Archive | June, 2012

#G5 Entertainment: Ranking check and look ahead

29 Jun

Q2 2012 is coming to an end and it is time for the last G5 Entertainment ranking check of the quarter. As we have reported over the last weeks and months, G5 games were and are selling very well and the company managed to increase the amount of games it has in the global top grossing charts gradually over the quarter.

It will be interesting to see what this will mean for Q2 revenues. As usual, management will give a mid-quarter update a few days after the end of the quarter, i.e. sometime around 2nd -4th of July. Typical seasonally suggest a slower Q2 vs Q1 for the app market overall, however, as the amount of devices continues to increase steadily, so is the overall customers base. Coupled with the increasing amount of G5 games in the global top grossing charts (supported by the steady strong flow of newly published games), we are confident that the company will report Q2 2012 revenues of somewhere in the region of SEK 18-20m (Q1 2012 revenues was SEK 17.4m).

Either way, G5 is well on the way to deliver on its 2012 guidance to achieve revenues of SEK 87m. Growth will continue even in the years ahead and we have become more and more confident that the company will achieve its target of sales around SEK 300m already by 2014. Assuming margins of around 30%, an EPS of SEK 10-11 per share is within reach.

Here is the latest ranking check:

As we have learned from a recent Appannie-study, iOS global revenue across 35 comparable countries outperforms Google Play by a factor of 71 to 29. Whilst Android wins the war in handset penetration, this has not yet translated to revenues generated for Google Play.

(As always, we are screening the app market of Australia, Canada, China, France, Germany, Italy, Japan, Netherlands, Russia, South Korea, Spain, Sweden, UK and USA)

G5 Entertainment games among the Apple top grossing games:

G5 Entertainment games among the iPad top grossing games:

G5 Entertainment games among the iPhone top grossing games:

G5 Entertainment games among the Mac top grossing games:

G5 Entertainment games among the Google Play top grossing games:

Nordic Investor

PS: Want to be among the first to receive our regular ranking checks? Subscribe to our blog or follow us on Twitter!

#Glu Mobile: Rumours about takeover by #Microsoft

27 Jun

Mobile game developer Glu Mobile‘s share price has been soaring in recent trading sessions despite the generally muted market. Several sources are citing rumours that Glu Mobile has received a takeover bid of $7 per share from Microsof. The same rumor has already surfaced on June 14.

A spokesperson for Microsoft declined comment on the renewed chatter. A Glu Mobile spokesperson was not available.

At USD 7 per share, Glu Mobile would trade at a PE-ratio of 44x expected 2013 earnings. As a reminder, our top-pick G5 Entertainment currently trades at a PE-ratio of 12x expected 2012! earnings. Unlike Glu Mobile, G5 is already profitable and is growing faster and has a net cash position. Applying a PE-ratio of 44x on G5′s expected 2012 EPS of SEK 3,2 implies a share price of SEK 140 (the share is currently trading below SEK 39). That does not take into consideration that G5 is expected to grow by some 80-100% also in 2013 and 2014, which makes EPS in the region of SEK 5.5 – 6 realistic for 2013. 44 times 5.5 equals 242.

Another data point that highlights the huge share price potential we see in G5 Entertainment.

Nordic Investor

#Mobile gaming: Recent trends in global #app markets

27 Jun

Appannie (www.appannie.com) is out with an interesting study concerning the developments on the global app markets. Here are the highlights:

Despite the emergence of Google Play, iOS revenue stays well ahead

China and Japan make up 25% of iOS’s total download volume

The data shows clearly that East Asia’s appetite for the iPhone and iPad is translating well into sheer download volume. Two of the top three countries by downloads are now Asian, with Western European countries lagging behind in both volume and growth.

While Android handset growth in Asia has been well reported, it’s clear that the Google Play store has yet to establish itself as the dominant Android app store in Asia. In China and Korea, Google Play is not only competing with iOS, but faces stiff competition from regional app stores operated by local mobile operators and other platform owners. How will Apple and Google respond to these trends in the fastest-growing app store region in the world?

