Nitro Games Oyj

Good morning. Hyvää huomenta. We're back. Yes, indeed. Welcome to our Q1 webcast. It's us, Antti. And Jussi. We're the co-founders of Nitro Games.

By the way, it was an awesome trailer that we had in the start. Indeed, indeed.

I haven't seen that before. It's fantastic how technology develops and we're able to do all these crazy new things. uh here in nitro as you maybe saw from the uh quick video clip uh we do action and shooter games uh we've been best known for our mobile games in the recent years but over the last say two ish years we have more yeah indeed indeed and uh even though we look young but actually quite old and we've been doing cross-platform world and so on. So these things tend to go in circles. But in any way, we're your powerhouse when it comes to action and shooter games. We do high production value stuff and we want to be pretty good, especially when it comes to technological performance of our games. So we do pretty challenging projects. That's something that defines Nitro pretty well. And we work a lot with different IP, both in terms of IP and brands that we develop ourselves, but also IP and brands that somebody else has developed.

one industry event and it seems and feels that everything that we have done past years are now coming together and market need and our offering is matching very well. Yeah, better every year.

Cool. And we will talk more about our projects, our portfolio, our strategy and all that stuff as we go forward in the webcast today. But first, let's have a quick look in terms of what did we deliver during the first quarter. Again, we delivered growth. Like we said, that's one of the big targets for us this year. deliver on the bottom line. And how we do that is a combination of growing our business and staying very careful with our cost structure. And that's something that also dictates how we do business here in Nitro, that we have a flexible, scalable cost structure where we combine our in-house team with our outsourcing partner network. We've spoken about that a lot in the past. And during the first quarter, again, we signed some follow-ups. Then our strategy, we have a portfolio strategy and where we're going with all of this is that we started in 2017 with this new strategy. We listed in first north in Stockholm. I still have that picture framed where we're ringing the bell.

business. And now I feel that the portfolio strategy with the two business units, it's starting to maturing into the, into the position where, as, as mentioned already, the market is looking for such services that we have having those two leg business units and maturity with the development skills and technical skills and, uh, and not even the publishing skills is, is kind of starting to play together very well in our favor. Yeah. And, uh, we are getting exposed bigger and bigger projects

that because we have a portfolio strategy and because we operate in a very driven business we have this mindset of having several shots on goal so the way we work is that at some points we expand the sort of funnel that we have we start a lot of new game process for example and then as time goes forward we step by step through data mostly validate our games and pick up the winners and then

for which kind of those new things might be the ones that ending up into the bottom of the funnel then again someday. So it's kind of interesting period when we have identified the current kind of winners from the big pool of the initiatives that we have and now slowly and easily and very risk aware starting to

people reach out to us and ask that, should we expect more games from Nitro moving forward? Should we expect new B2B process from Nitro moving forward? And the answer is yes. Then should we expect Nitro to take all their cash and pour it into one investment in terms of a new time is right. If we then look at what actually has happened with the game portfolio, one of the big things now is, of course, Otagon Heroes, which has recently announced that we are now done with the launch phase. Yes, yes, we're right now in the live phase. The game has been transferred to our new publishing partner, Supersonic, who are part of this global, big, huge, It's going to be, you know, years and years of partnership and growth and fantastic things happening. But we're still very early. But we couldn't be happier with where we stand now. Everything has gone smoothly. And so far, it seems like all that, you know,

success with the game. And I think also the selection process of the partner for the Otakon Heroes was a good example of the funnel thinking. And we had a lot of discussions with the various parties and then funneling them into the best one that we think from the industry at the moment for the game like Otakon Heroes and the company like United Games. So I think there's a really, really nice and good fit.

Yeah. Yeah. And what you should expect moving forward from this one is that we in Nitro, we continue to do our side of the coin, which is essentially, you know, the team keeps developing the game forward. There will be plenty of updates coming. I think you might have already seen something recently and more of that good stuff is going to come. We're going to be working together on the live side with Supersonic, making sure that we read and assess the data in the same way and we figure out how we run the live operations to the game and the marketing And then if we look at the other game in our game portfolio, Nerf Super Blast, that's something that we have discussed earlier, that we have limited our investments in the game. That's still very much the case. So we haven't actively invested too much into the game during the first quarter either. We put out some updates and get the game alive and serve the players that are enjoying it. But now as we are more clear with our plans with Autogun,

commercialize those and how to best take advantage of that. And in innovative ways to commercialize those without risking too much of the current business. And I think there are clever ideas already on our table that we've been discussing. How we can, in an innovative way, boost the game and find some new channels and what not.

