Games Workshop：Warhammer 的世界 [Business Breakdowns 第239期]

Today, we're breaking down Games Workshop. This episode is another examination of the business of intellectual property. Whether it's Disney, Electronic Arts, or Nintendo, there are so many businesses built around a core IP franchise.

Games Workshop and its Warhammer franchise may not be as familiar to our North American listeners, but this episode will tell you why that may be changing very soon. You can also stay tuned on Amazon Prime or search around your local area to see if there are Warhammer retail shops near you.

My guest is Todd Wenning, president and CIO of KNA Capital. Todd shares his personal story of covering Games Workshop many years ago. He gets into the fun evolution of this business, which ties into the vertical integration it has today, and he shares what lies ahead as awareness of Warhammer grows and those loyal enthusiasts who have been around for generations welcome more people into their world.

Todd, it is great to have you back. You gave us one of my more enjoyable episodes last year with Ecolab and some of the unique details about that story. Anyone who hasn't listened to that episode, I would definitely point you to it.

Today, we're here to talk about Games Workshop, a business that I have seen popping up. I actually had someone else reach out—a former guest who was interested in doing a breakdown on it. There seems to be growing interest in this name for obvious reasons. It's a fascinating story that we'll get into, but I wanted to start with a simple introduction because I think there's IP here that some people may be familiar with.

I would consider it part of the niche hobbyist category, and you can elaborate on that in terms of what Games Workshop is as a business and what it might be known for.

Matt, thanks for having me back. It's great to be here. I love listening to the show, and any way I can contribute is all the better.

1. The Warhammer Origin Story

Games Workshop is, in my opinion, the best company that most North American investors have never heard of. It's a really fascinating story. As you mentioned, it combines intellectual property and network effects, and there's a television show coming out. There's a lot to dig into with Games Workshop.

It's a company I came across in probably 2019. I had heard of it—I used to work in the UK, and I had heard rumblings about it—but I hadn't really known much about it. Once I started diving into the company, I thought, “This is really one of those companies I needed to have on my radar.” Then, once I launched my fund, I saw the opportunity to buy some and have been a shareholder since. I'm very excited to talk about Games Workshop today.

Maybe you can get into some of the IP. We have famous brands associated with IP, like Marvel or DC, as a framing, but what makes up Games Workshop in terms of that special IP and the way they monetize it, operate it, and nurture it?

It's probably good to start with the history of Games Workshop. There is deep lore about Games Workshop's origins and backstory, as well as the narratives of its stories. It's a very beloved IP and a very beloved company, and that's part of what makes it a really special company.

In the late 1970s, a group of 3 men in the UK were building wooden games, backgammon, and Go. Around that time, they caught wind of this new thing that was hitting the US called Dungeons & Dragons. They thought it was really fascinating, and they had some connection with the owner of Dungeons & Dragons in the US. So they became the UK distributor for Dungeons & Dragons.

Eventually, they saw how this connection between narrative and gameplay was coming together, and they opened their own store. They started selling their own games, as well as Dungeons & Dragons materials through those stores.

In the early 1980s, they decided to create their own game. The first game they came out with was called Warhammer, and it was loosely based on the Lord of the Rings-esque medieval fantasy role-playing genre.

Instead of creating a tabletop game where people sit around and tell stories, they incorporated miniatures. The miniatures are part of the game. You get these miniatures, and they're very ornate. Now they're plastic, but back then they were made of metal alloy, and you could paint them. Each of your characters has different attributes, and you roll dice. There are similarities to Dungeons & Dragons.

About 2 years later, they came up with a new concept called Warhammer 40,000, as opposed to Warhammer, which is more medieval fantasy. It's basically the Warhammer world 40,000 years into the future. So it became this grimdark science-fiction fantasy world where you have a human race that's fallen, and they're fighting against different alien factions across the galaxy.

You can play as a humanoid or as an alien faction, and you can pick whichever one appeals to you the most. I'm not sure if it was part of the plan or not, but when you have a world that takes place 40,000 years from now, you can build a lot of backstory to the present—just endless stories and IP around how things got to where they are. That has created new storylines for the business.

