Thank you, Oscar. I'm really happy this morning. I'm really happy being here presenting these two things today. I will probably start with, for you, the least interesting thing. There is still the record year of THQ Nordic 2017 and the Q4. Let me grab this pointer. Oops. Our financial performance in Q4 has been driven, obviously, of our new releases. Our net sales increased almost 100% over the same period last year, up to SEK 255 million. The EBIT margin has been 40%, which is about in line with the previous year, and the EBIT number for the Q4 was SEK 102 million compared to SEK 50.6 million last year. Looking at the full year number, we exceeded SEK 500 million and reached SEK 507 million for the full year compared to SEK 302 million last year.
For the full year, we have 71% in gross margin profit compared to the 61% last year. Looking at what I'm really driving the business on is the EBIT margin, really how much money you're making. That number is up to SEK 188 million for the full year compared to SEK 95 million last year. That is an EBIT margin of 37%. Cash flow from the operating activities has been increasing about in the same level as the EBIT. Looking at the net sales breakdown for the quarter and for the year, we had in the quarter of Q4 a profit margin of 73%. It's obviously driven by all the new releases where you have higher margins.
If you note here, the physical sales in the quarter is up to 60% and the digital is 40%, which is a bit lower than the previous quarter, but that is driven by all the new releases. The new releases of physical products still have a, I would say, fairly good margin. In Q4, 82% of the sales came from our own titles and only 18% from the publishing titles, which is a new record number. 74% of the sales in the Q4 came from new releases versus 24% for catalog. Obviously, the whole organization really focused on bringing out these 11 new products on the market. A bit on the KPIs. You can find all the KPIs in the back of the Q4 reporting. The depreciations of IPs are fairly in line, SEK 3.8 million.
Game development is the very much increasing number, which in the quarter are SEK 43.4 million, which is obviously driven by all the new releases. Just to remind you, we're having the same model for all our releases. 33% of the development are depreciated the first quarter, 33% remaining nine months, so two-thirds of the full development the first year, and then 33% the last second year. We continue to invest even more into the future. The investments in game development and royalty advances were SEK 93.2 million. Also the capitalized internal development, meaning really the burn rate of our own studios, the seven owned studios, which has been increasing considerably, are now SEK 33 million for the quarter. The KPI of completed development, meaning the capitalized investments into development that are finished are put into the balance sheet, and then that number are stopped being depreciated.
Just shortly on the new releases for Q4, we had a significant release activity in the quarter with 11 releases, which nine were our own IPs. Just to run them through very quickly, we had our publishing title *Battle Chasers* by the *Darksiders* creator Joe Mad, shipping on PC, PlayStation 4, and Xbox One. We had our semi-global launch of *The Muscle Hustle*, the second major mobile title we're having. We had the last installation of *We Sing Pop* on PlayStation 4 and Xbox One. We had the sequel, meaning for the fan base follow up the *Gothic* of *ELEX* releasing in Q4, and that was obviously our biggest release for the quarter and biggest investment for Xbox One, PS4, and PC. We had *This Is the Police*, the IP we acquired the previous year on Nintendo Switch.
We had the sequel of *Black Mirror*, kind of *Black Mirror 4*, but it's just called *Black Mirror*, on PS4, Xbox One, and PC. We had a very small asset care release on PC called *Sphinx and the Cursed Mummy* that is actually published by THQ Inc. back in the days. I'm glad for that. We had a sequel in the end of the quarter in December of *SpellForce 3* that were developed in our own studio, Munich, Grimlore Games. We had the asset care title, *de Blob*, previously from THQ Inc., Xbox One, PS4. We had our first original IP title from Black Forest Games called *Fade to Silence*, which is a survival game in winter settings that is currently in the release in Early Access on Steam, which is due out on all other formats later on.
Finally, we had a surprise release made in Skövde of the expansion pack of *Titan Quest*, the 11-year-old IP we own that previously was owned by THQ Inc., called *Titan Quest: Ragnarök* that actually made a really good success without any previous announcement. Announcements we made were also coming back to *Titan Quest*. For the future of *Titan Quest*, we also announced we will port it into the console platforms, PS4, Xbox One to start with, coming out this quarter, Q1 2018, and on Nintendo Switch later on. I'm really glad we made the deal to acquire Experiment 101, headed up by Stefan Ljungqvist, that having this fantastic new product called *BIOMUTANT* that are supposed to launch in the future. We paid a consideration in November of SEK 75.3 million, a mix of cash and shares, and we have a smaller earn-out based on the performance.
Far the performance in the development are really nice to see. A bit of the future, the pipeline. Here is a selected announced project as of December 31st. As you know, we have a well-invested pipeline for the future. We have *Battle Chasers* coming out on Switch, which I think quite a few of the fans really looking forward and waiting for. We have *Darksiders III* that were announced last May that obviously we have a lot of fans waiting for, currently announced for Xbox One, PS4, and PC. We have *MX vs ATV All Out*, that are now confirmed for release the 27th of March in this quarter, which is a totally new, from the ground up built gaming on Unreal 4, made in our own studio in Phoenix, Arizona. Well, I'm really looking forward to actually bring out something new.
