Frontier Developments ‘hammers’ towards $billion milestone
UK video games company Frontier Developments is basking in an unprecedented surge that is taking it closer to the magical billion dollar valuation mark.
Its share price has surged on the back of recent announcements to nudge its market cap to almost $816m.
The company, which is anchored at Cambridge Science Park, recently clinched an exclusive IP licence with Games Workshop to develop and publish a real-time strategy game within the rich and extensive world of Warhammer Age of Sigmar.
Frontier now expects revenue to be towards the top of the previously stated range of £65-73 million for the current financial year ending May 31 with operating profit, as reported under IFRS, anticipated to be within the range of £11-13m.
To offer even more cause for optimism regarding continued growth, a fresh report says global videogames sales rocketed 63 per cent in March alone.
Inspirational CEO David Braben said: “Like many companies selling mainly online in the digital entertainment industry we have seen increases in demand for our products.
“This started in China from February and in much of the rest of the world from Marc, and is likely related to global lockdown conditions. We believe the immersive and creative nature of our games and the engaging play times of hundreds of hours makes them particularly popular in today's uncertain world.”
The Warhammer licence is another massive coup for the business. Warhammer Age of Sigmar is Games Workshop’s most recent iteration of the globally renowned fantasy setting in which the four Grand Alliances of Order, Chaos, Death and Destruction vie for control of the Mortal Realms.
Unique and distinct in style, and endless in scope, this ever growing universe sits alongside the far future dystopia of Warhammer 40,000 as the most successful tabletop miniatures games in the world.
Frontier has the exclusive rights to develop and publish a real-time strategy game worldwide on PC and console platforms, together with the rights for streaming services. The game is planned for release in Frontier’s financial year ending May 31.
Frontier’s development roadmap is now stronger than ever, with two major releases from internal development teams now confirmed for each of FY22 and FY23.
FY22 will benefit from the multi-platform release of a game based on an as yet unrevealed major global IP and the release of Frontier’s first Formula 1 multi-platform management game alongside the 2022 F1 season.
FY23 will see the release of the 2023 Formula 1 management game and the Warhammer Age of Sigmar multi-platform real-time strategy game.
For the current financial year two internally developed major releases are also planned: Planet Coaster expanding onto PlayStation and Xbox, and a major new paid-for release for Elite Dangerous.
FY21 and beyond will also benefit from releases from Frontier’s third party publishing initiative. Two games have been signed for release in FY21, with a further three already signed for FY22 and scope for more. Five or six third party game releases per year are expected from FY23 onwards.
Frontier acted quickly to transition the majority of its 500+ staff to homeworking during March, prior to the lockdown. Despite this, Frontier was able to release both the Elite Dangerous: Fleet Carriers Beta update and the Planet Zoo: South America Pack on schedule before Easter and to a positive reception.
Braben said it was too early to judge the long-term effect of homeworking on efficiency and there remains significant uncertainty regarding how long the lockdown may continue but the company does not foresee a permanent loss of efficiency.
Braben said: “The company is in a strong position and while the board continues to monitor closely the impact of COVID-19, we do not currently expect to use government employment support or apply for grants.
“We continue to recruit and we already have a number of new joiners who have started with us by working from home. The business has a strong, debt-free balance sheet with cash of approximately £40 million, which allows us to continue to invest in our strategy of developing and nurturing high quality games.
“We are delighted to announce this licence with Games Workshop. I personally think it’s great news that two such well-established and world-class creative UK companies with global reach are collaborating on a new project.
“Our roadmap is looking stronger than ever with two games from our internal developments for each of FY22 and FY23 and an exciting portfolio coming up from our third party publishing initiative, starting in FY21.
“I am incredibly proud of the positive reaction of our staff to the challenges of COVID-19 and would like to thank them all for their dedication.”
The coronavirus outbreak hit the entertainment industry hard, causing enormous losses for the companies operating in this sector generally. However, as millions of people started spending more time indoors and online, the last few months have witnessed a surge in video gaming.
According to data gathered by GoldenCasinoNews, from March 16 to March 22, the global video games sales jumped 63 per cent with a total of 4.3 million games sold worldwide. At the same time, like-for-like game sales rose by 44 per cent globally.
In that period, the global console games sales surged by 155 per cent and spending hit $1.5bn in March. The United States ranked as the leading country globally and a recent survey in the US showed that one in five respondents expected to spend more on gaming due to the coronavirus outbreak.
French gamers ranked second with a 38 per cent increase in time spent playing video games. The UK and Germany followed with respective 29 per cent and 20 per cent increases.