It gets really deep and very intricate. If you're thinking about the Tolkien world or the Game of Thrones world, where they just keep adding new context to the backstory, it's very similar. It can go very deep.

Games Workshop actually owns its own publishing arm, called the Black Library, which produces a lot of this narrative. They are vertically integrated all the way from paint to publishing. They manufacture the miniatures, make the paint through Citadel, publish through Black Library, and handle the distribution and stores. They own it top to tail.

It's a very fascinating business in terms of how they control all of it, as well as the lore of their IP and how beloved it is with their fans.

I'm curious. You don't often hear about the origins being in distribution and then evolving into the creation of a world, a game, and a narrative around it. Were those original founders still very much a part of that storyline into the 1980s as they took off with the homegrown IP? Did they play a major role there, or was it someone else coming into the fold who helped them evolve that side of things?

One of the 3 decided that he wanted to go back to what they were doing before, working on wooden games. The other 2 really got into this fantasy world, its narratives, and tabletop gaming.

They brought in other people. A couple of major outsiders came in and helped them develop the game, and it spawned this subculture of people who really loved the narrative, dove into it, wanted to play it, engage with it, and connect with other people. That's a big part of the story today.

You alluded to this. It sounds like the evolution of that story takes place both in publishing—whether it's books, graphic novels, or whatever it might be—in addition to the miniatures. Is it fair to call them figurines?

We've got to be careful here, Matt. I think the way it's framed is that they are miniature wargames. They are not figurines. They are tabletop gaming pieces. They are things that we engage with and use to achieve our mission in the game, so we have to be careful what we say.

I may not have appreciated the definition of “figurine” to begin with, so I learned something way beyond businesses on this show.

2. The Warhammer Store Network

In terms of the brick-and-mortar concepts, there are Warhammer stores. Are they distributing Warhammer-related IP products, or is there also third-party product distributed through those stores?

No. They have their own retail stores, as you mentioned. They have about 575 around the world, and about 55% of those are in Europe and the UK, about 35% are in North America, and 10% are in Australasia.

You probably don't even know that they have a store in your town. If you live in a semimajor city in the US, you probably have what's called a Warhammer store. If you go to Google and type in “Warhammer store near me,” you probably have one. I don't know for sure, but we have one in Cincinnati. There might be one in Pittsburgh and one in Cleveland.

A lot of these stores are run by enthusiasts. About 75% of their stores are single-staffed stores. These are just enthusiasts who thought, “I get together with my friends anyway to play this game, and I might as well have a store, have everything set up there, make some sales, and make a little money while I'm doing it.”

A lot of them are in strip malls. The stores are fairly small, but they're stacked to the gills with Games Workshop materials. They do not distribute any third-party products.

About 20% of the revenue comes from the retail channel. 60% of the revenue goes through the trade channel, which is third-party. That's where they might be in hobby stores. I'm not sure if they're in Walmart, but they might be in a Walmart store somewhere.

These are all distributed to third-party independent sellers. I looked to understand the concept of a Warhammer store and found there was one just a 20-minute drive from me, so I can attest to that being the truth.

Just to have some context about this market, I think it is very enthusiast-driven, but it continuously amazes me, the level of enthusiasm. I think you can even look at something like Marvel movies and the real appreciation and diehard nature of some of the fans of the origin stories going back to the Stan Lee days, and what that generated for that IP over time. Do you have any way of contextualizing the size of this type of market? Games Workshop revenue is one data point, but I'm curious about that.

3. The Warhammer Community Expands

It's a lot bigger than you probably think. There are 790,000 people around the world who have signed up for the My Warhammer emails. They are free, regular emails that go out to people who are interested in Warhammer. About 248,000 people are subscribed to Warhammer+, which is a $50-a-year subscription. Now, this number is up from 115,000 three years ago.

It has doubled over the past three years in terms of people who are willing to not only subscribe to the emails but also pay for the unique interactions they have with the company. So this is bigger than you might expect and growing very rapidly.

When you mentioned the origins, was there demographic concentration or geographical concentration where this was really material in Europe first before expanding outwards? How key is Europe to the story? You mentioned the 55% number earlier, but I'm curious about that as well.

