[This article from the end of 2018 looks into the success story at Codemasters]
CEO Frank Sagnier is straight to the point, telling us that “Codemasters equals racing.” And looking out across the expansive car park at its Southam site it’s easy to see that many of its employees love their cars.
Few UK developers have the history of Codemasters and while the business is now a far cry from the one the Darling brothers created 32 years ago, one thing hasn’t changed: its HQ offices still sit alongside the Darling family farmhouse. It’s a beautiful countryside setting and a brilliantly sunny day as Sagnier gives us the grand tour.
The company, long known for its racing games such as Dirt and F1, has over recent years doubled-down on all things wheeled and fast, figuratively driving the company forward with arguably greater consistency and focus than at any point in its long history.
“For the last four years we have grown top line margins and bottom line, year-on-year, there hasn’t been a single red number over four years,” Sagnier tells us proudly. And while he can’t talk about the publicly-listed company’s current year, the market’s outlook is for more of the same.
“Within the past four years we’ve almost tripled our business in revenue,” he continues, adding: “And we went from losing money, to now making a significant profit.”
The future is looking very bright for Codemasters, in part thanks to a historic quirk of the industry, where a racing title remains a key part of any console launch. Because of that tradition, Codemasters’ biggest competitors – Polyphony’s Gran Turismo and Turn 10’s Forza Motorsport – are both console exclusives.
“The biggest [racing] games right now on each platform are exclusives, but a lot of people are very excited about multi-platform, and we’re multi-platform,” says Sagnier. And with cross-platform play looking to be increasingly key to building communities and brands, “that’s quite attractive,” he adds.
“We are platform agnostic, we sell content, we want to reach as many people on as many platforms as possible. We don’t want to limit ourselves.”
Clive Moody, senior executive producer, adds: “I can’t remember a time when there was so much platform opportunity.” And with eighteen years of experience on the studio’s key racing titles, that’s some statement. “In terms of what we do with racing product, the opportunities have just exploded over the last two to three years.”
As well as the growth in PC gaming globally and a strong console hardware line-up, Sagnier points out expanding market opportunities such as live services, mobile, VR and esports. Many of which Codemasters is already involved in. And he only sees Codemasters share of “a $120bn industry, which is growing at seven to ten per cent a year,” increasing.
THE FRENCH CONNECTION
A key example of Codemaster’s genre-focused but broad platform approach is the company’s upcoming F1 Mobile Racing. We were surprised to discover that it’s the first free-to-play F1 mobile title, with the company holding the rights to console, PC and mobile versions.
That makes a lot of sense as the mobile game can draw upon its console sibling, F1 2018, Sagnier continues: “We’ve used many of the assets, so it’s truly representative of the real circuits, the cars and the sponsors.”
The game isn’t being made by one of Codemaster’s own teams, though: “The game was developed externally by Eden Games in Lyon. They are a long established racing developer with a number of successful games and a recent focus on mobile – the right partner for us.”
With this mobile title, Codemasters is hoping “to reach a far broader audience,” Sagnier says. “The mobile experience is more accessible, and will reach tens of millions of people, who are going to download the app for free over time.”
And both F1 itself, and Codemasters by relation, stand to benefit from bringing F1 to a younger audience. “F1 is a sport that is keen to reach a younger audience. And games in general – console, mobile and esports – attract a massive audience of younger people.”
As with any mobile title, the game will be updated regularly, but with no annual moniker on the game, it will also receive significant updates for each new season with all the latest developments.
“This is here to stay, and we’re very excited, it will expose millions of customers to F1, which may not want to pay £50 upfront for the console or PC title,” says Sagnier. “It’s a complementary type of experience which will maximise the reach of both the game and the sport.”
SETTING THE PACE
Moving on to the core console and PC versions of the F1 game, which are produced by two teams in the Birmingham studio, brings us around to the company’s approach on iteration for its flagship titles.
In this case F1’s annual seasons are a key reason to maintain an annual release schedule of course, with Sagnier explaining that at present the company “does very well every year.
“If you look at our F1 game, we’re not selling the same game to the same consumers every year,” he explains. “There’s only a proportion of consumers who buy it every year, and some people buy every two, every three. There is a big community of several million people who want to play a Formula 1 game, it doesn’t means we sell to that ten million people every single year.”