BIOMUTANT, as mentioned, AquaNox, an older, one of the first IPs we acquired from JoWooD, coming out on Xbox One, PS4, PC later on. The Guild, whenever that is finished in the final version, later on on PC. We have also a game I myself really enjoy seeing and playing, Wreckfest, which is kind of the folk race made of the totally crazy Finnish guys at Bugbear. If you follow the game on Steam, we have made a really good process of updating the game. The game has been on Early Access for at least four years, so fans has been. Now we're actually supporting Bugbear to bring the product into the next level. When that is done, it will be released on PC and then later on on PS4 and Xbox One. It's a fantastic game. Titan Quest, obviously as mentioned, on the console formats.
In total, we had 36 products in our development pipeline by end of Q4, whereof 12 were announced by that date, and 24 was unannounced by that date. That's a fairly stable pipeline of products. Well, that's the Q4. Oscar, I don't know if you want to say something. Otherwise, I will continue what you are waiting for.
Well, perhaps we can discuss the Q4 a little bit first, or do you want to go through the acquisition first?
No, go ahead. You can take a few questions on Q4.
Okay, excellent. Well, very strong growth as we have been through. Overall, are you satisfied with the result and what do you see for 2018 in terms of your pipeline?
Well, starting with the results of Q4, I think it's stable. I think it's in line with my own expectation and the management expectation. Obviously, a few titles could have performed much better. Reviews could have been much better. Our quality process of bug fixing could have been much better. We are still a very small team in THQ Nordic Vienna, and they make a lot of products compared to other companies in the industry, as you will see. I think we have a process to just become even better in the future, executing our releases. That could actually add to the future revenue and profit.
Okay. As for the games that you weren't perhaps as satisfied with, what games are those?
Oh, I think "Black Mirror" is one standing out. It's not a huge investment, but I'm just getting a bit upset myself on failing on a few points there. However, in the overall 11 releases, I think the performance is fine. I think "ELEX" did to expectations. It did well against the fan base in Central Europe, Russia. Didn't break through in America. It's a really hard game. It's harsh. You need to be beaten for 20 hours before actually enjoying it. It's not really something you jump into for a few minutes. It's hardcore. However, there is a very good experience in the game. On the long-term basis, I'm confident it's a good investment, and not only in Q4.
Yeah. Generally, you have received quite good reviews. I guess ELEX is one of those that hasn't really reached that level where you.
As you've seen, some ELEX are up in the 80s, or up to 80. Then you have American fan sites giving it 40, which on Metacritic average out to, whatever, 68. I don't think Metacritic is a good metric to decide if ELEX is a good game. It's a very polarized fan base. Either you love it or you kind of don't understand it and kind of hate it, yeah?
Yep. You also released The Guild 3, that was in Q3.
Yeah.
What's the status of that game now? It's Early Access in England.
Well, the development, that was one, I would say, the first product we start development on in our company history. That has been a far too long process. We learned a lot. We can do it much better. We have a plan how to take it forward. I still believe there is a huge market for the fan base and the kind of niche it is in, and commercially, the game on Early Access has been doing okay. Financially, it's okay for us. However, my own expectation, I would say, is a bit higher on the quality level at Early Access.
You really pushed the envelope on investments in 2017, I have to say. What can we expect going forward? Will the pace continue at this level?
You mean the investment in development?
Yes, development investments.
The story goes on. We are continue adding new development projects, obviously we're carefully managing not only the investment in terms of money, but how many products we actually could manage. That is a bottleneck, we might have solutions, various solutions for that going forward. Bottlenecks of the organization is one thing that limits our investments. Also a bottleneck of actually finding development resources for our key IPs. A few of our IPs, perhaps there is only one or two or three teams in the world that are able to pull such a game off. You need to wait for the right people to get excited and ready. That could take many years, five years, two years, 10 years. I don't know.
We'll come into acquisition more later, could this be a way to sort of solve the bottleneck, more capacity in general?
I've been stating that before, obviously, bottleneck could be solved partly with acquisitions.
That's a big way to solve the problem. Q4, obviously very backend loaded year 2017. Now in Q4, can we expect something similar in 2018, or will it be quite different?
Yeah. I think we have a history of releasing products late in the year, looking back in the numbers, it looks like it will be the same going forward, yeah. It's hard to predict exact release dates, I'm not communicating that really. Obviously the market are peaking on especially console in Q4. If you can break that through, you in theory could have a higher sales, but partly it's a higher risk because the competition is higher. In the end of the day, to be honest, it's all about making the game ready to launch and to have it in the quality needed to actually have a success, and that will be an even important factor for us in the future to get the best return on investment.
We need to wait until the products are good enough or perfect, whatever you can call it, to release. We need to take that investment of not being pushed by you as analysts and others.
