"Fewer, bigger, better" a boon for one mid-sized publisher
Koch Media CEO Dr. Klemens Kundratitz explains how Koch and Deep Silver are capitalizing as bigger companies have narrowed their release slates
The trend of "fewer, bigger, better" game releases over the past decade has pushed plenty of mid-sized companies out of the market, but at least one such outfit has found a way to take advantage of the situation.
Koch Media occupies an unusual place in the game industry ecosystem. On the one hand, it's a distributor that helps developers and publishers release their games in Europe. But it also owns Deep Silver, which publishes and markets games--sometimes in partnership with other companies--as well as creating and developing owned IP like Saints Row and Homefront at studios like Deep Silver Volition and Deep Silver Dambusters. And even though Koch is on some level competing with virtually everyone in the industry, it's also partnering with many of them. Speaking with GamesIndustry.biz this week, Koch Media CEO Dr. Klemens Kundratitz said his company has seen booming demand for its services in recent years, particularly when it comes to distribution and co-publishing.
"If you only have two products a year, no matter how big you are as a publisher, it just is not economical to keep your own local offices"
"For many companies, they used to have a much larger slate of products every year but now bring out two or sometimes three products a year, but no more," Kundratitz explained. "And this represents a real challenge for each company to maintain a publishing infrastructure in a complicated part of the market like Europe, especially, where you have so many different cultures and languages, different styles of publishing games... If you only have two products a year, no matter how big you are as a publisher, it just is not economical to keep your own local offices."
That's where Deep Silver comes in. With nine regional offices throughout Europe, the company can handle local social media, marketing, PR, sales, and other functions for companies like Bethesda, Capcom, Sega, Square Enix, and Tecmo-Koei. So there's an increased level of demand for those services, yet the amount of competition to provide them is essentially stable, according to Kundratitz.
"I wouldn't say it's any different now than 10 years ago," he said. "It's just the task is becoming bigger, and if you don't have the relevant size to sustain a publishing infrastructure of 150 people that we currently employ across all of Europe just doing publishing... if you don't have that size as a business, it's hard to build it for anyone who wants to enter that market."
The European publishing partnerships are a core part of Koch's business, but the company is also looking to better establish itself on the global stage. It has stepped up its efforts in the US in particular, working with Codemasters to co-publish last year's physical versions of Dirt Rally and F1 2016, as well as the upcoming Dirt 4 and Micro Machines.
"We try to do different jobs for different people," Kundratitz said. "When we partnered up with Square Enix to bring Final Fantasy XV to Europe, what they needed was a very powerful sales and marketing job for that time window. And they have their own offices in key territories, but they don't have the direct access to retail businesses all over Europe. Then if we work with a company like Tripwire, for Killing Floor 2 they needed basically every single publishing function because they're in the US, have no footprint at all outside the US, and needed Deep Silver to do their global publishing for them."
"[P]ublishing is not about the technical ability to bring a product to market. There is so much else that needs to be done in order to get your project actually seen by players"
That might sound a bit like the abundance of a la carte indie publishers that have spring up in recent years, but Kundratitz was clear that Koch is not looking to play small ball. Koch is by no means a jack of all trades, he said, adding that, "Our space is clearly that of meaningful, large products."
Just as the biggest game companies in the world have been re-evaluating what a company like Koch can do for them, Kundratitz said perceptions among developers about the actual value of a publisher have been similarly in flux.
"In the early success years of Steam, many developers discovered that not only can they develop a game, but they can publish a game," he noted. "And then who needs publishers? But as the market developed further, I think many developers saw that publishing is not about the technical ability to bring a product to market. There is so much else that needs to be done in order to get your project actually seen by players. The technical ability that digital distribution offers in no way means that everybody is now their own publisher. Publishing entails so much more, from getting the messaging right to getting the release window right, getting the opinion leaders on board, correctly aligning marketing with communication... It's so much. And obviously at the end, you're also selling digitally and physically."
Although Kundratitz was most eager to talk about Koch's external projects, he was adamant that the business wasn't shifting away from its owned IP like Dead Island and Saints Row.
"We've never been as highly invested in owned development and publishing than now," he noted, while also adding that the distribution and publishing partnerships are just as much a foundational part of the company's future as its original projects.
"I think mixing our own developed products with partner products is a very healthy way of balancing the risks of the business and the dynamics of the market," Kundratitz said.