16th Dec 2022 19:00
(Alliance News) - Games Workshop Group PLC on Friday reached an agreement with Amazon Content Services LLC, a subsidiary of Amazon.com Inc, for the development of its intellectual property into film and television productions.
The Nottingham, England-based wargames maker and retailer said rights will initially be granted to develop the Warhammer 40,000 brand universe.
Games Workshop said the project is "wholly dependent on and subject to contracts being agreed and entered into", but that Amazon will begin development activities inducing preliminary discussions with writers.
Jefferies' Andrew Wade said: "This is very exciting news for Games Workshop. Licensing income has built strongly in recent years, from GBP2m in FY15 to c.GBP17m in FY23e, but we saw a more limited progression ahead, believing that only a major film deal would support another step-change. With today's news, that is now a very real possibility. Moreover, a mainstream TV/film product could be game-changing in terms of Warhammer's brand reach and awareness. Pass the popcorn."
Jefferies maintained a 'buy' rating on Games Workshop with a price target of 8,700 pence.
AJ Bell's Russ Mould agreed saying "this could be an extremely significant step in Games Workshop’s development."
"Developing in this area has several upsides for Games Workshop. It generates extra revenue and cash flow for a relatively limited extra cost and, while Amazon will be granted the relevant merchandising rights, it could deepen fans connections with Games Workshop’s table-top gaming products and bring them to a wider audience," Mould continued.
"The big risk is that, by almost certainly surrendering any creative control, Games Workshop is at the mercy of Amazon making something which might alienate its existing followers. The mixed reaction of Tolkien fans to Amazon’s recent Lord of the Rings prequel is something to consider," Mould warned.
Shares in Games Workshop closed 16% higher at 8,483.86 pence each in London on Friday.
By Chris Dorrell, Alliance News reporter
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