QTech launches funding round for studio group concept

4 February 2019

Asia-focused distributor QTech Games has launched a $3m (£2.3m/€2.6m) funding round for a new gaming studio network that will seek to exploit the shift towards consolidation in the industry.

The GameFactory venture will acquire or form partnerships with gaming studios worldwide following the initial funding process, which will be used to support the initiative’s proof of concept, QTech said.

QTech told iGamingBusiness.com that the funding round was launched to “select investor contacts” on January 15 and is set to run until the end of April, although a further funding round could take place in the third quarter of 2019.

GameFactory will embark on what has been described as an “acquisition spree” in the second half of this year, with the final quarter looking most likely at present.

GameFactory will allow the studios to continue to develop their games independently whilst handling sales centrally, backed by an existing compliance and administration framework, in addition to licences in the UK and European Union.

Markus Nasholm, who was appointed as QTech’s global CEO last month, said that a typical investment prospect will have between five and 10 games live and will “preferably” be generating revenues, whether through a portfolio of games, standalone game titles or exclusive distribution agreements in certain markets.

GameFactory is seeking to form a studio group of between 10 and 15 “rising stars of iGaming” after having been launched by QTech in response to the rapid growth in the number of game development studios over the past four to eight years. Swedish studio Snowborn Games is one venture to have been brought into the fold, with its Portals production having been launched on limited release in January and exclusively via QTech’s platform.

QTech said that it hopes GameFactory will establish a studio group that will have the “flexibility and freshness to take on the likes of NetEnt and Playtech in a B2B-supplier era that has yet to truly consolidate”.

Nasholm (pictured) said: “Time was when behemoths like Novomatic, Playtech, Microgaming and NetEnt dominated the gaming landscape. But now there are a few hundred studios chasing their coattails which have trouble growing, getting distribution and complying with increasing regulatory demands.

“The trend for consolidation is industry-wide – we have seen this among casino operators and in the affiliate space. Indeed, my former employer Catena Media is a great example, showing the power of combining smaller outfits with a greater group.

“However, when combining, the danger is that breakout talents can lose their way and individuality in the process, and when you’re at scale-up stage, you can’t afford to risk that. GameFactory safeguards this principle with a strong set of central mechanics, a clear business ethos and a core sense of identity, supported by a team of experienced veterans.”

QTech will unveil GameFactory’s senior recruits to support the initiative in the coming months.