Monday, 18 June 2012

Pricing Problems

Games Workshop's annual price increase has just gone by, an event now so routine that Jake Thornton over a Quirkworthy has dedicated a post to noting that even the complaining has become somewhat repetitive.

It's certainly true that every year there will be a fresh crop of protests, a certain amount of outrage and some people will insist that this is the last straw and they are finally done with the Evil Empire for good, some of whom actually will be. Amongst all this general grumbling, apparently wiser heads will point out that the only way to protest is by taking your business elsewhere. It's a theoretically sound argument, the problem is that it doesn't quite work.

Games Workshop's target market is somewhat different than most other wargaming companies. The focus is on 12-16 year olds, 10-18 at the outside, who are just starting out with wargaming, do not come from a gaming background and have no knowledge of any other gaming companies. Ideally, their parents will be financially well-off and indulgent, but if not a fair bit of mileage can be had from persuading them to part with every last penny of their disposable income in a desperate bid to compete with better resourced teenagers.

These teenagers will be milked for all they are worth for a few years until one of two things happens, either they grow out of wargaming entirely or they discover that Games Workshop is not the only player in the game. When this happens, they may stick with GW to a lesser extent or abandon it entirely. In practice, Games Workshop would prefer it were the latter.

Games Workshop does not see itself in competition with other wargaming companies. This is partly sheer arrogance, but mostly that their target market doesn't know about them, or at least doesn't see them as part of the same industry. Games Workshop sees their competition as Playstations, Pokemon and trainers, not Privateer Press and Mantic. Once their players learn about other games GW is done with them.

It's a slightly odd strategy that is essentially based on exploiting a monopoly position that the company does not in fact possess. They maintain the illusion of being the only game in town when this is not in fact the case. This strategy works well in the UK where Games Workshop maintains a high street presence, while independent Game shops are decreasingly few and far between.

This means that Games Workshop is at best dis-interested and at worst actively hostile to the more adult elements of the hobby. Independent conventions, websites and forums are at best tolerated and at worst shunned. They need to maintain clear blue water between their core market and other gamers. Hence the final end of Warhammer Historical just recently, a venture that opened up Games Workshop players to a wider wargaming world.

This is not to say this is true of all Games Workshop staff, many of whom play a number of different games, but this is essentially the attitude of the company.

All of this means that when you vote with your wallet and take your business elsewhere Games Workshop don't care, it's actively factored in. In fact, if anything, they want you gone. The point at which the company stops being exciting and starts being subject to criticism is the point at which they no longer want your business.

If you really want to hurt Games Workshop, the way to do it is not to walk away but to target their core demographic. My little brother is 16 and arguably right at the heart of the Games Workshop market. But he has been exposed to a 32 year old who drags him to conventions. The upshot of this is that he is now building an Empire Army from Perry miniatures War of the Roses figures and a Norse army from Gripping Beast Vikings. If the core GW market found out about the cheaper and, arguably, better alternatives, their sales would drop fast.

So if you want to hurt Games Workshop try persuading a group of 12-14 year-olds to try a new game. Or just talk about one in their presence and let them find out. Alternatively, you could just walk away from Games Workshop. This is perfectly valid reaction, if they won't sell a product you want at a price you are willing to pay. Just don't expect them to shed a tear.

4 comments:

  1. I think it is fair to call GW a sort of cult, at least in mentality and practice.

    A few of my friends have been staff and even management up to the regional level for GW and I was always amazed at the amount of effort the company puts out (or at least did) to promote a GW-centric mentality among its employees.

    Everything from management field trips to shiny hubs of GW wonder to commisar-esque secret shoppers and draconian management style have been described to me. If this wasn't enough, seeing the look of confusion/fear in the eyes of many GW retail employees when presented with alternate gaming options speaks volumes. It has been a rare occasion that i have had a GW employee discuss with me what I actually do with the few products I purchase from them (rarely).

    It has been said, by a few people that GW doesn't care about what effect their constantly revised rules have on their players because, with their current market plan, whatever rules set is out at the time is likely the only GW rules set that most players have or will ever play. They simply move on before it really matters.

    -Eli

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  2. It astonishes me how few people know about the other game systems. I love Rattrap, but I can only game it once a year at the local HMGS show.
    And I can't get them to carry my company, www.kraftmark.biz (grumble, grumble).

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  3. You have it, it is core part of their business that everything you need to game with is available from them and that you only play their games.

    Works incredibly well and means that they have a market of inelastic demand, so that when their prices go up, sale revenue increases (which you can see in the accounts).

    I am sure that other wargaming businesses would love to be the huge success that GW has been (the Coka Cola of the wargames world?).

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  4. GW didn't invent this business model, btw. This was the standard operating mentality of the comic book industry up until the likes of Alan Moore & Frank Miller came along and woke them up to the potential of their adult fan base. Prior to that time they considered their customers to be a revolving door of children who would purchase their products for ~5 years and move on.

    The first GW grand tournament I went to, I went out to dinner with the GW staff on the first night. They asked us, "how much did you spend on GW stuff your first year in the hobby? What about your second year? And the third?" making this exact point; that the bulk of their revenue comes from customers in their first few years in the hobby. These were good guys, btw, they didn't agree with the attitude, they were just explaining it. Here I am well past a decade later and I'm still spending too much per annum in the hobby, but unfortunately for GW, they get very little, if any, of my cash. If they weren't so utterly convinced of their correctness, they might have gotten quite a bit more out of me and many others.

    Silly Games Workshop

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