It’s an Irish success story that you’ve probably never heard about. A billion dollar company based here but listed in London, and growing at a phenomenal rate.
You are not alone if you are unaware of the existence of Keywords Studios, a Dublin-headquartered provider of technical services to the video game industry.
"We've always operated below the radar," laughs chief executive Andrew Day when asked why he isn't shouting about the company's success from the rooftops. "Even within our own sector we're still being discovered. Keywords is everybody's best-kept secret in the industry."
With a market value of £966 million (€1.1 billion), Keywords provides services to 23 of the top 25 most prominent games companies globally, including Tencent, Electronic Arts, Oculus, Supercell, Activision, Microsoft, Sega, Nintendo and Ubisoft.
The chances are that if you’ve played a video game at all over the past few years, Keywords has had a part in developing it the product.
In less than a decade, the Sandyford-based company has grown from being a small studio employing 50 people at a single site in Dublin to one that now has up to 5,000 working across 42 locations in 20 countries.
It has also shifted from being a single-service business to one with lines covering integrated art production, engineering, audio services, testing, localisation and player support services across 50 languages and 14 game platforms.
Keywords has made 27 acquisitions since 2014, including 11 in 2017. Although as Day notes, this pales into insignificance compared to his previous turn working in mergers and acquisitions where he once pushed through 20 deals in 18 months.
Day says the company has only just begun, with plans underway for it to make several more acquisitions in 2018 and beyond.
An unassuming character who claims to be both boring and lazy, Day is the opposite to the brash fly-by-night types who typically represent the tech sector.
He is more entitled to bragging rights than most, given the success Keywords has enjoyed, but it isn’t the South African’s style or that of the company he runs.
“We’re quietly confident in our capabilities and don’t feel the need to make a song and dance about it,”he explains.
Others do though with both Day and his company picking up a series of gongs over the past few months. These include taking home the ‘chief executive of the year’ award at the Grant Thornton ’quoted company’ awards in London in late January, and ‘growth business of the year’ at the Alternative Investment Market (AIM) awards last October.
The company, which raised £28 million when it floated on the AIM in London in 2013, recently forecast 2017 revenues to be no less than €150 million, up from €96.6 million a year earlier and from just €16 million five years ago.
Its full-year pretax profits will likely reach €22.5 million, compared to €14.9 million in 2016.
"This company is in a really good place and I believe we will continue to grow rapidly in the coming years. I think that in five years time we'll be three times the size we currently are and that there will still be people wondering where we're come from," Day told The Irish Times on a recent visit to Dublin.
What makes the success of Keywords all the more impressive is that it didn’t start out working in gaming and its chief executive is someone who “only plays games occasionally”.
Founded in Dublin by Giorgio Guastalla and Teresa Luppino in 1998, Keywords initially started off as a localisation service provider to the business software market. It slowly shifted towards the video games sector in the early 2000s and then fully embraced it when Day came in as chief executive in 2009.
Born and raised in Johannesburg, Day has a background in technology, manufacturing and business services through corporate development and general management roles in both publicly quoted and private companies.
During the late 1980s and into the early 1990s, he had responsibility for corporate development activities at Britannia Security Group, TIP Europe and Brent International.
At the latter, he ended up holding the position of divisional managing director before becoming chief executive of interactive retail software developer Unipower Solutions, and eventually head of retail for Europe, the Middle East and Africa at NYSE-listed advanced analytics business FICO.
“I’ve known Giorgio for 25 years as he used to work for me so I always followed what Keywords was doing and even did a bit of consultancy work for the company when it made the move towards gaming.” he says.
In spite of repeated calls by Guastalla to take over the leadership of the group, Day initially resisted.
“I’m basically a business guy. I originally wanted to be an engineer but took a role at Rothmans early on and then by accident ended up working mergers and acquisitions for a number of years before ending up in the tech sector, where I’ve stayed ever since in one form or another,”he says.
