Ladies and gentlemen, hello and welcome to Media and Games Invest press conference. Throughout the call, all participants will be in listen only mode, and afterwards, there will be a question and answer session. Today, I am pleased to present CEO Remco Westermann, CFO Paul Echt, and COO Jens Knauber. Dear speakers, please go ahead with your meeting.
Good morning, everybody, and welcome. I would like to welcome our investors, analysts, and all other stakeholders in this call. Yeah, we're proud and happy to present a very exciting M&A transaction that has great synergies and a perfect fit to the company, and it's called AxesInMotion. That's what today's financial hearing is about. I would like to go to page four and quickly introduce the presenters for today. First of all, Jens Knauber, our COO. He's responsible for gaming, for the gaming studios, and he has also executed this transaction from the start, which is quite a while ago, and also brought it to the finish yesterday.
We have Paul Echt, our CFO, who's responsible for finance and investor relations, and who has also executed yesterday the capital increase that we did together with this transaction, where we will elaborate on in more detail. Yeah, myself, CEO, heading the company for quite a while and, really extremely happy with this transaction. On the right side of the slides, you see the shareholdings. They will be updated after the transaction because we're also very happy that our key shareholders, most of them also really participated very well in the capital increase, but also there we've got a bit more details later. I would like to move to the next slides and get to a few headlines of the transaction. The company is called AxesInMotion. It's a Spanish company. It's a mobile racing game developer.
It's really you have different segments, of course, for the games, and they are really specialized in the racing games with over 700 million downloads. That's really very substantial. Why did we do this transaction? First of all, there's a very good strategic fit to MGI's Vision 2025. We'll get back to that later in the presentation. You see the flywheel also on the bottom on the left side, where we're combining ad tech, first-party content and data, and that really drives revenue substantially and gives us a lot of organic growth. Where is the synergy potential? It's a company that has 87% of its revenues via in-game advertisements. As you can imagine, with our media part, we can sell those ads better.
Also, we can, of course, help the company a lot with user acquisition. The company's already growing substantially by itself, so it's a good, very, very cool combination. Purchase price, and also more details later in the presentation, EUR 55 million fixed and up to EUR 110 million maximum earn-out, depending also on the performance in the next years up to the full year in 2024. It's a highly accretive acquisition, adding 20% EBITDA to MGI, taking our synergies into account in the coming years. We financed the acquisition also partly via capital increase because we don't want to get our leverage higher. Current capital markets are, of course, how to say, it's not ideal. Also there we have to choose between not diluting our equity holders too much.
On the other hand, also not increasing the leverage because that's also what the market doesn't want to see at the moment, and also there we want to stay within a certain risk profile. Those are a few of the headlines. On the right bottom side, you see a bit more. Revenue 2022 expected EUR 9.2 million with EUR 6 million EBITDA, so a very substantial EBITDA percentage. Company has been growing very well, so 36% organic growth. We're paying a 9.1x EV/EBITDA multiple. Paul will go into a bit more detail when it's also about the earn-outs. Purchase price EUR 55 million, I mentioned already, and also the 700 million downloads. I would hand over to Jens to go into a bit more detail in the presentation.
Yeah. Thank you very much, Remco, and good morning, everyone. Today, I gonna tell you a little bit about AxesInMotion, and guide you a little bit through the key facts and the KPIs. As Remco already said, we are all, the whole team, everyone is super excited to have done that acquisition, and we are looking forward to work with the team over there in Spain, Sevilla. AxesInMotion at a glance. It's a leading mobile developer and publisher based in Sevilla, Spain. Some key facts.
They are coming with more than 700 million total downloads and adding of this really massive owned and operated supply to our portfolio at MGI, which also enabling us to use the synergies and leverage each other. The company has above 30 employees, all based in Sevilla, Spain. Also the employees, when we announced in the news yesterday evening to them, all reacted very extremely positive and are also looking forward to work with our teams at MGI. Company last year, 2021, it generated EUR 7.9 million in revenues and has some really outstanding EBITDA with EUR 5.1 million and a 64% EBITDA margin. The headquarters is in Spain, as mentioned already.
The company has three mobile racing games, all own developed, so it's an own IP. It comes with a 36% organic revenue growth and 87% of the monetization is done via in-game advertisement. Next slide, please. Here you can see the company is showing growth since 2014 until today, 64% annual growth. It's very strong in the U.S. In 2019, some highlights maybe in 2019, there was a new strategy adopted. The release with prototypes to unlock full commercial potential. You also can see in the numbers that this even pushed the whole company and also the KPIs, extreme.
