Games Workshop Tries to Crack Down on Internet Sales

heirodule writes "In this messageboard posting internet retailer The warstore says he was contacted by Games Workshop, maker of miniature wargames such as Warhammer 40,000 and the Lord of the Rings Battle Game. GW will be refusing to distribute their product to retailers who sell over the internet after July 1. That's bad enough, but they cited the problem of IP violations (like people posting pictures of their products?) as part of the rationale. The claim is that for GW, this has nothing to do with internet sales offering discounts (yeah, right) but with the 'experience' that GW wants customers to have (of coming into their own stores and getting a hard sell)." The nearest Game Workshop store to me is a 1 hour, 10 minute drive, according to their store locator. The Usenet thread may be of interest.

Comments

so

[Graspee_Leemoor]

So if you sell GW stuff on the internet but don't have pictures, just descriptions you should be ok. People can always go to the GW site to see what the stuff looks like, or read White Dwarf.

graspee

That's Capitalism.

[RatBastard]

GW will find out the hard way that people will not buy what they can not access. There are no GW shops where I live and probably never will be. The only options I have is to either buy on-line or have a friend shop for me, provided I have a friend near a GW shop.

Re:That's Capitalism.

[TopShelf]

This is an incredibly short-sighted decision that will ultimately cut GW off from a large number of customers. Every manufacturer has the right to do something like this, but they don't, for obvious reasons. Instead of merely saying "that's Capitalism," I'd say it's more of a short-term vs. long-term mistake...

Re:That's Capitalism.

[Observador]

Try Their Site
I'm sure they have one-click shopping...

Re:That's Capitalism.

[Ed Avis]

Are you sure they have the 'right' to do it? In many countries policies like this (limiting resale to certain outlets, setting a minimum price, etc) are considered anticompetitive and subject to investigation if the company concerned has a large market share.

Ugh.

[NetJunkie]

I hate this "you have to buy from a local retailer" BS. It's like this with a lot of AV equipment. I can't mailorder the speakers I want...they want me to get ripped off at a local dealer. So, I end up ordering from a grey market dealer for 1/2 MSRP.

The problem isn't with the Internet. If you want to charge more locally do it, but I better get some good service for the extra money. Plus, you better stock the exact model I want and not take 3 weeks to get it.

Re:Ugh.

[DownTheLongRoad]

I wish I could remember the marketing term for this. The reasoning is that if a customer can get a product for much less off the internet than in a store, they will waste the stores time getting information on the product(demonstrations and comparisons) and then buy the product online. Because of this, the store will stop carrying that brand of equipment. Compare the price of a laptop on a companies website to the price for the exact same laptop in a store. It's the same principle, keeping your supply chain happy and free from the fear of being undercut. Before anyone gets their panties in a bunch, none of this is my opinion, it's from an MBA marketing textbook.

I worked at Circuit City years back and if people had the slightest idea what the mark-up was on some of the AV equipment/Accessories they buy, they would probably be physically ill. To go really off topic for a second, the items with the highest percent mark-up are batteries. That's the reason they are placed all over the store. Just some useless FYI ramblings.

games-workshop.com

[microTodd]

I guess I'm missing something here.

www.games-workshop.com has an online store at their site.

Maybe they fear competition?

Re:games-workshop.com

[yar]

According to the newsgroup thread, ONLY Games Workshop will be allowed to sell their products over the Internet.

They are using intellectual property theft as a main reason for taking this kind of action... I find that difficult to believe without their being more specific about the matter.

Smart business model

[grub]

1. Sell millions through internet "e-tailers"
2. Realize that too much profit is bad (for whatever reason)
3. Quit selling to "e-tailers"
4. ???
5. Bankruptcy!

Shouldn't be too much of a problem

[Otter]

Hey it's not like their entire customer base is hot-headed, demanding nerds with Napoleon fantasies...

GW Strong Arm Tactics

[Shadow Wrought]

GW did this to retailers as well, albeit in a different way. According to the local gameshop, to carry GW merchandise you had to buy all of the miniatures for any particular game, not just some of them. And don't even think about returning what doesn't sell!

That's why my friends and I would buy the set, sell the minatures on, and then make cardstock chits for our battles. We just played a 3,000 point Warmaster battle for the total investment of the rules and the 2002 annual (about $50).

Suppose that's a DMCA violation because I made an apparatus to bypass their propriatary miniatures?

Re:GW Strong Arm Tactics

[b1t r0t]

That's not all. I had this explained to me last month. If you don't do things "their way", as in stocking their entire range of stuff, and display it prominently, you'll get demoted to a "C" class retailer. For which you don't get much more of a discount than the average Joe who orders bulk direct from GW.

