Game Developer Virtuos Seeks Acquisitions and Growth in Japan

(Bloomberg) — Virtuos, which supports the development of some of the world’s biggest games, plans to acquire a Japanese studio in the coming months to expand its presence in the No. 3 video game market.

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The Singapore-based company, which has been involved in such major franchises as Call of Duty, Horizon Zero Dawn and Metal Gear Solid, is in active talks with multiple studios in Japan, Chief Executive Officer Gilles Langourieux said in an interview. The company has narrowed its focus on targets with 100 staff or fewer and with a track record of reliability, he said.

“I visited and had conversations with two Japanese studios this week alone,” the former Ubisoft Entertainment SA executive said on the sidelines of the Tokyo Game Show. “I wouldn’t be surprised if we close a deal within the next six months, as we’ve really been looking at this quite closely.”

The little-known company provides art and gameplay-supporting content to some of the world’s largest game publishers, helping them speed up development. Its team of 3,800 has been involved in more than 1,500 games, providing art such as weapons, maps and landscapes, or helping to remaster classic titles.

Revenue at the company — now around $200 million — has the potential to triple in the next four to five years, Langourieux said, adding that acquiring a local studio would be key to working with big Japanese publishers and reaching that goal. Japan accounts for only 10% of the company’s sales, he said.

Founded in Shanghai in 2004, Virtuos has grown through aggressive mergers and acquisitions. In 2022, it bought Ho Chi Minh-based Glass Egg Digital Media, an art production studio that now houses 450 people. In August, it acquired British indie game developer Third Kind Games.

Virtuos’ growing headcount bucks the industry trend, where many studios are slashing jobs to fight fierce competition for consumer attention. The company will likely need a fresh funding round in the next 24 months to continue to acquire creative talent, Langourieux said, adding that going public is also an option in the future.

Virtuos is winning clients because every phase of game development requires different headcount and outsourcing some of the work gives studios flexibility while cutting costs, the 55-year-old said.

“It’s a time of transformation,” Langourieux said, adding that the publishers that win are the companies that operate the most successful online games and that innovate with premium titles. “Growth is possible if you focus on the right stuff.”