Frontier Developments warns on lower revenues as shifts to new model

19th Jun 2014 16:11

Computer games maker Frontier Developments claimed good progress in its strategy to move from being a designer of games for third-parties to self-publishing its own games. In a year-end trading update, the AIM company said it experienced a reduction in headline revenue and earnings while it invests in its immersive space-faring game 'Elite: Dangerous' (E:D) and other unannounced elements in its strategic transition.But Frontier said it remained confident that its plan "will result in much greater returns and further opportunity", especially after E:D received a very positive reaction at the recent E3 games conference, where it picked up an award for the 'Best of E3'. Frontier has recently made an on-schedule start to the Premium Beta phase of development which sees over 10,000 more of the backers test-playing the game. Chief Executive David Braben said: "E:D and its enabling technology are progressing very well. We have had a good cadence of public releases throughout development of the Alpha phase of the game, and have entered the Beta phase in a great state."He also cited other, unannounced, projects for major external publishers, at a combined value of $12m, were "going very well too".House broker FinnCap pointed to £8.6m gross cash that will see Frontier through its transitional phase and cover development costs of the flagship E:D. It added: "We are impressed by the remarkable quality of E:D, and the steady progress in development - however Frontier must now demonstrate its ability to successfully advertise and market the game to generate significant sales and returns from its new model."Due to the lack of visibility in timing of the key E:D development and release the broker is widely holding back forecasts. But it said believed Frontier represented a "unique investment opportunity is presented to investors as a publicly listed independent games developer in the UK". Shares in the company were unmoved at 277.50 on Thursday. OH