How 2 Games Made CD Projekt the Most Valuable Game Company in Europe
By December 2019, CD Projekt SA posted a 21,000% return since 2009
That’s right. The Polish game studio CD Projekt is now the most valuable game company in Europe at the moment. It's even bigger than Ubisoft. For the plethora of games at Ubisoft’s arsenal, 2 games, The Witcher 3: Wild Hunt, and the upcoming Cyberpunk 2077 were able to beat the giant.
CD Projekt's growth is unprecedented given the company has relatively few IPs to its name. It may seem a bit odd. But no stock on the Stoxx Europe 600 Index has jumped as high as CD Projekt has since 2009. Here’s a look at how the company ended up in this position.
The Witcher magic
CD Projekt Red is well known as the company behind the highly successful medieval fantasy game, The Witcher. In case you didn’t know, the game’s original source is a Polish fantasy series in the same name by Andrzej Sapkowski. A relatively small game studio, the first iteration of Witcher was released in 2007. The game got a decent reception, followed by its successor, Witcher 2. The audience started picking up for the franchise.
By the time Witcher 3: The Wild Hunt hit stores in 2015, the franchise hit peak popularity. With it, CD Projekt’s status from an upcoming game studio status shot up to be among the top respected brands in the gaming industry.
Witcher 3 sold 4 million copies within 2 weeks of launch. In fact, pre-orders hit 1 million just 8 days before it was released. Today, that number has exceeded 28 million. The success of the game spilled over the company’s valuation as well. By December 2019, CD Projekt SA posted a return of 21,000% since 2009, to a $6.8 billion valuation in Europe. Yes, you read that right.
Getting the formula right
By this point you might be asking, “wait, a video game can’t possibly be that good, could it?” Well, it turns it can. There are a few key reasons why Witcher 3 is a phenomenal success, even to this day. For one thing, the graphics and aesthetics of the game hold up well for a 5-year old game. Another reason is its compelling story. The game translates the fantasy series from the books to amazing detail. Then comes nailing proper gaming mechanics for an action RPG.
The cherry on top was the free downloadable content (DLC). Witcher 3 added two expansions in the form of DLC. One titled “Hearts of Stone” added 10+ hours of content. This was followed up with the “Blood and Wine” expansion that reported 20+ hours of content. One could argue these expansions alone has content enough to make up for another game. But unlike the company’s peers, the DLC was offered free for customers.
It did not take too long to understand the level of success this game has left in the gaming industry. Ubisoft’s popular Assassin’s Creed franchise took a page from Witcher 3 and revamped its format to fit an RPG style. Assassin’s Creed Origins was the first experimentation, followed by Assassin’s Creed Odyssey. Though Ubisoft’s new direction for the franchise has not reaped the benefits on the level of Witcher 3.
Before long, The Witcher franchise made its way to Netflix as a series. Its debut season, starring Henry Cavill drew in crowds by the millions. 76 million to be precise. This in turn gave The Witcher 3 and by extension, CD Projekt even more fame.
The Cyberpunk 2077 promise
By 2019, CD Projekt’s reputation as a reliable AAA game studio has been solidified. But the studio had something exciting up its sleeve. At E3 2019, the company unveiled its brand new title, Cyberpunk 2077. As expected, the reveal trailer showcased a visually stunning cyberpunk dystopian setting with a seemingly promising storyline and gameplay.
But it was the last few seconds of the trailer that got everyone talking. As actor Keanu Reeves made an appearance on screen, the audience erupted in applause. The company knew it struck a PR goldmine featuring Keanu Reeves when the whole internet could not stop talking about it.
The game was actually revealed back in 2013. But was shelved owing to the focus on The Witcher franchise. CD Projekt’s approach to AAA game development is to focus on one title at any given time. Hence why Cyberpunk 2077 only resurfaced in the last couple of years.
Bigger than Ubisoft
The high expectations from the Cyberpunk title, coupled with the massive Witcher 3 success meant that the market views optimistic towards the Polish company. Almost 5 months after the company reached $6.8 billion valuation, CD Projekt grew to $8.13 billion. It edged up just above Ubisoft’s $8.12 billion. Thus, making CD Projekt the most valuable game company in Europe. At least for the time being.
Of course, it's unclear how Cyberpunk 2077 will affect the company’s growth trajectory. Amidst a remote working environment, CD Projekt president Adam Kiciński mentions that the company is still on track to hit the September deadline. Meanwhile, there are already talks of a possible upcoming Witcher game after Cyberpunk is launched in September this year.
In any case, one thing is certain. It's a good time to be a gamer right now.