People Can Fly (PCF) Q1 FY2024. Operating Profit 3,996 PLZ. Bulletstorm VR 'unsatisfactory launch'. Internal greenlight on Project Bitfrost & Victoria

[KR_EP]

People Can Fly​

Investor Relations (ENG)
Financial Year (FY)
Jan. 1, 2024 - Dec. 31, 2024​

Aviation History
People Can Fly (PCF) FY2023. Operating Loss 83,302 PLZ. Project Gemini (Square Enix) under strategic review. Letter to Shareholders.
Preface: FINANCIAL HIGHLIGHTS TRANSLATED INTO THE EURO on page 3. Full report published tomorrow (May 28, 2024) will post latest & review the latest on PCF job listings.

PCF GROUP SPÓŁKA AKCYJNA GROUP
Interim Consolidated Financial Statements for the first quarter of 2024 ended 31 March 2024 (all amounts in PLN thousand, unless stated otherwise).
*1 złoty = approximately 0.23 euros or 0.25 dollar*

STATEMENT OF PROFIT OR LOSS​

1 Jan - 31 Mar 2024​	1 Jan - 31 Mar 2024​
Revenue	56,881​	34,917​
Cost of Sales	36,462​	22,193​
Gross Profit (Loss)	20,419​	12,724​
Other expenses	121​	103​
Operating Profit (Loss)	3,996​	(1,501)​
Profit (Loss) Before Tax	3,751​	(1,501)​
Income Tax	4,615​	1,063​
Net Profit (Loss)	(864)​	(4,294)​

(page 10)​

Cash flows from financing activities

Proceeds from sale of other financial assets	15,000​	-​
Cash and cash equivalents at beginning of period:	124,016​	67,983​
Cash and cash equivalents at end of period:	118,354​	60,866​

(page 15)​

3. Revenue and operating segments

In the three months to 31 March 2024, the contract development segment included revenue from Project Gemini and Project Maverick, game development projects carried out by the Group in partnership with the publishers Square Enix Limited and Microsoft Corporation, respectively.

Positive cash flows from this segment enabled the Group to partially cover expenditure on games that the Group intends to publish on its own in the self-publishing model.

The copyrights (royalties) segment encompassed revenue that the Group derives from contract consideration (royalties) for previously produced games.

The main source of the Group’s revenue classified as revenue from the copyrights segment, i.e., the segment of royalties for previously developed games, is the development and publishing agreement for the game Bulletstorm: Full Clip Edition (remaster) of 24 October 2016, entered into between the Parent and Gearbox Publishing, LLC. The Parent has retained copyrights in Bulletstorm: Full Clip Edition by granting the publisher an exclusive licence for an indefinite term.
​

Self-publishing segment (licence fees)
Revenue recognised by People Can Fly Ireland Limited comprises the licensing fees charged for each game sold to the end user, adjusted for the profits earned by intermediary distribution platforms.

The two exceptions to the above described model are ‘Green Hell VR’, which was developed and released by Incuvo S.A., a subsidiary of the Parent, and ‘Bulletstorm VR’, which was co-developed by the Parent and Incuvo S.A. and co-published by the Parent and People Can Fly Ireland Limited.

(page 25-26)​

January 1 - March 31, 2024

Contract development of video games (development fee)​	Copyrights to developed games (royalties)​	Self - publishing​	Other Activities​	Total​
Revenue from external customer	35,669​	299​	20,913​	-	56,881​
Total Revenue	35,669​	299​	20,913​	-	56,881​
Segment's Operating Profit (loss)	(659)​	299​	4,356​	-	3,996​

(page 27)​

10. Financial guarantees, contingent assets and liabilities
On 24 May 2023, the Parent’s subsidiary People Can Fly Canada Inc. of Montreal, Canada (‘PCF Canada’) as the borrower, and the Bank of Montreal, as the lender, signed a credit facility agreement to grant PCF Canada two demand revolving facilities comprising: (1) a credit facility of up to CAD 1,200 thousand, intended to finance working capital and general corporate needs of PCF Canada, and (2) a credit facility of up to CAD 8,000 thousand, intended to finance future tax credits in Canada.

On 24 May 2023, the Parent issued an unsecured guarantee to the Bank of Montreal for up to CAD 9,200 thousand to secure the bank’s claims against PCF Canada under the credit facility agreement and security provided under that agreement.

Apart from the instrument described above, as at 31 March 2024 the Group did not have any other financial guarantees or contingent assets or liabilities.

