In Q3 2013 the CD PROJEKT Group profited in all of its activity segments. This sizeable influx of cash secures next year’s release of The Witcher 3: Wild Hunt.
“Currently the most important challenge facing the Group is continued development and promotion of The Witcher 3, keenly anticipated by players worldwide and favorably reviewed by the gaming media on the basis of exclusive presentations. This fills us with pride and optimism. The fact that the Group is in a healthy condition – and that it continues to generate profits – means we can safely focus on developing the third installment of The Witcher franchise as well as Cyberpunk 2077.” – says Adam Kiciński, President of CD PROJEKT.
Throughout the first three quarters of 2013 the Group had an aggregate net profit of 12.14 million PLN, including 4.43 million in the 3rd quarter. Consolidated revenue was 103.21 million PLN in the January-September period and 40.22 million PLN in Q3.
Net cash flow from operating activities amounted to 11.00 million PLN in Q1-Q3 and 4.69 million PLN in Q3. Moreover, in the January-September period the CD PROJEKT Group reduced its liabilities due to credits and loans by 4.48 million PLN, to a negligible value of 266 thousand PLN as of the end of September.
“Throughout the first three quarters our expenses associated with game development – particularly of The Witcher 3 and Cyberpunk 2077 – were 16.3 million PLN. In the corresponding period the Group achieved a positive cash flow from operating activities in the amount of 11 million PLN. Our cash reserves, augmented by ongoing cash flows, facilitate further development of world-class videogames.” – says Piotr Nielubowicz, CD PROJEKT CFO.
The above results are in line with analysts’ expectations and the market consensus, which assumed that in Q3 2013 CD PROJEKT would have a revenue of 39.9 million PLN and a net profit of 4.43 million PLN.
The Witcher bringing in profits
Fans throughout the world await the expected 2014 release of the third installment of The Witcher series for the PC, Xbox One and PlayStation 4. The game has already garnered 81 industry awards, including the most recent Golden Joystick award in the Most Wanted category – a prestigious accolade awarded by the global fan community since 1983. In a global poll The Witcher 3 was voted the most keenly anticipated market event, outdoing not only other videogame releases but also the premiere of the PlayStation 4 console.
This interest in the Warsaw studio’s newest release is continuing to drive up sales of The Witcher and The Witcher 2: Assassins of Kings, generating further profits for the Group. In the first three quarters of 2013 the Group’s revenue in the “videogame development” category was 18.23 million PLN despite the lack of any new releases. In the same period, in spite of record-breaking expenses on development of new videogames and promotion of The Witcher 3 the Studio still managed to achieve a net profit of 3.73 million PLN. In October the Studio announced that over six million copies of The Witcher games had been sold to-date.
Taking advantage of the popularity of its videogames and of The Witcher 3 in particular the Group plans to release additional franchise tie-ins in 2014. Dark Horse Comics, a leading American publisher, is collaborating with CD Projekt RED on a new series of comic books. Another ongoing project is the development of The Witcher Adventure Game, both as a board game and an iPad application. These new products will provide additional sources of income for CD PROJEKT while supporting the intensive promotional campaign of The Witcher 3 planned for the coming year.
An important aspect of the Group’s recent activity involves distribution agreements concerning The Witcher 3. The Group has selected Warner Bros. Interactive Entertainment as its Northern American distribution partner. The game will be promoted and distributed by Spike Chunsoft in Japan and by Namco Bandai in Europe. The Polish distributor will be CDP.pl. In each case the CD PROJEKT Group retains global digital distribution rights. Agreements concerning additional territories are currently being negotiated.
Dynamic growth of GOG.com
The GOG.com service, which covers the “global digital distribution of videogames” activity segment, has seen sustained dynamic growth in 2013, with a total revenue of 42.33 million PLN and 7.78 million PLN in net income.
GOG.com is currently among the most widely recognized digital distribution platforms in the world. While the platform started off as a one-stop market for older “classic” games adapted for contemporary systems, it eventually began to offer newer titles in higher price brackets, with particular focus on innovative indie releases. Consistent implementation of the “no DRM” policy has earned GOG.com the respect and loyalty of fans worldwide – the company regards DRM restrictions as both intrusive and ineffective, preventing customers from using legally acquired software.
The fan-friendly policy and innovative approach to digital distribution has been noted by Time Magazine which included GOG.com on its list of the world’s top 50 websites of 2013.
In August 2013 GOG.com launched a new initiative by which it extends support for indie game creators. Favorably reviewed titles can count on financial and marketing support. The project has attracted considerable interest from developers whose games are a staple of the GOG.com catalogue and a cornerstone of its competitive advantage. Currently the company’s catalogue includes over 650 titles from around 170 business partners. GOG.com is also working on new projects which will be revealed in 2014 and may bear significant impact on the service’s popularity and scope.
Successful releases at CDP.pl and cooperation with Biedronka
The “distribution and publishing activities in Poland” segment – the domain of CDP.pl – has achieved a revenue of 42.8 million PLN and a net profit of 173 thousand PLN since the beginning of 2013.
This outcome is due to several successful releases, including console versions of Diablo III, Arma III and Pro Evolution Soccer 2014.
CDP.pl is also a distributor of DVD and Blu-ray motion picture releases. Among its key premieres in Q3 were Oz the Great and Powerful on Blu-ray, Blu-ray 3D and DVD, as well as Iron Man 3 – a popular Marvel production, published in September on DVD and exclusively available in Biedronka retail stores (96 thousand copies).
The company is also successfully developing its B2B activities, having published a series of Witcher-themed e-readers in collaboration with Lark. Customers who purchase these readers can also download a selection of Andrzej Sapkowski’s books from cdp.pl.
CDP.pl takes pride in the success of its digital distribution platform cdp.pl, which celebrated its first birthday in October 2013. While the platform initially launched with fewer than 40 games, it currently offers over 3 thousand products, including e-books and comic books, as well as (since October 2013) motion pictures and audiobooks. During its first year it attracted over 3 million visitors who jointly downloaded over 300 TB of data. As of 10 October 2013 the average number of products (games, books and comics) on a cdp.pl customer’s virtual bookshelf was 21.