They have still a strong focus on strong operation, and that's why the company is showing those good results. In 2021, they also released Extreme Car Driving Simulator, a remake of it, and also pushing the numbers again. Next slide, please. Now I give you an overview of the current portfolio of the company. Extreme Car Driving Simulator launched in 2014. The flagship title and main revenue driver of the company consistently delivered strong results and continued growth since 2014. It has a global appeal while U.S. is being the strongest market. Has generated 480 million downloads since release, so really a massive amount.
has an 88% revenue share of the company, and 87% of the revenues are generated via ad monetization. That's really the flagship title, and there's also a strong launch pipeline for further adding content and continuing with the game. Car Stunt Races: Mega Ramps launched in 2019. It's the newest game of the company. It's a stunt racing game identified as an attractive market opportunity for a global audience. The prototype also very interesting, was developed in only two months. That also shows how fast the team can react on new market trends and everything. There's a high interest in game in emerging markets, but really spilling over the developed markets.
The game has generated already in less than three years, 30 million downloads, still rising. It's a 5% rev share, but also rising and monetization 84%, ad revenues. Last one I'm gonna show you, the last game is Extreme SUV Driving Simulator, also launched in 2014. Yeah, it's recognized as one of the best off-road simulator based advanced off-road real physics. It's only available on Google Play. Porting to iOS is possible. We are looking into this opportunity, and we have successfully or they have successfully reflowed the game, growing daily downloads from 25,000 to 100,000. The game is still worked on, and we are also looking into the opportunity to bring it to iOS.
It generated 50 million downloads since release, 3% rev share of the company and 97% ad monetized by ad revenues. The next slide, please. Here you can see the revenue split of the top 10 countries, which is accounting for 66% of the total revenues. You see a split of the monetization model in-app purchases versus ad revenues, and also the platform mix from Google Play to iOS. There you can see U.S. is the largest market, accounting for 31% of ad revenues and 46% of in-app purchases.
Followed by Germany, Brazil, India, U.K., but it just shows how strong the U.S. Market is, and it also gives us the opportunity to further grow the U.S. market, but to also internationalize more and grow the other markets, especially in Europe. Yeah, next slide. For the next slide, I thank you all together, and I would like to hand over to Remco again. Again, we are all really excited to work together with the two founders, with the team, and really looking forward. It's a really nice acquisition we have done here. Thanks a lot.
Yeah. I'll take over here and put it in the strategic perspective of the company. This slide you'll see the flywheel that we have presented already in earlier presentations. This company is growing very well by combining the platform, the ad platform, with own content and with data. Each of those parts enforces the other parts and accelerates the whole growth of this company. There are more companies in the market doing this, but not that many, and we really see that it's driving organic growth, making us stronger and also driving profitability very well. Going into, where does AxesInMotion strengthen our flywheel? It's of course on the own content side. It's adding three great games which for...
Yeah, first-party content with a lot of ad space of course, and also need for user acquisition, which we can cater via the ad platform. It adds a lot of data. The bottom, 700 million downloaded games of course with the players behind it gives us a lot of data and those data drive our AI, artificial intelligence routines, and also again help us to target ads better, and by that make more money for the games itself, but also help our advertisers. More advertisers again also gets more publishers of course. This is the flywheel and that really works well. Yeah, we were looking for a great mobile game company and with AxesInMotion we have found that. If we go to the next slide.
Go a bit more in detail also regarding the elements of the flywheel. It's a company with very significant organic growth opportunities. The company has shown growth already in the last years. Substantial growth. We think, or we are convinced that we will be able to accelerate that. If you go through the main elements, user acquisition is very important. So far, the company has not really invested a lot of money in user acquisition, which means that all user growth basically came organically. This is something that we can speed up, where we can, with our media part, really grow the users faster and more, and also in territories where they're not so strong yet. That's a huge possibility. Our DSP coming into place, demand-side platform.
Another big synergy space is the in-game ad monetization. They are at the moment selling their ads via various intermediaries. With our platform, we can get better CPMs. We cut the middleman basically, so the whole margin space within the company. By the data parts that we have, we are able to further raise the CPMs, so the prices that they get for the ads, and also to increase the fill rate of the advertising. Here's substantial growth potential as well. The company itself has, of course, very substantial growth in the games, but also with new game launches. Two new game launches coming up. I have another slide on that coming up after this slide.
