News Frontier Developments plc IPO announcement

[Fia]

You are not purchasing anything when you back a kickstarter project. You are backing a project you would like to see succeed. In return, based on how much you have contributed, you MAY be promised a reward in thanks. Of course any serious amount of money, or generally anything even over €10 is going to get you something. The point is it is not a pre-order system. Anyone that actually expects a project to be completed on time and within budget is only fooling themselves. Even with the most careful planning and best of intentions no one can forsee every problem and many of those behind kickstarters are inexperienced (obviously not FD) so they are learning on the job which will slow things down.

By backing a kickstarter project you are not buying a definitive product, you are donating money to help get a project done in the hope that it will meet expectations but in the knowledge that aspects of the project may change due to funding, unexpected difficulties, over optimistic goals, problems with suppliers, manufacturing (mostly done in China which is an absolute nightmare to deal with for small companies) and anything else the universe will hit you with. You are backing a concept which will hopefully match your vision or at least come close.

After a period of expensive kickstarter use I no longer back anything as I know it will either most likely fail to meet expectations (Tomorrow from Conquistador games), miss its deadline by a couple of years (Kingdom: Death) but mostly because the product will be available much cheaper after it is released (Godus) and most of the KS exclusive rewards turn out to be rubbish that contribute nothing to the product (in one case the KS excl. components were actually so bad and unsuitable the standard cardboard cutouts were superior, Tomorrow again).

 

[deusx_ophc]

(Full disclosure - I've never backed a Kickstarter for anything - and I never will...)

TBH this is what rankles me about Kickstarter in general: You give money to see something happen, and it does, and it is an amazing success - and then those who essentially bankrolled the "risk" by using kickstarter run off and have an IPO/Facebook buyout/big$$here.

The kickstarter backers are donating money to start someone's business. The return on investment is ridiculously small for them. For those getting the funding, it is a miracle - millions in seed money for nothing more than a flashy demo reel. When that sweet sweet investor cash rolls in for the pay-day, it was the backers who made it happen, but they aren't going to get a dime from it or see any benefit.

I get the argument that Kickstarter helps get concepts off the ground that can't get conventional funding, but the complete lack of shame or even acknowledgement when they go public or get bought out really turns me off.

This is equally true for all the other kick starter programs: Oculus, Star Citizen, etc. The ones who REALLY benefit from the best kickstarters are the people who get the IPO/Buyout money later on.

So, congrats to Frontier for making millions off Kickstarter and hey, we got a good Sci-Fi game too. Just remember to thank your backers for all that money you used to get your payday.

(Full disclosure - I've never backed a Kickstarter for anything - and I never will...)

TBH this is what rankles me about Kickstarter in general: You give money to see something happen, and it does, and it is an amazing success - and then those who essentially bankrolled the "risk" by using kickstarter run off and have an IPO/Facebook buyout/big$$here.

The kickstarter backers are donating money to start someone's business. The return on investment is ridiculously small for them. For those getting the funding, it is a miracle - millions in seed money for nothing more than a flashy demo reel. When that sweet sweet investor cash rolls in for the pay-day, it was the backers who made it happen, but they aren't going to get a dime from it or see any benefit.

I get the argument that Kickstarter helps get concepts off the ground that can't get conventional funding, but the complete lack of shame or even acknowledgement when they go public or get bought out really turns me off.

This is equally true for all the other kick starter programs: Oculus, Star Citizen, etc. The ones who REALLY benefit from the best kickstarters are the people who get the IPO/Buyout money later on.

So, congrats to Frontier for making millions off Kickstarter and hey, we got a good Sci-Fi game too. Just remember to thank your backers for all that money you used to get your payday.

(full disclosure - i've backed all Elite Dangerous related kickstarters - and also hold shares in FDEV )

the kickstarter was part of the plan that made the development of ED happen, it worked as gauge to vet the market interest.

the IPO was at that time already planned and actioned shortly after the ks ended (july 2013).

if you were to follow the various announcements/annual reports since the IPO you would find the exact what, hows & when FDEV have planned for the next years. they have ambitious plans and ED is only part of that.

to add, until today none of FDEV have made any significant money on selling their shares (as that would have to be reported). DB used a sizable chunk of his shares to buy back the licensing rights to the Elite IP and hovers at just above 50% of all shares.

the IPO just as the ks and the bank facilities (FDEV are debt free atm) are just means to RAISE CHASH FOR THE BUSINESS not for individuals. and as much as we can see the business seems to be spending that money well (on the ongoing development of ED and many other 3rd party projects).

FDEV have been around for some 20 years, they are NOT SHORT TERM cash grabbers.

saying that i would not hold it against DB & crew if they were to sell FDEV to MSFT in 15 years for U$ 2 billion. in fact i hope they get there ^^

 

[deusx_ophc]

Just seems like a slippery slope, potentially with an "oh dear... we really need some money for these servers and game developments and we've already had our one hit wonder on Kickstarter. Did we mention all of the new online store content...? *cough*" moment in there.

