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#G5 Entertainment: Solid Q1 2013 report; future looks bright

15 May

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Mobile gaming developer and publisher G5 Entertainment reported its Q1 2013 report this morning, slightly beating its preliminary numbers released in early April.

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Consolidated revenue for the period came in at 27 557 KSEK, up 58% compared to 17 388 KSEK for the same period of 2012. This is  compares to the the previously communicated forecast of 27 MSEK. EBIT adjusted for non-recurring items (related to the ongoing relisting process to Nasdaq OMX), amounted to SEK 9.4m, up 62% compared to 5 753 KSEK for the same period of 2012. The implied EBIT margin reached 34%, 100bp above the level recorded one year ago. Earnings per share for the period are 0.97 SEK. This result is in line with the previously communicated forecast.  During the period, the group had positive cash flow of 30 971 KSEK, which was boosted by the proceeds of the new share issue amounting to SEK 34m. Cash reserves on March 31st 2013 amounted to 44 336 KSEK.

G5capdevelopmentcosts

G512Mtrailing

Regarding “The Secret Society”, G5′s hidden object free-to-play game released in November 2012, the company states that the game continued gaining the audience and improving monetization as G5 rolled out the updates for the game. The game increased average daily revenue through the period and became the highest grossing among G5 games. After the end of Q1 2013, The Secret Society, has received updates much anticipated by players, featuring new content and features, and addressing a number of known issues with the game. As a result, the game went up in Top Grossing ranks worldwide considerably, entering Top 50 Grossing Games in USA on iPad, and becoming the highest grossing game in G5’s portfolio on a continuous basis. G5 also states that it has 70 games (each for multiple platforms) in the development pipeline to be published in 2013 and 2014. This number also includes a number of free-to-play games to be released starting in 2013.

The big question mark remains on exactly how much money Secret Society is generating for G5 and its shareholders. With top grossing positions around #50 in the US, we have previously argued that it could be generating around SEK 10m (http://nordicinvestor.net/2013/04/28/g5-entertainment-secret-society-saves-party/). This numbers remains, however, highly theoretical and we would appreciated input from our readers on exactly how much a top 50 grossing position has generated for them on average.

G5 Entertainment and its CEO Vlad Suglobov do not want to give any more details around the topline contribution from Secret Society at this point. Nordic Investor put a couple of questions to Mr Suglobov following today’s results release:

Nordic Investor: Is there any chance that you can be a bit more specific about Secret Society’s impact on the numbers? You mention that it is the highest grossing game on a continuous basis. If you compare it with VCP’s importance back in q3 2012, is secret society more or less important than that for your overall performance? Can you give any hint on what a top 50 grossing rank in the US for iPad is worth in dollars ( on average)?

Vlad Suglobov: I cannot give you specific details on the revenue of The Secret Society. All I can say is that it’s been #1 in our Top10 on the site for quite a while and I can re-iterate that it’s been making more money than any other game for some period of time now. Although note that it was communicated in “after the end of the period” part of the report.

Nordic Investor:  I saw you released your first game for windows 8 last week. Is the porting process to this platform very time consuming or can we expect several other releases within short?

 

Nordic Investor: Can you say some words about the contracting with new 3rd party developers: how is that proceeding? Would you say you sign increasingly more contracts or is the flow rather stable?

 

Nordic Investor: Can you say anything about if and when secret society will come to android?

Vlad Suglobov: We aim to release our games across all platforms we support, so follow our news for TSS Android information.

G5′s current valuation on the stock market is by no means in sync with its operational performance.  Even at an annual growth rate of “only” 60%, G5 can easily earn an EPS of around SEK 4 (excluding non-recurring items) in 2013, which would imply a 12-months forward PE-ratio of below 13x.  International companies with exposure to mobile gaming (but with much lower growth than G5) are currently trading at expected 2013 PE-ratios of around 25x (Gameloft) and 20x (Electronic Arts). Glu Mobile is not expected to make any profit this year but looking at their PE-ratio on 2014 estimates, the share is currently trading at a PE-ratio of 30x. Needless to say that we expect a signficant revaluation of the G5 Entertainment share once international investors can invest in the company when it is listed on Nasdaq OMX. What do you expect will happen when foreign analysts will start to include G5 in their peer group valuation tables? Gameloft is covered by several French investment banks while Glu Mobile, is covered by nine American investment banks and brokerages.

