Frontier Developments Share Discussion Threads

[makw61] 15/2/2018 17:38

You'll notice in the video btw that the building is simply placed, it isn't built from the ground up. JWE will be more about gameplay rather than building which i think gives it broader appeal, although i accept that building games e.g. minecraft, cities skylines etc have very strong followings.

[makw61] 15/2/2018 17:33

I expect the buildings in JWE will not be configurable in the way that they are in PC. A single building in PC may have hundreds of component parts which can be put together in essentially an infinite number of ways which makes it computationally expensive. In JWE a building will be a building; there may be variations of that building type but they will not be customisable.

The forecasts for JWE make no sense to me. PC runs only on high end pc's and yet sold over 1m units first 12 months. The addressable market for JWE across pc, PS4, xbox is probably an order of magnitude greater, plus it's got dinosaurs! Suspect the analysts are just playing it safe. I expect 5m units first year, with 10m as a high-end scenario.

[nimbo1] 15/2/2018 16:51

Good point. I should have asked that qu the other week. Ref your 3 platform comment - its why the core 1.5 mil sales figure is so pessimistic in my opinion - it would mean only matching the performance of planet coaster for the PC and selling nothing on the x box or playstation...

[mark4231] 15/2/2018 16:38

One thing to note about Jurassic World Evolution is that it is to be launched for PC, Xbox and Playstation, just like Elite: Dangerous, whereas Planet Coaster is only for PC.

As a side note, I read here that the reason Planet Coaster isn't available on the consoles is due to performance reasons so I'm a little surprised that Jurassic World Evolution will be on the consoles as I would have thought it would be similar. I'm intrigued, presumably there is something fundamentally different about Jurassic World Evolution that means it can run OK on the consoles.

[nimbo1] 15/2/2018 16:03

I've been looking at the fincap note and their sensitivity for JWE sales.

For full year revenue 2019 they assume operating profit of £14.5 million.

to help generate that figure JWE core scenario is for 1.5 million copies sold at an average net selling price of £22.5.

- the upside to this is clearly more units sold and a greater average selling price
- another unknown quantity is the license % they have to pay to universal which is unknown.

In the upside scenario there are 2.5 mil sales at a price of £32.5 = revenue of £81.3.


Because FDEV are operationally geared IF figures are near top end it will ensure large profits and make the current price look very cheap.

this isnt in the note but ff you assume those sales end 2019 they would be expecting total sales of 105.5mil vs 58mil currently in the analysis. Assuming costs remain the same PBT could be in the region of £50 mil plus against the current core prediction of 14.5 million.

If the PE were to drop to say 40 (there will be the next franchises coming along after all so it should remain high) that could lead to a market cap of £2 billion.

Clearly until we see what sales are like etc this is blue sky thinking but underlines the potential over the next 18 months.

[makw61] 10/2/2018 15:00

Couldn't resist buying a few more myself on fri. Should see a steady stream of news now to move the share price.

Brief mention of FDEV in today's FT, focused on the Tencent stake and with Braben quoted on the Chinese opportunity. I think we all agree that is a big one.

Will probably pick up a few more of these on monday if Mr Market continues in manic depressive mood.

[nimbo1] 10/2/2018 13:26

Next news will be in my opinion only - China strategy, jwe launch in the west followed by China (film time releases always differ due to permissions), 4th franchise title and loose game details for 2019 release. Should have all this within next 6 months. I suspect all this combined will put fdev on another level of market cap and growth rate.

[mark4231] 10/2/2018 11:47

I think the current price will be seen as a bargain in six months time. There hasn't really been much new news since the Tencent investment and JWE announcement last summer so I'm not surprised the share price has dropped a bit without anything new to talk about. I'm sure that is about to change!

[allstar4eva] 10/2/2018 10:58

Couldn't resist buying more on Fri as regardless what happens in the wider markets if FDEV execute their strategy well then this still looks like a long term multibagger. All imho of course.

[panic investor] 09/2/2018 18:46

Might get it even lower at this rate - I'm currently 100% cash - even day traded xlm for a few k - when this bottoms it's going to be a dream !

[melf] 09/2/2018 18:06

I don't think you be saying that this time next year nimbo :-)

[nimbo1] 09/2/2018 17:00

I must be mad, added some more before the close. Good weekend all and hope the volatility chills out a bit next week!

[ashehzi] 09/2/2018 12:31

Wondering if 1185p a good buy point here.

[makw61] 09/2/2018 11:07

2 page preview of JWE in PC Gamer this month, so i think we can assume the hype machine is starting to crank up. Should get something similar across the XBox and PS4 titles i would think.

We should also be due a new teaser trailer soon as the initial one is over 5 months old now.

