Frontier Developments Share Discussion Threads

[nimbo1] 28/6/2018 19:25

I agree with you both lack of 4th title Visability has put a massive downer on sentiment in an already otherwise glum market. But we know it’s being made, it’s just a timing issue.

Makw that’s kind of my point ref the broker note. Say fdev have sold 1 million units by end of July (or when physical ships) they’ll have to release an rns raising expectations for fy19 because current core forecast is so dire - at least if not on units shipped, on unit price.

[sogoesit] 28/6/2018 19:15

If there has been a contractual arrangement entered into for another franchise then my view is that that is price sensitive information and should be released to the market.
Otherwise, what is the criterion for releasing this information?

[endion] 28/6/2018 19:14

Over £1,000,000 worth of shares bought after hours. Only one sell worth £160.

[makw61] 28/6/2018 18:23

My bad, Nimbo. £22.50 was coincidentally very close to my net net price assumption which is my preferred way of looking at it. i.e. every additional JWE sale above 1.5m should contribute an additional EBIT of around £25 by my reckoning.

We can also conclude i think that the Finncap note is completely wrong, so kind of glad i never bother reading brokers' notes haha. Useful i guess as a gauge of market expectations though.

Personally i expect much higher earnings but a lower multiple. Maybe 25 times until Frontier have a longer track record as a public company. I think lack of visibility over the fourth franchise has been a big factor of late as the market doesn't appear confident that the step change in profitability from JWE is sustainable. As the price has dropped i think it is harder for management to argue it is not price sensitive info; just my opinion of course and i accept it's a difficult judgement for management/house broker.

Still expect some market update in the next two weeks or so; fingers crossed GLA

[jman5268] 28/6/2018 17:46

Good number of serious buys being registered after hours!
On the up?!

[nimbo1] 28/6/2018 17:28

They based the net price on ED / PC. JWE price point is much higher, which is what the more recent credit suisse note pointed out.

Scenario analysis
In our view, the range of possible financial outcomes in FY19 is wide. This is principally due to uncertainty surrounding Jurassic World Evolution (JW). We therefore conduct scenario analysis to provide investors with greater insight as to what different pricing and unit sales assumptions (for JW) could mean for Frontier in terms of sales, profit and implied valuation.
Sales scenarios

In Figure 4 below, we vary both unit sales and pricing assumptions to show different outcomes for JW. We believe that the risk is to the upside relative to the £33.8m, which we forecast for the following reasons:
Pricing – An average selling price (ASP) of £22.5 is comparable to ED’s and PC’s ASP in their first and second year of release. However, the strength of the Jurassic World brand might afford management to price Jurassic World Evolution as a ‘premium’; game, i.e. more in line with an AAA title – these typically retail for £40 or more
Unit sales – The 1.5mE units for JW is only just over the 1.4m which PC has achieved over a comparable period. We think that this is a prudent assumption considering that PC achieved this sales figure as a PC game only whereas JW will be available to a wider audience as it is being released on PC, Xbox and PS4 simultaneously. Please also see the link here where, in a previous note, we provide further support as to why 1.5m units could be a prudent estimate.

[endion] 28/6/2018 17:26

Absolutely. And the jurassic franchise, dinosaurs etc does chime well with a console audience.

[allstar4eva] 28/6/2018 17:22

Well theme dependent or not JWE has very good ratings for consoles and is released at the same time as a major movie so you would hope that console sales benefit from this.

[makw61] 28/6/2018 17:19

I think by net in this context they mean net of VAT/sales tax, net of Steam/platform charges and probably net of Universal's cut, i.e. that part of the selling price that FDEV get to keep. The upside is that 1.5m across all platforms is obviously low, the question is by how much?

[nimbo1] 28/6/2018 17:02

While there is a lot of noise I just wanted to revisit Fincaps assumptions for their £17 price target for FY 19. For JWE this includes the core assumption of sales of 1.5 million at an average net price of £22.5 to give revenue of 33.8 million for JWE. Revenue from ED and PC they estimate at £23 million. These assumptions lead to Fincap estimating operating profit of £14.5 million.

Net means net of VAT, which going back to the conversation yesterday is 10%, as Frontier pays Gaming VAT

They dont need to sell many copies to reach analyst forecasts revenue wise because of the higher selling price. If they do reach the unit numbers at the higher selling price then we'll make a lot of money because on forward PE terms its currently very cheap for a fast growing company.

[endion] 28/6/2018 16:42

The ratio of pc to console sales is very genre/theme dependant. So we'll only really know when hard facts are released. Also, most pc games that went on to console release within a similar genre to JWE were released on console at least 1 year or 2-3 years after pc release. That happened with the sims, city skylines and elite. This is one of the reasons for market doubt, its very new territory. Those of us who have been following this story closely however are one step ahead and I believe will do well out of this.

[mad foetus] 28/6/2018 16:08

Struggling to keep up today but see from Twitter that the Elite servers are down for the big upgrade.

[mark4231] 28/6/2018 15:52

That people play games the most when they've just bought them and that they play most at the weekend.

[pdiddy1] 28/6/2018 15:49

What is your thoughts on this trend?
hxxps://steamdb.info/app/648350/graphs/

[vworlds_cambridge] 28/6/2018 15:07

I read it as a multiplier of 140% to 150% for console sales.

[hpcg] 28/6/2018 14:55

TravellingTrader - I too have assumed that majority, if not vast majority of sales will be on console. To me that is where all the potential upside is.

[nimbo1] 28/6/2018 14:42

I’ve played the game for 10 hours now on PlayStation. It’s been designed for console. Some people on pc have complained it doesn’t have the customisation of planet coaster - it’s because fdev have simplified it and gone for the console market. Why? Because the console market is much larger than PC. If JWE sells 1 million In PC over the next 12 months and 2 million on console we can say good decision.

[mark4231] 28/6/2018 14:03

I personally think that the game will sell better on consoles than alphabeta's estimated 40% to 50% - my thought is equal console sales and PC sales - but we'll see when hard sales figures are announced. The hard copy version of the game for consoles doesn't get released until next Tuesday so it'll be a while before we see figures from FDEV. The game is simpler than something like Planet Coaster and works well with a controller as well as mouse/keyboard. The menus are clearly designed for console but I guess it has to be done that way to ensure a common code base between PC and consoles.

[travellingtrader] 28/6/2018 13:56

Interesting to hear that the consensus seems to be it selling more on PC than consoles.
The menus in the game have been designed for console. The deluxe edition continues outsell the regular version on both consoles going by the playstation and xbox stores.
I've added some today.

[mark4231] 28/6/2018 13:44

Hopefully you caught it at the very bottom hpcg.

[hpcg] 28/6/2018 13:09

I managed to get an order in at 13.40 earlier, which admittedly was at the top of quite a hefty bid stack on L2. First time in a few days I've seen it so decisively lopsided. Mention for FDEV on FT Markets live today. Nothing in the ether apparently so assumed to be profit taking.

[sogoesit] 28/6/2018 12:10

Chart support at 1380, base of uptrend channel at 1310 approx.
(Weekly charts)