So we'll come back to this one. So here's the Cold Iron transaction. So we'll start with the introduction of Cold Iron Studios and the product itself. So Cold Iron, based in San Jose, California. They're known for releasing a game called Aliens: Fireteam Elite. That game came out in 2021, and then ended up selling around 2 million units in less than two years. In terms of the studio itself, it was previously owned by Daybreak prior to its sale to EG7. So along with the transaction selling to EG7, we ended up having to spin it off as the prior management team did not want to buy it. So existing shareholders at the time of Daybreak, Jason Epstein, as well as myself, ended up retaining ownership.
But with that said, the new product that they're making, we can't disclose what the IP is, another major IP, but I will say that people could connect the dots pretty easily based on what the first game was and what the second game could be. But the idea is the same multiplayer, third-person shooter, you know, set in the same universe, and ultimately the target release date right now is for 2025. Once again, 2+ million units sold in less than two years. Over 5 million players who have played the game, including Game Pass, currently at 81% positive rating on Steam, which is very good.
We look at the transaction as being a solid fit with what we're trying to do, and today, along with the presentation, we're going to cover what our future plans are for EG7 and how Cold Iron transaction fits perfectly into that. But overall, great fit. This is meant to be first of hopefully many third-party core franchise products that EG7 could be publishing going forward. And also the structure that we created with the work for hire as well as the publishing transaction makes the returns very attractive. So here's the transaction overview. So standard publishing deal. So I think, you know, one thing that maybe we didn't realize, as we're saying that, is that a lot of the audience that we have, investors, et cetera, do not know what that means.
So this is meant to explain what a standard publishing deal is. Transaction for this particular publishing deal consists of two items, right? One is the publishing deal with Cold Iron between Daybreak. The other one is the Cold Iron co-development deal with Toadman. In terms of the agreement, it's an exclusive worldwide publishing right for Daybreak to publish the second title that Cold Iron is making. Development advance is $23 million, but that $23 million is not meant to be invested day one. It is invested over time based on milestone review and approval. So subject to whether Cold Iron is remaining on track or not, that money could be stopped. So it's not an investment day one. That's not how it is. It's a project financing.
In terms of where the money is going, 100% of the funds are going into making the game. There's no profit that Cold Iron is making with this particular, cash flow coming in from Daybreak, as it's going to fund the game development itself. No profit margins, no extra fees or anything like that that's baked into any part of this transaction. In terms of the co-development agreement, you know, it's approximately $8 million in contract value. Profitability-wise, about 55% pre-tax profit margin for Toadman, which is a very nice margin for a co-development contract. And the overall combined contract, when you look at the eight, you know, netting out from the 23, you get to this $15 million net investment economics.
As to the economic structure of how it works, Waterfall, priority of cash flow, et cetera. Once again, funding is in installments over time. So it's throughout the development period. There's milestone that's delivered, and once it's delivered, it's reviewed by third-party as well as the independent board members. Based on their approval, that's when the milestone payment could be released. As to the third-party outside game development consultant, we'll talk about that on the next slide. But in terms of how the eventually, when the game comes out, how the cash flows, the way the standard publishing contracts typically work is that publisher funds the project. Until they get all their money recouped, there's no profit share.
So $23 million over time goes in, subject to the game making progress as it should, and based on that, once the game comes out, there's the initial commercial release. Platforms take the very top of the waterfall, 30% to Sony, Xbox, Steam, etc. After that, there's the IP royalties that go out. So in this case, third-party, major, you know, global IP, there's a IP licensor that'll take their royalty cut. After that, you get to the game net receipts number. That is the number that's utilized to pay back the publisher first and any other investment the publisher makes on top of that, including marketing, etc., gets taken out first, and after that is when the profit split happens. So until that profit split happens, there's no profit anywhere for Cold Iron to be made.
Once again, this is how the standard publishing agreements work. As to what we think of the returns possibilities, we have two cases here. On the right side, we have the publishing plus the work for hire. At the very top line, it says 2 million unit sales over three years. You know, we look at that as a downside case, namely because the first game sold over 2 million units in two years. Assuming that it sells two over three years, we expect that the returns could be very positive, 32% at the $50 price point, and then, you know, at, at $60 price point, 40% IRR, and then it goes up from there.
Our base case, we do believe that this is somewhere between three to four, potentially even five, in terms of what we could achieve, and that's the underwriting behind why we're doing this deal, and we believe that it's a great transaction for EG7. When you look at the publishing only, of course, that's not factoring in the work-for-hire revenues. So, as a result of that, you see lower returns potential from this, but even then, in a downside case of 2 million units over three years, we do see positive returns in a conservative case without factoring in the work for hire, and then the returns above that is quite compelling, even on a standalone basis. One more note there, in terms of the initial price per unit, that's the initial price.
So the way this works is that year one, there's the pricing for the game when it comes out, and over time it goes down. So this returns analysis factoring in the likely decline in revenues from pricing of the game itself, so that it is factoring that over time, over three years. So we do believe that this is a very, you know, compelling contract and opportunity for EG7 from an economics perspective, returns perspective. Deals like these are not readily available in the marketplace, and this, we look at it as almost a benefit because of the related party, 'cause we get to steer the transaction to EG7 because we're shareholders there. And we're looking for shareholder returns also for the investment that we made in EG7.
The first title did have a third-party that distribute the game called Focus. They made a very nice return on the first game. The economics for this particular transaction and how it's structured, if you were to compare it apples to apples, I can't disclose what the transaction terms were, but I could tell you that it is comparable to potentially better. That's how we structured it.
So, it is meant to be a core part of what we're trying to do for the business going forward, to be able to look for core franchise-based opportunities, because this is not meant to be, "Hey, we get a game out, and we're done." The idea is that we get this game out, and then we have a franchise that we could continue to get additional games out, and that core franchise concept, we're gonna talk about a lot more with the presentation. Excuse me. The related party information here. So once again, it's formerly owned by Daybreak. So Daybreak acquired Cold Iron back in August 2020, and Daybreak was sold to EG7, December 2020.
Between those two periods, a lot of negotiation with the former founders, and then, you know, management of EG7, where we felt that given that the game is coming out eight months after Daybreak's acquisition. Oh, I'm sorry, EG7's acquisition of Daybreak, that it would have been very valuable for EG7 to acquire Cold Iron as well. They opted not to, and they had good reasons behind it. Their view at the time was that Cold Iron had yet to release a game as a studio, which is true at the time, so they opted not to do it. We did structure an option agreement around that, though.
The idea was that after the game comes out, from the initial release date for the following 12 months, whatever the EBITDA is, the agreement is eight times that, you know, EBITDA, as the purchase price for EG7. As a lot of people probably here realize that during that time period, EG7 had some ups and downs. There was no way that they were able to afford that type of transaction during that 12-month period, so the option has expired. So with that said, we look at it as when you look at product for a video game company or publisher, there's multiple ways of getting product. One way is to build it yourself. Another one is to go buy it. In between that is publishing, which is renting. We call it renting, right?
Because you're really financing the product without having to pay a premium of buying a business. So because of that, we look at that as a nice hybrid opportunity for really anyone, including EG7, to be able to strike a, a compelling publishing deal, as long as the economics and returns profile makes sense. So that's why we put this publishing deal in place. Along with that, we thought adding the work-for-hire feature was a nice way of boosting additional yield, which is what, what, what it's going to be doing, also helping Toadman with building that foundation for working on Single-A to Double-A products, where that track record could help them continue to expand their capabilities with other, third-party clients. On the independent review process front, so fully independent process, contract, oversight committee, by the board.
There are four independent members that were within that committee. Jason Epstein and myself, nowhere close to it. The committee went through their full review, including utilizing some expert advisors, Tiger Team Productions, game development and production evaluation, as well as where the game has been in terms of development process. Ernst & Young financial review, and Wiggins, who does a lot of work around contracting and publishing and games, was representing EG7 Daybreak in this regard for the contract. You got Baker McKenzie, who is the company's external counsel, that's advising us for the usual conflicts, related party, MAR, et cetera, that the securities law-related advice that they provided us and guided the independent board members.
So based on all those evaluation, it was a lengthy process, with evaluation by third party, lots of discussions around whether this makes sense for EG7 or not, but given the economic compelling economic nature of this transaction, as well as, you know, being able to also rely on third party that's evaluating to say, "This is very much in line and very standard type of transaction." Hence, the reason why the independent committee members ultimately approved the transaction. Now, we got this press release out on Friday, and I think it caused a lot of confusion, and, yeah, we could have absolutely done a better job of communicating it better.
We had a number of the investors reach out to us to let us know that, "Hey, this information just is not enough." So that's why we wanted to make sure that we covered this first, as this may be top of mind for a lot of the investors that we have. Get the information out, of course, we'll be happy to answer additional questions around it. And then, you know, this will come up again later in our. Because it used to be in the back of our presentation, but we covered it now, but it is going to be a core part of what we're trying to achieve as a business going forward. Okay? So we'll take questions on it later, but, one question, could I go back with this? Red button. Okay, so maybe , stepping back a little bit.
So, now we'll start the presentation, the Capital Markets Day presentation, as it was intended, okay? So, here's some of the primary goals that we have for today. You know, we're looking at this presentation as a really informational communication of our company to our target audience, which is existing prospective investors, as well as the Capital Markets Committee. And the primary topics that we wanna cover today, it is related to what we are and who we are, and then where we are today versus where we were and where we're planning on going. Our go-forward plan, along with the business focus and strategy for our future, and then the target goals that we have released today with the press release. We'll talk about that more. I do wanna stress this.
Sometimes I like to do this where we talk about what we want to talk about, also talk about what we are not going to be doing, which is, hey, this is not a company marketing presentation by any means. This is meant to be. We do need to, reset might be a very strong word. That's not the intent. But with that said, I think we haven't communicated with the investor base like this in a very long time. So this is where a bit of a reintroduction is happening as to what we've achieved and what we're planning on achieving, and really, be able to get on the same page with the expectation of what the investors may have as to what the management plans are, what the board is intending to do with this business.
Also, we're not looking to raise capital. This is not a capital raise presentation. This is, once again, informational for the existing as well as the prospective investors, and there's no product showcase here. So, this presentation is going to be very businesslike. So, you know, there might be our community members that may be listening to this presentation because they're interested in some of the games that we have, but no pretty pictures. This is going to be very dry to a certain extent, but we believe that it's going to be quite informative. Okay? So as to the main topics, we'll first start with the company overview, where we are, and then we'll talk through some of the leadership background. So, you know, I think reintroduction of myself, I think that's useful, and management team with Fredrik and also some of the board members.
We have a couple of new board members that joined. We'll talk about their, their background as well and some of the track record of management. And then we'll go through how we progressed over the last number of years, and then, industry dynamics and business opportunity as to how we look at the industry. And I think that's important. You know, there's a lot of research out there, but I think when you evaluate an opportunity, I think you, you do have to understand what the management's perspective is on how we look at the industry, because that informs how our strategy is executed and developed. And then we have the business strategy that's based on the dynamics, go-forward plan, targets and outlook, and then once again, topics for shareholder consideration. We got the press release out today.
There's a couple items in there that we'll talk about more in detail, and then we'll wrap with questions thereafter. So we'll get past this. So company overview today. So some key facts. You know, this is what most people already know, but based in Stockholm, most of our operations are in North America and partly in Europe and founded originally as Toadman in 2013 as a co-development studio, but rapid, accelerated growth with 6 business units today, and we got 10 live service games that we're operating, as well as third-party services in gaming, including marketing, distribution, publishing, and work-for-hire.
Over the last couple of years, successful rationalization of the business, with the new leadership coming in, and business has really been optimized for cash flows, and that was the intention, and we'll talk about why, and then, you know, where we go from here going forward. Now we do believe that this, the reason why we're having this meeting is to communicate that we're ready for the next steps, be able to get those plans out and get the investor base to understand how we're approaching the market and business.
Now, some of the key figures for LTM, the second quarter numbers, SEK 2.1 billion of net revenues, SEK 595 million of EBITDA, SEK 454 million of cash on the balance sheet, and we currently have 0 debt. Group companies, Daybreak, acquired in 2020. PC, console, live service, that's what we do primarily. I say "we" because I also serve as the CEO of Daybreak, based in San Diego, California. It's formerly known as Sony Online Entertainment, so they're known for really EverQuest and H1Z1, those two titles.
EverQuest being one of the, I would say, three seminal fantasy MMORPG IPs in the world, along with World of Warcraft and Ultima, as one of the very early MMO that was quite successful, and we like to call it the Fortnite of its generation. And you got Big Blue Bubble, also acquired in 2020. It's been our star darling over the last number of quarters with their performance. We'll talk about how they're trending, but their focus is really mobile. Yes, they have capability across PC, console, et cetera, but they're really a mobile studio that they focus on. London, Ontario, Canada, that's where they're based, and their game primarily is My Singing Monsters, with a couple smaller titles that do generate revenues, but on a smaller scale.
Piranha acquisition in 2021, primarily a PC console, and they've started their business as a co-development studio. Great reputation as to what their track record is, but they ended up getting into their own first-party title with MechWarrior Games. MechWarrior line is still out there, MechWarrior 5. They just announced a new MechWarrior game coming out in 2024, MechWarrior 5: Clans, which we're looking forward to. But they have been working with MechWarrior IP for over a decade at this point, and they are the steward of that particular IP. Also ramping up on co-development work as well as we've announced in the past, a SEK 100 million contract that they were able to sign a number of months back. They continue to make great progress on.
Toadman, the founding organization, PC console game co-development studio. Super talented group of individuals, headquartered in Stockholm, but also offices in Novi Sad, Serbia, and also Berlin. About 150 people total. They're ramping up on multiple fronts, obviously, Cold Iron development project, as well as a couple others that we hope to announce soon. Fireshine, originally called Sold Out. Their business was in more distribution, physical distribution of games, working with three publishers, you know, Frontier, Team17, and Rebellion, but they're moving into or have been moving into indie publishing, where digitally they've been having some success with, you know, 2022 Core Keeper, recently another title, Shadows of Doubt, both titles at 90+ positive rating on Steam, building a nice track record and building steam there.
But still, they're generating nice revenues from physical distribution as well as ramping up on digital publishing. Petrol, you know, their reputation is quite well known as the guys that do all the key art for Call of Duty. Also worked on titles like Elden Ring, but marketing agency, creative branding, based in L.A., have been. You know, they also make contribution here with their presentations, so they, they've been a great part of the group. Then capabilities across the value chain. So we did wanna sort of map this out for the investors to understand, like, alright, what does everyone do within the group, six business units? So, you know, looking at the first column, you got development. So under development for PC console, you have Daybreak, Piranha.