Yeah. And like we said, when we spoke about our portfolio, we definitely have a plan of again going into the mod world step by step again. keep putting things there and then if we look at the b2b service business during the first quarter obviously warframe went live on ios that was a big milestone for us and for the team we also did the following Indeed. And something that makes me super proud is that it's a game that's, I think, as prime example as it gets in terms of how can the lifecycle of a free-to-play game look like when it's done really well and when you make sure that you service your players the right way. And Warframe, I think, is a game that represents all that. It's always sort of players first and years after years after years. it's great to see, you know, how, you know, you keep sort of putting more effort into the game as time goes by instead of the reverse. And that's the beauty of free-to-play and game as a service over the long run.

Also, it's like a very good example on one new trend that is coming on a mobile where true AAA, AA experiences from the big screens are coming one way or another their way into the mobile and naturally we're in a good position on that kind of projects as we have expertise on the older platforms and traditional platforms and also the mobile platform. That's like a prime example where the existing well-received and huge user base having games can make a difference in the mobile market.

Indeed. Then we of course have our project with Netflix. sure that we deliver quality milestones, we stick to the plan, what is our role, and make sure that we get the project started really smoothly.

And I think it's safe to say that we and the team, we are very, very excited about it. It's going to be something that makes the team proud, makes us proud, makes the company look nice, and having such an excellent partner on that Everybody's very excited.

Yeah. And this is something that makes me super proud because where we come from is that in our B2B service business, we work with so many great companies out there, so many great projects. We've also sometimes done what we call this white label of service work for others, all the different things. But now in line with our strategy and our vision of being the household name in action and shooter games, we managed to make sure that our B2B service looking process in terms of like what they mean for nitro financially but also cool process that are fun to work on and and super good match for what we want to be as a company and speaking of numbers uh next up are the financials from the first quarter so as discussed in the beginning we managed to deliver a profitable quarter again we managed to And this is well in line with what our plan is for this year, which is to make sure that we deliver stability and we don't take excessive risks when it comes to investments in new products. But we try to be more clever in terms of how we commercialize existing things while we build new stuff for the future as well. And if we summarize everything from the first

new initiatives and current PD sales funnel and all of them are coming together with the action and action. We actually live it through our vision and that is kind of really, really good thing and reason to be proud of everybody on the company.

Yeah, definitely. In terms of categories, mobile and cross-platform. something that we're also looking into with our own IPs that, okay, how can we leverage more platform?

in the future also other way around. Something first and then mobile also. Not always kind of mobile first or mobile only.

And maybe something to note on that front as well is that we didn't go too much and all that stuff. But what's been really cool to see is that we've had game after game breaking new records and making comebacks. This is something that I love about this games business is that it's always changing, always evolving. There's always something negative around the corner that will basically kill the market. And then it doesn't take too long for winners to figure out how to adapt to the new environment how to make even bigger wins than what was possible before.

It's like a PC gaming market that has been predicted to be dying for past 20 years, whereas we have been in the industry and it seems to be doing pretty well.

Yes. Cool. All right. I think we're done with the updates on Auren and next up, let's let's start with the email where we do have at least some so let's see uh can we elaborate on how our developer role has changed if at all now that supersonic has become the publisher with other heroes obviously uh what has happened is that something we did towards the end of the launch phase is that uh we were more and more mature with the game in a way so we streamlined we will of course maintain that and that we will keep developing new features new elements to the game and then over the longer period of time looking at you know next year and the years after that uh i can easily see us starting to grow the team again but that will of course you know require that the game grows and all that stuff so i'm reading the question a little differently but the developer role at least if the

to the same success and I think that has been changing in the market and especially on the mobile publishing side of the business that it's more of an equal partnership rather than kind of we are masters

financial factors there are kind of cultural fit and all kind of all kind of things coming into the play when you are actually in a partnership definitely uh sort of follow-up question to the same that can we expect lower development costs now that the game has entered the live phase well yes and no uh what i mean with yes that you can expect us to be careful with our cost structure like we have demonstrated during this quarter during previous and so on and so continue actively developing the game, continue pushing out actively new content to the game, and perhaps even increasing that moving forward. But that's a little bit longer down the line. Then there's a question, what do we mean with a quote from our report where we say that the Otakon Heroes roadmap is clear and we can now continue exploring other new ways of commercializing our game portfolio. And then there's in our games business and so on. That's exactly what we're doing at the moment, but we're doing it the way that we want to be super careful with not over investing until we have reached a certain maturity with the games and the opportunities that we have. While at the same time, we're seeking to also commercialize things that we have in our game portfolio and finding ways to make more money with the things that we already have. And we are exploring also not only the

commercializing the games, but also commercializing the items.