Yeah, the in-game item sales, they are doing a certain percentage as you saw on the previous slide, but that's below 20% basically. On item sales, that can be improved. We can also do more. We have a lot of experience in-house in doing item sales, of course, from our MMO side. Also here we see potential. Let's say, the usual, but still very important to be mentioned, content updates to really adding fresh content in the games and, yeah, bringing it out. As we saw in one of the previous slides also, they have also upgraded the games graphically and all those things. Those things are very important to keep the revenues growing. I would go to the next slide, which you saw in the games pipeline.
Yeah, there are two other races or let's say games in the same genre. I think that's important to say, we like companies that really are masters in what they are good at, or let's say that are really focused. This company is really very focused on this car and the racing genre, which they do very well, which of course also has the advantage that if you launch a new game in the same genre, you already have players or you have the player base for these type of games. You have the image in the market. They have two games coming up. Nitro Clash, which is quite far already in its development. It will also be a soft launch within the next 12 months. Big expectations. It's a car game.
Also again, same topic, but a bit different game of course. Gonna be launched for iOS and for Android. A bit further in the pipeline, so let's say it takes a bit longer to get it launched, but also a very cool game, multiplayer game, Drift Master. That one will be coming up. As I said, the company is growing already itself, has really good things in the pipeline, and we can leverage a bit with our synergies. That brings me to the financial part, where I would hand over to Paul to go into the financial details. Paul.
Thank you, Remco. Yeah, starting here right away, with the combined financials, based on 2021 performance. We see on the left side, MGI, standalone 2021, and in the middle, AxesInMotion with EUR 8 million revenues and EUR 5 million EBITDA. Very strong underlying EBITDA margin of 64%, which would on a combined basis have increased the revenues by 3% and EBITDA by 7%. This is actually not the beauty about this transaction. On the next slide, we see how it looks like also taking the buyer-specific synergies into account. Here we expect that we can increase the revenues on a midterm basis to EUR 24 million and the EBITDA to EUR 17 million and increase also the EBITDA margin to 68%.
This would already, on a 2021 basis, would have increased the revenues by 10% and the EBITDA of the group by 23%. This is in the end, what also Remco has mentioned as part of the flywheel, really, investing more into user acquisition on a very efficient way, through our ad software platform. At the same point in time, also monetizing the in-game advertising space in a better way and also the up to 50% margin fully stays in-house. That is something where we can leverage the company quite nicely. We have proven that actually with other games internally, especially with our casual games portfolio. Therefore, it's very concrete things and actions which we can take into account to really drive these synergies in the coming years.
This is also what we see here on this page and slides. We expect for 2022 a revenue of EUR 9 million, with a very strong underlying EBITDA of EUR 6 million. Nevertheless, already taking synergies for the coming years also into account, we expect to increase the revenues by 165% and the EBITDA by 176%. We have also been quite conservative here. We have also normalized the numbers for an IDFA effect, where the identifier is going out of the market and also have taken into account further certain licensing costs, which might come up. Therefore, yeah, there's a lot of potential in this company and it's very concrete.
Therefore, yeah, we're looking really forward to now get our hands on and realizing them together with the founders. Looking now into the transaction structure on the next page. Here we see what we have discussed in the beginning of the presentation already. We have a fixed purchase price of EUR 55 million. EUR 5 million of it is actually deferred after 12 months. Here we would come on a fixed consideration to 9.1x the EBITDA based on the EUR 6 million EBITDA for 2022. We have three different earn-out layers for the next three years, so for 2022, 2023 and 2024, where we just pay a kind of multiple of 5x for the EBITDA over achievements, which starts with EUR 7 million in 2022.
These EBITDA over-achievements will then be multiplied by five, but also been capped at EUR 20 million max earn-out for 2022, EUR 35 million earn-out for 2023 and 2024, and EUR 55 million for 2024. Based on this kind of revenue and earn-out multiples, we actually come to a very aligned yeah, move going forward because the synergies which we can realize together with the founders also partly getting paid to them, but at the same point in time, we also align interest. If you look at the multiples, they always stay below 8.3x because we also have this kind of maximum earn-out in place here and therefore, yeah, it's a great acquisition.
A lot of synergies which we can realize together with the founders and therefore also driving a lot of long-term shareholder value for our MGI shareholders. That brings us actually already to the Vision 2025. Before that, actually going to the guidance 2022, which we have updated. We have updated the guidance 2022, obviously also for the AxesInMotion part. Here we expect to grow now to EUR 295 million revenues and up to EUR 350 million, which means a revenue growth of 17%-25%. That's also very strong EBITDA of EUR 83 million-EUR 93 million, which is strong EBITDA growth compared to 2021 of 7%-11%.
