Plenty of Dark Clouds on the Horizon for Games Workshop in 2013?

I’ll begin by prefacing I’ve always felt Games Workshop produces excellent miniatures and have solid intellectual properties in Warhammer and Warhammer 40k (how many sorry attempts at 40k clones have we seen over the years people?) while, at the same time, I’ve had major issues with plenty of other ways in which the company does business. Personally I’ve always felt their pricing system is completely out of whack, their playtesting needs serious revisions, and a draconian overprotection of their IPs leaves a lot to be desired; sending out “cease and desist” notices to people who’d post painted images of GW miniatures – thus promoting the company and that particular figure – struck me as asinine at least and downright detrimental to promoting positive brand identification at worst.

There are plenty of reasons coverage of Games Workshop is extremely sparse here on TGG.

This isn’t to say GW hasn’t provided plenty of gaming goodness for folks who dig minis or haven’t done a lot to raise awareness and interest in miniature gaming right here in the good old U.S. of A and around the world. I had quite a few 40k miniatures in my day as well as the Epic 40k line (had tons of those as my friend Ed Rupprecht will attest and we played a ton of Adeptus Titanicus and Space Marine back in the day) and religiously picked up White Dwarf magazine for a good five year span. This certainly isn’t going to be one of those, “I hate all things Games Workshop” sort of posts because A) there’s very little in this word I would assign such a strong feeling as hatred and B) I can’t imagine anything in our hobby of kicking it with our friends over a board or tabletop which could conceivably bring me to such emotion.

That said, I do understand GW does have legions of detractors, which is understandable, while many others out there are also huge supporters of the company. For me, Games Workshop is more of a non-entity when it comes to my thoughts about gaming seeing I no longer purchase any of their products or play their games. This doesn’t mean I don’t hear about what’s going on with the company or know about releases they have in the pipeline.

The announcement Mark Wells was stepping down from the position of CEO of Games Workshop last week struck me as the latest in a string of goings on at GW which fans of their games might want to take note and is an indication there’s trouble currently going on behind the scenes with more on the horizon for GW. Most worthy of mention is how the announcement was made to investors and the wording used regarding Wells leaving the company:

Games Workshop announces that after five years of outstanding service Mark Wells is stepping down as CEO.  He leaves on good terms and with our very best wishes.

The board will be seeking to appoint a new CEO in due course.  In the meantime, our Chairman, Tom Kirby, will be Acting CEO and Chairman.

As anyone who is familiar with the business world, usually when someone with as prestigious a position of CEO is leaving they normally have more than four sentences devoted to their departure. If they happen to be truly stepping down as opposed to being thrown out the door, that is… Internal communications within the company indicate the reason for Wells’ exit:

The needs of the business over the last few years has meant there has been a gradual overlapping of the roles of Chairman and CEO.  Recently this has become so complete that, after discussions together, Mark and Tom have agreed that the CEO’s role, as it stands, is redundant.

Now I don’t run a multimillion dollar miniature gaming company in the U.K. but anyone going about operating a business anywhere who thinks the job of chairman and CEO can not only “overlap” but essentially become the same position needs to go back and take Business 101; the two roles are vastly different. This isn’t to say there aren’t plenty of folks out there who are Chairman AND CEO of their companies because there are and those folks are capable of wearing two hats; one is a bowler and the other a ten gallon. The fact Games Workshop has gotten to the point where the Chairman and CEO were doing the same exact job would be extremely worrying if I were an investor. Yet, I’m not buying the official redundancy claim because if that were indeed a fact I think GW would be in much worse shape than it finds itself today. Even though there was a much more courteous press release following the curt send off Wells got on the investors page a few days later, I still saw a smoke screen.

Given the rumors the largest shareholder in the company, Kirby himself, is preparing to cash out it then makes sense to shove Wells out the door and take the reins of both positions to better push the company into a maximum profit mode until Kirby can divest himself of his stock. I sort of laugh writing that last sentence because I can’t think of a time in the last two decades GW wasn’t just pushing for maximum profit but I think you get my drift. I believe we all know a customer first approach isn’t exactly GW’s bag of tricks. Nor, as shown in the past, is public perception of the company foremost in the minds of folks behind the scenes at GW.

Even more reason of concern about the future of GW is the fact 2012 was not a good year for the company. 2011, as a matter of fact, wasn’t a banner year for them either. Of course very few companies around the globe can lay claim to stellar sales and growth over the past couple of years but good sized miniature companies have done better than the average business and many, Privateer Press comes immediately to mind, have done exceptionally well with their intellectual properties – especially here in the U.S. as more and more gamers are getting turned on to products outside of GW’s offerings.

Sales numbers across the board are down with GW (although their profits were up due to the release of Sixth Edition WH40k last June and what was in essence a 20% price hike on all their products coinciding with the release) as their titles aren’t moving off shelves like they once had. Warhammer 40k and Warhammer Fantasy are losing market share at an astonishing rate in the U.S. as American gamers seem fed up with $75 core rule books and Land Raiders. You don’t even have to sit down with Alan Greenspan to do any math, just take a look around your friendly local gaming store which may carry an assortment of miniature gaming lines. Try to remember how much space was devoted to GW products at the beginning of last year, or two years ago, and compare that to what you see today. I’ll bet in a majority of cases you’re going to find there are a whole lot more games you may not have been intimately familiar with in January 2012 occupying shelf space where GW used to reign supreme.

