In a landmark deal for Australia’s gaming industry, PlaySide Studios (ASX: PLY) has been engaged for development work by global gaming giant 2K Games, creators of Grand Theft Auto, the NBA 2K series, Borderlands and many more.
2K Games is a label of Take-Two Interactive Software (NASDAQ: TTWO) which has a market cap of USD $21 billion and is widely known as one of the largest creative gaming companies in the world.
The collaboration comes in the form of a work-for-hire development agreement where PlaySide will produce work on a forthcoming major franchise in a deal the Company says is worth upwards of $10 million.
“This is an extremely pleasing outcome for PlaySide, representing the largest work for hire contract since listing. We are excited to be working with 2K Games, a label from one of the world’s largest Publishers, TakeTwo Interactive Software,” said PlaySide CEO, Gerry Sakkas.
“Our ability to secure this agreement with 2K Games underlines our position as Australia’s largest publicly listed game developer. We are looking forward to starting work on this project to demonstrate our capabilities in AAA game development on a franchise that we are extremely passionate about.”
The engagement follows a work-for-hire strategy that PlaySide has utilised to quickly become the largest video games developer on the ASX where its fixed price development contracts have been particularly popular with its client partners. While working on these development deals which provide stable revenue, PlaySide has continued to strengthen their in-house capabilities which can be transferred into their own games.
Work to be delivered to 2K Games is expected to take 23 months to complete with a further 12 months to be included post-launch of the unnamed gaming franchise.
This work will be completed in parallel with PlaySide’s own publishing team which has developed games in collaboration with studios such as Disney, Pixar, Warner Bros, and Nickelodeon.
While further financial details were not disclosed by PlaySide besides it being an “eight-figure (AUD)” deal, the revenue will likely eclipse the Company’s $10.8m generated in FY21 which represented a 55% increase on the previously year.
Alfred Chan is an Analyst at Emerald Financial, specialising in ASX-listed small cap companies.
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