To whom it may concern,

I am the Hobbies Product Manager of Mighty Ape Ltd, the largest online retailer in and also trading in Australia as Mighty Ape Australia. I am writing to provide a submission on the exclusive dealing notification lodged by Games Workshop Oz Pty Limited (GWOP), reference N97404. As our trade account is managed by GWOP and Games Workshop treat Australia & New Zealand as the same market under the same trade terms this notification is of specific interest to both the NZ and Australian arms of our business.

We submit that the terms proposed by GWOP would result in significantly lessened competition within the market for Games Workshop products, an increase in the competitive advantage for GWOP’s own sales channels and would be detrimental to the public interest within the tabletop gaming and Games Workshop hobby communities.

1. By way of background, please provide a brief description of your business. Include details such as the demographics of your customer base, their location and the mix of distance selling and ‘bricks and mortar’ shop front selling if relevant.

Mighty Ape is the largest New Zealand Online Retailer, offering a range of consumer products from Games and DVD’s through to Toys, Clothing and Hobbies and also trades in Australia via the Mighty Ape Australia website. Mighty Apes customers are spread through New Zealand & Australia and include an very wide range of demographic and regions. Many of our customers come from areas where there is no local hobby retail store and therefore have to purchase their products online.

Our main sales channel is online, both within New Zealand and Australia, however we also conduct face to face sales at events and conventions such as the Armageddon Expo and Battlecry Convention and offer a click and collect service via our based pick­ups and showroom location. Over the counter retail purchases can also be made in our showroom, pending the availability of stock which is stored in the adjacent warehouse.

Specifically the Hobbies Category within the business is run as a ‘Virtual Local Hobby Store’, as close as possible to offering the service and sales experience of a full physical hobby retail store. We offer a range of hobby products, including Games Workshop, tabletop wargaming, roleplaying games, scale model kits, model railway, slot cars and rc, as well as paints, tools and supplies.

Via our social media channels, including our Hobbies facebook page and blog, we produce and promote a wide range of hobby content, promotions and competitions to support the hobby community. These include painting tutorials and competitions, how to guides, community shout outs and event promotion. We are also heavily involved in supporting and promoting gaming and hobby clubs and events throughout New Zealand, including sponsoring tournaments for Games Workshop products.

3. Has the proportion of GWOP sales or the mix of bricks and mortar versus distance selling of GWOP products changed in recent years? If so, please explain how and to the extent possible, why.

It is common knowledge that across the entire retail industry there has been a significant shift in consumer purchasing behaviour from physical retailers to online retailers, both local and increasingly international. This is especially true within the hobby industry, including in particular the tabletop gaming market of which GWOP products are a feature.

Regular online purchases have become the norm and the central importance of stores within the hobby community has diminished due to the rise of social media. Community forums, facebook groups and youtube have become key features in the growth of the hobby community and in recruiting new players and customers.

Hobbyists are sharing their projects online via blogs and videos , offering tips and advice, arranging games with other local players. Many find it more convenient to shop and share their hobby from the comfort of their own homes as opposed to going to a physical retail store.

Online stores like us operate facebook groups, post hobby editorial content in blogs and on their websites, organise, support and promote local hobby events such as tournaments, painting competitions and more. As such they are actively encouraging new people to enter the hobby and supporting the growth of the community. We are not “Free­loading” off the work of brick & mortar stores as GWOP contends.

With regards to GWOPs products specifically customers are increasingly purchasing them online and often from overseas discount retailers. There are a number of factors involved with this shift; such as the closure of smaller local stores, increasingly fast and cost effective shipping options, and consumer confidence in the security of online transactions.

One of the most significant factors is the regional pricing structure which Games Workshop Ltd have adopted, which makes their products significantly more expensive to purchase within Australia and New Zealand than anywhere else in the world. Combined with ongoing price increases this has created a customer base which is increasingly price sensitive. Local retailers, both online and bricks & mortar, are simply unable to compete with overseas prices as the wholesale price from GWOP is also regionally based.

