4
TO REDUCE THE RELIANCE ON THE ITALIAN MARKET WE NEEDED TO GROW THE BUSINESS INTERNATIONALLY
TO EXPAND THE BUSINESS INTO BECOMING A GLOBALLY INTEGRATED PUBLISHING AND DEVELOPMENT COMPANY
TO INCREASE SIGNIFICANTLY THE PORTION OF DIGITAL REVENUES
IN THE LAST 5 YEARS THE STRATEGIC CHALLENGES WE FACED:
5
EVOLUTION OF THE VIDEOGAME MARKETFROM TRADITIONAL RETAIL DISTRIBUTION TO DIGITAL, MOBILE & MULTICHANNEL
Game as a service is a community game that retains gamers through the continuous delivery of additional contents
Gamers now access content across the web through all available digital channels including consoles, smartphones and tablets
MULTICHANNEL
With the explosion in mobile devices everyone is now a gamer, the size of the market opportunity in Social and Mobile gaming has increased exponentially
MOBILE & SOCIALGAAS(GAME AS A SERVICE)
7
EVOLUTION OF OUR CURRENT AND FUTURE FREE TO PLAY GAMES
2016 2017 2018
FREE TO PLAYGAMES’ LIFE ISSIGNIFICANTLYLONGER THANPREMIUM GAMES
8
60%
GLOBALIZATION & DIGITALIZATION
REVENUES TRENDITALY VS INTERNATIONAL
REVENUES TRENDRETAIL VS DIGITAL/MOBILE
ITALY RETAIL
INTERNATIONAL DIGITAL/MOBILE
16%2%
33%14%
62% 72%
40%49% 49%
80% 82%
84%98%
67%86%
38% 28%51% 51%
20% 18%
FISCAL YEAR ENDING 30TH JUNE
78%
22%
9
CONSOLIDATED FY 2017 REVENUESACTUAL + FORECAST BY OPERATING SEGMENT
20,5 %ITALIAN DISTRIBUTION
1,2 %OTHER ACTIVITIES
10,6 %FREE TO PLAY
62,2 %PREMIUM GAMES
5,5 %STUDIO
FISCAL YEAR ENDING 30TH JUNE
10
CONSOLIDATED FY 2017 REVENUESACTUAL + FORECAST BY COUNTRY
21,7 %ITALY
5,3 %GERMANY
4.4 %IBERIA
2,1 %ASIA & PACIFIC
5,8 %FRANCE
41,2 %NORTH AMERICA
19,5 %UK
FISCAL YEAR ENDING 30TH JUNE
12
PLANNED INVESTMENTS
OUR SUCCESSFUL PRODUCTS GENERATED CASH
TO INVEST FOR GROWTHWE ENTERED INTO THE LARGEST INVESTMENT PLAN THROUGH STRATEGIC ACQUISITIONS ANDBRAND NEW PUBLISHING DEALS
13
PREMIUM DIGITAL & RETAIL
SIGNIFICANT RELEASES FOR PREMIUM AND FREE TO PLAY
13
2017 2018
FREE TO PLAY CONSOLE AND MOBILE
ASSETTO CORSA
PROMINENCE POKER
ABZÛ
OVERKILL’S THE WALKING DEAD
BATTLE ISLANDS COMMANDERS
HAWKEN
HOW TO SURVIVE 2
PORTAL KNIGHTS
BLOODSTAINEDRAIDNEW NEW
1414
ASSETTO CORSA“Assetto Corsa is a shining masterpiece of virtual motorsport, a new standard for the future of driving simulators and an all-Italian pride” 95/100 IGN Italia
#1 PC RACING ON STEAM PLATFORM – OVER 500,000 DOWNLOADS
CRITICALLY ACCLAIMED FULLY-LICENSED NEXT GENERATION RACING SIMULATOR
100 FULLY LICENSED RACING CARS FROM THE WORLD’S TOP CAR MANUFACTURERS INCLUDING: FERRARI, LAMBORGHINI, MCLAREN AND PORSCHE
Released on August 2016 on PS4 and XBOX ONE
15
HAWKEN
LARGE AND DEVOTED PC COMMUNITY BUILT UP OVER 3+ YEARS
