505 Games

505 Games’ investment pays off

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In January 2015 Starbreeze sold their game “Brothers – A Tale of Two Sons” for USD 500,000 (SEK 4.1 million) to 505 Games (Digital Bros). Just a week ago 505 Games released the game on iOS and it has already generated a decent level of revenues. Release on Google Play is soon to come.

Features boost Brothers’ initial iOS sales

When Starbreeze (STAR-B.ST) sold the Brothers game to 505 Games in January 2015 its PC- and console version had generated approximately SEK 6.5 million to the company since release. With regards to its low revenue generation it is understandable that Starbreeze did not consider it as being a part of their core business and hence made the decision to sell it. However, in retrospect the price may be a subject for discussion.

Almost one year later, after having spent time and probably a few million SEK on porting the game to other platforms, 505 Games finally released it on iOS one week ago. It immediately received app store features in more than 100 countries, which actually is quite rare for P2P games (pay-to-play) nowadays.

By looking at available data it appears as 505 Games already one week after the game’s release on iOS has received a decent amount of revenues. Due to extensive and world-wide spread app store features the game conquered a top30 paid download placement on most major markets since October 22. Though, the features are now starting to run out.

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According to Thinkgaming the game has so far generated on average 3,000 downloads per day on Iphone in the United States. If assuming that Iphone represents around 65 percent of the total amount of downloads it would imply that Brothers on average has been downloaded 4,600 times per day in the United States since release. At a price of USD 4.99 per download the game has generated revenues of USD 23,000 per day, whereof 505 Games gets to keep USD 16,100.

As the graphs above show the United States is not the only market where Brothers has been generating a significant amount of downloads on. Numbers suggest that the United States so far represent 20 percent of the game’s total amount of downloads, meaning that 505 Game’s daily revenues has been around USD 80,500 since release (gross revenues of USD 115,000).

According to these assumptions, that are based on available market data, the game has generated approximately USD 640,000 (SEK 5.4 million) in revenues during its first 8 days since release. Not far from what it (the PC- and console version) generated to Starbreeze during a period of five quarters.

There also exist other, somewhat unclear and more pessimistic data, that suggests total revenues of approximately USD 400,000 (SEK 3.4 million) on iOS since release. Regardless it is clear that 505 Games most likely made a great decision when they decided to acquire “Brothers – A Tale of Two Sons” for USD 500,000.

Except for iOS revenues the game has also been generating revenues on PC and console since January 2015. Soon it will most likely be released on Google Play as well.

Disclosure and disclaimer

None of the companies mentioned above (Starbreeze or 505 Games/Digital Bros) are currently a part of Alpha Researcher’s Alpha Picks or portfolio. No one that is affiliated with Alpha Researcher currently holds any position in Starbreeze or Digital Bros. This article is written to solely highlight the financial performance of “Brothers – A Tale of Two Sons”.

Alpha Researcher will not be held responsible for any errors or omissions in this analysis or article. Remember that no one but yourself is responsible for your own investments.