The UK's gaming landscape is about to witness a significant shift as Games Workshop, the maker of miniature wargames, is on track to be promoted to the FTSE 100. This comes after a remarkable period of growth and success for the company. Founded in 1975, Games Workshop has come a long way, from being a mail-order business to becoming a global leader in tabletop miniature gaming.

Financial Success and Growth

Games Workshop's value has been steadily rising in recent years, driven by the continued success of its Warhammer franchise and lucrative new licensing deals. Since 2019, its shares have more than quadrupled, and in 2024 alone, they have risen by 43%. The company's pre-tax profits are expected to rise by 25% in the last six months, reaching at least £120m, while licensing revenue is set to more than double to £30m or more.

Warhammer and Its Appeal

The heart of Games Workshop's success lies in its army of enthusiasts who play tabletop conflict games using its collectible armies. These troops, although not cheap, add to the fun of collecting, assembling, and painting the small figurines. For example, a pack of 10 mounted Chaos Knights costs £52.50, and the "ultimate starter set" for its Age of Sigmar game is £130. This pricing has led to the nickname "heroin for middle-class nerds" in the past.

New Ventures and Deals

Games Workshop has been making waves in the entertainment industry as well. It has agreed a deal with Amazon to create a series based on Warhammer. This move is a significant part of the company's future growth strategy, with potential for expansion into films or series. Additionally, the launch of the fourth edition of Age of Sigmar is also lifting revenues.

Financial Position and Leadership

Susannah Streeter, the head of money and markets at Hargreaves Lansdown, highlights Games Workshop's strong financial position and accessible cash. The company's prowess in production design, manufacturing, distribution, and retail has made it a global leader. Its top hit, Warhammer 40,000, had a big year with the 10th edition launched, driving record revenue and benefiting from video game licensing.

Challenges for Others

However, it has been a less happy time for the companies set to leave the FTSE 100. Vistry has issued two profit warnings due to understating build costs, while Frasers is struggling to integrate luxury names and take control of Boohoo and Mulberry. Investors have also been rattled by falling like-for-like sales at B&M European Value Retail.The reshuffle will be decided by index operator FTSE Russell based on Tuesday's closing share prices and announced on Wednesday evening. Games Workshop's journey to the FTSE 100 is a testament to its innovation and market dominance in the miniature wargame industry.