How Games Workshop turned plastic figurines into solid gold
When Sony, Nintendo and Microsoft began to pull in billions from video games, many believed that the days of the old-fashioned plastic gaming figurine were over.
The fate of Games Workshop, once almost ubiquitous on the UK high street, seemed to confirm this. The Nottingham-based retailer, known for selling models of goblins, aliens and other fantasy characters, has had a difficult time in recent years, hit in 2015 by disappointing Christmas sales and a slowdown on the high street.
But the company has now made a dramatic recovery, with its revenues and pre-tax profit soaring in 2016. Last week the business announced that its profits would be “well above” last year’s – with dividends now standing at 35p per share – to send the company’s share price rocketing by around 10pc.
Just what has brought about this reversal of fortunes?
The digital revolution
Games Workshop has been pumping out its plastic figurines to a hardcore community of gaming fans since the Seventies. But the business did not make the mistake of trying to fight the digital revolution.
Instead, Games Workshop accepted that gaming could well be shifting online and has expanded its range to suit, launching several apps for
– its biggest fantasy game – in recent years. Indeed, before 2015
fans often complained that they couldn’t find any apps for their favourite game. Now, according to one fan website, the app store is “full to the brim with the damn things”.
It would be a mistake, however, to think that Games Workshop’s comeback is entirely down to its digital transition. Much of its success in 2016 was in fact driven by oldfashioned means: sales of plastic figurines over the high street counter, or through the “snail mail” post.
Indeed, the company took £30.2m from mail order sales in the year to May 2017, a 20pc increase on the previous year, and brought in £58.7m in traditional retail sales, an 18pc jump. For this, Games Workshop can thank the growing international appetite for its traditional plastic figurines; the retailer opened 14 new outlets in North America in 2016, as well as five in Asia and five in Australia.
A growing enthusiasm for plastic figurines may, in the age of Playstation 4 and virtual reality gaming, seem like an anachronism. But it’s not as surprising as you might think. Across the gaming world, a nostalgia-fuelled fondness for “vintage” board games is prompting many gamers to turn away from their computer screens and towards their plastic collections – and Games Workshop is cashing in.
Games Workshop opened 26 new outlets outside the UK in the year leading to May 2017, bringing its total number to 315. Three quarters of all sales are now generated outside Britain. This growing foreign presence gave the business cause for celebration in June 2016, when it was able to cash in on the sharp fall in the value of the pound following the Brexit vote.
While the retailer posted revenues of £158m in the year up to May 2017 (a 34pc increase on the previous year), this figure would only have been £143m (a 21pc increase) at a constant currency rate. Brexit, and the sharp fall in the pound, is clearly crucial; during the previous year (up to May 2016) currency fluctuations made almost no difference to revenue forecasts.
For the last 40 years, Games Workshop has sold millions of physical products – figurines, board games, model weapons, and a host of other geeky dreams. But it has also created a brand, a community of fans loyal to the
Now, this global (and growing) reputation is beginning to pay rich dividends in the form of royalties, with Games Workshop making £7.5m last year from the sale of its intellectual property. This marked a 26pc increase on the prior year.
With vintage board games once again in vogue across the global gaming community, Games Workshop’s brand looks set to grow ever stronger – and the retailer is ready to cash in.
Video games and film spin-offs, such as Warcraft, have not dented sales of figurines