How do you feel about that constant pressure of expectation?
I'm enjoying managing the business. I have various things I could tune on to manage this.
As for 2018, can you say something about what games are closest to being ready for the markets?
No. The only thing I can say is "MX" is coming out in March. "Titan Quest" is coming out in this quarter. You have the release list in the Q4 report here. That's it, really. The daily business operations in Vienna are communicating various release dates being updated all the time. I can't really say anything more about that. Sorry.
Fair enough. A two-part question. Which games are you most excited about for 2018, and what game do you think has the largest commercial success potential?
Again, I don't want to talk 2018. What games I'm excited about, I can talk, yeah. I'm excited obviously for all our games, but most perhaps likely "Darksiders III," "BIOMUTANT," and "Wreckfest" especially, and perhaps a few of the 24 not announced games I could be also excited about.
It's quite remarkable with the sharp sales from physical still for THQ Nordic. It's quite unusual today to see that level.
I think that there's a wrong perception in the market that it's all just going digital. For us as an IP holder and developer, it doesn't really matter if it's physical or digital and what channel it's sold in. The margin is great. You just need to make good products, and we make sure to distribute in all the relevant channels. That is what's driving our profit. Now, physical is a really relevant channel when you do console gaming. It's even more driven now by the release of Nintendo Switch. We could see up to 80% of our incomes on Nintendo Switch products are physical. Nintendo Switch players, they would like to buy the physical thing. Partly it's a technical thing because you don't have the capacity to download full games. You need to buy new memory sticks, or you can just buy this game.
I think the market for, in my horizon, three to five years at least will be stable in the physical market, I'm quite confident there will be a physical market in many more years than people think.
Let's talk about Nintendo Switch for a bit. It has been a fantastic success for the company. What do you see in the potential for you guys on Nintendo? You've obviously announced a lot of projects recently.
Yeah, you can see some are trying to make a challenge of shortest press releases ever, announcing titles now almost on a weekly basis in the past weeks here. We have a huge catalog of assets and IPs we can bring on Switch. Obviously that will be constantly made. It's more of a challenge when talking news, big titles, especially if they are developed as a very high-resolution, high-spec game from the beginning. It's a considerable work to actually make the Formula One of releasing products to make a simultaneous release on all platforms at the same time. We are working on this, obviously Switch is a great revenue generator, for sure we will work on Switch for the years to come.
Okay. Should we go over to the acquisition?
Yeah.
Do you have a presentation or just-
Yeah.
Okay. I'll let you take over there.
Thank you, Oscar. Just making such a deal as this takes quite a lot of time, and it's about timing, and it's been a tight process. We signed this deal in the morning in Vienna today. The history behind THQ Nordic and Koch Media are various. As you know, I've been in this industry for 25 years, and Koch Media has always been a player, especially the past 15 years. It's very much a global and especially European company that are linked everywhere in the industry, with other publishers, with their own products, with people. I have employees that are working there. There is always links to this. I've known Klemens, the founder, Dr. Klemens Kundratitz, for many years. That obviously has been more intense the past half year.
They are a major player. I think it's a really good fit between the companies. We have a few things in common. One thing being in the THQ Inc. process 2013 when they went under on Nasdaq. The big IPs of THQ were acquired by a few big industry players, one being Koch Media and Deep Silver, the other ones being Take-Two and Ubisoft, and a few others. We made a last deal taking everything else on the plate too. I didn't have enough money to be with the big guys. That was a few months before. It's really glad to have this THQ IP back into the THQ kind of family. The process has been as I like it, you start doing a business with someone, you start to learn someone.
We started the business relationship with Koch Media early last year in the spring 2017, where we chose to pick Koch Media as our publishing partner for certain territories in Europe, being the German-speaking language, the Italian markets, and the Benelux countries. Just to try out how are they, paying in time, all these things. We were really happy. We could see they can do more business on our products than our current setup. Obviously I visited Volition myself, the development studio in Chicago, right before E3, I start having a few ideas. Obviously, I had this idea long before, with Klemens, we start talking. This whole thing became a reality in the end of 2017, November-ish. Koch Media were owned by Dr. Klemens Kundratitz is the founder. However, he's not been the majority shareholder.
The majority shareholder is a private older person in Austria that kind of wanted to find a new home for this business. It's a massive amount of employees. He want to find someone that could take care of it. I could really see that we could take care of it and invest into the future. It was a very short process of deciding the terms. When deciding the kind of terms, I hired hopefully the best advisors, Carnegie, Baker, and a well-reputated accounting firm to actually do this due diligence valuation. All this you need to do in the proper way. Ended up this morning signing in Vienna. That's the process. You need to remember, Koch Media, founded in 1994, has been profitable since foundation, every year, but hasn't really paid any dividend out from the company.
