We have had the opportunity to conduct an interview with Ace St. Germain. Ace is the CEO of the gaming company Beyond Frames, where the company has been able to demonstrate a very strong sales growth in 2023. During the interview, we discuss a range of subjects such as Ghosts of Tabor and the expansion of the partnership with Combat Waffle Studios.
Please note that the interview took place on December 21, 2023. Depending on when you are reading this, some information may have become outdated.
You have had a very strong growth so far in 2023, as you have almost quintupled your sales during the first 9 months of 2023 compared to the same period the previous year. What has contributed the most to this positive development and how do you view 2024?
2022 was mostly about shifting company culture while 2023 was about putting that change into action.
Probably the 2 most impactful changes we made were implementing frameworks for decision-making that prioritized player and partner demands over internal affinity, and investing in processes that added incremental improvements to the way we work.
As an example to the first point, there was a time when a hardcore military shooter may not have been the right fit for the kind of games Beyond wanted to invest in, but VR gamers wanted hardcore military shooters. So, this was simply about getting better about listening to the market and removing internal constraints to take the right decisions. This might seem like an obvious approach, but I’d argue most games companies still take decisions on “touch and feel”.
As an example for investing in process, we were getting too comfortable with legacy processes and thinking, which throttled innovation. To combat that, we focused on putting out products that would give us the data we needed to make and publish better games. That data even translated to proof points that helped secure the project funding we announced in 2023.
For 2024, we think it’s important that we continue to challenge our understanding of the market. Ideally, we’ll also be expanding into non-VR PC and console games so we can fulfill our goal of being one of the greatest providers of immersive entertainment in the world.
At the beginning of next year, Ghosts of Tabor will transition from early access to a full release in the main storefronts. What are your expectations for the launch and how has sales been during the early access phase?"
Sales have been strong. While I can’t share specifics, relative to market we’re confident that Ghosts of Tabor would have been and still is a top seller across all storefronts even in its early access phase.
The expectations for full launch are tricky and we have a policy on not sharing forecasts. What I can say is that a majority of games that graduate from early access tend to experience multiples on their early access sales due to the increased visibility on main storefronts. We’re hoping to experience the same but are tempering our expectations due to the existing popularity of the title.
Your gross margin was slightly above 20% during the first 9 months of the year, which is relatively low in our opinion. Can investors expect this to increase over time?
To provide some clarity, we report gross revenues before store fees (30%) and publishing partner splits (50%-70%). Relatively speaking, other games companies report revenues after store fees and splits. Adjusted, we would have a lower topline but improved margin. So, while we’re always working toward increased margin, it’s important investors understand the numbers they’re looking at today are very healthy by market standards.
Considering that Meta Quest 3 has recently launched and Apple Vision Pro is set to launch soon, how do you view the market in the short and long term?
We’re positive about the market along the entire time horizon. Meta and Apple are approaching the XR market completely differently. I’d argue they’re chasing 2 completely different audiences, which means an expanded total addressable market for software companies like us.
I’d also like to use this opportunity to highlight that growth in XR has been steadily climbing over the last decade. During the peak of Covid, like most consumer tech, we experienced an explosion of growth and have since seen a corrective decline from Covid’s peak. I think some only look at that window post-peak-Covid as the trendline, but it’s more important to note that 2019 to 2023 has still shown growth in adoption. I think Meta and Apple investments will continue to push that trend upward.
About a month ago, you announced that you have signed a licensing agreement with a yet-to-be-named media and entertainment company. Could you provide more details about the agreement and what players/investors can expect?
We’re still early in production on the unnamed title. At this point, all we can say is that the game is tied to an internationally-loved intellectual property with a massive audience that has generated billions USD in consumer revenues over the years. The audience for this IP indexes highly for gamers and those who currently use or are interested in VR, so we feel confident in the future value this game will bring to players and Beyond.
For those unfamiliar with the economics of licensed games, we will owe an ongoing royalty to the IP owner for the life of the game, but in exchange we get access to their characters, worlds, and storylines, along with marketing support toward their large fanbase.
You recently announced an expansion of your partnership with Combat Waffle Studios, the studio behind Ghosts of Tabor. Is there a possibility for you to provide more details about this press release?
Combat Waffle Studios has 2 additional games in production. We are not at liberty to share more about those titles quite yet, but the goal was to take the core of Combat Waffle’s mechanics and build games on top of that to super-serve their existing audience while expanding their total addressable market. In addition to the studio’s game development know-how, they command an incredible community of promoters and are already seeing buzz about these new titles across Discord and other forums.
Our relationship with Combat Waffle for these titles will be similar to our current relationship for Ghosts of Tabor where we act as their publisher of record, partially funding, producing, distributing, marketing, and selling the games in exchange for a revenue share.
Could you provide a short motivation as to why you should invest in Beyond Frames?
What Beyond Frames Entertainment produced in 2023 was a proof of concept. Under new management, a 50 MSEK capital raise in the summer of 2022 was transformed into a nearly quintupling of topline revenue, a return to EBITDA profitability, and the promise of future value with strong recurring revenues through existing publishing titles, and games within our studios being built on some of the most valuable IP in the world.
We are not a one-game company. We are a portfolio-based business with a diverse mix of internally built games, externally published titles, and other partnerships that generate equally diverse revenues. This brings a healthy dose of stability and growth compared to games companies that focus on one major launch every several years.
We are thriving compared to the market due to our operational approach and are very early in our journey. For those looking to hold short, we’ve already announced some incredible projects on the horizon. For those looking to hold long, we believe they’ll be invested in one of the strongest games and entertainment companies in the world as we work to be a leading global provider of immersive entertainment.