AVAILABLE ON PS4 AND XBOX ONE
OVER 3 MILLION DOWNLOAD ON STEAM PLATFORM
#1 FREE-TO-PLAY MECH SHOOTER ON PC STEAM
Released on July 2016 on PS4 and XBOX ONE
1515
16
PORTAL KNIGHTS
INTERNALLY DEVELOPED CONCEPT AND FULLY-OWNED IP
TERRARIA MEETS MINECRAFT MEETS LEGEND OF ZELDA
#1 SELLING GAME ON STEAM AT LAUNCH OF EARLY ACCESS END OF FEBRUARY 2016
85% POSITIVE USER REVIEWS
Release date:. Fall 2016 on PC and mobile . Spring 2017 on consoles
17
RAID: WORLD WAR II
EXCLUSIVE WORLDWIDE CONSOLE RETAIL DISTRIBUTION AGREEMENT WITH AN INVESTMENT WHICH INCLUDES THE PAYMENT OF A MINIMUN GUARANTEE ROYALTIES OF 4 USD MILLION
ACTION-PACKED FOUR PLAYER CO-OP SHOOTER GAME THAT LETS PLAYERS TEAM UP AS THE RAID CREW AND VENTURE THROUGH THE EPIC EVENTS OF WORLD WAR II
DEVELOPED BY LION GAME LION AND PUBLISHED BY STARBREEZE AB
17
Release date on Summer 2017 for PS4 and XBOX ONE
18
OVERKILL’S THE WALKING DEAD
ALL-NEW WALKING DEAD STORYLINES WRITTEN BYORIGINAL AUTHOR ROBERT KIRKMAN
SMASH HIT COMIC SERIES AND TV SHOW (14.4M AVERAGE US VIEWERSHIP SEASON 5)
NARRATIVE-DRIVEN CO-OPERATIVE 1ST PERSON SHOOTER
DEVELOPED BY STARBREEZE OVERKILL (PAYDAY2) IN AN ALL-NEW CUSTOM BUILT GAME ENGINE
EXCLUSIVE WORLDWIDE PUBLISHING RIGHTS TO FULLY LICENSED CONSOLE GAME WITH OVERALL INVESTMENT OF USD 20 MILLION
Release date FY 2018 on PS4 and XBOX ONE
19
BLOODSTAINED
THE SECOND LARGEST VIDEOGAME CROWDFUNDING KICKSTARTER CAMPAIGN IN 2015 WHICH HAS RAISED 5.5 USD MILLIONS TO DATE FROM 65K BACKERS
THE SPIRITUAL SUCCESSOR OF THE BELOVED CASTLEVANIA SERIES WHICH HAS BEEN A TOP SELLER GAME IN THE LAST TWO DECADES
EXCLUSIVE WORLDWIDE PUBLISHING RIGHTS ACROSS MULTIPLE FORMATS WITH A TOTAL INVESTMENT OF 4,4 USD MILLIONS
THE LATEST CREATION OF KOJI IGARASHI, THE FORMER SERIES PRODUCER OF CASTELVANIA FRANCHISE
19
Release date on the first half of 2018 on PS4, XBOX ONE, PSVita, Wii U, PC Windows, Linux and OSX
20
PAYDAY RIGHTS SOLD BACK TO STARBREEZE
AS A DEFERRED CONSIDERATION DIGITAL BROS WILL BENEFIT FROM A 33% REVENUE SHARE ON FUTURE PAYDAY3 UP TO 40 MILLION USD
SOLD BACK FOR SEK 249.3 MILLION (APPROX. USD 30 MILLION) PAID IN 10.9 MILLION NEWLY ISSUED STARBREEZE B-SHARES
IMPACT OF THIS AGREEMENT ON THE FISCAL YEAR ENDING30 OF JUNE 2016 HAS BEEN:- REVENUES: €26.8 MILLION- EBT: €19.7 MILLION- NET FINANCIAL POSITION: €22.9 MILLION
THE GROUP WILL CONTINUE TO HOLD PUBLISHING RIGHTS FOR THE CONSOLE VERSIONS OF PAYDAY 2: CRIMEWAVE EDITION
22
CONSOLIDATED P&L – FY2017 Q1 ACTUAL
THE GROWTH IN REVENUES IS DUE TO THE SIGNIFICANT INCREASE IN PREMIUM GAMES AND FREE TO PLAY SEGMENTS SALES, DRIVEN BY THE POSITIVE RESULTS OF THE LAUNCH OF NEW PRODUCTS IN THE QUARTER.