Yeah, definitely. Yes. So long story short, yes, you can expect new games. We will take our time until we come out of the closet with those one until we have reached a certain level of maturity like we always do. And then can we provide some perspective on the overall competition in the market? Have we observed any easing of competition after two challenging years?

I was following Mr. Tattinen last week in one industry event when he and a couple of other experts were giving a panel discussion regarding this topic. And I think there was quite a few good points. And I think the overall feeling within the industry executives is that the marketing is easing up. But maybe you can summarize the things that you and your colleagues there had a chat.

Yeah. I think what we're seeing now very much is that a lot of the companies, unfortunately, already have faded away. So in that sense, there is less competition, especially for us in the B2B market, but also when it comes to the free to play mobile games market. What we are also seeing more and more is that companies that are still there are being more clever, not just us, And something that we think that we're going to see more and more moving forward is that smaller indie labels are going to deliver a lot of great stuff. And why that is, is because many of the big AAA houses, they've canceled so many projects. They're focusing on the safe bets, so to speak, you know, sequel of this and that famous IP, which for us consumers who are playing the games, but maybe less innovation. And innovation always comes in games and now it's turned definitely and I think for us down the line it means two things one we have opportunities to choose from like where we invest our monies and how we collaborate with other games and studios out there but also in terms of these big boys so to speak they will need games moving forward and now they don't have so much growing organically so there will be a day when everybody goes shopping and buying stuff because people want to release things so So long story short, the market is developing in the right direction. If you ask me and us and probably so many others, when exactly will the floodgates open? Nobody knows. Then let's see what else. Nothing in here. Then let's see the activity feed. Any new games in the plan? And is there a chance to strike a deal for a nerf game? New stuff brewing. Yes. Chances to strike deals with anything in our portfolio. Yes. Will we go into specifics on this call? No. How is Netflix game going and will we get to know what it is soon? Depending what is soon. Yes. Yes. We will know when the time is right. I don't think we even have a date for that. So even we don't know. Yeah. We have previously had a community manager for our games. How come you haven't had that for the last few years? And how will you address this in the near future? That's a very good question. And that's something that we do with the community management.

We haven't had a dedicated community manager.

And that's something that's one of the classical chicken and eggs things. And that's something that, how to say it, you always need to. the cost structure that you have because there's so many other things like this very topic when it comes to the whole game development and the game publishing process like how are you supposed to grow your game if you're not investing in your community management and the flip side of that question being why are you investing so heavily in your community if you don't even have it yet and you know this type of chicken and egg game development and game publishing is the key thing is that having a community management is more relevant than having a community manager yeah yeah true that i think it's safe to say that moving forward probably on that front uh we have reasons to be better let's put it that way uh then then have you started receiving income from the netflix deal yet the answer is yes uh we usually structure our b2b deals in a way that we get paid somewhat frequently we try to avoid this type of classic deals where we first take big upfront risk and work a lot and then we deliver something and once that something is approved somewhere down the line then we might get paid we want to avoid that so we often demand structures where we start to get paid from the very get-go and we get paid with pretty short intervals as we deliver milestones these things vary a little bit from one project to another and are of course always you know into project specific details but usually we want to say no to the type of opportunities where we need to take too big of a risk in our b2b business uh then there's question that is there any new partners coming our way uh like blizzard well of course we're not going to comment on any single single entity out there because uh we are subject to super tight ndas and stuff in this business but how to say how Of course, you're all the time talking with pretty much everyone. That's normal course of business, which means that we are, of course, constantly in the mode where we try to see new things tonight. Something that I think is good to recognize is that we are at the moment trying to see bigger opportunities where more and more And looks like that's it. 29 minutes and 30 seconds. We set a 30 minutes timeline for each other before we started this call. So I think we succeeded with that. We will meet again August when we put our report for the first half of the year. Have a great summer everybody.

Spring is already here in France.

things to do before we can even dream about going to summer holidays so thank you for your support thanks for tuning in and see you the latest in august bye bye