GW LOGO
For those of you that are unfamiliar with Games Workshop (GW), it is the powerhouse of the tabletop wargaming industry. They developed and published games such as Warhammer Fantasy and Warhammer 40,000. GW has always had the industry firmly in its grasp, but recently things seem much less stable and there has been more uncertainty than ever before surrounding the company. But the question echoing in every wargamer’s head still remains. Is Games Workshop digging its own grave or is there something we are missing?

Games Workshop was founded in 1975 in London and was originally a generic board game developer, but later blossomed into the company we used to know and love. The company that pioneered tabletop wargaming and gave us the Warhammer world. Like them or not, GW was a very crucial part of miniature wargaming history. Now, unfortunately, they are known as the company that overcharges players for their products, tried sued a writer for using the word “space marine”, and put small business owners in a stranglehold with their online marketing restrictions. With their current financial figures showing signs of a company going downhill, there is little to no mystery why.

The latest financial figures for 2014 show that not only are their sales down 12%, but they suffered a profit loss of over 30% in a single year. To make matters worse, the release of these figures resulted in their stock dropping 24% in a single day. You don’t have to be an economist to know that those are quite significant figure changes for an international company. Accompanying the figures on the financial report was a statement from chairman and acting CEO of Games Workshop, Tom Kirby, that reads:

“Games Workshop has had a really good year. If your measure of ‘good’ is the current financial year’s numbers, you may not agree. But if your measure is the long-term survivability of a great cash generating business that still has a lot of potential growth, then you will agree.”

Most logically thinking people will look at those numbers and that statement and facepalm very hard. This means that Games Workshop is so deep in denial that they are losing grasp of the industry or there is something that everyone is missing. A company of their caliber should be able to manage good financial figures and maintain growth and “survivability”. Unfortunately, there are a few things they are overlooking.

One of the decisions that GW made that had a huge impact on the wargaming community as a whole was monopolizing online markets for their products. Games Workshop released a retailer policy in 2013 that basically made independent retailers unable to sell their products online. How is that possible? Legally, it can’t be enforced, but GW pulls it off by only selling to retailers that agree to abide by their policy. Why? Well, GW is not exactly known for selling affordable games and there prices vary from country to country. As a result, many players were buying online from retailers in more affordable countries. This resulted in a lack of purchases from the GW store direct, which required customers to purchase and ship at their current countries price range.

This seems like a very smart business move on their part, except for one small problem. They just severely damaged the small niche community that is their source of income. They “bit the hand that feeds” if you will. The wargaming community is large, but by no means it is mainstream. It is still a fragile ecosystem. By removing the ability for independent retailers to sell GW products on their online stores, they are severely crippling said store’s customer base. The store is now limited to its local area. Maintaining a traditional game store is a fragile business to begin with. It doesn’t take much to throw off the balance. Miniwargaming.com, for example, was a very popular online retailer for well priced GW products that had to close down its entire store due to the policy enforced by GW because their profits were so reliant on online purchases of GW products.

Not only did this policy damage retailers in a niche community, but it also emphasized the severity of the price hikes. With cheaper alternatives out their, such as Warmachine, Hordes, and Malifaux, GW games are looking less appealing to would be wargamers. When your whole business is reliant on a niche community of players convincing their friends to join, how is a $500 dollar investment for tiny plastic pieces going to sound appealing? It isn’t. In the past few years, GW practically doubled their prices, but defended it by saying their profit remained the same. So if prices are doubled and the same amount of money is made, that means you lost half of your customers. Not a solid strategy in a market depending on word of mouth suggestion.

There is no doubt that Games Workshop truly was a reputable company, but recently it has been acting more like Glenn Close from Fatal Attraction. One can only hope that Games Workshop pulls itself together and rearranges its priorities before it is too late. With growing competition in the wargaming market, they are going to have to get things sorted out and bring something better to the table if they want to stay competitive.