On Friday, a British investing site called Interactive Investor published an article titled Games Workshop AGM: A relentless profit machine. I’ll admit to being more than passively interested in the business world – I’m the son of small business owners, have actively invested in the past, and well, like many systems governed by numbers, finance is a fascinating thing to look at.

What follows is my take on the article, and what it implies.

First, the title, which is a little sensational. Nearly all corporations, at their heart, are “relentless profit machines”. Making money and returning it (in the form of dividends, capital gains, etc.) to their owners is what corporations do. You might as well have written Apple: A relentless profit machine or Nabisco: A relentless profit machine. It’s the financial equivalent of The Pacific Ocean: A large body of liquid.

Beyond that though, the article is an interesting look at the company behind the hobby we love, from the perspective of an outsider. And I think tellingly, how we portray what we feel about the hobby, given he headed to their meeting with this impression thanks to the Internet:

I came to the AGM wondering whether Games Workshop was alive to the risk that it is serving a diminishing band of nostalgic modellers who are prepared to spend a lot of money on intricate miniatures they will probably never use in battle, while through price rises, rule changes, and staff reductions at Games Workshop stores, the company has alienated new recruits who cannot afford armies of figures, and frankly aren’t that bothered about how pretty they are.

While some of this sentiment is valid, yikes does the internet occasionally get really negative.

There are other tidbits throughout that I think are worth looking at:

The turnover rate at GW stores is in the neighborhood of 30%. That doesn’t actually surprise me – they’re pretty middling retail jobs, and the whole one-man store concept (which I really hate) strikes me as brutal from the perspective of that one man (or woman). And while the author mentions many people getting into it as a “vocation” – because what gamer looking for entry-level jobs wouldn’t want that entry level job to be at GW, it’s pretty easy to go elsewhere and keep up with the hobby via a better salary. For example, I love Apple computers, loved the discount I got there, and really enjoyed the retail environment. That didn’t mean I didn’t quit when I got a better job.

The one-man stores caused lost customers, sometimes as much as 30%. This also doesn’t surprise me – scaling any retail outlet back will cause them to lose customers, but those stores are profitable now. That’s perfectly reasonable behavior from a company – they’re not a charity, nor are they obligated to provide you gaming space at a loss.

But the big thing that’s gotten everyone’s attention is this:

It does not mention games. In conversation, I’m told that the word “Game” in Games Workshop encourages the misconception that games are its business, but that only about 20% of Games Workshop’s customers are gamers. The rest are modellers and collectors. Maybe half of them think about playing now and then. The other half have no intention. People actually walk into the stores because they’re curious about modelling fantastic armies.

Honestly, we have no way of knowing this is true, but I suspect it’s nonsense, and if that number is even close to correct, it’s blind luck. Estimating something like that is hard (part of what I do for a living is estimating what proportion of people with X trait also have Y trait, which is exactly what this is – and it’s tricky). Especially for a company that has claimed, in the past, not to do market research.

What do they mean by customers? People who shopped at a GW store in the last month? 6 months? Year? What about people buying GW products online, or from their FLGS? What counts as a “gamer”? People phase in and out of these categories – for example, at one point I was clearly a gamer, but not a GW customer (I was using a club army the University had). Then I was both. Then I was a customer but not a gamer because I was moving too much. Then…well, you get the idea.

It also doesn’t necessarily matter to us – the gamers. After all, you don’t have to be a GW customer to play their games. And you certainly don’t necessarily have to be a frequent one, especially if you aren’t trying to keep track of the competitive meta. On the other hand, it is interesting that GW believes this is true. You can see it in a lot of other ways – between Unbound, “Forge the Narrative”, Age of Sigmar, the battle reports in Warhammer Visions, GW the company has been moving to “Play with your cool figures with your friends” as their primary organizing principle. You might disagree with it, but it’s a logical one from their perspective.

My observation, over the last year and all the changes its brought, is that GW has been remarkably consistent in it’s overall message – more freedom, less structure. Now we can see why they think that, and the number (right or wrong) that they’ve pegged to it.

There is one final entry in the article that I’d like to take issue with:

Potentially lucrative income from licences granted to video games producers like the much anticipated and soon to be released Total War Warhammer will always be incidental because video gamers do not become modellers, and Games Workshop doesn’t know how to make good video games.

Video Gamers certainly do become modelers – ask anyone who had a red painted army during the Dawn of War series’ popularity. I know a huge number of people whose first real exposure was that series, and it’s definitely driven sales. Indeed, it was one of the reasons why I was so surprised that GW detonated WHFB right before Total War: Warhammer comes out. But I definitely think the analyst is off the mark there.

Not much really to say beyond that – mainly, the article was an interesting glimpse at the business of the hobby, and a reminder that everyone needs to keep in mind when interacting with GW: It’s a large, publicly traded company, and it’s going to act like one. Also, I really want to make some 40K related t-shirt reading “We Are the 20%”.

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