Stephan Bernstein, CEO of GreenRoc, details the PFS results for the new graphite processing plant. Watch the video here.
It's an interesting question as to what sales of Horizons might be. In terms of purchasers of ED I would guess that maybe one-third never got into it, one-third played for a while and moved on and a third are reasonably committed and will buy the expansion. Of course, since Horizons includes the original game plus next year's developments then it is far better value than the original ED and should attract some new players. The email update today states that in addition to planetary landings, it will include ship-launched fighters, multi-crew ships and customisable commander images. In addition, crafting will allow the creation of new equipment. That sounds like a more compelling game than the initial release. For what it's worth, my guess is that sales will be similar or possibly a little higher overall than ED. It's interesting that they are working closely with Valve on the VR side. I would expect Valve to really get behind the release as it seems like a game that's ideally suited for the VR market and Valve will be to keen to get critical mass with the first consumer-available hardware. Overall, I think things are moving in the right direction, and there seem to have a number of decent-sized buys in the last week or so which is encouraging, including some director buying. GLA
Revenue £22m, operating profit £1.25m, net cash increased, paid unit sales of E:D now in excess of 640k. Enough said! No doubt some will find fault with these numbers, but they look good to me. GLA
I will spell out my thoughts in a bit more detail to avoid any potential confusion. The screenshot shows revenue of £17.1m and unit sales of 614k giving an average unit revenue of £27.90. This is entirely consistent with initial sales achieving revenue of £33.33 and e.g. Steam sales at 70% of that i.e. £23.33 giving an overall average of £27.90. By revenue I mean gross revenue before any deductions. Card processing charges are likely treated as an overhead in my experience rather than a reduction in revenue. I would expect the company to pay around 1.5% on credit card transactions and perhaps 15 pence on debit card. Not peanuts, but not particularly material in the grand scheme of things. The beauty of software is that incremental costs are essentially zero so I am indifferent to them selling one unit at say £20 or 2 units at £10. GTA V was discounted in the Steam sale (and I assume Steam take some of the discount out of their cut) and the GTA franchise is the most successful in video game history in terms of sales value so I read nothing into ED being discounted similarly. If the discount results in a sufficient increase in sales to raise overall revenue then it is the right commercial decision. Frontier have bags of cash and this will likely have only increased since their half year results so they are in no financial difficulty. Really there is very little to say now until results are released late August/early September. See you all then and good luck all!
Are encouraging, and thanks to synthetic for posting those updates. Biglittle, those numbers sure look like sales figures to me (I'm assuming UK sales at £40 include VAT and therefore FDEV book revenue at £33.33 per unit on full price sales, so overall the average price achieved looks absolutely spot on to me). I've said previously that Frontier's success will be reliant on their ability to deliver ongoing development at a fast pace and it seems to me that they are doing so. The Mac release has happened, the Powerplay update has been generally well received and the Tournament mode (initially for Xbox) seems a good idea as a way of introducing console players to the steep learning curve in the game. From a business point of view they seem to have a clear roadmap to ensure that revenue remains strong. Sales to 31 May will have been boosted by the launch on Steam. Sales in the financial year starting 1 June 2015 will include Xbox sales and then going forward we have PS4 release, probably a paid expansion around planetary landing and then the rollercoaster game. As an investor in the business I am pleased that it is being managed as a business. A lot of the negative comments on various BB's and forums seem to have no concept of business at all! Overall then I feel the risks around this share have greatly diminished in the past 6 months whilst the upside is as strong as ever. The icing on the cake could be the uptake of VR such as Oculus etc as both E:D and the rollercoaster game appear ideal for VR.
bigliitle, whilst I enjoy reading differing views on FDEV and in fact that is the real value of BB's for me (I don't want to get too blinkered in my view of a company) you do seem to misrepresent the facts. The company projections were based on an average unit price of £10. It makes perfect sense to maximise sales at £40, then go on Steam and achieve sales at £28 (ignoring VAT). The average revenue from console sales may be lower still (I don't know, but there are some costs around physical distribution of discs) but surely well above £10. New games nearly always follow this well-established pattern of pricing; as the price falls, unit sales will increase, the user base will increase and the target market for future (paid) expansions increases. I fully accept that the game is not for everyone - the learning curve is steep etc, but as a company they seem to be acting in a very commercial fashion which should be good news for shareholders. I'm expecting a quarterly update must be due soon as the last was 9th Jan and they said these would be "roughly quarterly". I suspect that the timing of the release on Steam is no coincidence so will be interesting to see what impact this has had on sales.