I think they paid EUR 10 million ever. That's it. It's a really solid business on the balance sheet and the financial settings. They had a major issue 2017. They had the very big investment into "Agents of Mayhem," which were a title developed by Volition, the "Saints Row" developers. That totally bombed and flopped when releasing in August last year, selling not a lot of units. They really failed on delivering, I don't know, to the fan base. I think the game is okay, but it's not the "Saints Row" and the fans wanted that kind of game. That resulted in almost EUR 50 or EUR 47 million, only that year, EUR 47 million write-down, impairment test, which is really hitting the P&L. Financially, they had the first loss year ever.
Obviously, I'm buying into this because I really believe in all other businesses they have, and I can promise you, I won't really make "Agents of Mayhem 2." We most likely make something else. Volition is a great team. It's a really talented studio. I really believe it were the right moment for us to come in here, make this deal, and work with them in the future to execute their business plan because they are really talented. They have a great business plan, lineup of products, and their growth will really be generated just by execution of these four AAA titles we are communicating today. Koch Media is huge. You will have a lot of information here. As stated, they have AAA IP rights in "Saints Row," "Dead Island." I would say it's above our current lines of IP. "Darksiders" might.
I wouldn't talk about "BIOMUTANT," I don't know. "Saints Row" is a very established IP. You will see later on in the presentation. "Dead Island." "Dead Island" were their own first really good success, and they made a lot of money on that, 2011 onwards. They have the long-term exclusive license for games for the "Metro" brand. "Metro" is a very famous science fiction book series made by the Russian author you can read here. Nice, amazing books, and it's an amazing series. The first game was made under the flag of THQ Inc. Koch Media acquired the license for "Metro" or the game assets, and then "Saints Row" and Volition from THQ. Again, they have four AAA titles in production. That is including the "Metro Exodus" coming out 2018 and "Dead Island 2," that will be coming out in the future.
They have two AAA studios, which is way bigger than we have currently, one being Volition and one being Deep Silver Dambuster Studios. They are the number one publishing partner in Europe for over 50 companies. They are the biggest player in partner publishing. We'll come back to that as well, but we're talking SEGA, Square Enix, Codemasters, Paradox, along a lot of other industry players. For THQ Nordic, they have a very complementary business model, so they have other business models than we have. They have a very much entrepreneur-driven company. Klemens is entrepreneur himself. I really enjoy doing business with him. Also his full organization, they have 14 companies. They have considerable companies in all Europe, the U.K., the Nordics, Spain, Italy, and so on. Each organization have their own entrepreneurial spirit, it's a really good fit to us.
Obviously, this deal has a lot of potential revenue synergies. To be honest, we haven't communicated. I haven't counted that on day one. We can make a huge list. What I'm communicating day one is we're not really making any headcount cuts. We're not making any restructuring. We will look into these synergies in the future. It's just a huge potential. Both companies, THQ Nordic in Vienna as a publisher, and Koch Media with all their companies, will be two independent businesses from day one with synergies potential in between. I think earnings per share, it's a stable deal for shareholders, that will bring value. I don't use the word fantastic ever. Some KPIs on both companies. This is not super, but it's KPIs that I will talk you through. The internal development studios, we have seven, they have three.
As I stated, they are much bigger in headcounts, and our studios are smaller. In total, we will have 10 internal development studios in the new group. External development partners, again, we have more. We have 18, they have eight. They are bigger. That including, for example, 4A Games making the "Metro Exodus" that has lots of people on Malta and Kyiv. Number of IPs. That's our core competence to acquire IPs, so we have a lot of them. We have 91, and they have 15. Again, they have much bigger IPs if you're talking "Dead Island" and "Saints Row." The pipeline for the future, we have 12 announced and 24 unannounced. They have five announced and nine unannounced. Again, they have bigger projects. Headcounts, talking internal and external, we have 462 end of quarter, and they have 1,181.
In total, we will have 1,643 people. I think internal employees on that is about 999. The number I got. Net sales for the period, and the reason being nine months is because of Koch Media's financial reporting. For the nine months, April to December 2017, we had sales of SEK 426 million, and they have sales of SEK 2.5 billion. The total group over the nine months was almost SEK 3 billion net sales. EBIT level, adjusted EBIT, well, it's the same as our normal EBIT. It's SEK 157 million for us and SEK 296 million for Koch Media. That is before the impairment test, extraordinary write-down of "Agents of Mayhem." In total, we have an adjusted EBIT of over SEK 500 million on last year's nine months. Here's the high-level transaction structure and terms.
THQ Nordic AB in Karlstad, Elmgatan, are acquiring a new dormant company called SALEM 100 Holding in Vienna. That company is acquiring 100% of the shares of Koch Media Holding based in Germany. We are getting 100% control of Koch Media operating company based in Höfen in Austria, a very nice Alp village. Our plan is that SALEM 100 will be renamed this week or as soon as possible to Koch Media Holding GmbH. The purchase price is EUR 91.5 million. I really paid them the cash I had on account with a buffer to run the operating business, and that was EUR 66 million paid today. I agreed with the seller they would have another EUR 16 million in cash paid no later than six months later in August this year.