It started in the UK. It feels like a very British company. They're based in Nottingham. Warhammer World, the big showcase store, is next to their headquarters in Nottingham. They're actually building a new Warhammer World in Washington, D.C., that comes out in 2027. So that's another part of the story, but it's a big cultural thing in the UK.

There are a lot of young men in particular. It's not always men, but it tends to trend toward young men who get really into this game. Henry Cavill, who I'm sure we'll talk about in a minute because he's producing the Warhammer series for Amazon, is a big fan, so he'll go on talk shows and talk about it.

A lot of people grew up playing Warhammer, maybe in a similar way to how you and I might have collected baseball cards and gone to baseball card shows. So it's a very hobby-driven type of business. Management talks about the hobby gene that a lot of customers have. Not everybody has that. That's a big part of the people who buy it.

In terms of age, it tends to be young men between the ages of 10 and, say, 18. Then a lot of times they fall away from the hobby because it's an expensive hobby. The starter box that I bought was about $70, to give you an idea. So it's roughly video-game-level, and it can go much, much higher. You can get individual units that cost hundreds of dollars, if not more, depending on what you're doing. So it's a very expensive hobby.

A lot of times, young players are supported by their parents when it comes to buying Christmas gifts, birthday gifts, things like this. A lot of times, what happens is they discover the opposite sex or they discover someone with whom they partner, and they just get distracted for 10 years or so. Then, in their 30s and maybe in their 40s, they come back to it. That tends to be the trend in terms of age and interest in Warhammer.

Once you lose access to the parental funds, too, it becomes more focused on the budget until you get back out of that hole. But it is interesting when you have the demographic evolution where, as they come back to the hobby, they might also have their own children to help break into the hobby. I can imagine that happens quite a bit.

I think you've laid out who, in theory, would be the competition, but I'm always very curious when it comes to having the hobby gene. What attracts people to Magic: The Gathering versus Dungeons & Dragons versus Warhammer? Are those the right competitors to think about when you think about where competition exists for the business?

In some ways, yes. I think a lot of it comes down to what your friends are playing. Warhammer is a lot about community and having something to do with your friends in an increasingly digital world. It's a great way to come together in a physical world and enjoy time together.

One of the things that separates Warhammer from, say, Dungeons & Dragons or Magic: The Gathering is that you can latch on to various parts of Warhammer. You might really enjoy the gaming, or you might really enjoy the collecting, or you might really enjoy the painting. I don't want to go too deep myself into this world because otherwise I start mixing up investing and the narrative of the business, but I did get a starter set, and you paint these figures. You have to do multiple layers sometimes to get them right, and so you spend hours of your time putting these things together.

If you can get really into painting them, some people actually paint them, if they're really good at it, and sell them. You can latch on to various parts of the hobby without having it compete with Dungeons & Dragons or Magic: The Gathering. It could be that you really like collecting these space figurines or these medieval-fantasy figures.

They actually produce the official Lord of the Rings tabletop games. If you want to collect armies of orcs fighting elves in The Lord of the Rings, you can do that by buying Games Workshop products.

Yeah, it's always interesting to me in terms of the symbolism of when you see something that is a niche hobby evolve. One of the key moments, I think, is when you see the resale with customization. There's just something that represents the fact that there's a market above this market that now exists, and that is representative of an ecosystem. People willing to spend the time to create a business around the original IP is usually telling in terms of the level of enthusiasm there.

The other question I had was that vertical integration seems like it can be very impactful for Games Workshop, particularly because of that community element that you mentioned. If you have a traditional hobbyist store, they might have a Magic: The Gathering monthly event. They might not, but I'm sure that pretty much all Warhammer stores have these events. Is that normal in the industry, based on what you've seen?

Games Workshop does put on a lot of competitions and events. The attendance numbers are much larger, again, than you would probably expect. It's very much a bonding-type of business.

One of the things I like about this business is that there are hidden network effects. If one friend starts to play, another friend starts to play, and it starts building. The community that you build around you gets stronger, which makes Games Workshop stronger, and the entire value of the whole ecosystem gets stronger.

