The Playside Studios Ltd [ASX:PLY] has entered a work-for-hire agreement with 2K Games.
2K Games is a label of giant Nasdaq-listed publisher Take-Two Interactive Software (NASDAQ:TTWO), with a US$21.4 billion market cap.
TTWO is popular for publishing iconic games like the Grand Theft Auto series.
Source: Tradingview.com
PlaySide and 2K Games sign deal
PLY, Australia’s largest publicly listed video games developer, today entered a ‘significant’ work-for-hire development agreement with 2K Games, a label from one of the world’s largest publishers.
PLY says this is the largest work-for-hire agreement it has signed since listing on the ASX.
2K Games is developing an upcoming major franchise with PlaySide to act as a partner.
The agreement involves a 23-month development cycle and a 12-month maintenance period post-launch.
Although the agreement was a ‘landmark’ and the largest since its listing, PlaySide did not disclose the precise payment it will receive for the work.
PLY did reveal, however, that the agreement is an ‘eight-figure’ deal. This suggests the deal is worth at least $10 million.
PLY was similarly tight-lipped about the remuneration details surrounding its work-for-hire agreement with Facebook, which was extended in September.
PlaySide said only that the Facebook contract value is now 90% higher than the original contract.
In FY21, PLY made $10.9 million in revenue, ending the year with a $5.9 million net loss.
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PLY strategy and outlook
The work-for-hire agreement struck with 2K Games raises a few questions. Chief among them – what does this mean for PLY’s long-term strategy?
Will the Aussie developer pivot to work-for-hire as its core revenue stream? Or is this contract with 2K Games a way for PlaySide to prove itself on a bigger stage?
PLY CEO Gerry Sakkas did say today:
‘Our ability to secure this agreement with 2K Games underlines our position as Australia’s largest publicly listed game developer.
‘We are looking forward to starting work on this project to demonstrate our capabilities in AAA game development on a franchise that we are extremely passionate about.’
PLY also mentioned it has shifted its work-for-hire strategy lately to target larger contracts with AAA studios.
The AAA contracts ‘provide attractive and stable revenue for PlaySide, while providing opportunities to access other partnership relationships.’
PLY also thinks executing the 2K Games deal can strengthen its relationship with the major label and extend PlaySide’s credentials as a global player in the industry.
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