Further nine and a half million EUR in shares, the majority of those shares will be held by Dr. Klemens Kundratitz, the founder and CEO. The dilution for the current shareholders making this transaction is 1.2%, which is a good number if you're a shareholder. The total consideration for 100% of the share capital is EUR 121 million in enterprise value. I won't talk you through enterprise value. We just have a journalist on the call trying to explain this, but it's all in the press release. Please read it. The closing is expected to be taking place today. Our aim is to reassess our capital structure in the mother company to explore potential debt in order to continue being active in value-adding acquisitions.
We decided because we had the funding and we made this construction and we are having a very solid business anyhow going forward without this, we decided to wait post-transaction to make this process. Hopefully, we have better terms. Oscar, you look like you have lots of questions.
Yes, I do.
Just hold on. I will just talk you through a bit more. Here is the new organization setup. We have now two Klemens reporting to me. Actually, I have two Reinhards as well. Yeah, this is quite funny. Fantastic persons. Klemens will continue to run Koch Media as an independent entity. Klemens Kreuzer, our operating managing director in Vienna, will continue to run that publishing part. Here's a bit of the history of Koch Media. As stated, founded in 1994. 1996 they entered the video games market. I think before they were more in the software business, which were big back in the days. 2002, they launched the Deep Silver publishing brand. 2003, they started with films. 2008, they opened the first U.S. office branch. Then here you can see the key titles releasing in the previous years.
2009 was the first year their turnover exceeded or surpasses EUR 300 million. 2009, they released the first "Risen." Then they made "Risen 2" and "Risen 3" coming out 2014. "Risen," as most of you or a few of you know, is the IP that was previous to "ELEX" from Piranha Bytes. 2011, they had a huge success of "Dead Island," developed by the great Polish developer Techland, but they owned the IP. That was generating in 2011, 2012, 2013, a huge amount of revenues and profit for Koch Media. 2013, they made a THQ Inc. transaction, as I told you before. 2014, they acquired Dambuster Studios along with the IP of "Homefront." "Homefront" was also one THQ Inc. IP that Crytek, another industry player, acquired from THQ.
However, they went into some difficulties, and which Deep Silver was funding the development, ending up Klemens making a deal taking on the development studio and IP. However, that products were released in 2016, and they didn't release it in a good shape. That didn't become a success. However, I would say Homefront really are now a good game. However, and especially under the THQ era, it was famous in the days. 2017, I told you about Agents of Mayhem. I'm just coming back to that in a second. Here is the glance of Koch Media. This is on the left the games, they have the publishing label, Deep Silver, making the big titles, AAA titles. They have another label called Ravenscourt that are publishing games. They have a global presence.
The nine months 2017, the Deep Silver business had EUR 68 million in revenues, representing 26% of their total sales for the group. Koch Media are the number 1 publishing partner in Europe with 11 offices. Had a great year, having EUR 175 million in revenues, representing 67% of the revenues. The smallest part on the business is the film business, which has a lot of synergies with the partner publishing. It's independent distributor and co-producer of films. They have a huge right catalog of 1,500 products for German and Italy. They have some niches I like. I'm not a film guy, but when you talk to them, they are really into it. They have some cult classics for the German market, for example. In Italy, they are really strong on horror movies, so they found their niche in this business.
However, it's a EUR 20 million business representing only 8%. The majority of the income on the film business are non-physical, meaning downloading TV, cinemas, and et cetera. Volition. The highly praised open world developer with their own tech. It's based in Champaign, which is a city size of Karlstad in just south of Chicago, Illinois. They are the leading, I would say, in a few aspects in the open world, especially making kind of destruction things within games, yeah. Which you can see in our IP, called the Red Faction. After the issues with Agents of Mayhem, they made a restructuring, cutting 50 headcounts and the management partly, and they brought back Jim Boone, which is a very senior guy that previously worked at Volition back to Champaign and to lead the studio. Currently there are 148 employees. You see here a bit of the IPs.
If you're a gamer, you kind of love a few of them here. Descent, FreeSpace, Red Faction, The Punisher, and then the Saints Row mixed and ending up with Agents of Mayhem. Dambuster Studios. It's really origins back to the '90s. It was a studio called Free Radical Design, which were very famous for certain products in the— In England. Here again, if you're a gamer, you can recognize TimeSplitters, Crysis from published by EA. Now, Homefront. It's a very experienced team based in Nottingham. Lovely settings and office. Really talented. 180 employees currently. Then finally, the third and last studio, called Fishlabs, is based in Hamburg. Currently 67 employees. They had a huge success on mobile. Winning quite a few awards in mobile gaming.