35,811
33,417
4,642
3,405
11,034
7,874
26,247
25,339
2,754
1,864
2,546
1,569
9,564
8,078
1,888
1,541
8,488
6,305
36.4%
31.9%
68.5%
82.6%
n.m.
n.m.
Q1 FY 2017 Q1 FY 2016 CHANGE CHANGE%
GROSS REVENUES
NET REVENUES
EBITDA
EBIT
EBT
NET PROFIT
€/1000
SOURCE: DIGITAL BROSFISCAL YEAR ENDING 30TH JUNE
23
PREMIUM GAMES – FY2017 Q1 ACTUAL
25,711
23,904
5,461
5,226
15,400
15,260
3,927
3,635
10,310
8,644
1,535
1,591
66.9%
56.6%
39.1%
43.8%
Q1 FY 2017 Q1 FY 2016 CHANGE CHANGE%
GROSS REVENUES
NET REVENUES
EBITDA
EBIT
€/1000
FISCAL YEAR ENDING 30TH JUNE SOURCE: DIGITAL BROS
SIGNIFICANT BOOST TO THE REVENUES OF PREMIUM GAMES THANKS TO THE NEW PRODUCTS LAUNCHED DURING THE QUARTER, SUCH AS ASSETTO CORSA, ABZU AND ALSO ROCKET LEAGUE WHICH WAS RELEASED DURING THE LAST QUARTER OF PREVIOUS FISCAL YEAR.
A LARGE CONTRIBUTION ALSO CAME FROM PRODUCTS LAUNCHED DURING THE PAST YEARS, SUCH AS PAYDAY2 AND TERRARIA, WHICH, EVEN THOUGH IT WAS LAUNCHED THREE YEARS AGO, CONTINUES IN ITS GOOD TREND OF SALES.
24
ITALIAN DISTRIBUTION – FY2017 Q1 ACTUAL
SOURCE: DIGITAL BROS
6,883
6,304
1,399
1,348
9,493
8,755
1,194
1,146
(2,610)
(2,451)
205
202
-27.5%
-28.0%
17.2%
17.6%
Q1 FY 17 Q1 FY 16 CHANGE CHANGE%
GROSS REVENUES
NET REVENUES
EBITDA
EBIT
€/1000
FISCAL YEAR ENDING 30TH JUNE
ITALIAN DISTRIBUTION REVENUES FOLLOWED THE DECLINE OF THE DISTRIBUTION OF VIDEO GAMES, PARTIALLY OFFSET BY AN INCREASE OF YU-GI -OH! TRADING CARDS REVENUES.
LAST YEAR FIRST QUARTER ITALIAN DISTRIBUTION REVENUES BENEFITED FROM THE SIMULTANEOUS LAUNCH OF PES 2016 AND METAL GEAR SOLID, NOT REPLICATED IN THE PERIOD JUST ENDED.
25
FREE TO PLAY – FY2017 Q1 ACTUAL
FREE TO PLAY REVENUES TRIPLED DUE TO THE LAUNCH OF NEW PRODUCTS THAT HAVE BEEN PUSHED FROM THE PREVIOUS FISCAL YEAR, HAWKEN AND PROMINENCE POKER.
THE LARGEST PORTION OF REVENUES CAME FROM GEMS OF WAR, ALSO AVAILABLE IN CONSOLE VERSIONS AND OUT IN THE MARKET SINCE 2014.
SOURCE: DIGITAL BROS
2,180
2,180
30
(629)
622
622
(595)
(934)
1,557
1,557
625
305
n.m.
n.m.
n.m.
