STARBREEZE investor Presentation SEB Nordic Seminar, 10 January - - PowerPoint PPT Presentation

1 Slide /

STARBREEZE investor Presentation

SEB Nordic Seminar, 10 January 2018

2 Slide /

Financial overview

• utline

Introduction to starbreezE Starbreeze games and publishing Virtual reality

3 Slide /

San Francisco Los Angeles Stockholm (HQ) Brussels Barcelona Paris Luxembourg Bangalore & Dehradun

Starbreeze in brief

§One of the first independent studios in Northern Europe – founded in 1998. §Established developer and publisher of PC and console games and VR products. §Net sales of SEK 257.7m and EBITDA of SEK –59.9m in 2017 YTD. §Listing on Nasdaq Stockholm in October 2017

Office locations At a glance Net Sales splits

Starbreeze Games 39% Publishing 56% Other 5% PC 60% Console 40% By business area1) By platform1)

Large portfolio of strong ips

650

employees2)

System Shock 3

Digital 85% Retail 15%

4 Slide /

Note: 2012-2015 Jan-Dec figures are not reported fiscal years

Founded 31 142 161 218 345 357

1998 2012 CY 2013 CY 2014 CY 2015 CY 2016 CY 2017 Q3 LTM

Net sales (SEKm)

CAGR: ~28%

GAMES DEVELOPMENT PUBLISHING AND INVESTING IN VR VR ECOSYSTEM

Starbreeze evolution

PC (retail)

PHYSICAL DISTRIBUTION, FEW PLATFORMS DIGITAL DISTRIBUTION, MULTI-PLATFORM

5 Slide /

Net sales

Starbreeze target is to achieve net sales of at least SEK 2 billion in 2020.

Profitability

Starbreeze target is to generate positive EBITDA for the fourth quarter of 2018 and then on an annual basis for each subsequent financial year.

Dividend policy

No dividend in the next few years, generated cash flow to finance the continued growth and development of the business. Long-term policy to distribute 50% of net profit after tax.

Vision

> be a leading provider in the entertainment industry by creating world-class experiences.

Vision and financial targets Financial targets

6 Slide /

Strong Portfolio growth ahead

357

~2,000

(financial target) 2017Q3 LTM 2020E

current portfolio

?

System Shock 3 Psychonauts 2

future portfolio

Net sales (SEKm)

7 Slide /

Starbreeze GAMES and publishing

8 Slide / 8 Slide / STARBREEZE

Large and growing addressable games market

Global consumer spend on games, USDbn Steam is the most important digital platform for pc

101 109 116 123 129

2016 2017E 2018E 2019E 2020E

Source: Newzoo (2016-2020 Global games market)

CAGR 2016–2020E

6%

Current addressable market is growing

2

11,000+

GAMES IN THE STORE

W

125

MILLION USERS AS OF FEBRUARY 2015

Y

7,000+

ACTIVE FORUM THREADS DAILY

U

17.7

MILLION CCU AT ONE GIVEN TIME

x

75%

OF ALL PC GAMES SOLD THROUGH STEAM

5

67%

GROWTH OF USER BASE FROM 2014 TO 2015

9 Slide /

Trends in the games market

Games with a context Continuous monetization Technical progress Virtual reality consolidation

M

43 % 54 %

2015 2016 Top 10 public gaming companies market share1)

public companies up 17% in 2016, top 10 take more than half of global market.

10 Slide /

11 Slide /

Business strategy

Be a market leader in

• wn games

development 1 Drive growth in the existing game portfolio 2 Grow the game portfolio through publishing 3 new plat- forms and geographies for existing game portfolio 4

12 Slide /

Be a market leader in games development

1

§ Develop games based on strong IPs, owned or licensed. § Hardcore action games in co-op and first person shooter segments. § Multi-platform strategy including PC, console and VR. § Large, high quality, replayable games with state of the art gameplay. § Storylines with repeatability to enable games as a service to with long revenue tails.

Strategy and focus in games development

‹

Case study: PAYDAY 2 Case study: OVERKILL’s The Walking Dead

Release 2018 H2 Action / Role play

Release dates

August 2013 (PC) June 2015 (Console)

UNITS SOLD

>16,000,000

PAYDAY 2 IN GROSS SALES

>2bn SEK

STEAM COMMUNITY MEMBERS

5,450,000

DLCS AND UPDATES

>160

Based on the smash-hit graphic novel series

Extremely strong brand, 8th TV-series season on air, 11.3M average viewership during season 7.