This takes into account the first time consolidation, 1st of June 2022. Now I would like to hand over actually to Remco for our Vision 2025.
Yes. I would like to show you how this fits in the total, but I'm also just realizing that we didn't talk too much about capital increase. Would like to say a few words on that and thank Paul Echt and his team and the banks of course, and everybody who supported us here. It's difficult capital markets at the moment. I said before, we don't want to increase our leverage in this kind of markets. On the other hand, also not to dilute our shareholders too much. We chose the middle way. We placed 300 million shares, roughly EUR 30 million yesterday. We're well oversubscribed, which is very good in this market. Also, we're able to place it with a very limited rebate, which was much less than we have even expected in this market.
We're really happy with that. That's of course also driving further and makes also sure that there's still enough money in the bank account for also further M&A. This brings me then really to this last slide. We have presented our strategic Vision 2025 a few months ago. This transaction, AxesInMotion, is especially bringing us further with the flywheel, with becoming one of the five worldwide leading ad software platforms. It really helps us more on content that drives more advertisers because of those great ads. We can also see who is looking at those ads, so there's a lot of data available. Having those own ads brings on board advertisers on our platform and more advertisers brings in also more outstream publishers.
It makes really the flywheel go around, accelerate and go faster and get bigger. That's how it fits in the strategy. I would like to get to the end of this and come to the questions, but not before saying a few words. I would like to thank all the investors, of course, for their trust, also participating in this capital increase. I would like to welcome the team of AxesInMotion to the group. It's a great game studio where we will support them in their growth and see where we get the synergies, as much as possible. Thank, of course, the teams, because these processes, these M&A processes are very intense. I know that Jens and his team has been working on this for quite long.
I would hand over to the moderator for the questions. Thank you very much.
Thank you. Ladies and gentlemen, if you wish to ask a question, please press zero one on your telephone keypad. Thank you for holding until we have our first question. Our first question comes from Ken Rumph from Jefferies , please go ahead.
Hello, everybody. Thanks for the call and the presentation.
You're welcome.
I wanted to just make sure I understood, which part, 'cause clearly some of the benefits of this kind of accrue, as you say, to the buyer, to yourselves, MGI, and some accrue to AxesInMotion as it's defined and therefore would affect the earn-out. I wanted to just make sure I understood kind of, on, for instance, I think it's 21, maybe, the slide you talk about, you know, where you think you might be in the medium term. Yeah, 20, actually. I'm wondering kinda how much of how does that divide between the part that would generate earn-out payments and the part that kind of is all yours. A second question, and apologies if I missed it. Who are actually the vendors?
Is the money all going to the founders, to the team, to some other party? It's quite a significant amount of money. Are the founders gonna stick around? You know, is there a backer who's cashing out? I was just curious about that. Thank you.
Great. Thank you, Ken. I can take the answers or start with it, and maybe Paul will also fill in and Jens. Yeah, we bought this company at a low multiple, and maybe it's because, let's say, what's your reasons for that? First of all, the markets have come more under pressure, so the multiples that were paid for a normal game company have come down. But also we are paying this low multiple because there are these big synergies in the transaction.
There's usually more people interested in a company like this, but we got very fast exclusivity in this process because they saw that we at Games and us have a very unique position that we can really let them grow faster on the user acquisition side, can make more money with our ads. Factoring this in, these synergies into also their multiple made them really very quickly decide that even if that's low multiple, that they are really extremely keen on doing this deal with us. That helped a lot on doing the deal. Not all the synergies that we see with this transaction will be only on the AxesInMotion side, because the synergies in the AxesInMotion side will indeed be better ad sales, more user acquisition.
We will see a lot of synergies also outside of that, which is, let's say getting more advertising, the data advantage. The part that drives really our media companies. Altogether, tons of synergies, but indeed part of it we give to the sellers, which makes the sellers very happy in this transaction and also very motivated, of course, to generate those synergies. Because if you take the synergies only on our side, it's always more difficult from our experience to get a team to really work on them. Now they will be super motivated to get the synergies going. That's the reason and the background to that. Lower multiple, but therefore giving, yeah, let's say part of the upside, part of the synergies also to the sellers.
Paul, I don't know if you want to add something to this? Otherwise, I would come to the sales.
Ken, was everything answered on that end, or did we forget something?
