I am very glad to have you all here today. We will start with this Q1 presentation, followed with the Capital Markets Day at 1:00 P.M., then followed by AGM at 3:30 P.M. Q1 2018. To follow the tradition, I would say we had a stable quarter. It was the first quarter where we welcomed and had the consolidated revenues in the middle of the month of Koch Media. The net sales in the quarter compared to last quarter was up 673% to SEK 633 million. EBITDA was up 439% to SEK 226 million. The EBIT number, actually how much money you make, was up 236% to SEK 107 million. Obviously, the quarter was a lot about the acquisition of Koch Media. I am coming back to that right soon here.
Except Koch Media, we also had a good quarter at the classic operations in THQ Nordic and Vienna, having our first sequel for MX vs. ATV series. Obviously, Koch Media having the very well-received release of Kingdom Come: Deliverance. I will just give you a few minutes or a minute on Koch Media acquisition. This is the same information you got February 14. Obviously, this was our by far largest acquisition to date. I think just to give a bit of wording on the acquisition, I think the start we have been off to has been according to our expectation levels. Obviously, having the day before acquisition, the release of Kingdom Come: Deliverance helped to have a flying start in the relationship. The acquisition was done February 14, and the purchase price was EUR 91.5 million for 100% of the shares in Koch Media GmbH.
With Koch Media, we will have a much more diversified business. They are in size a much larger publisher than THQ Nordic, and they also have business areas adding value to the group as the partner publishing with the local offices across Europe. Not only the partner publishing, obviously, they are having the AAA IP rights of Saints Row and Dead Island, along with the exclusive license of Metro. They are having two AAA studios, one based in Champaign, Illinois, Volition, along with Dambuster in Nottingham in the U.K. Over the coming years, we see a lot of potential in soft synergies between the entities, and we see Koch Media as a strong platform for further acquisition and consolidation. The Q1 2018 financial update. Coming back to the numbers again.
Koch Media were consolidated from February 14, which obviously has been a challenge, not only having in the middle of the month, but also having different accounting principles. I would say the absolute majority or the majority of the income of Kingdom Come: Deliverance has been counted into the quarter. Because of the business of Koch Media, the gross profit margin was down from 70% last year to 50% this year. Obviously, this is partly depending on the lower margin in the partner publishing business area. However, as a businessman, I am counting millions, not percentage. The EBITDA and EBIT numbers were up. That's the most important thing. Also happy to give you, at least in this quarter, don't expect it in every quarter. The EBIT number excluding Koch Media.
THQ Nordic in Vienna, including the mother company, were up 54% to SEK 49 million in the quarter. I would like to say that, just commenting a bit on the business of THQ Nordic, and I have been having some questions on the "MX vs. ATV" release, how the performance has been. I would like to restate a phrase I used in the Q4, that I am happy to say that collectively, all our releases in THQ Nordic, the five of them, has met the management financials objectives. However, I also have noticed that, for example, the "MX" game hasn't entirely having raving reviews to all fans. However, I do have noticed some fans really enjoy it. As all fan groups, they are mixed, as long as journalists.
I also been stating in the Q1 wording that going forward, especially now when we're having Koch Media on board, it's even more important that we're taking the time of releasing new releases in the expected quality or expected to the fans' expectations. That's one thing. The other thing is we need to take the time to find the right release window. I would say Q4 is a very busy season, and everything out from Q4, it's a bit easier. We actually had at least one release last year that really got hit. I am thinking about the "Black Mirror," releasing that in the fourth or end of November last year. Cash flow. I don't normally comment the cash flow, but now with Koch Media on board, I think it's relevant that I give some more detail on cash flow and the balance sheet.
