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THQ Nordic/Koch Media Parent Company Acquires Acquires Vertigo Games

by Rainier on Sept. 16, 2020 @ 12:00 a.m. PDT

Embracer Group, through its wholly-owned subsidiary Koch Media, has entered into an agreement to acquire 100% of Dutch-based Vertigo Games, known for VR title Arizona Sunshine.

Vertigo Games is a company that develops, publishes and distributes games exclusively for VR, best known as the studio behind Arizona Sunshine, and has After the Fall in its pipeline. Founded in 2008, it is based in Rotterdam, the Netherlands, and currently employs 50 people of which 37 are developers.

The upfront equity purchase price amounts to EUR 50 million in total, where EUR 40 million is paid in cash and EUR 10 million is paid in newly issued B shares. This equals an upfront enterprise value of approximately EUR 45 million, adjusted for EUR 5 million in acquired net cash. Subject to fulfilment of agreed earnings targets and release of certain titles during a up to 10 years period an earn-out consideration of a maximum of EUR 65 million may be paid, where a maximum of EUR 25 million will be paid in cash and a maximum of EUR 40 million will be paid in newly issued B shares.

“Since we decided to focus exclusively on VR gaming in 2013, we have experienced rapid growth with the release of global hit Arizona Sunshine, and we have our most ambitious project to date, After the Fall. The VR gaming market seems to be on the edge of really taking off with the coming together of better, more accessible hardware and more and more high-quality content being released and announced. We believe that now is the time to accelerate and in Koch Media and Embracer we have found the perfect partner to do so together with”, said Richard Stitselaar, CEO of Vertigo Games.

Dr. Klemens Kundratitz, CEO at Koch Media adds: “We have been monitoring the VR market over the past years very closely. We feel that now is the right time to extend our groups activities into this fast-growing market. I am sure that we are only at the beginning of the technological development of VR and what it offers players around the globe. We are delighted that with the acquisition of Vertigo Games, leading VR experts are joining our group. Together, we will push the boundaries of VR gaming even further, combining our strong global development and publishing network with their specialized VR games expertise.”

Since 2013, Vertigo Games has focused exclusively on VR, across all its business areas, to move early in the VR space and become a dominant player as the market takes off.

Vertigo Games comprise three business areas: Vertigo Studios, developing high-quality VR-exclusive games. Vertigo Publishing, publishing Vertigo Studios’ games as well as third-party VR content. And Vertigo Arcades, licensing own and third-party games to VR arcades globally.

Arizona Sunshine, a four-player co-op zombie shooter built exclusively for VR, is Vertigo Games’ largest success so far. Vertigo Games estimates it is the fourth most sold VR game in the last two years, having sold more than one million copies, and is currently the number one most played game in VR arcades. The game was released in December 2016, developed by Vertigo Studios and Jaywalkers Interactive, and is published by Vertigo Publishing. It is available on all major VR platforms. Vertigo Games owns the Arizona Sunshine IP and has the full rights to create sequels or spinoffs based on the IP.

After the Fall is Vertigo Games largest development project so far and is one of the world’s most anticipated VR releases, slated for release on all major VR platforms. The game has already received strong validation and support from leading VR platforms and will have one of the largest marketing campaigns ever for a single VR game. The game is an epic VR action first-person shooter with intense co-op gameplay at its core that pits up to four players against a vast, hostile VR world in a raging fight for survival – set in the ice-covered ruins of LA nearly 20 years after the apocalypse. After the Fall is developed exclusively for VR by Vertigo Studios and published by Vertigo Publishing.

Vertigo Publishing offers funding, technical solutions, marketing support, and certified publishing to indie VR developers. There are currently few third-party VR publishers while demand for these services is assumed to increase as the VR market continues to grow. The company’s pipeline includes proprietary title After the Fall and three third-party titles including Traffic Jams. In total Vertigo Publishing has sold 1.5 million games with the largest releases being proprietary title Arizona Sunshine and third-party title A Fisherman’s Tale.

Vertigo Arcades is a leading distributor of proprietary and third-party VR titles to VR arcade operators globally. The company’s titles are already available in 700+ locations in 40+ countries and account for estimated 25% of all playtime in Western VR arcades. Vertigo Arcades only account for a minor share of total net sales of Vertigo Games but was growing notably prior to a downturn with the Covid-19 outbreak.

Going forward, Vertigo Games will continue to operate independently within the Koch Media Deep Silver umbrella and work across the overall Embracer Group to find wider collaboration within VR. The senior management team is committed to stay on for the long-term and four key people, including Managing Director and co-founder Richard Stitselaar, Marketing Director Kimara Rouwit, and Director of Business Development John Coleman, have earnout packages spanning up to 10 years.

Vertigo Games anticipates the VR gaming market to exhibit substantial growth in the coming years jointly driven by new high-quality headsets (both standalone and tethered) and increasing releases of high-quality VR games.

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