. Looking back, they were probably under a lot of stress too.

 

Anyone with half an ounce of sense knew that the wave would end (the dvd releases were only ever going to lead to a small increase) but there seemed to be this massive group-think of management that just absolutely refused to acknowledge it. I wonder if people working at places like Blockbuster went through something similar..

 

Really appreciate you sharing this, and appreciate you in general, working retail in this time.

 

Here in Hong Kong, the early 2000's we had this awesome Games Workshop store in a prime area, I was so shocked it was there.  I remember Inquisitor was the game everyone was interested in but never played, people were always saying what they were planning to do, but never pulling the trigger.  That was the LotR timeframe.

 

I traveled a bit for work, came back after I got my MBA, went to the same place, was shocked to find Warmachine minis there from Privateer Press.  Found out it stopped being a GW store to a FLGS, still with Warhammer stuff.  That was post-2007.  The then-GW Store manager was let go, but kept the shop, the staff, became a FLGS.

 

I later found out there was a sad story behind this.  GW HQ told the manager in Hong Kong they were shutting that store down, lay off all the staff.  He did everything to satisfy Nottingham.  They gave him an impossible sales target.  He got all the customers to contribute, to meet that impossible target.

 

It wasn't just a dollar figure, but a way to show the strength of the Warhammer Community there.  They still closed down the store, it was up to him to take out a business loan to turn it into a FLGS, keep everyone employed.  I didn't know about this until running into an old Warhammer acquaintance, dude never complained.

 

For a long time, I thought it was GW screwing us.  Then I realised with the financial data in-hand, no, all of GW was screwed.  It was easy to blame a CEO, but even he, Mark Wells, was let go shortly after.  And I absolutely feel Nottingham was kinda blaming their own stores, because they gave them the headcount during the LotR surge.

 

You can hear it in Rick Priestley's tone.  Sales guy to sales guy, we've been in the same trenches, tasted the same dirt.  I blame no one.

 

Because I think you're right, there WAS a group think of how LotR would boost sales then level off.  The cope was everyone assumed it would hold off at the plateau, never go back down to pre-LotR levels, GW HQ invested in local GW Stores according to that plateau they assumed, local stores hired with the same assumption.

 

It's like that's why no one wanted to say anything.  Everyone up and down the chain had the same mistaken assumption.

 

It's easy to say in hindsight, that's why I can say it now, it's easy for me to say.  But at that time, everyone just wanted to grow The Hobby.  But one does not simply walk in and replace a dedicated LotR fanbase.  Last Armies On Parade, a LotR player we NEVER met walked in with the WHOLE thing, it was awesome.

 

You had to be there, like our Warhammer Store manager actually kept the tables to play, but shoved all the minis for the demo tables to one side, because the LotR player had all the terrain for like the Witch King's castle, like it was the whole Angmar scene, we were in awe.  The manager joked like if his boss walked in and saw he pushed aside the GW policy-mandated demo tables, you know how tetchy the bosses get about changing stuff like that, he'd be in so much trouble.  But it was a case of easier to seek forgiveness than permission, our redshirt's a good guy, real Customer 1st guy.  We loved talking to that LotR player, we were laughing and joking together, he appreciated how we appreciated his work...and we never saw him again.

 

So all this is bittersweet to me.  I feel nothing but love, like I feel it for everyone, and I felt the love they had.  And it just didn't work out.

 

 

+++ Addendum: why the focus on salespeople +++

 

 

I share this in the hopes of just taking that unfair burden off people like Brother Pacific and Timperial Guard:

 

 

Operating Expenses are the running costs of a company.  It's to pay salaries, rent, keeping the lights on, all that stuff.

 

This is from 2007.  "Selling costs" alone is about 60% of all GW's operating expenses, and it's pretty much always been like this.  In later years, they'd further break it down.  GW's "Retail" or GW/Warhammer Stores would always be about 50%.  FLGS support, like the GW rep they speak to, is around 10%, their website/mail order team is another 10%.  To compare, their actual miniature design to manufacturing is like single-digits percent, tiny.

 

From a sheer numbers perspective, it's like the GW/Warhammer Stores were the highest points unit, you were the Elites of the GW army.  You know how people blame their Terminators but never the Scout Squads?  It's because people have such high expectations of their Terminators or Sanguinary Guard or Deathwing Knights, etc.  They do a lot, but there's certain things their Deep Strike and 2+ saves can't deal with, like making up for LotR.