The cash flow from the operating activities were SEK 700 million, compared to SEK 29 million last year. The majority of that difference is due to a forfaiting process at Koch Media, having SEK 450 million added into the cash in the quarter. The forfaiting means that they are selling the receivables without recourse. The cost is really low. I would say it's only the interest, and the interest rate in Austria is very low. This is lowering our balance sheet and adding cash, and the cash was mainly used to pay back actual loans. This is a process they've been doing for several years in the end of the year, and they had the end of the financial year end of March. We are now discussing this to continue having this every quarter or if we just should have it end of the year.
It was not only forfaiting. Obviously, the operating profit and depreciations and reduction of working capital in general added to the cash flow. We have the cash flow from investing activities, which were minus SEK 549 million. Of which SEK 362 million was relating to the acquisition of Koch Media. Some asking me, "Didn't you pay SEK 600 or something, Lars?" Yes, but they also had cash on account. This is the net of it. Going to cash flow from financing activities, which were minus SEK 681 million. That is because Koch Media paid back SEK 781 million in loans to various German and Austrian banks at the end of the quarter. The total available cash, including then cash on account and unutilized credit facilities, both long-term and short-term, were SEK 1 billion 117 million, compared to SEK 766 million end of December.
Business areas within the new group. If you noticed in the Q1 on the last page, we added a bit of KPIs, and I was to give you a bit of information on this. The new group will report the most important business area being games. That is then THQ Nordic and Deep Silver. Within that business area, there is our own products, our own IPs, "Darksiders," "Biomutant." Then we will also include exclusive license because this is a long-term exclusive license for "Metro." Everything else within Koch Media will go under partner publishing/film. Some net sales breakdowns for the business area games. In the quarter, that business area had SEK 391 million in revenues. The own titles, "MX," "Darksiders," "Metro" catalog business, for example, were SEK 134 million. That's 34% compared to SEK 55 million the first quarter last year.
The digital share of the whole games business area were SEK 148 million, 38%. I would say that's partly because of the Deep Silver release of "Kingdom Come." A good chunk of that was physical, even though console digital also contributed very well. During the quarter, because of "MX" and because of "Kingdom Come" and other smaller releases, of the revenue, 63% were new releases. Added to just this presentation, I added pro forma net sales per business area, just to give you a bit deeper information. This is unaudited management accounts. If you're comparing here the full Q1, if we had owned Koch Media from the 1st of January, the numbers have been the following. Obviously the numbers for Deep Silver and Koch Media here is then under different ownership.
The full quarter would then have been SEK 943 million this quarter as compared to SEK 651 million Q1 2017. You will be able to download this from the IR website. You can just notice here the release of "Agents of Mayhem" here in Q3 2017. I have to say here that the Deep Silver and THQ Nordic business is obviously having a seasonal effect. One of the most important factor of that business, if you have an AA or an AAA release within the quarter, at least that is driving revenue. Profit-wise, the back catalog could have a much higher percentage, so it's not entirely true, just the revenues adding to it a bit. The partner publishing business is a much more stable business. You need to understand here that Koch Media has a much higher fixed overhead cost.
They have a much bigger organization, the partner publishing business is a stable business, but it's really depending on the seasonal and the general market, the games market. Obviously, that business also could be adding a lot of revenues when they have big releases, such in the past they've been having "F1," for example, in Q3. I would say you should expect probably the same this year, that Q3 and Q4 would be much stronger than Q2, which we don't see this as a very strong quarter for the partner publishing segment. Depreciation and investments. If you think this was complex before, it's getting even more complex now with Koch Media. I'm trying to give you a bit of color of this, I'm sure this will be a topic we're coming back to every quarter. IP depreciation is not a lot to comment about.
It's added a bit to SEK 4.1 million in the quarter. Games development depreciation is obviously the depreciation for the completed and released own development. During the quarter, we had SEK 65.5 million. We are adding a new line here called partner publishing/films. I would say the majority of that is films. They are being depreciated according to a model where they're using a quotient. We can't apply exactly the same model we are having for games at THQ Nordic. Also Film, I would say, had a very stable Q1 quarter. Investments increased from SEK 54 million to SEK 115 million in the quarter. Capitalized internal development was SEK 57 million. That's the burn rate for our own development, our owned studios. Films adding SEK 6.4 million in the quarter. In the quarter, thereof, we have completed development of SEK 122.9 million.
