24 Bit Games' journey to joining Annapurna Interactive

You can read all our South Africa Games Week articles on this page.

After seven years in business, Annapurna Interactive made its very first acquisition last year: South African studio 24 Bit Games. While seeing Annapurna jump onto the M&A bandwagon might seem surprising, this specific acquisition makes a lot of sense considering the very close relationship between the two companies.

"Annapurna and 24 Bit have been working together since 2019," says 24 Bit COO Pieter Koornhof. "We initially started doing a bit of light porting work for some of their clients – Fulbright Interactive would have been the first one, with Gone Home. And then, when you work with a studio that has a publishing unit, you invariably work with the publisher. And we saw a good cultural fit from the start. We started [porting] a lot of their more popular games, and just over time, the relationship grew. Then there were hints dropped about forging a stronger commercial relationship, and we played coy.

"The industry is precarious; in Africa, it's even more precarious, because we're constantly having to punch above our weight. Most people just don't know us. We didn't want to do anything that it didn't make sense to do. [We] danced around it for two, three years, and then finally, at the end of 2022, they said, 'Look, this is something we would like to do, let's start having actual conversations about what this could look like'."

This led to further talks about culture fit, various negotiations, and studio visits, until an offer was made and the deal sealed at the end of October 2023.

"The industry is precarious; in Africa, it's even more precarious, because we're constantly having to punch above our weight"Pieter Koornhof

24 Bit Games has been around for 11 years, founded by president Luke Lamothe, spanning out of his earlier companies that did original content creation, like Luma Arcade.

It specialises in porting and co-development and has had its hands in many pies over the years, most recently porting indie hit Cocoon, for instance. And for now, the Annapurna acquisition is not changing anything on that front.

"For the time being, it's business as usual," Koornhof says. "We talked to all of our clients before the announcement was formally made, just to ask if they were comfortable carrying on with the relationship. We made sure that there weren't any legal blockers to the acquisition. The general feedback from our clients has been positive.

"The mandate we've been given is, 'Just carry on doing what you're doing.' They like us. They want to carry on forging that relationship. And as far as they're concerned, we are our own company, still. Management hasn't changed, just the shareholders. And we have to keep on doing what we do."

Developing its own IP is somewhat on the horizon for 24 Bit, but the studio enjoys the niche it carved for itself.

"The nice thing about porting and co-development is you get to work on a variety of different projects," Koornhof continues. "You don't carry the risk of the project being successful. I mean, will we ever work on original content? Yes, we would very much love to do so, but…"

24 Bit Games producer and UX designer Tarryn van der Byl interjects: "It's not a huge priority – we genuinely really enjoy what we do and are not in a hurry to change that."

The studio works with a variety of companies, including Landfall, Devolver Digital, Annapurna and a "couple of others [they] can't disclose," the pair says. And it's this ability to be able to work on different things that is appealing to them.

"We face constant problems that we tend to solve that other people can't, and that's what gave us the reputation we have," Van der Byl says. "You get a lot of different experiences in quite a short space of time, because I've usually got two or three projects going on at the same time with different timelines. It's a huge amount of experience, you're exposed to, maybe a lot more than a person sitting on the same thing for a few years is dealing with."

We ask the duo whether the goal for Annapurna is to have its own porting pipeline, which Koornhof confirms.

Van der Byl continues: "It's a valuable asset, especially in the indie space, where you have a lot of people that are making their first game, and it gets picked up by a publisher, but they're making it for Steam, [and] they're not going to have the expertise to do the porting. So, I think that's a common scenario with publishers like Annapurna, it just makes sense to have porting there."

Publishers having their own porting teams makes a lot of sense and feels like a natural fit, with Koornhof emphasising how it empowers devs to focus on the core development. But he highlights that 24 Bit increasingly does more co-development these days.

"That is a conversation which we've had with all of our publishers and all of our prospective clients, and it's one that resonates with them. So, we increasingly do more than just porting, we increasingly come on earlier, and it's not just for Annapurna."

He continues, circling back to the IP conversation: "I think everyone at some point wants to try and build their own thing. I think the soft landing to that is often publishers will have IPs within their books which the existing studio that built the games don't necessarily want to work on, but they want to still build the franchise. And so there are always the in-betweens, going and building a spin-off or a sequel for an existing IP as a new studio. And we have done pitches for things like that in the past, and we've gotten frighteningly close.

"That's the logical next step for us, working more on games, establishing more chops that we don't necessarily have a lot of. Because we're mostly technical engineering, we have a design team, but it's a very small team. Those are the types of things we'll probably build out before ultimately making that. Is it something we would like to do down the line? I think the answer is definitely maybe..."