While it’s a successful model, it’s one that Sagnier understands may change with the transition to digital services. “The ability to update content and create new features or organising events throughout the F1 season may lead towards a subscription business model particularly suited to streaming platforms. This would allow us to be less constrained by yearly iterations.”
We ask what F1 would think of such a move, to which Sagnier replies: “I think the licensor would agree with this model if it resulted in growing their brand and maximising their long term value.”
He then explains: “There will be several business models co-existing which will allow to maximise our audience and deliver the best gaming experience regardless of the platform.”
From the hardcore F1 fan who’s happy to pay every season for all the latest content, plus watching and even attending races, all the way down to a casual gamer who simply wants to race a few laps around Silverstone, at a far lower price point.
“We then have the ability to address a much bigger audience by providing them with the specific content they wish to consume. The consumer is king and we want to allow them to choose whichever way they want to play our games.”
LAPS AND SPLITS
While the hardcore end of the racing genre has embraced games-as-a-service, with pay-per-track and pay-per-car models, Codemasters has largely continued with big one-shot releases. But surely more can be done to bring the live games model into the mainstream racing space.
“There’s a lot more that can be done in that sense,” Moody agrees. “And we’re in a very privileged position because we created this incredible portfolio of racing games. If you look at that as a whole package, and you think about the opportunities for service around that, it becomes far more than just about one franchise or one product. It’s about how we can build that out into the greater whole, that’s the real opportunity for us.”
He’s not talking about rolling all the games into one huge service platform quite yet. “Of course we want to support games on a per-game basis and service those titles, but we have to think a lot bigger beyond that, and that’s something no other developer can do in our space and genre, given our portfolio”
A first step could be to reduce the number of big individual releases, we suggest. “I think you’re right,” says Moody. “I think reducing the cadence of brand new iterations versus being able to service them is a really good goal for us.
“We would rather have [a title in a given series] every two to three years and enhance the title via service over that time. Because it allows you to reach more consumers on your franchise, and keep them engaged for longer, it also allows the leap to the next game to be much higher by giving us longer to develop the next greatest thing.
“You get that step change, which we have always been looking for, that level of innovation. We’re all about innovation, we always have been about innovation… although you do need time to do that.”
And that approach applies to the brands as well, Sagnier tells us: “We would rather have fewer but bigger franchises, it makes sense to focus and expand our biggest brands, rather than constantly create new ones, as development costs and customer acquisition are increasing. Growing existing successful franchises is what our gaming community is asking for and it is also the best return on investment for Codemasters. And we all know how difficult it is to create new IP.”
A good example of that is how Codemasters took its Dirt franchise and span off a more focused, more hardcore sibling in Dirt Rally, for which a sequel is launching in February of next year.
“Nothing stops us from doing a slice of something else,” says Moody. “If you take a game like Dirt, we could easily have a Paris-Dakar expansion pack. We’ve got WRX within Dirt, and we’re very excited about this, we can bring more content, but it doesn’t have to be a separate game every time, it could be under existing brands.”
So just how many titles is the company planning for? Sagnier estimates the company will release “two or three” major titles every year, with those coming from the five development teams that are spread across three UK locations. Two of those teams are here at the HQ in Southam, while the two F1 teams in Birmingham are about to be relocated to new, larger, more central premises.
The fifth team, and the most recent to join, is in Runcorn, Cheshire, which, as Evolution Studios, produced Driveclub, plus the Motorstorm and WRC series for Sony over an almost ten year stretch. Sony closed the studio in March 2016, but Codemasters came in to resurrect it only weeks later.
Just two years on, the team released competitive arcade racer Onrush in June. News coverage painted the title a failure and that narrative looked to persist with layoffs that came soon after, but Sagnier and Moody are happy to take the opportunity to clarify events around the game and the studio’s future.
“We are always pushing innovation, and we are proud of what the studio has achieved and there is no doubt over the high quality of the team. Within just two years, the team engineered cutting edge technology, created a new IP and executed something that was well-received by critics.” Moody reveals. “It was a pretty stellar effort.”
Sagnier adds: “Large parts of the tech will be included in our next-generation of our Ego engine. It’s really something that’s taking us to the next level.”
He continues: “The game was very innovative, and brought a fresh twist to the racing genre. We had amazing feedback from some consumers but unfortunately, others were expecting a more traditional racing game. This resulted into a lesser commercial success than expected at launch but we believe in the product and hope to revive the franchise sometime in the future.