That is including, for example, a good chunk of this was MX vs. ATV All Out and other completed games. Crystal clear, isn't it? The balance sheet. I think it would be relevant to give you a bit more detail of the intangible assets because it's increased from SEK 571 million to almost SEK 1.9 billion. Of the SEK 1.9 billion as of end of March, the finished completed games were SEK 200 million. The ongoing game development projects, all the 54 ongoing development projects were SEK 1,131 million. Obviously, this is everything from the early start in development, the pre-productions, up until the end of it. The films and royalty advances were SEK 148 million, the total IP values, the surplus values from the acquisition of Koch Media, and a little bit of goodwill were total SEK 420 million.
The financial assets, I would say, is mainly, or the absolute majority is relating to a deferred tax asset in Koch Media. The majority of the SEK 591 million current receivables are accounts receivables, mainly in Koch Media. This meaning they don't using the forfaiting process for everything. They still have accounts receivables. The majority of the SEK 339 million being provision relating to price protection and returns in both entities. Obviously, this is a very important balance, running a business as partner publishing at Koch Media. This is a very complex material. We're not having bad surprises in the future. That's why this amount is considerable. Current liabilities is mainly relating to accounts receivables. Interest-bearing debts, I would say that is mainly the mother company here in Sweden.
The deferred payment for Koch Media, EUR 60 million to be paid in cash in August latest, and EUR 9.5 million to be paid in shares. We ended the quarter with a net debt position of SEK 154 million. Release activity and pipeline. Coming back to in the quarter, Kingdom Come: Deliverance obviously had also partly mixed reviews, but it sold, I would say, a good number. I'm not stating a number, but I noticed the developer stated it sold over 1 million. We don't have the tradition to state sales numbers here. I think we have a very good cooperation with Warhorse. They made a fantastic game. If you're enjoying these kind of games, you can actually try this game out here in the lounge area. MX vs. ATV All Out in turn developed sequel at Rainbow Studios in Phoenix, Arizona.
They made a complete new game in Unreal. Sorry, I don't know what's wrong with this. It was released March 27. Again, it sold an okay number. We met our financial collectively with the other releases in the quarter. We're still working because it had some performance issues. We're still working to improve the game. We have launched various DLC activities after post-release. We are confident this will also, as long as the other games have been, be a long-term seller, especially in the North American markets. We released The Raven Remastered on PS4, Xbox One, and PC earlier in the quarter. Koch Media had the Radiant Historia. That is a Nintendo 3DS game from Atlus, owned by Sega. We had a Titan Quest porting release on PS4, Xbox One, and PC.
I've noticed that lots of fans are waiting for a Switch version that are due out later. de Blob 2, not a very big release. Surviving Mars is a physical publishing deal under Deep Silver together with Paradox here in Stockholm. Finally, we had Rad Rodgers from the Danish developers. It's an IP now we own that's released on PS4, Xbox One, and PC. To give you a bit of update on the mobile games. Foxglove will continue developing both these games. We have not reached break-even yet. We still see improving KPIs. They are working with the Snipers vs. Thieves with Playstack in London as a third-party publisher to improve the game. They haven't scaled up any marketing really. They're working with the community. The game has way above 20 million downloads and getting a good number of downloads every day without any marketing.
However, people are yet not spending enough. Just changing that 0.0 something to something else, then we are off. Seriously, I think it's a very good game, we are really believing this could be when reworking the game on break-even level or profit level. We're learning our own publishing at doing The Muscle Hustle, the wrestling game. Having the opposite, we have very good KPIs in the games. People are spending a good amount. They're really enjoying the game, but we need to understand how to acquire the customers. The game has about over half a million downloads. It's an active community. We now have hired the first in-house publishing people and monetizing and data analysis this game. I don't like strong words, but I'm confident this is the right team to succeed within mobile and learning.