Big Blue Bubble has that capability, but not really focused on it, and Toadman. On the mobile, Big Blue Bubble is the one there. No one else is really focused on mobile. And then on third-party services, you have Piranha and Toadman working on development, co-development projects. On the live service side, Daybreak, that's our, our bread and butter. You got Piranha with MechWarrior Online, and then you got Big Blue Bubble live service with My Singing Monsters. On the publishing, Daybreak has always been a publisher, but with that said, you know, last game that we published as a new title was H1Z1 back in 2015. So now going with the, Alien Fireteam or, or the, the Cold Iron's, new title, Daybreak will be stepping back into that publishing capability, and Fireshine is, distribute or publishing and distributing indie digital titles.
Then Petrol is, on the publishing side, you know, marketing, creative branding, is where they're focused on with, you know, working with some of the biggest AAA, publishers in the world. Distribution side, Daybreak, we have our own platform. So when you look at our profitability as a business at Daybreak, there's not a lot of that 30% cut that's going out to Steam because we get to distribute our own games on our own platform. So in terms of the, the cost of distribution is way lower versus relying on Steam. Fireshine, you know, physical distribution is what they're focused on, as well as digital on Steam. And third-party services, Fireshine is working with those three publishers I mentioned, for their products, to put them on the shelf as a physical distribution. And globally recognized IP.
So that's one of the key selling points, you know, for EG7. We have a number of first-party owned IP that we believe are highly, highly valuable and can be utilized further for additional titles, EverQuest being at the top of the list, together with My Singing Monsters. EverQuest PC/console feature, as well as My Singing Monsters, more continuing to be on mobile. And we have H1Z1, which generated over $200 million of revenues over three years, when the game first came out, that we get to evaluate for further opportunities going forward. And you got PlanetSide 2, which still remains today as the only massively multiplayer online first-person shooter that's out there. Third-party major IP, we have some relationships with top, you know, license owners. We got Warner Brothers with DC Universe.
We have Hasbro/ Wizards of the Coast, Magic: The Gathering. We have Lord of the Rings Online, which now is owned by Embracer IP. And then you got Dungeons & Dragons also, you know, with the Wizards of the Coast and Hasbro, and then MechWarrior, owned by Microsoft, that we continue to make products for. Financial performance. So chart on the left, quarterly numbers. So this is the same chart that everyone should have seen, along with our quarterly earnings announcement for the second quarter. What you see there is some ups and downs due to our seasonality, but in all cases, growing and highly profitable. On the right side is what you're seeing is the LTM figures. We go back to third quarter 2021 to now.
The reason why we go back to third quarter 2021, partly, is because that's when the transition of leadership happened. We utilize that as the comparison point, you know, 1.8x net, net, you know, revenue LTM growth, and then 2.4x LTM adjusted EBITDA growth. All this has been organic in nature. Of course, we did add Magic Online, beginning part of 2022. That's not a traditional M&A deal. It is a acqui-hire/publishing. long-term publishing relationship where we do generate significant revenue and very high profitability from the relationship. That type of transaction came about because of our relationship with Wizards of the Coast, with Dungeons & Dragons and other types of games that we've done in the past with them.
So they entrusted us with their top IP to be able to do that, but highly profitable. But we do look at it not as an acquisition. It's more of an organic transaction that we were able to bring in without real capital outlay, typical for what a, you know, acquisition would be. Revenue mix by region and platform. On the left side, you have, you know, revenue mix by region. As I noted earlier, most of our revenue come from North America, 67% of it, and then Europe, Western Europe, mostly, 25%, and Asia, a small portion of it, and a smaller portion in Oceania. And then on the right side, you have revenue mix by platform. These are all for LTM, second quarter, 2023.
PC is our biggest revenue source, with 54%, and you have mobile at 35% and a couple smaller, you know, sort of slices for consoles. And of our portfolio, there's a couple games that are on consoles. You have, you know, DC Universe Online, which is on all the consoles, and then you have PlanetSide 2, which is on PlayStation, but largely most of our portfolio of live service game are on PC, primarily. Contribution by business unit. On the left is net revenue mix. For the last quarter, LTM, we have Daybreak with the biggest contribution on the revenue side at 39%, and Big Blue Bubble, 29%, has become a lot bigger than it used to be as it has grown a lot.
Then, after that is Fireshine with their digital, as well as physical distribution, and after that, Petrol and Piranha and Toadman at 2%, but growing. Then on the adjusted EBITDA mix, you know, as we've noted in the past, Big Blue Bubble is the most profitable. So you see that their contribution at the EBITDA line is the highest at this point, at 61%. Then you have Daybreak below that at 34%, and then 9% for Piranha, and then it goes down from there. Significant portion of our profitability are driven by really two businesses at this point, with other business lines continuing to have some traction.
But we expect this to be the largely how we maintain our mix going forward with Big Blue Bubble and Daybreak contributing the majority of our profitability. And now we're going to step through some of the individual business unit P&L history. So we have Daybreak here. So going back to 2018 through LTM Q2. So revenue growth has been. You know, you could see the spike in 2020, and then 2021, you see the drop. 2020 spike is related to the pandemic. And then you see the drop in 21 as pandemic effect was, you know, sort of going down. In 2022, you see the jump because of Magic Online.
That was, brought into our portfolio beginning part of 2022, and then LTM period so far, we're tracking below it. You know, 2023 has been a slower year so far. And then when you look at the profitability, similar trends, so you see from 2019 to 2020, big jump, and then it's slowly declining. And there's a couple of reasons behind the decline there. You know, one of them is related to obviously cost increases that everyone is experiencing. So is Daybreak. So there's cost increases that we're dealing with and also some level of fixed cost component as revenues come down. You know, there's a fixed cost component that does eat into the margin more, as not everything is variable. But nonetheless, you know, it's, it's this highly stable portfolio that we've been managing.
EverQuest is turning 25 next year. It's a mixed portfolio of games where you see certain games a lot more stable than the others, and we'll go through that with some additional figures here. This is our monthly gross revenue trend by game. So there's a lot of lines here. You know, we didn't put any numbers here because we do believe that that's a little sensitive as to disclosing all that information. But the bar chart, the bar in the back is meant to be the total consolidated gross revenue per month. And then the line charts are with the x-axis on the left figures meant to be the gross revenue by game.
Couple things that should jump out here, when you look at the total gross revenue trend, where we are today versus where we were, before the pandemic, it's largely consistent. We've been able to maintain it quite strongly, even though it's been on a downward trend since the pandemic peak, but nonetheless, still higher than where we were in 2019. But with that said, the top line chart right there with a high volatility, that's DC Universe Online. DC Universe Online is the biggest game that Daybreak currently operates, because it's on multiple platforms, but it's also the most volatile. Of all the games that we have, that is the most casual among the bunch. More casual games tend to be more volatile.
You see a lot more in, you know, inflow of new players coming in, but they're not as sticky either. Whereas EverQuest, you see it's, it's, you know, if you. It's difficult to see here, but you'll see that EverQuest numbers actually have gone up because it's super sticky core audience that's not going anywhere. We continue to push out great content, and they're sticking with us, and we expect 25 to be even a better year as we celebrate. I'm sorry, next year to be a better year as we celebrate our 25th anniversary for EverQuest. But it is variable. But among the portfolio of games that we have, two games that were most, I would say, negatively impacted with declines are DC Universe Online and PlanetSide.
The other games that we have are highly, highly stable, and we continue to maintain great profitability. And then MAU Trends by Game, this will largely reflect the same as what we just saw. So, when you look at the total MAU, once again, comparing it to pre-pandemic to where we are, it's largely flat. And then you see the DC Universe Online MAU, the one that's declined the most, along with the PlanetSide 2 and the rest of the portfolio being very, very stable. Okay. Big Blue Bubble. So this is a very pretty chart. So as you can see, for 2022 and 2023 LTM period, big jump.
When you look at the historical periods, when Big Blue Bubble was evaluated for the acquisition, their performance level was in that SEK 93 million-SEK 40 million of EBITDA versus the net revenue. 2021, they saw a little bit of a bump, and then 2022, in the fourth quarter, is when we saw that huge influx of players coming in, along with the virality on TikTok. And LTM period, you know, it's been on a downward trend, but nonetheless, because now this is factoring in the fourth quarter and then higher numbers for year to date, you see that these numbers are way higher than what it was in 2022, because that only includes one quarter of significant uptick. But highly profitable, you know, back-to-back record year so far.
And we expect 2023 to also close at a very, very strong number. You know, some of the figures that we have for how fast net revenue and EBITDA has grown, obviously very big numbers. And LTM period, the net revenue is, you know, so far, 375% year-over-year growth, EBITDA, 424%. And performance is still related to what the viral uptick was. The team has been working very, very hard, 'cause once you acquire users, the next step is you try to retain them the best you can. So that's what they're working on with constant content updates, great content.
This particular month, September, is their anniversary month, so nice uptick in numbers again, because the benefit of having 140-150 million people registered for your game is that you have an audience that likes your game. So you get to go back to them every time you have a celebration to be able to reengage them. You're not gonna reengage everyone, but you get to reengage a good chunk of them, and then you see a nice uptick from that with your revenues and then a lot of the KPIs. So we do expect September numbers to be great, and then, you know, going into the fourth quarter, December typically ends up being one of the best months as well for My Singing Monsters.
But the key theme or, you know, I guess we made this comment multiple times over the last couple quarters in our earnings, but we do want to make sure that we communicate that the expectation is that they are going to settle down at a lower point. They're not gonna maintain the peak level. It's just not, not how it works. So while we got the great benefit of the uptick, and the new normal will be higher than where we were back in 2020, 2021, meaningfully higher, we expect it, but nonetheless, it's not going to be at the SEK 600 million SAC of net revenue level and then SEK 366 million SAC of EBITDA. KPIs. So gross revenues by month and MAU.
So, gross revenues, once again, you see the peak in November and December and then January, and then you see the decline, and then, in April is where we have Easter celebration, et cetera, some additional content, so you'll see a little spike, and then, you know, it's trending, in a downward, you know, slope. On the right side, you see the MAU. Whereas, like, when you see the big spike that happened in early part of 2022, you see that peak and drop right away. What's been happening with this particular, uptick has been that the team has been working very hard with great content update to moderate that decline and try to settle it down at a higher level.
So that's what you're seeing, a little bit of a uptick as it's declining, and we won't know where the new normal is yet. So we're, we're, we're going to see a nice jump in September. It's gonna drop again in October. But that trend ultimately will settle down at a certain point that we expect to be able to maintain. Once again, lower than the peak, but significantly higher than before the viral uptick. Piranha, great year so far. So Piranha, you know, MechWarrior five performed reasonably okay. But with that said, the DLCs have been performing really well. And MechWarrior IP is an interesting one because it's not a mass-market IP, but it's a very hardcore IP, where there's a fan base that just love it.
So every time we get a DLC out, they, they come back to pay for it and play it, right? So that's why you see, so far LTM period, you see a nice jump because we got a DLC out, and, you know, we have a new DLC coming out relatively soon also. And then, you know, we have a new game that we announced with MechWarrior 5: Clans that's coming out in 2024. So along with MechWarrior franchise, we're able to continue to drive nice results for Piranha, and then 50% of their staff is also doing, you know, work for hire and at great margins as well. So they're able to really continue to drive their business forward.
So we're excited for them to see what they could do with not only MechWarrior IP, but building out that additional capability or really rebuilding it, because that's what they used to do on the work for hire. But they're seeing a nice momentum there. But you know, more to come on the new game. We're excited for that, a new MechWarrior 5: Clans game . When we look at MechWarrior-based and IP-based games, we're not thinking that we're gonna sell millions of units. That's not the point. The point is, is it a good investment or not? Meaning, how much money are we investing? What do we expect to get out of it? It's a significantly positive outcome when we do the math as to what we expect from it. So MechWarrior 5: Clans is going out next year.
In terms of how much money we invested. well, we expect the performance to be. We're not thinking, "Hey, look, it's gonna be way better than MechWarrior 5." We based our projections based on how MechWarrior 5 performed, and that is the baseline for how we think about how the Clans game could perform. And it's gonna be a nice outcome for Piranha and overall group. Toadman, so, you know, work-for-hire, primary focus, right? So with that said, you know, prior to Toadman business really transitioning at some point under the prior management team into making their own first-party games. Prior to that was nicely profitable work-for-hire business.
Management team decided that, "Hey, we got to make our own games, and Toadman has the capability to be able to do so, so let's try that." As you can see, the results did not bear out, when you looked at the results 2020 to 2022. We're turning it around. Cold Iron transaction would be a nice step in that direction, as well as a number of other projects that the team has been signing up. Benefit of that, we'll start seeing in 2023, latter part of this year, as well as 2024, where we expect Toadman to be profitable in 2024 going forward. It's a trend that you can see, but at the same time, over the last couple of years, has been somewhat difficult in terms of profitability.
Fireshine, you know, this, so this business is also transitioning, right? So, you know, historically, distribution business, which is quite stable, but at the same time, 100% reliant. So they have no control over what games. So it's Team17, Frontier, and Rebellion, whatever games they got. If they have delays, then Fireshine has delays in their revenues. So there's a lot of dependency on third-party, but that was their business. Very little risk, highly profitable. Okay. It's not highly profitable, but consistently profitable, that they've been able to manage their business over the last number of years, but they've now gone into digital publishing as we see that as the future and physical distribution is continuing to go down, as most people are consuming their content digitally versus physical.
So that transition was not only because they want to, but part of it is due to necessity as well. But great success in 2022 with Core Keeper coming out of early access on PC, and then we expect that game to do really well on console when it comes out as well. So once that happens, we'll see another uptick from that, benefit. But LTM period so far on the physical distribution side, not as many titles from their three publishers that they work with. And on the digital front, not the best comparison to Core Keeper as to what they have this year, hence the reason why you see a decline in their performance, but profitable. Petrol, the revenues look great. You know, they, they've seen a nice uptick in their revenues, but their profitability continues to be an issue for us.
Nonetheless, you know, they, they do work with some of the best AAA publishers in the world, representing the best games. Then they have a very strong clientele that they could rely on, but they've been pushing to grow their business. Along with that push, there's additional cost that, that went into increasing that revenue, but at a lower margin than we like. So there's steps being taken there to manage that margin better, and to get that margin up to where we want it to be. But just like Fireshine, until Fireshine transitions mostly into digital publishing, their margins will be low 'cause physical distribution is a low-margin business. Petrol is a similar situation in, in terms of service business, you're not gonna have significantly high margins.
So their margin should be somewhere between 10%-20%, depending on what kind of contracts they're signing. And we do want them to get back up to that level going forward, and we're working with management team. Management team is doing what they can in order to get there, but more to come on that front with Petrol. But for now, profitable, but we need more improvement there. So that's where we are today. So what, what's the summary? Highlights. And some of this, we'll talk about why we're here, you know, in the next section, but, you know, we're stable and predictable at this point. Very solid cash flows, as we've demonstrated over the last number of quarters. Significant cash, no debt, good liquidity.
