18th Dec 2023 11:46
(Alliance News) - Games Workshop Group PLC on Monday announced it has sealed a licensing deal with a US streaming heavyweight, which analysts predict could bring the firm a wealth of returns.
The Nottingham-based firm said it has entered an agreement with Amazon.com Inc's Content Services subsidiary for the prospective development of its Warhammer 40,000 universe into films and television series, alongside the associated merchandising rights.
Warhammer is a miniature figure-based table-top wargame, where players enact battles using warriors and fighting vehicles. The models are assembled and painted by the player.
The deal grants exclusive rights to Amazon for film and TV series set within the universe, as well as an option for exclusive rights in the Warhammer Fantasy universe down the line.
Games Workshop announced an agreement in principle with Amazon in December last year.
"Games Workshop and Amazon will work together for a period of 12 months to agree creative guidelines for the films and television series to be developed by Amazon. The agreement will only proceed once the creative guidelines are mutually agreed between Games Workshop and Amazon," the FTSE 250 company said.
Jefferies said it had "always been confident" a deal would be reached after last year's announcement, despite others having questioned the progress after the hiatus. However, the broker said it expects an "extended timeline" before the resulting production hits screens.
"After the 12-month period to agree creative guidelines, the process will include hiring a writer, preparing scripts, finding locations, building sets, filming, production and postproduction. In all, we are of the view that it could be 3 years before a first TV series is aired on Amazon. We also note that there can be a circa two-year gap between seasons, unless the schedule is fully committed and well planned in advance," Jefferies analysts said.
Jefferies estimates that Games Workshop could earn USD1 million per episode as the rights-holder, or USD10 million assuming a 10-part series. In financial 2023, Games Workshop brought in revenue of GBP470.8 million.
"We are particularly upbeat on the potential for core brand sales to be enhanced by the exposure of a TV series, believing that the downstream effect on miniatures revenues could be significant," Jefferies said.
However, AJ Bell investment director Russ Mould offered a note of caution. While acknowledging that Games Workshop was sitting on a "gold mine" of fantasy world intellectual property, Mould warned, "there is a fine line to tread between sweating the assets and royally mucking up."
"Games Workshop risks long-lasting reputational damage if Amazon makes a mockery of its IP on the screen. After all, a stinker of a show stays in people’s minds for a long time. For every Lord of the Rings blockbuster franchise there are catastrophic flops like the Dolph Lundgren-fronted Masters of the Universe film," Mould said.
However, he pointed to evidence of the firm being "very protective" of its assets, with its zero tolerance policy towards fan-made animation videos on YouTube.
"That suggests Amazon will not be given complete creative licence to do whatever it wants," Mould considered.
Shares in Games Workshop were up 1.4% at 9,923.48 pence each in London on Monday.
By Elizabeth Winter, Alliance News deputy news editor
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