One of our top video gaming developers has been sold offshore - the culmination of a chance relationship that began on Twitter.
Wellington's A44 Games, founded by Weta Digital alumnus Derek Bradley, has been bought by Kepler Interactive - a new UK-based venture that has recently raised US$120 million to acquire a series of video game developers.
A44 is the creator of the Xbox and PlayStation title "Ashen" - a fantasy multiplayer that has clocked some US$15m in revenue since it was first released in December 2018.
It's the latest in a flurry of tech companies gone to overseas buyers this year (see foot of article), but its founder says it will allow more local hires, and stresses that he's got a slice of the action through the shares he gained in the international buyer.
Kepler told the Herald that he did not regard the sale as a traditional founder payday and "exit". He said he planned to hire another 40 staff, which would take his total complement of full-time equivalents to 100.
Bradley could not comment on the sale price - other than to confirm it was below the $100m threshold for Overseas Investment Office approval.
But he emphasised that along with a cash element, he received shares in Kepler - along with the heads of the six other gaming studios bought by the UK outfit. Weekly meetings would see the "collective" giving feedback to each other's titles in development and to help assess other potential acquisitions.
The new ownership model also gives Bradley and staff to work for a year or more on their next game console title, he said. That sort of breathing space would have been hard to manage if A44 had remained independent - especially given Bradley's plan to make the new game much higher production value. It can take up to five years to process an A-list title he says. And the road is much easier to travel if you're part of an international network.
The acquisition had its genesis in a 2014 Twitter post, back when his company had only around 100 followers for Twitter.
"We put out a tweet, which was just a gif of a little guy standing on a cliff somewhere, with the wind blowing majestically through his hair"
"And somebody from Microsoft reached out and said, Hey, we'd like to find out more about this game. That was actually like the very first business connection we made - because we hadn't got the project to a maturity point where we even were ready to talk to people yet."
As first business connections go, it turned out to be not a bad one. The Microsoft employee who reached out on Twitter was Alexis Garavayan, a Seattle based member of the tech giant's Xbox team who managed its relationships with gaming studios.
Bradley and Garavayan stayed in touch as Garavayan left Microsoft for Chinese conglomerate Tencent in 2015 (Tencent would later buy a majority stake in NZ's largest gaming studios, Grinding Gear Games, and take a minority holding in another local A-list player, Rocketwerkz - two of the Big Three in NZ's gaming sector as it closes in on being a $1 billion export earner).
Garavayan founded a Singapore-based global gaming investment fund called Kowloon Nights in 2017, raising US$100m to invest independent developers, before becoming CEO of Kepler in September last year. In his new role, Garavayan got in touch with Bradley, suggesting the buyout.
By this stage, A44 was pumping along quite nicely.
Ashen had picked up multiple awards, including and had an 81 out of 100 rating on Metacritic.
Bradley had even hired his old boss from Weta, where he worked as an environmental artist until he left in 2013 (then age 27). Audrea Topps now works as his chief operating officer.
The A44 deal is the latest in a string of offshore tech sales this year, which has included robotics-specialist Rocos' sale to a US firm, the $100m+ sale of EzyVet, plus the sale of Vend ($455m), Timely ($135m), Seequent ($1.45b), mobile gaming outfit Ninja Kiwi ($203m), Education Perfect (in a majority-control deal valuing the firm at $455m) and the $500m Hawaiki Cable (a deal now in front of the Overseas Investment Office), while December saw the sale of local retail hero Mighty Ape to Australia's Kogan for $128m.
But Bradley underlines that under Kepler's collective ownership and management structure, his gaming studio is powering up rather than selling out.
Kepler, which has offices in the UK and Singapore, "is run by developers who understand the industry and are focused on expanding our local production capability and technical expertise through a shared skill and resource base," he says.
"We believe this deal has the potential to expand the visibility of New Zealand's gaming industry on the world's stage."
A44 joins Alpha Channel (Canada), Awaceb (New Caledoinia) Ebb Software (Serbia), Shapefarm (Japan), Sloclap (France), and Timberline (US) as one of the gaming studios under the Kepler umbrella.
"Being one of the first studios acquired, we're very involved in setting up the infrastructure and having a hand in what this thing will be, which is quite interesting. And with its scale, Kepler will be a real power within the games industry."