Member Info for cryptonomicon

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!