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Why Games Workshop is not a good business
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<blockquote data-quote="Cor Azer" data-source="post: 5872372" data-attributes="member: 870"><p>Preamble: I hope my tone doesn't come off too harsh. I'm actually rather enjoying this debate - a nice change from those that quickly devolve into "Nyuh-uh - you!"/"No way - you"</p><p></p><p></p><p></p><p>I appreciate the apology, but as a general tip - attempting to justify something after you've apologized makes the apology seem less sincere.</p><p></p><p>And thankfully, I like to think I love to gripe about where GW goes wrong (why must they torture my Sisters so...), but I also try to give credit where credit is due.</p><p></p><p></p><p></p><p>Don't mistake disagreement with misunderstanding.</p><p></p><p>I will note that my last post was typed on an iPhone, so I was somewhat terse in somethings due to "fat finger-small keyboard"-itis.</p><p></p><p>I had thought an earlier post with arguments against the licensed material had already covered that point, so I was going against the extension of it. My apologies for not specifying that.</p><p></p><p></p><p></p><p>I'm not arguing that they don't target every demographic, but really, is your argument that they should? Yes, I know you're not saying they should target every demographic, but they do target the ones that make sense. The ones that make them money.</p><p></p><p>Just like baby products aren't advertised to the male 18-40 demographic. Yes, a lot of those males are fathers, and yes, a lot of them have money to spend on those baby products. But it's much more effective to target advertising at the female 18-40 demographic - it's cheaper (I'm sure TLC doesn't charge the same for advertising as ESPN), and it's more likely to yield profit (strictly anecdotal, but us fathers don't often make the baby product purchasing decisions). </p><p></p><p>Could baby product producers target men? Sure. They might even make a little bit of money. But it would cost them a heck of a lot, money that would be much more wisely invested into greater targeting of their existing demographic.</p><p></p><p>Sound familiar?</p><p></p><p></p><p></p><p>Another tip, if you write something, and you yourself realize that it might be offensive, adding "don't mean to be offensive" does not suddenly make it not offensive. It's much easier to rewrite it in a non-offensive way. Thankfully, years of tech support have thickened my skin, so I try to ignore the presentation and seek the meat.</p><p></p><p>GW stores have limited shelf space. They are inherently finite given physical products in a physical space. What you haven't done is address how removing some of their product that yields 100% profits to them and replacing it with product that yields, at best, 10-15% somehow magically helps (That number is strictly monkey-poo; I don't know what their licensing percentage is, but if it's higher than that, then in my opinion they've got some wicked-skilled lawyers or their licensees are wicked-inept).</p><p></p><p>How does it help their business? Do you really think that many new customers would be brought it to cover that gap? How long would that take? From another posters comment, the shops are doing just above break-even so could they sustain a short term loss until the gap is made up?</p><p></p><p>Are you also suggesting they spend their advertising budget on another companies licensed product as well? Because if GW doesn't advertise them in places these new customers look, then how would they know these licensed products exist there? I don't expect FFG spends its money to advertise GW stores - I haven't seen any ads lately, but I expect that they say stuff like "shop online at FFG or at your local gaming store". So the two possibilities are GW's license forces its licensees to advertise the GW shops (which they might, but I would suspect that the negotiated license percentage drops accordingly) or GW spends time advertising another company's product, which still cuts into that hypothetical 10-15%.</p><p></p><p>And without any extra advertising, the only new customers are those who just happen to wander by this colorful store with painted miniatures in the windows and pop in to see what it's all about. Which is what they already get. So all you gain by having the licensed products in there are the very few who go "Huh! Painted miniatures - cool. Oh, but I don't want to buy any, but hey! I can play a game where I imagine I'm playing one of them!" That sounds like a suspiciously small number of new customers to overcome the huge gap in potential profit of carrying their own products vs licensed ones.</p><p></p><p>An exaggeration? Perhaps, but I wouldn't think by much.</p><p></p><p></p><p></p><p>Ah. A cynic. That's ok, but I tend towards realism. Well, no, I tend towards idealism and optimism (with a dash of self-deprecation), but logic keeps me weighed down.</p><p></p><p>Yes, I made assumptions. But all assumptions are not created equal. Generally, assuming someone's incompetence in their area of expertise is a poor assumption. Likewise, extraordinary talent is called extraordinary because it's beyond the ordinary. I tend to assume general competence, nothing below or above average.