How Games Workshop transformed into a miniature wargames giant

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

The young adult writer, known for his Knights of the Borrowed Dark trilogy, says the mix of dark science fiction and “ridiculous bombast” hooked him and prompted him to write fan fiction before he could even afford to buy iconic Warhammer tabletop figures.

Rudden loves how a ‘modest box of Space Marines’ can occupy your time as much as any novel, computer game or television series, whether building, playing or painting it in your 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 a stock, except its value is determined by you and a very enthusiastic community who are as eager to hear about your journey with your models as you are about theirs.”

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

Demand for the group’s fantasy miniatures has helped send its shares up 144 percent in the past five years – and a whopping 2,652 percent in 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.

Joining London’s blue chip index comes at an opportune time; 2025 will mark 50 years since three friends – Ian Livingstone, Steve Jackson and John Peake – founded the company in a flat in Shepherd’s Bush.

After starting out selling board games, the trio got an early break when Dungeon & Dragons creator Gary Gygax asked them to become the exclusive UK and European distributor of the popular role-playing game.

Shortly afterwards, the company provided funding to help set up Citadel Miniatures, which produces miniatures for tabletop games, before starting Warhammer in 1983.

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

Its business soared early in the next decade when it acquired the rights to make Lord of the Rings miniatures in conjunction with Peter Jackson’s epic film series, but struggled after the third film fell out of cinemas .

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

Under his leadership, Games Workshop’s annual turnover has more than quadrupled and pre-tax profits increased from £16.6 million to £203 million.

This has been achieved by improving relationships with fans, in part through the launch of the Warhammer Community website to help them get in touch and introducing games with simplified rules.

One particular game, Blood Bowl, is a parody of American football, where teams of fantasy creatures such as elves, orcs and dwarves compete to score touchdowns.

Another example is Warhammer 40,000, a dystopian war game set in a galaxy dominated by an autocratic human empire called the Imperium of Man.

These games aren’t cheap; a second season edition of Blood Bowl costs £100 online, while a Warhammer 40K starter set costs £130.

But Warhammer has so many loyal fans willing to spend relatively large amounts of money on fantasy figures, both old and new editions, giving Games Workshop a reliable stream of sales.

‘If you or a loved one has ever been bitten by the Warhammer bug, you know that the variety and constant changes that Games Workshop has injected into the miniatures ensure that you’re always a few pounds lighter when you walk out the door. their stores,” said Alex Campbell, analyst at Freetrade.

‘It’s no wonder that Workshop Warhammer has grown into a powerhouse that could achieve more than £240 million in profits in the current financial year.’

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

This followed a record annual result, as pre-tax profits rose to £203m in the year to June 2 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 which forced the group to impose strict trading restrictions on its stores in the early 2020s, including temporary closures.

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

Many people became involved with Warhammer, such as “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 distract from, and I bounced around a number of different artistic outlets before landing on Warhammer: Age of Sigmar,” he says.

“It offered me a sense of artistic expression while being less demanding than many traditional art forms.”

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

One of the reasons he believes Warhammer has a very dedicated fanbase is the “sense of permanence” that comes from owning models you’ve painted, which can’t be so easily recreated with video games.

“Games Workshop can’t make my models disappear, and even if they update the aesthetic of an old model, the originals remain,” 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 face of the earth tomorrow and I could still play the game.”

Warhammer is gearing up for streaming debut

Ownership is taken seriously by Games Workshop; it controls almost all aspects of its products, including their design, production and distribution.

The setup gives the company a firm grip on its intellectual property and contributes to its high profit margins, which rose to 69.4 percent last financial year.

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

That could change in the coming years if Amazon were to develop Warhammer 40K into films and television shows.

Games Workshop reached a deal in principle at the end of 2022 in which the retail giant would make films and TV series based on its wargames.

The pair reached a milestone this week after agreeing on ‘creative guidelines’ for adapting Warhammer 40K to on-screen productions.

If an Amazon series or movie inspires even more people to collect fantasy miniatures as a hobby, then the golden form that 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 belonging to old-school industries such as banking, oil and tobacco?

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

The company is an unusually British success story that seems virtually immune to the general pessimism that dominates the British economy.

However, its future prosperity will likely depend on the continued loyalty of an intensely passionate fanbase, 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 spend a few hours sitting around a table in someone’s garage, sharing a few drinks, pushing miniatures around, swearing or to cheer over dice rolls, and just enjoy our time together.’