M

Narrative driven co-operative 1st person shooteR

2

13 Slide /

Drive growth in the existing game portfolio

2

Games as a service activities create long-term player stickiness PAYDAY 2 case study: sales trend compared to a typical game

PAYDAY2 was released in August 2013. The comparison game was released October 2014. The chart shows the number of players until September 2015 (thus, one year after PAYDAY was released).

20 000 40 000 60 000 80 000 100 000

Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 PAYDAY 2 Typical game Crimefest community event Spring break community event Steam summer sale Events

r

Community Marketing

Y

DLCs

2

Free game updates

T

14 Slide /

Grow the game portfolio through publishing

3

§ Broader catalogue of games with lower cost per game to decrease individual game risk and a more steady flow of revenues. § Explore non-core genres. § Storylines with repeatability to enable games as a service to with long revenue tails. § Flexible financing arrangement and IP management (~0–50%

• wnership).

Strategy and focus in publishing Case study: Dead by Daylight Publishing games in development

Asymmetric horror

Release dates

June 2016 (PC) June 2017 (Console)

UNITS SOLD

>3,000,000

DBD IN GROSS SALES

SEK 400m

STEAM COMMUNITY MEMBERS

>800,000

DLCS AND UPDATES

>10

Publishing is a complementary business model to own games with lower investments and risk per game. The raft APE-X Hero

85% 15%

? ?

15 Slide /

new plat- forms and geographies for existing game portfolio

4 Virtual reality

§ Develop games. § Publishing to widen portfolio.

How?

§ Large potential market for premium content.

why?

§ VR centers to be

• pened soon.

§ Games in production.

when?

Launching an established IP on mobile

§ Using successful IPs from its growing game portfolio to attract mobile users within its existing user base.

How?

§ Increase interest for forthcoming title PAYDAY 3. § Mobile games market is large and growing.

why?

§ PAYDAY Crime War is in development with release during 2018.

when?

Expansion to the Asian market

§ Enter partnerships with local partner for distribution. § Strategic collaboration with Smilegate initiated in 2016.

How?

§ Asian gaming market is large and fast-growing. § Geographical diversification.

why?

§ Strategic collaboration through partnerships for distribution in Asia.

when?

16 Slide /

Virtual reality

17 Slide /

155 307 457 616 825 31 55 80 105 134 41 73 110 146 187 14 24 35 45 55 200 400 600 800 1 000 1 200 1 400 2017 2018 2019 2020 2021 Asia-Pacific Europe North America Other

global revenues – reaching 1.2 billion usd in 2021

Source: Location-Based VR entertainment Market Report, 2017-07-12, Greenlight Insights

LBE global VR Revenue Forecast 2017-2021 (MUSD)

>4x

increase

18 Slide /

Examples LBE VR centers

1 user Title: John Wick VR Location: LA

IMAX

5-25 minutes

$7-10

4 players Title: Ghostbusters: Dimension Location: Utah, Dubai

The Void

10 minutes

$55

6-8 players Title: Zero Latency Location: Japan, US, Spain

Zero Latency

45 minutes

$70

Source: Location-Based VR entertainment Market Report, 2017-07-12, Greenlight Insights

19 Slide /

1 User 4 Users 20+ Users 100+ USERS

ARCADE MULTIPLAYER THEATRICAL SEATED LARGE FIELD

Types of player experiences

20 Slide /

Vr strategy – to enable premium content

StarVR headset

Time Profit Large investments to enable sale of content

Illustrative

Location-based vr centers Premium Content

STOR M

21 Slide /

Location based vr to provide additional revenue

Business model Dynamics by type of center

Share of ticket price 15 USD Wholly-owned (Stockholm) Partnership (Dubai) Tech and content supplier (IMAX)

Headset, tech, pods

20-40%

Content

20-40%

Operations (landlords)

20-40%

• Costs carried by

Starbreeze

• All costs

Costs for headset, tech, pods and content No costs

22 Slide / Slide /

23 Slide /

Large and growing addressable games market large pipeline of new titles based on strong global franchises Established and successful games development with gaas revenue model Large potential for content within location based virtual reality Proven publishing business

Starbreeze highlights

attractive financial profile of high growth and profitability

24 Slide /

Contact us

Sebastian Ahlskog

CFO

sebastian.ahlskog@starbreeze.com

Ann Charlotte Svensson

Head of IR and Corporate Communications

anncharlotte.svensson@starbreeze.com

25 Slide / S T O C K H O L M

STARBREEZE STUDIOS OUR ADDRESSES: WWW.STARBREEZE.COM OUR CONTACTS: IR@STARBREEZE.COM

26 Slide /

THANKS!

The Starbreeze team