PRESENTATION MAY 2020
COVID-19 UPDATE
The world is currently undergoing a harrowing and unprecedented event: the COVID-19 pandemic. The health and well-being of our employees is our greatest priority.
The precautionary measures adopted by governments around the world, to contain the spread of the contagion, locked people in their houses and caused the shutdown of numerous retail stores and chains. The free time from work and school during these times significantly impacted the demand for home entertainment and increased the revenue stream coming from digital distribution improving the operating margins of the Group.
Digital Bros have monitored the evolution of the pandemic emergency since the beginning and has responded to the changing needs of its people in real time. We have been acting and will continue to act in the best interests of the community, following government authorities' guidelines. We have asked to most of our employees to work from home to limit the spread of the Covid-19 and we have implemented all prevention and protection measures to guarantee safety of our organization and continuity of the business.
OUR MILESTONES
1989 | 2000 | 2007 | 2013 | 2015 | 2017 | 2020 |
FOUNDATION | LISTING | RETAIL | MOBILE | MOBILE AND CONSOLE | LAUNCH OF | |
PUBLISHING | PUBLISHING | DEVELOPERS ACQUISITION | BRAND NEW IP |
M O B I L E
3
WEDEVELOP,PUBLISHANDMARKET MULTICHANNEL VIDEOGAMES
STUDIOS PUBLISHING DISTRIBUTION
DR Studios | IP scouting and selection | Retail Distribution | |
Kunos Simulazioni | Production Survey | (Chains and Stores - | |
Global Distribution | |||
Avantgarden | Marketing & PR | ||
Network) | |||
Sales and Promotions | |||
Avantgarden | |||
Customer Support | |||
6
MARKET STRUCTURE
DEVELOPERS | PUBLISHERS | CONSOLE | DISTRIBUTORS | RETAILERS | END |
MANUFACTURERS | CONSUMERS | ||||
RETAIL
DEVELOPERS | PUBLISHERS | CONSOLE | END |
MARKETPLACES | CONSUMERS | ||
DIGITAL
MAY 2020 | 5 |
DIGITAL CHANNELS DRIVING GROWTH AND MARGINS
FROM TRADITIONAL RETAIL DISTRIBUTION TODIGITAL, MOBILE &STREAMING
GAAS (GAME AS A SERVICE)
GAME AS A SERVICE IS A COMMUNITY GAME THAT RETAINS GAMERS THROUGH THE CONTINUOUS DELIVERY OF ADDITIONAL CONTENTS
MULTICHANNEL | MOBILE & SOCIAL |
GAMERS NOW ACCESS | WITH THE EXPLOSION IN |
CONTENT ACROSS THE WEB | MOBILE DEVICES |
THROUGH ALL AVAILABLE | EVERYONE IS NOW A |
DIGITAL CHANNELS | GAMER, THE SIZE OF THE |
INCLUDING CONSOLES, | MARKET OPPORTUNITY IN |
SMARTPHONES, TABLETS | SOCIAL AND MOBILE |
AND STREAMING | GAMING HAS INCREASED |
EXPONENTIALLY |
MAY 2020 | 6 |
MARKET SIZE
THE WORLDWIDE GAMES MARKET WILL REACH $200.8 BILLION BY 2023
+8.3%
$200,80 Bn
$187,80 Bn
$174,20 Bn
$159,30 Bn
$145,70 Bn
TOTAL MARKETCAGR
2019-2023
2019 2020 2021 2022 2023
SOURCE: NEWZOO MAY 2020