US, UK and Japan generate more revenue than the rest of the world

If you’re a publisher that’s looking to generate global revenue scale, then you can’t ignore these three countries. Both platforms have these heavy hitters in their top three. The US, UK and Japan have firmly established themselves as key revenue centers, accounting for over 60% of global revenue across both platforms. We’ve seen major moves by the big Japanese publishers such as GREE and DeNA to make strides in the international stage. We’ve also seen many Western publishers attempt to enter the Japanese app store market with localized apps to significant difficulty. App stores are bringing about the consolidation of global digital content, and the race between Eastern and Western publishers to dominate the globe will be an interesting contest.

Google Play Sees Strong Growth in Brazil

The growth rates seen in this section of the infographic are taken from the first four months of 2012, and from that perspective it looks like everyone and their mother in Rio got an Android phone for Christmas and has been downloading apps on Google Play since. 88% growth year-to-date more than triples the growth rate of the nearest country on either platform. Conversely, Brazil has not seen the same stellar performance in iOS. A key factor perhaps being the import tax levied by the Brazilian government, pricing the iPhone and iPad out of people’s disposable incomes. There are of course talks of Apple setting up a factory in Brazil to manufacture devices locally which would of course solve that hardware sales problem and allow their app store to flourish in that country.

Russia’s growth rate across Google Play and iOS is also noticeable, and whilst much has been made of the rise of China, it seems the next wave could be the other developing countries in the BRIC region. Within this, India is not yet significant with the country too early to be a smartphone force to be reckoned….for now.

For every $1 spent on Google Play, $2.45 are spent on iOS

It’s very clear from the data and from developer feedback that Google Play is still playing catch-up in the revenue game. iOS global revenue across 35 comparable countries outperforms Google Play by a factor of 71 to 29. Whilst Android wins the war in handset penetration, this has not yet translated to revenues generated for Google Play.

iOS and Google Play revenues growing at the same rate

According to the first four months of 2012 revenue data, iOS and Google Play are growing at the same pace. Therefore there is no catch-up pace from Google right now, and what makes the Google I/O conference that much more interesting is to see their response to this well-reported trend. App developers worldwide have been calling out for numerous changes to be made to the platform – if Google Play wants to start catching up in 2012, then now is a great time to make a big announcement.

Nordic Investor

PS: Want to benefit from the fast growing global app market? Check out our top-pick G5 Entertainment http://nordicinvestor.net/g5-entertainment/

#G5 Entertainment: Insider buying and CEO interview

26 Jun

Last Tuesday, Pär Sundberg was elected as a new member of the board of G5 Entertainment, representing its major shareholder Traction. The same day, Mr Sundberg bought 2,000 shares in G5 (http://aktietorget.se/QuotesInstrumentInsider.aspx?Language=2&InstrumentID=SE0001824004). This shows commitment and belief in the company’s case.

Elsewhere, pocketgamer.biz published a fresh interview with G5 CEO Vlad Suglobov  (http://www.pocketgamer.biz/r/PG.Biz/G5+Entertainment+news/news.asp?c=42403):

“Having made the leap from PC to smartphones, it’s not unexpected that Swedish/Russian outfit G5 Entertainment would talk up the growing strength of the mobile market. But in an interview with the official Casual Connect website, CEO Vlad Suglobov suggests too many developers are falling into the trap of focusing solely on iOS. It’s a strategy he believes could see them come unstuck in the years ahead.

According to Suglobov, G5 releases one new game on iOS and Android a week, with its current tally having surpassed 200 smartphone games, mainly on iOS. Compared to PC, Suglobov claims said games make “several times more on mobile” than on PC.

“In a couple of years, virtually everyone is going to have a touch-based smartphone in their pocket or a tablet in their hands capable of running casual games,” added Suglobov, before noting that iOS isn’t the only option. 