We have some very compelling assets, and from a underwriting of risk perspective, really not a lot of risk, as to how we operate our business very conservatively. Now, what are the questions? And this is what we want to answer: You know, what's next? What's going to drive our growth? And, how are we going to be utilizing the cash that we have, on the balance sheet, as well as cash that we're generating? So let's talk about the leadership. So bit of a reintroduction of sorts here. So this is the group management and the board. So, you know, acting CEO of EG7. My background, primarily, prior to taking on Daybreak, back in beginning of 2015, my background was in finance, so both private equity as well as leverage finance, as well as investment banking.
So I would say I'm fairly classically trained finance guy, and then we ended up acquiring Sony Online Entertainment. Originally, the idea was for me to go in there to really restructure the business and leave it alone, but we ended up doing a lot more than just restructure. Of course, we ended up with a nice, successful outcome. And with that said, now been doing this for the last nine years, so I do feel very comfortable with the industry, as well as expertise around game development, publishing, all around, as well as having the business background to be able to marry that together with the games business to make sense of it. Fredrik joined us a couple of years now already, our CFO and Deputy CEO.
Wealth of experience in terms of, you know, working within the local markets with public companies as the CFO, as well as board member on multiple boards, has been instrumental in really bringing our company to where we are from a financial controls perspective. We are a grown-up at this point versus where we were two years ago, thanks to Fredrik. Jason Epstein, a majority shareholder now, he owns- I mean, I'm sorry, not majority. Largest shareholder now with, with about 10% of, of the shares outstanding, with the additional shares that he acquired over the last 12 months, serves as the Chairman of the Board. Jason and I have been working together for over 20 years.
So my mentor/my partner at this point, but we've had a lot of success working together on opportunities, and we continue to find great situations where we could create value for the shareholders. Marie-Louise and Gunnar, you know, board members at EG7 for a very long time at this point. They bring that stability, the foundation and continuity from where we were to where we are today. A lot of experience, obviously, in this market, both as leaders as well as just being able to work within the local exchange and the community to guide us in the right direction as how we, you know, move the business forward with that. That's, you know, sort of a Nordic knowledge and business knowledge. And we have two new board members that we added.
You have Ben Braun, new board member. He's a partner at Liontree. Liontree is one of the preeminent media technology investment banks in the US. Ben was the one that sold Marvel to Disney, so, very experienced. He is one of the top media bankers in the US, probably in the world. So he brings a wealth of strategic knowledge and experience to the company to take us to the next level as, as we work on the next steps. Ron Moravec. Ron, Ron's background is games. So, you know, we brought in Ben to provide us with additional strategic guidance as to how do we continue to drive our business forward. And then you have Ron, who is the real expert in games, formerly COO of EA's biggest studio, located in Vancouver.
Prior to that, co-founder of Relic, studio known for Company of Heroes, and then multiple executive roles at some of the big gaming publishers in the world. EVP at THQ, as well as at Nexon, which is one of the biggest Korean publishers in the world. And he also has experience on work for hire, so he just sold a business to Keywords, you know, sometime last year. So, we're really looking forward to Ron making a great contribution with his knowledge and experience to be able to also steer us in the right direction as we embark on the next steps. Some of the successes that we've been able to produce over the last several years.
So some of these are not meant to be, "Hey, look, this is what EG7 has done." Some of this is going back to, you know, what we have done prior to us joining EG7. But the first one here is Daybreak acquisition from Sony. We acquired it beginning of 2015. The underwriting for it was super simple. We're, you know, business guys, finance guys. I like to play games, but at the same time, my focus and expertise is really on the business front and operational front. So looking at the business, you know, Sony wanted to divest this asset because it's not core to them. They make PC online games. Sony makes their money from PlayStation, which is console. So ultimately, they decided to sell it, but broken business.
They lost over $400 million over seven years. Significant accumulated losses. When we bought the business, they were losing about $30 million a year. We went in 30 days, lots of big changes because we, we like to operate quite decisively when there's changes that need to be made. Got it to profitability within the month, and then we ended the year significantly profitable from $32 million of net loss the year before to $12 million dollar profit in the year after, 12 months later. And since then, obviously, we've done really well to be able to find a nice outcome there. So transaction value-wise, distressed business, very low valuation, so the returns on this was exceptional.
And then along with Daybreak transaction, we ended up folding in Standing Stone, which was formerly called Turbine, but I think Warner Brothers. still kept the name Turbine, so we ended up having to rename it Standing Stone. Lord of the Rings Online and Dungeons and Dragons Online, same thing. You have a situation where you have a media conglomerate, Warner Brothers. At some point, these games are not big enough for them. So for them, "Hey, look, it's generating, you know, $20 million, $30 million, $40 million of revenues," but they want to make $500 million bucks with their new game. So when it becomes of that certain size, it's no longer within what their focus would be, so they look to find other opportunities.
Because of the relationships that we had and the demonstrated success with what we've done with Sony Online Entertainment and prior to that. I didn't put Harmonix here, but Harmonix was another deal that we did, another nice outcome. I didn't put it there because we didn't do anything other than buy it right. But nonetheless, that was also a very nice outcome. Because of that track record, we were able to get this deal done with Standing Stone Games, Warner Brothers. Games. $147 million of gross revenues over the last number of years since we bought it. $81 million of game level EBITDA. Similar transaction where we really didn't have to pay a whole lot up front because it was a restructure. Situation was, hey, their licenses were expiring.
We had to go get the license extended, and after we bought the business, we got the revenue to grow because neglected by former owners, we get to take the business and put the right TLC on it to be able to trend it in the right direction, which is another successful outcome. Cold Iron transaction, Scopely sold it to us back in August 2020. As I mentioned earlier, this one was a studio acquisition. So Cold Iron history is a little interesting because Cold Iron, I looked at the deal back in 2017, when they were making a co-op shooter game. And then, we ended up losing out to Fox. So Fox ended up coming in very, very last minute, and FoxNext is gaming, a game development arm of Fox, or used to be, that focused on mobile games.
But they wanted to get into PC console. They ended up buying Cold Iron, 'cause their view was, "Hey, look, we got a bunch of great IP at Fox. You should utilize that to make a, a, you know, PC console shooter." So they utilized Aliens. So FoxNext bought it, but Fox got sold to Disney. Disney does not make games, so Disney was like, "Get rid of this." So they ended up selling it to Scopely, and Scopely is like, "Well, we make mobile games. We don't make PC or console. Get rid of this." So we ended up being on the receiving end of that, another unique transaction that we were able to strike. When we looked at it, the game was probably 70%-ish done, but what they were pitching is that they wanted to make a free-to-play game.
I don't know if you guys are gamers, but free-to-play game set in the Aliens universe is not a pleasant experience. In terms of that type of environment, you're not gonna spend hundreds of hours in that environment, and also it's very difficult to craft a free-to-play economy with a game of this nature that would make sense. So our perspective, underwriting, we're the only one to come up with this, which was, "Hey, not interested. We'll tell you what, if you make this into a premium title, we'll buy it." So we were able to shift them into premium title development because our underwriting was, "Hey, look, Alien IP, worldwide, major IP." Evaluation of the game itself, great core gameplay. So our view was, "Hey, look, if you could develop this game as a premium product where people are willing to.
They see the value of, hey, look, great gameplay, this fantasy of playing as a colonial marine against the Xenomorphs hasn't been done in a very long time. If you could do that, good, then people would be lining up to experience it," which was our underwriting. So, you know, after we, you know, acquired it August 2020, we ended up getting the game out in 12 months. Now, we could have spent more time and more money and ultimately got it to even a better point, but we got what we considered to be a good game out. And now, as we're talking about the publishing deal, the idea is, as we talk about some of the business model in terms of how we approach game development, we'll talk about that.
Similar here, the idea is that, "Hey, look, you have a good product, you make it better." You sort of take the logical next step, and that's how you continue to improve the value proposition for your audience. But another great outcome, over 2 million units sold, 5 million, you know, players have enjoyed the game, and we look at that as a potential franchise opportunity going forward because of that success that you could utilize as a foundation. The last one is, Magic Online. We talked about it briefly earlier. Development and publishing deal, more acqui-hire. We took on the team and already profitable, long-term license, and then continued to generate great revenues and the profitability.
Over the next number of years, you know, we do expect that contribution could be in the tens of millions SEK of revenues and profitability, you know, which is also very high. Summary of the management, really the background as well as our, you know, what the value is that management brings to the table here. What we think about in this case is, hey, look, we have the requisite sector expertise, and that also comes from our underlying business unit leadership. They've been doing this for a very long time.
On top of that, some of us who have come from the outside industry but been doing it for almost, you know, a decade at this point, we understand this business from multiple angles, and because of that, we've been able to structure nice situations with great returns, and then that unique skill set of being able to put that business filter on to be able to underwrite it and look at it institutional sort of way, and then coming up with a plan to execute. And then every single one of those four examples that we provided, and the fifth one that I didn't put, Harmonix, also a nice outcome where we sold it to Epic last year.
So in all cases, we've produced nice returns, in some cases over 100% IRR, and that's the expertise that at least we like to think that we have, that we bring to the table when we look at situations also like EG7. And I'm gonna call it a situation because we'll talk about how we're approaching it and how we have approached it over the last couple of years, but we're very proud of our track record as to what we've been able to do in the gaming industry. So now the progression. I used. I called it transformation at first, but I'm like, that sounds a little too strong because we're not quite done yet. So I use progression because it's also a gaming term.
So we're still in the process of trying to get to the destination that we want to get to. So here, here's the chart, right? This is sort of how we got to where we are. So when you look at the very bottom left, you see Toadman founded as a work-for-hire studio. And then after that, you know, with the market, you know, I think in the Nordics, really opening up for M&A. And then, of course, Embracer is the one that led the way, and there were others that followed suit, Steelfront, you know, EG7, et cetera. But M&A strategy made sense at the time, along with that, significant growth, roll-up vehicle, and I personally don't really have any criticism around that. I think prior management team did great, right? They were able to secure some really good assets.
Not all of them are great, but that's typically how roll-ups work. You have some winners, and you have some losers, okay? So that's what happened here, but nonetheless, as to what they achieved, I think it's great. And then new leadership came about, me and Fredrik. This happened around August of 2021. And when we came in, the idea was originally, I would say, acting CEO, right? So my role was really to come in. This is not a job that I applied for, okay? This is something that, you know, the board asked me to step in and, you know, help sort of transition. So the idea was, all right, step in for some amount of time. Great assets, market was relatively okay still. Let's see whether we could find a strategic exit for the business.
That's what was considered until Innova situation happened. So that happened in early spring of 2022, Russia, Ukraine, and Innova's business is in Russia. So when that happened, all sort of conversations ceased, and then, you know, we had to sort of retrench and really think about where do we take this business. You know, we weren't thinking about it so strategically at the moment because we're thinking about, "Hey, maybe we could find a better home." But now we were forced into thinking about what do we do with this business going forward long term. So that's what we did. So over the last 18 months, after sort of, you know, initial transition into leadership, lots of strategic conversations about where do we take this business.
What we did is what I consider to be pretty straightforward, and this is the approach that, you know, I've utilized for all the other situations that we talked about with some of the deals. Always like to look at opportunities with low-hanging fruit, medium, and high-hanging fruit. In terms of where we are, what's the low-hanging fruit that we could pick off immediately to create value? So it was initially to really create stability and predictability with our business, which means cleaning up the balance and shutting down projects that we didn't really feel great about, and also optimizing for cash flows. That's what we did. We do think that we were successful in doing that. Now, as we sit here today, we have a great business, solid liquidity, good cash flows, solid assets, and a management team that's motivated.
Where do we go from here? And that's what we want to focus on today. So here's the roll-up strategy. We talked about it real quick. That's how quickly we grew from 2000. the years went missing, but 2019 to 2021. M&A roll-up strategy, and ultimately, you know, this happened to I think a lot of the other roll-up strategies, which is used to when you started, I think there were like a lot of, "Hey, look, it makes sense to buy that." But it eventually became buy what you can because the market got too hot and prices were going up, became a seller's market.
So your options were going down, and then because of that, you saw situations unfolding where people are just buying what they can, bidding it up, overpaying for stuff, the usual stuff that happens in any industry. That, that's what happened in the gaming industry as well. But that M&A strategy no longer works. You know, I could question whether it really ever worked in the first place in this industry. But nonetheless, we are where we are because of the strategy. There's a lot of positives to that, but there are areas that weren't so good that we cleaned up successfully. So stage two, rationalization phase. What did we try to do? So we mapped out what we're trying to achieve here, right? So that's another thing that we like to do. There's the expected outcomes and desired outcomes, right?
Desired outcome is outcomes that we want to happen. How do we get there is sort of the strategy that, you know, plans that you come up with. But desired outcome is, say, let's reduce risk, okay? Market is opening. M&A market is no longer what it used to be. We can't grow that way, but at the same time, we got some really solid assets. Let's get these assets in order, and then let's reduce risk by getting rid of things that we shouldn't be spending money on. So reducing the overall risk, which also increased business predictability, those sort of go hand in hand. And then we increase cash flow, strengthen liquidity, our balance sheet is super clean, and then we're fully funded. We're not relying on third-party to fund what we want to do or, you know, grow our business.
The rationale for that, obviously, I just mentioned that M&A growth strategy was no longer viable. And then, you know, there was good bit of randomness, I would say, in terms of some of the games that we're making. There wasn't really a strategic direction as to what we wanted to achieve with our business. It was more like, "Yeah, we have money, let's make games." And that's not how you create successful outcome in games business. And then also, you know, prioritizing that, that financial strength, and then we're, we're trying to set up our business for the next step. So actions taken, shut down a bunch of stuff, minimal effect, Blockin' Load 2, IGI, N83, and Marvel, a big one there. Difficult one, but nonetheless, the right choice. Business divestitures and closures. Innova, we had to do it, you know?
Innova, we had to ended up divesting it. We thought we're gonna get nothing for it. As I think some of you guys are probably seeing in the headlines, whether it's Heineken or a number of other big businesses that were still there, they're having to just hand over the keys to the locals for a buck, right? But we were able to produce EUR 20 million from that transaction, which was a nice win. Added to our liquidity, which was nice. And then, of course, when you looked at the purchase price versus what we got back, big write-down, but at the same time, our stock price had already come down a lot. And then when you look at how much shares we issued versus how much cash we got back, ended up being actually a pretty reasonable deal, outcome there.
And then Antimatter recently shut down. That took a little longer than we want it to, but part of it was we want it to be fair. They're making a game, and we got great staff that were working, by the way. They found another great opportunity, which I'm happy for them. But the idea was, hey, they have something, we don't want to fund it. Are there other opportunities? So we went through that process, and we took the time to be able to do so, finding third-party publishers, et cetera. We got kind of close with a couple opportunities, but ultimately, we did not want to prolong that for months and months, which cost money. We ended up making the choice to ultimately unwind the business.
