Why Games Workshop is not a good business

[Glade Riven]

Then they'll eventually end up with a competator that breaks their business model, and they will have to adapt or die.

 

[korjik]

I have to wonder if there isnt a rather massive difference in corporate culture between the US and UK branches of GW. Specific examples below:

By Paco Garcia Jaen

Recently I had a conversation with my gaming friends about GW and we talked about whether they are a good business or not. For them it was a matter of "they make money, they're a good business". For me it isn't as black and white as that, so wrote this article for G*M*S Magazine and thought I'd share it here too. Hope you enjoy it!

There is no doubt that Games Workshop is a successful company. They make a lot of money, are very well known worldwide, keep a very healthy number of games shops that video game retailers would like for themselves and the popularity seems to be on the rise, despite the highly priced products in the current economic climate.

So there is an argument to say that they are a good business. As three of my gaming friends put it in one of our conversations “they are making money, they are the people in the know, so that’s it. You are saying otherwise, and therefore you are not being logical, Paco”. Yes. They, pretty much literally, said that.

So, for the sake of clarity, I will point out that I do not consider profit to be the reflection of good business. Good business, in my book, is when any company makes the most from and for its market, not just its product. Also is when a company reaches to the widest possible demographic successfully.

I dont disagree with anything so far, but I will point out that a lack of profit does make it a bad company

So, as business, is it the best it can? The answer is no. By any stretch of the imagination.

There is no doubt that they make money. This is not because they do the best they can as business but because they do well with what they have. They have a loyal (brainwashingly so) following of people who are prepared to pay huge amounts of money for what is perceived to be quality product. They are also prepared to put up with the constant change of rules and the new books that appear on a regular basis.

'(B)rainwashingly so'? Are Apple customers brainwashed cause they like Apple? This smacks of personal bias.

Also, quite alot of products are updated regularly. The computer I am using is now nearly 3 editions behind the current sale product.

They also make money because their margins are astronomical. Last I heard it was 2000%, but I have no real way to prove that, so take it as a guideline and not as a rule.

Without proof this also smacks as bias. Without knowing the whole cost all you have is an unsupported assertion. Thing is, even if they do have a 20 to 1 sale to production cost difference, so what? The market demand obviously supports the cost .

Let’s look at their shops. I have no idea what it is like where you are, but here, in Brighton (UK), the shop is small, dingy, uncomfortable and smelly. It is attended by people who don’t seem interested in anything else than to sell you as much as they can, which would be fine if they just pretended they care about the people and weren’t so jolly obvious about the intentions. But, of course, they are indoctrinated when they start employment to behave like selling drones and not like people who have an common interest with the clients. I know all this because the owner of my Friendly Local GAme Store is a former employee of Games Workshop and he can vouch for all this.

This is where I really start to wonder about culture differences. The GW stores I have been in here in Houston have all been fairly large reasonable well kept and run by people who were personable and knowledgeable about the games. Yeah, they did want to sell more product, but so does every other person in retail on the planet. My experience was that the employees were quite willing to discuss the hobby when business was slow, and they certainly werent high pressure salesmen.

Needless to say, if you go into any of the shops and ask for any product they don’t sell, you will receive a smirk and probably be shooed away with some sort of holly water least you pollute the mind of anyone into believing there are games that have nothing to do with them.

Go into an Apple store and ask for a Droid or Windows 8

You might get the feeling I don’t like their practices. I don’t. But let’s forget about that for a bit and look just at the business aspect exclusively. I still believe they’re not doing the best they can.

For starters they are not supporting everything with their name on it. Allowing other company (Fantasy Flight Games) to handle some of their products, specifically the RPG line and some boardgames, is indeed a shrewd move. However, refusal to sell those products and even support them with miniatures is incongruent. You may argue that it takes shelf space. I will argue that is space that will host products that will produce profit and will attract a different type of customer who could get interested in the rest of the product line.

I have though a bit on the lack of FFG product in GW stores. Here in Houston, at the very least, I dont think that the GW stores are all that profitable. Even with relatively low pay and rent, I estimate that $3000 dollars a week in sales is needed to break even. That may not sound like much, but that would have to be nearly all friday and saturday sales, and for a small game store, that is actually quite a bit of sales.

My point here is that the FFG line of books may be a decent seller, so I also wonder why they arent sold in the GW store, but I think there would be very low demand for miniatures, and I doubt that they could show any profit on the minis. That would be a bit of unpreforming shelf space in a small store that probably is pretty close to the edge in the first place.

