Don't Nod 2019 Business Review: Ramp-up of Projects Under Development

Key insights

6 takeaways

01
DONTNOD Entertainment grew 2019 operating revenues to €18.0 million, an 18.6% increase driven by a 13% rise in publisher fees and a 4.8-fold surge in capitalized production to €4.1 million.See it on page 1
02
The studio is executing a strategic shift toward co-production and self-publishing to retain greater intellectual property rights for its future portfolio.See it on page 1
03
Royalties declined by 45.9% to €2.1 million in 2019, attributed to the natural lifecycle of VAMPYR and revenue recognition timing for Life is Strange 2.See it on page 1
04
The company is scaling its development pipeline with new projects including Tell Me Why and Twin Mirror, focusing on AA-budget adventure, action, and RPG titles.See it on page 2
05
Despite a controlled decline in operating EBITDA, the studio maintains a positive outlook for operating EBIT while navigating the transition to a more self-reliant business model.See it on page 1
06
DONTNOD implemented business continuity plans in early 2020 to mitigate the impact of the COVID-19 pandemic on its ongoing production productivity.See it on page 2

Summary

DONTNOD Entertainment’s 2019 business review highlights a strategic transition toward co-production and self-publishing, reflecting the studio’s long-term goal of retaining greater intellectual property rights. By shifting its financial reporting to combine revenues with capitalized production, the French independent studio demonstrates an accelerated investment in its development pipeline. Operating revenues reached €18.0 million in 2019, an 18.6% increase over the previous year, driven primarily by a 13% rise in publisher fees and a 4.8-fold increase in capitalized production, which reached €4.1 million.

This growth in development activity offsets a decline in royalties, which fell by 45.9% to €2.1 million due to the natural lifecycle of existing titles like VAMPYR and the timing of revenue recognition for Life is Strange 2. While the studio anticipates a controlled decline in operating EBITDA, it maintains a positive outlook for operating EBIT. The firm’s portfolio remains robust, bolstered by the critical success of Life is Strange 2 and the ongoing development of new projects, including Tell Me Why and Twin Mirror.

The studio’s operational scope covers the development of AA-budget adventure, action, and RPG titles for global distribution across PC and console platforms. Despite the onset of the COVID-19 pandemic in early 2020, DONTNOD implemented business continuity plans to maintain production productivity. Looking ahead, the studio is focused on the 2020 release schedule for its self-published and co-produced titles, alongside pre-production efforts for future projects. This strategic ramp-up underscores the studio's commitment to scaling its original content creation while navigating the evolving landscape of the global video game industry.