Publishing Agreement

Mar 19, 2021

Press Release

Thank you so much. Welcome, everyone. Ladies and gentlemen, I have some very exciting news to share with you today. Myself and the whole team here at Starbase are very excited about our news today, and I am to share that with you. Let us move to Slide 2. Starbreeze, as you might know, is a company with a long history. We have offices today here in Stockholm in development studios in Paris and Barcelona. And our focus is on the Payday IP and the Payday 2 game that has up to date sold over 28,000,000 base games historically. But today, I'm going to talk about our next gain in development and the publishing agreement we have announced this morning together with Koch Media. So let's move to Slide number 3. And what I'm going to cover today is mainly about our work together for the future here with KORST Media and slightly about what this means for the game. Let us move to Slide number 4. So our co publishing agreement with Payday 3 with Koch Media announced this morning. It's about taking the Payday 3 game that we started development of in October 2019 to its release in 2023. This is a joint operations getting this game out there, but it also stretches beyond the release, of course, because this is a co publishing agreement for a games as a service game, which means this is meant to work in the same fashion as Payday 2 has done previously, where we continuously develop and enhance the feature set and the content of the game. So after the release, there is a long plan of continuous work that's going to be put into the game to engage the community and keep on selling way beyond its release. And we think that Koch Media is the perfect partner for this. Let me tell you a little bit more about that if we move to Slide 5. So Koch Media, in short, is an independent producer, marketer, the publisher of the distributor of all kinds of entertainment products they have, which has been very important for us and international presence. They've had a lot of experience of making games and entertainment products to the market. And they are also part of a bigger family, the Embracy Group. For us, Coke Media was really stood out in the discussions that we had with a lot of various publishers out there because they shared really our passion, not only for the game itself, but for games as a service, where you take this type of game and continuously monetize it. For us, when we were looking for a partnership in Payday 3, that was obviously something that was a significant factor for us. Coke has a long experience of working with game developers and publishers, and we feel very at home with the discussions we've had put them and are really looking forward to now continuously getting into our relationship and delivered the best possible Payday 3 game. So let's move to Slide 6. The strategic rationale for doing a publishing deal on Payday 3 is that here at Stavros, we want to focus on making this game. Pay the 3 is a big undertaking in terms of product. We want to focus on that and really put all of our efforts into that. To be able to have that focus. We need somebody who helps us with the financing, of course. And to that point, this is a deal that secures the Payday 3 Publishing and helps the game to get out there. But it's also a publisher that brings so much more. Today to share the passion for the game, I said, and the vision for how you long time hired you during the duration of the game monetized. We say this is a co publishing deal. What does that mean? Well, we are both parties are working with the development of this game, sharing the efforts of producing and marketing it throughout the whole game cycle. As really is a partnership. And for us, being able to focus on the game means that we need a partner we have this international presence in terms of the local offices and experience in Distribution and Community Management. And with Quote Media, we really found that partnership. Will move to Slide 7. So the partnership in detail. While this is not a deal where we disclose any of the specific details. We want to give an understanding of what kind of investment would go into a project like this. So as we've written in the press release. And if you calculate the total investment being put into this game by us and Coke Media always duration of the development time and up to 18 months after release. The estimated investment can be over €50,000,000 So this is a significant gain, significant resources put into this, and we think this really secures the position on the market that we expect BabyTree to be able to have, considering its historical performance of 82, for example. We at Starbase remains the owners of the IP. This is, of course, important for us. In a partnership, we will, of course, coordinate with our with Koch Media in making sure Payday 3 is the best possible. But for our owners, it's good to know that we established the owner of the Payday IP. The continued game development. It's something that we continue to do here at Starbase in our studios in Stockholm and Paris and Barcelona. And it's not only up to the release, as mentioned, but further on that. What Coke Media will help us to do here is really reached the market, both from a digital and fiscal standpoint. Coke have worked in fiscal distribution for a long, long time, over 20 years, but digital