KEYWORDS AIMS TO UNLOCK GAMING’S FULL POTENTIAL
WORKING BEHIND THE scenes for some of the big game developers, Keywords Studio (KWS:AIM) has 23 of the top 25 game producers as clients and using a buy and build model is picking up new companies and offerings at a tremendous pace.
Keywords is not reliant on the success of a single game or even a handful of titles. It provides the ‘picks and shovels’ to get these products to market and is paid regardless of how popular they are.
The model clearly appeals to investors, at £17.14 the shares are up nearly 13-fold on the issue price from its July 2013 IPO and trade on a price-to-earnings ratio of 40.3 times 2018 forecast earnings per share.
Andrew Day, CEO of Keywords says he’s not really after more clients as his list is already stellar. Moreover, given the amount of services he can offer his clients, he wants them to use his company for multiple tasks.
‘One of the problems we’ve had as we’ve increased our level of capabilities is to show our clients the level of our new offering,’ says Day.
Day says the big trend at the moment is a move into games that are continually supplying new content into existing games. This is to keep players ‘engaged’ according to Day and the new content can come weekly or even daily.
Another ‘big thing’ Day has noticed is the increasing sophistication of mobile games. The old MMO (massive multiplayer online) model mobile games is merging with a pay to play model and ‘people are willing to play more and more sophisticated’ games on their mobiles.
KEYWORDS CONTINUED EXPANSION
The company recently moved into gaming analytics with the acquisition of Yokozuna Data for $1.6m. This move was hot on the heels of the purchase of Snowed In, a software engineering firm.
Day explains that predictive analytics is about being able to read when players are about to leave and trying to increase the level of spend within a game.
In terms of the price Keywords has paid for its astounding number of acquisitions, Day surprises with his response.
‘We are the known buy and consolidator in this sector so we can set the price. Most of the conversations in this space are less about valuations and more about making sure they are getting the same sort of deal out of the Keywords deal that others got,’ says Day.
In its earlier incarnations, Keywords was a company offering translation services to games producers to enable them to market their games to a wider audience.
From a single service line business, Keywords now offers seven service lines and has an addressable market of around $6bn.
Keywords is becoming more vital in the game production supply chain as it diversifies its offering with each new acquisition. (DS)
Shares up 13-fold on 2013 IPO