Two years ago, we delivered a fairly in-depth review of the state of Games Workshop as a publicly traded company. Given everything that’s happened to Games Workshop in the interim, it seemed appropriate to revisit that assessment.

But first, a bit of record keeping – in that article, we made a few predictions on what was coming next from GW:

  1. Slowdown in Regular Releases: We get a partial hit on this one. While the 40K and Fantasy lines continue to chug out at the normal pace, the marked drop in Lord of the Rings and Specialist Games products definitely constitutes a slowdown overall.
  2. More Bundle Deals: GW has really been pushing the bundle model with dedicated box sets and online deals designed to get more product into player’s hands (including the premium bundles for new rulebooks!).
  3. More Player-Initiated Events: We definitely nailed this one – Planetside, Planetary Empires, Spearhead – GW thinks they’ve struck gold with this model and they don’t show any sign of slowing down.

Not bad overall. Before we take a look in our crystal ball for the next two years, let’s take a look at where GW stands today.


Financially, GW seems to have turned a real corner. In terms of raw revenue, we see that 2007 and 2008 were both down years, but 2009 was fairly strong. General industry wisdom is that macro-economic events (like worldwide recessions) don’t generally impact niche/hobby industries. This tends to be a fairly pollyanish view of the world to be honest and GW’s revenue reflects the broader commercial sector fairly accurately, showing a recovery that started last year into this year. What this does tell us is that GW is about as stable as they’ve been for the past decade – reliable, but not necessarily the company you want to bet your retirement on. That said, GW’s revenue is not all that interesting from a gamer’s perspective – for those nuggets, we need to dig a bit deeper.

Digging deeper into the 2009 report, we find that GW’s sales have increased – this is great! Until you realize they’re talking about sales in terms of value, not in terms of volume. Big difference. GW states that sales are actually somewhat disappointing and were actually down during the critical final quarters (akin to the US holiday shopping season). Which brings us to our handy little graph to the side – the amount of money GW needs to deliver products to us, the consumers, has been steadily increasing, with some notable jumps in 2009 in terms of raw costs and admin/expense costs – yet, their gross and net profit both increased significantly. Is this the result of gouging or are sales steadily increasing overall (in spite of the holiday dip)?

And that brings us to everyone’s favorite topic, price increases. We always talk about how it seems like prices go up two or three times a year, but have you ever looked back over the history of these things and figured out how often they actually occur? I did. It’s not actually as frequent as you might think – it’s about one a year. That said, they’re averaging somewhere between 4%-15% depending on the specific product you look at. It’s impossible to tell how much these prices increases are truly contributing to GW’s increased bottom line without actual volume data, but a bit of basic math does provide a few clues.

GW claims that in 2009, they were able reduce the percentage of sales cost due to goods “from 29.81% to 28.57%” or about a 1.24% drop. This is handy, because it allows us to do adjust these costs from 2009 to ignore this benefit and get a better idea of how much product was actually created (i.e.: volume – this isn’t perfect, but it’s as good as we’re likely to get). When we do this, we see that GW probably produced more product in 2009 – about a 9.5% increase. Not bad at all. So we should see a similar increase in revenue (since we’ve factored out the benefits of their increased efficiency in the raw goods department – again, this isn’t perfect, but it should be in the neighborhood). And here’s where your average gamer gets a bit annoyed: a 12.25% increase in revenue. Roughly 3% over what we would have expected from pure volume. To be clear, what we’ve done here isn’t exact – variables like fluctuations in sales on premium products vs. evergreen products (which are typically priced as loss-leaders) can throw an analysis like this right out the window.

So is GW an evil, money-grubbing corporation? Not really. That 3% increase we talked about? When you go through everything, that increase is nearly solely responsible for GW being in the black in 2009, with a net income of £5.6MM (it seems like a lot, but that’s not really all that great for a company the size of GW) as opposed to the outright loss they took in 2008 & 2007. When you factor in the 2.4% rate of inflation/year in the UK, there’s a strong chance that GW’s management might actually know what they’re doing. Much as I want to rake them over the coals, GW has done what they needed to in order to survive – and if I enjoy their products, that’s just going to have to be something that I accept.


Now that we’ve got that out of the way, what’s next for GW? My suspicion is they’re going to play it safe. They’ve found a plan that allows them to keep costs down and keeps product moving – I don’t see any radical reinventions in their future. Instead, I think you’ll see GW focus on three key things:

  • Merchandising/Licensing – Let’s face it, Black Library does some darned fine work. Great writers telling genuinely interesting stories about some truly epic characters – what’s not to love? We’ve had a few hits and misses with regards to video games, but nothing that’s really taken a life of it’s own until Dawn of War (and the inevitable sequel). Even better, GW is being very public about their upcoming Ultramarines movie (which is looking spectacular to be honest). Heck, they’ve even figured out how to return to their glory days with regards to board games (admittedly by using Fantasy Flight Games as a proxy). It’s official – GW has figured out that they’ve got a ton of value locked up and they’re not making the best use of it. Expect more movies, more books, more comic books and at least a few more attempts at a blockbuster video game.
  • More, but Smaller Events – We’ve already seen the first moves towards running more events that aren’t quite as epic as the Games Day events. Games Workshop has even been partnering with smaller events, providing direct support to these events. Expect this to continue with GW pushing more events as part of their program to keep new players engaged.
  • Focus on Hobby Support – Think Spearhead and all of these other mini-supplements are about getting you to buy more models? OK…they are, but that’s not all they’re about. They’re also about making sure you’re staying engaged in the hobby – in other words, getting you to build on what you’ve got without making you choose between starting a new army and ignoring the newest hotness.


So all in all, where is Games Workshop today? I think they’re looking pretty solid. They’ve finally got their financial house in order, gamers are buying more product than ever and they’ve figured out how to leverage their huge base of intellectual property to generate new fans and excite old ones. In a lot of ways, this is a return to GW’s glory days of the 90’s – a juggernaut in the hobby gaming industry who’s intellectual property permeates every aspect of gamer culture. And I for one, couldn’t be more excited.