 

Nordic Investor

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#G5 Entertainment: First game launched for #Windows 8

10 May

 G5 Entertainment has launched its first game for Windows 8. Yet another stream of revenue has been opened. G5 starts with one of its “oldtimers” – “Supermarket Mania 2“, a game where it owns the IP and where depreciations are already done.  (http://www.aktietorget.se/NewsItem.aspx?ID_News=65508&Language=1)

Expect to see more G5 games to be ported to Windows 8 in the near future.

Nordic Investor

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#G5 Entertainment: Ranking check; Secret Society performs well

9 May

newlogoSomewhat delayed we are releasing our weekly ranking check for G5 Entertainment today. The overall rankings for the games portfolio as such show no major new trend compared with recent weeks. What does continue to stand out is Secret Society and its success around the world, primarily on iPad. The game continues to be among the top 5o grossing games on iPad in the USA, which (as we have discussed in a recent article), could be worth around SEK 3.5m per quarter. Adding revenues from other countries and also iPhone (to a lesser extent), we believe the game alone could generate around SEK 10m per quarter at current performance levels. Trends in recent days were actually upwards and today Secret Society is ranked #44 in the USA. It is also ranked #34 in Canada, #58 in Germany, #51 in France, #64 in South Korea, #57 in Russia, #53 in Italy and #73 in the UK.

Elsewhere, G5 Entertainment released the sequel to its smash-hit Special Enquiry Detail for iPhone and iPad yesterday. The game was highly successful with top 10 grossing positions in several countries. Check out this review of the PC version which is very promising: http://www.examiner.com/review/the-impatient-gamer-reviews-special-enquiry-detail-engaged-to-kill

We believe comments regarding the success of Secret Society could be the highlight next week when G5 will present its Q1 2013 report on May 15th. As always, the actual numbers are not too much of a surprise due to the fact that G5 has already released preliminary numbers at the beginning of April in is usual mid-quarter update.

Number of G5 Entertainment games among the top grossing charts for iOS:

(We are screening the app markets of Australia, Brazil, Canada, China, France, Germany, Italy, Japan, Netherlands, Russia, South Korea, Spain, Sweden, UK and USA)

G5Apple

Number of G5 Entertainment games among the top grossing charts for Google Play:

(For Google Play, we are screening the app markets of Germany, Denmark, Sweden, and USA)

G5GooglePlay

Secret Society top grossing rankings in USA on iPad:

Secret Society

 

Nordic Investor

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#G5 Entertainment: Appoints new CFO

9 May

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In its preparations for the big re-listing to Nasdaq OMX during 2013, mobile gaming company G5 Entertainment has appointed a new CFO.

On Monday May 6th, G5 announced that Mr Odd Bolin has been appointed CFO as of May 2nd, taking over from Sergey Shults, who will remain within the company as Head of Accounting.

Says G5 CEO Vlad Suglobov: “The upcoming relisting to Nasdaq OMX Stockholm during H2 2013 puts increased demands on our company in terms of financial reporting and market information. With Odd joining us as CFO, we want to utilise his pracitcal experience within these areas and strengthen our management in general.”

Odd Bolin comes from Swedish Cybercom Group, an IT consulting company, where has held both positions as Head of Sweden and CEO. Mr Bolin, age 49, also has experience from Corporate Finance and Equity Reseach.

This appears to be solid recruitment for G5. Mr Bolin has been CEO of a listed company in the past and knows the Swedish investor base well. Hopefully, he will manage to build trust and confidence for the G5 case, both in Sweden but also abroad. Once the company is listed on Nasdaq OMX, foreign investors will finally be able to invest in this fast growing, profitable, debt free  growth story.

Nordic Investor

 

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#G5 Entertainment: Secret Society saves the party

28 Apr

newlogoThis week’s ranking check for G5 Entertainment is a continuation of the recent trends. Google Play is stuck in a downward spiral while iOS is keeping decent positions without managing to get to the next level. The big hope lies all the more on Secret Society, which continues to be ranked around the top 50 grossing games on iPad in the US (it also performs very well on other big iPad markets such as Germany, South Korea etc). 