Strengthening the balance sheet, we wrote down risky intangible assets. We did it because, you know, we want our balance sheet to reflect the value of our assets ultimately. And, you know, as we're going through this rationalization phase, we didn't want to wake up like, you know, 24 months later, having to write down something else again, because I think that that hurts our credibility a little bit. So the idea was, all right, let's do this, let's clean this up, and then we did that, and then we fully paid down the debt, so we got no risk with debt, which is nice. Although our cash is really negative yielding at this point, which is not great either, with where the interest rate is and inflation is.
So comparison of then and now, you know, I think this chart really tells a story, right? Like, where we were then is LTM or back in first quarter 2022, right after we made our final acquisition. So full year results for that time, you know, the far left net revenue compared to net revenues back then to, you know, LTM net revenue, second quarter, 13% growth. On the EBITDA front, 39% higher than where we were. Net cash, 9.3 times. Net cash is defined cash minus debt. And then you got business units, one less business unit. So we're smaller, more profitable, more cash, no debt. So when you look at all these metrics, maybe without the history, like, we look really pretty.
I think this is a nice outcome that we were able to get to. But once again, putting aside the optics, we wanted to do this because this is what prepares a business to be able to take the next steps. So solid position today, ready for the next phase. You know, solid foundation and footing, highly profitable, predictable, solid liquidity. You know, I like to say we're exactly where we want it to be. Now we're shifting our focus from that stabilize and prepare phase to growth phase. And I think that's where the five-minute break comes in. So more to come. I think we're about halfway through it, but you know, I think if people want, I think we got water, coffee, we could take a quick five-minute bio break, and we'll resume. All right, cool.
All right, I think everyone is back, so we'll get into our second half. And so this second half is where. So we talked about the present as well as the history, and now we will talk about our strategy and where we want to take the business going forward. But before we do that, we want to start with the industry. So quick, you know, overview of how we approach it, which is that, we believe that. I think, you know, not, not that we're unique in any way, because this is what a lot of the business plans typically have, industry, opportunities, etc. But in gaming, I do feel that this doesn't really happen enough. There's not a lot of thought about the strategy. It's more about more games, more and more something, right?
So we do want to really be able to explain how we understand our understanding of the industry and then what the opportunities are. So really understanding and underwriting the industry dynamics and the market opportunities and really grasping the landscape. And then when you do that, there are certain clear opportunities that do stick out, and then we have you know strong conviction around certain areas that we want to approach and execute our business plan around. And along with that, you know, our capabilities, expertise, what is it? and what are our assets? Is there a good match of what we're trying to do? And I think another quick anecdote about gaming, game development, what you often see is game developers like to make games they like to play, not necessarily what their expertise is.
So sometimes you'll see, like, guys that worked on Call of Duty for, like, a decade, no better, like, first-person shooter expert, but they want to make an action RPG and fantasy genre. So it's sort of like you're a basketball player, but because you're a professional athlete, you think you could go play football. Doesn't work that way. It's the same thing in gaming. So that's why, for us, it's really important that when we say there's certain opportunity, how we apply our expertise matters. It's not just a great opportunity, so we could do it. No, we could do it because we have the expertise to do it. So this one is an interesting one that comes up a lot. People ask, like, "How do you define the gaming industry?" Meaning, you know, is it content business?
Is it software and SaaS, GaaS, you know, games as a service, technology platform? And, I think depending on how the investors are approaching it, sometimes they come up with a different answer, and sometimes developers also think of it, differently as well. But the key determining factor of how, at least we look at gaming, is utility versus consumption. So software technology platform are utility-based solutions, whereas games are consumed like content, like film and TV. It's a very important distinction that at least we like to make, because that informs how our business strategy is supposed to be as well. So we look at gaming as a content business. Whether it's free-to-play or premium, doesn't matter. Every single game relies on content to keep the players there. So with that said, now we'll go into the industry.
This one, I'm sure most people have seen a lot. This information comes from Newzoo, global gaming industry, growth trends, big, attractive, great secular trends, and, and people say that, "Hey, look, this, this is a fast-growing, big, compelling, demographic-wise, similar demographics love this." All that stuff is great. So when you look at that from 2019, to 2021, you saw this big pop, as you see in the chart, with the pandemic, which accelerated the growth to a certain extent, but we've come back down. So the dotted line here is showing the, compounded annual growth rate, from 2015 to 2025, 10 years, including three years of forecast, at 8.2%.
But when you see the dotted line, essentially, you see the couple outliers during the pandemic, but we're now back on trend. Essentially, that's what this chart is showing. But with that said, going forward, the growth is slower. While the 10-year trend is 8.2, over the next three years or so, according to Newzoo, the industry forecast is a little over 4%. But, you know, it's a great secular growth story overall, and we expect it to continue to grow, albeit at a slower pace. And market segmentation by platform information. So there's console, PC, and mobile. So what's interesting here is that the underlying growth is not what people thought it was going to be. So if you go back five years, they thought mobile was gonna continue to grow like crazy.
But when you look at this chart, you see mobile now has essentially flattened because penetration is quite high across the world. So mobile is growing at 2.7% CAGR over the next three years. And then PC is largely flat, you know, in, in, whatever markets where, where, where people play games. A lot of people have PCs, and, and we're not gonna see a lot more PC getting obviously installed. And some of the emerging markets, whether it's India or China, et cetera, they're not playing on PC as much anymore, they're more mobile. So you won't really see PC going up too much. What's surprising, even for me, was consoles. So you see console uptick, 8.6% over the next number of years.
When I first started in this industry back in 2015, it might have been Newzoo, maybe it was another research, but at that time, it was like, almost like a projection of PC and console games going down over the next decade, with mobile being the main thing, but it did not happen. Console has been continuing to grow very nicely, and the premium titles, how revenue is generated in gaming also has been not what people thought it was gonna be a decade ago, where everyone thought it's gonna be all free to play. That didn't happen. But this part of it is really important, at least how we look at it, you know, market segmentation by competitive tier. So there's multiple tiers in the market, as usual, with any industry.
At the very top of this particular industry, we have the platforms. Okay, platforms are companies like Sony, Microsoft, Steam, Nintendo, so consoles and PC distribution platforms. And on mobile, of course, you have, you know, Apple and Google, and then, you know, Epic's also PC. And then, Tencent, you know, may be the biggest or second biggest technology company in China, but significant portion of their revenues come from games. So they really are also a game distribution platform in their market, as well as a number of the other Southeast Asia markets as well. Below that is the top publishers. So these are the top AAA and mobile publishers, EAs of the world, Activision, Take-Two, Ubisoft, et cetera. And below that, we have the mid-market, as we call it.
These are our definition in some ways, like mid-market and indies. Indies are what indies are, but mid-market, we kind of look at it this way from our perspective. You'll see that sort of, you know, nomenclature throughout the presentation. Mid-market is publishers like Focus, Five Oh Five Games, PlayOn, et cetera. Then you have the indies, right? tinyBuild, Devolver, Raw Fury, tinyBuild, and then Devolver haven't been doing so well, and then we'll get into some of why, along with some of what we talk about here. All right, competitive dynamics. It's a pyramid like usual, so range of competitive dynamic by segment, but I think it's important to highlight certain things here. When you look at the platform at the very top of the pyramid, it's an oligopoly, okay?
So, there's no breaking in, okay? There's not gonna be another console at this point. There's not going to be another Steam. Epic tried, that didn't quite work. So at this point, the platforms are locked. Apple and Google, Android, there's not gonna be another mobile platform. So in terms of how that market works, oligopoly, there's no breaking in, and they have significant part of the market. Below that is the top publishers. I call these more semi-oligopoly, meaning there's not 20 of these, there's less than 10, and they've been the top 10 guys forever, and that's not changing anytime soon. And they make some really good games, big games, billion-dollar franchises, and a lot of people throw around like, "We're gonna make AAA game." No, you're not, okay? It's not easy to make AAA games.
AAA game is not just a label you put on a game just because you spent a lot of money on it. There's a way to do it. There's a business model behind that, and the top guys have it. And below that is the mid-market. Highly fragmented. There's no clear leadership, and then I call it more the mom-and-pop management approach. So it's sort of like, you know, I'm sure in the, in the US, we have big grocery stores, right? So like big chains, and then there's the small mom-and-pop shops. They're highly profitable in whatever markets they are, but they can't scale because there's no institutional management. So that is what I call mom-and-pop management at this mid-market level. And everything is highly fragmented, relationship-driven, a lot of things that, you know, you wouldn't typically see in a mature industry.
And then also at the indies, even more fragmented than the mid-market. It's a little bit of a street hustle at that level. It's really unpredictable as to what it is, but there's a huge volume of games coming out. So when you look at this pyramid, the reason why we construct it this way is number of participants. So indies are obviously the biggest number, and then you go smaller as in, in terms of how many participants you have in each tier. Market share by segment, on the other hand, is completely the opposite, right? So platforms at the very top and top publishers, those two combined have 75% of the global gaming market share.
So global gaming market in 2022, around $182 billion, and of that, 90+ is controlled by the platforms, which is an oligopoly. And below that, you got the top 10 players. They own 25% of the total market or the 50% of the remainder when you exclude the platforms. And mid-market below that, there's next 80 guys, and that I think includes EG7 as well. And then, that group, we have 24% of the total market or 40% of the remainder. And indies, the little guys, super tiny. They only represent 1% of the total market and then 3% of the, you know, overall market net of platforms. So this is another way to look at it, addressable market, you know.
Our target market is really on the, on the right side there. So over here you see platforms and, and rest of the market. Platforms have, you know, 50% or $91 billion, rest of the market, $92 billion, 50% of the remainder. And of that 50% of the remainder, you have top ten guys, which control 50%, okay? And the remainder is $43 billion, what we consider to be the mid-market. And then indies are, are very, very small at $3 billion of annual sales. So our target really is the $43 billion market share. And we're not looking to compete against the platforms really, right? Can't do it. And also, we're not looking to compete against Call of Duty and, and the AAA published titles.
So when, when people say market's huge, it's growing, it's, it's massive opportunity, well, you do have to look at where the opportunities are. It's not the 180, it's really this 43. Well, I'm sorry, yeah, 46, including the indies. So this one, I don't know that anyone really talks about it much, but I think it's important. So this is Steam. So Steam, when you look at the history, back in 2024, they only released 64 games. 2022, they have 11,000 games that came out on Steam alone, on PC platform, right? So, we call this the birth of the lower market segments, direct to consumer segment. This didn't exist before Steam. Before Steam, there were the usual suspects, the top ten guys that I'm talking about.
That was the only way to get the games out, with the platforms. Once Steam came out, well, it's the Netflix or YouTube. Like, a lot of the musicians that like to sort of record their own music and put it on YouTube, essentially what it is with Steam. There's a lot of good games, a lot of bad games that are out there, to 11,000 games, right? So with that said, quality control has been a big issue, with the, this big rise in volume. But rise in volume doesn't mean that revenue went up because the volume went up like this. The revenue growth with this big uptick in volume, it was still that 8% over the last decade, okay? So all this volume is not making money. That's the indies. A lot of the indies are not making money.
But with this, without this phenomenon that Steam brought to the market, video game market would have been very similar to film and TV, would have become an oligopoly. But this channel opened up, and hence the reason why we have the lower market segment, which is what we consider to be our target market opportunity. So here's a quick look at why the lower quality, right? So on the left side, you see film and TV publishing. It's high level. I mean, there's a lot more complexity to this, but this is meant to illustrate a point. So you have production houses that come up with, you know, films and TV shows. There's good, you know, strict QC going to the big studios, film, TV, like Disney, Warner Brothers., Netflix of the world, and moderate to indie studios.
There's a very strict QC, quality control and gatekeeping in order to get them distributed. You don't see garbage as much as a consumer because there's this strict QC that is governing with the oligopoly that's in place. On the right side, on the game industry, not so much, okay? It used to be that. Game studios, strict QC, very strict QC, going into leading publishers, Activision, EA, Take-Twos of the world, and then they go into console or not always Steam, but, you know, they go through, go, go through their channel of distribution to get the consumer, `and this is a AAA channel, right? High-quality stuff. On the right side, you got the indie publishers, medium-sized ones, including EG7s of the world. You see limited QC. We're not competing against what AAA guys are doing, but better still.
Then you get to Steam, console, and then we get the consumer. On the right, there's a sort of a, a different channel there for D2C. This is like two guys in a garage, they make a game, they can still get it out on Steam. They couldn't do that before, but this is what Steam opened up, and there's little to no QC. The highest quality comes from the leading publishers, and then below that, the indie mid-sized publishers, and then you got the D2C. There's a big difference in that in terms of how publishing is done. A lot of text, so, you know, you don't have to read it all. I'll explain it. It's apples and oranges. When you look at how the big publishers do it versus how everyone else does it.
So when you look at the big publishers, there's really three areas that you have to focus on to construct a video game business. So there's the business model, publishing model, and development model. So business model up top, it's based on really, as Activision or EA, their business model, as the biggest video game publishers in the West, $7 billion+ of annual revenues, they're focused on creating repeatability and predictability with core franchises, okay? And they're not swinging for the fences. They're always trying to make great products, get it out, see how it does. If they see the potential to make it bigger, that's when they'll start investing more. But they wouldn't just go into it blindly and invest $200 million on a new game, hoping that it's gonna be another big success. That's not how they operate their model.
They, like, this is a U.S. term, but they're usually batting for doubles, meaning, you know, they're looking for reasonable return on the investment versus trying to hit home runs, baseball term. You know, they're really focused on improving that average, their batting average over time, versus trying to hit it big every single time. That business model determines how they approach publishing. For them, publishing is you have to be highly selective, and you have to have high, you know, high quality for everything that you release. There's institutional hands-on publishing. You know, there's a reason why sometimes you see, like, big, well-known studios like Bungie, they're like, "We're done. We don't want to work with Activision." Well, there's a reason behind it: because Activision has a model, and their model is predictability, repeatability, and significant revenue growth.
In order to do that, developers have to work in a certain fashion with the publisher sitting on top, and some developers that have certain track record, they don't want to work within that framework because they want to make what they want to make. So you see that happen, you see divorces like that happen from time to time, but this publishing model is not something new. Has been in the market forever, you know, and, and, and they've proven that it works. It's not the sexiest, but it's a business model that works. And then in terms of development, what happens?
Well, well, you got to standardize development, and then you got to design it to support the business model, meaning how do you develop games, process, timeline, everything else, and then you have to take a very cautious approach to innovations, avoiding new unproven tech until proven, meaning. And I remember people used to ask me, like, "Oh, my God, VR, AR, why, why aren't we investing in this stuff?" I'm like, "Do you see Activision or EA or Take-Two doing any of that? Why not?" Because they have the luxury with their size, their revenue, you think, and cash. You think they could do it, but they won't do it because they invest in things that are more proven. So they let other people spend money to see whether it works or not. If it works, they'll come and dig.
