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What Keywords Studios' acquisition strategy looks like for the coming year

What Keywords Studios' acquisition strategy looks like for the coming year

It feels like Dublin-based games development and services giant Keywords Studios is always in the industry headlines. The firm has become infamous for its acquisition strategy, buying a sizeable number of companies in a given year. 

In the past, these have included developers and QA and localisation companies, but in 2018 Keywords upped its investment in marketing and audio services as part of the eight acquisitions it made last year - deals worth $68.1m. At GDC we caught up with CEO Andrew Day to find out a bit more about his company's strategy moving forward - with $114m in the bank for purchases - and what he learnt from taking Keywords public in 2013

So, how was 2018 for Keywords?

It's been good. Solid organic growth, which is what we always focus on. We've done eight acquisitions, so continuing to do very much what we've done in the past, building out our services platform around the world. I guess one of the features of this last year or so has been that we're plugging in some technology solutions as well to sit alongside our services. And then we also, in contrast to what we've done in previous years, we've not been building out our existing services so much as we've been filling in gaps. We've introduced sound design, we've introduced music management services, as well as marketing services. That's good, and we're continuing to invest in those sides of the business. Our engineering and game development services are growing very fast - there's lots of demand for that. Again, we'll probably continue to invest in those inorganically as well as organically. It's been busy. We're very pleased.

Is your acquisition strategy right now a case of 'filling in the blanks'?

Yeah, I think so. In terms of acquisition focus, we're focused a bit more on the development, marketing services, audio sides. Each of our service lines has its own strategy, so where there's an acquisition component, we try to support that. A lot of it is organic growth. Our first focus is always growing organically.

There's something else that people forget when they joke about Keywords buying someone else - we can't buy anyone that doesn't want to be bought. People want to join the Keywords family

Are you sick of people making jokes about Keywords acquiring companies left and right yet?

Ha, we can't help that - that's what we are doing and we are continuing to do it. People are realising that we're not buying something and taking it off the table; we're leaving that choice there for our customers. When a company joins the Keywords Group, it comes with its existing relationships and its clients continue to work with it. They don't have to filter through a Keywords corporate funnel or anything. People have seen that over the years we've been super good at retaining the talent. They grow without the Keywords family so it works well. There's something else that people forget when they joke about Keywords buying someone else - we can't buy anyone that doesn't want to be bought. People want to join the Keywords family. There's a transaction involved in that, but basically, there are a lot of companies that want to be inside this umbrella organisation. It's working well; while it continues to work well, we'll continue to build it.

What are you looking for in acquisitions right now?

The number one thing is talent and access to talent. It doesn't have to be a big studio, although bigger is better. But they need to have access to really great talent. That has a bit of a geographic connotation to it. You're wanting to invest not just in the company as it is today, but in the company that it can become tomorrow. It needs to have this access to talent in order to grow organically.

Have you seen much change in your clients as you expand what services you offer?

We have fantastically loyal clients that we've been working with forever. Usually what's happening is over the years, they're buying more services from us, they're buying more of the same services from us. The relationships deepen and broaden which is fabulous. As a business, that's your most valuable asset. But what's nice about adding more and more service capability is that we end up having clients that didn't use to work with but are now a client of Keywords and we can introduce them to the other services. That ability to provide them with access to all the services rather than just the one service they started buying from us.

Sort of like Amazon - 'You bought this so you might like this?'

Yeah, it's almost a bit like that. I hope we're a bit slicker than that.

We did eight acquisitions in 2018. We'll probably do a similar number, maybe more, in terms of value spend in this year

Keywords was one of the first companies to go public in the UK games industry, floating back in 2013. What do you make of the wave of UK-based developers and publishing doing their IPOs since the end of 2017?

It's interesting, isn't it? It's created a publicly quoted games sector that wasn't there before, which I think is very healthy. This is good for the industry and investors - they can see a Sumo Digital, a Team17, a Frontier, a Codemasters and a Keywords and increasingly understand the difference between those businesses. Five years ago I think if you tried to describe the different businesses that existed in this space, it would have been hard to fathom. The finance community is able to figure out a certain amount of the risk profile, the potential reward curve and so on. It's good. As far as the industry is concerned, I'm not sure it makes a lot of difference. But in terms of the public market, it was good.

As someone who has done an IPO, what tips would you offer companies looking to head in this direction? 

First of all, you need to understand what an IPO is. It's not an exit - it's the start of another part of your journey. If it's just cash or exit that you're looking for, then an IPO isn't the best route to go down. If you're going to do an IPO, do it for the right reasons. The way I look at it is as a way of accelerating growth, it's a way of accessing capital. The second would be taking the time, two or three years, before you even get to that point, making sure that your company is ready for life in the public market; the disciplines of financial reporting and so on. Is your business the kind of business that should be a publicly traded company. If it's not very big and you've got high dependencies on an individual game or client or stop-start in terms of the project make-up, maybe that isn't the best model. If you can't be consistent with your results, it's not going to be a very pleasant experience on the Stock Market. Going public isn't for everybody and people can sometimes get a bit confused.

What's the ambition for the coming year?

We focus on client satisfaction, execution. We pride ourselves on doing the very best for every project we've got. That's how we run our business on a day-to-day basis. If we can carry on running things that way, I'd be happy. Organic growth is our primary motivation. We like all of our businesses to grow. It's so much nicer to be running a growing business than a static or shrinking one. If we just keep trying to grow, we have the advantage of quite a nice tailwind of serving an industry that is itself growing. There's this heading towards outsourcing as well which plays in our favour. So we should be able to grow at a decent clip. Then on the acquisitions, the year before last we did 11 or 12 acquisitions. We did eight acquisitions in 2018. We'll probably do a similar number, maybe more, in terms of value spend in this year. It's not a target as such - it's just the way that the deal pipeline works.

PCGamesInsider Contributing Editor

Alex Calvin is a freelance journalist who writes about the business of games. He started out at UK trade paper MCV in 2013 and left as deputy editor over three years later. In June 2017, he joined Steel Media as the editor for new site In October 2019 he left this full-time position at the company but still contributes to the site on a daily basis. He has also written for, VGC, Games London, The Observer/Guardian and Esquire UK.