Here is the interview:
1.During a period of approximately three months (~August to October), no new games were released on Google Play. What were the reasons behind this?
Many developers we work with were making their first iOS game and it was enough challenge for them, so they were starting work on Android version only after iOS version was ready. Android is a bigger technical challenge and therefore on their first iOS/Android game we had several months gap between the release of iOS version and Android version. As more developers are getting past their first iOS game and past their first Android game, they get more comfortable with the technology to be able to deliver both builds simultaneously on the following games, like you can see with Abyss game release which we did simultaneously across all platforms we support: iOS, Google Play, Kindle, Nook, and Mac. Going forward, we expect regular Android releases and more simultaneous releases across all platforms. We are doing it already and seeing the results – January is exceeding our most optimistic expectations.
2.In Q4 the grossing positions on Amazon Kindle have dropped significantly across the entire G5 portfolio of games. Do you expect to regain the positions or has there been any structural change to how your games are promoted on the platform that will make it more difficult in the future to achieve the previous relatively high grossing positions.
We are constantly analyzing our financial performance and performance in the charts and it looks like Amazon – just like Apple and Google – had very successful holiday season. We definitely have plans on how to capture more of this market.
3.When you started to release games again on Google Play, the release schedule has picked up pace significantly, continuing into January. Can we expect to see a large “backlog” of games being rapidly released on the platform during Q1 2013?
January is exceeding our most optimistic expectations and recent Google Play releases contribute to the success. We have a large portfolio of games for 2013, and we expect to maintain regular pace of releases on Google Play, Kindle, and Nook. This is optimal strategy for building up revenue. It does not make sense to release games faster than certain rate, because we need to give each game a window of visibility with our audience, before we release the next game.
4.You once said that all of you own IP are coming as playground games, i.e. free-to-play versions. What, and how many, can we expect of these in 2013?
These games are scheduled to come out in 2013. There are several such games. Please follow our news.
5.In the preliminary result released on Friday last week you state that the capital structure will be reevaluated. To me, this suggests you intend to raise more capital through issuing shares at the time of the IPO, or seek other alternative financing. What are the reasons behind this and how do you want to spend the money? Do you intend to be a part of the coming consolidation in the market through acquisitions of developers? Are you going to hire more staff for internal growth?
We are happy with the number of staff that we have. We have enough people to maintain the pace of releases and satisfy our development needs. We don’t currently plan to substantially increase staff during 2013, unlike previous years. As you know, we have introduced option program in the company, and I can inform you that we had 100% subscription despite the fact that strike price is set to over 100 Kr per share.
Regarding consolidation, I believe that given the growth of the market it might be early to talk about consolidation. As a high growth company operating in the market that is driven by the fastest ever consumer technology adoption, we are seeing plenty of opportunities to boost our growth. Every now and then we have to evaluate if our capital structure is right to pursue unique opportunities on this market. Consistent with what we did before, even if we decide to attract more capital in the future, we would only do that because we know we can put that capital to such work that it would propel the company to the next level and create substantial value for the shareholders.
6.What incremental cost can we expect per year attributable to the higher listing costs on Nasdaq OMX compared to Aktietorget and what amount do you expect to be one-time costs associated with the initial IPO?
Given the pace of growth we were showing in 2010-2012 (and we intend to grow as fast in 2013), and roughly 30% margin we are maintaining, one can see that costs will be easily handled by the company, and would not affect the result substantially.
7.It seems to me that the slightly weaker turnover in Q4 2012 was due to the fact that most of the games were not free-to-play and you also didn’t release any own IP during Q4. Can you give us your thoughts on the key drivers behind G5s growth during 2013? In my mind, more focus on internally developed IP with the free-to-play monetization model is important for future growth, but also experimenting in other genres and on other platforms are important to capture additional growth.
There are several reasons why Q4 turnover is perceived as slightly weaker: (a) as you have noticed, we had a natural gap in Android game releases and it affected sales compared to other quarters, (b) Q3 was boosted to a large extend by our F2P game Virtual City Playground, which had a very successful update and was heavily promoted. It shows great potential of F2P games, but it also distorted the regular smooth growth pattern we had before. There is also seasonality factor that we are seeing affecting pre-holiday sales and after-holiday sales (Fall and Spring) more, compensated by higher sales in winter and summer months. If you take it into account, you can say that the performance was great and our revenue continued growing Q1 to Q4, with extra bonus in Q3 for our experiments with F2P. We may see more of this kind of distortions going forward until our F2P portfolio is large enough.
January 2013 is exceeding our most optimistic expectations and any months company has previously had. Our pipeline has unprecedented number of games for release in 2013. You will see more original IP and F2P game releases from G5 in 2013 than in previous years.
8.Are there any particular geographical markets that you are aiming at specifically in the short term? One can for example read about the stunning growth of the app markets in Russia, Brazil, Japan, South Korea etc.
Each of our games is localized to 11 languages. Russia, Brazil, Japan, South Korea and of course you wanted to mention China – are regulars in our Top 10 grossing countries’ list in any given day.
9.How do you see your casual games leveraging the current ‘social trend’? Doomsday Preppers and Virtual City has some social elements, but still quite subtle. Could we expect to see any type of multiplayer game or turn-based games from G5 in 2013 or other ‘social’ elements?
We do plan on rolling out more and more advance social features across our F2P games in 2013. This should help us grow revenue from our F2P portfolio.
10.Can we expect to see G5s games on Windows Phone 8 soon?
Yes, one would expect that, based on G5’s cross-platform approach.
11.You have also released a few of your games on the different telco’s own appstores. Can you describe your success there and plans forward?
Almost quoting one of the telcos’ emails to developers: “We believe that users’ needs are well-served by the existing App Stores”, and I would agree with this statement.
12.Some of your direct competitors have ventured into the casino-app-business, with great success, e.g. Big Fish Casino. Is this something you are also considering?
We would consider everything that fits our audience, portfolio, and is able to enter top grossing ranks. This success has definitely caught our attention.
13.By listing the company on an official stock market, higher demands are put on the Senior Management and in particular the CFO. When can we expect to see more of this person?
You can expect that we will do everything needed to satisfy stock market requirements.
14.Is all your growth still organic or have you started with spending marketing money on user acquisition?
We are performing experiments with traffic acquisition and analyzing the results, but amounts we have spent so far are minor and had more experimental/scientific rather than practical purpose. We continue to grow organically. At the same time, we want to explore further if we can achieve better results through paid user acquisition.