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Hello. Welcome to this Q4 presentation with THQ Nordic. We have CEO and the founder, Lars Wingefors here to present, and I also believe we have some other interesting presenters with us here today. Quite a good quarter and especially interesting acquisitions. We have Warhorse Studios coming into the group, which is very exciting, I think. So we'll hear more about that and also go to a Q&A with all included here today. So without further ado, I'll leave it over to you, Lars. Please go ahead.
Thank you. Morning, everyone. I'm also excited, Oscar. So starting with the Q4 report, we had a stable quarter with revenues close to SEK 1.4 billion. That is up 441% from the numbers last year driven obviously by the acquisition earlier 2018 with Koch Media along the release of Darksiders III in the quarter. EBITDA was SEK 326 million compared to SEK 156 million last year. We have a new KPI that we are reporting that is operational EBIT that were SEK 194 million compared to SEK 106 million last year, and I'm coming back to that KPI in a minute. The EBIT was SEK 152 million compared to SEK 102 million last year. That's an increase of 49%. During the quarter, we released 11 titles and absolute biggest being Darksiders III that I'm happy to say it has recouped all development, including marketing during the quarter. And it's in the range of the management expectations but it's not exceeding currently, but we are still bringing out new content and we're looking forward to DLCs during 2019. During the quarter and last presentation, we announced 2 acquisitions, one being Coffee Stain, the Coffee Stain Group, the third leg under the business area Games; and the developer, Bugbear with the IP Wreckfest. We also made 2 IP acquisition, Carmageddon in December and Expeditions from Denmark in November. So coming back to the operational EBIT. It's a new alternative KPI. And I'm keen to fairly disclose this for you so you understand. The purpose is providing a fair picture on the underlying operational performance. The thing is that we are having local Swedish GAAP, K3, meaning that we are amortizing all our goodwill and we've decided to amortize acquisition-related goodwill, surplus values allocated to business areas. Currently, that is the Film business area and Partner Publishing business area and IP rights. That's the 3 areas we are excluding in this KPI. And we decided to make a straight equally 5 years [ amortization ] period of all this, meaning in the quarter, we had operational EBIT of SEK 194.4 million. We have IP rights amortization of SEK 4.3 million. We have surplus values of SEK 10.4 million, and furthermore, we have goodwill of SEK 27.6 million, mainly that comes from the acquisitions of Bugbear and Coffee Stain that we made in November. And that then becomes EBIT of SEK 152 million in the quarter. So the business, Games business area. In the quarter, THQ Nordic had sales of SEK 352 million, again, driven by the release of Darksiders III. We also had some minor releases such as 8 to Glory physically in North America. We had Jagged Alliance that unfortunately didn't hit my expectations. Sunset Overdrive, together with Microsoft on PC. And we have, from our friends here in Stockholm, another version, edition of The Hunter - Call of the Wild. In the business area Deep Silver, we had sales of SEK 187 million. To be fair, Deep Silver didn't have any significant release at all. They were all working and preparing for what's coming on this Friday, Metro, but they had a few minor releases such as Broken Sword on Switch, Bards Tale on PC, fireman game called the Emergency (sic) [ The Complete Emergency ] on PC, the Bridge Constructor Compilation on PS4; Let's Sing on Switch, PS4 and on the old classic Nintendo Wii, actually; and finally, Youtubers Life on PS4 and Xbox One. Also, the third leg had 6 weeks of revenues in the quarter. Coffee Stain, they did not have any releases. They're all coming 2019, so they had SEK 14 million in revenues. In the quarter, we had digital sales representing 41%. That is a bit lower than normal because of the release of Darksiders III. A game such as Darksiders III are having substantial physical revenue day 1, including the sizable Collector's Editions and various other editions we're bringing out. The new release percentage in the quarter in the business area was 58% of the SEK 553 million in revenues. And the owned titles represented 72% of this SEK 553 million. In the business area, Partner Publishing, we had a stable quarter. We had a range of notable releases, including: Farming Simulator 19 from our friends at Focus Home. We had Just Cause 4 by our friends at Square Enix, developed by our friends, Avalanche here in Stockholm. We had Football Manager, that is still a business on physical in Europe, especially in Germany from our friends at Sega and Sports Interactive. And finally, we -- as a notable release, we had Ride 3 from our dear friends in Milan, Italy at Milestone. Looking forward in this release, we have a similar, I would say, fair release list. It's including releases such as Kingdom Hearts III from Square Enix; Monster Energy Supercross 2 from Milestone. We have my own favorite game, Dirt Rally coming end of February from Codemasters. We're having Tropico 6 from another great German company called Kalypso. And we have Dead or Alive 6 from our friends in Japan, Koei, along with many more titles, I would say. So looking to the cash flow. As you remember, last quarter, we had SEK 744 million in negative operating cash flow. This quarter, we had SEK 455 million positive. So the cash flow after the working capital obviously from investing activities was minus SEK 746 million, mainly driven by the acquisitions of Coffee Stain and Bugbear. Depreciations and amortizations and investments. So looking at the depreciations in the quarter, we depreciated SEK 96 million in game development. And we're having the same