The big question is: How much are these rankings worth in real money? While it is straight forward to get the rankings of individual games, it is almost impossible to get the actual value of these rankings.  Pocketgamer, Distimo and others are from time to time publishing bits and pieces about certain games’ performance and one of our readers was kind enough to sent us his thoughts on the subject:

“In a recent article on pocketgamer.com it said that e.g. “Fish out of Water” made some USD 15,000 a day from the US iPhone plus iPad market with a top grossing rank of around 60. Unfortunately, Secret Society is not performing that well on iPhone so we only should look at the iPad side of these USD 15,000. Assuming around 30% of the app store revenue in the US comes from iPad, it should be a reasonable assumption that around 30% of the USD 15,000 are iPad related as well. That would mean that “Fish out of Water” made some USD 4,500 a day with a top grossing ranking of around 60 in the US on iPad. Quarterly revenue for a consistent rank 60 US iPad game would then be 4500*90*6.6 = 2,673,000 SEK. Secret Society is currently ~50 meaning revenue would be higher than that if it holds the position. On top of that would come revenue from the rest of the world, and from iPhone.”

This seems to be an interesting approach of tackling the issue. www.forbes.com had a recent article titled “iPad app revene catching up with iPhone faster than expected” (http://www.forbes.com/sites/terokuittinen/2013/04/09/ipad-app-revenue-catching-up-with-iphone-faster-than-expected/). According to the article, iPad app revenue nearly doubled year-over-year between January 2012 and January 2013. This significantly outpaces iPhone growth. In download numbers, iPad app volume is still roughly 70% below iPhone app volume. But revenue generated by iPad apps is less than 30% below iPhone app revenue (see Appannie chart below). This might suggest that the calculation above could be even conservative, as Appannie’s findings indicate that roughly 40% of US iOS app store revenues are generated by the iPad.

Using the same reasoning above, a top 60 grossing iPad US ranking could therefore by worth: USD 15,000 x 40%= USD 6,000. Quarterly revenue would then be around SEK 3.5m, in current FX rates. Again, Secret Society is doing actually better than that for quite some time now, with a top grossing ranking around 50 in the US. On top of that, Secret Society is doing very well in other major countries as well (in some even better than in the US). We believe that around 35% of all global app revenue is generated in the US. For the sake of simplification we could than come to the conclusion that total revenues from Secret Society at is current performance level is around SEK 3.5m / 0.35 = SEK 10m.

We would appreciate to get input from those of you who have more inside knowledge in the matter. How much is a top grossing postion worth for iPad and iPhone in the US (or other countries for that matter)? Maybe some of you are developers that have had games at these levels? We are also very interested in the value of other top grossing position of course. Please send us a mail and let us know what your app has generated at certain top grossing positions. Also, please do not forget to cast your vote in the bestappever Android awards. Several G5 games are nominated and as you can see in the ranking check – all positive attention is highly needed. Vote here: http://nordicinvestor.net/2013/04/23/g5-entertainment-games-nominated-bestappever-android-awards-2013/

AppStoreSalesSplit

 

Number of G5 Entertainment games among the top grossing charts for iOS:

(We are screening the app markets of Australia, Brazil, Canada, China, France, Germany, Italy, Japan, Netherlands, Russia, South Korea, Spain, Sweden, UK and USA)

g5Apple

Number of G5 Entertainment games among the top grossing charts for Google Play:

(For Google Play, we are screening the app markets of Germany, Denmark, Sweden, and USA)

G5GooglePlay

Secret Society top grossing rankings in USA on iPad:

SecretSocietyUSAiPad

Nordic Investor

 

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#G5 Entertainment: New games even between the years

27 Dec

G5 Entertainment does not take a break, not even between X-mas and New Year’s, and continues to release new games. As Apple’s App Store is closed for new games until December 28, G5 Entertainment focuses this week’s releases on Android.

We have not come across any initial numbers of the X-mas app download volumes yet but will certainly update you as soon as one of the analytics houses is out with some numbers. In the meantime, we can notice that G5 Entertainment’s “Green Jelly” is slowly but steadily climbing in the top grossing charts for iPhone and iPad, not the least in the sizeable Brazilian market.