If it doesn't work, they're like, "Yep, good thing we never touched it," right? So that's their approach, very cautious. And, and, you know, they're not trying to go after the next big thing until commercial potential is proven. And great example of this is Call of Duty: Warzone. So when you look at battle royale games like Fortnite, PUBG, and whatever, H1Z1 used to be one, quality-wise, like, who is-- I mean, arguably, Call of Duty has. I mean, there's different flavors of shooters, but Activision makes the best shooters in the world. They would have been the right people to make the battle royale, but they wouldn't do it until it was commercially proven to be viable market.
Because what they knew was that once it's viable, they could come in with their unlimited resource, with their IP, and make a experience better than anyone else can, which is what they did. So you see Warzone as well as it's doing, because that's what they did. They don't have to be the first mover. That's the point, right? On the right side, you got indie mid-market publishers. It's, once again, very apples and oranges, very volume-based. You know, it's portfolio approach, and then there's very little predictability because it's volume-based, and it's, there's no specialization. So, specialization is important. You know, it's like anything else. You develop expertise in games as well. So, as a publisher, you also develop expertise in certain genres, but indie publishers don't do that.
They're like, whatever comes your way opportunistically, because in similar fashion to what the M&A, you know, role of strategy has become or had become, it's like, get what you can versus get what you should. Because what you should is based on a strategy, what you can is based on what's coming your way, and that's what happens when you go to Gamescom, okay? There's a lot of developers looking for money, and then people are willing to invest without having the right expertise, right? So that's what happens at the indie level. A lot of people are always swinging for the fences. Developers, brilliant developers I work with, a lot of brilliant developers in the world, but they're not business people, and that's a skill that they sometimes lack. So their view is, "Hey, look, Fortnite, let's swing for the fences.
We're gonna be able to do something better because we got a unique sort of strategy." Well, it doesn't work that way. So, and then at the mid-market level, a little more institutionalized, but this is more like stock picking. Like, they're like day trading a little bit, so that's also not great. And then when you look at the portfolio management approach, it's like very VC, you know, fund-like, meaning there isn't the right balance of publisher actually utilizing their knowledge and expertise to guide the developer in terms of how we get to a positive outcome with the game that they're making. So it's very hands-off. It's sort of like you show up to a board meeting every quarter. Well, that's not enough in order to really guide development.
So, and there's no, like I said, little to no, but really, there's no standardization of development. Meaning, if you guys decided, let's go check out one developer versus another, everyone uses the same tools, okay? But no one does it the same. It's all very, very. I think of gaming industry growing at 4% as more, more or less mature at this point, and there's pockets of opportunity. In a mature market, you have a lot more standardization, but in this market, there isn't. It's not that there isn't, because at the top of the market, there is. It's this new channel that Steam opened up that there isn't. So that's an opportunity, but also that's an opportunity to not only make money, but lose money as well. And developers are sitting atop the decision tree usually.
In the indie side, publishers are afraid. because they're competing to sign up these games. So they're like, "We're competing, like, we got to let the developers do what they want." And then, you know, doesn't work out so well most often. And then, you know, there's no risk management, right? It's nonexistent. And then there's a lot of chasing innovation and the buzz, whether it's VR, AR, like, you see a lot of the investment that went into it. A lot of the developers that did that, well, they lost it all because that market didn't pan out to be what people were hoping it was. Big guys are like, "Let's wait and see.
Let the smart money, less smart money. Let the less smart money figure it out, and then once they've proved it, then we'll decide what to do." And there's a lot of fast follow, which also is not a great strategy. So what is the summary of the industry's, you know, opportunity here? So we looked at. We, I say "we" because, hey, look, other people could have other opinions, right? But EG7, we collectively look at industry as mature. But nonetheless, there's good secular growth. It's oligopoly at the top. I mean, that there's no real need to debate that there is. And then 50% of the market is taken by the platforms, so we're not gonna try to break into that. And top 10 publishers, yeah, we're not gonna make another Call of Duty, so that's pretty locked up as well.
It's really below that, where the opportunities are. And then outsized growth opportunities in the mid-market, because this, once again, this lower market segment that Steam opened up, there's some really good products, too. I'm not saying it's all bad. There's really good products, but the framework isn't there to really create predictable outcomes. Being able to apply the right framework could create more efficiencies and better outcomes, and that's an opportunity. There's clearly proven out business models at the top, but not actively being used. This is really interesting because when you think about it, like, it's no secret, right? Like what EA does, what Activision does, like, not like they're hiding it, how they operate their business. It's been out there for, like, two decades.
But you have certain indie publishers that come out and say, "We don't wanna do AAA. We don't like that strategy. We're gonna do it our own way. Developer first, this is how we do it." Well, it didn't work out. You know, whether it's Devolver or tinyBuild, that model doesn't work, okay? You don't want to give money blindly to developers. It's just not the way it works. And it's highly inefficient, unpredictable, and there's ways to improve it by applying the right model. So value creation opportunities, you know, there, there's no leadership. We believe that there's an opportunity, whether it's us or somebody else, to grab the leadership in that market.
And you know, there's no institutional management or best practices, and I've tried really hard over the last many years at Daybreak to bring that institutionalization of how we operate, and you see the results. They're very positive when we do that, and that could be applied to many other situations within the gaming industry as well to create value. And really, the application of the AAA publishing model, it's not rocket science, it's not a secret. It is what a maturing industry should be utilizing versus recreating the wheel, but it happens. So I think, you know, we believe that there's an opportunity by doing that. And then ultimately, it's not about having more games. It's about having franchises because I think everyone knows this, franchises create more predictable outcomes. But this volume-based approach, our view is that doesn't work.
So now, based on that business strategy, so what are we trying to do? So long-term objective for us is to try to establish a leading video game business in the middle market segment. And the large emphasis I want to say is business. We're trying to build a business, a framework. We're not trying to build just games, okay? We're not trying to build a door around a doorknob. We're trying to build a door properly with the right business plan and business model. And I, you know, I'll give you a quick analogy. So, you know, when you look at the film and TV industry, 'cause you could look at that in some parallels, like you got the top big, like, global publishers and, and, you know, studios, so Disney, Warner Brothers., et cetera. But there's a company called Lionsgate that operates below that.
I think a lot of people know Lionsgate. They made John Wick, they made Hunger Games, Twilight, and then bunch of horror movies. What they've established themselves is not mass market, except Hunger Games was mass market, but, like, John Wick's not mass market. But they're extremely good at what they do with specialization. Horror, no one does it better either. So they developed this expertise, and they've developed these franchises. They'll never be Disney, okay? They'll never be Warner Brothers., but they're really good at what they do. And then they are that second-tier leader that they've established themselves with. Once again, in the gaming market, that opportunity exists. Now, as to whether we're gonna be that or not, don't know. But our aim is to try to, you know, ultimately try to get there. And looking at medium to long term, how are we getting there?
Well, publishing recognized franchise, third-party developed games. Cold Iron Studios is one of them. That's why it's core to what we're trying to do. Management who own shares and run this particular business, and we could align with Cold Iron Studios because of, yes, related party. It's always raises a lot of questions, but as we noted earlier, there's no money being stripped out anywhere. It's product. We're making product together, collaborating with Toadman. We're gonna get that game out. The idea is: can we create a franchise model with that? And then we're gonna be also, of course, we have great IP. I say we have great IP, but not doing anything with that would be criminal. So we're gonna do stuff with our existing first-party IPs and grow that, and ultimately be able to grow a you know predictable revenues and profits.
Near- to medium-term objective, we got to bridge to it. How do we bridge to it? 'Cause this is the long-term goal, but in order to get there, we have to be highly focused in some of the third-party games that we're trying to do, and we do have to begin investing in some of the games, and then work-for-hire business. It's a bridging versus core growth, because we've talked about work-for-hire business as being important, because we don't want any of our business units to be losing money. We want them to get the profitability. At the same time, the skill set that Toadman and Piranha has is very useful for what we're trying to achieve. So as they get to a certain level, we're not trying to be Keywords. Impossible, actually, to get there at this point.
So the idea is let's get Toadman, Piranha profitability, along with that excellent resource, talent that we get to also leverage for what we want to do, but it's profitable. So that's part of it. Look, so it's important, but it's not like, "Hey, look, that's our core strategy, core vector for how we're going to grow." Rationale, and some of this is a repeat, so I won't spend too much time on it, but really, it's institutional application of institutional models onto middle market, versus just building a portfolio. We don't want to do that. And, and we're looking at that, you know, A, AA, Premium First, model, and I'll talk about why Premium First versus, game service and then free-to-play. So, our view, our perspective is, so we, we have a lot of free-to-play games.
On mobile, there's no other option. Mobile, you got to be free to play. PC console, there was this period when everyone's like, "Everything has to be free to play." And then what they try to do is they try to apply the free-to-play models from Asia, South Korea, China, and they try to bring it here. Well, market has been very clear. At least the player base has been very clear they don't want that. Grindy, buying power, all the things that Western players don't like is what really works well in Asia, but one size doesn't fit all. What happened over the last couple of years is that the biggest games that come out have been premium titles. Elden Ring sold 20 million units, Hogwarts sold over, I think, 10. And then, you know, Call of Duty still sells $1 billion-plus every year.
So when you look at the market, what the premium model is doing, it's not going away, number one. Number two, it's a lot more predictable. Number three, consumers like it because they like the value proposition in the West, at least. I'm gonna get 20 hours of gameplay, but you're gonna charge me $60? They're okay with that. Now, when you layer on a bunch of microtransactions on top, they hate it. So we keep it simple. You want to keep doing what's simpler and makes sense, and the market accepts, and that's more premium, first, franchise-based model, and then focusing on predictability, repeatability, spray, and pray, right? That, that, to me, is the high volume or venture portfolio approach. We want to stay away from that and institutional.
And then some of this at the bottom is, you know, mix of credit and equity underwriting. I think that's important as well, because everyone like in, in gaming. I remember, like, when I first started in gaming, and then I was presenting to somebody for something, I forget. And then, I was walking through the business, and their comment, and this is probably a fair criticism, they're like, "You're not selling me. You're, you're not selling me the vision and the future and, and the equity story." I'm like, "But I'm telling you." Also a balanced approach. There's the credit side of this as well. Every investment that we make, we do have to also look at the credit profile, meaning, does it make sense? What's the risk profile as well as the upside? Gaming tends to be more upside-based versus this stuff.
That balanced approach is what we need. How are we gonna do this? Existing business, baseline business, you know, we're gonna continue to actively manage, right? We got the existing products and service business, highly stable, and, you know, we already optimized a lot of it for cash flows, but we probably could do more, but we want to continue to focus on that. We want that to be, continue to be a great cash flow-generating machine. Then, you know, in case where we need to invest in the existing business, certain games, we want to do that. EverQuest 25th anniversary, yeah, we should invest in that. Okay?
So there's areas like that where we'll be selective as to where we invest, but we're not gonna be like, "All right," all of a sudden, "Hey, look, we thought about this, and we ultimately ended up not doing it." We said, "Hey, let's go, remaster Lord of the Rings." Sounded really great, and we went through the numbers. When we did that, like, we got to spend, like, $30 million. I'm like: Why aren't we just making a new game? Because the return you could get from investing $30 million into an existing game versus finding a good risk-adjusted opportunity in new, like, it's dramatically different. So for us, it's not the right use of capital, hence the reason why we're staying away from things like that. New, mid-market publishing. So this is where we really, really want to focus on.
Pursuing Third-Party publishing deals that align with target criteria. Once again, I'm gonna throw in the Cold Iron there as one of those. And, you know, where we could do sequels every 2-3 years, that's the model. And that's the first investment that we're making and release for the product in 2025. Wish it was sooner, but yeah, they. We have a, you know, license holder that has a window that we need to work with, and that, some of that does come into play as to when we pick when the games could come out. And then new First-Party titles, MechWarrior Clans.
Okay, so I want to be very clear, like, I don't want people to be thinking, "Hey, oh, my God, they're going to make more MechWarrior." And then I, somebody asked a question over email, like: "But MechWarrior 5 didn't make that much money." I'm like, "It actually made a lot of money." It's all relative, right? Meaning I invested $10, it made $40, that's a good outcome. I'm not saying that that's what MechWarrior 5 is as example, but those are the type of returns we expect from MechWarrior type of games. We want to sell 1 million units over three years. Investment's not gonna be as big. So we look at that as a very, very nice business investment opportunity, and we will do those.
And then, of course, MechWarrior is owned by—IP is owned by Microsoft, so we do need to work with them to figure out whether this is something that we could do. But Russ, CEO of Piranha, is here, but, you know, ultimately, we've been doing this at Piranha for a decade plus, where they've been really the one guiding the MechWarrior franchise, and no better studio to be able to guide it forward. And then we're gonna establish a, you know, franchise plan with MechWarrior H1Z1. So this is a game that we do want to release in 2026. EverQuest, I say slotting for 2028. That's not a promise by any means, you know? EverQuest is a tricky one, but we have an idea of how we want to approach it, and I'll talk about that later.
And then opportunity in terms of opportunistic M&A. You know, we're not proactively looking for M&A. I got criticized for this, I think, with the fourth quarter earnings announcement. Some of the investors are like, "You said M&A!" Everyone's freaking out. I'm like, "No, we're not doing M&A." Opportunistic means we'll selectively look at opportunities when they come up. We're not out there trying to grow our business that way, but guarantee you, there will be opportunities given where the market is. Prices are coming down. There are certain things that may fit us strategically. We want to evaluate those, and there's no harm in evaluating. So institutional publishing model, we already covered this, but same thing, right? Business model, publishing model, development model. There is balance that you have to strike, and examples of this is Call of Duty and FIFA is one of them.
So when you look at Call of Duty, right, business model-wise, big success with the first release. So Activision said, "Wow, it's big. Let's do this on an annual basis. It's a potential franchise." So after the first one came out, the second year, they didn't release it because they're prepping their development model in order to be able to support annual release. They spun up three studios. Infinity Ward was the first. They spun up Sledgehammer and then one more in order to be able to do this every year. And there's a bunch of you know, sort of supporting studios. Each studio does it, three-year development cycle, three-year development cycle, but they're able to get a game out every year. Every year, they make $1 billion+ with that.
So publishing model, they said, " Well, we business model, so we get to focus and, you know, sort of create that predictability, repeatability with that model." But now it's arguably one of the biggest gaming IPs in the world. Well, what else can we do with it? Mobile and Warzone, battle royale game, came out, right? So publishing model-wise, annual release, premium SKU. So you could just count, like, you know what? It's money in the bank every year. They're not gonna change that. Free-to-play battle royale mode, they took their time to figure this one out because they were not going to experiment. They wanted to make sure that once it came out, it's gonna be a hit. Free-to-play mobile, right? And development-wise, variation of 80-10-10. I'll talk about this. Proven, existing, improved, and new.
