Thursday, May 21, 2009

GW Price Hike

I like Games Workshop products. We also have a great relationship with the company. We're a partner store, which means Games Workshop actively works with us to promote the hobby. Actively, is the key word, as they're the only company that will sit on the phone with me and brainstorm about how to better sell their product and promote the hobby. They provide us prize support, free copies of pre-release books, pre-release models at cost, promotional materials, and order fulfillment second to none. Got two left tracks for a tank? Show me and you get a new tank; keep the incomplete one for parts or terrain. No other game company of note comes remotely close to this kind of support. They're so good that I have to resist being a GW apologist. It's easy to forgive foibles when they do so much right by you.

The price increase announced for June 1st is a reminder that the company can be a bit schizophrenic. Their last annual report promised no price increases, followed a few months later by a price increase. This was due, we're told, to the increased price of commodities, raw materials used in their products. Since then, oil and tin, the main ingredients of their models, have plummeted. This commodities based increase was supposed to be an exception to the five year plan, in which all models are gradually raised in price over a five year period. With the June increase, the five year plan has been abandoned completely, just a few years into it and nine months since the commodities increase. We're told the price increase is about trying to acquire some sort of parity or alignment with national prices around the world. With the Internet, it's easy to see that some countries are getting things cheaper than others, and it creates problems for them.

How do you explain this to a customer in a way that doesn't make you look like an idiot or a liar? It's one of those areas of discussion in which we have to shake our heads and move on. Unfortunately, a lot of customers are moving to other products or activities. Spray primer is a good example of this. It was once one of the best selling items in the store. For some heavy GW stores, GW black spray primer was the most popular product; their best seller. Increasing the price to $15 scared away all but the most die hard hobbyists. Now we sell a stupid amount of Board to Pieces primer with Army Painter primer slowly beginning to gain traction. A $14 bottle of Army Painter primer doesn't seem so expensive anymore.

Other customers are moving on to different games. The time of protest games, like Warmachine, are behind us (Warmachine players are curiously protesting new rules by playing Infinity). These are not gamers with money in their pocket looking to make a statement. These are gamers who have become very cautious with their money, switching to board games or Magic out of necessity. Others just hold off their purchases for some future time. It's a little strange when customers openly long for models they cannot afford. Pulling back from a culture of instant gratification can be a little clumsy sometimes. Poor is the new black, so complaining about your finances is acceptable now.

The truth is a lot of customers are being priced out of the market in these hard economic times. I think there's a permanent shift in US spending, especially in what's considered luxury or premium brands. Games Workshop increasingly backs itself into the premium corner with their price increases. Yes, we love their products, truly, but we're seeing hard limits on the way in which people are willing to spend their money.


  1. GMT in the boardgame realm is by far the closest to what you describe, execpt their prices are entirely reasonable and they don't have market domination like GW does. They have the single best customer service experience of any game company I have dealt with (and many non game companies too). Your selection of GMT games is weak and I understand that is because your wargame crowd is likewise weak (I being one of the few faithful). Still, GMT rocks.

  2. "your wargame crowd is likewise weak"

    Lets use the term 'thin' instead. =)

    Play Lock n Load or ASL?

  3. As a customer GMT might rock, but as a retailer? Not so much. As a smaller company (we sell 9000% more GW), I don't hear from GMT ever. They have no organized play, no demo product, no prize support, no nothin'.

    Worst of all, the reason why we don't do well with their games, is that they suck up a good proportion of new GMT game sales with their pre-order system. This means we almost never get a new GMT game unless it's an expansion. Why? If it's that good, serious customers already own it. It's highly disappointing as a retailer. I see it as representing the death of an industry niche.

    Edited: 9,000% increase.

  4. Cardboard chit wargames companies more or less left the retail market during the initial CCG boom. This was after a long slow decline following the initial RPG boom that was then compounded by the growth of personal computers.

    It wasn't a choice on their part, it was a matter of necessity as the retail market abandoned them in favor of the incredibly hot CCG market. As far as I know, every cardboard chit wargame company that survived this period did so by adopting something similar to GMT's 500 program of direct to customer pre-orders linked to discounts.

    Those companies are still generally happy to sell to retail stores that want to carry their product, but they don't see it as beneficial to encourage that market, and it's hard to blame them.

    They've found a way to produce games with minimal risk. They don't make the physical components until they have enough orders to at least cover the cost of production, so the most they are risking is the development cost on a game that doesn't reach the minimum order amount. That's a relatively low cost compared to the cost of production.

    Sure, they lose visibility and potential new customers, but as much as I love them, these types of games are living on borrowed time anyways, and are unlikely to gain many new players regardless of how much visibility they get.

    The computer is simply better at handling the more complex games, while the simpler ones will eventually move towards companies with better production values. For the most part it's only us fogies who grew up playing them that still do.

  5. As for the price increase, I think their reasoning is weak. They could just as easily lower prices elsewhere if that's their only justification.

