How Games Workshop grew to become more profitable than Google

·5 min read

It started in a small flat in west London, with three friends selling board games and a fanzine via mail order; now Games Workshop is worth more than Marks & Spencer and Asos and is more profitable than Google.

This week the Nottingham-based company, which produces the Warhammer fantasy role-playing brand, announced all of its workers would get a £5,000 bonus after sales and profits surged during the pandemic.

Run by Kevin Rountree, a former accountant who shuns the press, the firm counts Ed Sheeran, the Fast & Furious actor Vin Diesel and Superman among its legion of fans – the British actor Henry Cavill, who plays the comic book hero on screen, revealed his love of Warhammer in an Instagram post during lockdown last year, in which he confessed to an addiction to collecting Games Workshop’s tiny figurines, describing them as “plastic crack”.

The company was founded more than four decades ago when friends John Peake, Ian Livingstone and Steve Jackson began making their own wooden board games and creating a gaming newsletter. They found their feet when the American creator of Dungeons & Dragons asked them to become the role playing game’s first UK distributor.

The first Games Workshop store opened in Hammersmith in 1978 and began producing miniature wargaming models before, in 1983, creating Warhammer, which stages bloodthirsty battles between orcs and elves.

From those updated toy “soldiers” based on a mix of science-fiction and the fantasy world of elves and orcs, Warhammer is now a global brand behind books, video games, a magazine, animations and a planned TV show. The company has 523 shops worldwide, where fans can learn to create and paint models, or play the game.

Collectors build large forces of miniature plastic gaming models, which can cost more than £100 each. A miniature can be made up of hundreds of pieces which must be fitted together and then painted with colours such as “flesh” and “bone”.

A customer uses a tape measure to play Warhammer in a London Games Workshop store in London.
A customer uses a tape measure to play Warhammer in a London Games Workshop store in London. Photograph: Alamy

This can be used to play out clashes on a tabletop battlefield at home or at events, although some fans never play and instead compete to show off their creative versions of the models.

The long history of the game “lore’” is another source of income with books, a magazine and online content keeping fans informed. The group is working to develop Eisenhorn, a live-action science-fiction and fantasy television series with Frank Spotnitz, the American producer of The X Files.

The latest accounts show that last year the company made sales of £361m and an operating profit margin of 43%, higher than Google owner Alphabet Group’s margin of about 25%.

Designing, making and selling the vast majority of its products in-house means that the group doesn’t need to hand a cut of profits to third parties such as factory owners or retailers.

In recent weeks, news of the company’s success has prompted some former workers to raise concerns about low pay for the army of creatives who devise the games and design new miniatures. Those complaining of their treatment all appear to have moved on several years ago, and the company now regularly pays profit bonuses and offers a share save scheme to ordinary staff.

Livingstone, who has just written a book on its early years, says the success of Warhammer is its “metaverse” – a world in which fans can become completely immersed.

Games Workshop’s White Dwarf magazine, which was originally started to write about the role-playing games the founders loved, turned out to be a stroke of genius, helping to create demand from a loyal fanbase.

“Traditionally simplistic toy soldiers became a hobby. You can always buy something whether it is a miniature, a tin of paint or a rulebook,” he says.

Livingstone, who sold his stake in Games Workshop back in 1991 and is now chairman of the British video game developer Sumo Group, says the group has also benefited from a rise in geek culture, partly prompted by the success of tech-entrepreneurs behind the likes of Google and Facebook. The internet has also made it easier for potential fans of the complex games to find each other and learn about how to play.

The worldwide tabletop games sector that Warhammer is part of will be worth $12bn (£8.6bn) by 2023, up from $7.2bn in 2017, according to the consumer data firm Statista, with new entrants able to raise funds from enthusiasts through platforms such as Kickstarter.

At least 10,000 gaming fans are expected to descend on Birmingham’s NEC conference centre this weekend for the first UK Games Expo in two years and more than 200 exhibitors will show off their games.

Kate Evans, from Games Expo, says: “We are seeing more and more families each year coming along. People are looking for a quality time with more for your money and more social, with people talking to each other.”

In recent years, interest in tabletop gaming has been fuelled not only by more interest in home-based activities during the pandemic, but also by the Netflix drama Stranger Things, where the characters are fans of Dungeons & Dragons, and by YouTube shows such as Tabletop, fronted by Wil Wheaton.

“We used to be told we were geeks, nerds or anoraks to be looked down on. Now it’s become pretty cool,” says Livingstone. “There is a huge resurgence in board games. People enjoy social fun and communicating with people while stabbing each other in the back.”

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting