Quoted from iceman44:Also bought OTGL.Y. CD Projekt. Poland gaming company. Here is Motley Fool summary
"The Warsaw, Poland-based gaming company’s shares have reacted predictably to this kind of terrible newsflow, falling by nearly 50% from their peak in November. Cyberpunk 2077, which CD Projekt Red has been developing for the better part of a decade, is a public relations disaster for the company. They put out a game that is buggy, and simply too ambitious, particularly on console platforms there it is simply too much for the hardware to handle.
Cyberpunk 2077, I predict, will also be one of the most important games in the industry, and will be that way for decades. You know that old saying “buy on the cannons, sell on the trumpets?” Well, the cannons are blasting away.
Here’s why I believe that this is a blip -- yes, yes, of course the company completely blew it with its release. But read a review or two from people who are playing it either on PCs or in the cloud and you will see some form of what gaming legend Seth Schiesel wrote at Protocol: “The depth of detail, narrative maturity and sheet scale...make it one of the most engaging games I have ever played. Visually I have never seen a game as beautiful as Cyberpunk.”
Here is what I predict will happen: the optimized versions for the new PlayStation 5 and XBoxes isn’t due to come out until 2021. In the meantime those playing on PC will serve as a massive hype machine for the game. The headline of today will be forgotten. As will the current share price.
How big is this game? Let’s talk scale.
In 2011, Harry Potter and the Deathly Hallows Part 2, the final installment of the massive Harry Potter film series, hit theaters. It was a cultural phenomenon. By the end of its first weekend, Harry Potter and the Deathly Hallows Part 2 had generated $483 million in sales. To date, it is the sixth-largest-grossing movie opening of all time.
I mention this because Cyberpunk 2077 also had $480 million in preorders before it was released earlier this month on more than 8 million units sold. It’s the biggest video game launch of all time. It too is a cultural phenomenon. On Dec. 9, there were more than 1 million concurrent viewers of the gameplay on Twitch; on the morning of Dec. 10, more than 1 million people were playing it on Steam concurrently.
If the terms “Twitch” and “Steam” are not fully familiar to you, you are not alone. The growth in video gaming as what sociologist Ray Oldenburg calls a “third place” — a place where communities form that is neither home nor work — has been happening amongst the younger generations for years, but the speed at which video games have become a cultural meeting point in a time when people have been forced to be physically isolated has been breathtaking. It’s one of those things that was already happening, has been turbocharged by COVID-19, and is unlikely to reverse once the world opens back up.
In our portfolio, we have talked about the systematic, disciplined investor in gaming, Stillfront (OM: SF). CD Projekt is Stillfront's wild first cousin. Stillfront commutes to work by bike and likes a good espresso. CD Projekt has face tattoos and practices medieval sword fighting as a hobby.
CD Projekt is made up of two segments, CD Projekt Red and GOG.com, both of which are video game developers. The company's title portfolio includes massive hits like The Witcher, Thronebreaker, and, perhaps most importantly to the present moment, a brand-new, highly awaited AAA game called Cyberpunk 2077.
The two founders, Marcin Iwiński and Michał Kiciński, met in high school in Poland and shared a passion for video games. Like many gamers at the time, they sought out new games, which could be found in the computer bazaars in Warsaw. In 1994, they formed a business, CDP.pl, to import new CD-ROM software releases from overseas. It might seem somewhat unbelievable today, but their competitive advantage at the time was that they produced Polish-language boxes and manuals for the games. Even though the company (and, let's face it, the industry) has long abandoned CDs as a gaming medium, the brand awareness the company had built up locally convinced the founders to retain the name.
CD Projekt began producing games in 1999, starting with a Polish-language version of Baldur's Gate, which was owned by Interplay. Again, while this might seem bizarre today, the competitive market was made up at the time almost entirely of pirated games. Iwiński and Kiciński were essentially betting that the market would be willing to pay up for a locally produced, locally relevant game. Baldur's Gate went on to sell in excess of 100,000 copies, a wild success given the relative immaturity of the Polish market at the time.
The company followed up by forming a full-fledged studio, culminating in its release of The Witcher. In 2012, this title was re-released, garnering more than 100 international awards. In 2008, CD Projekt formed a digital distribution service, Good Old Games, which became GOG.com.
The two arms of the company have different mandates.
GOG.com publishes older games without any digital rights management, allowing consumers the ability to install the game as many times as they want. They tend to release the back catalogue of games from other developers, including ones from Ubisoft (OTC: UBSFF).
CD Projekt Red, on the other hand, is a game studio, producing high-budget titles. The studio has a reputation for high-quality games, winning the Developer of the Year award at the Game Awards in 2015. Starting in 2017, CD Project Red began talking about a massive new game it had in development, a high-budget title called Cyberpunk 2077, based upon a terrifically popular series of tabletop games first released in the 1980s.
Cyberpunk 2077 was originally supposed to be released in April 2020. It then got pushed back to November, finally being released on December 10. Reviews for this game are all over the map, with reviewer Rick Lane calling it "the best and worst game CD Projekt has made."
Certain glitches have caused CD Projekt to apologize and promise to fix the game and to offer refunds. Meanwhile, three things are happening:
The buzz around the game is incessant, including a tweetstorm by Tesla (NASDAQ: TSLA) CEO and ardent video gamer Elon Musk;
CD Projekt Red is quickly rolling out patches;
The company's stock has tanked, dropping some 30%.
I'm giving a lot of this detail to show the reality of studios that produce AAA games (an informal rating that means these take a high budget to develop): There is a great deal of focus placed on the newest title, and the market can and will overreact to the performance of that title, even in the short term. Unlike with movies, development of games can continue even after they have been released (essentially building the car while driving it). While there is no guarantee that CD Projekt will successfully make the adjustments to Cyberpunk 2077, it still has a Metacritic rating of 89, which shows just how high expectations were. This game is a massive winner, and I believe that it will not only overcome the challenges wrought by its sheer ambitiousness, it will leave a massive global community thirsty for more."