We think about network effects with Google, Facebook, and eBay, but when you really think about them in a physical gaming world, you don't really think about it. But Games Workshop has it.

You gave us some sense of the revenue breakout with retail and trade. I'd be curious what the other 20% is, so maybe we could start off there.

4. The High Margin Growth Model

The other 20%: 15% comes from online and 5% from licensing. The online can just be people who order from Warhammer.com. It can be the subscriptions that I talked about earlier. I think they do. My estimate is that their annual run rate on that number of subscribers is about £12 million. It's rising but still a small part of their business.

The licensing business is the remaining 5%. That can be cyclical. They might have a big licensing deal come in with a video game. So if you go on to the Switch marketplace or PlayStation, you'll be able to see Warhammer games. They license their IP to video game producers.

That business is really high-margin, so it's well over 90% in a typical year. Ninety to 95% is what I have in mind. As a firm, their gross margins are about 70%. It is almost like a luxury product when you think about those margins, and they have significant pricing power.

If you think about their retail stores, my guess is they do about 80–85% gross margins in those stores where they control the process. Online is probably similar, with their costs there being logistics and distribution. With trade, I think their gross margin—my guess, since they don't disclose this—is probably 50–55% thereabouts when they sell wholesale. So it's a very strong model from an economic standpoint.

Their EBITDA margins are over 40%. It's a very cash-generative business.

The licensing point—I still remember reading there's all this lore about Ralph Lauren, but if you go back into the early biographies, it was a failing business, really under a lot of stress, until he licensed a fragrance, and that was a huge profit driver and cash generator. It always made licensing in my head a completely different concept.

But nonetheless, even if that sits at the top of the chain, 50–70% gross margins are quite impressive. On those buckets, would you point to any single bucket being a large growth driver going forward as you think about expansion?

The D.C. store seems like it can make a big leap into the U.S., and having a Prime show seems like they're doing things with the IP that are sensible from both an attention and awareness standpoint. What would you point to from a growth perspective?

If we think about the network effects that I mentioned, with the TV show coming out, I think it'll appeal to a lot of people who have never even heard of Warhammer. They might go check out their local store. All of a sudden, you've got a new node in the network. They introduce their friends, and so on and so forth.

If you look at what's happened with the Mario movie, for example, when the Mario movie came out, Nintendo management said, “We were surprised. We had high expectations. We were surprised by even how much that drove what we wanted them to do, which was buy Nintendo video games.”

And when The Witcher, which also stars Henry Cavill on Netflix, came out, that was a stagnant video game series.

And the sales went through the roof. People see IP, whether it's Lord of the Rings or whatever, and they want to continue to engage with that IP. They want to stay with it. My investment thesis is that this will lead to stronger sales in the higher-margin categories.

It'll certainly drive interest in trade. People might go to a hobby store instead of going to a Warhammer store nearby, or maybe they don't have a Warhammer nearby and they go to the hobby store, in which case it's lower gross margin. But I think that will increase some of the licensing revenue they have, which is 90% gross margin.

It will also drive the online business, which I think is 80–85% gross margin, and certainly drive traffic into the Warhammer stores, which are again about 80–85%. And that's where management wants you to start your experience: in a Warhammer store.

When I went to buy my Warhammer starter kit—Warhammer 40,000, to be specific—I walked in with my kids, and there were probably 6 or 7 30-year-old men sitting around tables playing this game. They all looked up at me to see, “Hey, is this guy one of us?” I started asking questions, and they were talking to my kids.

I think it's just a great way to get a feel for what Warhammer is, what they offer, how the game is played, and what sort of social events are around it. It's a great introduction to the experience and to the community.

It's a very interesting thing that we're starting to see more of. You mentioned the Mario movie, which I can tell you is the first movie I got my son to watch in full. That meant something to me in terms of the nostalgia of playing the game growing up, but also on another extreme, Formula 1: Drive to Survive.

I think a lot of people are trying to use that as a blueprint. You can see how that drives additional interest and entryways, potentially for a certain type of buyer as well. So that's quite interesting. On the licensing, I'm just curious. You mentioned it can fluctuate quite a bit. How does that work?

