Editorial: On Games Workshop's Recent News - Finecast, Price Increase, and Trade Restriction

Many of you will know, over the last few weeks, there has been much speculation and many rumours surrounding Games Workshop's sudden pulling of almost their whole line of metal miniatures from their own retail stores and independent retailers. Naturally, a move this drastic was sure to generate a lot of speculation, especially when you consider just how much of the product line from Games Workshop was made in metal.


Much of the speculation revolved around the possibility that Games Workshop would be re-releasing the miniatures in some form or another. Some suggested that such models would be strictly direct only, others that they were dropping metals for all new plastic kits, and then there was a growing surge of speculation that production of metal models would be converted to a resin production process.


The obvious reasons for such a move would be to eliminate the volatility of cost of metal, specifically tin, ergo reducing production costs and allowing a price reduction across the metal product line.  Tin, the basic metal used by Games Workshop since their change from lead in the 90s for health and safety reasons, is a commodity material, and has seen drastic price swings over the last two years. So drastic were these commodity price swings that many casting companies, and their industrial customers, are seeking methods to control those price swings, such as making massive orders at reduced costs, and demanding locked raw material prices from their suppliers. Countered by those same suppliers tacking on commodity fees to cover their costs in excess of the agreed base price, especially for fabricated goods. Ending in ever increasing and out of control price increases for a raw material.


Obviously, since profit is determined by the simple formula Profit = Price - Cost, and costs were arguably increasing out of control, this had to eventually come to a head. 


That moment obviously came for Games Workshop recently, as they set in motion plans to change their production process in a most dramatic fashion. This change first becoming part of the public consciousness when they pulled their metal lines, without a word to their customers. So, after weeks of speculation, that flame only fanned by Games Workshop's relative silence on the matter, Games Workshop have finally officially announced today that they are indeed re-releasing much of the removed metal product line as resin models with the new process brand called Citadel Finecast.

"Games Workshop's quest to create the best quality miniatures in the world is about to take a huge step forward...

On 28th May we are launching Citadel Finecast miniatures to the world.
Don't miss the full announcement on games-workshop.com on the 23rd May to find out more." 

Though this press release was sparse in detail, it definitely ties in with the speculation that Games Workshop has converted production for this model line from tin, to resin... I will refrain from pointing out the potential health hazards with resin, except the pointed reminder that Games Workshop deliberately moved away from lead miniatures in the 90s due to fears of lead poisoning...

This announcement was made at the same time that Maelstrom Games, a UK based brick and mortar games and hobby store with a strong internet store, issued a press release on their website that Games Workshop was imposing new trade conditions prohibiting them from conducting sales outside of the European Union.


That same press release also substantiated the speculation of the new material for the Finecast range to be resin.

"Finecast 

Onto other Games Workshop news. We'll shortly be stocking their superb Finecast range, which - if you didn't know already - is most of their deleted metal models, re-released in resin but somewhat more expensive than the original. Those will be on general sale on the 28th of May, for Games Workshop do not wish us to put them up for sale until then so they can keep up with demand." 

This was followed by a list of Finecast pricing, as well as another list of much of the rest of the range, of forthcoming price changes. Admittedly, a couple of prices appear to have dropped, but the vast majority of models have gone up. Increases which range from about 3% to a whopping 25% increase across the range.




25%


Wow!


We all know that hobbies like ours are not cheap. In fact, we also mostly know that our specific hobby is not high in the realm of expensive hobbies, after all, once you have your basic army, that's all the expense you really need to worry about, at least initially. The fact we are collectors and want new stuff, or need to get a couple new things once in a while is what gets us, ultimately, to spend more money on the hobby.

