We’re focused on controlling the digital games ecosystem and becoming the platform of choice to buy, discuss, promote and publish games. We place the customer at the centre of everything we do, driven by our technology, data, community, brand, partnerships and own publishing IP.
Increase marketing and strength of brand
to grow customer base and loyalty
The level of invested capital in the Group to date has meant that there has been little scope for significant marketing investment. Over the past three financial years, the Group has spent £3.97 million on marketing, which represents only 3.5% of net revenue over the period. As a result, the Directors believe that the potential to improve brand recognition amongst the video gaming community globally through increased marketing is significant.
The Directors estimate that the Group currently has a 0.9% market share of global digital gamer accounts and, therefore, there is a significant opportunity to grow the Group’s customer base and capture market share. The Directors believe that, as the Group increases its investment in both performance marketing and brand to penetrate further in both existing and new territories, the number of total accounts will increase as will the proportion of active customers in relation to total accounts which will drive unit sales growth; the Directors also expect the average spend per customer to increase.
Due to the limited marketing budget the Group has historically pursued a cost of sale model and as such customer acquisition has been driven by the ability to leverage cost effective channels to the customer. Following the IPO, the Group plans to focus on brand and increased spending in performance marketing channels and move to a lifetime value model. The Directors believe that this could have a significant impact on the total active customers of the Group and will also drive repeat spending.
The digital gamer community and social media dimension of the Group’s website is a key part of the strategy. News, reviews and personalised content attract digital gamers to the website and allow them to interact with each other. This is a key element of the Group’s retention and loyalty strategy. The Directors believe that if the Group improves customer engagement through website interaction, it is likely to increase customer loyalty and in turn grow the number of digital games bought on a yearly basis.
The Group has sold games to customers in 195 countries and will seek to increase its market share in all regions where it currently generates significant revenues (mainly US, UK and mainland Europe) and also in regions where there has been little focus to date by the Group or into new markets such as India, Middle East and China.
The Group’s investment into technology and operations to date means that in the Board’s view it is well placed to continue its geographic expansion. The Directors consider that the experience gathered through the Group’s international expansion to date stands it in good stead for entering new markets and then building scale.
Continuing to invest in proprietary technology
With 28 full time technology employees delivering over 710,000 lines of code a year, the Group’s proprietary technology platform supports the website. Nevertheless, the senior management team is aware that the industry is fast moving and the Group intends to continue to invest in its platform to seek to ensure that the customer proposition is continuously improved and the Group’s business can scale internationally.
We believe that the market trends in the video games industry continue to move in the favour of Green Man Gaming and that the Group will increasingly benefit from the shift to digital distribution, platform fragmentation and increase in content. As these market trends develop, customers will require greater curation and personalisation, publishers will require more retail platforms and that the Group is ideally positioned to capitalise on this growth opportunity.
