Space Marines aren't something that Warhammer 40,000 and Games Workshop invented back in 1987, the concept is often considered to trace its roots back to the Starship Trooper series, though Games Workshop's interpretation set the standard against which all other power armor clad super soldiers are measured. The Space Marines are widely considered the poster boys of Warhammer 40,000, however has this attention hurt them more than it has helped them?

Let's be clear here Warhammer 40,000 is a respectably aged scifi universe that draws heavily from other science fiction and fantasy series. The Space Marines are integral to the lore of the universe, and one of the most flexible armies in the game. However this has not shielded them from criticism or how Games Workshop has handled the Space Marines.

Currently as it stands there a grand total of 7 Space Marine armies available from Games Workshop with a total of 314 available models and items available from GW's main website out 26 available armies 820 available Warhammer 40,000 products. Space Marines make up almost a fourth of Warhammer 40,000 armies and nearly half of their products for Warhammer 40,000. Space Marines are also the best supported armies with the most frequent updates and new models while some armies go entire editions of the game with older army books that don't account for new rules or models that haven't been updated since the late 90's to early 2000's.

And then they put them in Age of Sigmar, which some feel happened just so Games Workshop could put Space Marines in both of their main franchises. The Stormcast Eternals as they are known, are actually one of the worst selling armies in Age of Sigmar as most people just play with their old Warhammer Fantasy models or have dropped the game all together. More than a few of Games Workshop's designers and writers are actually getting tired of constantly doing more Space Marines stuff.

Is the intensive focus on Space Marines choking the life out of Games Workshop, a company already in trouble finacially and facing growing competition from up and coming games?

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That's probably a contributing factor, since it snubs a decent portion of their already small target demographic.
What's hurting them more is there inability to adapt to changing tastes and the fact that they can't seem to go outside their safe zone.

From what I know, 40k's story hasn't advanced in years. Which when combined with the ludicrous pricing on figurines means that their player base is already feeling fatigued.
And with the Age of Sigmar thing, that implies that they are unwilling to change and would rather write the same things over and over.

Basically, they're floundering because there stuff is stagnant from a lore and gaming standpoint which causes long term fans to stop playing and the franchise is so niche that most people would never consider picking it up. Making the previous decision even worse.

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40k's story hasn't advanced in years

Well this guy is appearing out of the Warp.

and that's Magnus as a Daemon Primarch. also, there are speculations that GW is going to make post-heresy Primarchs and speculations that the end times might happen. Which that could mean, Big E is getting of his throne.

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I stand by my point that, at least up until very recently, the franchise's story has been moving slower than the bowel movements of a Wisconsinite.

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Well GW's has been focusing on resurrecting specialist games like Bloodbowl, Mordheim, Battlefleet Gothic, Epic 40,000, and some other games. In addition of the rise of Horus Heresy stuff in Games-Workshop.

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Also the recent Warhammer games like Total War: Warhammer in May and Space Hulk: Deathwing in December. Total War: Warhammer was amazing, and Deathwing honestly looks like it's gonna leave very few people dissapointed as well.

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Sad thing is that whenever they have tried to advance the story it back fires on them.

Warhammer Fantasy: Storm of Chaos
Chaos was supposed to be the big threat but across the board they were getting their asses kicked with GW pushing them forward with the power plot. This ended up with Chaos' big cheese in Fantasy, Archaon the Everchoosen getting his ass kicked by Grimgor Ironhide, an Orc. GW cried itself to sleep that night and eventually scrubbed the whole storyline.

13th Black Crusade:
Chaos once again supposed to be the big threat against the might of the Imperium. Things once again don't go as planned, Chaos gains a foot hold on Cadia but lose the Orbital battles leaving Abbadon's entire army stuck on Cadia with no where to go and running out of ammo. GW once more slammed its face against a wall repeatedly before scrubbing the whole thing again and writing their own version while trying to salvage the Armless Failure's reputation.

End Times:
They just flat out destroyed Warhammer Fantasy, this time giving no control to the players. Had a promising Start with the first Undead books but then everything began to go horribly wrong. Fluff was brutally raped, armies were forced together, most of the rest of the world got killed off screen, and then it all lead into Skubmar.

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I'll give you that.

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...Who the hell is in charge of writing this franchise?

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well once upon a time they wanted the results of player games to dictate the story. That caused Storm of Chaos and the Thirteenth Black Crusade problems.

Games Workshop has a lot of writers both of the novels and the fluff with some being better than others. Not sure who is actually in charge of writing and Lore.