You could also argue that they already have a business model that works and therefore don’t need anything else. I would argue that is a very narrow minded perspective for a business that relies on retail and retailers to sell their wares. Attracting shoppers who are interested in something else than their main lines of product provides the perfect chance to sell something else. That is pure logic. How many times do we go to a shop to buy X, and then get the shop assistant ask us “May I interest you in this? It’s only £xx today and it would work very well with your purchase”. Those shops do that because it’s a technique that works. I am not ashamed to say it has worked on me and you shouldn’t be ashamed to say it’s worked on you.. it probably has worked on every one at some point.

That is called retail sales. You dont sell Windows in an Apple store, you dont sell Chevys on a Ford lot. You do try to sell a bell or a whistle tho.

Thirdly, GW has a reputation for attracting “spotty kids”. Firstly I would like to point out that we have all been “spotty kids” at some point. To refuse going to a shop because there are young people in it is absolutely pathetic. The sort of prejudice that we condemn in other areas of the population when they call us “geeks” or “nerds”. Those kids will be us someday. However, I would like to point out that the majority of the sales team that work in GW hardly provide an image of professionally and trustworthiness that would inspire me to follow their advice or look at their wares. It is sad to say so, but when the person who is “helping” me is so eager to sell and so disinclined to talk and empathise with my needs and enthusiasm, I turn onto the internet and onto other shops if available. This, my friends, doesn’t make business sense.

'Spotty kids'? That isnt American idiom. I assume it is a somewhat maladjusted teen?

If that is correct, then I have to agree that not going to a store cause of some teens is stupid. My personal view is that older players should be teaching good sportsmanship to the teens, to make them good gamers later on.

It is also another difference between what you see and what I do. Other than the single store worker having to be distracted running the store, I have seen the employees try to engage the players in the store as much as possible. The employees I have seen were not sleazy in any way either. A few of the players were, but not the employees.

I think it is pretty clear by now why I don’t believe that Games Workshop are the best business they can be. I would stretch that to say I don’t believe they are a “good” business. The margin of profitability they have are never, ever, ever passed onto the consumer. Products keep getting more and more expensive, even if the production keeps getting cheaper and cheaper. And no, I will not believe for a second that producing a plastic miniature today is cheaper than creating a metal one 20 years ago. Or even today.

It isnt profit if it is given back to the consumer

Seriously tho, have you seen the price of gasoline, or food? Costs go up. I am old enough to remember 25 cent candy bars that are a dollar today. Try buying GW products here in the 'States, where the weak dollar has shot the prices up a bit more than just inflation.

This is not to say they don’t have their good points. It should be praised that, if you are into their games, the support is endless. Free painting lessons, tons of advice, championships, their own dedicated magazine… all at the fingertips if you like going exactly by what GW dictates.

GW tells you how you should paint your minis?

Plenty of you will be wondering why I care. I am not into their games, so why bother writing all this?

Because I care about the hobby at a grander scale. That’s why.

GW was the flagship of our hobby. Games Workshop is the organisation that brought us D&D from the US and introduced myriad games. It is a social hub where young guys can get together and share a hobby that, if it is anything like mine, will change their lives.

But GW doesn’t care about that. At all. They care about profit. And nothing else.

GW converted to GW only quite a while ago. Most of those 'spotty kids' you mention werent even alive then.

I expect that from banks. I expect that from insurance companies. I expect that from heartless companies that carry products so detached from human nature that they don’t need to worry about humans.

I expect a fashion retail to worry about fashion. Not just because they should have an interest in making money, but because they should strive to provide the best fashionable content at the best price and to satisfy customers, and that means listening to those customers and predicting and setting trends. I expect a car manufacturer to care about cars for similar reasons. The same can be said about pretty much any industry.

Well, I expect GW to worry about gaming and gamers. They fail. They care about perpetuating a formula that’s making them millions without innovation and without passing any of the loyalty from the customers back to the fan-base.

GW worrys about GW gaming and GW players. They put out some very high quality product within that limitation. They have been the trendsetter in minis for most of two decades. I dont know what you are expecting from GW. What 'loyalty' are you expecting? How can you say 'without innovation'? have you compared minis from the early 90s to todays? Have you compared the early plastics with todays?

And quite frankly, that bothers me. It bothers me a lot because I can’t help but to see what good work they could be doing with little effort and how they totally disregard it. It bothers me that their communication with the gamers, suppliers, press, etc, is mostly on bad terms, and it bothers me how they totally ignore people’s complains and suggestions.

Correct me if I am wrong, but that is not a good business.

Source: G*M*S Magazine ( Why Games Workshop is not a good business »)

What 'good work' do you think they can do? The stores Here in Houston are pretty good game stores, generally run by fairly good employees. What more should thay do?

 

[Vyvyan Basterd]

GW went public several years ago. They owe it to their shareholders to keep profits and the stock price up. Those are the humans they primarily need to concern themselves with.

