Video games Workshop (LSE: GAW) shares have climbed over 40% within the final six months. 

The FTSE 250 producer of miniature wargames has gone from power to power, rising its market worth to £4.5bn, which makes it, based on the newest knowledge I’ve, the 89th-largest firm of these eligible for the FTSE 100. 

If nothing modifications, then the agency seems to be like a useless cert for the UK’s premier index. 

IP power

Whereas a seat on the desk with the large boys received’t have an effect on issues an excessive amount of – exterior of a dose of status and a doable share price soar as Footsie index funds rush into the inventory – it’s an indication of how nicely the corporate has carried out in latest instances. If I didn’t already personal a place within the firm then I’d purchase the shares within the Warhammer model proprietor as we speak. Right here’s why. 

The first cause is the power of the agency’s mental property, or ‘IP’. A superb IP engenders critical loyalty and will get clients to open their wallets for all method of merchandise. 

The Lion King remake was one of many largest-grossing movies ever made. Was it as a result of of us wished to go to the cinema to see a narrative about expressionless CGI lions? No! It was the IP! They’d fond recollections of the primary film and had been joyful to spend cash to see Simba and the gang once more.

Proof for the power of the Warhammer IP comes through the online game world. For these not within the know, the gaming trade is in one thing of a disaster. Previously honored AAA growing studios are churning out flop after flop. I’d want the fingers of each fingers to depend the notable failures this yr alone. 

In among the many tumult, alongside popped a bit of sport known as Warhammer 40,000: House Marine 2 and it bought like scorching truffles. In simply a few months, 4.5m copies flew off the proverbial cabinets. One insider claimed it was promoting sooner than any of the Doom or Quake video games. 

Large affect

The affect for Video games Workshop is that the agency expects to triple its licensing royalties this yr from £13m to £30m. That’s a helpful addition to the agency’s total high line of £260m, and bear in mind, licensing out IP is a really high-margin endeavour. 

A sequel to the sport in all probability received’t be far-off both, however the actual profit is the publicity to the model.  What number of children may ask mum and pop for a Warhammer set for Christmas after taking part in this new cool laptop sport? Fairly just a few I’d guess. 

Is that this a risk-free funding? After all not. No inventory is. And certainly one of my bigger considerations is that the agency’s insistence on UK manufacturing means expensive merchandise go away them uncovered if cost-of-living points worsen. 

On the entire although, I believe this a inventory buyers ought to contemplate. The corporate will have fun its fiftieth anniversary subsequent yr and I wouldn’t be shocked if the power of the model and firm thrives for one more 50.