MAY 2020 | 7 |
PRODUCTS
PREMIUMAND FREETOPLAY
PREMIUMGAMES
- Internal development/acquisition of contents rights from developers (IP ownership,long term agreements)
- Distribution of the videogames through traditional international sales network and digital marketplaces (Steam, Sony Playstation Network, Microsoft Xbox Live and Epic Games Store)
FREETOPLAY
- Internal development and publishing of videogames available for free on the main digital marketplaces (console, mobile and social platforms);
- In App purchases are the main revenue stream
- Continuous development and improvements after the launch to maintain stickiness
8
CHANNELS
DIGITALANDRETAIL
REVENUES TREND RETAIL VS DIGITAL | ||||||||||||||||
DIGITAL | RETAIL | |||||||||||||||
DISTRIBUTION | DISTRIBUTION | |||||||||||||||
Online Marketplaces: | Main Chains & Stores | |||||||||||||||
Steam | E-commerce | |||||||||||||||
Playstation Network | ||||||||||||||||
XboxLive | ||||||||||||||||
Epic GamesStore | 69% | |||||||||||||||
72% | ||||||||||||||||
60% | ||||||||||||||||
Game App Download: | 49% | |||||||||||||||
40% | 42% | 47% | ||||||||||||||
Mobile And Tablet | ||||||||||||||||
14% | ||||||||||||||||
Stores | 2% | |||||||||||||||
FY | FY | FY | FY | FY | FY | FY | FY | FY | ||||||||
Online Social | 11/12 | 12/13 | 13/14 | 14/15 | 15/16 | 16/17 | 17/18 | 18/19 | 19/20* | |||||||
Platforms: | ||||||||||||||||
Digital | Retail | |||||||||||||||
Main Social Networks
* Q4 FY19/20 - Digital Revenue expected to be 81% of total revenue (fiscal year closes on June 30)
MAY 2020 | 9 |
CONSOLIDATED P&L - Q3 FY19/20 YTD
Euro million | 31.03.20 | 31.03.19 | Change | Change % |
Gross revenue | 99.1 | 42.6 | 56.5 | 132.7% |
Gross operating margin (EBITDA) | 20.6 | (1.6) | 22.2 | n.m. |
Operating margin (EBIT) | 10.2 | (7.6) | 17.8 | n.m. |
Profit/(loss) before tax | 9.9 | (7.5) | 17.4 | n.m. |
Net profit/(loss) | 6.4 | (5.9) | 12.3 | n.m. |
Recurring profit | 7.8 | (5.9) | 13.7 | n.m. |
FISICAL YEAR ENDING 30TH JUNE | SOURCE: DIGITAL BROS |
SIGNIFICANT REVENUE GROWTH INTHEFIRSTNINE MONTHSAND IMPROVEMENT OF ALLFINANCIAL MARGINS FUELED BY NEWVIDEOGAMERELEASES:BLOODSTAINED (Q4 FY18/19),CONTROL (Q1FY19/20),INDIVISIBLE (Q2FY19/20),JOURNEYTOTHE SAVAGEPLANET(Q3FY19/20)
COVID-19PANDEMICINCREASEDREVENUESFROMDIGITALDISTRIBUTIONIMPROVINGTHEOPERATINGMARGINS
MAY 2020 - FINANCIALS | 11 |
GLOBALIZATION
100% | ||||||||||
90% | 16% | |||||||||
33% | ||||||||||
REVENUES TREND | ||||||||||
ITALY VS INTERNATIONAL | 80% | |||||||||
70% | ||||||||||
62% | ||||||||||
60% | 79% | |||||||||
80% | ||||||||||
Italy | ||||||||||
50% | 82% | 82% | 93% | |||||||
International | 40% | 84% | 86% | |||||||
30% | 67% | |||||||||
20% | 38% | |||||||||
10% | 20% | 18% | 21% | |||||||
14% | 18% | |||||||||
