Shares - - TALKING POINT -

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.


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

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