Our Key strengths are:
Size of addressable market
The digital video game industry is estimated to be worth £30.4bn and forecast to grow 32% to £40.1bn by 2020. The Directors believe that the Group is ideally positioned to capitalise on this growth opportunity;
Shift from physical to digital distribution and
The Directors believe that the Group’s pure play business model will ensure it has significant opportunities to capitalise on the growth trends of the global gaming market and the market’s continued shift to digital in both the PC and console markets. Furthermore, over the last few years, the industry has witnessed the launch of numerous publisher-backed platforms competing with Steam. There is an ever-increasing amount of content and number of digital games being released across the industry. The Directors consider that gamers are looking for greater curation and personalisation, while publishers are looking for more channels for distribution;
Proprietary and scalable eCommerce platform
Since 2009 the Group has built a proprietary technology platform that is lean, agile, scalable and resilient. The platform manages a catalogue of over 6,600 digital games and transacts business in 195 countries with four language websites and 16 currencies enabling dynamic pricing for every game that it sells in all countries that it operates in on a real time basis. The platform, which can quickly scale to 3x its present size, holds and tracks over 1.1 billion data points on the gaming community. The platform, which took 108 man years of development time, underpins the Group’s eCommerce operations and is beneficial to the Group’s customers, publishers and business partners. The Directors believe that this is both a key competitive advantage and potential barrier to entry;
Commercial relationships with a large number of
The Group has established relationships with 677 publishers, including some of the industry’s leading suppliers of digital games such as Ubisoft, Take 2 and Warner Bros, and also a wide range of leading independent games developers. The Group is therefore able to provide customers with over 6,600 digital games and a competitive price proposition through discounts and offers. The Directors believe that these strong and long term game publisher relationships are key competitive advantages and potential barriers to entry and have contributed to the Group’s sales volumes and commercial success to date;
The digital sales proposition is game platform agnostic
Key to the Group’s competitive advantage is that it sells digital games which can be downloaded and played on a wide range of PC digital game platforms, including Steam, Ubisoft’s Uplay and Rockstar Games Social Club, which allows it to offer a significant breadth of publisher content and can provide a broad range of affordable digital games to customers. The Group currently works with 677 publishing houses, selling digital games across 19 PC platforms and two consoles;
Loyal community of gamers
The Group currently has approximately 4.7 million registered customer accounts of which over 1 million are active customers, who are defined as customers that have each spent over £1 over the last 24 months. The Directors believe that the Group offers its customers a focused customer proposition and service in relation to price,
Established international presence
The Group currently sells digital games in 195 countries and offers 16 local payment currencies and four localised website languages. The Directors believe that the Group’s ability to offer competitive cross-region prices, while optimising margin and conforming to applicable local legal requirements as regards the sale of digital video games, is a key selling point. In the year ended 30 December 2017, approximately 90% of the Group’s revenue came from outside the UK with the US being the largest market for the Group;
Established partnerships with leading corporate partners
Separately from selling digital games on the Group’s website, the Group has commercial and strategic relationships with companies supplying IT hardware such as Intel, Lenovo and HP, media companies and leading hardware resellers. These relationships are the result of such companies wanting to be associated with video game intellectual property, brands and products. By bundling, discounting, or giving away digital games for free, these corporate partners look to attract, retain their own customers;
Customer data analytics
The Group collects a large amount of in-game data from its customers, using the proprietary game-tracking software of Playfire Ltd, which it acquired in 2012. The detailed intelligence allows the Group to give valuable insight to its commercial partners on customer trends and behaviour on an anonymised basis. This data analytics is also helpful for the Group’s marketing team as it informs offers and promotions and is leveraged by the Group’s publishing arm when working on pricing and launch strategies to help independent developers bring new digital games to market;
leading customer reviews and numerous industry awards have helped to enhance credibility and trust in the Group’s brand. This is of significant importance as customers are highly aware of the impact of piracy in the games industry and the unreliability of grey market sales. This customer trust is demonstrated by the Group’s current Net Promoter Score of 40
The Board, led by founder and CEO Paul Sulyok, together with CFO Callum Jay, has many years of senior level industry experience in both large corporations and smaller independent businesses including leading retailers and video game publishers. The executive management team has led the Group’s growth since inception and is committed to the next phase of the Company’s growth. Following the IPO, the new Board will include Nigel Payne appointed as Chairman bringing over 30 years’ experience of listing companies, fund raising on the public markets and acting as either Chairman or Non-Executive Director of public companies; Spyros Giamas games industry veteran and CEO of CD Media; Joanne Lake with 30 years’ experience in financial and professional services holding Board positions for main and AIM market businesses and Rob Murphy with considerable Board experience across numerous sectors including video games and digital media.
Proven financial track record with little capital invested to date
To date, the Company has only had approximately £6.7 million of equity capital and carries no debt as at the date of this document. The Group has achieved consistent strong revenue growth over the last seven years. Over the three year financial years ended 31 December 2017, the Group delivered a sales CAGR of 26.7% to £47.5 million and achieved positive EBITDA.