 

That kinda coloured sentiment inside GW, I'm sure.  It's still an unfair, unreasonable assessment, but I think that's partly why.

Edited Wednesday at 10:39 AM by N1SB

[Scribe]

Another thing I find funny, is you walk into any kind of FLGS and say "The Hobby" and well, I've never met someone who is a regular who doesnt know what that is.

 

40K, GW itself, should recognize (and celebrate!) that it is well WELL beyond a 'miniatures company' at this stage, and if I had to guess, it already has even if its not quite there yet in the market reports.

[LostSocksMcGraw]

Thanks for a great article and also the discussion in the comments. Really interesting to read.

 

Apologies if this has been mentioned by someone else in the comments and I missed it, but I thought it would be interesting to think about how much the finecast debacle c. 2010/11 prolonged that decade of downturn.

 

For me, a classic case of a business decision made for all the right reasons, but poorly executed. The switch from metal to all plastic has undoubtedly been a game changer and can be seen the in the size, complexity and dynamism of modern models compared to the old ones I grew up on in the 90s. However, trying to implement quickly using resin in their metal moulds (which is what I believe they did for finecast) as a sort of stepping stone to producing the expensive and time consumingly tooled plastic moulds cost them in both money (failure rates were high) and customers (this directly initiated a hobby hiatus for me and several others I know).

[N1SB]

2 hours ago, LostSocksMcGraw said:

Apologies if this has been mentioned by someone else in the comments and I missed it, but I thought it would be interesting to think about how much the finecast debacle c. 2010/11 prolonged that decade of downturn.

 

For me, a classic case of a business decision made for all the right reasons, but poorly executed. The switch from metal to all plastic has undoubtedly been a game changer and can be seen the in the size, complexity and dynamism of modern models compared to the old ones I grew up on in the 90s. However, trying to implement quickly using resin in their metal moulds (which is what I believe they did for finecast) as a sort of stepping stone to producing the expensive and time consumingly tooled plastic moulds cost them in both money (failure rates were high) and customers (this directly initiated a hobby hiatus for me and several others I know).

 

I never looked into this.  I will now.  I also remember it was a stop-gap technology.

 

Timperial Guard also told me something, as you did, just re-use the molds for metal, but with that horrible, almost powdery resin as a stepping stone to tie them over until they did a proper upgrade.  My current army uses 2 finecast models, the 2 old C'tan of the Deceiver and Nightbringer, so I totally hear ya.

 

I'll update here, but probably take me at least 24 hours.  The answer might be, "I got no idea."

[N1SB]

Brother McGraw, turns out you're onto something.  My biases vs. Finecast aside, I'm sure it didn't help GW sales, but it did (help) slash costs.

 

I started with the easiest way, which was via Revenue (thanks for reminding me the year, btw).  Revenue was so flat, but that doesn't mean sales were holding steady, because prices were increasing.  So there was this gradual decline in that decade between 2007 and 2016, but it wasn't suddenly in 2012, right after Finecast's introduction.

 

What WAS interesting was what I did NOT see; nobody even mentioned Finecast in their annual reports to GW shareholders.  They spent some time talking about their paints.  I remember GW was trumpeting Finecast like it was the best thing since lasguns to us!  They also shut down their Shanghai plant around that time, I found.

 

But we know big issues like these have a lead-lag, things take years to happen.  Like how GW's 2007 crash was a result of LotR films ending in 2003.  So I looked a few years BEFORE and AFTER Finecast began, like in raw materials in inventory.  This was an interesting note and it made me think it's the impetus for Finecast:

 

 

Before Finecast: GW generally kept £1 million of raw materials back then; remember, that was when a lot of minis were metal, not just for Made-to-Order.  It jumped to £2.445 million, so more than double, in 2009.  That was the year the Assault on Black Reach came out.  There's still a lot of those Tac Marines around, but not THAT much.  Remember, they were still hurting from 2007, they were £2 million in the red, everyone was being asked to cut costs, and now they bought that much of raw plastic?  Somebody would've said, "ya we're going to have to find a way to save money on that."

 

After Finecast: GW didn't just take their raw materials costs down from that peak back down to around £1 million, but to LESS than £100k:

 

 

This was the year right before they launched AoS, so they were going to do a huge run for the AoS range, and even then they reduced their raw materials cost to less £100k.  It was then I realised why Finecast even exists.  To us, it's an insult to the sculpts, hideous dopplegangers of what the minis should be.