(page 34)​

14. The Group's achievements and factors with a material effect on the interim condensed consolidated financial statements
In the three months ended 31 March 2024, the Group pursued the strategic objectives defined by the Management Board of the Parent, including:

• Continued development work, in collaboration with Square Enix Limited, on Project Gemini (a game in the production phase as at the reporting date), as well as holding strategic discussions with Square Enix Limited on the future direction of Project Gemini and the terms of further collaboration on the game, which have not been concluded yet.
• Continued development work on Project Bifrost (a game in the pre-production phase as at the reporting date; the game was internally greenlighted and advanced to the next stage of pre-production, aimed at developing a “vertical slice”, or a highly polished gameplay segment that showcases key mechanics and includes a portion of the final graphics, referred to as the “beauty corner”) to be ultimately self-published by the Group using its own funds (or funds sourced from third parties under debt instrument agreements) and based on new intellectual property rights that would remain owned by the Group. As the same time, in accordance with the investment agreement of 28 March 2023 signed by the Parent and Sebastian Wojciechowski as the Parent’s key shareholder and President of the Management Board with Krafton, Inc., if the Parent contemplates publishing Project Bifrost in a model other than self-publishing, Krafton Inc. will have the right of first negotiation and the right of first refusal with respect to entering into any such agreements. For more details on the investment agreement, see Section 16 “Significant events and transactions” of these consolidated financial statements.
• Continued development work on Project Victoria (a game in the pre-production phase as at the reporting date), to be ultimately self-published by the Group using its own funds and based on new intellectual property rights that would remain owned by the Group. As in the case of Project Bifrost, if the Parent contemplates publishing Project Victoria in a model other than self-publishing, Krafton Inc. will have the right of first negotiation and the right of first refusal with respect to any such agreements.
• Continued development work on Project Red (a game in the pre-production phase as at the reporting date). At the same time, the Group has been looking for a third-party published to partner with to further develop Project Red.
• Continued development work, in collaboration with Microsoft Corporation, on Project Maverick.

(page 35-36)​

16. Significant events and transactions

• Execution of short-term content rider for the development and publishing agreement for the Gemini Project

On 30 January 2024, the Management Board of the Parent announced that, following the expiration of the existing content rider to the development and publishing agreement for Project Gemini on 29 January 2024, the Parent entered into a short-term content rider with Square Enix Limited on 30 January 2024. The rider facilitates the continuation of development work on Project Gemini, enabling the parties to conclude strategic discussions regarding the project's framework and cooperation terms. In this context, the parties continued their efforts to develop a plan for Project Gemini, which required modifications in certain areas and a refocused approach. One of the consequences of executing the content rider was a considerable reduction in the Company’s margin on Project Gemini relative to prior levels.

(pages 36-37)​

• Settlement of the production costs for Bulletstorm VR and mutual termination of the development and publishing agreement for this game

On 15 March 2024, the Parent entered into an agreement with Incuvo S.A. concerning the settlement of the remaining key production milestones of Bulletstorm VR, covering the period up to the game's release date on 18 January 2024. As part of the settlement, based on the terms of the development and publishing agreement, the Parent, as the publisher, charged Incuvo S.A. with the cost of development work and quality control tasks carried out by the Parent on behalf of Incuvo S.A., amounting to PLN 871 thousand.

In light of the unsatisfactory launch of Bulletstorm VR, the Company and Incuvo S.A. agreed to terminate the development and publishing agreement for the production of the game, effective as of 19 January 2024. It was also agreed that Incuvo S.A. would not be entitled to any royalties from the game's sales. Any subsequent development activities related to Bulletstorm VR will be carried out through a production process in which the Parent is responsible for creating the final product and managing its commercialisation, including the market launch. The Management Board of the Parent is open to using Incuvo S.A.'s resources for the execution of the aforementioned development activities.

(page 38)​

Internal greenlight for Project Victoria
Project Victoria, which is in the pre-production phase, was internally greenlighted and advanced to the next stage of pre-production, aimed at developing a “vertical slice”, or a highly polished gameplay segment that showcases key mechanics and includes a portion of the final graphics, referred to as the “beauty corner”.

(page 39)​

 

[Garlic]

... They made a Bulletstorm VR?

 

[EnergyDrink]

... They made a Bulletstorm VR?