Is it just the sense that if you're licensing a video game, you're going to have that initial bump in Year 1, but until you release a new game, you're going to have that natural decline curve?

Most of their licensing historically has come from video game partnerships. It depends on when consoles are launched and when games are developed, so it can be a little lumpy. When it hits, it goes right to the bottom line, pretty much. There's very little operating expense related to that. It really just falls to the bottom line.

So I'm thinking that as the movie comes out, that will lead to more licensing deals, whether directly from Amazon or from new video game partners, et cetera. I think that will remain a very cash-generative part of the business for a long time.

Just in terms of being UK-operated, did the tariff volatility end up impacting them at all? It's one of those questions that comes to mind as you mentioned their origin and having that strong footprint there in the UK. How caught up in all of that activity did it get, and how much does it actually impact the business?

That was some of the concern earlier in 2025. The stock sold off or was stagnant a little bit. The concern was that, after their annual report came out—they work on a different reporting schedule—management said in the May report, “We're concerned about tariffs and what the impact might be to our gross margins.”

The stock had a nice jump a couple of weeks ago because they said in their November report that it actually didn't impact them as much as they expected. Then we saw this week—we're talking on January 22nd—when there were concerns about new tariffs, the stock sold off a little bit.

Again, they are impacted by it. But this is why the vertical integration helps quite a bit. Not only does it help protect them from IP theft, which is one of their biggest concerns, but it also helps them control their supply, and they have complete control of their supply at all times.

You mentioned those gross margins, which to me feel very impressive. Is there any way to contextualize that versus peers? I don't know if there are others that are public that you can compare it to, but I'm curious about that.

5. The IP Moat Runs Deep

It's such an idiosyncratic business that there's really not a ton of good comps. The best comp is the Wizards of the Coast unit at Hasbro, which owns Magic: The Gathering and Dungeons & Dragons, and they have similar EBIT margins around 40%.

This is very lucrative IP, and it's very, very difficult to get. You mentioned nostalgia earlier. You can't just create this IP. Let's say you wanted to go out and compete against Magic: The Gathering or Warhammer. I would just say, “Good luck,” because it takes decades to build up that nostalgia and those deep connections. Importantly, that enables you to pass it down to the next generation.

I played this growing up. I'm going to show you how to play it. It's similar to the way we played games with our sons or our children on Nintendo. We played it growing up. We share it with them. Nintendo doesn't have to win them over on their own. We're doing it for them. We're the salespeople.

It's just extremely difficult for anybody to come in and compete with these deeply seated, deeply rooted experiences and IP.

I'm still amazed at their ability to transition from being known for distribution, manufacturing, and all of that into building out this world-building storyline and all that goes with it, because that is such a massive undertaking and takes such creativity and a special type of genius. So, more credit to them.

I think you see now that everybody's just dying to get a world created, and there's so much demand for people who can make games like that and get them attached to it—let alone this.

On the point of where margins go, are there any headwinds or tailwinds where you expect them to materially change from the level that they're at? Obviously, you could have a mix shift, which sounds like it could theoretically happen in the future if you get more online consumption. But is there anything that you think would materially change that trend line from where they are today?

On the positive side, we touched on the network effects building, and the manufacturing facilities are high fixed costs. They have more throughput coming through them, which should increase margins.

The risk is really trying to stay relevant, because network effects are great when your product's relevant, and they can unwind just as fast when you're irrelevant. That is something I'm always keeping my eye on: Are they staying interesting to their fan base?

One of the risks is that they gouge prices, right? They push prices too hard, and that's a common piece of feedback you see online. That doesn't mean people stop buying it, but people are saying, “Hey, this is just getting too expensive for me.”

I think Games Workshop does a good job, in my opinion, of stewarding that and thinking longer term. They have a very long-term view. I don't think that they are trying to maximize short-term profitability at the risk of long-term relationships and gains.

But that's certainly a risk if they get to the point where they have to raise prices due to inflation and that just gets out of control for their core customer.

You started looking at it in 2019, and that's certainly a tenure at this point in 2026, looking at the business and its history. Do you have any sense of whether it has ever had stretches of time where it maybe went out of popularity or lost some of the luster that was associated with it?

