Keywords Studios, the international technical services provider to the global video games industry, today announces the acquisition of Kite Team s.l. together with its wholly owned subsidiary, Kite Team Mex S. de R.L. de C.V. (“Kite Team”). With audio recording and localisation studios in a modern facility in Madrid and with a new audio and localisation facility in Mexico City, Kite Team is rapidly becoming a leader in games localisation and audio recording for both Iberian and Latin American Spanish.
Keywords is acquiring 50% of Kite Team immediately with the remaining 50% to be acquired subject to certain conditions with effect from 31st December 2017.
The acquisition is in line with Keywords Studios’ strategy of growing both organically and by acquisition to extend the Group’s client base, market penetration or service lines, where the Group can use its existing expertise, multi-service platform, scale and global reach to generate synergies.
Kite Team has a blue chip client base of global video game publishers and developers and it has also established a relationship with Binari Sonori, part of the Keywords group. Keywords will now move its Spanish and Latin American audio recording to Kite Team from previous regional partners.
Under the terms of the acquisition, which is expected to be earnings enhancing in the next full financial year, Keywords will pay vendors initial consideration of €0.5m in cash, with deferred consideration of up to €1.8m to be satisfied by a mix of cash and Keywords shares.
Trading and Market Update
Trading for the first half of the year has been in line with management’s expectations with the games market, particularly in the console games segment, returning to more normal trading patterns (as expected) following the refresh of the console hardware market led by the launch of the PlayStation 4 and Xbox One in November 2013. The seasonal ramp up in activity, particularly in audio and testing services, started in May and is well underway in all of the Group’s facilities. Recent acquisitions are performing well and Lakshya, the art outsourcing business acquired in October 2014, is performing very strongly and meeting its demanding organic growth targets by expanding capacity in its New Delhi and Pune studios as well as opening a new studio in Seattle, Washington.
Content for video games continues to grow strongly with particularly buoyant activity in the mobile and console sectors. Smartphone gaming is breaking down barriers between markets in China, Japan and Korea which have traditionally been distinct markets with little crossover while emerging markets in South East Asia, Latin America and Arabic speaking territories are growing fast. All of Keywords’ services benefit from the proliferation of game content.
Keywords will provide a further update on trading when it announces its half year results for the six months ended 30 June 2015 on 22 September 2015.
Andrew Day, Chief Executive of Keywords Studios, commented:
“Following on from our investment in Brazil with the acquisition of Reverb in January this year, the acquisition of Kite Team provides us with an important base from which to service the localisation and audio requirements for the growing market for Latin American Spanish video games in both North and South America. The Latin American market for digital games is forecast to grow from $1.1 billion in 2013 to $2.5 billion by 2018, representing a 17% 5-year CAGR1.
“In addition, as a single language provider with market leading talent, the Madrid operation will allow the Group to offer this important language to those clients that prefer to source languages separately rather than adopting a multi lingual approach. As a supplier of Spanish audio recording to Binari Sonori, the investment in Kite Team will also enable us to capture the margin on revenues we were previously outsourcing.
“We warmly welcome our new colleagues at Kite Team to the fast growing Keywords group and look forward to working alongside them to further extend the range of services and choice of production approach we are able to offer our clients globally.”