model, as you remember, in the group, being 1/3 the first quarter, 1/3 remaining 9 months and 1/3 the second year. So 2/3 of all our game development is amortized the first year. Then we had other intangible assets, I would say, is mainly Films, SEK 30 million in the quarter. And then again, having this acquisition-related amortizations, IP rights, surplus values and goodwill that I was mentioning over -- under the operational EBIT KPI. Investments in the quarter, we had external game development investments of SEK 167 million. And as you can see, the KPI of how many products we have in the pipeline for the future is now a record 77 upcoming products. The internal capitalized developments was SEK 106 million in the quarter. Investments in other intangible assets, I would say mainly films, was SEK 30 million and IP rights was SEK 10.6 million. And then finally, the finalized and completed game development, moving the ongoing development that we are balancing and capitalizing every quarter to a finished product and start amortization, that KPI was SEK 162 million in the quarter. So looking at the balance sheet. We got SEK 3.3 billion in intangible assets so I want to give you some color on that. So the finished completed games that we are amortizing is SEK 258 million. The ongoing game development projects is SEK 1.667 billion. Other intangible assets, mainly films, is SEK 152 million. IP rights in the balance sheet is SEK 70 million. The surplus values is SEK 151 million that all originates from the Koch Media acquisition. And then we have goodwill, mainly audience from Coffee Stain and Bugbear of a little bit more than SEK 1 billion. So that's our intangible assets. Cash at bank, we had SEK 922 million end of Q4. And including credit lines, we had a total available liquidity of SEK 2.216 billion end of the quarter. So acquisitions, as mentioned, we had Coffee Stain. I have Anton here in the room today and I'm really happy to have Anton, Tim and all the other in the team joining the group. I'm, I would say, overly positive about having them in the group. I'm having a great daily relationship and I'm surprised by their very ambitious cherry-picking agenda of new upcoming products. I'm really looking forward to the release -- the Satisfactory release during 2019. Just a few weeks ago, they released Goat Simulator on -- digitally on Nintendo Switch. I hope that our friends at Koch Media could help us bring that out physically later in the year. I'm sure they will do that. Also happy to see that our fantastic product, Deep Rock Galactic that we are publishing from our friends in Copenhagen are still performing very well and continue to perform very well. And I'm also looking forward to the full release sometime later in the year. Then we have our Finnish friends. They are working very hard to make a console release later 2019. And I think the whole team is very excited to be part of the group now and we are adding more resources into the development. I would say regarding acquisitions, that's something I really -- I like to do a lot. And we have still a long list to do for a number of -- good number of years to come. There is competition out there. There is a lot of Chinese friends, American friends that are also visiting the places I'm visiting. But I could see that many people enjoy -- could imagine to become part of our group. But this a bit differently from others and to let really the local management and entrepreneurs continue running their business and really empowering the management, Klemens, Anton and many others to make their own decisions. Obviously, I'm speaking, together with my colleagues in Karlstad, with this management daily. I don't know how many times a day I speak to Klemens, sometimes feels like 10, 15x. But obviously, it depends on what day it is, but yes, we're having a good time in the group. So stay tuned. So pipeline, as mentioned, we have 77 projects. I think that KPI is up from 55 last quarter. Obviously, Coffee Stain added a bit, but we also signed a few good titles in the quarter that are to be announced. So we have 48 unannounced products to be announced in the future. Just to mention a few here, we have our biggest investment so far ever to be released on Friday this week, Metro Exodus. And from what I understand, we will see the criticals coming today and tomorrow. Then we're having -- our friends at Coffee Stain having a top-secret projects here in Stockholm that are to be announced sometime in the future. I'm really excited about that one. We're having Monster Jam. I would say a fantastic license made by our team, Rainbow Studios in Phoenix, that will be brought out this year. Wreckfest, console, Biomutant from our dear friends and colleagues in Stockholm. Dead Island 2, Satisfactory I mentioned. We have Volition ongoing. As mentioned, we're having a new general manager at Volition, Mike Kulas, that is also the company founder of Volition, 1996. He rejoined the company just a few weeks ago. He was actually leaving the business when THQ Inc., the previous THQ, acquired the business in 2011. Really happy to have Mike back on track at Volition. He's a great entrepreneur, I think. We're having Desperados 3 coming out sometime in the future. Generation Zero, again, from our friends at [indiscernible] at Avalanche in the end of this quarter. Shenmue, developed in Tokyo, coming later 2019. As mentioned, we have Deep Rock Galactic from our friends in Copenhagen. We're having our first expansion at SpellForce coming later this spring. And finally on this slide, we got, as many fans have requested, that to play Darksiders on Switch and we are starting out with bringing the first Darksiders out on Switch, both digitally and physically soon. So that is the Q4 presentation. I'm now really excited to welcome Martin Fryvaldsky up on stage. Martin is -- thank you, Martin.
Thank you.
Martin is CEO of Warhorse and one of the founders, anyway, and I got to know you...
Kind of.
