Thread by @compound100x

$GAW thread

1. Spent the weekend down the Games Workshop rabbit hole. It was loads of fun and a great case study for anyone keen to learn about IP turnarounds in this space. The annual reports across the years provide loads of learning as you can see the evolution of thinking..

2. across different Chairman/CEO at the company over last 10 years. I highlights some below

- 2010 Kirby (Chairman): "That will not surprise those of you who follow the fortunes of computer games companies. It seems they are going through another phase of change. From

3. Sinclair ZXs, to Atari STs, to Commodore 64s to PCs to consoles and now, apparently, to Facebook and the iPhone. How different their world is to ours. In all that time we have simply carried on making miniatures and encouraging people to collect, convert, paint and play with

4. them. I trust it is ever thus!"

Comment: seems like Kirby doesn't think about the platform potential of the IP enough. Did little to note how games can help reinforce Warhammer IP

- 2010 Wells (CEO): "We make things, we are a manufacturer, not a retailer. Hobby centers are

5. the front end of our manufacturing business. We focus on new ways to make our products and improve its quality. We know that people who are interested in collecting fantasy miniatures will choose the best quality and be prepared to pay what they are worth"

Comment: This is

6. wrong, they are an IP business. CEO doesn’t understand the key moat of the business. He talks about IP last, when IP should be top most priority. This guy doesn’t get it

- 2010 Wells (CEO): "People getting excited about opportunity to use Warhammer IP to generate

7. royalty income. Through gaming for example. We want products to be high quality in their genre, don’t want to devalue IP in pursuit of ST cash. We want to retain control of the IP. We don’t want this part of the business to distract main Hobby business, we manage licensing

8. business separately"

Comment: Was hoping he’d talk about how this piece fits into the whole IP flywheel. However, the fact he talks about how this is run as a separate business unit so as to not distract Hobby business shows that he doesn’t understand how royalty business

9. helps to reinforce the Warhammer IP. This is not a guy to maximize IP value

- 2010 Wells (CEO): "Focus on restoring LFL growth in Hobby center: 1. Sales training. 2. Implementing performance related pay. 3. IP relaunch to create excitement"

Comment: IP relaunch is the

10. last on the agenda! Crazy! Generally, a lot of talk about retail strategy, inventory supply chain strategy. This guys’ background must be in manufacturing? [Actually, Wells was ex-retail industry], basically not a media IP type of guy.

Fast forward to 2015 when

11. Kevin Rountree took over as CEO, big changes!

- 2015 Rountree: "Rebrand our stores Warhammer from Games Workshop, it is what our customers call us...Relaunched Warhammer: Age of Sigmar, simplified rules, made entry barrier lower for new players"

Comment: lots of

12. optimization, first indications of more emphasis on branding aka rebranding stores, new line of game play to reduce entry barrier, more signing of licensing deals. But not enough signs of recognizing what it takes to build an IP flywheel yet

13.
- 2018 Rountree: [added a brand discussion section] "The Warhammer settings are incredibly rich and evocative backdrops. They’re populated by more than three decades of fantastical characters and comprise of thousands of exciting narratives. Going forward, we want to make

14. it easier than ever for people to engage with and immerse themselves in our IP. To that end, I have a small, senior team to help me find new partners to help us bring the worlds of Warhammer to life like never before. Together, we’ll explore animation, live action and more,

15. while ensuring we do no harm to our core miniatures business...We grant licences to a number of carefully chosen partners. This allows us to leverage our IP to broaden the presence and brand exposure of Warhammer around the world, often entering new markets such as board

16. games, apparel or accessories. We want to work with skilled people at the top of their game who can help bring our Warhammer brands to a new audience and provide the world class quality needed to delight our existing customers."

Comments: Compare how the language around IP

17. changed! First year to include branding as a separate section for discussion! Indeed, all his efforts to connect better with customers, actually improved all aspects of the business is extremely impressive and the share price performance since tells the story.But watch what

18. he writes in 2019 on new initiative to explore media rights: "We are eager to learn about the new ‘space’, particularly with regards production and distribution. Whilst our short term goal is to understand how the entertainment and media industry works (it appears somewhat

19. complex and expensive), longer term we believe we can closer integrate our media efforts within our business." The words IP and brand did not appear much in 2015 letter, but gradually increased over the years, demostrating his increased focus/appreciation for the core moat

20. of the business. Concurrent to $GAW's consistent focus on ROCE, LT orientation, i think Kevin Rountree is another leader worth following. Personally struggle with $GAW's current valuation, but hopefully get an opp in the near future. Loads of fun studying this one!