Revenue in the six months to 31 December 2006
Revenue in the six months to 31 December 2006 is expected to exceed £70 million, a 40% increase on revenue in the corresponding period to 31 December 2005 (£50.1 million). The majority of the increase in revenue arose from the distribution of products, particularly Justice League Heroes and continued sales of Lego Star Wars.
As in prior years, the major portion of the Group's product releases and revenues arise in the second half of the financial year. The Group has therefore not revised its internal budget for the financial year as a whole. As in the 2006 financial year our internal budget plans a loss in the first half followed by a profit for the full year.
New product releases
New product releases accounted for approximately 50% of revenues for the period to 30 December 2006.
In the six months to 31 December 2006 the Group's most successful new product launch was Just Cause. Just Cause was released in September 2006 and immediately entered the UK charts at No 1 in the Microsoft Xbox 360 charts and No 2 in the All Formats charts. We now expect Just Cause to sell over one million units in the current financial year. The sequel to Just Cause is in development.
The Group also released Reservoir Dogs, Bionicle Heroes, Who Wants to be a Millionaire? and the PC version of Championship Manager 2006/7.
Distribution and back catalogue income
Approximately one third of revenue for the first half arose from the distribution of third party titles. Lego Star Wars, first launched in April 2005, continued to sell strongly. We have now sold over 5.4 million units of Lego Star Wars. In addition we released Justice League Heroes in November 2006. This title has performed strongly and we now expect sales to exceed one million units in the current financial year.
The balance of revenue in the first half arose from sales of back catalogue product, including further sales of Tomb Raider Legend and Hitman Blood Money previously launched in the 2006 financial year. Platinum versions of these products will be launched in the second half of the financial year.
Future plans and platform strategy
As in previous years the major portion of the Group's revenues for the 2007 financial year will arise in the second half.
Our second half release schedule will include Tomb Raider Anniversary which celebrates 10 years of Lara Croft and Tomb Raider. Tomb Raider Anniversary will be released on Playstation 2, PSP and PC in April 2007.
Our second half releases include a growing number of products aimed at the casual and family market. These products include Pony Friends, Zendoku, Diner Dash, Prism: Light the Way, Ora: Use Your Emotion and PC versions of six classic casual games including Luxor: Amun Rising, Jewel Quest and Cubis 2.
Following the success of Just Cause on the Microsoft 360 platform, we will launch Battlestations Midway on the 360 (as well as a PC version) in February 2007.
In Spring 2007 we plan to launch our first titles on the successful Nintendo Wii platform. These titles will include Bionicle Heroes.
Our future next generation console titles include new versions of Tomb Raider, Hitman and Championship Manager plus exciting new IPs including Kane & Lynch and Crossfire. In the light of the launch of the Sony Playstation 3 in North America in November 2006 and its planned European launch in Spring 2007 we are assessing the timing of when to launch these titles on the appropriate next generation platforms.
We are very pleased to be distributing the PC version of the forthcoming Massively Multiplayer On line title Age of Conan. We expect this title to be released during 2007, with future updates.
Partnership with Warner Bros.
Part of the Group's strategy is to publish a wider range of titles to match the broadening demographics of games buyers. In line with this strategy, On 15 January 2007 shareholders approved the resolution necessary to complete the agreements with Warner Bros announced on 15 December 2006. Accordingly;
1. Time Warner will subscribe for new shares representing 10.3% of the enlarged share capital of the Group. Admission of these shares is expected to take place in March 2007.
2. SCi will license the interactive rights to a number of Warner Bros intellectual properties including Batman, Looney Tunes and properties from the Hanna Barbera catalogue.
3. Warner Bros will provide certain primary distribution services to Eidos in North America.
These agreements strengthen our relationship with one of the world's largest media companies. The proceeds from the share subscription will be invested into further growth opportunities including expansion of our product pipeline, building further development capacity in low cost locations such as Canada and China and expansion of our New Media and Casual Games divisions. We expect returns from this investment to benefit the 2008 financial year onwards.