I disagree. Corporations need to remember that shareholders are not their only stakeholders. A corporation must prioritize the needs of the customers, the employees, and the shareholders for their long-term health. Getting into why they must do such things is probably getting too political for ENWorld though.

 

[Mark CMG]

The vast variety of Medieval Fantasy minis available on the secondary market for cheap that are orignally GW minis and wind up being sold off due to their business practice of planned obsolescence has actually been fine for me and my gaming. Picked up a ton of Empire figures at a recent auction for maybe $0.25 a figure.

 

[ExploderWizard]

@ExploderWizard


What I argued is that they don'd do the best they can to take advantage of their market. They are letting their stakeholders down by not exploring ways to make even more money. They have a formula, it works. Thus they ignore any other ways to enhance or better that formula. To me that is not a good business model.

I am not complaining that they make money. I am complaining that the money they make is not proportional to the service they provide (even though some people believe it is) and that they don't put the effort to evolve as a business they should, which would lead to a better position for the hobby in general.

Exploring what ways to make more money?
Opportunities have costs and risks associated with them. If the current model is producing a super high profit, why expose yourself to these risks and costs?

If you don't think their product is worth the money then don't buy it. If enough people come to this conclusion then yes, GW will have to adjust their business model.

I think their stuff is way overpriced personally but not everyone feels that way.

What kind of evolution are you talking about?

 

[Leviatham]

I have to wonder if there isnt a rather massive difference in corporate culture between the US and UK branches of GW. Specific examples below:



I dont disagree with anything so far, but I will point out that a lack of profit does make it a bad company

That is true, which is why I am not saying they should reduce their profits or make any loss. I am very happy with them making millions, after all, I wish I could have a few million myself, why should I wish for someone else to have less?

'(B)rainwashingly so'? Are Apple customers brainwashed cause they like Apple? This smacks of personal bias.

I am not going to deny I am biassed. This is an opinion piece, not investigative journalism!

As for Apple... don't get me started... that should go on another thread and another website! LOL

Also, quite alot of products are updated regularly. The computer I am using is now nearly 3 editions behind the current sale product.

The fact that you can still use it and be a part of the same community without having to upgrade is the example of why the updates that GW does are not good. If you want to participate in championships and the like, you must update or you can't enter because the rules are not usable. That is milking the cow when is giving you blood!

Without proof this also smacks as bias. Without knowing the whole cost all you have is an unsupported assertion. Thing is, even if they do have a 20 to 1 sale to production cost difference, so what? The market demand obviously supports the cost .

The last time I heard that figure was from a friend who worked for GW, but that was 4 years ago. Today it could be different. I read in the BBC website a couple of weeks ago (don't ask me to point to the article... I really am not sure I'd be able to find it) that the production cost for an average tank is 5$.

The problem I have with that is the same problem I have with Nike getting cheap stuff manufactured in China and sold to us a lot more expensive. The market might be able to support it, but it shouldn't. I would also argue that if the prices were a bit cheaper, more people would be able to afford it and thus their profitability would increase. This is of course, speculation.

This is where I really start to wonder about culture differences. The GW stores I have been in here in Houston have all been fairly large reasonable well kept and run by people who were personable and knowledgeable about the games. Yeah, they did want to sell more product, but so does every other person in retail on the planet. My experience was that the employees were quite willing to discuss the hobby when business was slow, and they certainly werent high pressure salesmen.

Dude, I lived in Chicago last year for three months and I can tell you and you in the USA are BLESSED with amazing customer services in shops compared with the UK.

When I went for the last time (ever!) to my "not so friendly local Games Workshop store" 3 years ago, I was with a friend who wanted to buy something. I was just looking. A shop "assistant" saw me. Came to me and asked me if I was interested in something. "I'm just waiting for my friend, he's buying something" I replied. He, literally, turned around without another word and went back to painting.

No, "what is he buying?", "Oh, you don't play, how come?", or even "have you ever played or are interested in miniatures? I could show you how to put them together, you don't have to play to be into GW".

Not one thing that would make me want to get into their products or stay in the shop. Or go back.

Yes my friend... there are cultural differences!

Go into an Apple store and ask for a Droid or Windows 8

Actually, I might do that just to see their faces. It'd be hilarious!

I have though a bit on the lack of FFG product in GW stores. Here in Houston, at the very least, I dont think that the GW stores are all that profitable. Even with relatively low pay and rent, I estimate that $3000 dollars a week in sales is needed to break even. That may not sound like much, but that would have to be nearly all friday and saturday sales, and for a small game store, that is actually quite a bit of sales.