“The company is doing well. So if there’s some small risks to take, we’d quite like to take them. If we know we’re protected as an overall business, we need to innovate, it’s important.” He adds: “Maybe it was too much innovation for a new IP.”
That said, the company continues to support the game, and has delivered new content since its release. Onrush has also appeared on Xbox Game Pass and Sagnier tells us that it “may be featured on other subscription services in the future.”
There’s a Chinese release upcoming, with partner Subor, which Sagnier hopes “can broaden its audience.” And he isn’t ruling out a move to free-to-play in the future following the recent addition of microtransactions. After all, Fortnite’s success did not come overnight, so there’s always hope for a critically-acclaimed title such as Onrush.
“I can also confirm there were no redundancies,” Sagnier points out. “After each project you always have people that leave to pursue new opportunities. We took on a team of 50 plus people over two years ago and we are still at that level and growing.
“People need to look at the bigger picture, we’ve got a team that is now going to work on one of our most important franchises, they’ve done a great job in two years, so imagine if they work on an IP that is proven and they can bring more innovation to it, we’re very excited about that,” Sagnier enthuses.
Moody, who is now running the studio, agrees: “There’s a lot of excitement in Cheshire about what we’re doing next, there’s a lot of investment going back into that studio, to build that team to higher levels. I love getting fresh blood in, I think that mix of new people versus people who’ve been in the studio a long time really just keeps things fresh and functioning in a nice way.”
We’re told that the team is now the lead development team on a major new title for the company, though it’s not yet time to announce what that is. Bu that should quash the rumours that the studio was working only as a subsidiary for other teams in the company.
Codemasters is looking to grow as a whole as well, Sagnier tells us: “We’ve got about 35 to 40 people that we’re looking to recruit over the three sites. We’re going to spend about £100m over the next few years on development… That’s a significant investment compared to what we’ve spent in the past. We spend more time on the games, so they are more polished. If you want to be competitive out there you need to be the best in class,” he states.
The studio is keen to talk up its facilities and its expansive countryside campus at Southam will appeal to many.
“We’ve got a 5,000 square feet brand new gym, a football pitch, a car park for everyone, a subsidised restaurant, and we organise BBQs and other social events. We care about our people a lot, because happy people make great games,” exclaims Sagnier.
“In the new year, we are moving our F1 Birmingham team to brand new and larger facilities, a few minutes walk from the mainline train station. We are also planning to refresh the Cheshire studio facility. Not only do we want to make Codemasters a great place to work, we also want to make sure each office reflects the company values.”
A key advantage of having three locations is it allows people to relocate within the company, should they want to.
We wonder if being a single genre publisher might make it harder to retain staff long-term. Moody points out that while some are dedicated to the subject matter, others revel in “the technical or artistic challenge… As long as they have that ability to challenge themselves, they’re working on innovative products, on the bleeding edge of technology, then they’re happy people.”
As with many developers, the company has roles it’s always keen to recruit in, such as physics, graphics, AI and network programmers. “You don’t need to be from a racing background to join,” says Moody.
“If you have a happy team it comes through in the game. You can tell games that are made by a happy well-bonded, passionate team, versus teams that are perhaps not functioning as they should be. I honestly think that shines through,” he smiles.
Sagnier feels the company is set for even greater success, which he ascribes to a new-found focus.
He explains: “Our focus on quality racing games has proven very successful. You need to be best at what you do if you want to succeed. While we specialise in a single genre, the evergreen nature of racing, the continual growth of the gaming audience and their greater access to games through multiple devices is our recipe to continued success.
“When you’ve got such huge opportunity, the risk is to go to the wrong opportunity, the risk is to try to do everything… I think we’re very careful, we’re focusing on what we’re very good at, console and PC. We’re now doing a little bit of mobile, but the focus is we can double our PC and console business by engaging consumers with better content.
“We did get it slightly wrong this year, we didn’t anticipate digital would grow as fast as it did – good news. Maybe we were a bit conservative. And with digital revenue now over 50 per cent, there’s even more room for profitable growth.”
With games-as-a-service and mobile titles helping to boost and level out the company’s already pretty predictable income stream, last year’s IPO was a success, securing the funding to invest in “people, franchises and tech for the future,” says Sagnier.
“If you look at the UK market today, five games companies are publicly listed, all of them thriving, while offering different strategies, different skills, different games or services. It’s great to be a part of that healthy UK games development community,” Sagnier concludes.