Video game maker Virtuos looks to expand globally via partnerships, acquisitions

Virtuos CEO Gilles Langourieux and CFO Jasmine Cheong

Singapore-based video game developer Virtuos plans to expand its global footprint and offerings by acquiring new studios and growing its network of partners following its latest funding, its chief financial officer Jasmine Cheong told DealStreetAsia.

The company announced earlier this month that it had bagged a $150 million investment from Baring Private Equity Asia (BPEA). According to Crunchbase data, the company has raised $165 million in disclosed funding to date.

Following the latest round, BPEA will be Virtuos’ largest external shareholder with a 20% stake in the company, while 3D Capital Partners owns slightly less than 10%, Cheong told DealStreetAsia in an exclusive interview.

Virtuos will continue to operate under the leadership of CEO Gilles Langourieux who, together with the rest of the management team, still owns over 70% of the company.

The company last raised about $15 million from 3D Capital Partners in 2018 and announced that it would move its headquarters from Shanghai to Singapore. It raised its first round of institutional funding from Chinese VC firm Legend Capital in 2006, according to its website. Other existing investors include Xuhui Venture Capital.

Founded in 2004, Virtuos specialises in art production and game development services and works with 18 of the world’s top 20 digital entertainment companies including Activision Blizzard, Bandai Namco, Take Two Interactive, and Ubisoft.

The company had helped produce some of the industry’s most successful game titles such as Assassin’s Creed, Call of Duty, Final Fantasy XII: The Zodiac Age, and League of Legends. Virtuos has also contributed art services to some of the film industry’s biggest blockbuster franchises such as Black Panther, Jurassic World, The Avengers, and Star Wars: The Force Awakens.

Acquisition route

The company currently operates in 13 locations across Asia, North America, and Europe and is in talks to acquire new studios around the world. “When we acquire studios, we look out for the ones that can complement our capabilities and most importantly, are culturally aligned with us,” said Cheong.

“Proximity to our clients is very crucial in our upmarket strategy, which will allow us to get ourselves involved much earlier and deeper in our clients’ development processes,” she added.

Virtuos had in 2017 acquired a controlling interest in the Irish independent game studio Black Shamrock, accelerating its Western expansion. In 2011, it acquired the assets and core team of the French-Vietnamese animation company Sparx, which was behind the 2008 feature film Igor, starring John Cusack.

Virtuos is also working on identifying external partners for its digital platform to provide the required services to clients. The company counts 120 partners in its network, and has Sea Group’s gaming arm Garena and the Chinese tech giant Tencent as its clients.

The BPEA investment will also go towards scaling Virtuos’ ability to innovate and deliver bigger and better games across more platforms.

“The core teams in game publishers are often not large enough to cover all the relevant platforms such as console, PC, Switch, Playstation 4 to Playstation 5 at launch or even shortly after the launch. By partnering with these game publishers, they can often get their games to run on more platforms, and they can achieve much bigger returns on their investments into their original teams,” said Cheong.

Revenues surge amid COVID-19

Virtuos reported revenues of $90.46 million in the financial year ended Dec 31. 2020, up 35% year-on-year (YoY). Meanwhile, its profit after tax jumped 285% YoY to $8.49 million in the fiscal, according to its latest financial update.

Virtuos’s revenue growth in the first half of 2021 stood at 50% year-on-year. Headcount has also grown from 1,700 last year to the current 2,500 employees across 13 locations.

One of the factors contributing to the growth was COVID-19, which led to more people staying at home and spending more time playing games. The revenue growth is also attributable to increased cross-platform gaming, i.e users are gaming on both PCs and consoles, as well as mobile phones. With that, AAA game developers are also gradually expanding into the mobile market.

In August, the US- and Singapore-based gaming giant Razer reported a net profit of $34 million in the first half of 2021, a sharp reversal from the $17.3 million net loss it had posted a year ago.

Earlier this month, Play Ventures, a Singapore-based, gaming-focused venture capital firm, announced it has so far raised $30 million for its latest vehicle. The new vehicle — Play Ventures Opportunity Fund — seeks to raise $80 million and has already attracted commitments from at least two investors since its first sale last month.

The industry, though, faces emerging challenges such as regulation in China, the world’s largest gaming market. The country is trying to regulate the playing of online games by minors citing unhealthy addiction among youth.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.