Is Games Workshop a good business? Yes, because a business is in the business to make as much money as possible for a long as possible.
Is Games Workshop a good game/miniature company? Now that is debatable.
If someone wants to give their own meaning to words which already have a definition, go ahead, but don't expect folks to accept your new definition.
Games Workshop wasn't on the verge of bankruptcy a couple of years ago, they were doing not well, mostly due to overextending themselves during the LotR period. Which was great during the period when the movies were being released and the DVD releases, but it quickly crashed after that.
GW got back on track by extending an olive branch to old gamers, things like Apocalypse for 40k, Space Hulk and the Mighty Empires tiles for fantasy. Also the relatively great value starter sets bought them a lot of goodwill and a new lease on life. They also started cutting costs, closing GW stores, relocating to cheaper locations, etc.
GW is a $200+ million a year (revenue) company. Most of that goes to personnel and rent (gas/water/power). In the period of June-November 2010 they had a profit margin of ~11%($11M of $100M), for the period of June-November 2011 that went up to 14.5% ($15M of $105M). If you think that most of thatextra profit came from increased prices, your wrong. Their Royalty income went up from $1.7M to $4.3M (in six months). Royalties are for the FFG board games and RPGs, the THQ computer games, the MMO, the movie, etc.
I've been a GW consumer almost as long as I've been playing RPGs, as a matter of fact I might have bought my first White Dwarf before I even started playing D&D (my first RPG was ODM, Oog des Meesters, the dutch version of DSA), that's ~25 years ago. Have I been pissed over the years? Yeah, hell yeah! I remember when my allowance finally went up and then mini prices rose, I got my first job and they went from four minis to three in a blister for the same price. A pay rise, a price rise... I was twice screwed because at the time there was no GW store in the Netherlands, there was one, maybe two stores in the whole country who imported GW stuff at inflated prices. This was before the internet was big and everyone could buy online, and at the time very few people had credit cards (in the Netherlands), so mailorder was out as well. I was lucky that some of my fathers colleagues that did international transport runs sometimes could get me something from a games store in the UK at far lower prices. So, I've been around for a while, but GW certainly hasn't captivated me constantly over 25 years, there have been many 'breaks'. Sometimes from lack of interest, sometimes from lack of cash, even from lack of space to actually store minis and books. But I do keep going back, call it nostalgia, I like what I like.
That said, I remember when GW had sales, they had online deals where you paid very little and got a LOT of metal minis (still got a crate of metal mercenaries). While excellent for the gamers, it was unhealthy for the company, because if you go on the secondary market it's flooded with second hand GW minis. GW minis don't go bad and with a very few exceptions you can keep using their minis, gw has to compete with itself on that secondary market. If you dump a lot of cheap minis in that big global pool of GW minis, they are cheap on the secondary market and your market share can't keep up with the product already out there. If they stayed that course they would have gone out of business by now.
GW is making their products more expensive, not only to make a greater profit, but primarily to extend the life of the property. If you can't buy everything you want right now, you'll keep coming back. You might have noticed that the amount of new releases is just enough to keep folks from buying everything they want (unless they have really deep pockets). Raising prices and doing a new edition every four years or so isn't going to keep the reaper away for ever, you might have noticed that GW has been releasing new multi functional plastic kits, one kit that can make two or three different unit types (and I'm not talking about sword or spears), and a new armybook/codex getting half a dozen new units. Currently the WFB/40k range has 31 armies (I'll exclude LotR as that is a licensed property and has a limited lifespan anyway). If we have 5-6 armybooks/codexi a year, that's 30-36 new units a year, luckily they've started doing 2-in-1 boxes, so you've probably got ~20 new product codes a year, products that don't replace, but expand. Look at the size of a GW store or a store that has the whole WFB/40k range, that's a lot of shelf space. Now imagine that shelf space expands with 20 new products a year, how many years do you think it takes before it won't fit anymore? Stores either don't carry the entire GW range (and get penalized for doing so) or GW makes certain items mailorder only (which is bad overall). Now, due to the digital age and online shopping, GW has a chance, and they've done a good job with their webstore, which is excellent.
GWs costs are largely due to the cost of GW stores and personnel that works there. If they eliminated all the GW stores, they would save immensely in costs, but even if others were to pick up the slack that wouldn't mean they would see a huge increase in profit. A sale from a GW store is 100% revenue for GW, a sale from generic games (web)store is 50-60% revenue for GW. And one has to question whether there wouldn't be less new GW gamers. You can say a lot about GW stores, but they are a hub of GW gaming. In a time when most game stores are going the way of the dodo, that can be a good thing. How often has GW been the introduction into the gaming hobby?
Don't get me wrong, GW is expensive as hell, getting more so every year. Haven't bought new product in over a year. Four years ago I moved to a new house which gave me room to extend my collection significantly, and with the release of the new 5th edition 40k I spent about $25k+ in two years (2008-2010). I made a lot of trades with that stuff, and now have a lot of stuff still laying around to be assembled/painted. i do have some GW stuff on my wishlist, mostly armybooks and a few new plastic kits that include plastic characters, might actually buy that this year. Also the new 6th edition 40k starter set might seriously tempt me (who am I kidding ;-).
But GW isn't the only one that's expensive as hell, WotC is going to sell Dungeon Command for $40, for 12 prepainted miniatures. Paizo is selling their new set for $16, for 4 random prepainted miniatures (1 large, 3 med/small). Compare that to GW $25 for 10 unpainted minis (core troops), sure prices go from $35 for 20 to $40+ for 10. And large creatures can go as high as $45 for three. A Privateer Press unit of 6 unmounted knight models is $35. Sure, you need a lot more troops for your 3000pt WFB army then for your 50pt Warmachine army, but that's a whole different discussion.
I personally think that GW is a giant soap bubble, that keeps inflating their product line until it's so large that it becomes unmanageable and eventually unsellable. Price hikes might be a problem if they seriously outdistance the competition in a unit for unit price battle, which I doubt (Mantic isn't competition, yet). New editions isn't a real problem either, every four years a new edition isn't exactly a huge issue either when you compare it to D&D, Warmahordes, FoW, HG, or almost any other mainstream game system.
IMHO GW is a solid business for now (decent investment), that might change in the future. I'm quite neutral about GW as a gamer, sure I like their products and I like most of their models, that 'like' is seriously tempered by things like price hikes, crappy quality control (finecast), paint color changes, rumor clampdown, sleazy sale tactics at GW stores (which I luckily don't frequent all that often and they recognize me from a distance *grins evily*), etc. WotC has left me with a far greater distaste in my mouth.
But the 'Kid' in me wants that Chapter (1000) of Space Marines (half way there), wants to have 40,000 points worth of Eldar (haven't counted yet), wants to play Space Marine (Epic) and Adeptus Titanicus in 40k scale (working on it). The 'Builder' in me wants to build that Thunderhawk(s), classic Warlord Titan, etc. The 'RPGer' wants those darned cool monsters to throw at his players...
As a closing note, I don't care as a gamer if a company is a 'good business', I don't play with them. I like certain products and don't care who makes them, and I buy them when I can. Is there a limit to what I'll easily pay for a product, most definitely, GW reached that about two years ago. Is there a limit on what I want to pay for a product, sure, GW reached that a year ago. There is also a limit on what I can pay for a product, I'm curious when GW will reach that.
Fun fact: Plastic Space marines have become seven times as expensive over the last 25 years. Rhinos six times as expensive. Land Raiders eight times as expensive. Plastic Skeleton 7.5 times as expensive. A constant 3% inflation would make a product two times as expensive as 25 years ago.
Good post.