Basically, GW considers themselves to be an entire hobby, rather than being a part of the hobby of minatures gaming. They'd prefer it if people didn't even have a chance to use them as a "gateway drug" for minatures games from other companies.

Think of Microsoft times ten. Imagine if it wasn't just file formats in Office and site licensing that requires paying for Windows based on the number of PCs and Macs at a site. Imagine if they required stores to stock mostly Microsoft stuff, and to stock the entire Microsoft "hobby" line.

Re:GW Strong Arm Tactics

[Spasemunki]

You're not kidding. All of GW's promotional literature refers to it as 'The games workshop hobby'- little or no mention of role-playing, table-top gaming, or the idea that anyone other than GW might have ever thought of it. In addition to the numerous 'official' rules that GW has for retailers, I have heard from employees, owners, and managers of several independent or semi-independent (part of a non-GW chain) hobby shops that GW has a habit of 'loosing' orders from shops that don't stick to the party line (MSRP, for instance).

This is all heresay, of course, but a number of hobby shops in my area have exited the GW market entirely because they could no longer make a profit on it; they were being forced into ordering too much stock from GW, and then felt intimidated into selling it at prices that kept it from moving. They also have probably the highest 'churn rate' (rate of introducing 'new and improved' versions of products, and then discontinuing/depricating old ones) of any gaming company I've ever seen. They ban any miniature more than a few years old from any 'official' competition (cons, tournaments)- not old rules mind you, but old lumps of metal that look almost exactly like the new lumps of metal. Now, only the most dedicated of fans care a whit about these nerd-fests, and these are the people who have invested years, hours, and cash by the fistful in the hobby. And those are the poor saps getting shut out in the cold by GW.

The basic truth that a lot of people feel is that they no longer care about anyone old enough to notice or care about these things; they want to get 10 year olds hooked on it for two or three years, have their parents burn through a couple hundred buck at every holiday/birthday, and then chuck the whole thing in the trash in time for the next product cycle to start. Which is a shame, because long ago GW produced some of the most interesting games on the market (there are episodes of the old Warhammer Fantasy Roleplay game that are still classics), but much of their new material (except for that produced by licensees like the all-too shortly lived Hogshead, and that under extreme conditions of creative restriction) is schlock- a conscious choice to aim at the least common attention span. If we're lucky, they'll draconian policy themselves into a turnaround when they realize there's not much money in being overpriced and disliked. . . but I'm not putting any money on it- just like I stopped giving GW any money when it became clear they were getting worse instead of better with regard to both their product and their policies.

Games Workshop Hates Customers

[forand]

When I was in highschool and playing WH and the like there was a big split in Games Workshop that resulted in the creation of Warzone which is basically a WH clone but the cost of the figures was MUCH cheaper and the quality much higher. Games Workshop drove their modelers from their company by making the game too expensive to be played by your average High School student and making the working environment intollerable. Games Workshop seems to think they can do whatever they want and the customers will still buy their overpriced product and up till now they have been correct, maybe this will be the straw that broke the camels back. Question: How does this look on a legal front? How can a distributer say that the location of a store is grounds for not distributing to that store? I don't know anything about the relevent laws and thought someone might.

The only reason for this sort of thing

[Rocketboy]

Is because their retail dealers are screaming about internet (and before the net, mail order dealers,) undercutting them on price. That's the only reason for a manufacturer to take this kind of action, every other excuse is smoke and fluff.

If they survive the drastic drop in sales (which always happens when companies do this,) they'll be back on the net shortly. How quickly it happens depends on how much of their sales came from Internet sources. If internet sales accounted for much of their revenue they'll be back quickly; if not, they may just fade away. They don't have enough retail exposure (enough retailers carrying their stuff) to pretend the play the mass market game.

In other news...

[Bendebecker]

They also have decided that electritic lights and paper money don't give the GW customer the right 'experience'. So from now on they will be using torches and only excepting gold coins (or in the case of japanese made wargames, only gil.)

Open Source Gaming

[MAXOMENOS]

I'm thinking that if they come after us for playing their games without using their miniatures, the best thing to do would be to invent different rules and keep them under an open content license. After that, companies can compete to sell minis for the new open ruleset.

Re:Open Source Gaming

[Planesdragon]

I'm thinking that if they come after us for playing their games without using their miniatures, the best thing to do would be to invent different rules and keep them under an open content license. After that, companies can compete to sell minis for the new open ruleset.