Because of the mobile gaming challenges the past years of actually breaking through, they decided to move back into console and PC gaming. They're currently working on a range of products that will be announced in the coming years. Metro, bit of the IPs here. Metro post-apocalyptic first-person shooter. First release was 2010 under the flag of THQ Inc. Deep Silver has a separate agreement with the author of Metro, having the rights for Metro. Estimated €95 million in lifetime revenues, 12 million copies sold of the two games released. Currently, we have Metro Exodus under development by the external studio 4A Games, which is a really good and talented team, origins from Ukraine. Actually, I will show you just a very short trailer that were a big boom at E3 last year, and I actually was in the audience and just feeling, wow.
Here we go. There is quite a few fans across the world waiting for this. There's also quite a few fans for Dead Island. We estimate there is 14 million copies sold of Dead Island. It's really just been one game and then they made further versions of it, but it's been one Dead Island game. It's open world survival horror setting, one of the first in the zombie area in a way. They estimated €185 million in lifetime revenues in this IP. Dead Island 2 has been under development for quite a few years now by the external studio of Sumo Digital in the U.K. We have not still communicated a release window for that. Finally, Saints Row. Saints Row was a huge success back in the days for THQ Inc.
I would say it's one of the few titles or products actually standing up, back then at least, against GTA. It's kind of same audience. It's very violent, but it's also with a lot of humor. Just to give you some color on that, it has estimated $600 million in lifetime revenues. You can compare that to the Darksiders and MX, for example, which is much lower. It has 32 million copies sold lifetime on all platforms. As you see, the Metacritic for journalists and from the fan base has been fantastic on the four games they've made. Here is the last slide, or coming back to the problems. Agents of Mayhem, again, released 2017, only EUR 19 million lifetime revenues and only 300,000 copies sold on all platforms. Really, what's the reason?
You can talk a lot about that, but I think expectation from fan base and also perhaps using a name as Agents of Mayhem rather than actually building on the Saints Row IP, it was a decision they perhaps would have been doing different. The impairment write-down of Agents of Mayhem and Homefront investments has been EUR 87 million. Homefront did fairly better, however, not at all according to expectation, EUR 33 million in lifetime revenues, 1.2 million copies sold lifetime. Really, the game wasn't finished when releasing, which we're hitting the Metacritic, hitting the fans. People were angry. If you look at the game today, I think it has its nice part. It was released 2017. Deep Silver has a strong pipeline of new games. Here is the announced products, starting with Kingdom Come: Deliverance.
Kingdom Come: Deliverance is developed by a Czech developer called Warhorse, which has really good development base doing such games. It's a huge game. It released yesterday on Steam, and it's topping Steam. Well, you can look at the charts this week in Europe. It's a publishing title. It's not their own IP, but it's a good publishing title of Deep Silver. It's a niche product in a way. However, there is a big audience for it. I like it. They have Dakar 18 coming out through 2018. Metro, I told you about this year. Dead Island 2 in the future. Then they have another, if you're a gamer, you're surprised you have to love. It's Shenmue, which were an amazing game from SEGA released on Dreamcast back in the days. I actually remember selling this kind of semi-exclusive in Nordic like 15, 20 years ago. Thanks, Pelle here.
Shenmue III" is developed by a small indie team that, what I understand is from partly the creators from Shenmue in Tokyo, Japan. It's coming out in the future. Then have seven other pipeline projects, and then the two top-secret next AAA title from Volition coming out in the future, and the next AAA title from Dambuster coming out in the future. Not announced. Number one European publishing partner, again, it's not about only shipping products. They have a very good team actually replacing the local competence of the publisher. It's a lot about PR, local marketing in all the languages, strategic planning how to launch a product. This is very complex material, how to actually launch a global product. There is a lot of publishers in the world, and not everyone could have their own setup in all countries.
They are the number one partner with all, more than 50 players across the industry. They have huge operations based in Höfen, in this small village, which is very nice again. But it's actually serving continental Europe within 24 hours, except Spain, where they have their own operations in Madrid, and in the U.K. they have an external partner for operations. Selected key partners they're working with, it's Bethesda. All partners is not for all countries. If you are a publisher, you can really pick and choose what services you like and what countries you like. A few of them are for the whole of Europe, a few of them are just for one or two countries. For example, THQ Nordic, we picked them last year for three countries.
One partner being Bethesda, Capcom, Codemasters, they have a great relationship doing this Formula One and rally games, for example. Their own products, Deep Silver and Meridian, obviously, for Deep Silver products are within this business group. They have Focus Home Interactive in Paris, Kalypso, the great German publisher, Koei Tecmo, Japanese. Milestone doing racing games from Italy, Paradox here in Stockholm, Rising Star Games doing the niche Japanese games based out of U.K. and Kungsbacka. SEGA, I don't have to tell you what SEGA is. Sold Out, a great British publisher. Solutions 2 GO, they're publishing "The Ark," the product that has been successful on Steam, on console. Square Enix being one of the major players, obviously, with everything from "Final Fantasy" to "Just Cause" and many other products. Obviously the great THQ Nordic. Many others.
