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FDEV Results Presentation Sept '15 final .pdf


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September 2015 Full year results presentation

Introduction to Frontier


Frontier was founded in 1994 by David Braben, co-author of the seminal “Elite” game



Frontier currently have approximately 260 full-time employees and are well known for
many great games including RollerCoaster Tycoon 3, Kinectimals, Disneyland
Adventures, Lost Winds and Elite: Dangerous



Transition funded by a ‘Kickstarter’ campaign for Elite: Dangerous, followed by listing on
AIM in July 2013



Spanning three decades of rapid technological change and a wide variety of game
genres and platforms, Frontier has a proven track record of software technology and
innovative video game development



Developed over many years Frontier’s COBRA technology platform is at the cutting
edge of game development, and enables the wide range of games Frontier makes

2

Market Overview


Market






Drivers






Young market, still growing rapidly
Games market revenue estimated at US$82 billion for 2015, growing to up to US$103 billion in 2017.
Three roughly equal components, PC, console, mobile (ie ~US$28 billion each)

Move from high street to digital sales has meant quality now the strongest driver of sales
Successful franchises key to success
Major players (mostly US-based) franchise driven – Activision Blizzard, EA (US$20.4, $19.8 billion mkt caps)

Opportunity




Games market is continuing to grow at the expense of other media markets
Boundaries are blurring in the entertainment market around interactivity
Over next 5-10 years entertainment market will become ever more unified

Successful Franchises


1,400M

1,200M

Commonality


Annual Franchise Revenue (£M)



1,000M



800M

Minecraft


600M


.



400M



200M

0M
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

Five very successful franchises at different
stages, aligned by first year, with average
revenue in black
Successful franchises lifecycle of up to 15
years

Microsoft purchased Minecraft developer
Mojang for US$ 2.5 billion in 2014
Using DCF valuation gives Minecraft NPV of
US$ 2.7 billion if it follows a curve fit
Consistent with Microsoft’s purchase price

Frontier’s Strategy


Transition from making games sold through publishers to selling direct







Build a marketing and support capability






First step to being part of a new entertainment landscape
Opportunity as bricks-and-mortar retail is replaced with online retail
Raised money to do so, and started first franchise “Elite Dangerous”
First stage of transition now complete

Not needed in previous development-only organisation
Enables transition from low margin publisher work to high margin self-published work
Publishing Elite Dangerous ourselves has already doubled revenue to £22.8 million.

Create multiple high-quality franchises





Similar development process Frontier has been doing for 21 years – but now with Frontier as publisher
First franchise Elite Dangerous progressing well.
Creating a repeatable process, now being applied to second franchise, Planet Coaster
Enabled by common COBRA engine

Elite Dangerous Growth
£35M

£30M



Elite Dangerous Sales Increasing




Cumulative Elite Dangerous Gross
Revenue to August 2015 (£ Sterling)

£25M



£20M

‘Season’ Model



£15M

£10M

£5M

Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15

£0M

825,000 paid sales to 31st August 2015
Increased quality
Increased addressable market
(with Steam, Mac, Xbox so far)

Just announced season 2 - “Horizons”
Players all play together in same galaxy

Delivering on our Strategy


First stage of transition now complete





Elite Dangerous now well on its way





First shown at E3 2015 to great reception and building anticipation
Planned release late 2016

Enabled by the COBRA engine




Over 8 months since release, 20 months since the first ‘Alpha’ and Season 2 now announced
Franchise capable of spreading beyond games. Already 15 book deals.

Similar model now being used for Planet Coaster – Frontier’s second franchise





Completion of third party work for Amazon and Microsoft made available remainder of staff for Planet Coaster
Transition complete on release of Planet Coaster

Enables responsive, high quality development (eg early-mover advantage with VR)

Revenue up 139% to £22.8 million, Cash up to £10.5 million



Strong performance during transition
Performance better than expected

Recent Highlights


16th December 2014 saw the successful launch of Elite: Dangerous, which has already won multiple awards



By the end of August 2015 Elite: Dangerous had reached over 825,000 total units sold with work continuing, both on
continued expansion of the game and releasing on other platforms, including Apple Mac and Microsoft Xbox One



On 18th December 2014 Tales from Deep Space for the Kindle Fire was released with publishers Amazon Games
Studios and on 25th June 2015 it was also released on Apple’s iOS platform



Scream Ride was released for the Xbox One and Xbox 360 with Microsoft on 3 rd March 2015



At the end of FY14/15, turnover had doubled to £22.8M and net cash increased to £10.5M



On April 2nd distribution of Elite: Dangerous was widened to include ‘Steam’ hitting #1 in their chart on its first day



Announced live on stage at Microsoft’s E3 event in June, Elite: Dangerous became equal first
pre-release games available via their ‘Xbox Live’ ‘Game Preview Program’



Development was announced on Frontier’s next key franchise, Planet Coaster, at the E3
2015 trade show, with an expected PC release in 2016.



Elite Dangerous: Horizons, the second season of Elite Dangerous was announced at
the Gamescom consumer show in Cologne in August 2015.


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