-32.6%
Q1 FY17 Q1 FY16 CHANGE CHANGE%
GROSS REVENUES
NET REVENUES
EBITDA
EBIT
€/1000
FISCAL YEAR ENDING 30TH JUNE
26
FINANCIAL NET DEBT OVER THE LAST YEARS
10,00
0,00
(10,00)
20,00
30,00
40,00
50,00
60,00
70,00 35,00
5,00
10,00
15,00
20,00
25,00
30,00
Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17
SIGNIFICANT REDUCTION OF NET FINANCIAL DEBTS DUE TO THE DEAL WITH STARBREEZE
CASH
FLO
W IN
VEST
MENT
S
NET F
INAN
CIAL
DEB
TS
27
OUTLOOK
The investment plan that the Group embarked upon over the last twenty-four months and which has led to the simultaneous development of numerous new products has started to generate revenues as from the first quarter of the financial year.
The Daily Fantasy Sport, Fantasfida, will continue to generate negative margins in the coming year, but decidedly lower than those recognised last year.
The outlook is for a positive year that will not, however, replicate the operating margin achieved in the year just ended, due to the impact of the sale of PAYDAY2 rights. Expectations are high in relation to the Free to Play operating segment for which the outlook is for significant revenue growth and a positive year in terms of operating margins.
The net financial position, which became a net cash position as a result of the sale of PAYDAY2 rights, is expected to remain stable during the course of the year, partially due to the impact of investment in new products, specifically, Overkill’s The Walking Dead and Bloodstained, which will be released in FY 2018.
28
WHY DIGITAL BROS?
A GROWTH INVESTMENT CASE WITH VISIBILITY ON NEXT FUTURE PERIODS
A FLEXIBLE ORGANIZATION OPERATING IN A DYNAMIC MARKET IN CONTINUOUS EXPANSION (ALSO GEOGRAPHICAL)
ACQUISITION STRATEGY BASED ON AAA AND AA TITLES (OVERKILL’S THE WALKING DEAD & BLOODSTAINED) AND OPPORTUNISTIC DISTRIBUTION AGREEMENTS (RAID & ROCKET LEAGUE)
FOCUS IN BUILDING FULLY OWNED IP EITHER IN PREMIUM (PORTAL KNIGHTS), F2P (BATTLE ISLAND & PROMINENCE POKER) AND COMMUNITY ENTERTAINMENT (FANTASFIDA)
INTERNATIONAL SALES AND MARKETING INFRASTRUCTURE IN PLACE
CASH FLOW CREATION
DIVIDEND PAYOUT
30
OUR MILESTONES
1989FOUNDATION
2007RETAIL
PUBLISHING
2013MOBILE
PUBLISHING
2000MILANSTOCK
EXCHANGE
2012DIGITAL
PUBLISHING
2015MOBILE AND
CONSOLEDEVELOPER
30
31
INTERNATIONAL PRESENCE239* PEOPLE WORLDWIDE
31
OREGON
CALIFORNIA
FRANCE
SPAIN
UK
ITALY
CHINA
GERMANY
110.1 MREVENUES
2016
*30TH SEPTEMBER
32
MARKET SIZETHE WORLDWIDE GAMES MARKET WILL REACH $118.6 BILLION BY 2019
SOURCE: NEWZOO GLOBAL GAMES MARKET REPORT Q2 2016
2015 2016 2017 2018 2019
28%
6%
30%
9%
24%
3%
27%
5%
29%
10%
27%
2%
26%
5%
28%
10%
30%
1%
26%
4%
27%
11%
32%
1%
25%
4%
26%
11%
34%
1%
$91.8Bn$99.6Bn
$106.5Bn $112.5Bn $118.6Bn
$30.4Bn
MOBILE $36.9Bn
MOBILE $42.5Bn
MOBILE $47.4Bn
MOBILE $52.5Bn
MOBILE
SMARTPHONE TABLET HANDHELD TV/CONSOLE CASUAL WEBGAMES PC/MMO
33
CONSOLE DEVELOPER ACQUISITIONPIPEWORKS INC.