For sure. If you look at the chart, you can see where it falls apart. What happened was they got the license—the agreement to manufacture the Lord of the Rings miniatures and those games. It was such a bonanza. I'm sure you can remember in the 2000s how big Lord of the Rings was. They had 3 movies, and everyone got really excited about it.

What happened to Games Workshop was they took their eye off the ball when it came to investing in their own IP. They were just making so much money working with Lord of the Rings that they weren't keeping their IP fresh.

When the Lord of the Rings movies stopped coming out, that traffic stopped. Now they didn't have fresh IP. They ran into some real challenges in 2008. There was a real scare that they might go under. That was an important moment.

A lot of great companies, if you look back at their history, probably had a moment somewhere along the line where they had a near-death experience. Great companies say, “We're never doing that again. We will not take on debt. We won't do whatever got us in trouble the first time. We're going to fix that.”

And that's certainly what Games Workshop has done. Again, it's super critical that they continue to invest in their IP. They release new editions, and that keeps the IP fresh. Some people might say, “Oh, I didn't like this edition,” or whatever. But they'll buy the next one.

The idea is just to keep it fresh, keep it going, invest in the business, and stay relevant. That's the key to Games Workshop's business.

Is there a creative director who sits on top of managing that IP? I think a lot of the success of Marvel and those movies should be attributed to Kevin Feige, who was a diehard fan and made sure that evolution into the theater was done thoughtfully around the most enthusiastic Marvel fans but could also be consumable by normies like myself.

How does Games Workshop approach that? Do they disclose who looks over it? What's the storyline there?

They have a very unique organization as well. It's a flat organization. It's not a strict hierarchy. They actually have it set up where there are 2 groups.

One group is focused on core retail, dealing with the stores and dealing with manufacturing, and another group is focused entirely on IP. They take that IP part of their business extremely seriously, as they should.

That’s, I think, a key to Games Workshop’s success—this modern success post-2008—is that they’ve realized, “We really need to build up this IP again and make a deep connection with the users and the game players.”

Back to the financial model, or the spreadsheet-oriented questions, in terms of capital allocation: I assume with EBITDA margins at 40%, a decent amount of that flows into free cash flow. What do they invest in if they do have to reinvest in capex? How would you describe the overall capital allocation framework for the business?

6. Capital Allocation Stays Simple

They have a very unique approach to returning capital to shareholders. I think their average dividend payout ratio is about 80%.

Very UK of them. It—

—is very dividend focused. There’s another company in the UK called Admiral Group, which is a car insurance company. They have a very similar process where they figure out, “Here’s all the cash that came in. We’re going to keep a buffer to make sure that we are secure in case there’s COVID or something different comes up—an emergency—and whatever’s left over, we give to our shareholders.”

It’s very simple. I believe they have authorization to buy back stock, but I don’t believe they’ve done it before. They haven’t really had a 2008-type period where the stock was super cheap either. Their approach is, “Hey, we’re just going to give you whatever is left over.”

I think it’s a very shareholder-friendly approach, especially for their type of business, because you can imagine that, being as cash-rich as they are, they could easily fall into the empire-building trap where they just start buying up studios and all these sorts of things. They are just relentlessly focused on what they do. I think that is the right capital allocation process for them.

You mentioned a bit about the stock getting overly cheap. Do they have a way of thinking about valuation, or do you have a way of thinking about it, whether it’s P/E or anything else, just to frame the valuation framework that you would use for a business like this?

For this type of business, because it pays such high dividends and is really cash-flow oriented, I use a discounted cash flow model. I forecast what I think is going to happen with the margins, figure out what that turns into in cash, and then discount that cash back to the present. That’s how I model the business.

You might look at the stock today. I think it’s trading for about 30 times earnings, which is not optically cheap. But if you think about the potential for margin increases and this network-effect acceleration, we might look back and say that wasn’t too bad to pay.

You had a very nice write-up recently where “40 times earnings is actually cheap” was the actual headline. I often think that there are some impressive businesses out there that are like that, and you need to look for those characteristics. I could see your angle here, certainly, and 30 times, not 40 times, gives more reason on the risk side of the equation.