Yes, and it has very negative reviews on Steam and everywhere else. The release of the game in this state was an impudence. For example Eurogamer wrote: "It really is quite shocking how bad the VR version of Bulletstorm is"

 

[KR_EP]

Bulletstorm VR was delayed from December which meant it already missed the previous financial year. As to why People Can Fly (PCF) rushed it out of the door in January, then act real surprised/mad at VR studio Incuvo (which it majority owns) your guess is as good as mine. Almost as inexplicable as Square Enix taking 8 months to review Project Gemini due in 2026.

【金曜更新】今週の社長おすすめ格言・名言

Whenever you are asked if you can do a job, tell them, "Certainly、I can!" Then
get busy and find out how to do it.

（仕事を頼まれたら、「勿論できます」と答えよ。忙しくなったら、それをこなす方法を見つけよ。）​

セオドア・ルーズベルト

Only explanation I can think of is good ol' fashioned incompetence case of PCF wanting the financial bump under self-publishing it received this quarter, which leads us to the 3M24 slides. Slide FFVIII to be exact as it mentioned under Bulletstorm VR that WORKS ON IMPROVEMENTS ARE PROGRESSING - maybe complete those works before releasing it. Oh well...

PEOPLE CAN FLY
3M24 FINANCIAL RESULTS​

Staff Count

	31.03.2024​	2023​	Change YoY​
DEVELOPERS	520​	505​	+15​
BACKOFFICE	87​	88​	-1​
INCUVO	74​	76​	-2​
QA	61​	63​	-2​
GAMEON	21​	24​	-3​
TOTAL	763​	756​	+7​

Staff by Region

	31.03.2024​	2023​	Change YoY​
EUROPE	504​	498​	+6​
NORTH AMERICA	259​	258​	+1​

(slide 4)​

WORK-FOR-HIRE (“WFH”):

• EXISTING WFH PROJECTS ARE PROGRESSING
• MAVERICK REACHED FULL DEV CAPACITY
• NEGOTIATIONS WITH SQUARE ENIX STILL IN PROGRESS
• ADDITIONAL WFH OPPORTUNITIES BEING EVALUATED

(slide 6)​

SELF-PUBLISHING:

• BIFROST:
WORKS ARE PROGRESSING AS SCHEDULED
RELEASE DATE AS PROVIDED IN THE STRATEGY UPDATE GAME INTERNALLY GREENLIGHTED
FRIENDS & FAMILY TEST TO COMMENCE SOON
• VICTORIA:
WORKS ARE PROGRESSING AS SCHEDULED
RELEASE DATE AS PROVIDED IN THE STRATEGY UPDATE GAME INTERNALLY GREENLIGHTED

(slide 7)​

SUPPLEMENTARY PROJECTS:

• GREEN HELL VR:
  WORK ON DLCs (SOA) AND CO-OP PROGRESSING AS SCHEDULED
• BULLETSTORM VR:
  WORKS ON IMPROVEMENTS ARE PROGRESSING
• BISON:
  WORKS PROGRESSING APPROACHING VERTICAL SLICE

(slide 8)​

Like for like comparisons are difficult due to PCF 'TAKING MORE PRUDENT APPROACH BY PRESENTING NEW PROJECTS AS COSTS RATHER THAN CAPITALIZED' (slide 10). The mention of looking for more work for hire is worth keeping in mind, especially for RED which @CaptainCrunch queried in the previous financial results thread. But the main takeaway is that, despite the 2K Dagger in the back eventually proving fatal for Project Dagger & uncertainty over Project Gemini it continues to hire & push on with its self-publishing plans. This neatly ties into the Examining Real Residential Property Prices Index in response to gamesindustry.biz article: "Lower-cost regions are key to the industry's rebuilding" discussion thread by @ggx2ac about relocations in response to a (tone-deaf) editorial by Rob Fahey on the week his colleagues were laid off by IGN. So let's finish by reviewing in brief (full breakdown in the previous thread) the PCF careers page where the developer/publisher is looking to hire as its an example of a Polish company hiring staff in Pol-- Canada, the UK & Ireland. Hang on a minute.

COME FLY WITH US​

People Can Fly is one of the most experienced Polish video game developers. Our studio has made its mark with titles such as Painkiller, Bulletstorm, Gears of War: Judgment, Outriders.
Join our PCFcrew and let's develop new, exciting projects together.

Careers at People Can Fly​

...68 open positions in total (up 14 from the 54 that were listed as of April 30, 2024, although as I noted the day after, a couple more were added). I could go through all of them to see how many are the same as before but that would take effort & I'm tired. See if I had useful skills like -- oh I dunno experience, qualifications, the usual or the sheer balls gumption to apply without any of the above, I'd send off my CV. Why? Cause I'd want to be part of the attempt to fight the good fight, namely managing work for hire projects while struggling upstream against the odds to establish itself as a viable publisher in its own right. Even if you ain't sold on its line-up to date (I'm not - sorry OUTRIDERS you loot n' shootin' ain't slick!) let's all root for the Aviators!