Restricted access to stock from Games Workshop has also been a factor in this. A number of products within their range are “Direct Only’, which stores do not typically hold stock of because of the lower return on investment. Such items have to be special ordered in so there is no time difference between buying them online or from a bricks & mortar store.

Certain items are only released “While Stocks Last’ and with very limited initial stock allocations for all independent retailers. For instance we were only allocated 3 units of the recently released Warhammer 40,000 Space Wolves Datacards and we are a large extended range stockist. Note that significantly more stock is available through Games Workshops own webstore than they allow independent retailers to purchase.

Therefore customers have to shop around in order to find a store which still has the item available and that is much easier online than driving from store to store, if you’re lucky to have more than one store in your town.

A number of products are also only released via Games Workshop’s own webstore and therefore no independent retailers are able to sell them. Therefore there is no competition for those items whatsoever.

GWOP are well aware of the importance of distance selling within the Australian and New Zealand market, as demonstrated by the companies recent investment into a massively overhauled webstore.

4. Are there products, such as other table top games products and miniatures or other hobby products that are substitutes for, or compete with, GWOP products? If so, please describe them. If not, please explain why you do not consider there are other products that are substitutes for, or compete with, GWOP products.

There is an increasing number of different tabletop gaming systems and growing number of miniature companies emerging in the wargaming market, however they cannot all be considered to compete with GWOP products and Games Workshop Ltd. does its utmost to prevent or limit such competition.

Tabletop gaming is a broad market, including a wide variety of themes such as historical gaming, fantasy and sci­fi; as well as scales of miniatures ranging from Flames of war’s 15mm WW2 miniatures to GWOP’s own 28mm heroic scale. Miniatures from one company or game can be used to represent, also known as proxy or ‘counts as’, those from the GWOP product range on an informal basis between customers but not in any official sense.

However GWOP’s products exist within a specific niche in the tabletop gaming market, what they themselves refer to as “The Games Workshop Hobby”. Games Workshop and its two core product ranges Warhammer and Warhammer 40,000 are the most widely known brands within the tabletop gaming market and are promoted by Games Workshop as the highest quality wargaming miniatures in the world.

Other than emerging counterfeit products from China there are no substitutes for GWOP products. In order to play Warhammer or Warhammer 40,000 you have to purchase the Games Workshop models and rules publications and GWOP is the only distributor for their products.

They take a very hard legal stance on any competitors who market their own products as “Suitable for use in Warhammer/Warhammer 40,000” or “Compatible with Space Marines/” The most prominent example of this would be the recent and dispute Games Workshop Limited v. Chapterhouse Studios LLC 1:10­cv­8103

For instance as a retailer of both the Warhammer and Kings of War range (a massed fantasy battle game produced by Mantic Games) we could not advertise Kings of War miniatures as “Suitable for use in Warhammer” even if the models themselves are of a compatible scale and style, not to mention substantially cheaper. This is why you will see the description “Suitable for use with 28mm heroic scale miniatures” on a number of third party products.

Recent GWOP releases have also further diminished the ability of customers to use products from competing manufacturers. One example of this is the Warhammer Armies: Wood Elves released 03.05.2014. Some of the unique abilities for the Wood Elves involve additional pieces of terrain which they can add to the table during battles. In this new release the rules specifically state a particular GWOP product­ the Citadel Wood, meaning that players have to use this particular product and not any similar product, for example a Gale Force Nine Autumn Wood, in order for their army to be official for in­store use or tournament play.

Further more the examples of competing or substituting products which GWOP have included in their application includes a number of product types which are outside of both the specific ‘Games Workshop Hobby” and general tabletop gaming markets. In their own annual financial reports they do not consider products such as Magic the gathering, Pokemon cards or video games as threats or competition.

For instance while a hobby consumer may split their time and retail spend between Magic the Gathering, Warhammer 40,000 and video games, it is not realistic to consider them substitutive products. If they wish to buy a unit of Space Marines then a Magic the Gathering booster pack or an x­box game is not product which could be substituted.

5. If GWOP is able to impose the requirement that the Trade Account must have at least one outlet which sells GWOP products to customers in­store over the counter by way of face to face transaction, what effect will this have on your business?