“Some publishers only focus on casual games for iPad, but it’s wrong to ignore the rest of the market, which includes iPhone and, of course, Android devices,” commented Suglobov. “In the long term, analysts expect iOS to hold only about 20 percent of the market, so bringing your games to Android is very important. And G5 achieved outstanding success in monetizing casual games on Android.”

Suglobov said G5 has released 20 games on Android since July 2011 and is “making millions”, with total downloads coming in at “50 times ahead of our nearest competitor in casual games on Android stores.” “Using a free-to-play model removes the ceiling on how much a player can spend within a game,” he asserted.

“If your casual game is $6.99, that’s as much as one can spend on it. If a free-to-play game is engaging and balanced in the right way, some people may spend 99c, some $4.99, but some would spend $20, $50, or several hundreds of dollars.

“I would recommend converting … casual games to a free-to-play monetisation model first, and then add social elements. We are ready to share our recipe and knowledge with developers.”

#G5 Entertainment: Rankings boosted by VCP update

24 Jun

It’s ranking check time and this week we were particularly excited as we have noticed a strong boost for G5 Entertainment‘s freemium game Virtual City Playground (VCP) which received a EURO 2012 update. Gamers are obviously loving it as they have catapulted VCP on the top of the charts, especially on the iPad where the game managed to climb to several top 10 top grossing charts in big countries such as the UK. This means big bucks for G5 Entertainment.

(As always, we are screening the app market of Australia, Canada, China, France, Germany, Italy, Japan, Netherlands, Russia, South Korea, Spain, Sweden, UK and USA)

Number G5 games among the iPad and Mac Top 10 top grossing games:

Number G5 games among the iPad top grossing games:

Number G5 games among the Apple (iPhone, iPad, Mac) Top 100 top grossing games:

Number G5 games among the Apple (iPhone, iPad, Mac) Top 200 top grossing games:

Number G5 games among the Apple (iPhone, iPad, Mac) Top 300 top grossing games:

Number G5 games among the Apple (iPhone, iPad, Mac) Top 400 top grossing games:

Number G5 games among the Google Play top grossing games:

Nordic Investor

PS: Want to be among the first to read our regular ranking checks? Subscribe to our blog or follow us on Twitter!

#G5 Entertainment: CEO presentation in Stockholm

19 Jun

G5 Entertainment CEO Vlad Suglobov was in Stockholm today in connection with the company’s annual general meeting. Unfortunately, Nordic Investor could not attend today’s presentation but we flipped through the slides which are available on the company’s homepage. As expected, Mr Suglobov had no new message to convey today but rather reiterated the positive message given on recent occassions. The slides were similar to the ones presented a few weeks ago when CEO Suglobov highlighted 5 major growth drivers for 2012:

  • Continued growth of the smartphone and tablet market
  • Up to 50 new games to be released in 2012 for the various platforms (summing up to close to 300 new apps)
  • Increasing quality of games
  • New platforms (although an entrance of the Windows platform seems more distant given the unfavourable circumstances for developers)
  • Better monetization with more Playground games

One success factor is the 50-50 split between own IPs and games published for other developers which allows for a good balance and favourable risk profile. G5 has today contracts with over 60 studios. Oftentimes, G5 helps these studios to gain independence from the stagnating PC market by helping to start developing for mobile devices. The established sales channels and user base is a major selling point for G5 as independent studios would not be able to reach a sufficient audience on their own.

In connection with the recent Q1 2012 report, G5 announced the target to reach revenues of SEK 300m in a couple of years and said it was optimistic to maintain similar growth rates as in 2010 and 2011 (i.e. around 100%). While competition is naturally increasing, the addressable market is so huge (and growing) that G5 should be able to establish its own niche without having to think about market shares etc. Playing with the numbers, a 90% p.a. growth in 2012-2014 would lead to revenues of more than SEK 300m by 2014. With margins comparable to today’s, this implies an EPS north of SEK 10 per share.

Everything seems to be in place for a continued pleasant ride. We are eagerly awaiting the launch of “Jumpster” and are probably more bullish than ever on the G5 Entertainment share.