It's one of the only business areas within the group that is not profitable. Give a bit of color on partner publishing/film. This is all new to me to comment, but I'm learning along the way with the team at Koch Media. If you're staying on the Capital Markets Day, you will have a lot of more information. Just to note, there's a bit of key releases. We had Life is Strange from Square Enix. We have Yakuza 6 from Sega. Attack on Titan 2 from Koei Tecmo, I love this title, Secret of Mana from Square Enix. It was one of the first titles I sold in my own career in this industry on Super Nintendo, which we're porting asset care project from Square Enix releasing earlier in the quarter. This business area has a huge catalog of products.
Films is 1,500 products. Games, I don't know the number, but it's a lot. Back catalog is obviously a strong contributor, just worth mentioning F1 2017 are continued selling well across Europe. ARK: Survival Evolved still selling well, the Persona 5 from Atlus. Obviously, THEC64 Mini has been a major success in the end of the quarter. You will have more information about that at the Capital Markets Day. Also during the quarter, just to give you a bit of brief on this Nickelodeon asset care deal, we re-licensed the old THQ Inc. catalog of assets to having the opportunity to do asset care on all these assets. THQ Inc. is for the previous major American publisher. They made 59 games over a number of years.
For example, they have a lot of SpongeBob SquarePants games, Avatar: The Last Airbender, and Tak and the Power of Juju. This has still a strong following, and it's been millions of back then kids now grown up play these games. Don't expect too much out of this. It will take years or a good period until we actually could see some kind of considerable revenue out of this, if any. I think it's a great opportunity to using, if possible, the emulation programs at PlayStation 4 and Xbox One, as long as doing asset care porting to current console generation and PC. Pipeline. We now have the strongest pipeline ever coming up. You'll have a lot of more information in the Capital Markets Day, I would like to mention, obviously, the Metro Exodus. We now announced this is coming out in Q1, the calendar Q1 2019.
You'll have a lot of more information at E3 2018. This is exclusive license developed by 4A Games in Malta and Kyiv or Ukraine. Obviously we're having the AAA from Volition. We're having a Darksiders III coming out. You can see my wording in the CEO statement this morning that we are still evaluating the release dates of Darksiders III and Biomutant. I stated, I told you before, it's even more important to evaluate the right release window and that the product is hitting customer expectation. Having Wreckfest that is are showing really promising performance. If you're looking at the Early Access queue that are available on Steam, I think this product could do really well when it's coming out on console. Dead Island 2 under development. A Dambuster AAA project.
I have to say here, sequel is not correct either for AAA projects at Volition or Dambuster. Red Faction: Guerrilla remastered coming out soon on PS4, Xbox One, and PC. It's an IP developed by Volition that we are really seeing a great interest in to be remastered here. Shenmue III, you'll have a lot of more information at Capital Markets Day, developed in Tokyo, has a huge fan base, obviously, coming out on PS4 and PC. Wasteland 3 from inXile announced this morning in my Q1 report together with The Bard's Tale IV. This Is the Police 2. In total we have 54 projects, whereof 19 is announced and 35 are unannounced. I just want to mention that we are having also Carnegie that has an equity research covering us from now.
By Dan, I will also welcome Carnegie and Oscar Erixon on stage to hopefully having a few questions.
I do indeed. Thank you, Lars. As you said yourself, very stable quarter. I agree. Before we get into too much details about the report, can you say something about the reception you have received from competitors and partners in the market regarding the acquisition?
Well, I think it came from a bit of surprise for the industry, but I think the reception has been very good. I think people really see the combined entities together as a new, stronger player in Europe, a new independent player. I think we both could see in the group that industry partner are reaching out to us and want to do various kind of business that hopefully could bear fruit over the coming years.
