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US-based tinyBuild (TBLD:AIM) is a leading video game publisher and developer with major operations on both sides of the Atlantic. Founded in 2013 by chief executive Alex Nichiporchik and chief operating officer Luke Burtis, tinyBuild has since grown to a team of 166 staff and has published more than 40 games. Titles include hit games such as Hello Neighbor and Totally Reliable Delivery Service.
The company’s games pipeline is the largest and the highest quality it has ever had, with 26 titles including the widely anticipated Hello Neighbor 2 and new titles such as Potion Craft and Pigeon Simulator scheduled for release during 2021 and beyond.
tinyBuild’s operates an own-IP focused model creating partnerships with developers. The company supports them in creating long-lasting IP that results in multi-game and multimedia franchises. This approach leads to long-term value creation and improved profit margins.
Furthermore, tinyBuild’s back catalogue of titles contributes large amounts of recurring revenue (75% of revenue in 2020). tinyBuild has successfully extended the lifecycle of its key titles over several years by regularly releasing downloadable content, expanding games across various platforms, and generating additional revenue through licensing agreements.
tinyBuild publishes games on PC, console, mobile and streaming platforms, including Steam, Xbox, PlayStation, Nintendo, Apple, Epic Games and Google Stadia. Games are typically released first on PC and are launched on other channels depending on their potential. This two-stage release model ensures lower upfront development risk.
MULTIMEDIA STRATEGY EXTENDS THE LONGEVITY OF TITLES
tinyBuild has a multimedia strategy for its top games, expanding game-based IP into graphic novels, books, TV, film, merchandise and more. Multimedia products act as marketing and customer engagement tools that extend franchises’ longevity while generating revenue themselves.
tinyBuild has successfully proven this strategy with its Hello Neighbor franchise which has sold over 1.6 million books. There are plans for an animated series (a pilot has over 40 million YouTube views), and tinyBuild has released merchandise such as toys and clothing through licensing agreements.
For developers, tinyBuild’s differentiated offering is attractive. The company’s support empowers its partners to develop popular games and attract talent. tinyBuild’s background as a developer ensures that their needs are met and trusted long-term relationships deliver multi-year, multi-game franchises. Since 2013, tinyBuild has successfully ‘acquihired’ a number of development teams, and it has one of the lowest staff turnovers in the industry.
Over time, tinyBuild has built a platform to execute innovative, low cost yet high impact marketing campaigns, delivering strong engagement before a game’s release. As a result, tinyBuild has accumulated over 5 billion content views on YouTube alone and has built relationships with over 10,000 verified influencers and a global following of 780,000 followers on social media.
tinyBuild’s geographical footprint, through its development partners across five continents, ensures that it can continue to take advantage of the growing global video games industry. With a particular focus on developing markets, the company has access to high-quality talent and benefits from lower developer costs. Maintaining hubs in major cities facilitates relationships with key industry participants.
STRONG FINANCIAL TRACK RECORD
The company’s approach and its growing portfolio has ensured a strong financial record. tinyBuild performed strongly in 2020, slightly ahead of the ambitious targets set by management, both in terms of games released and the development of new games.
Five new titles were released, including Totally Reliable Delivery Service. tinyBuild saw total revenues increase from $27.9 million to $37.6 million, a growth of 35 % (2019: 13%). Operating profit increased to $7.6 million (2019: negative $2.7 million), mainly as a result of strong sales growth. In 2020, the net cash position increased from $17 million to $26.3 million, while the company accelerated investments in new titles.
In 2021, the progressive lifting of Covid restrictions across many countries led to a general expectation that this would impact video games sales. However, tinyBuild sales are progressing at least in line with expectations for the financial year 2021.
WELL-POSITIONED FOR THE FUTURE
tinyBuild is now well-positioned with a strong pipeline of new titles and a proven ability to attract, screen and market high-quality game franchises. The company‘s multimedia franchise model allows tinyBuild to extend the life of its IP, maximising return on investment. Its M&A strategy helps increase its IP portfolio, with an ambition for bigger, potentially transformative deals in the future.
DISCLAIMER: This article was written by tinyBuild and published by Shares under a commercial agreement. It is not a recommendation to buy or sell the shares. The article originally appeared in Shares’ Spotlight report on 26 August 2021.
