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“bottom line is triple AAA games don't need extra revenue”
Yea sorry, this is a ridiculous comment....dont worry guys we made a target amount of money, no need for us to be make anymore. You only have to look at the lootboxes and microtransactions that EA have used in their games (albeit it to wide criticism) and so any chance for them to make extra revenue in a way that wont cause public outcry is a tick in book. As an avid gamer myself for going on 20 years, if they can advertise without interrupting the experience or forcing me to pay to unlock stuff I would usually have to grind out (for the record and my principle I would usually just grind out) then that is surely a much better model
Drive into London via M4 companies are spending a fortune on Roadside billboards. The virtual world of gaming will be no different.
“bottom line is triple AAA games don't need extra revenue”
Doesn’t matter how big a company, they will always be looking for revenue streams and growth in order not to stagnate.
The ads in FM, Dirt, Grid look like they belong and add to realism. The challenge for bids is to do that in games such as fortnite for eg. I personally think it’s can be done quite easily without ruining games.
real world games such as GTA have fake ads all over the place. Adds to the game because that’s ultimately what the real world is like. Having a Coca Cola add up on a billboard just adds to realism and does not spoil game at all.
If anything, the big developers will overkill it.
You don’t see micro-transactions on FM.
You do see them on Codemasters though tbf.
The key is to be able to give away more and more content for less/ no money in return for loyal and engaged players. Native advertising is a good means to achieve that utopia for both gamers and developers.
Indeed MGXYZ, just look at Fifa, COD, Fallout 76, Star wars Battlefront (as you mentioned), Shadows of Mordor, Destiny.
All AAA video games full with microtransactions.
If the industry can make yet more revenue with non intrusive advertisement (the whole point of Bids as it shouldn't effect gameplay) they will lap it up like the money hungry robots they are.
It’s true. They are all facing growth headwinds and regulatory headwinds (loot boxes being made illegal).
Star Wars Battlefront was the biggest disappointment of a game which marked a turning point in the games industry - paid for DLC maps, paid for characters... it was a disgrace on a £50 game.
The old ones are still gold.
"AAA games don't need extra revenue and so wouldn't risk losing appeal to fans."
You obviously know nothing about the industry Persona, like absolutely nothing, if you believe that.
AAA studios have been dicking over their fans for close to a decade now with microtransactions, paid DLC which should have been a part of the main game, loot boxes, creating long grinds and selling the skip for cash, removing features only to sell them back to the customer.
Not EVERY AAA game is like this, but the majority are... you even get microtransactions in single player games now!
You don't know what you are talking about, so do your own research.
Bang on Girdz, that's clear reality thinking right there. These's games are entering into this agreement because they need the extra revenue, bottom line is triple AAA games don't need extra revenue and so wouldn't risk losing appeal to fans. (you can rule out fortnite or fifa without a doubt)
Course I could be wrong, happy to be wrong, i would invest if i am wrong, but not before for me.
Nice to hear the tone has changed here also, well done all.
“Yes, big games will dramatically increase the ball park but I feel you are underestimating the current roster of inventory.”
Maybe I am, and in my best interests to be wrong.
Codemaster have fast and furious this year and also project cars through slightly mad.
Time will tell
Not forgetting that this is 2-4 million people who might not even be reachable by traditional media anymore.
I don’t watch TV, I don’t read newspapers, I only listen to Radio 1 or local BBC radio... you can generally find me on games, mobile and TV/ music streaming services... where I enjoy a relatively peaceful adfree life currently.
I think you are underestimating the value of these games then Girdz.
When I quote gross inventory values of £90m - £120m I discount Grid and Dirt Rally 100% - I’m quoting FM inventory as that’s all I know and can calculate and because I have no idea what the impressions or inventory value is of the Cody games - although I read 1 million copies of Grid were sold.
Codies and SI are AAA studios and have a very big following - 2 million players for FM19 with a likely growth of 20% this year based on Miles Jacobsons stats and 1-2 million for The Cody games.
Context - ‘only’ 20 million people watch Dave and yet it attracts ad revenues of £344m in 2017 with profits of £90m. 2-4 million players is not tiny by any stretch of the imagination.
Yes, big games will dramatically increase the ball park but I feel you are underestimating the current roster of inventory.