We turn the conversation to the topic of gaming in South Africa and what the landscape looks like.

"Gaming in this country is a bit of an awkward thing to talk about, because we have tremendous poverty," Van der Byl says. "There's a huge gap between the middle classes and underneath that, and so it's a very privileged hobby. But it is certainly quite big, considering the circumstances. We're probably just lagging behind a little bit."

She mentions the prominence of annual gaming convention Rage Expo, that's been around for over two decades, as well as the more recently established Comic Con Africa, which debuted in 2018 and has a strong gaming component. The development scene is also growing, says Koornhof, who's also very involved in trade body Interactive Entertainment South Africa doing research and policy advocacy.

"We try to go out there, inform people about South Africa and the potential of the region as a whole. We have a fair amount of hobbyists, but we don't have large studios. We're the largest studio on the continent, and that's 50 people, and that's scary and atrocious. We hope to grow as a result of this, and we believe that that will be a good thing for the industry. If you think about Poland, what happened there when they had their Witcher moment... CD Projekt Red led to other studios being able to blossom within that ecosystem, that started developing around them. And it just built and built and built. So, the research we've done consistently is you either need a large studio to either organically grow or grow by happy accident, and create that mushroom effect, or you need a big player to come in. So, inadvertently we went for a bit of both."

While the South African industry is "tiny" compared to some other territories, Koornhof notes, it has a strength in its available talent pools.

"Talent used to be a problem but [it's] less of [one now] because we can start poaching from fintech pools, which is quite big, particularly in Cape Town. But the ability to pay those salaries was initially a problem. The geography, the fact that we're just so far removed from everyone else, it makes connections difficult. It makes travelling difficult."

Van der Byl remarks that in a post-COVID society, remote connections have normalised and are more embraced by businesses, creating an opportunity and some momentum for South Africa. We mention that it's a feeling that was shared by Australian developers we talked to for Australia Games Week.

"The one thing that I would say that Australia has better than us is, when they had that moment, there was also government support," Koornhof says. "So, you're seeing both city, regional, and national governmental support there. They're doing really cool things. Here, governmental support is-"

"Non-existent," Van der Byl finishes.

Koornhof points to provincial and city support in places though, and partnerships with economic development organisations including Wesgro (the Western Cape tourism, trade and investment promotion agency) or the French Institute of South Africa.

"That slowly but surely has become a more productive, proactive conversation. National government is still slow to change, to accept the conversation, but we're making inroads."

They also mention challenges that have been raised throughout by other South African devs we talked to: load shedding (regular power cuts, meaning studios and people have to rely on backup generators to keep things running), difficulties to get things inside the country, and misconceptions about the African continent.

"So, a lack of understanding, a lack of education about the region, and then there are infrastructural issues," Koornhof says. "Access to dev kits – we sometimes have to [almost] smuggle them in. That's an open secret, because if we do it the right way, they get stuck in customs for months on end because someone, somewhere mislabelled a VR dev kit as a headset, and they go, 'You're committing fraud.' And because of that, some platforms will not send dev kits here."

Van der Byl continues: "Just generally, there's a problem of perception. You can talk to a person in America and in the UK, and you tell them that, 'I'm from Africa,' and there's a, 'Oh! Do you have cars?' There is a perception that we are living in huts, here. Also, they're shocked that a white person is from Africa. It's a constant joy. There is a game development scene; it is very small, and struggling with the perception to be taken seriously, because, 'Well, how could you even have a company here?'"

"The joke [we] always make is that South Africa has the smallest industry in the world, if you exclude Tencent"Pieter Koornhof

"The joke that Nick [Hall, IESA CEO] and I always make is that South Africa has the smallest industry in the world, if you exclude Tencent," Koornhof smiles, referring to the fact that South African media conglomerate Naspers owns 26% of Tencent.

They insist that there's a huge momentum going in the South African games industry though, with growth, increased interest from publishers, incubators being set up, and improved game dev programmes, all of which can only be amplified by 24 Bit's acquisition.

"I think with the Annapurna acquisition, it will make a difference," Van der Byl says.

Koornhof points to Free Lives as the country's "national champion" (keep an eye out for our interview with Free Lives on Friday).

"There have been a couple of other interesting things coming out, but it's usually more indie-orientated. Nick and my great dream is to ultimately set up a AA or AAA studio in the country, because we believe it will be very good for the country. And we've successfully lobbied the government to have gaming be a category for a critical skills visa. It's on the box, but we still don't know how they're going to judge whether or not someone falls into that category. So, now we have to have the next fight. But it has definitely been growing in the right direction."

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