Kind of, you've been there for a long time.
Yes.
And Martin will obviously tell you who you are and about a little bit more about the business. I will tell you a bit more about the transaction before Martin is starting. So Warhorse, we acquired 6:30 this morning. 1 year ago, we acquired Koch Media. And the day before that, they published Warhorse Kingdom Come: Deliverance. And I have to be honest, that was a surprise -- not a big surprise but the game has exceeded, I think, everyone's expectations during now, the first year.
Even our expectations.
So last night, you actually were in Prague at the 1 year's party, anniversary party, celebrating the 1-year anniversary of the release. So the deal, starting with the numbers. We paid a purchase price of EUR 42.8 million, whereof cash was EUR 40.4 million and THQ Nordic B shares to the founders under lockup of EUR 2.4 million. Because of the success, they have a sizable cash position so the net cash was -- enterprise value becomes EUR 33.2 million. And I'm really happy to say that the management obviously stays on board, and I feel we have a good discussions how to run the business, how we can develop the studio going forward. And we have given you -- we discussed a lot about creative freedom and how important it is actually to continue making these fantastic products. The team will commence working on the next large unannounced project during second half of the year. They're currently busy or bringing out deals in content. Martin will come back to that in a minute. We are looking to invest into the studio to grow the headcounts, currently 120. We are approximately, sometime in the future, talking about 160 people. The financial performance of the studio has been great during 2018, obviously driven by the release. EUR 42 million in revenues and EUR 28 million in EBIT. It's an impressive number. The game is still performing well. Obviously, the big chunk or a good chunk of revenues comes from the first release in quarter. But I'm really happy to see that the game is still performing very well on various digital platforms. And you can see some numbers on Steam, how many we have sold during each quarter. I'm really impressed and happy to have you on board, Martin, together with the other founders, so I will like to leave the word over to you to tell a bit about the studio and yourself.
Thank you, and also thank you for having us here. It's really a great honor to become part of this group. As you might have known or noticed, this company was founded a long time ago in 2011 by 2 founders. But besides that, there was an investor from nongaming industry, and therefore, it's actually very important that we are becoming part of people who are fully committed to gaming. So it's really an interesting opportunity for us and we are looking forward. So Lars introduced already myself, so maybe let me introduce 2 other key people, 2 other founders, which is Daniel Vávra and Martin KlĂma. Daniel Vávra is, I would say, enfant terrible of the gaming industry, a stubborn person. And thanks to his stubbornness, we have a great product because great products typically, you can't produce without certain level of stubbornness. And Martin KlĂma, he is executive producer. He is founder of Altar Studio (sic) [ Altar Interactive ] in the Czech Republic, was very active in -- or still have been very active in the industry since 1997. So old, like very experienced person as well. Daniel Vávra, I didn't mention, is director of acclaimed game, Mafia I and Mafia II. He has nothing to do with Mafia III, but Mafia I and Mafia II. Mafia I especially is his baby as Kingdom Come is definitely his baby. As Lars already said, we have 120 people currently leasing in an office originally built for 75 people. So our expected growth, 160 people, will require some moving into new offices, which are already well underway. So we are moving -- yes, we are moving in summer. So we are growing. Maybe let's go on the next slide. This is an interesting thing, I guess. The studio was founded in 2011 with only 12 people. And the beginning of the studio was actually quite bumpy indeed. As I said, we had the stubborn founders who wanted to present or to make a game which is really unique. So we were pitching this game or at that time, they were pitching this game to publishers and very often heard, realistic, no miracles, no wizards. We want to have wizards. We didn't want to have them. We didn't have to have a single player. Single player is dead, et cetera, et cetera. So at certain point of time, the situation was so -- was right, either these 2 founders or kind of the general wisdom or not general wisdom but the publisher's wisdom, and we approached our investor who actually backed this project 100% financially and asked him to test it through the Kickstarter. We knew from the very beginning that producing a AAA game cannot be done with sources from Kickstarter only because it requires typically much more millions than you typically can get from crowdfunding. But let the people vote with their wallets. This is what we -- this is how we approached the Kickstarter because once you ask the people on the street, "Do you like this game? Would you like to buy this game?" They will say, "Oh, go. Yes, sure. Yes, but don't bother me anymore." But once someone votes with say, $35, $50 and is willing to wait a few more years, that's a vote. So we convinced our investor to go to Kickstarter and the original idea was to ask for $500,000, GBP 300,000 at that time. And the agreement we had with our investor was provided we get this, he will finance it because he's, as I said, he is not from this industry. So he said, "Fine. Let's rely on the general wisdom, not on the publisher's wisdom but the general wisdom of the people." And voila, what happened, this was in 2014 and we become the third largest project on Kickstarter in U.S. ever in 2014, actually not ever but in 2014. And we were voted by Kickstarter as one of the top 10 most innovative companies in U.S. So it was like, wow. So we are now, among publishers, but let me say one thing. At that time, we switched our strategy instead approaching publishers and kind of