4th Sep 2014 08:43
LONDON (Alliance News) - Frontier Developments PLC said Thursday it swung to a loss for the full-year on the back of a fall in revenue and increased investment costs related to its Elite:Dangerous game, which it intends to launch later this year.
The video games developer said it posted a pretax loss of GBP1.6 million in the year to May 31, against a GBP1.1 million profit a year earlier. That came on a big drop in revenue in the period, down to GBP9.5 million from GBP12.1 million in 2013, said the company.
Frontier Developments was also pushed into the loss by a GBP4.1 million investment in the development and promotion of Elite:Dangerous and the associated COBRA technology.
Elite:Dangerous is the company's flagship title, a Kickstarter-funded space simulator, and the COBRA technology, a cross-platform solution that allows codes and resources developed on a PC to be compiled and run on XBox360, PlayStation 3, iOS and Nintendo WiiU platforms.
The investment in Elite:Dangerous and COBRA was driven by a strategic shift at Frontier to move transition towards increasing its proportion of self-published revenue. Cash raised from self-published games and from pre-orders of Elite:Dangerous, represented 13% of the cash received from revenue, Frontier said. Elite:Dangerous is due to be released in the fourth quarter, with the first phase of its beta development launched in the full-year.
Frontier has been raising money to develop the Elite:Dangerous game through crowdfunding platform Kickstarter. It said it has now reached 100,000 backers and raised GBP6 million via this funding source.
In the year, the group raised GBP4.7 million via its initial public offering to back its transition to a new strategy, with total funds raised before associated costs at GBP5.8 million since May 2013.
Also in the year, the group signed a contract extension to its existing developer agreement with Microsoft Corp. The contract extension is worth USD1.8 million to Frontier, bringing the total value of the contract to USD5.7 million. It also signed two development agreements with an unnamed global publishing partner, under which it will deliver two new games using the COBRA technology. Those contracts have a combined value of GBP3.8 million over two years.
Frontier Development shares were down 3.6% to 265 pence per share on Thursday.
By Sam Unsted; [email protected]; @SamUAtAlliance
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