The real issue, as I see it, is not the actual expense of the hobby, but the sheer audacity of the price increases. Ostensibly GW is going to resin to help reduce the cost of production. It's the ONLY reason they would make such a drastic and dramatic change to their production process on such a large scale, because the dollars involved are big. As a requirement of my own job, I have a fundamental understanding of this kind of fundamental process change, and the only reason to undertake such a massive change is for cost savings, and a big savings. Therefore, to turn around and increase prices so dramatically, far beyond any price increase they have ever done by as much as 25% in many cases, is purely and simply a gouge the customer cash grab play.

Not. Cool.

Couple this with the HUGE disparity in regional pricing (Compare Canadian and Australian prices at the Games Workshop Online Store to the US and UK for a shocking eye opener), and the lack of equivalence to the international exchange rates, where customers of some countries are paying nearly DOUBLE what customers from other countries are paying, though neither the exchange rates, nor the duties and shipping costs can justify that price (hence the prevalence in international web stores), and it is clear there is a lot of room for profit margin in the price of the product already. Especially when combined with the newest tactic GW is using to prevent international web store sales to those same higher priced regions, ostensibly to "protect" the local brick and mortar independent retailers from unfair competition. I have nothing against web stores or brick and mortar stores competing and discounting, etc. This is a standard retail tactic, and works, when it's on a fair foundation for competition.... But it's not! And it hasn't been for over a decade.

Well, GW, shame on you. Shame! Because you are the ones who created the environment of unfair competition by creating regional price structures that do not account for low cost shipping, and deep discounts available in other regions because they receive better whole sale pricing. 

This environment of unfair competition is not the fault of the businesses who are competing and succeeding. It is entirely a result of GW not responding appropriately to changing economic climate, and fluctuating currency exchange rates. They banked on those rates returning to previous levels, but I have news for them. They aren't. In Canada's situation, it's been about 5 years, roughly stable at par with the US dollar, yet they still mark up Canadian prices by 20%, when there is no valid reason to do so.

It is that misguided and blatantly exorbitant abuse of pricing that has people so upset, and it's something many of us in the hobby, and who have had the ear of GW higher ups, have been saying will happen for the last several years. Unfortunately, this most recent price reaction is exactly the opposite of the advice they have been freely getting from seasoned and experienced economic and business veterans, who are also hobbyists... and far exceeds smacking of pure greed.

Those who know me, know I rarely speak so negatively about GW. So know that I'm not just echoing the crowd and jumping on the "Oh no, prices are up again" band wagon. This is something that has concerned me for many years, even as a former employee, then hobby rep. Forever have they spun the same story that "prices will soon be realigned, and there will be price drops". But with this newest production process change, and the ongoing exorbitant price increases, they have put the truth of light to their own lies....something they have been warned about for years. 

Will this stop me from participating in the hobby? No. It won't stop me from buying the models I need/love for my army, either. Though I will be far more judicious in my spending and it will impact how much I can actually buy, because my hobby budget is shrinking as inflation continues, though salaries do not seem to increase accordingly. I am fortunate that I have an abundance of models to build and paint, so will only see the pricing impact when I finally need to purchase new models. But others are not so fortunate. The youth of the hobby will be hit hardest, as it becomes more costly to even enter the hobby, let alone build a new army. There is only so much money to go around, and when dealing with an economy slow to recover, and set for increased inflation rates, this is not likely to change as necessities edge out luxuries.

In the end, despite what GW believe and claim, this move will not help local retailers as their sales will continue to decrease. It will only harm the hobby because it makes the product less accessible. It forces people to buy less product, therefore reducing their sales further. And looking back at that simple formula I posted earlier, reduced sales equals reduced profit. And it can quickly spiral out of control as prices continue to rise in a desperate grab to maintain their profit, not just grow them.

GW needs to remember the simple precepts of macro-economics, and start thinking these things through more carefully. They also need to start remembering that the hobby can only be sustained if your customers don't flee, as it's really a very niche and grass roots type of hobby. And it's those grass roots hobbyists who will keep the hobby alive, but only if it's something they can afford.

And they need to remember it fast. Before they doom the hobby.