begging for money as this typically happens to small studios. We were quite well financed so we decided to stop this talking to publishers. We wanted to develop the beta versions and to bring our smaller baby to a little bit bigger baby and then present it to publishers again. And this is how our cooperation with Koch Media later started. After we finished beta version, we made a deal or signed a co-publishing -- exclusive co-publishing deal with Koch Media, and therefore, all the negotiations in the last 2, 3 weeks were much easier because we were talking to people whom we known very well. They have known us very well. So it was really like very nice acquisitions and very nice cooperation. And actually, one of the questions we have got from our original shareholder was, "Do you like -- do you want to be with these people? Because if you say, no, I'm not selling." And we said, "Yes, we want to be with Koch Media because we like them. They helped us a lot. And we think that together with them, we can do much more in the future." And then the rest is already kind of history. Last year, we released the game. Even before released, we were voted Best of E3 in 2017, 6 months before release. We won a game -- Gamescom award in -- at Gamescom 2017 and the most interesting, very fresh thing is that we have been nominated for Game of the Year on Steam. Steam is indeed a kind of paradigm for digital, so far for PC digital distribution, and we finished on a second place. I forgot one thing, this is this external funding. After our success with Kickstarter in 2014, we just -- we thought, "Let's continue with crowdfunding. Let's do this on our own web page." So here, we have 35,000 backers who support -- 35,000 backers who supported us on a Kickstarter. We keep going on our own web page. And through our own web page, we crowdfunded another EUR 3 million and got 75,000 backers, which is a great community, big supporters, big supporting group, and this helped us very much in -- later on in marketing. We actually although we have -- we now are kind of AAA game, the marketing budget at the very beginning was indeed very nice but still was not like Call of Duty kind of marketing and the 70,000 people was super great help. Maybe let's go on next slide. Yes, a few numbers. Well, quote, no need to repeat them. I would like to point out a few numbers from this. We are -- we have a very large portion of digital sales, which is I'm very proud for this that although the industry as far as I know the industry, the numbers are not always super exact. But it's like 25% -- it's evolving but it's like 25%.
I still like physical more.
You like physical. Okay, sorry. So let's skip this slide then. Well, we...
I like both.
We like the digital, we like the digital. Maybe that's because we kept the digital rights for PC. So therefore, we loved it a little bit more. But I think digital distribution is evolving. And well, we certainly can expect a lot of changes in coming years, which will help the developers flesh, once the developers is part of the bigger group, the group to keep a bigger margin indeed there is -- and I am always -- I'm strongly convinced that the last -- the largest portion of the margin should stay with who are creating the content or the -- because this is the kind of the heavy asset of this business, this content, these IP rights. And that's what's happening now on the market is exactly is this that it's coming back to content creators. Therefore, we like it. And we have a 75 -- 72% digital distribution. Another very important information, which is -- which I would like to share with you is the fact that we are -- the Kingdom Come is very console-ish kind of game. Typically, these smaller projects or projects which one started as small projects are, in the first edition, a kind of PC project, PC game. And then only afterwards, once you do another project, you become a little bit like more console-ish thing. This thing happened to be very console-ish from the very beginning. And that's a great thing because indeed, consoles market, it's like buying -- playing game on console, it's like buying BMW or Mercedes. So we are very happy that we have a very strong portion of console sales.
And you're bringing out some new content as well, aren't you?
Yes. There are one more DLC coming sometimes in -- sometime here. This will be the last DLC.
Great, Martin. And I would like to say that you have 2 company founders that are creative and really managing the development, but also you joined the company. I think the 3 of you make this very strong. You are really managing the company very well, and I'm really looking forward to working with you for many, many years to come.
Thank you. Same on our end.
So thank you, Martin. There is some more financial data in the end of the presentation here. Worth mentioning is the excess of purchase price over book value, meaning what will be amortized during equally 5 years is EUR 22.7 million. The business and the games is still performing well and we expect it to do so for many years. So well, I don't like to give forecast so I'm stopping that sentence there. But thank you very much, Martin.
Thank you.
So 30 minutes later this morning at 7:00, we announced another acquisition, 18POINT2, a leading Australian partner publisher. And I would like to welcome Klemens Kreitzer -- sorry, it was a late night. Klemens Kundratitz, the CEO of Koch Media, up onstage. Sorry. So unfortunately, we don't have our friends from Australia here in Stockholm this morning. It's a bit of distance. But Klemens will tell you all about the business. I just tell you a bit about the deal. So the enterprise value we paid is EUR 1.9 million. The purchase price was EUR 2.4 million, whereof cash was EUR 1.2 million and shares during lockup -- under lockup is EUR 1.2 million given to the founders that will remain with the company. And then they have a further earn-out potential up to EUR 400,000. Looking at the numbers for last year, the operating income revenues for full 2018 was EUR 15.6 million with EBIT of EUR 2.3 million. So that's the business and that's the transaction we're doing. So Klemens, the word is yours.