 

[KR_EP]

June 2024 round up, emailed PCF a month back, querying the lengthy strategic review. No response but they replied in spirit with an update on its IR page. Plus a few pieces of news:

Current report No. 13/2024
Date: 19 June 2024
Subject: Agreeing on a plan for Project Gemini and concluding a content rider for the development and publishing agreement for Project Gemini
Legal basis: Article 17 Section 1 of the MAR

Report content:
With reference to the current report no. 58/2023 of 24 November 2023 and current report no. 2/2024 of 30 January 2024, the Management Board of PCF Group S.A. with its registered office in Warsaw (the “Company”) informs that it has agreed with Square Enix Limited, the publisher of the game codenamed Project Gemini (the “Publisher”), a plan for Project Gemini and, as a result, the Company concluded another content rider on 19 June 2024 to the development and publishing agreement regarding the continuation of the development works on Project Gemini rendered for the Publisher by the Company’s group in Europe in the work-for-hire model.

Moreover, with reference to current report No. 58/2023 of 24 November 2023, the Company's Management Board informs that, in accordance with the concluded content rider, the development of Project Gemini will not be continued by the Group on the current commercial terms. As a consequence of this fact, the Management Board estimates that the future revenues obtained by the Company on this project will only cover the direct costs incurred by the Company for its development.

The effect of including the updated commercial conditions in the valuation of Project Gemini will be a reduction in the margin achieved by the Group on the implementation of the entire development and publishing agreement with the Publisher, which, as a consequence of updating the contract valuation in accordance with International Financial Reporting Standard 15 “Revenue from contracts with customers”, will result in a decrease in standalone and consolidated sales revenues and a decrease in the standalone and consolidated financial result.
This current report updates the information contained in the current reports No. 58/2023 of 24 November 2023 and No. 2/2024 of 30 January 2024. It is not the Company’s intention to inform the public in the future on conclusion of content riders to development and publishing agreements, unless it is required by law.

TLDR: This deal gets worse all the time.gif Square Enix may have reduced funding and/or used its leverage as a publisher to secure better terms for itself resulting in a reduction in the margins for PCF. The second paragraph mentioning would suggest it means they only get paid for making the game, no additional source of revenue (royalties, merchandise?) are to be expected going forward. This is what I meant here in the previous Media Create discussion thread about power relationships between the publisher & external, contracted developers.

Still they got the next tranche of funding so they focus on securing more work-for-hire projects while continuing to invest towards becoming a publisher, bringing us neatly to the next topic..

Bulletstorm VR Announces New Upcoming Horde Mode Alongside A Major Update And Pico Launch Later This Year​

Warsaw, Poland, (June 26, 2024) – Together with Incuvo S.A. we have released a trailer today boldly acknowledging our missteps when launching Bulletstorm VR and announcing an upcoming free major update for fans later this year. The update will include a new horde mode, upgraded weapons, new skillshots, an improved energy leash, and the much-requested left-handed mode.

The latest ‘We fixed our s#!t’ trailer highlights that Bulletstorm VR did not launch in January at the expected quality level that players or People Can Fly wanted before showcasing the improvements Incuvo has made over its three post-release patches and promises a free major update later this year that will bring the biggest and best version of Bulletstorm VR’s bloody action-packed experience.

“I’m excited to reveal that we’re investing heavily in bringing the biggest and best version of Bulletstorm VR to PICO and existing platforms with a brand new ‘Horde Mode.’ Get ready for an adrenaline-pumping VR experience like never before!” said Dmitry Muratov, VR Senior Publishing Producer at People Can Fly.

“I am thrilled to collaborate with our talented development team to introduce exciting new features and enhance the overall core experience of Bulletstorm VR,” said Honorata Najda-Szajewska, Senior Producer at Incuvo. “We are dedicated to delivering an exceptional gaming experience that will captivate players and elevate our game to new heights.”

Bulletstorm VR will also launch on the PICO platform alongside this newly announced major update scheduled for later this year. For more information on the PICO launch of Bulletstorm VR, head to https://bulletstorm.com/pico.

Fans can check out the brand-new uncensored trailer on the Bulletstorm VR YouTube channel here.