So 80-10-10 model, easier to utilize, like, maybe FIFA or like some of the American, like EA games, like the football game, Madden. But what it is, is that they get that game out every year. So they utilize 80% of the same from the last years. They'll take 10%, they're gonna try to improve from the last years, and they'll try to sprinkle in maybe 10% of something brand new. In reality, a FIFAs or Maddens of the world, it's not even 80-10-10. It's more like 95, two-and-a-half, and two-and-a-half, because it's largely the same. It's a model, once again, like, gamers don't like it. They're like, "I'm paying $60-$70 every year for this thing that barely changed." But it's like they're, they continue to buy it, right?
Madden was the third best-selling premium title in 2022 in the U.S. No one's complaining. They're still buying and playing the game, right? Because they make enough changes, people wanna do it. But the risk, like, it's really. you have to look at it as portfolio risk management. For them, development is a risky thing. So in order to really reduce the development risk, what they're saying is, "Hey, don't reinvent the wheel. We got all this stuff, 80, 90%, use the same. And then the remaining part is where we're gonna take chances." But because 80, 90% has zero risk, when you take big risks up here on a weighted average basis, the overall risk is very low. So it's a brilliant model that, once again, AAA guys came up with that others should use, but not many people use it.
So that variation of 80-10-10 is what, you know, Call of Duty also utilizes. Three studios development model, once again, this was established to support the publishing and business model, and the live service team to support the free-to-play battle royale. Third-party co-development for mobile game. Like, Activision is once again, they are really. Gamers don't like them, but I like them as a business, and I think shareholders like them as well. But third-party co-development mobile game, what is it? Well, Tencent is the best at doing this. So Call of Duty didn't spool up a brand-new mobile studio. They didn't do that. Activision didn't do that. So Activision said, "Let's call Tencent. They already have a shooter in China. It works really well.
Let's give them our IP and get them to build a mobile game, and they could get that done, like, in a year." So that's what they did, and that's extremely successful. And then results, 20 annual releases to date, $30 billion+ in lifetime revenues. FIFA, you know, now it's called EA Sports FC. It's the same, right? I mean, they, they have a monopoly in, in soccer football games. It got, you know, annual release premium as well as, free to play, like 95/20/20 model, and the development is structured to come out every year. 31 annual releases so far, 20 billion. 20 billion of, you know, lifetime revenues. When you have franchises like that, you have predictability and repeatability. Activision now has really one game in Activision side, is Call of Duty.
They used to have, like, 17 when you go back 10 years. What they've been doing is they've been weeding it out. Like, what, what, what can-- what, what do we double down, triple down on? Call of Duty. For us, target sub-segment, where do we wanna focus? Like, well, we don't wanna focus on the entire field, whatever, $50 billion at the, at the bottom. What we're trying to do is the upper half of the lower market. Because size matters, like, we could have a home run with a $500,000 investment, but doesn't really move the needle. Make 5 times that, but what? It's $2.5 million. It doesn't really move the needle, and it's very difficult to get, like, 10 of those right.
So yes, there's indie publishers that say they have really good batting average, but as we're seeing, that's not true. A lot of the indie publishers are struggling because they can't consistently come out with great products at that low sort of level. So yeah, so right size, it's a more balanced risk profile. Typically, at that side, like, higher level, like bigger studios, there's more process and then development structure in place. Could improve it, but at the same time, you have a better baseline to start from. And then, you know, there's a foundation, right? And then a more meaningful impact, ultimately being able to apply the strategy and then the model, and then it's a bigger building block. So this is our definition as well. This is—you're not gonna find this in some research.
You know, micro indies, we look at it as, hey, you're gonna invest less than $3, sales $5+, like Raw Fury is one. Indies, we look at it as less than $10 million budget, 10+ potential upside, tinyBuild, Devolver. Mid-market, this yellow highlight, is where we wanna be, $10-$30 million budget, $50+ million of sales, and then there's Focus, Five Oh Five, etc. And then the, there's a second tier, double-A's, which is, AAA's, $30-$50 budget. They're, they're looking to make $150+ of revenues. There's Square Enix and, and Bandais of the world. At the big S, you got the Activision, EA, Take-Twos of the world, although Ubisoft is hurting, but nonetheless, you know, they have some really good franchises. So this is the balance between publishing development.
So on the left, indie mid-market, as I said earlier, just very volume-based, and then it's VC fund, like, hands-off approach. So, like, you show up to a quarterly board meeting kind of thing. So developers have a lot of say, they sit on top. And then in the middle, this is what we all want it to be. Like, all right, it's a nice balance, idealistic. You know, you got publisher and developer really sort of seeing eye to eye, working together, and trying to aim for the same outcome. But it's great on paper, like many things, but doesn't really work in practice because developers, brilliant creatively, a lot of the times they don't have any sense of the business. So when you bring the business aspect to it, they don't like it, right?
So you do have to manage that well. But with that said, institutional publishing model is where publishing. You know, I think confined maybe is too strong of a word. Ultimately, you have to get alignment. Like, developers aren't gonna just do the work just because a publisher says, "I will give you money, make this game." No, they have to agree. So you have to find that balance still, but at the end of the day, the final say has to be the publisher because investment goes in. We're trying to generate a nice commercial outcome. In order to generate a nice commercial outcome, people that understand the market, commercial opportunities, as well as how the investment returns could be beneficial for all parties, including developers, have to have the final say.
So that's why we suggest that, say, "Look, that's what we want to do." That's how we are approaching the Cold Iron deal as well, and that's the model that we want to apply to every single game that we make. So summary here, strategic goal. So we're trying to become one of the leading, you know, we don't have to be the, but we think we can be one of the, leading publishers in the mid-market, core franchise base. It's got to be institutional. And then we already have some really well-known first-party, third-party IPs. We wanna be recognized for those, because that's the other part of it. You know, as a publisher, when you have certain brands that do really well, then when you make the next game, because you made a bunch of other good games, like, people wanna try your new games.
So that reputation, equity, value building, enterprise val-- value building happens with successful outcome with games that you have. And then, this one is really like. you know, this is one of the things that, that I, I really do champion, like best practice-based development process. It's not easy, 'cause every studio, once again, does it differently, but there really are best practices. And I think there's muscle memory to how developers like to make games, and they don't like to change. But if you do make the change, there's a lot more efficiency to be had. And that is something that I think, you know, from. So at the AAA level, they have it, but I think you'll continue to come downwards, where bigger, mid-sized guys will start to embrace it more. But right now, there's not enough of it.
You wanna do it. And then building a scalable business with predictable outcome, right? Based on franchise base versus the portfolio base. We're not doing any aggressive M&A. We don't wanna be a collection of assets, okay? We don't wanna operate our business like, you know, venture fund, like diversified. Yeah, I don't think people invested in EG7 as a fund of funds. We're not fund of funds, and a lot of the other sort of businesses shouldn't be fund of funds either. They should really operate their business 'cause gaming requires operation, and sort of venture risk versus investing in and employing proven models, right? We wanna use proven. We don't have to recreate the wheel. So what's the go-forward plan? You know, we are reprioritizing, right, business to support growth.
Daybreak is going to be doing mid-market publishing, Aliens title or the new Cold Iron title, and then more. Fireshine does have to go up market. We don't want them to be doing $250,000 investments and make 10 times and like, "Oh, wow, you made $25 million bucks, so let's go." Like, doesn't really work. And then, existing live games will be maintained with investments necessary. We're not pulling money out, okay? We're gonna invest as necessary to continue to prolong. Like, EverQuest will be here a decade later, and I would not be surprised if it's still where it is today. And we wanna make sure that that continues to be, but when I say no major investment, what I talked about earlier, like, we're not gonna remaster like DC Universe Online.
We stepped away from that idea. Service business will become support, okay? We don't think service business is what's going to take us to our future, okay? Lower margin, stable revenues, good asset, we own it. They'll contribute nicely. There are services that they offer that we could benefit from as an organization, so we would like to continue to work within those frameworks, but we're not investing in service businesses. We don't expect them to grow their revenue by 50%. It's a support. And then Big Blue Bubble, so mobile. It's at the bottom, not because we think it's not important. We think it's super important, but at the same time, you know, I'll be frankly, like, we're not mobile experts. And then, you know, Big Blue Bubble is a little bit like, King, to Activision, right? Candy Crush, right?
Like, could ask the management at Activision, like, what they think. They really don't have any idea. They're like, "Hey, you guys are making a lot of money. Keep doing what you're doing." So sort of that's what we do with Big Blue Bubble. Great team, they're working great, they're making money. There's opportunity because they established the franchise with My Singing Monsters. We could do more with this. So those are the areas that where we could help. What more can we do with their IP? But as to how they operate their game, how they're continuing to do great, like, you know, September numbers are gonna be great. Well, yeah, you guys are doing great. We're here to support you. But with that said, I do wanna say same thing.
Big Blue Bubble will be a growth vector for us, but it's not like our number one priority, like, that's how we're gonna become the next Supercell, right? That's not it. So sources and uses of funds. So this chart right here at the bottom, like the gray bar or, like, dark gray, so these are, like, by business unit, Daybreak, Big Blue Bubble, et cetera. These are all the cash flow generation from the existing businesses, okay? So these all make money, and when we make money, we want to fund it into the blue arrow, you know, sort of boxes, right? The growth vectors. So Daybreak going into third-party publishing and first-party game for My Singing Monsters. Big Blue Bubble, we wanna go into extensions of that IP. Piranha, more MechWarrior games, predictable.
We're not gonna sell 10 million units, but we know we could sell one. You got Fireshine continuing to do third-party game publishing, but we want them to go up market. And then Toadman and Petrol, more support. There isn't the growth here, and we don't think we plan to really invest there for that. Sources of funds, existing cash balance, right? So we got good balance, cash flow from live games, service business, and then growth investments, third party, all these blue bars. But the key thing here is that we're fully funded. We're not-- We don't need additional capital. We don't need to go raise more equity. Yeah, we're good. Of course, when I say that, you know, we're.
When you look at everything that we wanna do for the next couple of years, like SEK 500 million, and people are like, "Oh, my God, that's a lot of money." But I think one thing that people should recognize about how we manage our business over the last couple of years, now we have the track record to show it. We're not crazy, right? So meaning, we're very conservative as to how we run our business, and maybe some people fault us for it, but I think it's important in this market to be conservative.
So when we say SEK 500 million, that's not like locked and loaded, meaning like, all right, subject to performance, if this line item right here, fully funded and requires no additional financing, now becomes not true anymore, then we will adjust, and that investment dollar amount will come down accordingly. So that's how we will manage. So I hope people understand that. In terms of how we're approaching the middle market publishing criteria, so you have product target criteria, investment parameters. So on the left, game types, shooters, action RPG, sandbox RPGs, those are the genres that we wanna focus on. And the key thing there is, why am I even putting anything there? Like, why don't you just say all types of games? No, we wanna develop specific expertise, and that's what we wanna do, okay?
We wanna be known for being best at something, and I think that's how you really create value as an organization. That's why we have limitation of what we wanna do. We wanna work with established branded IPs. You know, branded IP, people are like, "Oh, my God, you gotta pay royalties." Well, yeah, but you don't have to market as much. So you save money on the marketing because user acquisition becomes a lot easier when you use major IPs. So and user acquisition is one of the biggest risk when you look at a game development, and by taking that down, we're improving the possibility of success. In multiplayer, you know, we're multiplayer online games. We wanna be more premium hybrid. I actually understand free-to-play game design very much, and I love it. It's fascinating.
It's really an end-to-end, fully closed-end customer relationship management software ultimately that you build. You're building a full economy. Now, when I say that, I think people should recognize that in itself is very difficult to do. And that particular model, like, literally how you describe it, like, you got to build in compulsion loops. Well, compulsion is not a good word, and the fact that, you know, free-to-play game design has that word in it, like, yeah. So in the East, China and South Korea, that's the only thing they like. We couldn't sell premium products there. But in the West, now, people don't like compulsion loops. People don't want full customer relationship management software on their computers.
And then, like, you know, people are like: "But Fortnite's really successful." That's like a really poor man's version of free-to-play game design. That's not how it really work, how it's supposed to work. It only works at crazy volumes. If Fortnite had million monthly active users, they would not be making money with that free-to-play game design. So, so it really varies depending on what you apply. For us, we want more predictability, and I keep saying that. In order to do that, it'd be like premium. We might have hybrid, where you might have a little bit light microtransactions, but never fully free to play. We wanna stay away from it. Franchise sequels, DLC for content model, Western markets, studio track record.
We want studios that make games, and we don't want studios that make a great first-person shooter, you know, to all of a sudden say, "We have great track record, but we wanna make a Elden Ring 2." Like, no, it doesn't work that way. Okay, you're not gonna go from professional soccer player to professional basketball player. So it's really important that there's specialization. And development model, some variation of 80-10-10. Sometimes it's gonna be 60-20-20, but what we don't want is 10-10-80. Okay? 10-10-80, meaning little bit of old, a little bit of improvement, and big everything is new. But 10-10-80, sadly, is what. I mean, not sadly. Just, just forget the sad or not sad, but 10-10-80 is what developers love to do, and it's risky. On the right side, investment size, $10-$30 million.
Once again, I do wanna stress, 10-30, we're not gonna do 10 of these games. By the way, the idea isn't just to fund it. We're not gonna deficit finance. Like, you know, everything that we do will be based on very conservative forecast of how the cash is being generated, and then along with that, we'll right-size the investment as we need to. But minimum return, 25% IRR. Payback period, once the game releases, we want the money back within 12 months. Then, of course, if you fund a game that's early stage, then longer before the ultimate payback. Publishing economics, depends, 30%-70% publisher share, subject to risk. Cold Iron deal is 50, but it varies depending on what stage, whether a second game or first game.
Like, there's a lot of components that go into determining this. Meaning it could be 70% of publisher if you don't have recoup, meaning from dollar one, you just, you get 70%. Well, I'd rather have 100% out first, and then we'll get into profit splits. That's where that profit split changes a little bit. Pipeline, we're not. Once again, we're not going with the portfolio model. We want franchises, ultimately, maybe three, four at max, and then be able to get, you know, one or two games out based on those franchises a year. So target franchise pipeline. So this is how we look at it. So when you look at 2024, you know, first-party, so you'll repeat it in 2027, I think. Yeah. And then, you know, the triangle. So, like, repeat every three years, but ultimately every year.
For 2024, 2025, we'll have one game, and then 2026, 2027, 2028, we wanna get to the point of being able to release a couple games. That's the goal. And then this is what it looks like currently, based on what we know. So we have MechWarrior 5: Clans coming out. Once again, we're not trying to make $hundreds of millions with that. Very clear what our goals are. We wanna be able to do another one three years later, maybe even sooner, 'cause relatively smaller games. Cold Iron in 2025, we want it in 2028 again. We wanna create this framework, so that we have repeatability. And in that franchise model, we're using the 80-10-10 model. H1Z1, 2026. And EverQuest, I should have, like, made it, like, blurry, but 2028 is sort of, like, far, far out, but that's what we think we could do.