Thank you for using an Austrian to present an Australian business. Further, I will do my best. We have been operating in Australia through partners for many, many years. We have used a range of Australian companies, and we have gathered, over time, experience and got closer to the market. And we have looked around how to make this market more strategic for the group. And I'm glad that we found a deal with 18POINT2 being a leading Australian operator in the field of local publishing. This will not only benefit our own IPs and our own portfolio of products going forward but also our partners that we work with on a long-term basis because we can now offer them, not only the service and the attention that they know about Koch Media in many European countries, we now can offer that also in Down Under. And I think that is a real value internally as well as for our partner business. At the same time, in a market like Australia, there is a lot of development talent that -- and there is no local publisher present on the market. And we believe that having a foothold there locally will unlock opportunities for us as a group to engage with Australian developments and bring them onto -- and publish them on a global scale. So the first step in that direction has already been made. We have signed a development project sometime ago but it will be announced later. Also, I would say, it is a natural extension of our activities as Koch Media in our existing markets, we have local offices, and these local offices, they do a very strong job for our partners and for our own IPs to be present and at the market to be talking directly to the gamers in the market, social communities, events, marketing, PR. So everything that we are doing in these markets, we are now doing in a new and very interesting market. The Australian market is very similar in size and in its player base to our European markets, so it's a natural extension of what we know and what we are strong at. And combining the existing products that our friends at 18POINT2 and now Koch Media Australia have with our pipeline will obviously make that company a leading -- a clearly leading player in Australia. So if we just turn to the people, the company is headed up by Roger Clarke. He used to run Warner Bros. Australia. And over the last 2.5 years, he has built 18POINT2 to a local publishing operator. Together with his team, Cahn Hewitt is his CFO and an experienced team of strong publishing staff. We are a licensed partner for Sony and Nintendo and can manufacture stock locally. We are -- we worked for many years there with leading companies like Warner, Techland, Milestone but many others. And we have full access to the Australian as well as New Zealand markets. So the -- both the opportunities, digital as well as physical opportunities in Australia, we can fully exploit with our local team. When we look at the position of 18POINT2 on the market, this is a ranking of publishers and distributors for physical software in Australia. According to official data, we are -- we have been ranking #6 in the first half of last year. And above us, obviously a lot of global publishing -- publishers. But as a distributor, we are clearly -- as a physical operator, we are clearly #1 there and that position will only increase. And just to remind you, we have these companies with no names over here that represents our European local publishing entities. And we are just adding Australia now into the mix here. Last but not least, it's noteworthy to say that the market -- the Australian market is in a very robust position. There is a growing console base there. So overall, I think it's fair to assume that the market will only grow from the current base.
Thank you, Klemens. I think the manufacturing you're mentioning is Sony and Microsoft, not Nintendo.
Sony and Microsoft.
Okay. Thank you very much. That is for today's presentation. I could imagine that Oscar has a few questions or...
As always, as always. Yes. So I think we'll start with a few questions from me and then also later leave it over to the floor and to the telephone call as well. So first of all, let's talk a little bit about the quarter that has passed. Obviously, Darksiders III being perhaps the key release of the quarter, if not the year for THQ Nordic. I mean, personally, how satisfied are you with the release? Do you expect a slightly better reception?
I don't like the word satisfied or [ need, ] really. But we had expectations and I think we have given a game to the fans that many of them like and I'm proud of it. They made a really good game account for our games together with my team in Vienna. Unfortunately, the game was brought out in a very, very busy season. The competition was really intense in the middle of Q4. So I think that has kind of made it harder to overachieve on the expectations. Metacritic was hammered by some bugs and early issues. That is, I would say, mainly fixed now. Then Darksiders is Darksiders. It's a hell of a game. It's hard to play. It's not Fortnite or Mario. If you play it on hard, it's a real challenge. And if you're not up for it, the fans could dislike it. But if you're up for such a challenge, you really enjoy it. On Metacritic user reviews, we can see a positive 7.5. On Metacritic, unfortunately, it's just 68. Perhaps it will be different if it was out today but that's the rules of the industry. You bring out a finished product bug-free, then you get good reviews if it's a good game. If not, you get hammered. So well, it's okay and Darksiders will continue to sell for many, many years to come, especially this year, we bring out new content on DLC. So stay tuned, yes.
Yes. And you mentioned in the report, I think, DLCs, further DLCs coming out during the year. Can you say something perhaps about how much of the total sales do you think may have come in Q4 and what do you expect for '19?
I understand you'd love to have that number, Oscar. Unfortunately, I can't have that guidance. But I would say we would have -- we would have a notable revenue also 2019. DLCs will sell but most importantly, normally, we bring out DLC program, you can -- in the end of the period, make a game of the year edition with all that content, and then you can bring out a new physical SKU, a new digital SKU that will add more revenues. We will also, on digital channels, console as PC and digital channels get the visibility on the storefront that will really help the sales. And obviously, this was a $59.99 product. I think when this is discounted in promotions, it will hopefully sell good numbers during the year and in the coming years at a lower price.
And final question on Darksiders III just to get that over with. What are your plans for the IP going forward? Should we expect a Darksiders IV?