    There's a lot of ill will out there over what's really not all that big an increase, largely because people feel that GW should have more respect for the current economic conditions that their customers find themselves in, especially after a lot of those customers showed similar respect for the earlier commodities based price increase.

    People who said they understood that when costs go up prices go up are a lot less understanding when prices continue to go up after costs go down.

    I just don't know how much it's really going to hurt them in the end though. Most people I know who play their games seem to fall into one of two categories:

    1) Those who regularly buy everything new that comes out, including quite a bit from uber-expensive Forge World.

    2) Those who haven't bought anything at full retail in years and mostly rely on eBay and trading sites for their 'new' models.

    Of course, neither of those categories include many new players, which could be a problem for GW in the long term.

  6. GMT game prices are just as "unreasonable" as those of GW or other companies.

    Cardboard chit wargames are not cheap, even if purchased as pre-orders - which is one reason that they have problems bringing in new players.

    @fulminata - I don't think it was a matter of retailers not carrying wargames, as much as computer based wargames eating into the market. Smaller market = lower sales = higher prices.

  7. It was a combination of factors that became a vicious cycle: fewer sales led to fewer retailers interested in carrying the product which led to fewer sales. It started with the growth of RPGs and was accelerated by the growth of the personal computer, and to a lesser extent the gaming console.

    The link to CCGs might be my imagination, but I know that I could still walk into a game store and easily find those kinds of games in the couple of years before Magic came out, and by the time I got interested in them again in the mid to late 90s they were gone and the remaining manufacturers were using direct sales as the primary means to market their products. The intervening period of time was the high point of CCGs.

    As for GMTs prices, if I spend $100 bucks on GMT I'm going to usually get at least one complete game that can be played by at least two people. I spend $100 bucks on GW and I'm going to get a rulebook and a squad, maybe two if I'm lucky, and still have to pay for paint and glue. We're talking orders of magnitude difference in cost there.

    I do get your point though that both produce "sticker shock" in the potential new customer.

  8. On top of this, there are definite demographics for war games that don't match our area. Several game stores in Oakland and Berkeley sell them quite easily. I've had discussions with other game store owners about this. We're just not in an area with enough interested people to support them. When I say interested, it means interested in buying them from me, because I know several customers who pre-order with GMT.

    Then again, we sell stupid amounts of other games that don't do well over the hills.

  9. Something else I just thought of. It's easy to tell when a wargame company has completely given up on the retail channel, which GMT has not done yet to my knowledge: they stop printing anything on the back of the box.

    Right around 2000 I was buying games from a company that did this. They had so few retail sales that it just didn't make sense for them to waste money on back cover promotional material that no one who hadn't already bought the game was going to read.

    Of course, it also wasn't long after that they went from being a publisher to being a design studio and turned their publishing over to MMP.

  10. I think the greatest impact of the CCG boom of the mid 90s was to cut the business of many game stores.
    This was because anybody with a retail tax number could order MtG in case lots - corner stores, sports card shops, comic shops, record stores, etc. - I've even heard of a barber shop ordering cases of MtG (owner's son played).
    In some places, the "gaming dollar" never made it to the game store, and many closed.
    Of course, many game stores also sank ALL (or most) of their inventory dollars into CCGs - many of which went nowhere - and did this at the expense of restocking other types of games.
    During this time, computer strategy games were also cutting into the board wargaming market.
    Ironically, my understanding is that TAHGC went under due more to problems with the computer games they were producing than to declining boardgame sales. They saw that wargames on the computer were an increasing part of the wargaming market, but were just unable to produce their own computer wargames in a cost effective manner.

  11. The CCG boom was one of those rare times when game store owners could make massive profits.

  12. Yep, and it's not hard to understand why many would then spend their time on the highly profitable CCGs to the exclusion of their other less profitable products.

    It's no coincidence that both TSR and TAHGC disappeared during this same period.

    At least around here, the people who took advantage of the various work arounds to get cheap cards never really impacted the game stores. The flooding of the market with hordes of Magic wannabes is what did that. No one wanted to miss "the next Magic" so they ended up with huge overstocks of stinkers like Quest for the Grail and even good games like NetRunner. It didn't help that some of the chain stores got into it at the same time and ended up turning around and dumping all their stock at deep discounts. This turned a lower than expected turn rate issue into a complete disaster for some game stores.

    TAHGC had a variety of problems including a lawsuit with MicroProse over Civilization that cost them over $400,000 in settlement costs and prevented them from continuing to produce one of their more successful games.

    It's interesting to note that their most successful games were never their wargames, but their more mass-market games like Facts in Five. If they had somehow survived the 90's I have a feeling they'd more closely resemble Rio Grande or Fantasy Flight today than they would GMT. Assuming that their Monarch connection would let them get away from the cardboard counters.

  13. Ben Franklin was wrong: three things are certain in life. Death, taxes, and GW price hikes.

    Now, if you'll excuse my post-and-run, I have a con to get to...