The censored, non-age-gated, embeddable version can be found here

For more information, visit https://bulletstorm.com/. The updated press kit (here) contains source versions of the censored and uncensored Horde Mode/PICO Announce Trailer and the original launch media kit assets.

Presented during the Upload VR Showcase (links for both version of the Bulletstorm VR trailer are provided by PCF above). Good to see them addressing feedback & well played for tying it into the promotional trailer. Also a reminder that PICO is a thing because we can't have Facebook being the only VR game in town. But it doesn't change the fact it was an unforced error & one that PCF cannot afford to make again if plans to become a publisher are to pay off - true Aviators fix their shit on the ground & fly without needing to patch their parachute! Last up..

Celebrating Five Years of PCF In The USA!​

This June marks 5 years since PCF landed in the US – since the first US-based Aviators joined the company. It is a great honor to watch them spread their wings together with us and seeing our international growth. Thanks to our US Aviators for their continued excellence. Here’s to many more years of high-flying success together!

When reflecting on PCF’s growth over the years, our Head of North American Studios, Sam Girardin, said “Looking at our US presence today, I’m very proud to see how we’ve grown over the past 5 years and that we have a core group of pioneers positively influencing the incredible games we’re making.”

Despite everything they've been through with publishers taking Aviators for a ride, PCF are still hanging in there, still hiring with dozens of open positions on the Careers page. Wanted to highlight the extensive credits of Sam Giradin - the artist CEO formerly known as Samuel in the credits while I'm here. Game On Creative (or Game On as its referred to here) is a Montreal based support team acquired by People Can Fly back in 2021 (see below). It has a few open positions on its Careers page as well, acquiring a support team was a savvy move by PCF. It means they have both a support team & development teams based on Montreal, presumably the facilities are used for in-house projects as well. Hopefully staff can move back & forth to work on new IP like Bitfrost.

PEOPLE CAN FLY ACQUIRES CANADIAN STUDIO GAME ON AS COMPANY’S EXPANSION IN NORTH AMERICA CONTINUES​

Spoiler: Press Release

Warsaw, Poland, (April 27, 2021) – PCF Group S.A. (People Can Fly) acquired 100% of Game On Creative, Inc. (Game On) based in Montreal, Quebec, Canada. PCFG S.A. announced details of the transaction in its Current Report released today.

Established in 2002, Game On specializes in motion capture, cinematics and audio services for the leading companies in the gaming industry. It employs nearly 30 professionals. Among its major clients are such firms as Electronic Arts, Sony Interactive Entertainment or Xbox Games Studios. For more information regarding the studio visit: www.gameon.studio.

Game On has also been a long-term development partner for People Can Fly. It has played an important role in the development of PCF’s latest AAA title Outriders, which was released internationally on April 1st, 2021. The game was developed by People Can Fly for Square Enix.

“The acquisition of Game On is an element of our growth strategy announced at the IPO. As our trusted partner Game On will enhance our competence in animations, cinematics and audio to create Triple-A games and capability to develop several large-scale projects at the same time. After the acquisition, we do not claim exclusivity: Game On will continue to cooperate independently with other clients in the gaming industry, and Sam Girardin will remain its CEO.” says Sebastian Wojciechowski, CEO of the PCF Group S.A.

“Sam Girardin also takes up positions of the President and Studio Head at People Can Fly Canada.” – adds Wojciechowski.

“PCF Group S.A. is now a global player that has been growing at an amazing pace in the recent years. Joining the People Can Fly family is a strategic move for us that strengthens Game On’s ability to innovate with new technologies and services to produce high-quality content to our clients.” adds Sam Girardin, CEO of Game On.

Plenty of recent work on major projects not just in & around Montreal, it has a motion capture studio on site plus they work in game audio & 'talent management' & was most recently credited by Square Enix under the salad wordy category English Voice Production Management: Talent Management & Dialogues Recording & Dialogues Postproduction - Game On. Almost forgot..

​

If you're heading to Unreal Fest in Prague make sure to check out Jakub Kapuscinski-Bernatek's panel about our Gameplay Ability System in Outriders on June 20th 4 PM CET! #PCFcrew #unrealfest​

Not found a link yet but maybe it'll be posted later. Shall keep an eye out to see if the presentation offers any clues as to what Project Gemini will build upon from the work PCF did with Outriders.