Darksiders is one of our main IPs at THQ Nordic, and it's one of our first acquisitions that really helped build the business. I have a deep love for Darksiders and the team around it. I'm sure we could please fans in the future with something. We're starting out with Darksiders on Switch and let's see what happens after that.
Yes, fair enough. And going over to Partner Publishing, another strong quarter in Q4, I would say, on top line despite, I would say, 1 or 2 slightly weak releases, at least reception-wise. Can you shed some light on what drove revenues in Q4?
Partner Publishing is just a wide range of products. As I mentioned, 4 big titles here and that is obviously driving the revenues, but normally, it's hundreds of products we're bringing out to the market. And in the respect of our partners, I don't want to comment on their business on the individual titles. So I preferably say if I have a stable release list, kind of.
And just a final question on earnings as well. Is it possible to say something about the profitability between segments? Obviously, high volumes in Partner Publishing, for example.
Partner Publishing is a stable business, that is on a yearly basis, profitable. I think 2018 has been a good year, a stable year for them. Deep Silver had, as you could see, SEK 187 million. Compared to other quarters, it's not amazing revenue but they didn't really have any releases. Profit-wise, we've decided to just disclose one EBIT for the group. It's not only because I don't like to disclose a lot of numbers, but there's also a lot of functions or group functions, especially Koch Media is 1 company, it's not 3 companies. And on the base of that, you're ending up in a discussion of where you allocate costs and rather not doing that, it's one EBIT for the group.
And I think we saw with the acquisition of 18POINT2, the profitability of that Partner Publishing business has been on a similar level, like [ 50% ] in 2018 or slightly lower price?
I think Roger had a good year in Australia. I'm sure he will have many more good years but I don't want to comment on his profit margins.
Great. And then moving on to, I think, what everyone is really excited about this week as well, more exciting stuff. Metro Exodus released on Friday. I think the first review is now out with 90 out of 100, a good start. What sort of reception review-wise would you be happy with?
Oscar, let's wait until the end of the day.
Fair enough. But what do you think is the game's strength and weaknesses in terms of, yes, reception and reviews obviously?
Let's wait, Oscar. It's just a few hours ahead us, I think the market will make the...
Okay, yes. But the big news leading up to the release has been the switch from Steam to Epic Games Store as the new platform, a bit of a risk perhaps, both pros and cons. And clearly, content is really king now with a lot of companies fighting for good content. What do you expect just, I mean, logically? I guess volumes should be lower, given that it's a new platform? Or on the other hand, you'll get the higher share of revenues. Is that a fair assumption?
Obviously, the agreement between Epic and us, I can't go into the details because it's a confidential business agreement. But -- so I can't comment on the Metro Exodus terms even though you love to have them as an analyst. In general, I could say that the business is changing, the industry is changing. There is new platform. There is new technologies coming to the market. That will change business models. From only physical to only partly full game download, this will change to subscription and to other business models. And we're getting paid differently. And obviously, as a group, we have always been keen to support new initiatives to reach consumers. And potentially when new big players are entering, they are willing to invest to get a market position. That could include people paying differently than we have been having on -- in the history. And I'm expecting that to continue this year and the coming years. There is new players, as mentioned already publicly, such as Google and others that are coming with new platforms and tech. So I think it's -- it's a very interesting industry at the moment. And Metro Exodus, Epic Games, yes, that's -- I think it's a sign of that exciting moment in the industry. I'm -- I have all the respect for fans for all our products. And I know a lot of fans are -- love to play it on their own platforms, so this has not been an easy call that Koch Media and together with me made on this. But now it's coming out on Friday.
Very good. And I mean, it seems, of course, it's a risk-reward decision. But I guess, the conclusion is that you feel content with the reward compared to the risk.
I can't comment on the terms. I think in general, we're embracing that we, as a content holder, could keep a higher percentage. The general business terms is that 30% of the revenue goes to the platform holder. If there is a platform saying, we can distribute your games to the audience for a lower percentage, we're obviously very interested to embrace that company.
And looking a bit into 2019, which I think we have to do. One thing I notice is that the Partner Publishing pipeline looks quite strong here in -- also in Q1 2019 with a lot of big releases. Do you expect another strong quarter volumes-wise?
I haven't used the word strong. That's your word, Oscar. I used stable and similar. I think Q1 has a similar release list as Q4.
And in general, the feeling for 2019? I guess some details have been discussed with the pipeline for perhaps the second half of the year as well. Are you comfortable with the release list compared to 2018?
Well, in general, we have 77 game projects. Many is announced already that is coming out this year but we have a good number or a notable number or a few titles not announced that is also coming out 2019, both within our own business segments, but also obviously, notable releases in the Partner Publishing business area. So we're still early in the year, there is many trade shows. I'm really looking forward to hopefully the most busy GDC in San Francisco ever in March. E3, Gamescom, Tokyo Game Show. So stay tuned.
And the Games segment also specifically. So far, the big releases that are announced for 2019 are mostly games that have been announced quite a few months ago or have been delayed to 2019. So I guess, there should be a number of larger -- medium to larger titles also coming out and being announced soon.