0% | 7% | |||||||||
07/08 | 09/10 | 13/14 | 14/15 | 15/16 | 16/17 | 17/18 | 18/19 | 19/20 | ||
ACT | ACT | ACT | ACT | ACT | ACT | ACT | ACT | ACT + FORE |
MAY 2020 - FINANCIALS | 12 |
REVENUEBREAKDOWN BY SEGMENT
CONSOLIDATED FY 18/19 | CONSOLIDATED Q3 YTD ACTUAL |
+ FY19/20 FORECAST | |
Premium Games | Premium Games |
71.2% | 88,8% |
ItalianDistribution | ItalianDistribution |
20.3% | 6,5% |
Free to Play | Free to Play |
7.6% | 5,2% |
Other Projects | Other Projects |
0.9% | 0.5% |
MAY 2020 - FINANCIALS | 13 |
PREMIUM GAMES - Q3 FY19/20 YTD
Euro million | 31.12.19 | 31.12.18 | Change | Change % |
Gross revenue | 86.8 | 25.7 | 61.0 | n.m. |
Net revenue | 81.3 | 24.3 | 57.0 | n.m. |
Gross operating margin (EBITDA) | 24.8 | 1.6 | 23.2 | n.m. |
Operating margin (EBIT) | 16.6 | (2.1) | 18.7 | n.m. |
FISICAL YEAR ENDING 30TH JUNE | SOURCE: DIGITAL BROS |
PREMIUM GAMES ACCOUNTED FOR 87% OF TOTAL REVENUES
MAY 2020 - FINANCIALS | 14 |
REVENUE BY BRAND - Q3 FY19/20 YTD
Euro million | 31.03.20 | % on total |
Control | 30.0 | 34.6% |
Journey to the Savage Planet | 10.9 | 12.6% |
Bloodstained | 9.9 | 11.4% |
Terraria | 9.7 | 11.2% |
Assetto Corsa | 6.1 | 7.0% |
Indivisible | 4.0 | 4.7% |
PAYDAY 2 | 3.1 | 3.6% |
Other Products | 7.0 | 8.1% |
Retail Products | 5.9 | 6.8% |
Premium Games | 86.8 | 100.0% |
FISICAL YEAR ENDING 30TH JUNE | SOURCE: DIGITAL BROS |
MAY 2020 - FINANCIALS | 15 |
FREE TO PLAY - Q3 FY19/20 YTD
Euro million | 31.03.20 | 31.03.19 | Change | Change % |
Gross revenue | 5.1 | 4.8 | 0.4 | 7.6% |
Net revenue | 5.1 | 4.8 | 0.4 | 7.6% |
Gross operating margin (EBITDA) | 1.2 | 1.4 | (0.2) | -14.2% |
Operating margin (EBIT) | (0.08) | (0.3) | 231 | 73.8% |
FISICAL YEAR ENDING 30TH JUNE | SOURCE: DIGITAL BROS |
REVENUESGROWTH BY 7.6% THANKS TO THE POSITVE PERFORMANCE OF GEMS OF WAR
FOUR NEW VIDEOGAME RELEASES IN NEXT FISCAL YEAR
MAY 2020 - FINANCIALS | 16 |
NET FINANCIAL POSITION OVER THE LAST YEARS
* | ||
(70,00) | 70 | |
(60,00) | 60 | |
(50,00) | 50 | |
FINANCIALNET POSITION | (40,00) | 40 |
(30,00) | 30 | |
(20,00) | 20 | |
(10,00) | 10 |
- | 0 |
10,00 | -10 | |||||||||
20,00 | -20 | |||||||||
FY12 | FY13 | FY14 | FY15 | FY16 | FY17 | FY18 | FY19 | H1 Q3 Outlook |
* ADVANCES PAID FOR IPs AND LICENSES + TANGIBLE AND INTAGIBLE ASSETS
INVESTMENTS °
MAY 2020 - FINANCIALS | 17 |
STARBREEZE AB INVESTMENT
SUCCESSFUL PROTECTION OF INTEREST IN PAYDAY
- Starbreeze AB (SB) is a Swedish videogame developer and publisher owner of the famous PAYDAY IP that successfully exited a reconstruction period on 6th December 2019.
- Digital Bros is a major stakeholder of Starbreeze (shareholding in the Company, earn out of USD 40m on PAYDAY 3, PAYDAY 2 console publishing rights and US USD 4.8m credit on the advance payments).
