Favorite Lines from GW Annual Report

So as per what I used to do I skimmed through the report.  GW continues to be pretty flat in performance which is pretty good.  Sales were down and units were down even more but that is par for the course.  If you look close Retail is not profitable but all those limited editions and such have pushed the a lot of sales into the highest margin mail order channel.  Overall much less interesting than last year which read like a big F-Off from the outgoing CEO.  Here are my two favorite lines:

"In July 2015, we relaunched Warhammer Fantasy to broad acclaim ‘Warhammer: Age of Sigmar’. We are so proud of this new range of miniatures that we have commissioned an additional statue at our HQ to complement our Space Marine, which has delighted our customers and staff for the last 17 years. You have to see it to believe it, you will not be disappointed."

I have not seen anyway complaining about the miniatures other than they are just taking Space Marines back to their roots of knights in space to knights in astral realms.

"In my opinion the greatest risk is the same one that we repeat each year, namely, management. So long as we have great people we will be fine. Problems will arise if the board allows egos and private agendas to rule. I will do my utmost to ensure that this does not happen on my watch."

I think this is the truest thing that GW has written in their report in a long time.  This guy might be trying to rock the boat a little.  He is still emphasis cash return over growing the player base but he admits that there have been the problems in the upper levels.  They say they are trying to expand their price point lines but without sacrificing margin and that management is involved in monthly product brainstorm sessions.  All of that is interesting.

The main issue they still have is that they do not really try to understand the customer base.  They are right in saying that the customer base whats great looking models.  They are certainly the largest manufacturer of great looking models.  No one in the fantasy/sci fi ranges do injected plastics are at their level.  I cannot really even debate that but again the production method vs use are still misaligned.  They should not be happy seeing unit volume drops since that uncuts the margins of the whole company worse than anything else.  Each year recently were have seen sales drop while prices rise and the number of models used increases which clearly implies less customer.

They need to really invest some time into understanding their customers and how they are segmented.  Nice models only get you so far especially in a world with so many options.  It probably does not carry the new customer past assembling a few models and learning that it is a ton of work to make the models look like they do in the pictures.  The customer needs to be engrossed in the world by either the fluff or the games.  You can look at the LOTR bubble to understand this.  The models were the models but when the movies were at the top of the wider worlds interest they sold like hot cakes.  Once the movies passed so did sales because those stories are a closed narrative.  You can love LOTR but often do not need to explore the world with your own forces as what they do does not affect the world.  The story is outside your hands.

The games themselves are the way you build the story and feedback on the fluff and involvement that the players invest.  It is like a 3 legged chair of Models, Fluff, and Games that hold the interest of the customers.   The retail stores built the empire by allowing them to build a scale of production to make their beautiful plastic kits and they have been riding that empire down from having to 3 top miniature games in the world to having one of the top miniature games in the world.

GW will to continue to exist for years to come because they are focused on the bottom line which is certainly a success but I think they will to stretched to really grow their revenue significantly without bigger change ups in the future.  Every year more players stop than start and they have to keep increasing the prices to make up the difference.  When I got back into GW products and looked at 40K and WFB for the first time(played BB, Space Marine, and Dark Future in the late 80s early 90s)  in 2005-2006 the starter boxes were 40 and like 48 dollars.  The Black Reach box started at 60.  The Age of Sigmar box is 125.  That seems like a lot for a company who runs their profits off very dedicated (addicted) customer base.  Maybe you only want customers who are willing to drop 125 dollars to try a game since they clearly have more money to buy models later.  The free rules for Age of Sigmar are a good start as you can sell people battalion boxes at like 90 dollars if you add a character and it is a starter army for any faction in the game.  Give that box a special formation and away people could go.