 

[KR_EP]

​

I've been waiting for this moment.gif With the Unreal Fest 2024 presentation by Jakub Kapuściński-Bernatek, Senior Technical Director (aka the Thanks guy...Thanks Mobygames) finally uploaded, the time has come & so have I for a belated round up of July, August & early September. The most important being the announcement of a business review after Square Enix cynically used its own strategic review, leading to People Can Fly accepting worst terms. Quality is subjective, art doubly so, milestone payments are made at the behest of publishers, a power relationship tale as old as time. All the more reason why its overall plans for self-publishing ought to be protected at all costs during whatever decisions PCF make when reviewing its strategic options.

24.07.2024
Current report No. 14/2024
Resignation of the Member of the Supervisory Board of PCF Group S.A.

07.08.2024
Current report No. 15/2024
Announcement of the decision to commence a review of strategic options

06.09.2024
Current report No. 16/2024
Termination of credit facilities

Current report No. 17/2024
Change in the composition of the Supervisory Board of PCF Group S.A.

Current report No. 15/2024
Date: 7 August 2024
Subject: Announcement of the decision to commence a review of strategic options
Legal basis: Article 17 Section 1 of MAR – confidential information

Report content:
The Management Board of PCF Group S.A. with its registered office in Warsaw (the “Company”) announces its decision to commence a process of strategic options review in relation to the Company and its capital group (the “Group”).

The review of strategic options aims to evaluate possible directions for further support in the implementation of the Group's strategy. These may include obtaining a financial or strategic investor, or conducting another transaction that may result in a change in the Company’s shareholders or capital structure.

In the course of the review, the Company intends to engage in discussions with various entities, and additional information about the Company and the Group may be provided to selected entities, to the extent permitted by applicable laws.

Both the timeline and the final outcome of the review of strategic options are uncertain. No decisions have been made so far regarding the selection of a specific strategic option, and there is no certainty as to if or when such a decision will be made in the future. The Company will publish updates regarding the strategic options review in compliance with applicable laws.

During the review, the Group will continue to implement its current strategy.

Termination of credit facilities involves a 3 year credit line established last October for work-for-hire projects, before the strategic review by Square Enix. It doesn't specify what it was going to be used for (or why it was never drawn from, leading to its termination). Maybe related to any change in scope of Project Gemini which resulted in staff reassigned & others laid off. No idea!

1H Financial Results (January - June) due September 26, 2024 - career page currently has 38 open positions - some new, many the same or are they the same but different? No idea Pt II!

 

[KR_EP]

When you make a post & later that same day we start to get more news on the PCF IR pages. Career page is down to 33 openings, could be related to the latest on its changes to its line up:

10.09.2024
Current Report No. 18/2024
Disclosure of delayed inside information regarding the commencement by PCF Group S.A. of negotiations towards the conclusion of a Master Services Agreement with Krafton Inc.

Current report No. 19/2024
Conclusion of a development and publishing agreement with Krafton Inc. ...

Current report No. 20/2024
Date: 10 September 2024
Subject: Decision to discontinue further work on Project Red
Legal Basis: Article 17 Section 1 of the MAR

Report Content:
The Management Board of PCF Group S.A. with its registered office in Warsaw (the “Company”) informs that on 10 September 2024 it decided to discontinue further work on Project Red (“Project Red”), which the Company’s capital group (the “Group”) intended to publish either in a model with an external publisher or in a self-publishing model, i.e. by the Group as publisher, with the Group's own funds.

The discontinuation of work on Project Red is the result of: (i) the failure to obtain an external publisher to continue the development of this Project, with the Company's simultaneous inability to independently finance further development work on the Project with the intention of publishing it in a self-publishing model; and (ii) the Company obtaining a new project to be developed in a model with an external publisher, about which the Company informed in the current report No. 19/2024 dated 10 September 2024 (“Project Echo”), work on which currently requires the involvement of the development team previously dedicated to the production of Project Red.

The decision to discontinue further work results in the creation of the write-off as of 30 June 2024 in the amount of 100% of the value of expenditure incurred on Project Red and the write-off of the value of expenditure incurred on Project Red from the Company's accounting books on the date of the decision to discontinue Project Red.

We're seeing the first signs of its strategy having to change with the early concept work on Project RED (see my post here) giving way to prioritising work-for-hire. KRAFTON is its second largest shareholder, so it's notable that rather than sign a publishing deal for RED it wanted PCF staff reassigned to work on a new mode for a title of its own under the codename Project ECHO.

The full write off will be included in the 1H report due September 26, so we'll possibly get a clearer sense of how much or little work had already been completed by the amount spent on it.