</p><p></p><p>Unfortunately, I suspect nobody will ever show you evidence to the contrary. If (and since I assume general competence, I suspect that's a 'true') GW did do research into the feasibility of carrying licensed products in their stores, they would never release it for public consumption. It would show too much information about their financial situation and/or risk acceptance/aversion. Companies do not like giving out that information.</p><p></p><p>Thankfully, were this a full and proper debate, we wouldn't have to show evidence. Evidence is generally required of the person making the extraordinary claim (ie - you and their ignorance). Of course, you get off the hook, because 1. this isn't really a full and proper debate, and 2. the only way I can see you ever proving that they did ignore the potential is by gaining complete access to all of their financial and corporate documents and trawling through them to show there's nary a mention of carrying licensed products. Again, companies do not like giving out that information.</p><p></p><p>Which leaves us at two assumptions - you and their ignorance in their area of expertise, and me and their general competence in their area of expertise. I know which I'd bet on, but then, I'm inherently biased towards my own assumptions (which is why they're mine).</p><p></p><p></p><p></p><p>It's close to a parallel, but not quite, assuming I understand you correctly - your shop gave up shelf space for your photos to allow shelf space for photos by other people? So the customers are still looking for photos, right? And you didn't have to change your advertising much (if at all), would you have? It's still photos (I can't speak to how famous the photographers are/were, so perhaps they were a big deal and I'm paying them an insult by saying 'still photos'). Did you really get in that many customers who wouldn't have already entered your store?</p><p></p><p>To be clear, I don't want to imply that expanding the lines of products carried <em>can't</em> be beneficial. It's all about risk. The shop you worked for was prepared to take that risk, and for you, it worked. GW, for their own reasons, are not prepared for that risk, although I suspect it's because in their assessment, it's not worth it. Risk-aversion doesn't make a company 'not good'.</p><p></p><p></p><p></p><p>GW has the distribution network to get <em>their</em> product to their shops. They do not have the network to get other people's products out to them. That would require new routes from other companies' warehouses to their own, or setting up addition distribution routes from those companies to deliver directly to the GW shop. So I would argue it would not be any cheaper for them to get the licensed products. GW may be a heavy-weight in the miniatures market, but they don't wield the influence a place like Walmart has to dictate the distributor's prices. There might be a slight advantage in that they could order at bulk rates (if such exist), but I wouldn't be surprised if that advantage weren't offset by the extra labour costs for them to break those bulk orders down to reship to individual stores.</p><p></p><p>I'll give you the sale forces - I don't think it'd be too much of a stretch to assume a general level of geek knowledge amongst their retail staff for them to know a thing or too about the licensed products.</p><p></p><p>GW's shops <em>are</em> different though. A regular retailer, one who doesn't also produce their own product, doesn't truly care what product they sell. They buy what their customers want, and then resell it in a way that, with luck, makes them money. They might specialize in a particular area due to owner and staff knowledge, but within that area, it's just personal appeal and what the customer wants. That's not the case for GW though. GW aren't there to just sell product. They're there to sell <em>very specific</em> product. Everything I've ever heard says that gaming shops run a pretty thin margin, and GW seems to stay above that margin by focusing on the products that make them the most money - their own. They're there to get people into the miniature wargame hobby. Pushy exaggeration from the earlier linked comics aside, they want new customers to come in, and buy dozens of miniatures. That's where they make their money. Getting new customers in to buy a licensed RPG and then maybe a model, isn't worth the advertising and carrying costs to them. Now, it might be for you. It might even make a little bit of money. But, especially now that GW is a publicly traded company, they have an obligation to their shareholders to turn over as much profit as they legally can. And simply put, they make more money selling only their direct products. At least an order of magnitude more money.</p><p></p><p></p><p></p><p>And again, I ask why? What is the gain? You haven't adequately explained that.</p><p></p><p>Who are these mythical new customers who would be looking for a licensed GW product, and know enough that GW has it's own stores, but don't know about GW's main product line? If they're only familiar with the IP, without realizing it's by GW, why would they be looking at the GW shop in the first place? Is that really a big enough demographic to make up the gap between 100% profit yield and whatever fraction the licensed product yields?</p><p></p><p>I can't see it.</p></blockquote><p></p>