*ahem*

http://www.opengamingfoundation.org/

An Open Gaming Content minatures system would be great. Unfortunatly, no one's done one yet.

gw

[Satai]

GW used to be a much different organization. As they became bigger and bigger, it seems like they really lost touch with the gamers, and they kept targetting a younger and younger crowd. I mean, if you can, get your hands on a copy of "Rogue Trader" -- and then compare the feel of the rules to the ones from the latest edition of WH40k. They've added more models, and yeah, they're better models, but it feels like they've surrounded them in a web of dense, arbitrary rules.

I suppose that's necessary, for the climate of gaming nowadays. It's much more important to win than to play, which it didn't feel like when I first got into WH/WH40k oh-so-long ago.

Well, anyway, this doesn't surprise me. TSR went through a phase like this, before WotC bought them out. Remember when all the online D&D supplements were curiously void of any actual references to D&D? I think GW is making that same transition -- from a company made of gamers to a company selling to gamers.

Games Workshop has always been anticompetitive

[drinkypoo]

For instance, the rules say that you can only use Games Workshop-licensed minatures in games. While you're just playing with your friends it's one thing, but if you want to field three land raiders or something, you have to shell out the $50 each for those model kits. (They're pretty high quality plastic models, but they don't have very many pieces at all, so you're paying strictly for licensing/the name. A similar model from testors or someone would be like eight bucks.)

how channels work

[boskone]

What GW is probably trying to do is protect their resellers' profit margins.

For instance, what a lot of people do is talk to the local guy, use up all his time and ideas, and then buy online from someone who is cheaper because they don't spend all day helping customers and providing a value-add. Therefore, you see the people who were providing all the quality customer service go out of business because they can't spend all that time helping people and compete with the low price guys. The same thing is in retail computer space, that's why the level of customer service is so abysmal IMHO. People would go pick the brains of the people who would spend time with them, and then go and order online or from some cheap guy that doesn't help them.

So, this makes it so that the stores which ostensibly put in the effort to educate customers and generate sales get crushed and the stores that add no value do well... BUT once the stores that provided the value go away, then you tend to get the whole manufacturer's sales go down because no one is helping the customers. You'll get some guys that will keep buying, but you'll not get many new customers.

THere are exceptions to this, and it sounds like they do need more resellers if their nearest one is over an hour away for someone, but they probably do have channel management reasons for wanting to make all their people compete evenly.

Re:how channels work

[ArmorFiend]

Heh,
I don't buy this "value add" thing. Even before the internet all the GW stores I went to had surly, greedy propriators. And why is that? I think its because GW intentionally breeds an "its all about the money" attitude. I once got to read the magazine they produce only for retailers, and it had a few telltale sentaces like: "soon your profits will be ballooning faster than your customer's belt sizes!"

I think warhampster is clearly a money collector just like Pokemon. If you really like miniatures wargaming there are several systems out there that do not require $500 + 100 hours to get into. Pernsonally I like Ogre

Clever tactic to grow the wargaming market

[Infonaut]

Now, now. Let's not overreact people! This is actually a clever ploy by GW to kick-start the miniature games market. As we all know, tabletop gaming hasn't exactly been growing by leaps and bounds lately. Computer/console games have eaten into their market and cut profits.

So now GW is doing the right thing by making it more difficult for gamers to buy their products. This will grow the market by... uh... wait... by... uh... .

I may be reading too much into this, but....

[King_TJ]

I have to wonder if this isn't also part of a larger issue?

Namely, the creators of these fantasy/role-playing games and miniatures attained their initial glory and status in the "pre-Internet" era. (By that, I mean, John Q, Gamer wasn't actively using an Internet browser at home or playing many games online.)

Companies like TSR made oodles of cash selling D&D books at $30 a pop through the local hobby shops, and items like the minitatures were soon to follow.

Nowdays, the prevalence of computers,the net, and online gaming seems like it is eating into their market. I guess some companies adapted better than others. (Look at how TSR went into the computer simulation game business in a *big* way.) In general though, I suspect the changes are somewhat lost on them.

I can easily see how they'd view the web and computer gaming as "the enemy" - since it would seem to be drawing folks away from a world of using one's own imagination to game, while establishing a "concreteness" to the whole thing by the purchase of small figurines. (In the virtual world, you simply look at photos of your favorite characters - perhaps as wallpaper or screen savers? The games provide a multimedia experience so you don't need to imagine what some "dungeon master" is trying to describe to you with just words.)

Warhammer

[phantomlord]

I was first introduced to Warhammer Fantasy about 10 years ago. I had started playing by using someone else's minis (I used Bretonnian figures though I play Chaos) but eventually started buying my own. Going to the local gaming store, a single (small) mini was in the $6-10 range while big minis (like the Chaos gods) were in the $45 range.