As previously stated while we are predominately an online retailer we do have the facility for customers to make onsite orders and over the counter purchases. However our systems have been designed to deliver the best possible online retail experience, including real­time stock allocation and fast fulfillment, so we do not currently offer a browsing based over the counter retail experience.

If GWOP were to impose this restriction this may force us out of the market as it the additional resources required may not be economic. If we had to establish a retail store in Australia in order to sell GWOP products to our Australian customers this would simply not be feasible whatsoever.

While we are an Extended Range stockist and have a constant high investment in stock of Games Workshop products we would have to make additional stock investments for a dedicated physical retail space. Otherwise potentially a customer could wish to purchase an item which is displayed on the shelf but are unable to as the item has been allocated to a recent online purchase and is about to get fulfilled.

We would also have to reallocate some of the resources which we use to support events and gaming communities throughout New Zealand to in­store promotions and events at our Auckland site. While this could be beneficial in driving foot traffic and retail sales to us it would be detrimental to the interested of the wider hobby community which we work very hard to support and grow.

If we are forced out of the market then this will result in a substantial loss of competition in the online market within New Zealand and to a lesser extent within Australia. We currently offer upgrades to same day delivery within Auckland, and , overnight delivery throughout New Zealand and quick shipping times to Australia. Our shipping times, shipping costs and prices are better than those provided by Games Workshops own webstore.

That is why we have so many customers spread across New Zealand and Australia, especially where there are no local stockists of GWOP products. These customers will lose out, all our other customers who chose to shop for their GW products with us for other reasons.

We contend that it is in the publics interest for customers to have choices in the sources of Games Workshop products, both online and brick & mortar stores, and that the local online retailers are not “free­loading” or harming the growth of the local gaming communities. We see this move by GWOP as an attempt to place further restrictions on consumer access to their products in order to maximise their own revenue via their own webstore.

6. There are other prohibitions on resupply of GWOP products within the proposed Trade Agreement. Will these restrictions affect your business? If so how?

Our chief concern with the Value Added Service Pricing Model (VASP) is that GWOP have not adequately stated how they intend to apply it to a retailer who has both an “Shop Front Channel” and a “Distance Selling Channel”.

In their application they state that the VASP Model is “Outlet­specific” for each Trade Account but do not clarify what they consider an outlet in the case of a company like ourselves, with both a shop front channel and distance selling channel operating from the same premises, stock holding and sales system.

It also does not state what the specific provisions of the VASP are and these would be entirely up to the discretion of GWOP and subject to change at any time. We are extremely confident that we are already providing the highest level of customer service, retail and hobby experience and community support but do not know how GWOP are going to be assessing this.

For instance in the Games Workshop prohibits any of its trade accounts from having a shopping cart based webstore and its VASP model for its UK and European trade accounts forbids the display of any non­Games Workshop products next to their products within catalogues and web pages.

The ability for distance sellers to display and market GWOP products is already heavily restricted. As retailers are unable to use any product images or descriptions from Games Workshop for their products, other distance sellers can only show product images once their stock arrives 2 days before the release date. Whereas the Games Workshop webstore has full product images, including 360 degree rotating images available for customers from the time pre­orders become available.

In Summary:

We submit that GWOP wishes to impose these restrictions on online retailers in order to increase their own sales via their webstore, which their vertically integrated business model and preferential stock allocation already gives them a competitive advantage over independent retailers.

We submit that there are no substitutes for Games Workshops products due to their extremely vigilant approach to protecting their IP and . There are a number of competing product ranges and games in the tabletop gaming market but customers cannot use them to play Warhammer and other GW games.

Mighty Ape is strongly involved in getting new players interested into tabletop gaming and the Games Workshop; hobby and work very hard to support local hobby communities and the proposed restrictions will jeopardize our ability to do so and set a precedent by which GWOP can further lessen online competition to their own webstore.

If you require any further information please do not hesitate to contact me.

Regards,

David Greig

Hobbies Gorilla Mighty Ape