You can download Green Jelly here: Green Jelly – G5 Entertainment

Also, do not forget to nominate it for the bestappever-awards 2012:
Nominate Green Jelly HD for Most Addictive Game Nominate Green Jelly HD for Best Puzzle Game Nominate Green Jelly HD for Best Casual Game

 

This week’s G5 Entertainment games releases:

Build-a-lot 3: Passport to Europe has been released on Google Play today, December 27, 2012.
Further information is available at
www.g5e.com/games/build_a_lot_3_android.
The game is developed and published by G5 Entertainment under license from HipSoft.

Bigfoot: Hidden Giant has been launched on Google Play and Nook.
Further information is available at
www.g5e.com/games/bigfoot_android,
www.g5e.com/games/bigfoot_nook.
The game is developed and published by G5 Entertainment under license from Joy Bits.

The Virtual City Playground 1.9 Update, featuring holiday-themed content and bug fixes, has been launched on Kindle Fire.
Further information is available at
www.g5e.com/games/virtual_city_playground_kindle.
The game is developed and published by G5 Entertainment.

Nordic Investor

#G5 Entertainment: First changes to #Jumpster

18 Oct

Some interesting news regarding G5 Entertainment’s “Jumpster” on www.pocketfullofapps.com (http://pocketfullofapps.com/2012/10/16/jumpster-update-is-live-in-app-purchases-fixed.html). Apparently, G5 has made its first changes to the monetization model of Jumpster. The game has been a hit in the top free charts but has so far failed to succeed as well in the top grossing lists. Reviews praise its quality but criticize the in-app-purchase model as being to aggressive. Furthermore, there seems to be a Halloween-update on its way. Exciting times as usual.

Here is the article:

“Since its launch three weeks ago Jumpster has been a big hit in the iOS gaming community. Most people agree that Jumpster is an amazing game, however, the  IAP (in-app purchases) seems a bit aggressive. So what have the developers done? Adjusted the IAPs for the better!

  • Changed in-app purchase sums and pricing. New pricing is as follows:Energy bar lasts 2x as long as it did previously
    • $1.99 – 500 coins (was $0.99 – 100 coins)
    • $4.99 – 1500 coins (was 750 coins)
    • $9.99 – 4000 coins (was 2500 coins)
    • $19.99 – 10000 coins – which pretty much lets you get through most if not all of the game.
  • Energy bar last 2x as long as it did previously
  • Energy bar is fully restored in only 4 hours. Before it restored every 12 hours.

Additionally, the Halloween update is in the works. You can download Jumpster on the App Store via this link. Enjoy!”

Nordic Investor

Mobile Gaming: More and more Chinese are playing

8 Mar

The number of Chinese people who play mobile video games is estimated to hit 215 million in 2012, according to a report released by Chinese market research firm Analysis International. The figure represents a 31.8% year-on-year increase and is expected to reach 360 million in 2014, said the report.

Mobile gaming has seen rapid development in China, according to analyst Sun Mengzi. Sun said the sector’s optimized business models will continue to contribute to the industry’s development by spurring the creation of promotions and third-party payment systems, allowing players to discover new games and pay for content at their convenience. Abundant content and collectivized operation will “inject vitality” into China’s mobile gaming industry, Sun said.

After the introduction of the official Chinese currency, the Yuan (CNY), in the Apple App Store in November 2011, download volumes in the Apple App Store China grew significantly. The download volume of paid applications in the Chinese top 100 almost doubled following the move.  Apple announced to support payments with the Chinese Yuan in the Apple App Store which made it possible for Chinese citizens to pay content with local bankcards instead of using a credit card. 

G5 Entertainment has a strong standing in China and many of its games are consistently among the top 100 grossing apps for both iPhone, iPad, Mac and Android (see www.appannie.com for the latest updates).

Nordic Investor

Flurry: Mobile gaming accounts for 52% of all mobile sessions

7 Mar

According to new data from mobile analytics company Flurry, the mobile gaming segment is one of the biggest growth drivers in the entire mobile sector. According to Flurry, games accounted for 52% of mobile sessions in January and February 2012. Flurry sampled the data from 64 billion app sessions over 500 million devices. Game sessions are up 20.5 times over the same time period in 2010 and 15.2 times from this time last year.