I started participating in auctions online and collecting an army for roughly half the price of what I was paying at the store. My army grew to more than 120 pieces before GW decided "welp, it's time to change the Chaos rule book and all the minis so we can make more money selling people new versions of what they already have." Fortunately, I only played with friends and not in tournaments since they banned all older minis from the tournaments. I couldn't see any reason to go out and by another Blood Thirster of Khorne when the one I already had was adequate enough.

Even back in those days, GW was trying to strong arm online retailers and auctioners into not giving discount prices. If anything, those prices made it easier for GW to clear out their old stock to bring in the new line. I certainly never would have as many minis as I do now if I had to pay full retail on all of them. Seems like they only want to shoot themselves in the foot. I wonder what they would think about how I created molds and copied some of the minis I had bought for my own use ($6 a pop for infantry level guys gets rather rough).

Worst Price-to-Product Ratio of any commodity

[ashitaka]

Seriously.

Little plastic or metal figurines. Once the original has been designed, you just churn them out by the millions. Most are just derivations of older designs anyway.

So why do these things cost C$30-C$50 each??!!

Unpainted.

Pardon my ignorance, but...

[gosand]

For instance, what a lot of people do is talk to the local guy, use up all his time and ideas, and then buy online from someone who is cheaper because they don't spend all day helping customers and providing a value-add. Therefore, you see the people who were providing all the quality customer service go out of business because they can't spend all that time helping people and compete with the low price guys.

Seriously, pardon my ignorance, but why exactly do you need to consult with a salesperson about buying miniatures? What value do they add? Consulting a salesperson on a computer if you don't know much about them? I can buy that. But purchasing miniatures for a game? I don't get it.

I have actually been in a GameWorks, I went to lunch with a couple of friends who were into it and they went in to buy some stuff. To tell you the truth, the place kind of creeped me out. And I didn't see anyone working too hard in there either.

Re:Pardon my ignorance, but...

[Annatar2]

Not sure how much expierence you have with war gamming but there are a lot of factors to take into account. Basically with Warhammer (and a lot of other games), you have several various 'factions'. Humans, Eldar, Orkz, Necron ect. Each faction tends to have different strengths and weaknesses. In those 'factions' you then have tons of different sub factions, also with things that they excel in and things that the do poorly in. For example Humans have the Space Marines and their various chapters. Within these sub-factions you now have several hundred different minatures to choose from, each on has different bonuses and negatives that need to be taken into consideration when fielding an army. Figuring out which faction best suits your playing style, and then which minatures will offer you the best bang for their fielding costs can be an awful lot of work. Just take a look at the many forums run for Warhammer, and all the army advice people ask for. Having someone close by, such as a neighborhood hobby store guy, that you can go in and chat to face to face about the various positives and negatives of a particular army you're thinking of fielding, and what he'd recommend against say a Skink horde is an invaluable resource. The thing is the majority of the players who play at a venue (some place that sells WH), buy from that venue to support it. The more assistance a particular venue offers, generally the more players will purchase from them. The thing with WH though is that from what I've seen, the majority of sales that do not happen from an actual retail location (neighborhood hobby store), take place on e-bay as resale. I'm curious how GW is going to deal with this type of competition.

It's called Price fixing.... Re:That's Capitalism.

[TedTschopp]

In the United States if you demand that a retailer sell something at a certain price, or you try to force the issue, you can go to jail.

That's why it called the manufactureres Suggested Retail Price or MSRP. GW is the manufacturer, they sell to distributers who sell to retailers, who sell to the public.

The problem is that GW doesn't like the fact that the mini's they make for $.25 and are sold to the distributer for $2.00 are being sold by internet retailers for $2.25 +S/H. Becuase at a GW owned store and at most Brick and Mortor stores, they go for $6.00.

Ted Tschopp

Hobby Stores can't compete at lower prices.

[thbigr]

I have a close friend who owns a Hobby Store which is the local Games Workshop re-seller. It is hard for them to make a living with the availability of cheep online stuff. Most sell at a 10-20 percent discont, which is the REAL problem.

You can always buy online from GamesWorkshop web site it self. There is no dicount however.

I hope the Hobby Store can stay in business, they offer tables to play and gather. I lecture the kids at the store all the time when they brag about buying this and that online for 50-75% off. You should support the hobby store or not play there.

Eventually the trend will be one source for these things, and no local places selling. This is bad for the economy.

Think globally, shop locally.