I think we’ve kind of alluded to several risks throughout. What would you keep your eye on the most? Is there anything else that you would add to it, or one in particular that you would highlight as the risk that you think most about for the business?

7. Staying Relevant Is Everything

In terms of the risks, there are a couple of things. Kevin Rountree, who we haven’t mentioned yet, is the CEO and writes, in my opinion, some of the best annual reports out there. If you’re an annual report fan, you have to check out Games Workshop.

You can imagine that if you were the CEO of a business with this sort of fantasy IP, you would be inclined to create these 200-page glossy annual reports with all the IP you have to show off what you’ve done. It’s like a Word document. It’s a simple Word document.

He’s got some great lines that he puts in those reports. He says, “We believe shareholder value is created primarily by not destroying it.” He has these great one-liners that any sort of Buffett fan would just love, and I do too. He repeats them in every annual report, so he kind of drives it home.

He’s been CEO since 2015 and it’s been extremely successful. He’s 55 years old, so still pretty young and could go on for a long time. But there’s always the risk that Kevin decides, “I’ve done a great job. I’ve got other plans in life. I want to move on.”

One of the concerns is: What does the post-Kevin Rountree Games Workshop look like? It seems like they have a blueprint for success to execute on, but you just never know. There’s always the risk of a management transition not going well, or someone who doesn’t connect with the fans. So there’s always that risk.

The key risk, however, is just avoiding irrelevance. If you go online and you go to Warhammer chats and things, people will be upset about prices or this edition, but that’s okay. When you’re looking at IP, what you care about are people who are passionate one way or the other.

The worst thing that can happen is just a yawn of indifference. If they care, that means that they will buy when they are happy, but they still really love the IP. As long as Games Workshop continues to harness that, it’ll be great.

AI is a potential concern or a potential benefit. It’s unclear at this point. Management has come out and said that they don’t want their IP creators to use AI because they’re afraid that it’ll get mangled in the AI world, or stolen, or something like that.

What’s interesting is that part of the backstory to Warhammer 40,000 is that humans used AI and it turned everything bad. They had to fight against AI robots. This is all coming kind of full circle in a weird way. Hopefully that’s not our future, but they are naturally concerned about their IP getting stolen, misused, and diluted somehow.

I think that’s another risk. That’s probably 3 risks right there to keep an eye on.

I think the point on Kevin highlights the importance of the people who oversee IP, who are so incredibly important, and some of those other points are noteworthy as well. Maybe Warhammer 40,000 will become some type of Nostradamus-like tale and add even more lore to the story.

This has been fascinating. I mentioned before that I absolutely love businesses built around IP, and particularly when they find ways to really nurture it while building a nice business around it. What are the key lessons that stand out to you from analyzing this business that you would potentially think about looking for elsewhere or applying elsewhere as an investor?

I think a lot of it has to do with sticking to what you’re good at and embracing the quirkiness, the community, and the narrative that you’re building around those things. You might be surprised at how big that market really is.

If you have a very niche interest, especially with the way the internet is today, there’s a community somewhere. You can find them. This is very positive for the world: a community for people to get involved in.

It’s human connection bringing people together. In the digital world, everybody feels isolated and fragmented, and I feel like this is one type of game that can bring people together. I think that’s really healthy.

From a lesson standpoint, I just think: lean into your narrative, lean into your community, lean into your niche. I think that’s a good lesson that I’ve drawn from the Games Workshop world.

Very good point. You were mentioning network effects and even the feedback loop. The feedback loop can get loosened because you’re introducing new things and it’s not as tight as it needs to be. But when you can have that focus, it really ties together nicely.

“Riches in the niches” is something I always like to reference. It’s always amazing, and the internet can open your eyes to just seeing how many niches are out there.

I compare it to living 1,000 or 1,500 years ago, when there were thriving civilizations that nobody really knew even existed. You might stumble upon them and think to yourself, “Wow, who knew they were out here?”

Well, Todd, this again has been a pleasure. I’ve learned a lot, and I’m sure the audience has as well. Thank you very much for sharing the knowledge.

Thanks for having me, Matt.