Nordic Investor

#G5 Entertainment: Ranking check

11 Jun

Another week, another ranking check. This week we let the graphs speak for themselves. Just that much: it looks very promising for G5 Entertainment! (As always, we are screening the app market of Australia, Canada, China, France, Germany, Italy, Japan, Netherlands, Russia, South Korea, Spain, Sweden, UK and USA)

Number G5 games among the iOS Top 100 top grossing games:

Number G5 games among the iOS Top 200 top grossing games:

Number G5 games among the iOS Top 300 top grossing games:

Number G5 games among the iOS Top 400 top grossing games:

Number G5 games in the Google Play top grossing charts:

Number G5 games among the Mac Top 10 top grossing games:

 

Nordic Investor

PS: Interested in how well G5 games are selling? We are continuously publishing ranking checks for G5 Entertainment. Be among the first to receive them by subscribing to our blog or follow us on Twitter.

#Google: More than 900,000 #Android activations per day

11 Jun

Google continues to increase its amount of Android activations. More than 900,000 units are activated per day, compared with 850,000 which was indicated at the mobile fair “Mobile World” in Barcelona in February this year, according to Andy Rubin, the head of Google’s Android business.  

 In December 2011, the number was 700,000 units per day and in June last year only 500,000. Rubin announced this piece of news in a Tweet in which he also said that he had no plans to leave Google. This was speculated due to his involvement in the start-up company CloudCar. 

Some recent reports indicated that Android might have peaked in terms of market share for smartphone operating systems. IDC, e.g. expects Android’s market share to decline by 8 percentage units over the coming four years. Nevertheless, Android volumes are expected to increase by 9.5% p.a. due to the immense overall growth of the smartphone market. 

I am long G5 Entertainment and you should be too!

Nordic Investor

PS: Looking for exposure to the fast growing smartphone and tablet market? Check out our top-pick G5 Entertainment (http://nordicinvestor.net/g5-entertainment/)

#G5 Entertainment: Presents #Jumpster at #E3

6 Jun

The Los Angeles Convention Center is currently the venue for E3, the world’s premier trade show for computer and video games which is taking place June 5th-7th.  E3 draws tens of thousands of professionals to experience the future of interactive entertainment. The most influential people leading the most innovative companies in the business attend E3 to see groundbreaking new technologies and never-before-seen products for computers, video game consoles, handheld systems, mobile, and the Internet. Our top-pick G5 Entertainment is participating at E3 and is using the opportunity to announce its next big bang. G5 is entering a new genre with “Jumpster”, a “physics platform game”. Jumpster will also be G5′s second freemium (playground), following its massive success Virtual City Playground. The company has repeatedly argued that the freemium-monetization system is far superior to others and that it plans to release more fremium titles in the future. Jumpster will be available on the App Store for iPhone, iPod touch, and iPad free of charge in July 2012 with a variety of in-app purchases that will customize your gameplay.

Here is the official game description:

Fans of the physics genre games are in for a treat. G5 Games is about to launch its first physics platformer, Jumpster – with high-flying action that is not to be missed. Jumpster has exactly what puzzle gamers are looking for: easy to master game mechanics, challenging but beatable gameplay, beautiful graphics and a soundtrack to which you’ll find yourself humming along. The game has tons of content that will be continually updated with new brain twisters for you to solve. The game will be available on iOS free of charge with a variety of in-app purchases that will let you customize your Jumpster and gameplay.  In the game you play as Jumpster, a cute little alien who is touring a galaxy. His ship gets hit by a meteorite and springs a fuel leak. Poor Jumpster crash-lands on the planet Okadia and now needs to recover the lost fuel, if he wants to continue his trek. To do so, he must tackle traitorous traps and hungry monsters in his path.  To play, you slingshot Jumpster by pulling back while setting your angle, and then you let go. You’ll fly Jumpster trough death defying traps and teleports, you’ll maneuver him though teeth gnashing monsters and control numerous moving vehicles while in search of the UFO fuel. Jumpster is a hit and you’ll be addicted right from the start!

