We primarily will comment on three important game releases in the future in this research note.
Q3: No Straight Roads (Publishing)
According to an interview almost a year ago with its publisher Sold Out, No Straight Roads was its biggest investment yet. According to EG7’s CEO Robin Flodin, the game is already profitable mostly due to the Epic Games PC-exclusivity. The game is developed by the Malaysia-based studio “Metronomic” and has been delayed several times. However, delays are often a good thing, we believe this is the case this time. No Straight Roads has an interesting twist on action-adventure games with its influences on the rhythm-based music genre. According to our estimates, this will be the most important game release for EG7 in Q3. This is also the major reason for our lowered estimates for Q2 and increased estimates for Q3.
Some gameplay has been shown for the first time (Toadman Interactive’s Youtube Channel) from the game since our last research update. We believe the game looks solid, however, we have only seen a few seconds 0f actual gameplay. The game focuses on different kinds of vampires you can choose from with unique abilities. The presentation with a somewhat “cartoonish” approach makes it stand out from other fast-paced first-person shooters.
EG7 has been working on EvilVEvil for about two years. On the 31 of December, EG7 signed an agreement to acquire the game project from Leyou Technologies. EG7’s investment in the game title and IP will have amounted to USD 4.1m, far below the actual development costs of USD 13m.
The game has a free-to-play business model, previously we expected a premium business model (pay first play later). The game was initially developed for Leyou, a company that focuses on free-to-play, which means the game most likely was built with “free-to-play” mechanics from the ground.
We estimate the game will generate approximately its initial investment of USD 4.1 million around 12 months after its launch. In contrast to premium games, successful “free-to-play” games generate more money in its second year.
2021: Minimal Effect (Publishing)
The game called “Project Anubis” has also been shown for the first time. The game is called “Minimal Effect” and is best explained as a cartoonish version (with a funny flavor) of the widely popular, loved and commercially successful “Mass Effect” series.
This game set in space, like Mass Effect. The similarities do not end there, this seems to be a story-driven third-person action RPG. We believe the game has the potential to attract a broad audience with these kinds of elements. But of course, we have no idea of how good the actual game will be in the end this early on.
A small indie title called Westmark Manor was released a few days ago. The game is published by Toadman Studios. The game sold almost nothing the first days (according to Steamspy), which was in line with our expectations.
We have lowered our estimates for 2020. EvilVEvil is a free-to-play game which often means the game will have a longer life cycle but less revenue during the initial months. We forecast revenue of SEK 624 million (690) and an EBITDA of SEK 82 million (124).
Only minor changes have been done in our estimates (both revenue and profit levels) for 2021 and 2022. For the major revenue contributors (marketing and publishing) our estimates I nearly unchanged.
We expect the major catalyst for the stock is of course new acquisitions and a potential refinancing or a new program for its bond with a lower interest rate (current interest rate 12%). Two other catalysts are the more important game releases in the relative near future namely EvilVEvil and No Straight Roads.
By clicking "Sign up" you indicate that you read and agree to our Terms & ConditionsI already have an account and want to sign in