Yeah, I think so. Perhaps just to expand on one point. If you increase UA spend, obviously that detracts from the profitability of the business, at least over some period, until you get a return on that through more players. How does that work from a kind of incentive point of view? Because, I mean, if I was gonna be extreme, I could say, you know, you could hold down the earn-out by ramping up the UA spend enormously for the next three years. The company makes no more money, gets loads more users, and then at the end of the earn-out period, you say, "Right, okay, we'll stop the UA spend and capture all the money." I'm sure that's not the plan, but sort of what's the expected path of UA spend? You know, 'cause clearly you're gonna do more.
I'm just wondering what kind of percentage it has been, and what will it be in the future?
Yeah, I can answer that one as well. Let's say usually UA spend should have a return on investment. There's some echo. Yeah. It should usually have a return on investment of 3-6 months. If you do UA, you see the revenues coming in very quickly, or let's say the profitability also coming in very quickly. We have, of course, also in this case, to also protect the sellers, with the governance structures in place, that it's not us, robbing them basically, and doing this. On the other hand, they have also the interest to grow this as much as possible, and that's also the reason that we chose a longer earn-out period. It's an earn-out period of almost 3 years, which of course, makes us together drive the user acquisition part.
There's a joint interest also here. It's with this kind of deals really to get an alignment of interests. That brings me, I think, to the second question that you asked, who are the sellers? The sellers are the founders, mostly, plus, the team also gets a good share of it. There will be a lot of people very happy, including in the investments done in the company. Yeah, we have, let's say, a lot of motivation here. That's also what you saw the price. There's EUR 55 million fixed, but then also very strong earn-out component of the EUR 100 million, up to EUR 100 million. We have also catered that into the deal.
There is, of course, all kind of governance structures in place to, let's say, let them stay with us for this period. Also hopefully after that period, and that's what we have seen with other acquisitions we did, that we are really good in keeping founders in the company, also after they made a lot of money, because the company's cool. It's cool to work together with people that are really energetic and grow in this company. We have from other M&A cases already shown that also after earn-out periods, we're really good in keeping the founders on board. I hope that that will be the case here as well, including the team, of course.
Okay, perfect. Thank you very much.
Thank you. Ladies and gentlemen, as a reminder, if you wish to ask a question, please press zero one on your telephone keypad. Our next question comes from Richard Williamson, Edison. Please go ahead.
Hi. Congratulations. Looks like a very interesting deal. I've got a couple of questions as well, if I may. Firstly, I suppose racing, you know, has not been your genre to date. The dynamics of the game, I again just to understand the dynamics of the game a little bit better. A lot of your sort of previous titles have been very long, you know, sort of, not long in the tooth, but nevertheless long-lived games, and very sticky. Do you see the same dynamics in these, in these sort of racing titles? You know, how long do people play the racing games for? Second question then, does it also indicate a direction of travel?
Are we gonna expect other acquisitions or games titles in specific genres sort of outside your historic expertise? A third question, if I may, just around the guidance, the uplifting guidance is, you know, if I can comment relatively modest, given the revenues and EBITDA you're talking about, and particularly, you know, when you look at the synergies, how long do you expect it to take for those synergies to flow through and, you know, to really impact the performance of the business? Thank you.
Thank you, Richard. I would like to start with the guidance. As you know from us from the past, we are always extremely conservative with our guidances and rather overachieve than overpromise. In that sense, I agree with you, there is synergy in the case. We are also convinced that part of the synergies we can start to get, pretty fast. For example, selling the advertising spaces, at higher amounts, higher CPMs, getting better fill rates. That's not something like you just put on a switch, but there are things that are really in one or two quarters, normally starting to work and then scaling up. User acquisition normally takes a bit longer 'cause you first have to have your UA routines getting it trained there and these kind of things.
Also there, we don't talk about years but rather about quarters. In that sense, yes, there will be synergy. We might indeed also here overachieve, but we don't want to promise it too fast, and we also shouldn't forget it's already May coming up, so part of the year is already gone. In that sense, time flies, and we are a bit more conservative on that. For the other question, I hope that answers your question as much as I can.
Yeah. Perfect. Thank you.
Go to the longevity of the games. I mean, that we work on a move more into mobile games. We have announced already quite a time ago, and it fits also very good to the flywheel to have those games with more advertising spaces which MMOs traditionally do not have. Moving into mobile games, that are a bit more casual also per definition then make sense. Also here we have a lot of longevity. Yes, I think you can say a bit more about the games and then how you see that.