Okay. As for the report, very strong organic performance from THQ Nordic. I think that stands out the most, perhaps.
Can you say something about sort of mix in the growth drivers there in the back catalog especially, and MX vs. ATV as well?
Well, we haven't broken down each business area games for each entity, obviously the new release were the majority, a good chunk of the majority of the revenues. Out of that, the MX vs. ATV had, I would say, a surprising strong performance on digital console and also a strong performance on certain physical channels in North America.
Okay. I think we have to ask also about Kingdom Come, especially because you could see in the numbers that the revenues from new games in the games segment was, I think, SEK 260 million. Can you say something about the impact of that game in the quarter?
Well, obviously, first of all, Deep Silver, we are accounting in the physical sales for console and the physical sales for PC
On digital, we're counting in the console sales, but not the PC Steam SKU, which is obviously a big chunk of the sell-through numbers. Although the revenue mix, the majority then is physical. The margins are, I would say, lower than that we traditionally have seen for publishing titles from THQ Nordic. However, it's certainly a good business, and we need to understand Deep Silver came in after the Kickstarter process. There has been other partners investing in the product. I think Klemens and his team made a good deal signing that up.
Yeah. When we're talking about margins, gross margins obviously came down in the quarter from 70%-50%, which is natural. I think it surprised me that it's still at 50%.
What should we expect in the coming quarters in terms of gross margins?
You love to hear that, Oscar, don't you?
No, I'm not giving a forecast on the actual gross margins. Obviously partner publishing being lower, business area games being higher, depending on the releases of own IPs or publishing titles. That is really the gross margin. Again, the partner publishing margin/films margin is obviously depending on in the quarter of the releases and business partner having different margins. If Koch Media are taking a low business risk, we have before been saying it's down to 15% or even lower, 12%. Then taking higher risk with smaller partners, it could be up to 30%-40%. The mixture, somewhere in between.
Fair enough. In terms of seasonality, just to touch on that briefly. You mentioned Q2 is perhaps an especially weak seasonal quarter.
Q3 is generally stronger. Is that due to the releases that comes out in games or is it also in partner publishing?
I think the releases. I've been in this industry for all my life, Q2 is always the sun is shining and it's not really a quarter people are hanging out and playing too much games. Also obviously it's depending on the release window. Traditionally the peak season starts end of August and then go up to Christmas. From August you can see quite a lot of strong releases. I can also see end of the summer that the kids are coming back playing when they are get tired of the sun and so on. Not only the kids, everyone grown up as well. I think that's the guidance really I could give you.
Okay. In terms of releases, we have two big conventions coming up this summer.
Obviously with E3 in June and Gamescom in August.
Is it fair to say that perhaps E3 will be the largest for Deep Silver and then Gamescom for THQ Nordic?
No, I think Gamescom will be at a fair size for both of us, especially THQ Nordic. I think at E3, obviously Deep Silver having a partnership with Microsoft, and with Square Enix. They don't have that direct relationship in the same way. We have presence with Deep Silver, obviously. Yeah, Gamescom is as always, very important for us.
Yep. "Metro Exodus," you announced the release in Q1 2019.
Not entirely unexpected, what is the reasoning behind it and what do you think about, do you have any feeling for sort of the quality of the game and how does it feel in terms of appeal to the mass market?
Well, as stated in the acquisition of Koch Media, one of the major assets and things we saw is obviously the pipeline of AAA releases and "Metro Exodus" being in the final stage of finalization and I'm not the right man to comment, but I have a strong trust in the team and the product. If they tell me the right window is Q1 2019, that's the right window.
Yep. Also "Darksiders III" and "Biomutant" in THQ Nordic. No announcement date yet. Is there either of the game especially important to get out in Q4? Is it you find the appropriate release window no matter when it is, so to speak?