I have to say, it's not only about shipping day one physical discs. They have a range of non-digital products, being accessories, being merchandise, collector's editions with figurines. They have this Commodore 64, THEC64 Mini releasing globally in March that sold out within a few days, if you look on Amazon. Coming out in a few weeks. Here is the slide of the revenues, going back. You can see that the total revenues has been fairly in the same level. What's happened differences is the business areas. They had this huge success. You can't see the years before here, but they have this also huge success of "Dead Island," and then the THQ deal with "Saints Row" making a lot of money. They had the issues with Homefront and Agents of Mayhem last year and the year before.
The partner publishing at the same time has been increasing, and they had the best year almost, or what we can see here, 2016/17 and 2017/18. Film business has been stable. They did try to get the film team to do U.K., but they left the U.K. film market, so now it's just Germany and Italy. The post-deal setup. Again, each organization maintains a full operational focus on executing its own business plan. Not only 2018, but obviously that business plan continues for quite a few years. That we've been working in detail with Koch Media to make sure we actually have a plan. We have no cost savings program planned. We have no operational changes to each entity management.
The primary focus is just continue with your current plans, continue executing, because both organization has a huge pipeline of products and partners they need to execute on. That's the most important thing. Obviously, in the future, we talking of synergies here. We will have a much, as a group, stable platforms to handle bottlenecks, as you say. There is potential synergies, for example, with partnerships for IPs within the group. One obvious thing, I'm not announcing anything here, but one obvious thing you can think of is "Red Faction" being made by Volition in the past. Or another thing is "Risen" they are selling is being made by our partner Piranha Bytes. There is a huge things similar to that you can look into. Development capacity and tech usage across the group.
Obviously, the distribution power of Koch Media and the THQ Nordic product could, in theory, improve our margins and revenues by adding that. They have a lot of office organizations that we don't have, for example, a big legal department and many other things. Going forward, I see they have a stable business as it is, but I see the margin improvements could be realized by further co-publishing deals with partners, licensing of products for Europe and global, and more publishing products. As long as adding a proactive acquisition approach. They have not had any acquisitions agenda really the past year or years, and adding that could bring value to the shareholders of the listed company. On the organization level, again, THQ Nordic and Koch Media will be two separate entities, but will be consolidated in the mother company listed.
The first quarter report will be on the same day as the AGM, the 16th of May. We will consolidate the business from February. We will propose, and after discussions at board and together with the companies, to change the name of the listed THQ Nordic. The reason being is. It's many reasons. One reason, I want the entities has their own independence. I don't want the public-listed company to be influenced by what's happening on the end consumer bit. I don't see this business in the deal in the industry is not really the THQ Nordic Vienna are acquiring Deep Silver. It's really the owner of THQ Nordic Vienna are acquiring Koch Media and Deep Silver. Pro forma, I think I've been talking through the net sales and then adjusted EBIT. Just a bit on the financial position.
No capital are being taken out from Koch Media pre the transaction, neither post the transaction. We're just buying the shares. They're not paying any dividend or anything. I was really keen to, they will maintain their business and very solid balance sheet as they are. We actually in the group now has a larger working capital facility today than we had yesterday. We approximately have SEK 800 million in working capital facilities, which is according to our analysis, more than well enough to run their business and do the deals they want in the daily manner. However, again, we will reassess the possibility at the mother company level to take on new a small bit of loan if the terms are right. We have the balance sheet to support that with the right terms, hopefully. We have a very comfortable financial position in the group.
Legal chart and appendix. Time is now 10:05 A.M., I just feel I stop talking, yeah. If you have any further questions, especially on the financials, you're very welcome to email me at ir@thqnordic.com and I will make sure to reply on you because there might be questions on the balance sheet and P&L. Oscar.
Let's start with a few questions from me and then perhaps a few quick questions from the audience as well. First of all, it seems like Koch Media has a lot of plans already for maybe the coming one to two years at least. You intend to-
I would say in this industry, you need to be longer than one to two years, yeah. It takes three years to make a game. I would say you need to have a much longer business plan than one to two years. They have that, and I'm confident in their business plan.
Okay. I think I read something about that there's been a lot of changes recently, I guess perhaps because of the games that didn't perform that well recently. Is that the case?
They restructured Volition, changed management Volition, they downsized the headcount. Not necessarily all relates to "Agents of Mayhem." I think it's quite normal if you have a AAA development and it's finishing off, you normally have a few headcounts leaving anyhow because you need to change team or people are leaving. They made a CMA restructuring in the summer or just right after summer. Same-ish situation at the Dambuster Studios when releasing Homefront, especially on the management side.
It is a triple-A studio company. How do you feel about that when you compare it to THQ Nordic?
I think when I have that organization, 1,100 people and 750 employees working on that, they have the competence. I trust them and I can see. Obviously, making a triple-A game, you need to have total different kind of processes in place. They learn a lot from the mistakes, obviously. They implemented what you call a stage-gate process in development, which is very detailed how you actually develop the game. Takes a bit longer time, costs a bit more money. However, you're taking away a bit of the business risk of development. All people gets together on a regular basis to check, is the development going in the right direction? Is the game of the quality and so on. That's just one example what they implemented. We are not working with a stage-gate process at THQ Nordic.