ED released on Steam yesterday, which was a little earlier than I expected, but should drive sales in this financial year. It's currently the first game shown when you enter the Steam store. From a shareholder perspective this is clearly good news and it seems that Frontier have a sensible road map for this product with Mac release in beta, Xbox release later this year, followed by PS4 then presumably paid expansions after that. I'm also encouraged by the pace of new development for the game with the Powerplay update to introduce drones, which sounds good, and the previous Wings update generally well received. My view is that since launch Frontier have maintained a very rapid rate of dev and releases have been generally smooth. Others may have different views but my experience of projects in a number of different industries is that projects always take far longer than anyone expects and you always end up doing some testing "in live". That is inevitable given the size of the code base. One thing Frontier will need to sort out quickly is whether to give a Steam key to those who have already bought the game (I think they will need to although there is some risk that people may sell them on). I know my son will only buy games through Steam as it means they are all accessible in one place and from any PC. Any thoughts out there as to whether this will impact the share price or do we expect little movement before we see the next quarterly update?
Hi BB, I'm sure you're right on that. It may even be 2016 but as you say the announcement will be very positive for the SP. I'm looking for FDEV to drive some further development/releases on ED over next 6 months then possibly a Steam launch second half of this year to drive PC sales further (albeit at lower margin) then console some time after that. That would probably maximise revenues for the guys. Just to clear up any confusion about my earlier post that is was in relation to ScreamRide on Xbox not ED. I suspect that ScreamRide may be a fixed fee development as it looks to be a Microsoft title but it must be good for that relationship if it is a commercial success.
Evening biglittle, I forget where I first saw the news but it's up now on the xbox site e.g. http://www.xbox.com/en-GB/games/screamride which is the UK/European site, with a release date of 6 March. I assume that means it is already finished or close to (hope FDEV are not still bug-fixing!). There was a brief mention at the bottom of the trading statement (not part of the statement but part of the background blurb). "The studio released Zoo Tycoon as a launch title for Microsoft’s Xbox One console in 2013 and Tales from Deep Space for Amazon in 2014. It continues to work on ScreamRide for Microsoft and other unannounced titles in addition to expansion of Elite: Dangerous." Haven't seen an RNS on this so not sure how material it can be? From BB's reply it looks like they have to give up at least 30% to Microsoft and hence the desire to self-publish going forward.
Does anyone know how the commercials work on this one - do FDEV get a fixed fee from Microsoft or is it royalty based around the number of units sold? Launch date for Xbox One/360 has been set for March so this falls within the current financial year, but it wasn't clear from the last trading statement what contribution had been assumed from this title in terms of the overall revenue forecast of £19m. Appreciate any insight on this.
My take on FDEV is that the shares are an asymmetric bet. The downside is limited and the upside could be very significant. On that basis I bought just after flotation and I think the company has made very considerable progress since then. The financials to date are fairly meaningless as they relate to the period prior to release of ED - a loss was pretty inevitable therefore due to revenue recognition rules. However the cash inflow and increase in deferred income were encouraging. I bought ED in beta to see what I thought (and also nostalgia I guess). Well, the core mechanics are great, but the game is pretty "grindy", lacks social interaction and the tutorials are a joke. However, all those things are easily fixed and I expect them to be fixed. I think the key now is how quickly FDEV can build on the game. After the early buying by people who played the original or who are into space sims, I think there may be a lull in sales. It's important then that they kick on and release more content and fix some of these issues so that the player base doesn't stagnate. The upside then becomes significant as I believe they may well port this to console and then further down the line sacrifice some margin for volume by selling via Steam. On top of that there is some big money behind Oculus Rift and I think ED is one of the best examples of its use..... Overall then I am happy sitting tight. The track record of listed UK games developers is pretty patchy tbh, but on balance I would back these guys to be a success. There are some good posts on this board and I've enjoyed reading them whether positive or negative in their views on FDEV because this is certainly not a "slam dunk" investment so I am trying to remain open-minded whilst tending to the optimistic since there is a chance this could be a multi-bagger!