Kind of already annoys me that any personality for your ships has been stripped away and monetised. You'd think basic customisation would be there? Just a few standard colours and then additional prettier ones online, but nope. Straight in their with purchasable personality.

FDEV are a sizable business with some 250 staff in 2 locations. and ED certainly has the feel of a much bigger budget than the kickstarter money alone. the ways for FDEV to raise more cash now (if needed) are

a) use the bank facilities in place (3,0 mio GBP afaik)
b) ks for a new project (???)
c) additional shares offer (that would dilute current share value and not be too popular ;p)

so really other than making ED a profitable (as is already i hear) long term asset and keep working on their 3rd party contracts there is little to do. and also FDEV have always been upfront about the need to monetise the game (via cosmetics). would you prefer a real p2w cash shop?

and i would wait on personalisation of ships and the like. it is early days yet ^^

 

[Patrick_68000]

and ED certainly has the feel of a much bigger budget than the kickstarter money alone.

And well recently in an interview, Frontier had declared £ 8 million for the game it seems to me

 

[Hero_of_the_Day]

Word of warning to anyone thinking of buying into the IPO...

Sinking a large chunk of money into ANY single stock--whether it's Microsoft, Frontier, or Enron--is incredibly dangerous. Frontier looks strong now and the best-case scenario is that you might see short-term, small dividends. But history's shown us how markets can collapse and business' can shutter overnight. Markets, by their nature, experience highs and lows, and the market's at its highest in three years in the US. Unless you have the intestinal fortitude to watch your stock portfolio drop lose half its value overnight, stay away from individual stocks.

If you must play though, buy into an index mutual fund that includes Frontier, or buy a handful of shares to dip your feet in the water.

Best wishes to Frontier though!

 

[Chaotic-Entropy]

FDEV are a sizable business with some 250 staff in 2 locations. and ED certainly has the feel of a much bigger budget than the kickstarter money alone. the ways for FDEV to raise more cash now (if needed) are

a) use the bank facilities in place (3,0 mio GBP afaik)
b) ks for a new project (???)
c) additional shares offer (that would dilute current share value and not be too popular ;p)

so really other than making ED a profitable (as is already i hear) long term asset and keep working on their 3rd party contracts there is little to do. and also FDEV have always been upfront about the need to monetise the game (via cosmetics). would you prefer a real p2w cash shop?

and i would wait on personalisation of ships and the like. it is early days yet ^^

I don't mean to be a downer, but this is a sizeable company whose release history over the past 14 years could be politely described as sub-par. http://www.metacritic.com/company/frontier-developments

They did have additional investment beyond Kickstarter to develop the project, it wasn't purely created on that money. Kickstarter tends to be more about drumming up interest and showing market demand for a project, any actual money is bonus. I'm pretty sure that at this point everything and I mean everything is balanced on a knife edge with the release of Elite: Dangerous. This doesn't seem like a great time for an IPO unless you're in urgent need of capital, which I guess they are due the outlays put in to this very ambitious project.

a) Bank loans are temporary solutions and in the long term increase the amount of financial burden on the company when the debtors come calling, especially if you presume that Frontier already probably has debts to pay.
b) They've kind of burned their KS audience when they reneged on certain promises in their initial plans. See Planetary Annihilation for how that pans out.
c) Additional shares would be a risky option especially so soon after an IPO.

2 years of development and a game going gold is not what I would describe as early days. Sure they are promising a lot of additional content but that is all post-release, using the money they got from sales on release to fund the development. Unless they start charging for content that gamers feel rightly entitled to then things seem like they might go south.

I guess we shall have to keep an eye on their business reports now that they're public. http://www.londonstockexchange.com/...mentals.html?fourWayKey=GB00BBT32N39GBGBXASQ1
Which seem to insinuate that the company was running at increasing loss until about two years ago when a Kickstarter took place which kept them going for a year or two and are now back in the red again. If I'm reading those figures wrong, then I'm sorry, but it doesn't look amazing from where I'm sitting.

If I'm wrong about this then I would gladly have you tell me how and I will take that on board. Also engine royalties don't pay for 250 employees and 2 offices, so it's got to come from somewhere.

 

[DJ]

Can we get "IPO announcement" dropped from this thread title por favor?

A forum search for "frontier+developments" yields only 6 threads, and so imho this is the only relevant one for both stockholders and ED. I think a new thread was started before, but they got merged and unfortunately kept this one's title.

The fifteen month old misleading title is inadvertantly causing nonsensical posts.

[edit: I have reported my own post to ask for this to be actioned. Gracias.]