I would say that is for the really big guys. You make that when you have products for EUR 15 million, EUR 20 million and up to EUR 100 million or even more. Koch Media is a bigger company than THQ Nordic. I normally say THQ Nordic is a really small player in a huge industry. Koch Media is a bigger player, but we are still, in the new group, a small player. The big peers we are having in this industry, as you know, are much bigger corporations. I still think we are underdogs in a way. I really would like to continue with this growth.
The physical publishing business is huge. You have a business in that as well. You're strong in physical. How can you use your position in Europe and what do you see in terms of competition and market share and all digital?
They are number one player. I would say the market is, these players have been around for many years. Most players have been around for 10, 20 years. They have one main competitor in Europe, so there are two continental Europe players on this, and then there are strong local players in each territory. That's the landscape of this. It's a stable, it's actually a growing business for them. It's profitable. I think it's adding a lot of other values to us. I've communicated, I expect the business to remain stable over the coming years. Especially within the current life cycle of consoles, I don't see that business being changed, especially if you include Nintendo Switch.
The publishing business is around 60%, roughly, and the games business 30%. What do you feel, in two, three years' time, what do you think the games business should be, given that publishing perhaps is more stable?
I have the luxury of not communicating the financial targets on this. I'm just confident they will deliver in the future. The big growth in profit or the growth in profit, not big, the growth. Revenue and profit will be driven by the execution of the AAA releases and the Deep Silver brand.
Can you say something about the profitability in the segments? Games is probably volatile, but the other segments.
Taking off Agents of Mayhem, they have a stable profitability in all business areas. It's a well-consolidated business. I'm not communicating the exact margins here. I'm expecting to give you more color in the future, especially as you as analysts, you need to be able to track this down. At the Q1 reporting at AGM, I would expect us to give some more colors on KPIs.
Okay, one last question from me for now, and then I'll leave it to the audience. With the acquisition, obviously the balance sheet changes quite a lot. You mentioned debt to finance, perhaps, at a later stage. How will the cash flow be in the new company, and how will it affect further acquisitions going forward?
First of all, I see cash as two separate thing, one being the working capital facilities you need to have to run the businesses. It's a cash pool of what you can use for acquisitions. Partly you can mix it, but in a way it's two different things. The cash flow in the past of Koch Media has been invested into the development. Because of the failure of Agents of Mayhem, really you can look at the cash flow generated has been eaten up by the Agents of Mayhem and Homefront failure. Going forward, they have invested already a lot of money into the current pipeline, including the game title released yesterday and a lot of these new products coming out. Quite a lot of that investment is already taken. Obviously, from this morning, we have a daily investment into the current development pipeline.
I can't really give you any future cash flow projections more than that.
Just the intangibles in the pro forma numbers, SEK 1.2 billion roughly.
You have around 300, 400 yourselves.
Is that mostly for the games business than for Koch Media?
Yeah.
Okay. Any questions from the audience?
All crystal clear. Do we have any calls?
Ladies and gentlemen, if you wish to ask a question, please dial zero one on your telephone keypad now to enter the queue.
No calls?
Okay, no questions on the phone. Perhaps a few last questions from me then. You mentioned revenue and cost synergies. It feels like for now, perhaps it's get the things done that's currently going. Do you see potential for perhaps slimming down the organization at a later stage? I mean, 1,100 employees.
Koch Media is a growth business, yeah. They are set up to deliver growth, yeah. If they are executing on that business plan, I don't see there is a need to make headcounts cuts, yeah. Obviously it could be synergies anyhow between the companies, yeah.
Can we get some flavor perhaps on the unannounced titles, the split between publishing and the own development?
Well, it's a good mix.
Good mix. 50/50 then. The film business, do you see a long-term future for the film business, or is that up for discussion?
I like the film business. I like to learn before we make any further decisions on the film business, yeah. There is synergies with the film business, and it's part of their DNA. It's profitable. I don't have a plan to divest it. I don't mind. They run their business, it deliver profits. I will learn more, I will come back in the future quarter reports on that. I don't know if you have any more questions, finishing off just deal, what is this deal, and it's really a signature deal, what I would like to do, yeah. I communicated I have a huge list of deals I want to make, and this is one of them, yeah. You get a lot of assets for this price, yeah. The opportunity for the future is huge. It was the right moment to make it, yeah.
I have a great confidence in the business, yeah.
Hello. Could you maybe just comment in what the production phase the AAA titles are? Are they pre-production? Are you still talking the financial forecasting now? No, I don't know if that's what I'm coming from. No, I can't really give you any color on that, sorry. Okay. Yeah. Great. Okay. Thank you very much. Thank you for coming here.
Thank you.