A multi-franchise success story
Having successfully completed a transition to a self-publishing model with its first two franchises, Frontier is scaling up to expand its franchise portfolio in order to deliver long-term revenue and earnings growth.
In the financial year ended 31 May 2018, the ongoing success of Frontier’s first two franchises, Elite Dangerous (launched December 2014) and Planet Coaster (launched November 2016) supported the investment in Jurassic World Evolution, which launched successfully in June 2018 (after the end of the financial year) and will deliver the next step up in financial performance for the Company.
We have a proven track record of sustaining and nurturing existing franchises to deliver multi-year revenues, with each new franchise release providing a step-up in overall Company financial performance, and we have proven our ability to successfully launch franchises for a third time with Jurassic World Evolution. Our ambition is to create a multi-franchise success story, and we remain excited about the prospects for our industry and for our Company.
Highlights & KPIs
Operational & Strategic Highlights
- Frontier’s strategy of sustaining and nurturing its franchises continues to deliver, as both Elite Dangerous and Planet Coaster continue to thrive.
- Elite Dangerous, which launched in December 2014, delivered its fourth year of sustained substantial revenue generation in FY18. In June 2017 the franchise’s addressable audience was further expanded with its release on the Sony PlayStation 4 platform, and we launched the Beyond season of free updates to continue to appeal to new and existing players by providing additional gameplay features and further narrative.
- Planet Coaster, which launched in November 2016, continues its genre-leading popularity. During the year we started to release chargeable themed expansion packs, each of which adds substantial features and content for players and generates additional sales for the franchise beyond the initial game purchase.
- Towards the end of FY18 we completed the development of our third franchise, Jurassic World Evolution, as planned and, in June 2018 (after the end of FY18), achieved a third successful franchise launch with its release alongside the launch of the Jurassic World: Fallen Kingdom film.
- £17.7 million was raised in July 2017 through a strategic investment from Tencent, a leading internet and interactive entertainment company based in China, to improve and accelerate Frontier’s growth into the key Chinese market and help drive scale-up of the business.
- In October 2017 the first Frontier Expo was held, a Frontier‑specific event which brought together Frontier’s developers, player community members and media to spotlight major franchise announcements, maximising awareness and further building Frontier’s profile.
- Total revenue of £34.2 million in FY18 reflected sustained sales performances for both Elite Dangerous and Planet Coaster following the step-up in sales in the prior period from the launch of Planet Coaster in November 2016 (FY17 revenue grew 75% over FY16).
- As anticipated, a combination of slightly lower annual sales resulting from no new franchise launch in FY18 and our planned increased investment in development and marketing saw operating profit reduce to £2.8 million (FY17: £7.8 million) and EBITDA reduce to £9.4 million (FY17: £12.7 million).
- Operating cash flow (operating profit excluding non-cash items, less investments in franchises and other intangible assets) was an outflow of £2.8 million (FY17: inflow of £3.4 million), reflecting the investment in Jurassic World Evolution.
- Cash balances increased by £11.5 million during the year to £24.1 million (FY17: £12.6 million) following the £17.7 million strategic investment by Tencent in July 2017.
Total revenue (£m)£34.2m
Operating profit (£m)£2.8m
Operating margin (%)8%
EPS (basic) (p)9.6p
Operating cash flow** (£m)£(2.8)m
Net cash balance (£m)£24.1m
* Earnings before interest, tax, depreciation and amortisation.
** Operating profit excluding non-cash items, less investments in franchises and other intangible assets.
We are well positioned for the future.
I am pleased to report on another healthy year for Frontier. Our first two franchises continued to perform well, and our team did a terrific job on the development and successful launch of Jurassic World Evolution in June 2018. Our chosen business model of multi-franchise self-publishing is delivering well for our Company and all of its stakeholders, including our community of players, our employees and our investors.
Our long-term ambition to become a global leader in entertainment remains on plan. We are scaling up to continue our multi-franchise success story through the development and growth of our internal capabilities together with an expanding use of external resources. Our proven ability to both launch and sustain franchises within a self-publishing model, as well as our long history of delivery and capability, positions us very well to continue our organisational development. It is pleasing to see both Elite Dangerous and Planet Coaster selling strongly in their fourth and second financial years respectively. This validates our model of establishing franchises with enduring appeal rather than for the short term. Franchises four, five and six are all at different stages of development, from full scale production to conceptual design stage. In addition we have exciting plans for our three existing franchises.
chairmans-statement-2018.pdf (174.05 KB) (174.05 KB)
I would like to thank everyone at Frontier and all our players around the world.
