Focus Home Interactive Q1 2019/20 – Excellent Quarter Driven by the Mid Tier

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We know from just four weeks ago that last year was a fantastic year for Focus Home Interactive (EPA:ALFOC), driven by successful releases of what can mostly be described as mid-tier titles like Vampyr and Insurgency: Sandstorm, as well as niche but appealing titles like Farming Simulator 19, MudRunner and Battlefleet Gothic: Armada 2.

The company budgets accordingly and succeeds as a result and if the report, released this week, from Q1 of the current 2019/20 financial year is anything to go by, this is looking to continue. Specifically, Focus Home Interactive have made €42.6 million in revenue, a 49% year-on-year increase and it's the balance of sales that truly shows how strong of a position the company is in.

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The Success of the Mid-Tier

The games industry has, over time, seemingly lost the ability to just make a game and budget accordingly. It's certainly a risk, but the inability to budget and set expectations accordingly has resulted in a slew of 'missed targets' and job losses. You look at flops (either critically or commercially) like Anthem, Fallout 76, Left Alive, TellTale Games as a company and a disappointingly large list of other titles and companies. Focus Home Interactive, with a few others, seem to be able to buck this trend.

As we have covered, Focus Home Interactive, in particular, has recently evaded these issues and seen a very successful period recently, primarily thanks to games that have performed far and above expectations. From the aforementioned titles at the beginning of this piece to yet another two titles. These two titles are World War Z and A Plague Tale: Innocence. In the quarter, these two titles account for €27.7 million in sales, 65% of the quarter's total.

The remaining 35% naturally comes from the publishers back catalogue, which includes the earlier mentioned titles and more. What highlights the strength hear is a 78% YoY growth from the same quarter last year, highlighting the longer tail within the company’s recent titles. This is an area in which Focus Home Interactive is growing in success over time, thanks to a slew of successful titles. Jürgen Goeldner, President of the Executive Board had this to say:

This quarter is an important milestone for Focus Home Interactive, with the confirmation of the anticipated successes of World War Z and A Plague Tale. The stability of our growth model is strengthened by the very strong performance of our back-catalogue. This excellent momentum and the highly anticipated launches of The Surge 2 and GreedFall in the near future promise for an excellent 2019/20 year and reinforce our ambitions for 2022.

Focus Home Interactive's Ambitious Future

Much of what we know about the publishers' future, we've already covered. Following the annual What's Next event, which I attended earlier this year, Focus Home Interactive was happy to show off upcoming games but also hints as to what is coming further down the line.

This year will see the launch of three confirmed titles: The Surge 2, GreedFall and MudRunner 2. All three of which have the potential to continue Focus Home's run of successful titles. The Surge 2 and MudRunner 2, in particular, have pre-existing fanbases which will help to propel the titles. GreedFall, it should be stated, is developed by Spiders who have recently been purchased by BigBen Interactive, though the game will still be published by Focus Home Interactive. Further away, the company announced a multitude of partnerships:

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Focus is proud to renew key partnerships with talented players such as DONTNOD Entertainment (Vampyr), SABER Interactive (MudRunner, World War Z), DECK13 (The Surge), ASOBO (A Plague Tale), STREUM ON (Space Hulk: Deathwing), and PASSTECH Games (Space Run). It will embark on new partnerships with industry veterans such as SUMO Digital (Eve: Valkyrie), GASKET Games (former members of Relic Games – Dawn of War), and promising new studios such as LIMESTONE Games and LIGHTBULB Crew. The Group also announced an agreement with historical partner Games Workshop for the development of three new Warhammer games, and a partnership with Chaosium for the exclusive operation of a series of Call of Cthulhu video games over the next ten years.

As a result of their recent successes and line-up for the future, the publisher is reaffirming guidance from the end of the previous financial year for annual revenue at the end of March 2022 to be within the range of €150m to €200m. While this year may not be to the same level of success as the one just gone, the Publisher is certainly in a position to achieve strong growth and stability over the coming years.

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