No, well, I don't know. I think Darksiders has a very strong fans following. Whenever it comes out, it will be picked up as long as we are delivering on the expectations. Biomutant, I would say, is more a mass market appeal from everything from kids up to whatever age. That's a bit of different. Obviously Biomutant still has a great momentum on social media and on various channels. Yeah.
Okay. Staying on THQ Nordic, coming back to the back catalog again. You had a lot of releases in Q3 and Q4 last year. Is there anything that stands out in terms of the back catalog? I understand ELEX perhaps has performed quite well and improving. Other games from the back catalog would be interesting to hear.
Well, I think ELEX has continued to perform well on especially digital formats and certain physical markets in Europe, such as Germany. We could see, as always, there is a lot of price promotions going on in Q1, especially from the console formats. We have since seen some strong back-catalog sales of certain titles. I don't want to give specific guidance on each title more than ELEX will continue delivering according to the management expectations.
Yeah. You mentioned Red Faction, a remastered version coming out. Is that sort of first step towards releasing a sequel, perhaps? Speculating here.
Yeah, that's your own speculation. Obviously, Red Faction has a good following. It's been made by Volition, the previous versions, and now Volition is part of the group. That is what I could say, really.
Fair enough. Port and publishing, I guess we will hear more during the CMD. Are there any titles that are already released that you think will be especially important in 2018?
No, I don't know if I should give any guidance on that really, Oscar. Is there any specific title you're thinking about?
Sort of niche title. Shenmue and these other titles that you announced, Wasteland 3, perhaps.
Yeah. Well, we haven't announced release dates for the titles. We are not disclosing release dates today or at any quarter reports. You need to follow each publishing entity to get the release dates, except now in this case, the Metro Exodus. Obviously, I'm really excited that Klemens and his team could sign up with Brian Fargo to have Wasteland 3 and Bard's Tale 4. I think they will be adding a good business over the coming years.
Yep. If I remember correctly, you released Wasteland 2 a few years back, I believe.
Yes.
Do you know anything about how that performed for you?
Well, I would say well enough for Klemens to sign Wasteland 3. I think the title has a strong following, yeah. It's a good RPG. It had a good Metacritic. It was well-received. I say it's a, yeah, hardcore niche title, yeah, in a way.
Okay. Do you want to have some questions from the audience, perhaps, in between here? I will continue afterwards.
Feel free.
Lars-Ola.
Actually, I will take a detailed question on Koch Media Games. The pro forma for Q1 was SEK 342 million.
You reported SEK 257. It was quite a nice performance in January until 14th of February. Kingdom Come was released 13th of February.
I just wonder about what kind of games was it that was making up for the other SEK 100 million.
I don't have the guidance on that Deep Silver revenue in January up until February 14. I'm sorry.
Is it fair to assume that part of that is the presale of Kingdom Come?
We try to have the majority of Kingdom Come: Deliverance into the consolidated numbers, obviously there is a bit of Kingdom Come that we haven't been able to allocate and consolidate into our numbers.
Okay.
I can't give a guidance on the numbers.
No, maybe what the mix is. Was it back-catalog sales from Homefront, Agents of Mayhem, et cetera? Okay.
I have two more things to just comment on before we are finishing. One thing being at the February 14, we announced that we will change the name of the mother company from THQ Nordic to something else in order to avoid the confusion and to be a bit more independent. Unfortunately, we haven't been able to finalize that name, and that process is going on. When that process is ready, we will announce that. Also, I would like to give some guidance on the IR and communication. We decided after the Koch Media transaction that now we're having 54 projects and much larger balance sheets and business and market cap and everything, not to communicate every single new game as a press release. I've been having a few questions on that.
Obviously, I will try to update you. Always, more information will always be communicated, but other information will be what we think is relevant for shareholders to have. I would like to state again, please follow each publishing entity or developer's social media channels.
Hi.
Hi.
Monster Hunter: World, we could read, was a huge seller this year.