 

But to GW upper management with the Great Master Plan of basically cost-cutting, whoever came up with Finecast is a genius, he reduced raw materials cost to a literal fraction of what it used to be.  It's not even like corporate greed, it's like after 2007, everyone's mindset was still on just how to save money.

 

Raw materials would only go back to about £1 million in the last 2 years...when GW is selling 5x times what it used to back when Finecast was launched.

 

Brother McGraw, you were more forgiving than I was, and you're right.  I was so biased against Finecast, but you were more clear-eyed than me, with these numbers in front of me it was CLEARLY a good idea, takes away a major direct input costs, I mean you need raw materials to make minis to sell.  Growing pains, I guess.

Edited Thursday at 12:14 PM by N1SB

[Lord_Ikka]

On 12/31/2024 at 3:32 PM, Scribe said:

 

Yes, the shift from 'we hate our customers' to 'lets actually engage with the people and nostalgia that kept us alive' sure seemed to do wonders.

 

I don't think that Kirby ever hated his customers, he just had a fundamentally flawed view of what he was selling. He thought GW was like Agora Models, in that the primary reason people were buying models were because the models were fantastic. He didn't view the game portion of the business as the driving force for purchasing, as the literal bedrock of the company. His view was always "physical models over rules", probably because the margin on rulebooks/codices is not nearly as good as that of the models. I personally think Kirby was both very good and very bad for GW- he lead the company through the 90s to become a global sensation rather than regional, but he also presided over the 00s/early '10s version of GW that really had a negative outlook on community engagement/support. 

 

**Knowingly off-topic, but perhaps pertinent to some frater** - The book Slaying the Dragon by Ben Riggs documents the rise and fall of TSR, the original company that published/designed DnD. The fall is particularly interesting, as the last CEO made some similar decisions to Kirby in the sense that she didn't view the core DnD game as the primary attraction to customers. It is a good read, I recommend it to anyone who wants to see an inside look at a company/industry strikingly similar to GW in ways (remember, GW technically started as a distributor for DnD in England). 

[Uprising]

These are some of my favorite post on this forum.  I am getting old.  

[Ahzek451]

This was fantastic to read. Much appreciated! 

After a few years go by, I would love to see the same kind of analysis on current GW activity. At least what I have witnessed, and I'm not sure the best way to categorize it, but seems like there is a growing/large unease over a multitude of issues from GW from prices, from game design, model availability, sales practices, controversy, etc. but at the same time people would point to the rising/healthy stock price and say all is well. 

[Xenith]

On 12/31/2024 at 6:18 PM, TopToffee said:

Having only just come back to the community properly for the first time in a long, long time…

 

what happened in 2016 that triggered the upturn?

 

Change in CEO and actual digital marketing. As soon as GW started advertising and promoting what they did, the money started rolling in. 

 

@N1SB LoTR was undeniably part of the great run from 2000 - 2003...however so was 40k 3rd edition, WFB 6th, 13th Black Crusade campaign, 3.5 ed CSM codex, [+/- BFG, Mordheim], basically banger after banger, with the background to embracing the internet and having hobby content online. Around 2006/7 we saw the release of 4th ed 40k, arguably a boring edition after the fun of 3rd, and pushback on GW media platforms, as well as shutting down support for Specialist Games. Between then and 2010 we see GW retract almost inside itself, retreating from social media, having basically zero online presence, until we got the White Dwarf Blog (in...2013 or so?) which ten paved the way for WarCom.

 

So 

1. Did you find anything that would give relative inputs from LoTR, 3rd ed 40k, 6th ed fantasy, 13th crusade (+BFG/Mordheim) to the bottom line from 2000-2003?
2. Would you have any way of mapping GW's social media regressions onto the revenue chart?

 

Edited Thursday at 02:34 PM by Xenith

[Xenith]

34 minutes ago, Ahzek451 said:

This was fantastic to read. Much appreciated! 

After a few years go by, I would love to see the same kind of analysis on current GW activity. At least what I have witnessed, and I'm not sure the best way to categorize it, but seems like there is a growing/large unease over a multitude of issues from GW from prices, from game design, model availability, sales practices, controversy, etc. but at the same time people would point to the rising/healthy stock price and say all is well. 

 

I'd say the Model Availability trumps all of those - despite any grumbling going on, people are still buying things faster than GW can make them. FWIW, aside from model availability, the issues you raise have always been present in my time in the hobby: People have complained about price incresases, dumbing down, loss of flavour, aggressive sales tactics, finecast etc.