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Keep A Close Eye On The World's Best Video-Game Service Provider

Apr. 02, 2018 11:30 AM ETKeywords Studios plc (KYYWF)5 Comments
Veni Vidi Emi profile picture
Veni Vidi Emi


  • Keywords Studios is the leading consolidator in a little-known space: The Video-Game Service Industry.
  • We cover what the sector entails and why Keywords should exist.
  • We cover the competitive advantages that allow Keywords to outperform the industry as a whole.
  • At almost 50x FCF, the business is still too expensive, but I keep a close eye on the business for any potential buying opportunity.

(Reminder: Currency in EUR and GBP based on €/£, USD explicitly stated).

Keywords Studios (OTC:KYYFW) is a roll-up operator in an unexpected space: The video game industry. The company has existed since the late 90’s and has been on an acquisition spree the last 4 years. The business has diluted recently for more acquisitions, but the stock has appreciated approximately 600% in the last 2 years.

1. Explaining the Business

The 20-year old company operates across the world as an integrated service provider. What does that entail? It can be hard to explain the need for an integrated service provider in the video-game space using abstract terms. The value of KWS comes by understanding their relevance in the value-chain. Here is a concrete example of how KWS would provide value to a customer:

1.1. A Customer Experience

You have produced an idea for a video-game at your decently-sized video game production company. You are ready to produce a great product with excellent storytelling and fun gameplay. Here are several problems you will face and how to potentially solve them, with KWS or without:

1. You need to visualize several environments for level designers. You also need character art and cover art for your games and a few minutes of animated cinematics.

Without KWS you would need to hire artists specialized in each subject on a per-project basis. Posting ads, researching & outlining fair pay, working through applications with interviews and salary negotiations.

KWS handles all of that through their “art”-segment where everything from animations to cover art. The full depth of the KWS art-segment is outlined below:


2. You need audio for your characters. Each voice is essential for the correct atmosphere and quality of the game.

Without KWS you would need a recording studio with sufficient quality, the ability

This article was written by

Veni Vidi Emi profile picture
"I came, I saw, I bought" - - - - - - - - - - - - -Currently inactive due to work and other responsibilities.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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