Well, that's our business to constantly make the best use of our communication methods, trade shows, the teams using various occasions to communicate new announcements of products. But as stated last year, I'm sending the message to all our teams that quality is key. We need to release products that are to the expectations of our fans, that are as good as possible in day 1. So that is obviously something you are working in the end, mid-end of the development to make sure you have the quality, the polishing, and we need to give the time to the developments team to polish the products. And sometimes, it takes a long time to do that.
And then I have a few questions on Warhorse, which I think is a very interesting acquisition and interesting company. So perhaps we could have Martin up on stage again, if that's possible.
Martin is very welcome to answer questions for as long it's not too much financial questions, then I will have them, Oscar.
Never, never. So first of all, a few questions to you, Lars, about Warhorse, just to clear some details. I suppose that it will be a separate leg in the group. Is that correct? It will be under one of the...
It will be consolidated in the Koch Media group.
Okay. And then I mean, there's been some confusion, I think, in the quarter regarding the name of the group and the name of THQ Nordic segment EBIT. How are you progressing on the name change for the group?
Now I think changing a name is a thing that I announced last year. And I think now is the time, yes. So sooner rather than later, I would say that process are taking place. So I would expect myself and our team working on this to have something sooner rather than later. Obviously, it's just a name, but I think the confusion that we recently past weeks has been having between the THQ Nordic publishing entity in Vienna and the mother company is a bit confusing to the market. So obviously now is the time to change this.
Great. Over to Martin then regarding Warhorse. First of all, what are your plans for 2019? You mentioned 1 DLC coming out quite soon. Should we also expect a game of the year edition, perhaps?
Well, the only officially announced is DLC 4 so I can't comment on the other products. But obviously, this is a 120-heads team so we would be -- and we will be working and we already are working on a yet unannounced project. It will take some time indeed to deliver this project. But yes, we -- so for 2019, it's DLC 4 as the kind of key thing. This will be actually quite large DLC so.
We would give them a long time to make -- whatever they make in the future, they will get the time and creative freedom.
So typically, a single-player game of this nature, it takes about 18,000 to 20,000 man-months to produce it so it's -- all our projects are long-term project.
We don't need to mention a number in years today.
Definitely, it depends on the size of the team.
It's a lot of months of I'll do some counting when I get back. But can you say something about whether this is an entirely new IP or if it's a sequel?
We will use the strength of the studio. Sorry, no, no, no, I wouldn't say that.
But more generally, would you consider yourself as an RPG-only studio? I mean that's your expertise, obviously.
This is what we love. This is Mafia I from Daniel Vávra, was an RPG -- this is an RPG so this is something which we think we are good in. So I think it's once I can...
You are fantastic.
Thank you.
What do you think has been a key for success for Kingdom Come specifically because it's been become almost like a cult classic among RPG fans?
Well, I think that saying that saying that something is different, it's like a little bit -- but it is, it actually was and is a different project. It's -- there is nothing like that on the market, so that was the key selling points. Realism, that's a very unique thing. Our combat system is also a very unique thing, realistic combat system. Actually, we have released, together with our last DLC, a movie about how we done our combat system. So it's a 1-hour movie with [ stunts ] who taught us how to do the combat. And we kind of took their combat or the historical -- the realistic historical combat into the game. So I would be happy if you watch this. And it's a really interesting experience how we were kind of transferring the 400- or 500-years-old kind of combat systems into the game. So combat realism, that's the key selling points.
And I guess it is quite a hard game so initially, quite a few struggled, perhaps. But I mean now the ratings are very good. How much have you worked on improving it during the year? And how many people have you used for that? Is that the -- most of the studio or...
Well, that was most of the studio and our strategy was that we would like to kind of set a new IP, new franchise. And you cannot do it with a buggy game. So provided, we were thinking about something like, okay, so let's do DLC, let's do -- let's let people believe that we are good in this. So you cannot left the footprint behind you, which is like these people are producing something which is buggy or not perfect. So it's a strategic consideration of whether -- some people or some of the studios release the game and just let it fly and then they jump on something else. It's actually materially and financially can eventually even work. But we didn't want this. We wanted to polish it, spend as many months on the polishing of the game, adding some new content as possible to convince gamers that it was worth investing or worth buying this game and please them with additional content and by producing additional content, support original game. In fact, we are selling -- any time we release a new DLC, it supports greatly the sales of the main game. So we still are selling the main game although it's a year's old project, 1-year-old product now. And in the gaming industry, having a 1-year-old game, it's like watching a 10 years movie, old movie. So that's...
I like old games, Martin, as well.
Yes. So again, [ so on box. ] And so this is -- yes, this is what we -- how we approach the development process and our new marketing and sales strategy.
Okay. And then just a final question before leaving over to the floor. So finally, Martin, what did you see as the main benefit joining the group as opposed to another company or investor?
Well, there certainly is a lot of competency we didn't have -- or we don't have and we didn't have before and don't have as yet, which is indeed marketing and sales competence. And there's also a tech competence and production competence on the Koch/THQ side. So there is a -- there are a lot of areas where we can find cooperation, I'm absolutely sure. And so -- and we will be identifying these opportunities as we speak. I think we signed at 6:30 today so I think we are starting, like during lunch, they're working on these things. So there's a lot of things we can do together.