Has Koch Media had a big business in selling, distributing Monster Hunter: World?
Yeah. It's only two territories out of all the Koch Media. It hasn't been a considerable revenue for partner publishing. It's been a great success in those territories.
Thank you.
Oscar?
Yes, I do have a couple of more questions if we have time.
Okay. Sure.
Okay. I think I would like to hear more about the C64, which is quite an interesting release.
I guess that's also in the CMD.
Yeah
I would like some more detail on if there's any tangible impact on Koch Media and the group.
No, I think for sure it sold about 50,000 units in a quarter. It was a first shipment. It was sold out. The demand was great. We're having a second shipment coming now. What I understand in the quarter, a bit more units and we are adding territories. We will be adding the States in the future, hopefully. We have the global distribution rights for this product. Perhaps I'm a bit nostalgic, but I'm really a fan of this kind of product. I really like this kind of product, and I really encouraged Koch Media to continue having such products. There is many kind of product you can make. Also making a good product, you can have a SKU that are selling for a long period of time is also valuable as a business. Yeah.
Yep. Some releases during 2017 were very good, and others were perhaps a little bit-
Not so good.
Not so good, exactly. You mentioned here in the report that you have or will very soon open a QA office, quality assurance office. Can you discuss that a little bit?
Yeah, obviously, it's one of the key areas, being able to execute on the releases. Again, you need to understand we are a young organization, a quite young company, now talking especially THQ Nordic, and we are learning every day. Producing QA and execution is obviously key. Now we're opening up a second office in Vienna focusing just on tech producing and QA. There is various other things that you can make or we are making that could improve this going forward. Again, also I would like to also being a bit of proud not of failing on releases, but also we are actually making money on the development. This goes hand in hand. Obviously you can't have 500 people finishing "MX vs. ATV." It needs to be a balance of cost versus the Yeah.
Let's perhaps end with a few questions about the new group with THQ Nordic and Koch Media. You've had a few months now to sort of get into the details even more than before the acquisitions. Has anything changed or cleared in terms of strategy, game budgets, acquisitions, distribution channels, anything?
That's the reason we're having a Capital Markets Day. I'd like to give a deeper information about, first of all Koch Media, but also where we are and where we're going in the future. Please tune in at 1:00 P.M.
I will. I think that's it from me. If no other questions from the Okay, one up there, actually.
I can just try to speak loud. No, no. We need the mic. All right. For the web. Hi, Lars.
Hi.
Are there some additional M&A related costs in the financial numbers for the transaction?
Hello, Christopher. Thank you for asking.
Yeah.
Because of we having Q3, K3, correct me, Erik. The cost for transaction has been added to the valuation and balance sheet.
Okay. Yeah.
It is in the goodwill.
Yeah. Great. Thank you.
Last question.
Hi. Pierre Mellström from Handelsbanken. Reading what you stated in the report and also not being scared to push up metrics, so there is a quarter quality assurance. Should we sort of assume that the sort of average development time will increase on the benefit of maximizing each game's potential from here on out?
Well, I think you need to differentiate from asset care releases, general sequel releases, and AAA development. There is a difference in this, and smaller asset care releases you can't spend too much time and money on because then you wouldn't make the money back. Somehow you need to make a cut. Obviously now, talking THQ Nordic, having bigger sequel releases such as Darksiders and Biomutant, we need to make sure that we're hitting the expectation and the quality of what you should expect, and finding the right release window. I think by far that will be the absolute best return of investments for all shareholders and all fans and all organizations. There is no questions about it.
I assume with Koch Media, you could be more comfortable sort of waiting a bit with the broader diversified portfolio.
Obviously, Koch Media have been adding a lot of titles and revenues. I think now having a bigger balance sheet and a much more diversified revenue streams, I think now is the time to really make that statement that we need to take the next step of executing on this. All right. Thank you very much. Welcome back at 1:00 P.M.