The share price here has been buffeted a bit by market gyrations, but i don't see why the US 10 year bond yielding 2.9% or 3.0% has any bearing whatsoever! Great results from Nvidia last night, so perhaps that may stabilise the NASDAQ later. When companies are growing so fast then an unreasonably high PE is actually reasonable. Or as someone put it - unreasonable growth at an unreasonable price.

GLA

[scottishfield] 08/2/2018 16:45

Wow, great recovery here, bodes well.

[nimbo1] 08/2/2018 10:45

Yes thanks for that and v good purchase! I am relaxed, 30% sounds high but I reduced my equities exposure by 60% mid jan so it used to be c.10% - I just wanted to keep exposure here at the same level long term and buy a few more. Take it easy, I'll be back when there is something interesting to say on FDEV or the price goes up!

[mark4231] 08/2/2018 10:23

I know how you feel nimbo. I invested 5% at an average of £2.50, so it's now about 25%. I haven't bought or sold any for over a year. I'm considering selling some to take advantage of my CGT allowance but otherwise plan to hold on tight. I'm very optimistic for FDEV's prospects although always know that any share can go to zero overnight.

[nimbo1] 08/2/2018 10:02

Ha I wouldn't put myself in the i know what i'm doing camp, more in the continually learning camp. 30% feels a little outside of my comfort zone but I think FDEV is compelling medium term. I think its hard as a pi to really get to know the companies as most don't/can't meet management or see a presentation etc. I always think all companies should film them and put them on the investor section of the website.

I suspect the next time we'll see some exciting materials from FDEV will be when they start marketing the game properly, which I assume won't be for another few months. Their marketing budget for this game although I don't know the specific figure is a lot higher than planet coaster, which they only spent c.1.5 mil on. Hopefully it will be money well spent.

Someone is definitely selling a few shares at the moment though, looks to me like it wants to visit 12 again.

[allstar4eva] 08/2/2018 09:49

30%? Reminds me of the saying: Diversification is for those that do not know what they are doing;-)

[nimbo1] 08/2/2018 09:43

Glad it's of interest, I'm very glad I went because I now feel comfortable holding on to my shares through any wider market and FDEV specific volatility. Im now at 30% here so could do with this working out over the next couple of years!

[mark4231] 07/2/2018 22:16

Thanks for all the info nimbo. Although I don't have a particular target price, I'm confident it's plenty above where we are now. Now need to be patient!

[p1nkfish] 07/2/2018 21:53

Thank you nimbo. Excellent background info, much appreciated.
A long while back I'm pretty sure I posted this could achieve £1Bn market cap, so was about £2.
£3.5Bn target makes my stretch look puney.
Now I think it possible.

[nimbo1] 07/2/2018 10:04

regarding price action - it seems to be being messed around with and looks weak, but then it is very illiquid - i'm relaxed that there is probably another few months to play around with the price but when JWE is released, we eventually learn more about the china op and the 4th franchise is known the price will be higher imo. only a few months to wait.

[bamboo2] 07/2/2018 09:57

Thank you for the posts mark and nimbo.

Funny how thew price has come down today, yet it is still not possible to get an online quote to buy even 200. I had the same problem yesterday afternoon, but eventually got a few more.

[nimbo1] 07/2/2018 09:32

There was a lot said about China in terms of market potential nothing ref specific plans. Tencent have 80% of the Chinese games market - until now a lot of that has been mobile games driven. The problem with mobile games is they are very easy to make because effectively they use technology pc games were using from 7 years ago. The competition are focussed mobile. As the middle classes boom so are sales of pc's which is really only a major transition in the last 12 months but over the coming years provides a very good opportunity. Its why Tencent have been coming west to find new sales avenue and games content - because its where they'll generate some of their future growth.

When you look at the competitors out there - starting at the top (not including Tencent) Activision, EA and Take two - the 3 largest also happen to still be old world - they create a game and sell it on a disk. DB sees the future as games a a service - people buy the game on a platform like steam then over time they release in game updates, at first free then for sale, have in game stores - some items free and some for sale and engage with the player communities. Its this games as a service that provides the sustainable revenue base and makes the income repeatable. They think under this model games should have a shelf life of 8-10 years.

Specifically regarding elite and dangerous revenue all they said was as per the rns - it continues to perform well. I'll be holding on for the ride.

The 30% to the platform provides better margins than via traditional disk sales, its why gross margin dipped from 74% to 69% - it should normalise in the low 70's. The numbers included the launch of Elite Dangerous through distribution partners on disk for the playstation, hence the lower margin figure.

Another important thing to note is on costs - when they have five franchises up and running it does not mean head count is 5 times larger than if they have one franchise - a development team consists of c100-120 people. when a game is made - the team downsizes and then the core moves onto the next game.

In the competition table there are 14 players - tencent at the top and Sumo digital at the bottom. There seem keen to take FD into the top half - if thats to happen the market cap would need to be between Sega Enix at $3.6 billion and Square Enix at $5.7 billion.

Whether you think he can do it is up to the individual investor!