I think hopefully, personally, we are sharing a lot of the same ambitions. And...
Absolutely.
I have a great trust for you. And obviously, you're working on a daily basis with Klemens and his team in Munich as well a lot. But you have also been to Värmland, so there is a lot of transferring between the countries. All right. So I think we're ready for a few questions from the floor.
Pierre Mellstrom here from Handelsbanken. How long does it, in general, take to port a game to the Nintendo Switch?
Depends how many you are. If you're -- some products we're having is just 1 person and it takes 1 year, 2 years, 6 months. If you have a porting team that is used to it, it normally takes up to 3 to 6 months.
Okay. And just a question, is Biomutant still on track for this summer?
Biomutant is done when it's done. And I'm just keen, whenever we're bringing that product out, that is now summer 2019. But if it comes summer '19 and with a specific release date, I'm just keen that it's polished to the quality of the expectations of the market.
One last question. On Metro Exodus, given the Epic Games deal and that it was 1 day available on Steam or if you preorder, you could buy on Steam, and now also with the sort of previews or reviews you're getting, would you say the uncertainty is lower ahead of the Metro Exodus release compared to how you normally see it ahead of a release?
No. It's a good question, Pierre. I'm -- I would like to say that let's wait for the release on Friday.
Can I just clear up a point -- sorry, Ken Rumph from Jefferies. For Martin, my arithmetic was 20,000 hours divided by 160 people in 12 months is 10 years, which sounded like longer than you were thinking when you -- did I get the wrong number? Or am I -- is my arithmetic poor?
I think you got high ambitions. And I'm supporting your high ambitions so don't expect the next unannounced project soon. I will let them take the time it takes to make ambitious project.
Cool, okay. If I could ask then a more general question. Looks like we're having the next -- maybe the last -- maybe without a hard disk, despite your love of physical generation of consoles next year, 2020. Does that affect how you think about scheduling some releases, whether you think, okay, we're going to do an exclusive deal with a platform or we're going to wait for the new year?
That is obviously something we're managing within the group, how to manage the console cycles and how you do it in the end of the current generation and how you're entering a new generation with a potential new generation. And I think that you all need to wait and see if there is a new generation and how that will look.
Okay. And regarding take rates, Steam, Epic Discord and so on, are there any games that we should think from a Steam point of view -- and obviously, Steam has a strong position, lots of people have Steam accounts, it's going to be quite sticky. Are there notable games that are going to pass the kind of $10 million, $50 million thresholds, assuming Steam doesn't move its prices again and kind of get into the 25%, 20% take rates?
Obviously, I can't disclose this, Ken. Our budgets on specific platforms in the future. I'm always welcoming lower percentages and more share to us as content creators that we can bring into the development teams that could make greater products.
Okay. Final question on that. Is there a likelihood of either bigger price differentiation for PC versus console or are the console platforms also coming under pressure to change the take rates?
I think that is a very interesting question and I think no one knows. No one knows for platforms that will be in 5 years. No one knows exactly how the business model will look like. I just know that as a content owner, IP owner, we are well positioned in the market to capitalize on this. Any further questions from the floor? Otherwise, let's check the telephone.
[Operator Instructions] Our first question comes from the line of Predrag Savinovic of Nordea.
I have a couple of follow-ups on the Metro deal and with Epic. So similar reception you've gotten from the move to separate with Metro. Some credit is good for competition and [ 2 ] large profits for Steam, especially on the developer side, and even Take-Two said something on this yesterday. But can this have any effect on the long term for you to have been -- can be regarded and both from players in terms of sales and with the value proposition you have towards developers, both good and bad? And also, is it safe to assume that you get some kind of one-off for this deal? And the same question then goes for the Coffee Stain where you made a financial forecast, predominantly on IPs there yet to be released and also to be released from Epic exclusively.
Thank you, Predrag. I think we have a hard time hearing you on the line. I'm sorry, I have to say it again, I can't give you the financial forecast or tell you anything about agreements between Epic and Koch Media. You're right, we made a financial forecast of Coffee Stain Group for the next coming financial year. That was what we did. And we didn't confirm any linking of that to anything else, such as Epic or Satisfactory. We just confirmed the financial forecast.
Can I ask something on the [indiscernible] and Origin Premier Access, where you've made a deal and how that deal is structured? I mean do you get a recurring subscription fee or depending on the amount of people who play it or is it also one-off there to get it -- to be available on their platform?
I'm very sorry, Predrag, but the line is so bad, so I can't really hear you. I think you, Predrag, and all of you are very welcome to e-mail us, and we will try to answer any questions regarding -- any questions you have on the report. Thank you.
Okay. That seems...
[Operator Instructions] And there are no further questions from the conference line.
Okay. So I think that's it from the floor and from me actually, so I'll leave it over to you if you want to conclude.
No. Thank you very much for letting us have -- being here at Carnegie. And yes, thank you.