“Independent” gaming studios are hauling in the most traffic. Flurry defines an independent gaming studio as; “independent game developers who started their businesses on iOS and Android versus established gaming companies who extended to iOS and Android from other platforms.” That would include the likes of Rovio (Angry Birds) and Toronto-based XMG Studios (Powder Monkeys) and not traditional game makers like EA Games and Zynga. Independent studios had 68% of game sessions in the first two months of 2012.

The revolution in gaming for independent studios overtaking traditional powers is a function of the ubiquity of the mobile ecosystem. Platform games are expensive to produce and deploy to market. Hence, they have high price tags for consumers and takes an organized enterprise to manage the vertical aspect of development, production, shipping and retail. For independent game developers, all that is needed is an understanding of native code or HTML5 and a developer license from Apple or Google.

“With Apple and Google entering the ecosystem, the rules of competition have changed dramatically, arguably creating the most open, egalitarian market in the history of video games,” wrote Flurry’s Peter Farago. “While we would have expected indie game developers to fare better early on in the history of iOS and Android mobile app platforms, it’s remarkable that their dominance to has grown over the last several years, with no signs of slowing.”

Nordic Investor

Mobile gaming: new M&A activity

6 Mar

www.techcrunch.com is reporting today about new M&A activity in the mobile gaming space.
“Big Fish Games is having some significant firsts this year, a decade after Paul Thelen founded the casual game developer and publisher. One is its largest acquisition to date: Oakland-based Social Concepts, the parent company of mobile social casino game developer Self Aware Games. Another is strong revenue growth — up 30 percent over 2011, to above $180 million.

Now, with Social Concepts, Big Fish will also be able to crack some areas that it has mostly stayed out of so far. It is the new owner of Card Ace: Casino, a top grossing app (not just game) on the iPad. This property includes a variety of casino games, like video poker. But it’s based around a social “lobby” where players connect to play and compete for prestige, as investor Bill Lee describes it to me. Big Fish is going to bring this people-oriented design to Facebook. Already written in HTML5, the game should be an easy port — the main difference is going to be the addition of Facebook’s social hooks.

Big Fish, whose strength has historically been in downloadable casual titles, has tried to get on the world’s largest social platform before. It brought iterations of its casual hits over in 2010, but struggled to find users. Now, Card Ace: Casino will give it a large install base and a fine-tuned social game experience, that it can point to a market that has already proven to love social casino games, from Zynga Poker to DoubleDown Casino to many other smaller titles.

Note that these games are not gambling, at least at present, in that users put money in to buy poker chips or other virtual goods, but can’t extract winnings. However, shifts in the U.S. legal climate appear to give developers new leeway to make that happen. “We’re not focused on gambling right now,” Thelen tells me, but “obviously that’s something you could do with a big casino install base.”

Beyond the introduction of new casino games on the mobile app, the planned social expansion, and the option to one day get into the real-money casino business, Big Fish is also getting into another new space via the purchase: location.

Social Concepts has been busy building up Fleck Touch, a game that lets you create a virtual zombie-fighting garden and go on zombie-slaying quests with friends across North America, using your iPad’s GPS feature. The title is currently available for iPad, but Lee and Thelen say that the iPhone version is coming within the next few weeks.

Beyond these titles, Big Fish gets the development and analytics teams that have made the acquiree successful. And, the closely-held company will also get some well-known Silicon Valley investors on board. Lee is an accomplished investor and entrepreneur, and he had already brought in some friends from around here to fund Social Concepts, including eBay founder Jeff Skoll, PayPal co-founder and Tesla-plus-SpaceX CEO Elon Musk, and early PayPal backer and Bridgescale Partners co-founder Matthew Cowan. They’re now all Big Fish stockholders.

So, in case you thought that mobile and social gaming wasn’t intense enough around here already, the Seattle-based casual company is looking like a serious new competitor. It has 600 employees who know how to build great titles — mostly at its headquarters, but also including 100 in Ireland, with other studios in Vancouver and Luxembourg. Social Concepts will be its newest studio, and its first in the Bay Area.”

Nordic Investor

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