In January 2019 Frontier will celebrate its 25th anniversary since I founded the company in January 1994. Both the industry and our Company have undergone significant change throughout that time, and I am personally very proud of all of our achievements. I am particularly pleased with the success of our transition to self-publishing over the last five years. The rise of digital distribution was the catalyst for our change, and our extensive experience in the games industry gave us the confidence to make the switch. I believe our decision has been proved correct by the ongoing performance of our first two franchises, Elite Dangerous and Planet Coaster, and the successful launch of Jurassic World Evolution. I would like to thank everyone at Frontier for their continued contribution and hard work and thank our players around the world who continue to make all this possible.
Founder & CEO
Elite Dangerous and Planet Coaster continue to deliver.
The ongoing performance of Elite Dangerous and Planet Coaster delivered a solid set of financial results for the 12 months ending 31 May 2018 (‘FY18’), following the significant step-up in financial performance achieved in the prior period (‘FY17’) which resulted from the launch of Planet Coaster in November 2016. The Group generated operating profits of £2.8 million (FY17: £7.8 million) despite increased investments in development and marketing, particularly for Jurassic World Evolution. Cash balances were boosted in the period by the £17.7 million strategic investment by Tencent in July 2017; cash balances at 31 May 2018 were £24.1 million.
CFO & Company Secretary
Our Strategic Priorities
Creating and managing franchises
In order to maximise the return on our core skills and assets we target game genres on PC and Console platforms where we believe we can both i) deliver high-quality, differentiated offerings using established expertise and intellectual property, and ii) have a strong chance of successful market entry, based on past experience or knowledge of that sector.
We use this repeatable model to invest our resources with the intention of creating world-class games with strong franchise potential and plan for strong post-launch franchise support to further help realise this potential.strategic-report-2018.pdf (4.09 MB)81spa411dF1
Developing our business to achieve repeatable success
We invest our development resources in games with strong franchise potential. In order to maximise the return on our core skills and assets we target game genres where we have established expertise and/or intellectual property. Our development focus is on PC and console. Audiences on these platforms tend to value games that exhibit Frontier’s key development strengths.
We continue to assess the distribution channels and platforms we use to achieve an optimal addressable audience for each game, and the monetisation strategy for each franchise. We participate in price promotions on each of the distribution platforms we use for each of our games as appropriate to its life-cycle stage, allowing us to reach the widest possible audience over time.strategic-report-2018.pdf (4.09 MB)81spa411dF1
Blazing a trail into the beyond
Elite Dangerous is now in its fifth financial year since release in December 2014. Since launch we have continued to release expansions to the original Elite Dangerous game, simultaneously on PC, Xbox One and PlayStation 4 as those platforms have been added.strategic-report-2018.pdf (4.09 MB)81spa411dF1
Evolving coaster park simulation
Planet Coaster was successfully launched in November 2016 after a short Beta period, achieving the global #1 position on the Steam distribution channel and continuing to sell strongly through the subsequent holiday period. In accordance with our strategy, we began to release free updates, each of which adds headline features but also expands and improves different creative and management aspects of the game.strategic-report-2018.pdf (4.09 MB)81spa411dF1
Jurassic World Evolution
Build your own Jurassic World
Jurassic World Evolution, launched on 12 June 2018. It was our first self-published title (although not our first game) to debut on PC, PlayStation and Xbox simultaneously, and the first to benefit from such a major marketing event as the simultaneous launch of the latest film in the franchise, Jurassic World: Fallen Kingdom at the start of the biggest games industry show of the year – the E3 show in Los Angeles.strategic-report-2018.pdf (4.09 MB)81spa411dF1
We are building a broad portfolio of franchises, each different to the last and each with the capabilities to expand over time. All future franchises will be selected using the same approach described above that was used for Elite Dangerous, Planet Coaster and Jurassic World Evolution. We are scaling up for the future so we can release games more frequently, and we already have future franchises in different phases of development.strategic-report-2018.pdf (4.09 MB)81spa411dF1
Annual report and accounts 2018
The games industry is transitioning into the world’s premier form of entertainment. Frontier has a proven track record of progressive development in video games spanning several decades of rapid technological change.