If I were the owner of a gaming store and had to come in every day to look at stock which was taking a couple of weeks or more to move out the door while constantly having to field inquiries into whether I had XYZ system and their figures, which would sell faster than I could unpack the shipments, you can bet I’d be on the phone to my distributor making sure XYZ was on my shelves and I had plenty of back stock. Sales numbers for the first boxed set for the latest 40k rules, Dark Vengeance, were nothing short of atrocious while recent Codex releases are sluggish at best. As the main sales driver for all things GW, if 40k isn’t moving as an owner I’m going to be making sure I’m carrying something which will sell. Add to this the price increases never equal an equivalent profit margin increase for the store owner and the seemingly annual GW bump in price moves more and more owners to move toward more profitable alternatives.

I’m sure plenty of readers are saying to themselves, “Ah… Jeff’s full of it! Games Workshop isn’t going anywhere! GW is a monster of the industry!” Obviously, I’m not saying GW is going to close shop nor, if it did, am I predicting it will happen before you finish reading this op-ed. But I remember a lot of titans of other industries in my lifetime who were much bigger and vastly more profitable than Games Workshop which are now a shell of their former glory or more likely long gone. Xerox anyone? How about Texas Instruments? I’ll bet quite a few people will wonder what in the world is a Texas instrument anyway. What about Radio Shack? Sure, they’re still around but when was the last time you actually walked into one? And by walking in I mean to buy something as opposed to strolling through on a lark because you didn’t even know what the hell Radio Shack sells since it surely can’t be radios…

All leaders in all industries face competition and challengers for the crown; it’s as old as the first moment someone sold something for a piece of copper or gold as opposed to trading for a chicken or a goat. Those which are able to succeed for an extended period of time do three things well: innovate, provide value (or at least a perceived value even if it’s just in the way they treat their customers), and what we used to call in business “if it ain’t broke, break it.” This last concept was a constant self-evaluation of the current business model and the ability to change things up even if everything was operating swimmingly. Apple, under Steve Jobs, was a great example of over performing in the first two and at least holding its own on the last. Unfortunately, it’s been a very long time since I saw Games Workshop do any of those three keys well, if at all. This current GW business model seems to be take a shrinking sales base, continually raise the price that base pays for a product while serving up what is essentially a rehash of the same old same old, and then laugh all the way to the bank.

This way of doing business reminds me of those illustrations you’d see of a snake eating its own tail. That image always struck me as funny because while the snake may have something to eat for a time at some point there just isn’t going to be any snake left. To me this is how GW always seems to go about things. Yes, they are a profitable company yet I always wonder how profitable they could be, or could have been, with other hands at the tiller. Many of their practices have never made much sense to me: promoting new systems in the pages of White Dwarf as if they’d be the greatest thing since sliced bread; devoting hundreds of pages to the game and then abandoning it before the release has time to catch on (Necromunda and Warhammer Historical jump to mind); the long held habit of taking an abandoned release and deciding to destroy the product in order to garner the biggest tax write off when utilizing that stock in a much more customer friendly way as giveaways, prizes, or even paint and takes would have scored nearly as big a write off (Dreadfleet was the latest example I remember of this); a constant stream of new editions of rule sets and Codex which tweak something here or change a couple pages there, which most companies would release as a free PDF download, yet garner yet another rehash which demands all the GW faithful plunk down another chunk of change.

For the most part I think Timothy 6:10 sums it up best when I think about Games Workshop… “For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs.” And the person sharing this is about the least religious person you will even meet but that’s what pops into my head. When I say I’m not religious, I truly mean it so for that quote jumping into my mind has to say something.

I’ll end this post the way I began by reminding the reader I don’t hate Games Workshop. Truth be told I had a lot of fun playing games released by GW, especially some of their board games they long ago abandoned and had a good time painting their minis. I’ve never thought anything I purchased from the company was complete crap or obviously second rate. Yet years ago I realized GW wasn’t my kind of company in which I wanted to finance with my purchases. Simply my point of view and my opinion yet I voted with my wallet and I also vote by my lack of coverage of the company here on my site; I’m sure no one at GW is shedding a tear because we don’t cover their releases and I don’t lose sleep over our lack of that self said coverage. In my opinion, overall I think the good they’ve done for our hobby is a complete wash when compared to the ill they’ve perpetrated on the average miniature gaming consumer; not only through their own actions but by other companies adopting the same practice of nickel and diming their customers to death. Thankfully there are plenty of miniature companies out there who don’t subscribe to the GW theory who easily gain my support and purchases.

As an outsider, I think 2013 will be an interesting year to watch what goes on at GW since the core of the company’s audience is shrinking while at the same time their licensed material is doing quite well – as Fantasy Flight Games can attest – so the core IPs are solid. Personally I think one final wave of price increases will hit before the larger stockholders cash out on the company and by the end of 2014 Games Workshop will be owned by another entity. I can only hope those who take the helm of the company are intent on not only making a profit for themselves but also instilling a philosophy of respect and appreciation of the people out there laying down the hard earned ducats to create that profit.

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Jeff McAleer

Founder/Editor-in-chief of The Gaming Gang website and host of The Gaming Gang Dispatch and other TGG media, Jeff tackles any and all sorts of games but has a special fondness for strategy, conflict sims, and roleplaying games. Plus, he's certainly never at a loss for an opinion...

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