distribution is something that you're also very experienced with and obviously, in already very important and in 2 years from now, likely even more importantly, and we feel very good about their experience in that field. This is a game that's developed on the Unreal Engine. Previously worked with our own internal engine for Payday 2, but this iteration of Payday, Payday 3. It is based on a well known industry standard engine called Unreal. Us to launch this game on PC and consoles like PlayStation and Xbox. We can launch the same game at the same occasion. And we can move to Slide number 8. So to wrap this up, what does this mean for the Payday IP and the future? World For Payday 3, which is a game that started its development in 2019. It means we can securely move it into the production phase during this year. As a company, we have recruited people to the team previously and continue to do so for the ramp up to the production phase here in 2021. We are aiming at the release in 2023. And as mentioned, using the Unreal Engine, what really helps with finding people on the market, recruits to the company who can to get into the studio and start working directly on the game when we need to. And yes, the last two points there, IP developed and owned by Starbase and really, really focusing on the games as a service model. For the Payday IP, what does this mean? Well, continuously a strong brand. This has been a brand that have benefited from merchandising already with the built in properties you have with the masks, for example. It's been a popular item to pick up for our fans. We think the Payday 3 game as a cornerstone here, will really help us to build on the IP for the future as well and develop this IP well beyond only being a game, so to say. This Payday 3 is a really strong pillar product that helps us to build that pathway forward. That is what I had to tell you this morning, and I'm happy to move 2 questions in the Q and A. We can move to Slide 9, if you would like to. Have we have got some questions here over e mail. To I'll refer to them here then. Do you know I'm still the interim CEO, that's correct, been Interim CEO since end of October. My focus has been to make this deal happen. The Board is working on the CEO question, so to say. So that's not really for me to comment on. We also got some questions about what resources is in Payday 3. And well, that's the Payday 3 game is built by internal an internal team here at Starry's, our studios in Stockholm and Barcelona and Paris. We're using reasonable amount of outsourcing as any game production does at this point in time. And also a question, of course, I understand that with the question we got here is when do we get to see something from Payday 3? And well, today, we have an announcement about the deal with Costa Media, not media announcement about Payday 3. The more information about the game itself will be revealed when the marketing teams here at Starbase and Koch Media decides it's a good timing for that. And I honestly don't know exactly when that's going to be for them to optimize and to make sure that when we take that step, it's done for building up to the release of the game. We also have some questions here about our deals with 505. Yes. So 505 do have continuously we're working with them continuously here for the console versions of Payday 2. The company have some outstanding debts as described in the reconstruction documents. And I think the important point to note here is with this need in place and what we're communicating around this is that we have a financing for the game and start this for the future that we are happy with and can continuously work with. Let's see. What is the latest regarding Doctor? You have a question as well. Well, not sure what that question refers to. So we haven't announced anything specific new about VR. An idea that's pretty much it. Yes, I think I catch up on the e mail questions that we got here. So yes, we can open up for any other questions. Thank have. And our first question comes from the line of Jacob Adler of Handelsbanken. Please go ahead. Your line is now open. Yes. Hello, Tobias. And first of all, congratulations on today's announcement, and thank you for taking my questions. I have a couple of short ones here. First of all, are you able to comment on the deal structure here? All the web splits between you and Koch Media. Is it fifty-fifty, sixty-forty, higher than that? And also if you can shed some light how the dynamics now will look given the €40,000,000 clause of digital growth? And we can start with that one and then I have some further ones as well. So yes, we don't communicate the details of our agreement with Cod Media the exact levels of royalty splits and investments into the game in that sense. The guidance we're trying to do here is to show how big of an investment it gets to be total over a period of time. But we're not going to be further going to the details. Okay. I understand. Are you able to Say something about will you have majority or you can't comment on it at all or how does it look? No, I think if we start going into the details, we're going to end up even further into the details. But I think the notion of this being a copublishing deal and joint venture, so to say, some indications that this is it is a crocodile, and so it's a joint venture into this. Okay. That's