-
To protect its stake in SB, especially its interest in the PAYDAY IP,
Digital Bros has several steps leading to the Group holding 10.05% of Starbreeze AB's share capital and 24.44% of the voting rights; - The transactions included the acquisition of all Starbreeze assets held by Smilegate Holdings for €19.2 m. The overall assets nominal value is €35.3 m (including a convertible bond of €19.7m, credit of approx. €14.8m, as well as shares)
,
MAY 2020 - FINANCIALS
18
OUTLOOK
- REVENUES GROWTH AT THE END OF THE FISCAL YEAR
- EXPECTED IMPROVEMENT OF FINANCIAL MARGINS RESULTING FROM INCREASED DIGITAL SALES
- LAUNCH OF ASSETTO CORSA COMPETIZIONE CONSOLE VERSIONS AND NINTENDO SWITCH VERSIONS OF INDIVISIBLE AND JOURNEY TO THE SAVAGE PLANET IN Q4
-
DEATH STRANDING PC LAUNCH Q1 FISCAL YEAR 2020/21 - JULY 14, 2020 (LIFETIME REVENUE
FORECASTED IN EXCESS OF €50 MILLION) - POSITIVE NET FINANCIAL POSITION AT THE END OF THE FISCAL YEAR (GROSS OF THE IFRS 16 EFFECT)
MAY 2020 - FINANCIALS
19
2IPPORTFOLIO
WHAT HAPPENED IN RECENT YEARS
Our successful products generated cash
To invest for growth
We entered into the largest investment plan through strategic acquisitions and brand- new publishing deals
MAY 2020 - IP PORTFOLIO | 21 |
IP PORTFOLIO
MAY 2020
LONG TERM | THIRD |
AGREEMENTS | PARTY PARTNERSHIPS |
OWNEDIP
22
LARGE QUALITY IP PORTFOLIO
Metacritic's #1 Publisher of the Year
Scored | Distinct | Average | Metascore | Points | |||
Products | Titles | Metascore | Distribution | ||||
5 | 8 | 80.0 | 306.7 | ||||
17 | 8 | 79.9 | 301.4 | ||||
24 | 24 | 80 | 299.2 | ||||
10 | 7 | 77.8 | 296.8 | ||||
24 | 13 | 79.1 | 291.1 | ||||
BAFTA Nominations
11 out of 11 nomination
11 out of 11 nomination
23
SIGNIFICANT RELEASES BY FISCAL YEAR
PREMIUM AND FREE TO PLAY
PREMIUM DIGITAL &RETAIL
FY18/19 | FY19/20 | * Console | FY20/21 | |
Puzzle
TBA 1
TBA 2
TBA 3
Quest I1I
FREE TOPLAY CONSOLE AND MOBILE
MAY 2020 - IP PORTFOLIO | 24 |
CONTROL
-
CINEMATIC THIRD PERSON ACTION GAME BUILT ON REMEDY'S PROPRIETARY NORTHLIGHT®
TECHNOLOGY - DEVELOPED BY REMEDY ENTERTAINMENT, DEVELOPER OF AAA VIDEO GAMES (MAX PAYNE, ALAN WAKE AND QUANTUM BREAK)
- WORLDWIDE PUBLISHING RIGHTS ON PC, PS4 AND XBOX ONE
- PUBLISHING PARTNERSHIP WITH EPIC GAMES
- DLCs LAUNCH PROGRAM (First DLC released on March 26th, 2020)
- HIGH METACRITIC SCORE (AVG. 83)
- EURO 39.5 MILLION LTD REVENUES
WORLDWIDE LAUNCH ON 27TH AUGUST 2019
STEAM LAUNCH IN AUGUST 2020
MAY 2020 - IP PORTFOLIO | 25 |
BLOODSTAINED
- LATEST CREATION OF KOJI IGARASHI, THE FORMER SERIES PRODUCER OF THE CASTELVANIA FRANCHISE
- THE GAME IS AVAILABLE FOR PS4, XBOX ONE, PC WINDOWS, LINUX AND OSX
- HIGH METACRITIC SCORE (AVG. ABOVE 83)
- EURO 23.8 MILLION LTD REVENUES
- EXPECTED LIFETIME REVENUES OF AT LEAST EURO 30 MILLION
- SECOND VERSION ALREADY UNDER DISCUSSION
RELEASED ON JUNE 2019
MAY 2020 - IP PORTFOLIO | 26 |
JOURNEY TO THE SAVAGE PLANET