Yeah, sure. Also exactly the term longevity, something which we see in this portfolio, and that's also for mobile game, by the way, really outstanding, when you consider the game has been the main game, the flagship title has been launched in 2014, and it still has such strong performance and still growing exceptionally. So the longevity of the users, also the ad spends we see and also now the in-app purchases is also coming from users who we just haven't logged in the game quite some time ago, which is very comparable to our current portfolio. I agree with you that we have never been in this genre of racing games.
On the other side, we also have the full team in place in Sevilla. Our marketing team and also our people at MGI are used to work in different genres. I don't see any issues with that. Yeah, the longevity of the players, it's just really nice to see. This also enables then the UA and the marketing team to bring in users at a really good price and with a really nice return on investment. Also, as Remco Westermann mentioned, for sure, ramping up marketing takes a while, but we expect to be able to further grow the game by our internal activities.
Just to mention it again, the longevity of the users already being in the game is also for mobile really outstanding. I hope this answers the question.
Yeah.
Perfect. Thank you.
I will get to your second question. Yes, I would say we will also get into other genres, 'cause what we see is if you have more genres, also here again, we can train our AI better and also support other companies in these markets better. Criteria that we look at, if you look at game studios, is that they have a lot of U.S. traffic and ads and also customers, of course. That ideally the revenues are coming from ads, but also a bit of in-app purchase because then you can also judge if people are really spending money. Of course, that it's a good game, that the games are growing, and that the comp...
Sorry, company or studio has proven that they can also do multiple game launches, so that it's not a one game company or one trick pony, as they say, but that they really have proven that in the same genre they can do more launches. Those things we are looking at. I said, the tension on M&A has gone down a bit because of also the capital markets. There are good targets around, but we will also be very careful of course, with what we buy. There, there's also not so much time pressure anymore on deals, that's also good. I hope that answers your question, and based your-
Wonderful. Yeah. No, that covers it nicely. Thank you very much for that.
Thank you, Ricky.
Thank you. Our next question comes from [audio distortion] , please go ahead.
Yeah. Hi, guys. Thanks for the presentation. Just two quick questions from my side. The first one probably fairly trivial, regarding the number of downloads. I think you wrote somewhere in the slide 700 million downloads. But then on another slide where you kind of introduced the three portfolio games, when I add up those three numbers, I only get to 560 million downloads. I was just wondering if you could provide some color on that.
Yeah, that's considered as a plus downloads. That's the difference on that end. It's plus 480-
download.
+480 on the Extreme Car Driving Simulator, +30 on the middle one, and +15 on the other one. Yeah. It's plus downloads. Yeah.
The second question is regarding also the games. Rather, you mentioned that they are developed by the company, the three portfolio games. Should we assume that MGI now will pursue the development of new games? If yes, I mean, how can we expect this to change the capital expenditure structure of the group due to development costs being a lot higher than your previous strategy of buying or licensing games?
Yeah, that's a very good question, and thanks for that. We have so far indeed always said that we will not get into game development, because of the, how to say it, the huge investments that are coming with that and also the launch risk that's tied to it. What I always took, I think as an example, is that to develop an MMO game, you need something like EUR 10 million-20 million. You should really develop like or be able to launch 10 per year, and then you have a three-year development cycle. You're coming to, what is it, 10 times 10 times 3 to at least EUR 300 million invest, if not EUR 600 million if the games cost EUR 20 million a game. That is for the MMO genre that we traditionally were in.
If you talk about this type of games, the development costs are a lot lower, so we don't talk about this kind of huge, expenditures. We have here a studio that in its genre, therefore the genre is so important, has already proven that it can launch new games. What we don't see here is that they also do a lot of prototyping. I think it was mentioned in the text on one of the slides. So they do a lot of prototyping, and most of those prototypes, they tested those market demands and things like that, and they don't even launch them. That's of course a lot cheaper than with an MMO, where you already need to do a lot more development work.
Straight answer to your question, yes, we are getting into game development, but in a totally different way than it would have been for an MMO. I hope that answers the question, also gives the rationale behind it.
Understood. Perfect. Thank you.
Thank you.
Thank you. Ladies and gentlemen, as a reminder, if you wish to ask a question, please press zero one on your telephone keypad. We have no further questions. Dear speakers, back to you.
I would like to thank everybody, and of course, I mean, if there's more questions coming in a later stage, we're happy to answer them. We're also happy to present, of course, the case again. Yeah, it remains for me to thank everybody for participating here and again to thank the investors for also participating in the capital increase and thanking the company to be willing to get into this transaction together with us. Thank you all very much and have a good weekend.
Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you all for attending. You may now disconnect.