CD Projekt is worth more than Ubisoft. As a supporter of the Polish video game industry, I don t enjoy it at all

CD Projekt received a beautiful gift to celebrate the 5th anniversary of The Witcher 3: Wild Hunt. Here, on May 19, 2020, Polish video game producers are worth more than Ubisoft itself – the global beast of the gaming industry, with brands such as Assassin’s Creed, Far Cry and Rainbow Six. Unfortunately, the balloons have that they like to burst.

The date May 19, 2020 will go down in history. Not only the history of CDP RED, but also the entire Polish video game industry. That day, the CD Projekt Group became more valuable than the giant Ubisoft with headquarters in Paris – the largest European video game producer and publisher, of course operating on a global scale. Based on data from the Warsaw Stock Exchange, Poles are valued by almost one billion zlotys against the French.

The market value of the CD Projekt Group is PLN 36.5 billion, as compared to Ubisoft’s 35.6 billion.

We’re dealing with a stock market success that was unimaginable even in the most optimistic scenario five years ago. Here is a small company starting from the sale of records on the computer stock market, was valued higher than the giant with such brands in the portfolio as Assassin’s Creed, Far Cry, Watch Dogs, Splinter Cell and Rainbow Six. Something absolutely amazing. Even believing in the great skills of the CDP RED team, no reasonable dared compare the CD Projekt Group to Ubisoft.

And this is not the only spectacular success of CD Projekt recently. Some time ago, the Group became the most expensive Polish company, breaking such molochs as Orlen, Bank PEKAO or KGHM Miedź on the Stock Exchange. To this day, the creators of The Witcher occupy the first place in the WSE main market table. It is hard to find a better example of how important video games have become in the web of the Polish economy. This can be seen not only on the example of Reds, but also PlayWaya, 11 bit Studios or Ultimate Games.

Unfortunately, I don’t enjoy the value of CD Projekt at all.

Let us have clarity – I love CDP RED, I love GOG, I know a few employees of the Group privately and I have always supported it. However, what is currently being done on the Stock Exchange is typical pumping. Not even a balloon anymore. Inflatable boat outright. One with additional inflatable armchairs on both sides. Although CDP RED creates outstanding games and the company tries to diversify its sources of income, it is still a shot or miss activity . Its success depends on one, up to two products. Come out. Or it won’t work out.

The current market value of the CD Projekt Group is largely made up of developers’ talent, amazing gameplay ideas and bold improvement of market patterns. However, a fairly large portion of these 35 billion zlotys is the desire of the stock exchange, hysterically reacting to every subsequent analyst predicting excellent sales of the upcoming Cyberpunk 2077. Of course, the game will sell superbly, there is no doubt about that. All you need is a few million copies, and this whole stock house of cards can start shaking.

CD Projekt vs. Ubisoft Group – what does it really look like?

What does it mean that CD Projekt is largely a shot or miss company? It is a business model of the company, based on one main product. It is Cyberpunk 2077. If it’s great and sells great – well done. However, if there is no (tfu, tfu, knock on), there will be a spectacular crisis. To leave the ship hastily and push through the lifeboats, even if the ship did not hit any glacier. This is how the stock exchange works. That is why CDP is trying to diversify revenues by establishing further studies and offering additional services. However, the company is only at the beginning of this road.

What is included in the CD Projekt Group? First of all, CDP RED development studios in Warsaw, Wrocław and Kraków. Added to this is the great GOG.com digital distribution platform, as well as the still fresh Spokko studio, founded with the intention of creating mobile games. You can add to this the CD Projekt RED Store company, which sells gadgets licensed under games. The leading CDP brands are The Witcher, Cyberpunk and Gwent. The number of employees of the Group for 2019 totaled over 1,100 people. It is worth comparing this structure to the previously mentioned Ubisoft.

Ubisoft consists of over forty development studios and publishing offices, which would include those in Paris (headquarters) Warsaw, Montreal, Helsinki, Singapore, Newcastle, Bucharest, Düsseldorf, Bordeaux, Barcelona, ​​Shanghai, Kiev, Malmo, Quebec, Belgrade, Toronto, Abu Dhabi or San Francisco. The gaming industry giant directly employs 16,000 people (over ten times more than CD Projekt). The leading Ubisoft brands are Anno, Settlers, Heroes of Might and Magic, Just Dance, Assassin’s Creed, Far Cry, Silent Hunter, Watch Dogs, Prince of Persia, Rainbow Six, Ghost Recon, Brothers in Arms, Rayman, Trials and Splinter Cell.

Ubisoft is not as spectacular on the stock exchange as CDP RED. Which means that in the event of negative circumstances it will not fall off as quickly. A company with such a large database of brands, production studios and specialists can afford to stumble. If Far Cry publisher doesn’t come out in a given year, Assassin’s Creed will come out. If not Assassin’s Creed, it’s Rainbow Six. The negative result of the daughter company repairs the favorable result of the sister entity. The large, horizontal structure makes profit not so easy to generate, but at the same time amortizes losses and increases the overall stability of the company.

Stability, in turn, is useful, because if the saying is true that the grace of the Lord on a motley horse rides, then the grace of the stock market is overpowered by a motley jet. With remote controls locked in the toilet. Stock quotes have the feature that in just one day you can become slimmer by several billion dollars. The world of video games knows such cases perfectly .

Ubisoft can afford something that CD Projekt must avoid: errors.

If Cyberpunk 2077 turned out to be a hood (which of course is very unlikely), the whole Group will be in a difficult position. What’s more, falling CDP shares will entail other Polish producers present on the stock exchange. It is a system of connected vessels in which the success of one entity affects a number of others. Among others that’s why Polish developers help Reds in their work on Cyberpunk 2077. For several months, this is no longer a secret.

Putting it all together, I look with concern at the reflexive pumping of the pontoon. Listed players rush to CDP as a start-up unicorn from Silicon Valley, often unaware of the company’s structure or core business. If it were up to me, I would prefer slower but much more stable growth. After all, it is worth remembering what started the great crisis of the gaming industry from 1983, beginning Japanese domination in the area of ​​consoles:

From inflating the balloon .

CD Projekt is worth more than Ubisoft. As a supporter of the Polish video game industry, I don’t enjoy it at all

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