“Key to unlock that though is revenues - a full fill rate would see this move to lower hundreds of millions valuation on the current games alone.”
I disagree with you there mgxyz.
Fm, grid, dirt are specialist, niche games that do not attract the masses that BIdS keep quoting in articles. I just can’t seem big agencies chucking masses of ad spend in these games.
If BIDs are to be truly successful they need an in with A big free online game like rocket league, perhaps EA Sports games, and they need some mobile presence with some one like activision blizzard.
No worries - it’s an important topic so thanks for bringing it up.
Boohoo valuation £4bn on £37m profit is too much for me to stomach buying but the market is happy to extrapolate some kind of mega growth there too.
It will become very interesting indeed when revenues start becoming material.
Thanks for your clarification calamari appreciated.
Mgxyz Tks also I would say that's the post the likes of me believe in but to be frank are just unable to script. As ever you appear to post for the benefit of all and it's appreciated . :)
Calamari is correct Wilson.
In saying that, this won’t be valued fundamentally for a long time yet. Don’t get me wrong, I’m a huge proponent of fundamental value but growth/startup stock valuation is an art and BIDS will always remain tough to value.
I’d focus on gross inventory values (currently at £90-£120m). The moment revenues start filling, the moment that the market will be trying to extrapolate what the total inventory value is, what the gross margin is and what the potential net profit could be if we scaled to the total inventory value.
I personally think it’ll be a bonkers re-rate. Now 90-125m gross revenues is from our small/medium sized three games alone. Bring a big player on board and I’m not exaggerating if I said that the gross inventory values could be in excess of billions of pounds.
It’s hard to know what Bids would get out of that kind of deal but even a paltry 5-10% would be a catalyst to a £500m-£1bn valuation imo.
I’m not trying to ramp here - I’m laying it out as predict this going.
Key to unlock that though is revenues - a full fill rate would see this move to lower hundreds of millions valuation on the current games alone.
A big game or two with full revenue fill rate would shift it closer to the billions.
Then, when growth and profit is easier to measure you could have a P/E of 138 for example (The Trade Desks earnings multiple on £477m revenue and £88m earnings is 138...) as growth stocks are notoriously difficult to put a number on which is why this will be the hardest stock to sell if they get it right. Imagine trying to consider wether to sell at £200m valuation on £20m revenue and £0 profit with the knowledge of the above. That’s why most of us are still here - we see the potential... the risk is paltry in comparison to the reward.
Can we get revenues and can we get big games? I personally wouldn’t bet against this team - they can definitely build strong relationships and I also wouldn’t bet against an advertising industry - they know how to make money, and lots of it... think google, Facebook etc.
It’s gonna be a tough equation mate and you could argue overvalued or undervalued right now but watch the direction of travel when (not if) James gets it right - and see how difficult it’ll be to sell ;)
Bidstack have other earnings which are going up and up albeit from a low level. They are working with a household name but we don't know if we're being paid for that.
In the first half of 2019 the operating expenses were 1.8m, but they will have increased significantly since then as they have been hiring a lot of experienced people.
The 2.5m is not earnings, it is gross profit. After Bids get 10m from the advertising agency first they have to pay 75% or 7.5m to the game owners. Then they have to pay all their operating costs; salaries, rent, legal (contract negotiations), etc. Then they have to pay tax. If there's anything left after that, that's the earnings.
Usual off work today(Saturday) so can't sleep so thought I'd have a bash at p/e (price to earnings) which is NOT my cup of tea this is obviously in its simplest form.
Bidstack have one large deal on the table for 10 mil I'm going to take that as the amount they will receive, the general perception is they will receive approx a quarter of that which is 2.5 mil.
P/e ratio's as I understand it can be anywhere between 10 to 25 times earnings, tech firms like bidstack are often at the higher end of this scale but I'm going to go at the lower end, so times ten.
That values the company at... oh ...25 million. Bidstack's closing value on Friday 24 million.
Therefore in its simplest form if/as each new deal turns up for 10 million that would therefore add 10p to the share price.
I'm also not including new games signed up which I would imagine would add notional value to the share price.
If I'm off the mark please let me know all replies welcome just don't be condescending I'm a bloody driver.
Tea finisher will see if I can get back to sleep. Gla