A case for Playside at 15c

I’ve been tracking PLY for a while now. FWIW I personally worked in the local industry for around 8 years in a middle management role. I think today this is a strong buy, and I'd love people's insight to help me flesh out the idea.

In regards to the recent announcements, this is pretty much what always happens in game studios. You start with charismatic, creative types who can inspire the teams but they are often too confident in their own ability to execute. The goal of every studio ever is to develop their own IP that people care about, but it's so hyper-competitive out there it almost never works out. You don't get that many bets, and really you have no real competitive advantage on creativity. The company's strategy of investing heavily into building out original IP at the expense of everything else is a losing one, most of the time. Often when these big bets fail, the leaders lose interest or are discredited and they are soon out.

What then usually happens is the bean counters get their shot. That's what's happening now and it’s a good thing. Let's look at the complete opposite strategy, i.e. ~50M in revenue but no new IP investment. Suddenly you don't need anywhere near 300 people, you don't need 2 offices. Your games still make roughly the same amount of money in live-service (maybe more with more of a focus here) but at a fraction of the cost. The company could go from unprofitable to a 1x free-cash flow multiple tomorrow if it wants to, and they are very highly incentivised to do that given their staff own stock. Of course, you throw away that lottery ticket you were keeping in your back pocket.

In reality you probably want to be somewhere in between. They are can build new games, which is nothing to be scoffed at, so you probably want to be working on some new stuff. But what is the point if your just on a treadmill, always looking to the next new thing.

So what should we be looking for moving forward? Personally, I want to see a renewed focus on the efficiency of the studio, the optimisation of its current portfolio and the work-for-hire pipeline, and less about making big bets on new IP in the hope that one will miraculously stick.