Then we wanna sign up third-party, a couple more, for 2026, 2027 to come out. So MechWarrior, you know, I think we talked about a lot of this, but, you know, once again, it's, it's an iconic IP. There's a huge fan base, and, and Piranha has been doing MechWarrior games for, like, before I was born. So, so they, they know what they're doing here. Product USP and rationale, unique selling points, highly dedicated core audience, their knowledge and expertise. They get to utilize the 80-10-10 model, proven success with MechWarrior 5 and its DLCs. And people might be like: What's the success look like? I'm telling you, we made a lot of money from it relative to how much money we put in, and we expect to do the same with the second title.
It fits squarely into what we're trying to achieve. Franchise plan, existing product, MechWarrior Online, we're gonna keep it on, where we have audience that we're supporting there. MechWarrior 5, two more DLCs planned, fourth quarter, and then, you know, this year and then first quarter 2024. And then we get to MechWarrior Clans. That's coming out, just announced it last Friday. It's, you know, it's exciting new entry, 'cause it's modeled after the most successful MechWarrior game, MechWarrior 2. And then, you know, its release is expected in 2024 across PC and consoles. And expectations are in line with MechWarrior 5 performance, where we expect to sell. We wanna sell more, but at a minimum, we wanna sell 1 million over three years.
Next MechWarrior entries, we wanna do these every three years, but that's subject to discussions with Microsoft, which we believe we can convince them of doing so. So these we already went through. But, you know, we'll ask, we'll answer questions on these later. So these are all the same slides that we covered earlier on Cold Iron. And then the first party game. So here's what we want to do. So on H1Z1, so we're not making the battle royale game, we wanna make the sandbox survival game. You know, we have over 40 million people that play this game. You know, it's mid-scale multiplayer that we're targeting, hybrid with premium, with MTX. What that means is that we're not gonna price this at 50, 60.
This might be priced at lower, like $30, but there will be some additional microtransactions on top. This will be a live service game. Dev budget could be around $25 million. We're starting development in 2024. Target release 2026. It's a variation of the 80-10-10 model based on what the gameplay has been and what we could do. In the concept phase right now, we're currently in the concept phase and pre-production. We expect to go in first half of 2024. MechWarrior, very, very straightforward. You know, I mean, no one knows this IP better than Piranha as to what they could do with the same thing. It's a small-scale co-op player, premium plus DLC model, $20 million-ish budget.
25 is when we want to start investing and then, you know, release 2027, subject to, once again, Microsoft. Variation of 80-10-10 model, but this is more the ideation phase and EverQuest. So this one is our what we consider to be our most important IP. It's fantasy MMORPG. It's literally the one that ushered in the golden era of MMO. So, like, World of Warcraft was based off of EverQuest. And then, you know, they will say that actually, I'm not making it up. Daybreak will be the one doing it. IP ownership, massively multiplayer, hybrid premium plus MTX, similar to what the H1Z1 is. Live service, I say $30 million+. I can't really put any more accuracy there.
This one requires a lot more work to figure out where, but we're not starting development for this for a while. Investment 2025. If we, you know, do this for 2028 release. But the idea behind what we're trying to do here is, I think. So FromSoftware, the guys that did Elden Ring, love them in terms of their model, right? And they spent $30 million making Elden Ring, and they made over $1 billion from that. But that's misleading to a certain extent because they spent 13 years making the same game, but different name, and then they continued to improve it. So really, 80-10-10 model there, too, and then they got to that outcome, successful outcome. And then Armored Core VI came out.
Like, normally, people wouldn't play that because FromSoftware made it, so everyone's like: "Let's try it, because they made it, it must be good." And then I think they did really well with that as well. But the idea is that what FromSoftware has done, I think, over the last decade or so, in gaming, that people didn't think was possible, is that there was this big push in game development to make it everything super user-friendly, make it easier, make it more accessible. And then FromSoftware did something very different, which is that it's the type of thing. And I personally have 200 hours in it, because literally one night, I tried to beat one boss all night long. Ultimately, couldn't beat it.
But the point is that they built this, like, you where you bang your head against the wall type of gameplay, but it's just a phenomenal experience, hardcore as they get. And people thought, that's not really commercial. Well, 20 million people bought the game, so it's clearly commercial. But what they did is change how gamers perceive gameplay. And I think what that means is EverQuest, the original one, is a hardcore game. So for many years, we thought about, how do you make it more accessible, where we're not? You know, our view is, "You know what? Thank you, FromSoftware. You said hardcore is okay. It could be mass market, and we wanna try to bring back that original experience as much as we can for EverQuest." That's where we're starting, but it's not a remaster. It would be a brand-new game, but we do believe that.
I mean, it's one of those things, if I said today, there's a new EverQuest coming out in 2026, like, that'll be global gaming news because it's a beloved IP. And we do think there's a huge opportunity, but once again, we wanna stay true to what the original experience was ultimately. Now, the financial targets and outlook. All right, so this is what we are aiming for. So you guys, everyone has our 2023 guidance, SEK 2.2 billion. Still tracking towards that and guidance of 23%-25% EBITDA margin. 2024, you'll see, I mean, it's a slight dip, and I'll talk about why. 2025 and 2026, so this is where Cold Iron game comes out.
Portion of it here, portion of it there, goes into the second year, and then H1Z1 is where we want to get that game out. Once again, the idea behind what we wanna do with game development is highly, very tightly scoped. So meaning there's something called the MoSCoW, you know, sort of a model which is must, should, could, will not. So that's a framework that you utilize on development for agile scrum. A lot of developers actually don't know it and don't utilize it, but it's a prioritization exercise, and then you create. You bucket things based on value, and the most important things are gonna be the must. And then, of course, next one should, could, it's a concentric circle, right? Will not part, I call it want instead of will not.
I personally, I call it want because that's where developers wanna be always, but you got to bring them back. So the idea is really tightly scoping particular game. You wanna be best at some gameplay that makes you special, not try to be great at everything. And that's what people love ultimately, when you look at the data, and I think you have too many developers trying to do everything, and that's when the scope bloats, budget bloat, the game never comes out. So the idea, whether it's H1Z1, it's gonna be a hardcore survival game. Okay, there's Rust, there's DayZ, there's Ark, there's Conan, a lot of these games, like some of these games, are top 20 perennially on Steam, but they make maybe $100 million a year, some of them.
It's a weird sort of this area where, like Rust, it's not big enough for the AAA guys to care. Because they care about, "We need to make $500 million when we get this game out." They don't care about $100 million as much. It's too big for the little guys to do it. So there's this sort of like, there's this gap where, like, you don't have to worry about the big guys, you don't have to worry about the little guys if you could do it. That's the sweet spot. So for us, H1Z1 is the sweet spot, so $26 million there, what we expect.
So ultimately, this is what we think we could achieve or just aiming to achieve SEK 3 billion of revenue, net revenue by 2026, and way higher margin, SEK 1 billion, because once again, we're de-emphasizing the service segment and then more new games with high margins, we see a significant margin improvement. So key assumptions for the projects that we have. Primary role for the existing products and services, cash flow, as opposed to growth. Okay? Existing live games, opting to limit investment, as we talked about, and prioritizing new investments and slow decline. We expect slow declines here, over time, with redirection of investment into new and core development business is expected to be steady and profitable, and service businesses are once again, same thing, largely stable but small.
And then the key point here is that we're redirecting cash into new. So transitioning from maintain to growth. And then when we do that, if we funneled every single dollar that we make or a lot of it into trying to keep the existing portfolio where it is, we can, but that wouldn't be very good return on capital, so we don't want to do that. So I think, you know what? We're gonna moderate it as much as we can, and be able to invest in larger, better risk-adjusted growth opportunities in this area right here, which is, hey, Cold Iron product 25 sequels every 3 years. H1Z1, same thing, 26 sequels, and then franchise, you know, game release model, for MechWarrior IP.
And then, we wanna be able to eventually get EverQuest out, but that's not in our forecast, obviously, numbers yet, because that's 2028. And then additional third-party franchise games, 2026, 2027. We do feel confident that we could sign up those types of games, for releases those years, and there's no M&A assumed for any of our forecast. So 2024. So expectation at this point is that primarily due to My Singing Monsters, because we think it's gonna settle at a lower point, maybe it won't, but we think it likely is, and I think it's better to be conservative than not. So 2024 could be a down year, to 2023, with MSM, you know, sort of lowering down. Still higher level than before, but at a lower, than peak.
You know, but when you see these numbers here for 2022 and 2023, Q4 2022, and then, you know, big chunk of 2023, we're still benefiting from that viral peak and then slow decline. So we see the numbers benefiting from it. But if you charted the line from 2021 to 2024, we're still showing growth, 10%+ CAGR for both net revenues and EBITDA. But I know some people are gonna be like, "Well, you're going down," but we're happy with what My Singing Monsters did, but we don't want to get penalized for it either, meaning our business is growing, but at the same time, you know, investors will do what they will do.
But the idea or the fact is that we're showing growth in all cases from 2021 to 2024 if you stripped out the My Singing Monsters impact with the big boost. Capital allocation, priority, and financing requirements. So you have capital allocation on the left, so sort of stack ranking it. New growth business is where we wanna put the money to work because we wanna drive shareholder value creation there. Third-party game, first-party game development, as we talked about. Existing business, you know, we'll continue to obviously push out great content for our live service games, and then some level of maintenance CapEx, not big. And then you got shareholder capital return, which we, I think, did a press release this morning, but we'll talk about this more in a couple of slides later.
The funding requirement, you know, over 2023, 2024, potentially, I say potentially up to SEK 500 million, because, for new growth, but it's subject to performance, meaning it could be. it could be 500. If it's 500, it's great! That means we're doing awesome. If it has to be less, that's okay. We're gonna be prudent. Existing cash balance plus solid cash flow from existing business is sufficient to fund new business. We do look at our conservative forecast, and we see ourselves as fully funded without any additional financing requirement. Now, here, shareholder capital return. So, here's what the board has proposed, you know, in terms of capital returns program, up to 50% of net income for shareholder capital return program.
And, you know, based on the estimated 2023 net income, 50% is approximately SEK 100 million. And then how that is broken up, there's a couple components to it. Annual dividends, minimum of SEK 40 million annually, starting in first quarter 2024. But, you know, of course, if our profitability goes up, dividends will also go up as well. But that's where we're starting, so we call it the minimum, but the expectation is that we wanna grow it. Stock buyback program, the difference between the 50% of net income and dividend amount, we wanna reserve it for stock buyback. Of course, you know, it's subject to market conditions, pricing, availability, all that stuff.
But, you know, we may opt to pay higher dividends one time versus buying back stocks if buying back stock doesn't make sense for market condition reasons. But the idea is that we wanna use up to that 50% of net income. And then, you know, exchange regulations, we can only buy up to 10% of shares ultimately. And then, we want this stock buyback program to be for initially for two years and to reevaluate after that. Process timeline, you know, EGM we will schedule it for this fourth quarter. We do need to get shareholder approval to do this. I suspect the shareholders will say yes. And then subject to shareholder approval, obviously, aiming to get this going early 2024. All right, potential change in the listing venue.
So, you know, we have been actively looking and working on this with advisors, and we do want to be able to get to the main list by end of 2024, maybe sooner, subject to the process, but we want to get to the main exchange. And the potential benefit, I think a lot of the investors here are aware, right? Access to broader investor base, both local and abroad, liquidity for the stock will increase, and more flexibility for share capital return options, including buybacks. Not that we couldn't do it at First North. We are gonna do it, consider doing it under First North because there are synthetic options to be able to do so at reasonable prices.
So that's what we're gonna utilize at first, but eventually, you know, at the main exchange, more flexibility. And the board is continuing to look for opportunities, right? To create shareholder value. They're not happy about where the stock price is, so they're always thinking about this. And an up-listing plan is one of the initiatives, and then in parallel, we're gonna be evaluating other listing venues. At least advisors will tell us what other options we should be considering, but we're on a parallel track, right? Like, our current base case assumption is up-listing. But nonetheless, I think it is the right thing to do, to look at options, all options, before deciding. All right, so we're coming to the end of the presentation. So key takeaways.
I think, you know, for us, management, and the board, we do believe, and we are quite proud of the progression we have made with the business to where we are. And, you know, in sort of in terms of how we prep the business, at current stage to be able to take the next step, it is where we want it to be, and then where we want to be. The industry is great. Industry dynamic, you know, I think.
I do think how we look at it may be a little more different than a lot of the other competitors that are out there, but there are certain pockets and segments within the industry that we think is very compelling, and we believe that we have the right skill set to be able to tackle them. And then clear focus, strategy, and plan. We presented it today. Of course, there's more details behind it, but, you know, we think we have a pretty compelling thesis, and the strategy around how we could create a business in gaming, and we'll continue to build towards that because we do wanna build a business versus just one-off product.
The leadership team, you know, I think, some of us have had some really good successes, with the investments and transactions we have done in gaming. We think a lot of that skill set, experience, expertise is very much applicable for what we're trying to do here. Because ultimately, the question is, all right, you might have a good investment thesis, good business plan, but who's gonna do the job? Our view is that we have the right people to be able to do that job really well. So investment case, performance and track record, we think that's positive. Financial and business position today, it's great. Industry dynamics, also very positive for what we're trying to achieve. Business strategy and plan, we think it makes sense, and we think it's smart.
Growth potential, if we execute this the way we think we could do it, significant growth. Value proposition, yeah, I mean, I think we believe that we're very, very, very attractively valued. And risk profile overall, based on where we are today, yeah, our business is quite stable, but we don't want people to be buying or investing in the company 'cause we're stable, 'cause we're not a utility, right? We're trying to grow our business. We think this industry is very compelling, and we could do a really good job creating shareholder value. So, ultimately, that risk profile will have to go up a little bit, but we think we could manage that very, very well. Leadership capabilities and track record, I just talked about.
We think we can do the job, and we have the track record to prove it. And, you know, not to say that, "Hey, look, you get every single one right," but we do approach everything very conservatively. Because of that, I think, you know, it's not a one-shot thing. We have multiple shots to continue to adjust and, you know, execute. So that is the end. Thank you for sitting through that. That was a lengthy presentation. And then, you know, I guess we'll go to Q&A. Appendix here, so this will become available, obviously. And part of the way we, the reason why we designed this presentation with a lot of words is because we want people to also be able to just read through it.
There's a lot of text here, but, you know, please read through it if you want to. Then we have the appendix here, which will show some updated information on the business, each business unit, game portfolio, et cetera. Some of this should be good reading as well for people that are interested. Thank you.
Am I still on? Yeah, I'm still on. Thanks a lot, Ji. Do you want to have a glass of water or something? Does anybody need to leave? Maybe you should think about doing that now before we start the Q&A. No? Right. So we have a microphone here, yes. That. But I'm gonna start. I think maybe if we try and structure the Q&A a little bit around where you started with the Cold Iron deal, if we start there. I had a couple of follow-ups on that, which sort of came up, and maybe someone else has something as well to ask about that. So, basically from your presentation, it seems very clear that this new game that you're funding is something like an 80-10-10.
