Koch Media just keeps on expanding. It recently acquired Italian racing specialist Milestone for instance, but it’s also growing both the reach and breadth of its publishing and distribution services – both for its own titles and those of its many partners, with the acquisition of Gaya Entertainment, plus the recent opening of a new office in Poland.
CEO Klemens Kundratitz explains to MCV the thinking behind the acquisition of Gaya, a German merchandise producer and distributor with 29 employees, which has more than a decade of experience in the gaming sector.
“It’s an interesting step for us, that we can compliment our video games offering to retail with game merchandise. We have long-standing relationships with other game merchandise companies, like Rubber Road, and they will continue as before, but having a merchandise offering in our own house enables us to offer our publishing partners a route to that segment of the market, not only manufacturing and distributing games but also help them on the game merchandise side.”
In a statement, Koch noted that Gaya Entertainment’s web shops and exhibition sales have increased its annual turnover from €3.9m in 2017 (£3.53m) to €6.3m in 2018 (£5.71m).
“It’s becoming clearer when we talk about ‘we can be an all-physical solution’ that means global reach to retail, that means not only games but everything around games,” Kundratitz says.
And with this increase in breadth comes another increase in the reach of its services.
SHOPPING THE BORDER
At the beginning of August, Koch Media announced a new regional office in Poland and Kundratitz explains to us the key rationale behind that move: “We believe you need to be close to the market, you need to be there in order to be effective. And while other people think you don’t need to be locally represented because of the digital dissemination of games, we believe that it’s absolutely vital to be there.”
More specifically on the Poland office he expands: “For us, Poland was a missing piece in the jigsaw of Europe, to truly offer a pan-European publishing service, not only to our own studios but also our business partners. Poland has a very robust and growing economy, it has a large player base, a vibrant PC business, as well as a console business.
“Building our Polish business up was a strategic step for us, and I think it also shows our dedication to our partners and to the industry, that we are committed to our strategy of local representation. Despite some markets having a decline of the physical business, it doesn’t stop us needing local representation,” Kundratitz stresses.
“And while other people think you don’t need to be locally represented because of the digital dissemination of games, we believe that it’s absolutely vital to be there.”
Speaking around the time of the Poland announcement, Kundratitz said in a statement: “We are hiring experienced product, marketing and sales experts and look forward to mutually beneficial business relationships with Polish retailers and trade, as well as gaming media and influencers. Our ambition is to establish Koch Media as the No.1 choice for local publishing and retail distribution services in the territory, supported by our local marketing, PR staff, key account managers and local area representatives.”
The new office will be opening its doors on October 1st and headed by industry veteran Maciej Turski as general manager of Koch Media Poland. He previously was senior publishing manager at Polish distributor CDP.
Kundratitz notes that Poland is just one part of “a general growth strategy,” coming alongside a similar move into Australia in February, where it chose to acquire distributor 18Point2 instead of building a new operation from the ground up.
A MAJOR MILESTONE
A third major expansion of business comes in development, with the team at Milestone joining the Koch Media family. But Kundratitz suggests it will be business as usual at the developer.
“It’s a good studio, it’s a business that has a leading position in the racing niche. THQ Nordic has an active M&A agenda for companies that are well managed, on solid ground business-wise and sharing our larger company strategies, and that was the case with Milestone.
“We feel the company is very well run and we don’t really see the need to change it, it’s really unlocking potential that’s the name of the game. I think there’s growth potential in many areas. Being a larger company you have a larger network of business partners and further reach than if you are smaller,” he notes.
We wonder whether Milestone’s titles will now come through Koch’s own distribution channels, but surprisingly that’s not a decision that’s been made: “The publishing stays as it is, they have different distribution partners in different countries and it’s down to Milestone to decide whether they want to change anything or leave it as it is,” he reveals.
AN EPIC DECISION
Speaking of publishing deals, Koch Media’s Metro Exodus was the first major title in the spotlight for signing an exclusive deal with Epic Game Store, moving the franchise away from Steam for the first time.
But that decision doesn’t reflect a broader strategy, Kundratitz explains: “I think you need to make that decision product by product, you cannot generalise it. We certainly value our partnership with Epic, they are a great partner and we continue to be good partners to other players in the market. It’s not about compromising business relationships with others.”
However, he is positive about Epic’s entrance and pleased that Koch was able to do that deal with the new store: “I think they really bring value to our industry by offering a business model which is better for content creators and others. They are ambitious, and being a part, playing a role in their journey, as well as them helping us, is a good thing.
“We are still happy to have a lot of business with Steam and we love to see Google being ambitious with Stadia. I would not want to put this out of context, but our relationship with Epic is great and I have to admit that for Metro Exodus it was a late decision that we took, but still it was the right decision,” he stresses.
With a final delay to November, we’re still awaiting the launch of Koch Media’s next big title, Shenmue III, both on PS4 and (again) on the Epic Game Store. The Kickstarted title has drawn some flack for its move from Steam to Epic, with Epic eventually offering refunds for those who didn’t want a copy from Epic’s store.
The title may be running somewhat behind schedule, but Kundratitz is now looking on the bright side of that decision: “Looking at the release window, we see that this Christmas there are not that many big games coming out, so that’s worked out well,” he smiles. “Still, I would have liked to have released it earlier, but if the game needs more time, then we give it more time. It’s important that the title is at its best when it launches,” he notes.
To which we wonder whether after such a long wait, 18 years since Shenmue II, it can possibly live up to
“We will give it our best shot and hopefully the fanbase will enjoy it. You never really know,” he concludes cautiously.