-Richard

GW Corp Policy

[Anonymous Coward]

okay, so i used to work for GW (I actually did the casting of the miniatures at their baltimore site - mind that i said casting and not sculpting). a friend of mine headed up the north american mail order dept. he showed me some numbers one day and explained the how-and-why of gw.

basically, they give crap-all about retail stores (their own or the indy's the push into being chapter approved). it's all just exposure. as he explained it to me, 80% of their revenue came in through mail-order (this was '95). 80% in north american, 80% asia/australia, and 80% in europe. at the time (and most likely now) they were the largest mail-order gaming company in the world. period.

so what's changed? nothing. you can buy online and i'm quite sure that gw isn't interested in anyone else profitting off their very lucractive mail/online-order business without shelling out some serious cash to become "chapter approved". it's just their business strategy - plain and simple.

that said, i used to be able to buy the miniatures by weight. that means an eight dollar item normally cost me about six cents. models were 50% off. but i left the company after being told that i needed to paint the "games workshop" way or not field an army. which pissed me off because i paint very well, just not their way. gw is the most ridiculously overpriced gaming company ever. this part of my rant is going nowhere fast...

to summarize: gw + mail/online-order = profit.

that's really all there is to it. honest.

Re:How do these places survive

[Tony Lau]

I talked to Kyran Henry (Regional manager for GW in North America) 2 years ago and he explained their marketing model.

1. Saturate the retail market with retail stores (currently australia is the only market that is saturated).

2. Increase their own internet sales for the times that the local retailer doesn't carry the mini that the customer wants.

Not only do they already have the monopoly on their games, they also have a very strict retailer ordering policy with high minimum orders and desplay and stocking requirements. This forces retailers to buy insane amounts of mini's that nobody buys leaving 1000's of their wholesale dollars tied up in these worthless figs. Summary: GW subsidizes their mall locations as advertising to give the players the 'experience' while making their money off their internet sales and by making the independant 'local stores' pay for them with large orders for stuff that nobody buys.

Not really...

[WebCowboy]

GW wants to ban ALL 3rd party internet vendors and do it themselves--they want the WHOLE pie to themselves. Perhaps they are trying to become "vertically integrated" (ie. greedy bastards). Theoretically, making, distributing, marketing and selling a product through one big company is supposed to reduce risk of IP theft, possibility of other entities that you depend on going under and so on.

However in todays economy (fast moving, information based, global) "vertical integration" is ineffective and obsolete except in the case of VERY big corporations like GM--and even they outsource (if there is a problem with the outsource, they have enough pull to affect their management or pull out, or even take them over). The "razor blade" theory is also becoming so much bunk too (giving away whe razor and ripping us off on the blades).

In the computer industry I can think of examples where the tactics GW used completely backfired. MITS created the PC industry with the Altair--they were the only player in the game, but success very quickly brough competitors (Proc Tech, IMSAI, Cromemco, Apple, Commodore, Tandy...). MITS tried to aggessivley protect their IP (namely the bus which became known as the S100 bus--competitors started making peripheral cards for it and soon make S100 PCs of their own). Not only was MITS uncooperative with 3rd party vendors--they went as far as to threaten lawsuit. On the sales and marketing side, MITS attempted to make all their dealers exclusive MITS dealers--but soon most broke off that deal as IMSAI (and later Apple) gave them sweeter deals and didn't demand exclusivity.

GW is doing this now. They are vigourously defending their "IP" to the point of crippling their marketing (they don't even want people to put up pictures on their websites---turning their nose up at free advertising!). Furthermore, hey are trying to control everything--they want to have the only website and a bunch of stores with nothing but their own product. Like MITS, GW isn't exactly a high profile company. Also like MITS, their product could be duplicated relatively easily (not cloned mind you, but if GW alientates customers work-alike products will fill the void). GW could be like MITS in a third way in 2 or 3 years--completely gone.

This vertical strategy only stands a good chance of working if you have BIG resources and can take BIG risks. Even Texas Instruments failed with the TI99/4a. From the start they employed a vertical strategy (along with the "razorblade" strategy when sales were slow). Before TI discontinued the machine, they controled manufacturing (the thing was loaded wil all TI chips---CPU, VDP, memory, logic), distribution and sales (making it a bit more difficult to find than say a Commodore, Atari or Apple) and software/peripheral/accessories (they figured they could sell the computer for much less than it cost to make and hose customers on software and hardware accessories--the 3rd party TI market was basically non-existent). TI couldn't pull it off and lost millions. Ironically, in the couple of years AFTER TI pulled out of the market, a small 3rd party industry blossomed around the TI.

If a giant like TI couldn't pull it off, how can a specialty shop like GW handle the whole pie?