How Games Workshop became a miniature wargaming giant

After stumbling upon the 2002 novel Soul Drinker in a small Irish library, Dave Rudden became hooked on Warhammer.

The young adult writer, known for his Knights of the Borrowed Dark trilogy, says the mix of dark and ‘overwhelmingly ridiculous’ sci-fi was engrossing and prompted him to write fan fiction before he could afford to buy iconic Warhammer tabletop figures.

Rudden loves how a ‘humble box of Space Marines’ can occupy his time as much as any novel, computer game or television series, whether building them, playing them or painting them in his preferred style.

“Each model gives you partial ownership of your little corner of the galaxy,” he tells This is Money.

“It’s almost like buying shares, except the value is decided by you and a very enthusiastic community that wants to hear about your journey with your models as much as you want to hear about theirs.”

And buyers of actual shares in Games Workshop – the FTSE 100 debutant behind Warhammer – have become equally enthusiastic, cashing in on a hobby Rudden shares with millions of people around the world.

Demand for the group’s fantasy miniatures has helped its shares rise 144 percent over the past five years, and a whopping 2,652 percent over the past decade.

With an impressive market capitalization of £4.6 billion, Games Workshop will reach new heights later this month when it joins the FTSE 100 index for the first time.

The entry into London’s blue-chip index comes at an opportune time; In 2025 it will be 50 years since three friends, Ian Livingstone, Steve Jackson and John Peake, founded the company in a flat in Shepherd’s Bush.

Having started out selling board games, the trio got an early opportunity when Dungeon & Dragons creator Gary Gygax asked them to be the exclusive distributor of the hit role-playing game in the UK and Europe.

Shortly after, the company provided funding to help create Citadel Miniatures, which produced miniatures for its board games, before founding Warhammer in 1983.

The 1990s were an eventful period; Livingstone and Jackson sold Games Workshop for £10m, the group listed in London, moved its headquarters to Nottingham and founded a publishing arm, Black Library.

Trade soared early in the following decade, when he obtained the rights to make Lord of the Rings miniatures alongside Peter Jackson’s epic film series, but ran into trouble after the third film stopped showing in cinemas. .

A key turning point for Games Workshop came in 2015, when Kevin Rountree became CEO.

Under his leadership, Games Workshop’s annual sales have more than quadrupled and its pre-tax profits have risen from £16.6 million to £203 million.

This has been achieved by improving relations with fans, in part by launching the Warhammer Community website to help connect with fans and introducing games with simplified rules.

One game in particular, Blood Bowl, parodies American football, with teams of fantastical creatures such as elves, orcs, and dwarves competing to score “touchdowns.”

Another has been Warhammer 40,000, a dystopian war game set in a galaxy dominated by an autocratic human empire called the Empire of Man.

These games are not cheap; a season two edition of Blood Bowl costs £100 online, while a Warhammer 40K starter set will set you back £130.

But Warhammer has so many loyal fans willing to shell out relatively large amounts for fantasy figures, both old and new editions, providing Games Workshop with a reliable stream of sales.

“If you or a loved one have ever been bitten by the Warhammer bug, you’ll know that the variety and constant changes Games Workshop has injected into miniatures means you’ll always be a few pounds lighter when you leave their stores,” he says. Alex Campbell, Freetrade analyst.

“No wonder, then, that the Workshop has turned Warhammer into a powerhouse that could reach more than £240 million in profits in its current financial year.”

Last month, the company said it forecast combined core and licensing revenue of at least £290 million for the six months ended December 1, compared with £248.6 million during the same period. in 2023.

This followed a record annual result, when its pre-tax profits in the year to June 2 rose to £203m thanks to increased demand from commercial customers and the release of the tenth edition of Warhammer 40K.

Games Workshop’s sales have increased for the past eight consecutive years despite the Covid-19 pandemic forcing the group to impose severe trading restrictions on its stores in the early 2020s, including temporary closures.

In fact, the coronavirus was a major boost to business, as restrictions on socializing led homebound consumers to look for new ways to entertain themselves.

A lot of people got into Warhammer, like ‘Ringed Mountain’, the pseudonym of an Idaho-based state employee who co-hosts a podcast about the game called The Bad Moon’s Orbit.

“Everyone was looking for something to entertain themselves, and I went through a couple of different artistic outlets before landing on Warhammer: Age of Sigmar,” he says.

“It offered me a sense of artistic expression and at the same time was less demanding than many traditional art forms.”

In addition to painting models, Ringed Mountain claims to play four to six times a week, often for about three hours.

One of the reasons he believes Warhammer has a very devoted fanbase is the “sense of permanence” you get from owning models you’ve painted, which can’t be replicated as easily in video games.

“Games Workshop can’t remove my patched models, and even when they update the aesthetics of an old model, the originals still exist,” he adds.

‘The idea that your entertainment is something you can own is practically a novelty in modern nerd spaces. Games Workshop could disappear from the earth tomorrow and you could still play it.

Warhammer prepares for its streaming debut

Games Workshop takes ownership seriously; controls almost every aspect of its products, including their design, manufacturing and distribution.

The setup gives the company tight control over its intellectual property and contributes to its high profit margins, which rose to 69.4 percent in the previous fiscal year.

Although it does not liberally license its intellectual property, the company is increasingly making money from licensing, primarily through the sale of video games in North America, the United Kingdom, and Europe.

That could change in the coming years if Amazon turns Warhammer 40K into movies and TV shows.

Games Workshop reached an agreement in principle at the end of 2022 for the retail giant to make films and television series based on its war games.

The pair reached a milestone this week after agreeing on “creative guidelines” for adapting Warhammer 40K into on-screen productions.

If an Amazon series or movie inspires more people to collect fantasy miniatures as a hobby, then the golden streak Games Workshop currently enjoys could last a generation or even longer.

So could Games Workshop become a regular mainstay of the FTSE 100, alongside companies in antiquated industries such as banking, oil and tobacco?

Analysts at Peel Hunt say the deal with Amazon marks an “important final step in bringing Warhammer to a global audience.”

The company is a rare British success story that seems virtually immune to the general pessimism that pervades the UK economy.

However, future prosperity will likely depend on the continued loyalty of an intensely passionate fan base, which has propelled Games Workshop to where it is today.

As Ringed Mountain says: “I don’t know if I’ll always play Warhammer, but it’s hard to beat spending a couple of hours around a table in someone’s garage, sharing a few drinks, pushing miniatures, cursing or cheering on the dice.” rolls and just enjoying our time together.