 

[KR_EP]

23.09.2024
Current report No. 23/2024
Change of the publication date of semi-annual report for the first half of 2024

PCF: Did I say September 26? Well uhh...my dicktits dog ate my homework, so lets make that September 30. ​

However it does provide an opportunity to catch up, in chronological order, first the latest with Bulletstorm VR then using Open Source Intelligence (OSINT) to join the PCF Aviator dots.

Bullestorm VR Launches The Biggest Update Yet!​

Warsaw, Poland, (Sep 19, 2024) — People Can Fly and Incuvo released a free major update today for Bulletstorm VR that brings Horde Mode and a suite of improvements, while also launching the game on the PICO VR platform.

“The entire team has spent the past five months working tirelessly to bring as many improvements and as much polish to the game as possible,” said Senior Product Producer Honorata Najda-Szajewska. “And with the brand new Horde Mode, we’re excited to see how much creative carnage players can make to get to the top of the online leaderboards.”

In addition to the major 1.4 Update, Bulletstorm VR launches on the PICO platform with a 50% limited-time discount from launch until September 29, 2024.

“We’re thrilled to bring Bulletstorm VR to our platform — a kickass action shooter that our users will love!” said Carolina Lopes, Product Marketing Manager from ByteDance. “This fast-paced game is a fantastic addition to our PICO Store library, offering players a thrilling dive into a world packed with adrenaline-pumping excitement.”

Details of the patch in the link above plus news of a 50% discount on Facebook Quest, Steam VR, and PlayStationVR2. Launch was an unforced error that PCF must avoid going forward, especially for its self-publishing strategy (more on that in a moment) but at least it is addressing the problems. Keeping track of the job listings to get a sense of where things stand now.

Careers at People Can Fly​

38 in total, up 5 from 33 when I last checked on September 14 for the previous comment, including 15 programmers. Italic emphasis mine below from a couple publishing job listings:

Our creative teams are currently working on several exciting titles: Gemini is our new project being developed with Square Enix; Maverick is a Triple-A game developed in collaboration with Microsoft Corporation; Bifrost & Victoria are projects we're growing in the self-publishing model. We are also busy working on a VR and undisclosed projects, more information on those to come later.

Video Editor
(Employees can work remotely)

• Full-time
• Project: Publishing
• Department: Publishing
• Location: PL, Warsaw (Remote/Hybrid)

As a Video Editor, you will play a critical role in crafting high-quality trailers with a global reach. People Can Fly is looking for someone who is highly skilled, capable of making both small-scale trailers built around gameplay and large-scale trailers with high-quality graphic elements guided by teams. This person believes in the power a video has in changing perception and is highly detail oriented. Their primary responsibility will be to create captivating trailers that show-off the company and our line-up of innovative games, both VR and PC/Console.

Head of Community

• Dublin St, Baldoyle, Dublin, Ireland
• Full-time

As the Head of Community, you will play a key part of the PCF Self-Publishing division, supporting its goal of creating sustainable GaaS products. People Can Fly is looking for someone who is well-seasoned in the industry, capable of driving the development, execution, and growth of the community for all PCF self-published products. This person understands the impact a positive community can have on a game and will proactively offer solutions to problems that may arise from running a live gaming environment. Their primary responsibility will be to oversee the execution of community strategies that successfully help drive positive growth across our gaming audiences.

The mention of Games as a Service (GaaS) alongside its plans for self-publishing doesn't mean every title is GaaS but we know at least 1 is going to be in that vein. That leads us directly to our third item on the OSINT news docket which is an update on the strategic options review mentions in early August. Lot to unpack here, let's start with the launch window of 3 games.

Current report No. 22/2024
Date: 20 September 2024
Subject: Update of the timeframe for the implementation of the Strategy
Legal Basis: Article 17 Section 1 of the MAR

Report content:
Referring to current report No. 15/2024 dated 7 August 2024, regarding the commencement of the strategic options review and current report No. 3/2023 dated 31 January 2023, regarding the update of the strategy of PCF Group S.A. and the People Can Fly Group (the "Strategy"), the Management Board of PCF Group S.A. with its registered office in Warsaw (the “Company”) announces the completion of the progress evaluation of the Strategy's implementation. As a result of the evaluation, the Management Board has upheld the key assumptions of the Strategy, on the condition of obtaining new financing, and has updated the following objectives defined in the Strategy:

• based on the current level of advancement in the implementation of the projects carried out in the self-publishing model, the Company plans the release of project Bison for 2025 and projects Bifrost and Victoria, under early access formula, for 2026;

Ok so we now have one self-published title due in 2025 (Bison), while in 2026 there are two set for an Early Access release (Bitfrost & Victoria) as well as Project Gemini for Square Enix.