- FIRST-PERSONADVENTURE GAME SET IN A BRIGHT AND COLORFUL ALIEN WORLD
- DEBUT TITLE FROM INDUSTRY VETERANS ALEX HUTCHINSON, YASSINE RIAHI AND REID SCHNEIDER'S NEW MONTREAL-BASED DEVELOPMENT STUDIO, TYPHOON STUDIOS (ACQUIRED BY GOOGLE DEC 2019)
- WORLDWIDE PUBLISHING RIGHTS ON PC, PS4 & XBOX ONE AND NINTENDO SWITCH
- PUBLISHING PARTNERSHIP WITH EPIC GAMES
- HIGH METACRIT SCORE (AVG. ABOVE 75)
- EURO 10.9 MILLION LTD REVENUES
RELEASED ON JANUARY 28, 2020
MAY 2020 - IP PORTFOLIO | 27 |
ASSETTO CORSA
- ASSETTO CORSA IS THE #1 RACING SIMULATOR - 6.9 MILLION COPIES SOLD AND MORE THAN EURO 42.2 MILLION REVENUES
- NEW EPISODE ASSETTO CORSA COMPETIZIONE: OFFICIAL GAME OF THE BLANCPAIN GT SERIES (3 YEARS PARTNERSHIP)
- FULLY LICENSED GT CARS FROM TOP MANUFACTURERS: FERRARI, LAMBORGHINI, MCLAREN UNIQUE SELLING POINTS OF THE GAME:
- Extraordinary level of simulation quality
- Outstanding level of details with circuit laser scan technology
- New unreal engine 4
- MOBILE VERSION UNDER DEVELOPMENT
CONSOLE VERSIONS RELEASE
JUNE 2020
MAY 2020 - IP PORTFOLIO | 28 |
DEATH STRANDING
- GROUNDBREAKING EXPERIENCE FROM LEGENDARY GAME CREATOR HIDEO KOJIMA
- CONSOLE VERSION PUBLISHED BY SONY INTERACTIVE ENTERTAINMENT
- Released on November 8,2019
- High Metacritic Score: avg. 83
- WORLDWIDE PUBLISHING RIGHTS ON PC FOR DIGITAL BROS
- EXPECTED LIFETIME REVENUE FROM THE PC VERSION OF THE VIDEOGAME IN EXCESS OF EURO 50 MILLION
RELEASE
ON JULY 14, 2020
MAY 2020 - IP PORTFOLIO | 29 |
HAWKEN
- MECH GENRE: COLLECT, BUILD AND CUSTOMIZE YOUR MECH
- STRONG F2P SYSTEM WITH PVE ELEMENTS
- LARGE POPULATION OF GAMERS
- THE ACTUAL PRODUCTION IS NOT JUST A SEQUEL:
- New game design
- Objective-basedPVE to maximize revenues without being 'pay-to-win' & to create sustainable long-term product growth
- Enhanced mech customization system for deeper monetization streams
- Mech differentiation to enhanceKPIs
RELEASE INQ2 FY2020/2021
MAY 2020 - IP PORTFOLIO | 30 |
DIGITAL BROS - A SNAPSHOT
- GLOBAL COMPANY, OPERATING ACROSS THE VIDEOGAME MARKET
- DEVEOLPMENT, PUBLISHING AND MARKETING MULTICHANNEL VIDEOGAMES
- COMBINING PREMIUM GAMES AND FREE TO PLAY TO MAXIMIZE THE BRAND PROFITABILITY
- ACQUISITION OF UNDERPERFORMING INTELLECTUAL PROPERTIES (I.E. ASSETTO CORSA) TO BE EXPLOITED AND TO MANAGE RISK ACROSS MULTIPLE PLATFORMS
- FLEXIBLE APPROACH ON CONTENT ACQUISITION: IP ACQUISITION, LONG-TERMCO-PUBLISHING, LICENSING IN THE FAR EAST, CROWDFUNDING
- STRONG LAUNCH PLAN OF NEW VIDEOGAMES: ASSETTO CORSA COMPETIZIONE, BLOODSTAINED, CONTROL, INDIVISIBLE, JOURNEY TO THE SAVAGE PLANEY
- HISTORY OF STRONG FREE CASHFLOW GENERATION THROUGHT THE CYCLE
MAY 2020 - IP PORTFOLIO | 31 |
- APPENDIX
29
WORLDWIDEPRESENCE
HEADQUARTERS: MILAN
216 PEOLE WORLDWIDE
MAY 2020 - APPENDIX | 33 |
CLOUD & STREAMING: THE FUTURE OF GAMING
CLOUD GAMING | |||||
