Video games: the French publisher Nacon is accelerating its diversification

It is a crucial sequence that opens for Nacon, a French video game publisher. Thursday, the tricolor group will market its title “The Lord of the Rings: Gollum” on consoles and PC. The launch of this new adaptation of this emblematic license will be followed with all the more attention since last summer, Nacon had to postpone its release.

“The rendering was not satisfactory and we reviewed our copy”, confides Alain Falc, boss of Nacon who bought the German studio Daedalic (for 53 million euros at the beginning of 2022) who designed this title whose development cost goes approach 15 million. A record for the publisher whose average budgets have gone from 2 million in 2020 to 5 million today. “With this title, we are aiming for one million sales in one year. But the challenge for us is long term since we are going to release two other games in this universe in the years to come”.

A wide range

Specializing in mid-range (“double A”) games, Nacon has long been very focused on niche sports games (cycling, tennis, rugby, etc.) which accounts for a third of its turnover. A segment where the publisher has further strengthened, at the beginning of 2021, with the acquisition (for 35 million euros) of the Australian studio Big Ant Studios, which notably develops cricket games.

But in recent years, Nacon has expanded its range with boxing games in the action-adventure category, from “Vampire The Masquerade”, to “Steelrising” via “Clash: Artifacts of Chaos”. “It’s a strategy that we are going to pursue,” stresses Alain Falc. With “Robocop Rogue City”, we will also soon have our first first-person shooter”.

Falling stock price

Cyanide, Spiders, Kylotonn, Midgar, etc: Nacon has also multiplied acquisitions in recent years. Today, the group has 16 in-house studios employing nearly 900 developers and generates 80% of its turnover through its own productions, compared to 20% for traditional game publishing.

“In terms of buyouts, we are taking a break. The priority is the release of all the big games over the next few months”, notes Alain Falc, whose group has seen its stock market fall by 55% over one year – to 228 million euros in capitalization -, between the discrepancy of the title “The Lord of the Rings: Gollum” and the disappointing sales of “Steelrising” released at the end of 2022. “What is missing to structurally balance the portfolio is one or two cash cow games able to make between 3 and 5 million sales with each release”.

Towards “game as a service”

In the meantime, Nacon will launch, at the end of the year, “Test Drive Unlimited Solar Crown”, a mively multiplayer open-world racing game. “After six years of development, the game is finished and the teams are in the process of fine-tuning it,” underlines Alain Falc. It’s a game to which we will add free or paid content over time and that we will keep alive for between five and ten years.

Clearly, Nacon will, for the first time, set foot in the “game as a service” genre. With more than 20 million euros of development budget, “Test Drive Unlimited Solar Crown” will also become its most important game in terms of financial investments. A double turn for the group.