Swedish/Russian publisher G5 Entertainment (STO: G5EN) has announced its nine months financials for the period ending 30 September 2013.
Consolidated revenue was $11.1 million (SEK 71.3 million), up 18 percent year-on-year.
Operating income was $1.3 million (SEK 8.5 million), down 48 percent.
Making the transition
The big news for G5 during Q3 (July to September) was this it was the first time that revenue from its true free-to-play games exceeded that from its previous model of providing a free download with the majority of the game locked behind a single purchase paywall.
However, revenue during Q3 was $3.4 million (SEK 21.9 million), down 9 percent year-on-year.
The company made an operating loss during the period of $760,000 (SEK 4.9 million).
This was mainly because of higher marketing costs, higher operational costs in terms of running F2P games, and a one-time write-down of $380,000 in terms of its legacy paywall games.
In addition, during Q3, the company's cummulative game download total reached 125 million.
Change of tone
"User retention and monetization is higher in free-to-play games, and so we are actively promoting our free-to-play games to our existing unlockable games player base," said CEO Vlad Suglobov.
"This to some extent cannibalizes on the sales of unlockable games, as players migrate to free-to-play games.
"At the same time, the market for unlockable game experiences increased competition and increased quality demands of regular players, and average sales per unlockable game on iOS were deteriorating during the first half of 2013, then bottomed out and stabilized in Q3.
"Revenue generated by free-to-play games continued to increase."
G5 Entertainment ended the quarter with available cash of $5.3 million.