Dontnod Investor Presentation: December 2019

Key insights

6 takeaways

01
Dontnod reported a 66.8% revenue increase to €7.8 million in the first half of 2019, driven by the commercial performance of the Life is Strange and Vampyr franchises.See it on page 19
02
The studio is shifting toward co-production and self-publishing models to retain greater intellectual property control and secure higher royalty shares.See it on page 18
03
A strategic distribution agreement for the title Twin Mirror with the Epic Games Store secured an 88% revenue share for the studio.See it on page 13
04
Operational strategy relies on a virtuous cycle of back-catalog sales, episodic releases, and multi-platform accessibility to generate recurring revenue.See it on page 11
05
The studio maintains financial stability through video game tax credits and strategic partnerships with industry leaders including Microsoft, Square Enix, and Bandai Namco.See it on page 8
06
Future growth plans focus on capitalizing on subscription-based services like Xbox Game Pass and the convergence of interactive gaming with traditional media.See it on page 27

Summary

Dontnod Entertainment, a French video game studio founded in 2008, focuses on the development of immersive, narrative-driven intellectual property for PC and consoles. The company’s primary business objective is to scale its production of high-quality titles while maximizing value through a diversified revenue model that combines publisher fees, royalties, and direct-to-distributor agreements. By leveraging a strong pipeline of original content, the studio aims to capitalize on the growth of the global video game market, which reached an estimated $138.7 billion in 2019.

The studio’s financial performance demonstrates significant growth, with revenue increasing by 66.8% to €7.8 million in the first half of 2019 compared to the same period in 2018. This growth is driven by the commercial success of established franchises like Life is Strange and Vampyr, alongside a strategic shift toward co-production and self-publishing models. These models allow the studio to retain greater control over intellectual property and secure higher royalty shares, such as the 88% revenue share agreement established with the Epic Games Store for the title Twin Mirror.

Operational strategy centers on a virtuous cycle where back-catalog sales, episodic releases, and multi-platform accessibility drive recurring revenue. The studio maintains a robust financial structure, supported by video game tax credits and strategic partnerships with industry leaders including Microsoft, Square Enix, and Bandai Namco. Looking toward 2020 and beyond, the company is positioned to exploit emerging industry trends, such as the rise of subscription-based services like Xbox Game Pass and the blurring lines between interactive gaming and traditional media. With a solid pipeline of new releases and a focus on high-margin distribution channels, the studio continues to expand its international reach and creative footprint.