CD Projekt Red: $9 Billion Story
On May 21st, a small company named CD Projekt went up to a market cap of 8.01 billion EU and thus surpassed Ubisoft to become the biggest video game company in Europe. How did a small company — with less than ten games in its Resume — place itself as the largest company in Europe?
Marcin Iwiński and Michał Kiciński were high school friends with a massive enthusiasm for video games. In Poland of the ’90s, video games were scarce, and the country that just earned its freedom from the Soviet Union suffered from poverty, and western culture was distant and unfamiliar.
Polish laws of copyright did not have any meaning in the country, and people did not speak English or any other western language.
CD Projekt is born
Iwiński and Kiciński made their first step into the gaming industry when they cracked western games and translated them into Polish. It was a shady business, and they tried to improve it. The timing was perfect since the early 90s marked the beginning of the western influence in eastern Europe. On May 4th, 1994, Marcin Iwiński and Michał Kiciński started selling games on floppy discs at the Warsaw computer market. They founded the company with $2000 and a rent-free office from a friend. They had a problem, though. Piracy could not be a long term way of living as copyright laws changed, and in general, the company could not last on theft as a source of living. Their games had a tremendous demand; gamers in Poland were looking for games in a localized version, so Iwiński and Kiciński started localizing games from the west.
The goal of localization is to create an enjoyable, non-confusing play experience for the end-users by paying heed to their specific cultural context while being faithful to the source material. Translating the text is a large part of localization; it includes other changes made to a game such as altering art assets, creating new packaging and manuals, recording original audio, transforming hardware, cutting out whole portions of the game due to differing cultural sensitivities and local legal requirements, and adding sections to replace cut content.
A Witcher is coming to life
CD Projekt made close relationships with Bioware after a few small successful projects. Bioware just published the popular game Baldur’s Gate and needed a localized version of their game. CD Projekt reached them and got the job. They included bonuses in the package and even hired popular Polish voice actors. The game sold 18,000 copies on its first day, which translated to a huge success.
Bioware turned to CD Projekt and asked them to work on Baldur’s Gate: Dark Alliance. CD Projekt hired employees, but unfortunately, Bioware’s development team lost financial resources six months into the project, and the game was canceled. They had the codes and the engine, but no rights to the game. That’s when they decided to try and create their own game.
CD Projekt went for a game based on novels by Andrzej Sapkowski’s Wiedźmin. He is a famous Polish author of fantasy novels. Reaching him was the simple part, but the idea for the game was unclear at that moment. The first version took a year to develop; they were unsatisfied with it, and critics were terrible. They couldn’t find a publisher and decided to publish it on their own. In 2004, they opened a booth in E3 and tried to sell the concept of their game.
The original team of the games consisted of 100 people and cost around $5 million. Porting the game to English was even more expensive, and the company was struggling with money at the time. After five more years of development, the goal ended up being a Western audience, so they finally settled on a name: The Witcher. The game came out in October of 2007 and was published by Atari. It earned a solid positive review while nominated for awards in the RPG field. The attempt to convert The Witcher to consoles cost dearly and almost ended the company’s funds. The significant loss made the company focus on the second title in the series, and thus, in 2011, Witcher 2 — the assassin of kings — published and sold 1.7 million copies.
The success pushed the company to a third title, The Witcher 3: Wild Hunt. This time, they strived to push the boundaries of technology and make the most out of the new generation of consoles. The Witcher 3 development lasted three and half years, with a budget of $81 million. The tremendous success was imminent, and the company settled among the largest gaming studios in Europe.
In 2020, Witcher turned into a Netflix series that bolstered the interest in the game. Meanwhile, the Nintendo Switch version came out and reignited the interest in the game. The company is supposed to publish a new massive open-world game named Cyberpunk 2077. The game had started developing right after The Witcher 3 and is highly anticipated.
GOG Bless you
Another successful project of CD Projekt Red is GOG.com. It all started as they were looking for a way for people to purchase old games. Good Old Games began its journey in 2008, offering past games to buy, but only after they did considerable modifications and adjustments. The store made the company well known, and they managed to harness large studios such as Ubisoft that approached them to sell their old titles. The store rebranded in 2010 to sell modern games as well, and today it tries to play in the big league with Steam and Epic, but not with great success.
CD Projekt Red made a significant path from selling cracked copies in shops to publishing multiple successful AAA games, and that puts them above Ubisoft in market cap. But when we look into the financials, we can see that CDPR sold 115 million Euros in 2019 while Ubisoft sold 418 million Euros in the 4th quarter of 2019 alone. Nonetheless, it is an excellent achievement for the company that made 5 games its entire life.