[QUOTE="Cor Azer, post: 5872372, member: 870"] Preamble: I hope my tone doesn't come off too harsh. I'm actually rather enjoying this debate - a nice change from those that quickly devolve into "Nyuh-uh - you!"/"No way - you" I appreciate the apology, but as a general tip - attempting to justify something after you've apologized makes the apology seem less sincere. And thankfully, I like to think I love to gripe about where GW goes wrong (why must they torture my Sisters so...), but I also try to give credit where credit is due. Don't mistake disagreement with misunderstanding. I will note that my last post was typed on an iPhone, so I was somewhat terse in somethings due to "fat finger-small keyboard"-itis. I had thought an earlier post with arguments against the licensed material had already covered that point, so I was going against the extension of it. My apologies for not specifying that. I'm not arguing that they don't target every demographic, but really, is your argument that they should? Yes, I know you're not saying they should target every demographic, but they do target the ones that make sense. The ones that make them money. Just like baby products aren't advertised to the male 18-40 demographic. Yes, a lot of those males are fathers, and yes, a lot of them have money to spend on those baby products. But it's much more effective to target advertising at the female 18-40 demographic - it's cheaper (I'm sure TLC doesn't charge the same for advertising as ESPN), and it's more likely to yield profit (strictly anecdotal, but us fathers don't often make the baby product purchasing decisions). Could baby product producers target men? Sure. They might even make a little bit of money. But it would cost them a heck of a lot, money that would be much more wisely invested into greater targeting of their existing demographic. Sound familiar? Another tip, if you write something, and you yourself realize that it might be offensive, adding "don't mean to be offensive" does not suddenly make it not offensive. It's much easier to rewrite it in a non-offensive way. Thankfully, years of tech support have thickened my skin, so I try to ignore the presentation and seek the meat. GW stores have limited shelf space. They are inherently finite given physical products in a physical space. What you haven't done is address how removing some of their product that yields 100% profits to them and replacing it with product that yields, at best, 10-15% somehow magically helps (That number is strictly monkey-poo; I don't know what their licensing percentage is, but if it's higher than that, then in my opinion they've got some wicked-skilled lawyers or their licensees are wicked-inept). How does it help their business? Do you really think that many new customers would be brought it to cover that gap? How long would that take? From another posters comment, the shops are doing just above break-even so could they sustain a short term loss until the gap is made up? Are you also suggesting they spend their advertising budget on another companies licensed product as well? Because if GW doesn't advertise them in places these new customers look, then how would they know these licensed products exist there? I don't expect FFG spends its money to advertise GW stores - I haven't seen any ads lately, but I expect that they say stuff like "shop online at FFG or at your local gaming store". So the two possibilities are GW's license forces its licensees to advertise the GW shops (which they might, but I would suspect that the negotiated license percentage drops accordingly) or GW spends time advertising another company's product, which still cuts into that hypothetical 10-15%. And without any extra advertising, the only new customers are those who just happen to wander by this colorful store with painted miniatures in the windows and pop in to see what it's all about. Which is what they already get. So all you gain by having the licensed products in there are the very few who go "Huh! Painted miniatures - cool. Oh, but I don't want to buy any, but hey! I can play a game where I imagine I'm playing one of them!" That sounds like a suspiciously small number of new customers to overcome the huge gap in potential profit of carrying their own products vs licensed ones. An exaggeration? Perhaps, but I wouldn't think by much. Ah. A cynic. That's ok, but I tend towards realism. Well, no, I tend towards idealism and optimism (with a dash of self-deprecation), but logic keeps me weighed down. Yes, I made assumptions. But all assumptions are not created equal. Generally, assuming someone's incompetence in their area of expertise is a poor assumption. Likewise, extraordinary talent is called extraordinary because it's beyond the ordinary. I tend to assume general competence, nothing below or above average. Unfortunately, I suspect nobody will ever