Trailer:

Watching the trailer, I cannot help but being somehow reminded of some elements from Rovio’s Angry Birds (not the least the “slingshot”-approach). It remains to be seen if Jumpster can become only close as successful as Angry Birds but it is nice to see that G5 is broadening its product portfolio. Jumpster could become a serious hit and the freemium concept could ensure a major income stream for a long time into the future.

Nordic Investor

PS: Interested in how well G5 games are selling? We are continuously publishing ranking checks for G5 Entertainment. Be among the first to receive them by subscribing to our blog or follow us on Twitter.

#G5 Entertainment: Positive tone in CEO’s letter to shareholders

5 Jun

G5 Entertainment published its annual report today and I thought I’d post CEO Vlad Suglobov’s letter to the shareholders as a nice Tuesday morning reading:

“Dear Shareholders!

In 2011, G5 continued to grow as publisher and developer of games for smartphones and tablets. Global smartphone and tablet shipments already overtook PC and laptop shipments in 2011, and analysts forecast that by 2013 the difference in shipments will be two-fold, and by 2020, there will be over 10 billion mobile connected devices on the planet, while the market of apps for these devices will reach $25 billion in 2015 from $6.8 billion in 2010. The growth is worldwide, with US leading the market since 2009, while Europe and Asia are quickly catching up.

G5 debuted on this expanding market in 2009, starting with the Supermarket Mania game for iPhone and subsequently releasing well over 100 games for Apple‟s iPhone and iPad, Google Android phones and tablets, Amazon Kindle, Barnes&Noble Nook, and other devices of the “post-PC era”, as present time is now called in the technology world. The number of downloads of G5‟s games increased five-fold from 2010 to 2011, and recently surpassed 50 million.

In 2011, G5 successfully debuted in free-to-play games with Virtual City Playground. This city simulation game can be downloaded for free, but provides the ability to purchase certain virtual goods, and many players choose to do so. This business model originally came from Asia and provides advantages in monetization compared to downloadable games. G5 plans to extend its offering in free-to-play games during 2012 and further.

In the market of games for smartphones and tablets, monetization through in-app purchases is prevalent now. By some estimates, in-app purchases accounted for over 70% of the App Store revenue in 2011. G5 is riding this trend. Already over 40% of the group‟s revenue in 2011 came from in-app purchases, and the ratio is expected to rise further in 2012.

G5‟s customer base and the ability to market games attracted tens of development studios from around the world that now work with G5 as a publisher on revenue share terms. During 2011, G5 further strengthened its developer network and has over 50 games in the pipeline for release during 2012. Still, the group‟s own games like Virtual City, Special Enquiry Detail, Supermarket Mania, Stand O’Food, and others continue generating the major part of the group‟s revenue.

The market of games for smartphones and tablets is forecasted to grow by leaps and bounds for at least several more years. This is why as G5 continues profitable growth in 2012, the management chooses to reinvest the profits in the licensing and development of new products, exploring new monetization models, and conquering new geographical markets and new technology platforms, with the goal to secure and improve the group‟s position in the market and maintain high pace of growth. The journey is only beginning.”

In the meantime, the G5 share continues to perform poorly. Given the uncertain macroeconomic situation and the general risk aversion this is not surprising, given the small size of the company and its listing on the small Swedish ”Aktietorget”-marketplace. It’s a pattern we know all too well from last summer. As we constantly screen in our “ranking checks”, business is going very well for G5 and its rankings are improving steadily, suggesting that the company is actually gaining market share.  Interestingly, the G5 share is now trading in-line with the lowest levels seen during last summer as well, at an PE-ratio of just below 11x.

Investing in stocks requires patience and good nerves at times, but it can be highly rewarding if you do your homework. We think the current share price weakness is a very interesting entry opportunity. The G5 share is currently the cheapest it has been since late 2010:

Nordic Investor 

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