Keywords cashing in on lockdown gaming boom
GAMING is one of the few sectors to have benefitted from the pandemic as increasingly large numbers of us were looking for entertainment at home.
Lockdowns are estimated to have contributed an additional $ 2.2billion (£ 1.7billion) in gaming revenue, with this year’s total expected to reach almost $ 160billion. The number of gamers worldwide is expected to reach 2.7 billion.
As a market leader in outsourced design, audio and translation services for game developers, Keywords has benefitted from growth in gaming market. First half organic revenues of € 173.5million (£ 158.6million) were 8 per cent higher than last year. And, despite coronavirus disruption, underlying margins nudged higher, meaning profit before tax was 18 per cent ahead of last year at € 21.7million.
But while there’s been an uplift, Keywords hasn’t seen the astronomic growth the likes of Activision Blizzard ( think Candy Crush and Call of Duty) has enjoyed. That’s because it’s focused on new content, and the launch of new games has been disrupted.
However, things may look different over the second half of the year.
Now that the group is running remotely, it’s well- placed to service the increased demand for gaming content. The launches of the PlayStation 5 and Xbox Series X are also expected to boost demand.
And while further lockdowns will still pose challenges, Keywords’ size and balance sheet mean we don’t think the group’s at risk.
Improving underlying profitability remains a key focus, though. Lower travel and marketing costs nudged margins higher over the first half, but we’d like to see more progress.
But overall we think Keywords has performed well. Revenues have continued to improve and trends emerging from the current crisis are likely to play in the group’s favour – but the pressure is on to execute.
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