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The Koch Media Plan

CEO Dr Klemens Kundratitz on how the company is changing to add new elements to its business

Last year at Games Convention it was announced that Koch Media had acquired the Rockstar Vienna studio, that it would be rebranded Deep Silver Vienna, and that it would work on original IP.

During this year's Game Connection event caught up with the CEO of Koch, Dr Klemens Kundratitz, to find out how the studio was progressing. How has the Koch Media business performed in the past twelve months?
Dr Klemens Kundratitz

The business is evolving according to our plans. We're broadening our publishing portfolio from core game products to family and casual, and that strategy is coming along nicely.

We're all faced with too much casual and DS products between now and Christmas, so we're also the victim of that - but I think that in spite of the economic worries we as an industry can be quite confident that we're not affected in too abrupt a way.

But I have my worries about the street pricing of Nintendo DS products for next year, and I hope that we aren't seeing companies that have overcommitted on this platform, and are slashing prices - thereby making the business model unattractive for everybody.

There are lots of opportunities, obviously, and the DSi is an opportunity which we can all embrace, but there are also some threats.

Going back to our own company, we've started activities in the run-up to the launch of our big four new IPs which will take place next year - Ride to Hell, Risen, Cursed Mountain and Seven Million. These are our big focus next year to show that we can not only distribute products for others, but we can establish totally new and fresh ideas for games as well.

On the film side of the business that's progressing too - next to games publishing and distribution we're engaged in the film business in German-speaking Europe, and our catalogue is growing every week.

What we have ahead of us now is expanding our film business beyond the German are to French- and English-speaking Europe. What sort of time scale are you working on for that?
Dr Klemens Kundratitz

We're actively talking to players right now, and the next step could be in three months, or it could be in a year's time. I have no reason to put ourselves under particular time pressure, but if the opportunity is there we're going to do it. You reference the economy - is there a danger that people read too much into the recent announcements of cuts by EA and THQ and see them as symptomatic of the whole industry, when they're really only symptomatic of certain listed companies who need to refocus?
Dr Klemens Kundratitz

I would agree - I don't think we have to be all doom and gloom. On the contrary, the business is very solid and growing - all the research companies are predicting growth in the next three years.

But each company has its own challenges, and certainly being stock-listed right now is a challenge in itself, and one I don't envy anybody. For no fault of their own they're battling with stock prices that are ridiculously low, and scepticism, and banks getting cold feet as a result.

It's absolutely difficult for some players, even though at the same time their core business is very healthy. All indications would point to a strong Christmas period - maybe the investors will be less worried come January?
Dr Klemens Kundratitz

Absolutely, we are all full invested in a big Christmas now - the financial situation didn't enter into our Christmas planning because it's been done a lot earlier. I think it's totally understandable that people are nervous to a certain extent, because if things are not selling according to plan then we'll have a difficult time to come. Are you expecting more investor confidence in January though?
Dr Klemens Kundratitz

Yes - there will be a negative impact, let's not paint the world too easy. It's not easy, I think there will be an impact - but I don't think it will be comparable to other industries, and maybe the blow will be tougher for some players, and maybe it will accelerate the ongoing process of consolidation again. But that's not an indication that the industry is failing. The other key issue you mentioned was the amount of titles that will be available for the DS this Christmas - is it a symptom of the success of the platform, and was it inevitable?
Dr Klemens Kundratitz

I think so, yes - it's a free economy, everybody makes their own assumptions, and if a platform is so enormously successful, everybody wants to have a piece of the action. In hindsight you're always wiser, but it's not something that anybody could have foreseen. Maybe it could have been predicted, but it's very hard. It could happen again. What steps do you take as a company to ensure your games stand out above the rest? With your distribution business, are you able to leverage those relationships?
Dr Klemens Kundratitz

Absolutely, I think I would be in a much more nervous state right now if I had to rely on third party partners to put my products on the shelves. It's always been my viewpoint that you need to have the channels open in the key markets, and once we have those channels open - and that's now including Spain since the summer, and now also in the US - you can then invest in long term projects and strong products.

In times where shelf space comes at a premium it's always those companies with the better retail contacts which will benefit. That will also be part of the consolidation, that people without that strength and reputation of being a reliable partner for retail will have it more difficult. Last year you acquired the Vienna studio - how has that changed the complexion of the company?
Dr Klemens Kundratitz

It added the strategic patch of development to the company - until then we only had external studios and co-publishing relationships. With Deep Silver Vienna being operational we now have our own studio, at it's triggered our step to move to America, and also means that we're looking forward to launching our own IPs on a global basis.

So it's triggered a number of very important steps of progression - there's going to be more to come. When you made that acquisition was the infrastructure there to launch into your own products immediately, or did you have some rebuilding to do?
Dr Klemens Kundratitz

No, it was the core team of Rockstar Vienna that we acquired, and they already had pre-production of Ride to Hell. So it wasn't a cold start - there was already one project, and they're also now developing Cursed Mountain, and we recently signed another one. One of the big discussions in Europe right now is how Gamescom will work out - as a representative of BIU, what are your hopes for the event in Cologne?
Dr Klemens Kundratitz

As you know I'm very much spearheading that decision, being a board member of BIU. I'm fully committed, and the reason why we took that decision in the first place was our conviction that the better is always the enemy of the good... [smiles]

We could see that we could really take the show to the next level by changing a couple of things - and one of those things was location, another was that it's changing from a convention centre that was on the outskirts to one that is right in the centre of the city.

International accessibility with the airport, hotel infrastructure... there's a number of critical factors, and you'll see that the show next year will have bigger support from international as well as national publishers. Our challenge is not only to successfully repeat what we've done for seven years in Leipzig, but to reach out to a more casual audience which is there at the doorstep of the show, and to reach more mass media - TV, daily newspapers and international press - and really make it the show from the European industry, for the European industry.

That just hasn't been possible in Leipzig. Do you expect a smooth transition?
Dr Klemens Kundratitz

Yes, I don't think there will be a problem there. When we moved the dates to August it wasn't triggered by the situation in Leipzig, it was pure organisational circumstances - that we could move to other weeks because of other events, so we have to move three weeks earlier.

So now I think we should put that discussion to bed and just focus on how to reach that next level. The industry support as far as I can see is unquestioned. The only question is how much we can change and grow it in relation to last year.

Dr Klemens Kundratitz is CEO of Koch Media. Interview by Phil Elliott.

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