show you evidence to the contrary. If (and since I assume general competence, I suspect that's a 'true') GW did do research into the feasibility of carrying licensed products in their stores, they would never release it for public consumption. It would show too much information about their financial situation and/or risk acceptance/aversion. Companies do not like giving out that information. Thankfully, were this a full and proper debate, we wouldn't have to show evidence. Evidence is generally required of the person making the extraordinary claim (ie - you and their ignorance). Of course, you get off the hook, because 1. this isn't really a full and proper debate, and 2. the only way I can see you ever proving that they did ignore the potential is by gaining complete access to all of their financial and corporate documents and trawling through them to show there's nary a mention of carrying licensed products. Again, companies do not like giving out that information. Which leaves us at two assumptions - you and their ignorance in their area of expertise, and me and their general competence in their area of expertise. I know which I'd bet on, but then, I'm inherently biased towards my own assumptions (which is why they're mine). It's close to a parallel, but not quite, assuming I understand you correctly - your shop gave up shelf space for your photos to allow shelf space for photos by other people? So the customers are still looking for photos, right? And you didn't have to change your advertising much (if at all), would you have? It's still photos (I can't speak to how famous the photographers are/were, so perhaps they were a big deal and I'm paying them an insult by saying 'still photos'). Did you really get in that many customers who wouldn't have already entered your store? To be clear, I don't want to imply that expanding the lines of products carried [i]can't[/i] be beneficial. It's all about risk. The shop you worked for was prepared to take that risk, and for you, it worked. GW, for their own reasons, are not prepared for that risk, although I suspect it's because in their assessment, it's not worth it. Risk-aversion doesn't make a company 'not good'. GW has the distribution network to get [i]their[/i] product to their shops. They do not have the network to get other people's products out to them. That would require new routes from other companies' warehouses to their own, or setting up addition distribution routes from those companies to deliver directly to the GW shop. So I would argue it would not be any cheaper for them to get the licensed products. GW may be a heavy-weight in the miniatures market, but they don't wield the influence a place like Walmart has to dictate the distributor's prices. There might be a slight advantage in that they could order at bulk rates (if such exist), but I wouldn't be surprised if that advantage weren't offset by the extra labour costs for them to break those bulk orders down to reship to individual stores. I'll give you the sale forces - I don't think it'd be too much of a stretch to assume a general level of geek knowledge amongst their retail staff for them to know a thing or too about the licensed products. GW's shops [i]are[/i] different though. A regular retailer, one who doesn't also produce their own product, doesn't truly care what product they sell. They buy what their customers want, and then resell it in a way that, with luck, makes them money. They might specialize in a particular area due to owner and staff knowledge, but within that area, it's just personal appeal and what the customer wants. That's not the case for GW though. GW aren't there to just sell product. They're there to sell [i]very specific[/i] product. Everything I've ever heard says that gaming shops run a pretty thin margin, and GW seems to stay above that margin by focusing on the products that make them the most money - their own. They're there to get people into the miniature wargame hobby. Pushy exaggeration from the earlier linked comics aside, they want new customers to come in, and buy dozens of miniatures. That's where they make their money. Getting new customers in to buy a licensed RPG and then maybe a model, isn't worth the advertising and carrying costs to them. Now, it might be for you. It might even make a little bit of money. But, especially now that GW is a publicly traded company, they have an obligation to their shareholders to turn over as much profit as they legally can. And simply put, they make more money selling only their direct products. At least an order of magnitude more money. And again, I ask why? What is the gain? You haven't adequately explained that. Who are these mythical new customers who would be looking for a licensed GW product, and know enough that GW has it's own stores, but don't know about GW's main product line? If they're only familiar with the IP, without realizing it's by GW, why would they be looking at the GW shop in the first place? Is that really a big enough demographic to make up the gap between 100% profit yield and whatever fraction the licensed product yields? I can't see it. [/QUOTE]
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