It's a variation of it. Once again, like that's a framework that we want to use.
Mm-hmm.
But it could be 70- 20-10, but yes, the framework.
And hence, it's not that. How long is-
That's how you bring the risk down with that particular title.
How long has that been in development at-
It's been since last fall.
Okay.
Yeah.
And the investment that you set aside already in conjunction with Q2, that's included in this?
Yes.
Yeah.
Yeah.
So that is a part of this. And also, you talked a little bit about step back into publishing for Daybreak. Does that mean you're building a publishing operation? I guess you need to staff that for, with, you know, project managers for each and every game and so on, or how-
Yeah. Good news is that Daybreak already is publishing a lot of our live service titles. So we have the infrastructure as well as the personnel. Do we need to add a person here or there? Probably, yes, but at the same time, the volume approach. So some of the competitors with 100 games that are coming out, yeah, you need to build a significant infrastructure for that. When you're, you know, producing and releasing one or two games, not so much.
Does anybody else want to ask about that particular deal?
Rather, maybe Daybreak. In general, returning to publishing, and you mentioned that you will target recognized IPs. How will you win this compared to other competitors that will also target these IPs, I guess?
You mean third party or first party?
Third-party, yeah.
Third party?
Yeah.
Yeah. So one thing that I think is interesting in gaming is from a my formerly, I did finance, right? So whether it's looking at high-yield bonds or leveraged credit or collateralized loan obligations, like, you price things based on risk and the yield that you're targeting. So publishing business, to me, in many ways, you can price it. So based on your underwriting, you could price up, our target is 25% IRR. All right? It could be higher, it could be lower, depending on the profile, but ultimately, when you price it that way, you end up with likely compelling economics for developers versus many others. Like, it doesn't matter what the risk profile is, we want 50%. Okay, so I don't think that's fair.
I think it's got to reflect the returns potential for every single game, and then if you do proper underwriting and pricing, we do believe that we could be more competitive.
Should we talk a little bit about your new titles or new games that you sort of have announced today?
Yeah. So,
Yes.
H1Z1?
Yeah.
Yeah.
Should we start with that?
Yeah.
’Cause I remember actually that, we talked about this the first time we met.
Yeah.
You said you didn't have the people in place to develop that game. Do you plan to do it internally, or is it gonna be an external-
We will do it internally. So currently, So that's the once again, how development works for a project like this, you'll have a very small team initially for the concept stage, and that could be three people. So we currently have an executive producer assigned to this particular project. Along with him, there's a couple other people who will be working on figuring out the concept, and then once that concept is ready, that's when we will start ramping to a certain extent.
When I say ramping to a certain extent, it's utilizing some of the teams that we have internally, as well as we might hire one or two people, but that number goes to somewhere between 10-15 people. So relatively small investment still, but that's where you go through the pre-production process. I'm a huge stickler about everything in writing, so, you know, a lot of developers will say, "You gotta find the fun, and then you gotta prototype." Absolutely true, but if you can't convey why a concept is compelling in writing to me, like, there is something wrong with that.
You gotta be able to convey what's compelling about it, either tell me about it or write about it. That's what happens in the pre-production process, where they will be fleshing out full development, game design documentation. Along with that, what we'll ramp and be able to do so. But, you know, pre-production could take, for some of the AAA guys, could be 12 months. But because for H1Z1, our, our goal is to be very laser-focused in terms of design and scope, we expect that to be about six months.
Yeah, that's. It's gonna be true to the old, the old game. Is it gonna be H1Z two or?
It's going to be. Yeah, we don't know what the name is, but we will use H1Z1 as a brand. I think we have two distinct pockets of audience for H1Z1. H1Z1 originally came out as a sandbox survival game, modeled after DayZ, and then after it came out, we added a game mode called Battle Royale with PlayerUnknown. And then when we did that, you saw a big uptick in that sort of activity as well. So we have certain people that contact us, community still. I ignore most of them because I don't have a good answer for them. But some of them ask for, "Hey, look, survival game. That's what we want back." Okay? Like, "Put the code back on a server. Can you just light it back up?" We don't wanna do that because it's terrible experience.
We don't wanna put terrible experience out attached to our name anymore. So t hen there's the people that want the Battle Royale. But Battle Royale, like, it's sort of like, just as we're not gonna compete with the platforms and top 10 publishers, Battle Royale is done. There's no way, it's, it's this locked market. I think, this is not where we wanna play, so we will go squarely into the sandbox survival, which we believe is a huge opportunity with Rust, DayZ, Ark. Those three in particular, continue to occupy top 20, and no one else is really going into it, once again, because it's just not big enough for some of the big guys, and then that gives us the opportunity.
Do you think, conceptually, do you think about it as a kind of season pass? Is that your hybrid model or?
Yeah. So for that one, I think, for a game like that, what we would want to do is, we would do premium model upfront, but not at anything close to AAA pricing. So it's gonna be somewhere between 50% to probably 70% of what a AAA pricing might be. And then along with that, games like that, as long as we're not selling power, you can have some level of microtransactions for cosmetics and things like that we could build in, and then we will have content updates that we do wanna sell as DLCs.
Okay.
So that's the model.
Yeah. Other question, does anyone else have a question?
Hi, Simon from ABG. So I was wondering, you, you said, Ji, that, you may need to add a few people in the pre-production, of the internal games. What about the full production? Are you intending to use internal staff to-
We will ramp beyond the internal staff for that, because Daybreak runs quite lean, so we have our teams that are focused on our live service games. But when we're spooling up a brand-new, you know, effort, whether we borrow resources or utilize resources together with Toadman or other areas that we need to ramp, but that's the idea, that it wouldn't just be limited to our existing staff at Daybreak, because we do run quite lean.
All right. And then if you move over to EverQuest, for example, will you use the same people, or how would that work?
Yeah, I think, you know, one thing that we've learned, and not many other people seems to have. Hey, look, it's all over the place. In order to make the new EverQuest, so the skill set for game development, also, there's the skill set regarding genres, but there's also skill set in regards to what type of. What, where you, where you sort of develop in the life cycle of a particular title. So a team that's exceptional at games as a service, live service, may not be the team that could ship a game, a brand-new game. So for new games, while we obviously want to utilize Dark Paw, the studio that oversees EverQuest, EverQuest II, it's not going to be all of them because we do think that particular experience, where we don't want to ever make that go away.
We want that staff continuing to focus on that. We will borrow. We will obviously work with that team, but we do need to ramp on top in order to be able to get the new one done.
In full production, how, how big of a share of the total development capacity on, let's say, H1Z1, would be staff you already employ currently?
It's not going to be any more than 15-ish.
All right. Thank you.
Yep.
Just on a follow-up on investments in new games. You have, as you said, about SEK 500 million of cash right now, and you're generating maybe SEK 200 million or something prior to investing in new games. Seems that you're gonna keep having a net cash position. Is that how you see this operating going forward as well?
Mm-hmm.
Just checking. Yes, very good. Go ahead and wave your hands if you have any questions as well. You talked unusually little. I have so many questions about work for hire that I prepared. There's very little about that.
Yeah. So once again, we don't look at it as ultimately a long-term core strategic growth area. We think it's smart as the existing team being able to self-fund each business unit. But growing Work-for-Hire business to something substantial is possible, but not easy. And I think not that it's not a good business, but there's only one way to grow Work-for-Hire business, by hiring more people.
Yeah, it's a consultancy business.
And signing more contracts. Yeah.
Exactly.
Yeah.
So, basically, if you calculate backwards, you're targeting an EBITDA increase of about SEK 450 million or something?
Yeah.
Compared to this year. I guess there's not more than 50 or something that comes from work for hire, or is it more?
Yeah, it's relatively small.
Yeah.
Yeah.
Yeah. Very good. And what else do we have? Yeah, what are your assumptions, or how do you think about the. Is it a, you know, the elephant in the room, My Singing Monsters? We all sit there and track it.
Yeah
But, you know, do you think it's a business that comes off 15%-20% from the peak, or is it 25%-30%, or, you know, where.
Yeah, I mean, the way we're thinking about it, along with the 24 numbers, we do think compared to the peak levels, I mean, it's not 10-15 it's more substantial.
Yeah.
Once again, it's still going to be 2.5-3 x more than what we were prior to the peak, but that still implies that it's a decent drop.
Some of us have done a lot of mobile games modeling. This one is a bit different because normally the biggest cost is UA spend. This is not the case here, right?
It's not. You know, that's, that's what's beautiful about the game, because there's such a big population of not only existing, but a lot of the lapsed players that love the game, so they continue to come back. That's one. And the other one is, the team has done an exceptional job in terms of how they acquire users, really utilizing a lot of the social channels. And then, you know, this year in particular, they started also participating in a lot of the game development conferences, where they're showing up, meeting up with fans, and expanding sort of the audience's stickiness, too.
Then, you know, at PAX, just announced a new Wubbox, which is the most chased-after monster in the game. People from Europe flew in to meet with developers for that. So there's this very, very core audience that loves the game, allows them to be able to expand or keep the audience without spending a lot of UA, like you said. Yeah.
But, if we were to model this in a decline, then there's still some fixed costs in it, I guess, the development, the work, the Live Ops kind of thing.
Right. Right. Yeah, but it's, you know, so they're based in London, Ontario, Canada. They have the benefit of overall cost being exceptionally low, compared to the U.S. Even prior to the uptake, you could see that the margins that they were generating was in excess of 40%. We expect them to continue to maintain super high margins going forward.
Any more questions? Yeah. Simon.
Yeah. So I have two more. First, on, on Fireshine, you, you focused a bit on that and, basically said, that it needs to move up from, from indie to, to mid, mid markets. Is it that easy really to just, you know, refocus?
It's not so much that it's easy or difficult. It's more so around the underwriting criteria, meaning as they go to market, you know, what type of opportunity are we seeking? And then we have certain. You know, when I say, "Hey, look, we have a slide in here that says, 'Hey, this is the criteria that we're after, product investment profile.' " It's not like, "Hey, look, unless you get every single one to be exact, we're not gonna sign." It's not that. So that's a guideline, right? And then you sort of go plus or minus. And, and as to the volume, because of what we talked about earlier with D2C channel, that Steam has opened up, and where the market has been as to money going into games have come down over the last, I wanna say, 12 months.
Because of that, competitively, we do believe that our liquidity position, our cash flow, and our specific targeted approach to what we wanna sign up, that Fireshine is an extension for the group to be able to go out, boots on the ground, to be able to find other interesting opportunity and be better now versus where they were 12-24 months ago. Because 12-24 months ago, it was very difficult. Yes, this model would be very difficult when there's just money pouring in and people are not being selective, and it's very difficult to compete, but the market, the world, has changed quite a bit.
All right. And a question on M&A. You said you might do something if something interesting pops up. Could you maybe elaborate a little bit about what an good or interesting deal could look like for you?
Yeah. Look, so I love, you know, Cold Iron deal when we did it at Daybreak. That was a great opportunity, right? Because situations where a studio has been investing for 2+ years, bunch of money went into it, there's a lot of substance that you could actually touch and feel, and then the underwriting around what the game could be. It's way easier to do that when you have substance, right? So we expect that those types of opportunity will come up over the next 12-18 months. And when those come up, you know, we will have very strict underwriting criteria for them. We're not gonna just spray and pray. The idea would be similar to what we did with Aliens. We're able to get the game out in 12 months, sell over 2 million units, over the following two years, significant return.
We think those types of opportunity will be available in the market, and those types of M&A we like doing, because you're not really paying for anything, it's more acqui-hire. And then on top of that, you know, of course, you gotta fund the development, but it's no different than us saying that we're gonna do third-party games or first-party games. Some of those might be earlier in terms of when we could get the games out because it's already midstream, and then the risk profile could even be lower with the smaller investment size. So those types of deals we do expect to see and then be able to potentially, try to transact.
All right. Thank you.
Yeah, hi, Ji. Quick question. So you mentioned the move from First North to the main market. Could you give us some more details on the rationale behind that and possible costs and effects on accounting standards and which investors you hope to reach and so on?
Yeah, I think it's beneficial for everyone. I mean, I think in order to move up to the main exchange, you do have to have further improvement on corporate governance. We already have it very close to where we need to be, so amount of work that needs to go into making that happen is not that significant. There's also ESG requirements, other things that we need to do. So cost-wise, yes, it will go up, and Fredrik will have more details around, like, what the estimated cost is, but it's not material. It's not significant where we wouldn't do it because of the cost. But the benefits to it, you know, originally the idea was that, "Hey, look, we got a bunch of cash. Our stock's trading at where it's trading at.
We should be able to do stock buyback." So that was the initial idea behind it. But, you know, I think, while that was the primary initial rationale, what's happened in the marketplace is even on First North, you're able to do stock buyback with synthetic options now. So we will try to utilize that for now until we're able to move up, but that option is no longer the primary driver. The driver for us is that we do believe being on the main exchange, more credibility, of course, better governance, that, that we're gonna continue to improve, and then more access to investors to us is very important, and the liquidity for the shares. So those are the reasons now at this point to really try to get that exchange or get move up the exchange.
Fredrik, is there gonna be any changes in the accounting?
No.
No. Yep. Did you hear that? Yep. Did everyone hear that? Yeah. Good. Very good. Right, it's probably time for us to wrap up. What are we gonna think about, which are your core areas now, your core game areas now? Shooters, multiplayer?
Yeah. So we want to. I mean, look, one benefit of, I think, even doing something like the Cold Iron transaction is, once again, the 80-10-10 model is really great because there's the combat mechanics, combat systems, overall gameplay for co-op multiplayer, which will now become available for EG7 as well, that we could leverage for that, whether we're doing H1Z1 or other games. So there's additional, like, inte- like, benefits that we're not writing. It's not economic, but there's a pickup there because we get to leverage the skill set, investment, and technology that's available there for how we could accelerate things that we wanna do. So shooters is one. We love them.
You know, I think our view is it's the biggest genre in market, and, you know, people are like: "It's so competitive!" Yes, it is super competitive, but we're not trying to compete at the Call of Duty, CS:GO level. What we're trying to do is, you know, Remnant II just came out a month ago, sold 1 million units in less than seven days. Another co-op shooter, and that was made by Gunfire, published by Gearbox. Great job there. We love those guys in terms of what they've been able to do. But that's exactly the point, meaning, yeah, there's Call of Duty, but they still sold 1 million units in the first seven days at $50 a pop, right?
We believe that there's a lot of depth to the market with quality gameplay in terms of good co-op shooters.
Lovely. Thanks a lot. Thanks, everyone, for staying here and listening to this presentation. Thank you.
Thank you, guys. And then, you know, look, I think we have our IR, Ludwig, here as well. So anyone that would like to do any follow-ups, we're available to answer any additional questions that you may have. So once again, thank you everyone for coming, listening. Lengthy presentation. I think everyone mostly stayed awake, so really appreciate it. Thank you.