Keywords Studios feels the Fortnite effect as H1 revenues surge

18 Sep 2018

Popular video game Fortnite. Image: Keywords Studios

Irish video game company Keywords is in it to win it and is eyeing growth opportunities through 5G streaming and immersive gaming.

Dublin-headquartered video games services provider Keywords Studios has reported H1 revenues of €110m, up from €63.8m a year ago. Profits before tax rose 67pc to €16m.

‘The games market is starting to focus on the prospect of games being streamed and played live across all connected devices’

The company added to its growing tapestry of outposts with the news that it has hired Sound Lab, the California team led by renowned Hollywood sound designer Scott Gershin. It also acquired Brighton-based firm The Trailer Farm for a total consideration of £2m.

This caps an acquisition spree that in the last six months alone includes Fire Without Smoke, Cord and Laced, Blindlight, Snowed In and Maximal. Keywords has also seen the launch of its own venture capital firm, Keywords Ventures, and its first investment in automated GDPR compliance test platform AppSecTest.

Keywords has embarked on the expansion of studios in response to demand, including investing €3.8m in new or expanded facilities in Montreal, Dublin, London, Liverpool, Madrid, Katowice, New Delhi, Chengdu, Manila and Tokyo, providing a total of 660 additional workstations. To support this growth, Keywords secured a new revolving credit facility for up to €105m.

Fortnite buzz

A character from popular video game Fortnite.

Popular video game Fortnite. Image: Keywords Studios

CEO Andrew Day said that the video games business is booming, especially thanks to rise of the popular online game Fortnite.

“In a period in which the gaming phenomenon Fortnite had a significant impact on the games market and in which the US dollar – which represented 54pc of our revenues – declined by 12pc compared to the same period in 2017, we have nonetheless delivered yet another strong set of results for the first six months of 2018 as we continue to deepen and broaden the business for the future,” Day said.

“Our continued organic investment and acquisitions have extended our geographical reach, added further scale to our existing service lines and broadened the range of capabilities we can offer our clients to include co-development, analytics, music, marketing services and sound effects. We are particularly pleased with our performance in respect of acquisitions and their subsequent integration.

“Our largest acquisition to date, VMC, which was absorbed into the group with a track record of reducing revenues and an operating margin of 9.1pc in October 2017, has been fully integrated and the resulting synergies are already significantly enhancing operating margins, as can be seen by the overall group profit margin of 14.5pc. We are confident of being able to return it to revenue growth in the near to medium term.”

The 5G future of gaming

Keywords Studios was established in Dublin in 1998 by Giorgio Guastalla and Teresa Luppino. The company works on video game development for multibillion-dollar gaming giants such as Electronic Arts, Activision Blizzard, Warner Bros, Riot Games, Sony, Supercell, Take-Two, Ubisoft and Nintendo. The AIM stock exchange-listed company has more than 42 facilities in 20 countries worldwide.

The addition of Sound Lab and The Trailer Farm indicate where Keywords may be going next as augmented reality (AR) and virtual reality (VR) become more substantial and immersive aspects of the gaming market.

With more than 30 years’ experience in sound design, Gershin and his team have been credited on an extensive list of bestselling video games including the likes of Final Fantasy XV, Resident Evil, Gears of War, Fable and Epic Mickey, and worked on projects for Riot, Capcom, Activision, Infinity Ward, Amazon and a host of others. The company is already a leader in the immersive AR and VR entertainment markets and provides sound services for movies and streaming content. Movie work includes Pacific Rim, The Book of Life and Shrek, to name a few.

The Trailer Farm produces trailers for the marketing and support of video games, and will complement Keywords’ recently acquired Fire Without Smoke marketing services business in producing high-impact, cost-effective trailers for a broad range of games. Founded in 2011 by brothers Tony and Dan Porter, The Trailer Farm’s team of 12 creative directors, video game artists, project managers and motion graphic designers produce trailers for both mobile and console/PC games for use in game launches and ongoing promotional events.

Day said that the future of the industry includes immersive content and streaming, and much of this will be done over 5G mobile. “The games market is starting to focus on the prospect of games being streamed and played live across all connected devices.

“Advances in technology and increases in internet bandwidth, including the forthcoming 5G mobile networks and the resultant reduction in latency of communications, could enable streaming of games for the first time, which we believe will drive record demand for gaming content.

“We are excited by the prospect of assisting the industry in creating and repurposing content for this new medium over the coming years and Keywords is already working on interactive streaming content and porting games to upcoming streaming platforms,” said Day.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years