Games Workshop Shuts Down Internet Retailers

March 15, 2013

Dear Valued North American Trade Account:

As a retailer of GAMES WORKSHOP products, you are undoubtedly aware of GAMES WORKSHOP’s commitment to the highest standards of quality and innovation that have become synonymous with its brand. The success of the GAMES WORKSHOP brand depends not only upon the design and development of innovative and imaginative models and games, but the efficient and effective retail marketing and sale of its products in a manner that ensures a positive purchasing experience for the ultimate consumer.

With these principles in mind, GAMES WORKSHOP recently conducted a comprehensive review of its retailer policies, trade terms and account management procedures in North America. While this review reaffirmed for us many aspects of our current policies and trade terms, it, nevertheless, revealed the need for changes to improve the retailing of GAMES WORKSHOP products in North America.

This review confirmed for us that the backbone of our trade business in North America is the instore retail sale of our products by properly stocked and committed retailers, dedicated to the promotion of our products and the hobby culture that they serve. In recognition of the fact that “brick and mortar” retailers provide the best method for retail sale of our products, GAMES WORKSHOP in the United States adopted an Amended and Restated Distributor and Retailer Policy effective July 15, 2003 (the “2003 Policy”). In that 2003 Policy, we recognized that the online retail sale of GAMES WORKSHOP products did not provide the same level of support for the hobby as in-store marketing, and required none of the additional investment necessary to operate a “brick-and-mortar” retail facility. In addition, we were concerned by unauthorized and improper copying and misuse of GAMES WORKSHOP’s trademarks, copyrighted artwork and imagery, and other brand indicators by many Internet retailers.

To prevent Internet retailers from free-riding on the significant investment made by in-store retailers in promoting the hobby and to better protect its intellectual property, therefore, GAMES WORKSHOP in the United States adopted its 2003 Policy. In that 2003 Policy, GAMES WORKSHOP reserved online sales of its products in the United States to GAMES WORKSHOP’s own corporate website and prohibited the online retail sale of its products by United States retailers. The 2003 Policy also set forth General Requirements for in-store retail operations and further established clear directives for the use of approved advertising and promotional materials for GAMES WORKSHOP products.

The 2003 Policy was a great success in the United States. Over the ten-year period since GAMES WORKSHOP adopted the 2003 Policy, the number of in-store retailers in the United States has increased substantially, and the hobby culture that those retailers support and promote has continued to grow and flourish throughout the United States. Also, by establishing clear criteria for in-store retail operations and for the use of approved advertising and promotional materials, the 2003 Policy provided direction as to what GAMES WORKSHOP expects of its retailers and how to best promote the GAMES WORKSHOP brand and hobby culture.

Given this success, we have looked for ways to improve upon the 2003 Policy and to expand its reach beyond the United States to our retailers in Canada. As part of a broader process of aligning the United States and Canadian businesses, therefore, GAMES WORKSHOP now announces its 2013 North American Retailer Policy. This new and improved Policy supersedes and replaces the old 2003 Policy and applies to all “Retailers” (defined in the new Policy to include both directly-supplied Trade Accounts and indirectly supplied retailers who purchase GAMES WORKSHOP products from Authorized Distributors) operating in the United States and Canada. In conjunction with and to compliment the new Policy, we further have revised our North American trade terms and account management procedures to improve service, enhance efficiencies and better align retail sales in North America with GAMES WORKSHOP’s global business moving forward.

The end result of this process is the enclosed 2013 North American Trade Account Packet. The packet includes the following:

• GAMES WORKSHOP’s 2013 North American Retailer Policy, effective June 15, 2013 (the “2013 Retailer Policy”);
• GAMES WORKSHOP’s North American Conditions of Sale for Trade Accounts, effective June 15, 2013 (the “2013 Trade Account T&C’s”);
• GAMES WORKSHOP’s 2013 Trade Account Management Policy effective June 15, 2013, (the “Trade Account AMP”);

Each of the documents contained in the enclosed Packet applies to all GAMES WORKSHOP Trade Accounts operating in the United States and Canada and will become effective June 15, 2013 (the “Effective Date”). Upon that Effective Date, the enclosed will supersede all prior trade terms and policies as they relate to Games Workshop’s North American Trade Accounts, including, but not limited to: (i) GAMES WORKSHOP’s current North American “Conditions of Sale;” and (ii) the 2003 Policy. 

As you will see from the enclosed Packet, many aspects of GAMES WORKSHOP’s existing trade terms and resale policies remain the same. Nevertheless, there are some significant changes as follows:

1. The 2013 Retailer Policy: Major changes include:

• The prohibition against online retail sales of GAMES WORKSHOP products is restated and now expanded in its applicability to all North American Retailers both in the United States and in Canada;
• Revised In-Store Requirements for North American Retailers, including stepped-up requirements for Trade Accounts;
• A requirement that all Retailers resell GAMES WORKSHOP products (including, but not limited to, components) only in their Original Packaging and Labeling;
• A requirement that Retailers limit their resale of GAMES WORKSHOP products to domestic sales in their respective countries – i.e., no exports;
• A requirement that Retailers comply with the timing and disclosure requirements associated with new product releases;
• A requirement that Retailers take steps to ensure that GAMES WORKSHOP products are only sold to Consumers meeting the age requirements specified on the product itself.

2. The 2013 Trade Account T&C’s and Trade Account AMP: Major changes
include:

• New order value requirements for Trade Accounts;
• A limitation of one carriage-paid delivery per week by GAMES WORKSHOP to each Trade Account; and
• A new credit policy specifically tailored to meet the needs of Trade Accounts.

The rationale for and details of the new trade terms, policies and procedures are set forth in the enclosed Packet. Please review the enclosed documents carefully. To the extent you have questions or concerns regarding the enclosed materials, please contact your account representative.

Thank you for your attention to this matter. We look forward to continued success in our relationship moving forward.

Sincerely,