very clear. A second Ekilon here. You mentioned that the total investment will be over €50,000,000 in time for the development and marketing on Peythe3. How much of the budget can we expect to be attributed for the initial launch? And how much will be spared for future VLCs and other It is related content. Yes, good question. So and again, we try to give the indication that over up to the release and 18 months after the development and the marketing efforts into this game can be over EUR 50,000,000. Exactly how that divided, we haven't guided on. But I think the we have a notion and an idea prognosis today for how the game will perform for the future. The beauty of a games as a service model is that you can adapt to what happens on the market and adapt your investments into that. So that's why it gets really difficult to say exactly how it's going to be for many years from now when the game is on the market. But if you look at Pay Me 2 as well, we have operated that game on the market since 2031 released, and we're continuously releasing content as late as Wednesday this week, and we'll continue to do so up to the start of Payday 3. So these kinds of games, when they're done in the right way, they can really benefited from the investments and work very, very long beyond its original release. Okay. Yes, that's clear. Another question here. Given that you now have an established relationship with Kokmedia and Embraer, Would you say they have enough expertise within mobile to be an eventual publisher for Crime War? Or are you looking for a different publisher there? We have not put the Crymor game and the Payday 3 games seen one package, so to say. We have talked to publishers separately about those games. We're continuously working on the Crymor game to find a home for that one. And I think the discussions there is going well. Who we're talking to in that sense, we're not going to disclose at this point. Yes. Okay. Just as well, a last one here. We saw in the latest DLC update here that you translated the game into Korean, obviously a large market. Could this be a strategy you want to pursue in the future, expanding with invasion market here with Tevye 3? Absolutely. I think we are reacting in the same way as the rest of the gaming market is reacting. This is a truly international business. And we have all seen the whole industry growing significantly over the last decades in the Asian region. And obviously, we do with Payday as well. So I think it's a natural development. You open up for more and more local directed content and adapt to the local markets. And again, I think this is why Koch Media is a great partner for us because they have presence on many of these markets as well and can really be a fantastic support for us. Perfect. Yes. Thank you so much for your answers, and that was all for me. Thank you. Thank you. Thank you. Have. We currently have no further questions. I will hand back to the speaker for any final remarks or questions via the webcast. This is Greg. Yes, I have one more e mail question here about the pace of communication on the game, I assume, is the question. Can we expect more information on a more frequent basis about the game. Well, the if the question was about the game, yes, it's going to be about the marketing teams for Payday 3 to really ensure that they do the best. They spend their money and the best way for that game. And usually these days, you don't speak too much about the game until you really start closing to the release. What we are doing constantly and trying to improve from Stavros' side here is communicating what we do, for example, with Payday 2 not exactly why we'll talk more about Payday 3. It's going to be up to those teams. From Starbee's perspective, we're working constantly trying to improve data about what we're doing and how we're doing it. So absolutely a big focus for me and the rest of the management team here to do in a frequent basis. We have one more question about the products per se. Any plans to introduce battle pass systems or things like that for Payday 3. Well, it really is too early to comment on exactly how Payday 3 will be repackaged and exactly when it will launch and so forth. Today, we've just announced that Record Media co publishing Vivo with Starbase. And now these teams will start working together here at our respective companies to established the best launch and the best strategy for Payday 3 forward on the market. So I think we'll have to come back to specific details about the game in the future. And I hope I have, with that, answered all the questions we got through the e mails as well. I thank you very much for your great interest this morning. What I can say to wrap this up. We have a really happy team here at Starbase today. And the people here who including myself part playing Payday 3 on a frequent basis. We are really excited about the time when we can finally then, in the future show you what we're up to. But for now, we're very happy with been able to start to work with our co publishing partner and secure the having announced that we have secured the publishing budget for 23. And tonight, we're going to do some celebration here at the office, I am sure, through video conferencing as you do these days. So with that, thank you all for your time, and I look forward to speaking to you all in the future.