• based on ongoing and planned projects, the Company plans to maintain the involvement of teams carrying out work in the work-for-hire model at approximately 370 FTEs in the period 2025-2028 (average during the whole period);

Combine that with the detail in the job listings & we can infer that at least one of those 3 games is GaaS, most likely, one or both of the Early Access titles. See the mention of having approximately 370 full time employees (FTE) involved in work-for-hire (WFH) titles like Square Enix (Gemini) & Microsoft (Maverick). If we look back over slide 3 in the the Q1 FY24 report, PCF advised it had 763 employees as of March 31, 2024. Using a percentage calculator, 370 is 48.9% of 763 - nearly half of its total staff are involved in the WFH side of the business.

• the strategic goal of the Company's capital group is to generate at least PLN 3.3 billion in total revenues over the period 2024-2028, with approximately 5% in the year 2025, approximately 27% in the year 2026, approximately 29% in the year 2027, and approximately 33% in the year 2028;

Regarding the mention of PCF wishing to raise additional funding over the next 3 years, it might help to use currency conversion. Google has 1 Polish złoty (PLN) pegged at 0.26 US dollars or 0.23 Euros. Keeping it simple, will use 0.25 to divide the PLN figure by 4 for a very, very, did I say very? I mean very broad outline of the amounts involved in either US dollar or Euro.

3.3 / 4 = 0.825
PLN 3.3 billion = 825 hundred million is the amount of total revenue it expects to generate between 2024 - 2028. With our trusty percentage calculator here's the annual breakdown.

5% of 3.3 in 2025 = 0.165
165 / 4 = 41.25 million

27% of 3.3 in 2026 = 0.891
PLN 891 / 4 = 222.75 million

29% of 3.3 in 2027 = 0.9569999999999999
PLN 957 / 4 = 239.25 million

33% of 3.3 in 2028 = 1.089
PLN 1089 / 4 = 272.25 million

Add those all together & you get 775.5 for 2025-28 so if you take that away from the 2024-28 figure of 825 we get 825 - 775.5 = 49.5 million is the approx. revenue for CY24. I think.

Napkin maths is my kryptonite! Help.gif In other words, Bison is Small Fry but its two Early Access launch of Bitfrost & Victoria combined with Gemini is when the big fish gets reeled in.

• the Management Board does not envisage recommending to the Company’s General Meeting a payment of dividends until the Company achieves revenues, profits and positive income cash flows from planned self-publishing activities, i.e., no earlier than in relation to the profits generated for the financial year 2026.

The company expects shareholders (who have seen a decline in the market cap over the past few years) to wait until 2026 at the earliest before they see returns on their investments.

A key condition for the further implementation of the Strategy will be obtaining new financing in the amount of approximately PLN 350 million during the period 2025-2026, i.e., to the extent necessary to maintain the current scale of the Company's capital group's activities in the area of projects carried out in the self-publishing model.

Using the same 0.25 conversion thats 350 / 4 = 87.5 meaning PLN 350 million = approx. 87.5 million US dollar/Euros is the around the amount of new financing required in the next two years for the projects under the self-publishing model. 87.5 / 2 = 43.75 million per year. Which makes sense based on staff counts, the amounts involved, at least one title being GaaS.

Due to the above, analytical work on introducing the incentive program based on the condition of achieving PLN 1.5 billion cumulative EBITDA profit by the Group in the years 2023-2027, described in the Company's current report No. 3/2023 (due to the above-mentioned changes in release dates, this condition would need to be adjusted, particularly by shifting the execution period to 2024-2028) has been suspended until the completion of the strategic options review and the acquisition of new financing as mentioned above.

Remember our previous change to the strategic plan. New plan. No I'm not going to try & work out the changes in revenue forecasts from 2023-27 to the new ones for 2024-28. I'm done.

As part of the strategic options review, the Management Board will also analyze the scenario of not obtaining new financing in the required amount or not meeting other conditions related to projects intended to be carried out in the work-for-hire model, and the consequent release of the Bifrost or Victoria project in the work-for-hire model.

Last sentence repeats the fallback option of one or more self-published titles going WFH, possibly referring to its deal with KRAFTON (PCF are working for on a mode for Project ECHO as per my last post). I must stress all of this is tales from my ass my attempt to try to work things out ahead of the any new Current Report that outlines the full details of its strategic options review. Reminder the 1H Financial Results are due on Monday. Will aim to have a new OP to cover the report. Next Week in InstallBase Games Magazine.