“To be honest I thought of Keywords as just a services business when Giorgio first asked me to take it over as it was still primarily engaged in software localisation at that point and I thought it was probably too small to be able to pay me what I’d normally get. It was only in 2009 that I sat down with Giorgio and said ‘okay, here’s how I think that we could scale this business,” Day adds.
At that point Keywords was heavily dependent on one client as is often the case with studios providing services to the gaming sector. Day had immediate plans to change that position.
“Most of our work was coming through Microsoft and I thought that was a scary situation in which to be. I decided that rather than reduce our dependency on them we’d be better off going out and winning new business instead.”
It did this rapidly, guided by a strategy that the company still makes use of today.
“I put the strategy in place in 2009 when I joined and we’ve stayed true to it for the most part. We had in it that we’d float in 2014 but ended up doing so a year earlier but outside of that we largely stuck to it and are still drawing on it now,” says Day.
Much of Keywords' growth has been acquisition-led. Last year saw the group's two largest deals to date with the $66 million (€54 million) paid for VMC in October, and the $27 million purchase of Sperasoft in December. Keywords also announced a successful £75 million equity placing late last year.
Day says that many of the companies it acquires are in the position that Keywords once was. That is, they are single-line businesses heavily reliant on one client.
Its deals to date have largely consisted of hoovering up many of these to enable it to expand into new business lines.
Keywords only made its first move into engineering last May, for example, with the acquisitions of XLOC and Game Sim. This was followed by buying d3t in October and the late deal for Sperasoft, a company that provides game development, art creation and software engineering services to video game developers and publishers.
“What we do is very specialised and there aren’t many companies of scale other than ourselves who do what we do. Part of the reason why it is so specialised is that it is a weird mash-up between creativity - and the ability to tell a story well - mixed with a very complex software product that involves countless possible interactions in terms of gameplay,” says Day.
“Back when we started in the field there were people who were doing translation for games but doing it largely from a creative perspective. Then there were those like us who had grown up localising software in a more structured approach and I think what we did really well was to be able to blend the two and in doing so come up with new innovative ways in terms of testing and localising games,” he adds.
Day adds that getting the balance right isn’t easy. Focus too much on the creative and you leave out process and procedures, push too far the other way though and you end up with a compromised product.
“There is a tension that continually exists in the games industry between the creative and the technical but the main thing you need above all else is a good story. Everything else comes from that,” he says.
“Given that, we don’t care so much about the devices, it is all about the content.”
The way games are developed is an incredibly complex process, made even more difficult by the fact that the way they are delivered has also changed. Rather than simply focusing its energies on a blockbuster product that comes out every few years, games often start off considerably smaller these days and are quickly scaled if they prove successful.
“It is all about attracting and retaining players and the only real way to keep them in the game is to keep feeding them with content,” Day says.
“The general public often doesn’t get how incredibly complex it all is. Unlike television or movies, which are typically released first in English with other languages to follow, with video games everything is created simultaneously.
“So you may launch in 15 countries at the same time with a product that has been localised in 20 or 30 different languages. Often when we’re working we won’t even have all the information to hand so we might be trying to translate ‘chest’ without knowing for sure if the word refers to a box or a body part.”
While all this sounds exhausting, Day adds that the sector’s need for fresh content is good news for Keywords, as is the fact that it operates in an industry that is still fragmented.
“Our aim is to be providing services across the whole lifecycle of a game. We’re not necessarily the largest company across all of our service lines but we’re the biggest in terms of the range of services we offer overall and our geographic footprint,” said Day.
“A lot of the competition is small so we’ve plenty of room to grow and there are lots of opportunities,” he added.
***********************
Name: Andrew Day
Job: Chief executive of Keywords Studios
Age: 52
Lives: London
Family: Wife, two daughters, two cats
Something you might expect: "My best business decision was joining Keywords."
Something that might surprise: "I only play games occasionally, and when I do I often choose to be the female character where there is a choice as I think it is great to get a different perspective."