I'm not sure they'd have to make such sales to remain profitable, specially at the high margins they sell. Of course that depends a lot on a lot of factors I don't really have, but if they need to sell so much, wouldn't it make sense to bring more products that, in turn, would attract more customers?

My point here is that the FFG line of books may be a decent seller, so I also wonder why they arent sold in the GW store, but I think there would be very low demand for miniatures, and I doubt that they could show any profit on the minis. That would be a bit of unpreforming shelf space in a small store that probably is pretty close to the edge in the first place.
That is called retail sales. You dont sell Windows in an Apple store, you dont sell Chevys on a Ford lot. You do try to sell a bell or a whistle tho.

Two things. I don't know what the shelf space is in the shop you have over there, but I know shelf space can be made very efficient and tons of stuff can be had in a small shop.

Why do you think there would be a low demand for miniatures? I am not sure how having other products that are GW branded could detract from their minis.

'Spotty kids'? That isnt American idiom. I assume it is a somewhat maladjusted teen?

If that is correct, then I have to agree that not going to a store cause of some teens is stupid. My personal view is that older players should be teaching good sportsmanship to the teens, to make them good gamers later on.

Spotty kids means teenagers full of pimples (spots in British). And I agree with you on that one. Not going to a shop because there are young lads and lasses is totally retarded.

It is also another difference between what you see and what I do. Other than the single store worker having to be distracted running the store, I have seen the employees try to engage the players in the store as much as possible. The employees I have seen were not sleazy in any way either. A few of the players were, but not the employees.

Could you please send those my way? We need some like that in the UK!

It isnt profit if it is given back to the consumer

I know... I know... but you know what I mean.

Seriously tho, have you seen the price of gasoline, or food? Costs go up. I am old enough to remember 25 cent candy bars that are a dollar today. Try buying GW products here in the 'States, where the weak dollar has shot the prices up a bit more than just inflation.

Oh, I am aware of the price differences between our countries. Normally USA products in here are sold at almost 1$ = £1. Check the prices of the same boardgame in Amazon between the USA and the UK sites. Make sure you're sitting down when you do!

GW tells you how you should paint your minis?
GW converted to GW only quite a while ago. Most of those 'spotty kids' you mention werent even alive then.
GW worrys about GW gaming and GW players. They put out some very high quality product within that limitation. They have been the trendsetter in minis for most of two decades. I dont know what you are expecting from GW. What 'loyalty' are you expecting? How can you say 'without innovation'? have you compared minis from the early 90s to todays? Have you compared the early plastics with todays?
What 'good work' do you think they can do? The stores Here in Houston are pretty good game stores, generally run by fairly good employees. What more should thay do?

Well, that I am not expecting much is quite clear!

I have compared them. I have seen metal minis, plastic ones, presin, pre-painted, hand sculpted... They have indeed changed the material and some of the molding techniques to enhance the detail. At a cost.

In my opinion, what they should do is to carry product that are theirs (like their own RPGs) and sell them too. Also their board-games. I don't think that is a crazy idea or too much to ask.

Ideally, I would love them to bring also other game accessories that can be used for, say scenario preparation. And, quite frankly, it would be great if they actually bothered to promote the games properly. The amount of tradeshos and conventions that GW attends is minuscule in the UK. Heck, I am not sure they had a presence in Essen (if they did, I didn't see them) and that is unforgivable!

 

[Leviatham]

Exploring what ways to make more money?
Opportunities have costs and risks associated with them. If the current model is producing a super high profit, why expose yourself to these risks and costs?

If you don't think their product is worth the money then don't buy it. If enough people come to this conclusion then yes, GW will have to adjust their business model.

I think their stuff is way overpriced personally but not everyone feels that way.

What kind of evolution are you talking about?

To continue with the clarifications, I don't think a business that doesn't take risks is a good business.

The previous reply I posted might give you some answers to your last question.

 

[NN]

I agree.

Games Workshop would be much better if they stopped filling their shops with those crappy miniatures for spotty losers and instead sold all the gaming stuff that I like to buy.

And another thing - they should reboot White Dwarf at issue 91 too.

 

[Leviatham]

I agree.

Games Workshop would be much better if they stopped filling their shops with those crappy miniatures for spotty losers and instead sold all the gaming stuff that I like to buy.

And another thing - they should reboot White Dwarf at issue 91 too.

Aaahhh.... if only I couldn't see the subtle sarcasm in your post!!

 

[NN]

Breaking News: UK Trading Standards have threatened to shut down Games Workshop for false advertising.

And official source advised "The name Games Workshop implies craftmanship, pride, and innovation - traits which we were unable to find in anywhere their dreadful range of puerile, cynical, crap. They have 45 days to rename their business to something less misleading. We suggest Metal BumNut Hut or Gitprong's Hand Shandy Respite"