PIPEWORKS INC., A BACKBONE DIVISION FOR YEARS, WAS FOUNDED AS A STAND ALONE COMPANY ON 1 AUGUST 2014
50 EMPLOYEES, RELEASED PRODUCTS AS DEVIL MAY CRY, GODZILLA AND ZUMBA FITNESS
CONSOLE DEVELOPER ACQUISITON (100%) ON SEPTEMBER 12, 2014
COMPOSED BY A LARGE TEAM OF ENGINEERS, DESIGNERS, GRAPHICS ARTISTS SPECIALIZED IN THE PRODUCTION OF HIGH QUALITY VIDEO GAMES FOR CONSOLE
STRONG TECHNOLOGICAL CAPABILITIES, GREATER OPERATIONAL FLEXIBILITY, IMPROVEMENT IN QUALITY AND TIMING ON INDIVIDUAL PROJECTS
ACQUISITION VALUE – USD 1.3 MILLION
34
MOBILE DEVELOPER ACQUISITIONDR STUDIOS LTD.
30 EMPLOYEES
DEVELOPER OF BATTLE ISLANDS
MOBILE DEVELOPER ACQUISITON (100%) ON SEPTEMBER 12, 2014
CREATIVE, FLEXIBLE AND YOUNG DEVELOPMENT TEAM
ACQUISITION VALUE – EURO 1.5 MILLION
35
CONSOLE DEVELOPER ACQUISITIONOVOSONICO S.R.L.
25 EMPLOYEES
FOUNDED IN 2012
BASED IN VARESE, ITALY
CREATOR OF MURASAKI BABY – AN UTTERLY ORIGINAL AND DEEPLY EMOTIONAL ADVENTURE
STEP UP ACQUISITION OF 49% OF THE CONSOLE DEVELOPER FOR EUR 720 THOUSAND
36
NET WORKING CAPITAL REQUIREMENTSNET WORKING CAPITAL REQUIREMENTS
RETAIL
MOBILE
DIGITAL
Overkill’s The Walking Dead• Long development time (24 - 36 months)• Manufacturing paid in advance• Inventories
Gems of War• Limited development process (2-9 months)• Development after money collection
Portal Knights• Medium development time (6-18 months)• No advance manufacturing neither inventories needed
37
CASH FLOW CYCLES PER TYPE OF GAME
-80
-60
-40
-20
0
20
40
RETAIL
Q1
DIGITAL
MOBILE
Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q11 Q12Q10
-3,75 -7,5 -11,25 -15 -18,75 -22,25 -26,25 -67 -22 23 2323
0 -12,5 -25 -37,5 -22 -2 23 3312
0 -1 0 5,5 27,5 36,513
37
38
FANTASFIDA
FIRST DAILY FANTASY SPORT GAME IN ITALY
SPORT MANAGEMENT SKILL GAME SEVEN DAYS A WEEK
REGISTERED USERS CHOOSE THE LEAGUE AND THE DAILY TOURNAMENT THEY WANT TO PLAY
USERS HAVE TO PICK 7 PLAYERS, RESPECTING THE GIVEN SALARY CAP TO CREATE A TEAM
EACH PLAYER OF EACH TEAM EARNS POINTS BASED ON HOW THEY PERFORM DURING THE REAL DAILY MATCHES. THE USERS THAT RACKS UP MORE THAN THEIR RIVALS, INSTANTLY TAKE HOME THE WINNINGS
WHAT IS FANTASFIDA?
3838
39
TERRARIA GOES TO CHINA
DIGITAL BROS WILL RECEIVE A 50% ROYALTY ON NET SALES
LICENSED TO IDREAMSKY GAMES THE EXCLUSIVE RIGHTS FOR TERRARIA FOR THE CHINESE MARKET
IDREAMSKY GAMES IS THE LARGEST INDEPENDENT MOBILE GAME PUBLISHING PLATFORM IN CHINA* LISTED ON NASDAQ (DSKY) - 253 USD MILLION CONSOLIDATED GROSS REVENUES AS AT DEC. 31ST, 2015*
HEADQUARTERED IN SHENZHEN
MARKET CAPITALISATION OF c$600 MILLION
1.3 BILLION REGISTERED USERS*
*source: iDreamSky