Videogames can be played on any device without | advantages: | mobility | constant upgrades | ||
owning a specific hardware and with no local/ | ubiquity | noexpensive | |||
physical copy of the game itself. Videogames are | |||||
hardware | |||||
streamed from the cloud on demand. | |||||
instant play | |||||
MAIN STREAMING GAMESERVICES | |||||
Google STADIA (available)
Apple Arcade (available)
Microsoft GamePass
(available)
Sony PlayStation Now (available)
SERVICE
Streaming
Digital download (possibly with streaming for specificcontents)
Digital download
Streaming
DEVICES AVAILABLE
PC, mobile, Smart TV and Consoles
Apple devices only (Mac, Apple TV, iPad, iPhones)
Xbox One and PC (Windows10)
Likely to expand to others
PlayStation 4 and PC
MODEL
Subscription
-Pro: 9.99€ per month + single game purchase
-Base: free + single game purchase
Subscription 4.99€ per month
Subscription 9.99€ per month
Subscription. 14.99€ permonth
,
MAY 2020 - APPENDIX
34
WHO ARE OUR COMPETITORS
RETAIL | DIGITAL | F2P | DEVELOPMENT | FAR EAST | ||||
PUBLISHING | PUBLISHING |
FOCUS HOMEINTERACTIVE
FRONTIER
GLUMOBILE
PARADOX
STARBREEZEAB
THQNORDICAB
TEAM17
BIG BENGROUP
DIGITALBROS
S O U R C E : D I G I TAL B R O S
, | |
MAY 2020 - APPENDIX | 35 |
ITALIAN DISTRIBUTION - Q3 FY19/20 YTD
Euro million | 31.03.20 | 31.03.19 | Change | Change % |
Gross revenue | 6.8 | 11.7 | (4.9) | -41.7% |
Net revenue | 6.3 | 10.3 | (4.0) | -38.7% |
Gross operating margin (EBITDA) | (1.2) | 0.1 | (1.3) | n.m. |
Operating margin (EBIT) | (1.3) | (0.2) | (1.1) | n.m. |
F I S ICA L YEAR ENDING 30TH JUNE | SOURCE: DIGITAL BROS |
DECREASE IN REVENUE FROM RETAIL VIDEO GAMES DISTRIBUTION (-41.7%),
EFFECT OF THE RETAIL BUSINESS CLOSURE CAUSED BY COVID-19
MAY 2020 - APPENDIX | 36 |
OTHER ACTIVITIES - Q3 FY19/20 YTD
Euro million | 31.03.20 | 31.03.19 | Change | Change % |
Gross revenue | 0.5 | 0.4 | 0.1 | 10.4% |
Net revenue | 0.5 | 0.4 | 0.1 | 10.4% |
Gross operating margin (EBITDA) | 0.0 | (0.2) | 0.3 | n.m. |
Operating margin (EBIT) | 0.1 | (0.3) | 0.2 | 82.5% |
F I S ICA L YEAR ENDING 30TH JUNE | SOURCE: DIGITAL BROS |
DIGITAL BROS GAME ACADEMY REVENUE
MAY 2020 - APPENDIX | 37 |
INDIVISIBLE
- CLASSICALLY-INFLUENCEDRPG AND PLATFORMER HYBRID CREATED BY LAB ZERO GAMES (DEVELOPER OF SKULLGIRLS)
- CROWDFUNDED ON INDIGOGO IN 2015 (MORE THAN US $2 MILLION RAISED) UNIQUE SELLING POINTS OF THE GAME:
- Mix of RPG action and platform
- Huge character roster
- WORLDWIDE PUBLISHING RIGHTS ON PC, PLAYSTATION 4, XBOX ONE AND NINTENDO SWITCH
- HIGH METACRITIC SCORE (AVG. ABOVE 80)
- EURO 4.1 MILLION REVENUES LTD
RELEASED ONOCTOBER 8,2019
MAY 2020 - APPENDIX | 38 |
Digital Bros S.p.a. Via Tortona, 37
20144 Milano, Italia www.digitalbros.com
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Disclaimer
Digital Bros S.p.A. published this content on 26 May 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 May 2020 16:27:01 UTC