Equities analysts at Jefferies see long-term potential in Games Workshop Group PLC (LSE:GAW)’s confirmed tie-in with Amazon.com Inc (NASDAQ:AMZN, ETR:AMZ), which will see the streaming giant translate the London-listed group’s popular Warhammer 40k franchise into film and TV content.
"The potential for Warhammer to build its global exposure is clearly a huge opportunity," said analysts.
The agreement, following a year of anticipation, grants Amazon the exclusive rights to adapt the Warhammer 40k universe, with potential expansion into the Warhammer Fantasy universe.
Jefferies reasoned that Games Workshop could earn approximately US$1 million per episode based on a production budget of US$20-30 million per episode, with potential increases in follow-on seasons.
Furthermore, the TV series is expected to significantly boost Warhammer's global brand exposure and positively impact core brand sales, especially in miniatures.
However, it won’t come in the near term.
“We expect an extended timeline until we see a Warhammer 40k production actually hit the screens,” said Jefferies. “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 three years before a first TV series is aired on Amazon.”
Jefferies is bearish on Games Workshop stock for now, with an 8,700p price target implying an 11% downside against the 9,790p publication price.