Rhys Dekle is a Partner at Strategic Alternatives, a strategy consulting firm focused on acquisitions. Rhys worked in business development for Microsoft Studios for 11 years, where they negotiated deals, like the one the company made with Epic Games for the Gears of War franchise, He has also worked at large companies like McKinsey & Company and Goldman Sachs as well as start-ups. At Casual Connect Europe 2017, Rhys discussed what it takes to get acquired (and how to do so at a premium price).
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“I love my 13-year career in the game industry and I appreciate the rest of my long and winding career for what it is,” said Rhys. “Not everyone ends up with a life working in startups, banking, consulting and managing a P&L – as well as business development/corporate development. I took a step back one day, looked at my skillset and realized there were not many people in the industry who had these particular skills. And I knew at that point that I wanted to put it to use in the service of entrepreneurs in the game industry.”
Good Games = Developer Value
Rhys helps to make sure that developers looking to be acquired can receive the most value. The primary way that a developer can increase that value, in his opinion, is just to make great games; it’s as hard and simple as that.
“It doesn’t matter if you are working on your own original IP or work-for-hire or just working on a piece of someone else’s game,” Rhys emphasized. “It sounds too simple to be useful, but I find too many developers lose sight of this point. Producing a great game as your end-result is the one thing that really ultimately matters to a game studio! And then being able to do that repeatedly and consistently makes you one of the most valuable studios in the world, there are so few who can do that.”
By their nature, many game developers are better at making games than they are at managing a business. This is a concern when a game development entity is looking to be acquired if they haven’t been structured in such a way that makes them an appealing target.
“Game developers most often fail to build an organization that can survive and thrive without them,” detailed Rhys. “They exert too much control directly and fail to bring in great middle management or fail to delegate to management. It’s hard to assign a high valuation to an organization that is just a couple of founders and their obsequious minions.”
The Always Changing Industry
What draws Rhys to the job is getting to work with entrepreneurs. Most game markers are very enthusiastic about their creations and their art, so it’s great to be able to interact with such passionate individuals.
“Entrepreneurs naturally take so many risks as it is; it is rewarding to assist them in navigating some of the complexities of the industry and of growing and selling a business,” he pointed out. “The best thing about when game developers get wealthy is that they almost always plow that money back into the industry investing in new startups, creating their own new thing, deploying know-how and capital. That helps the industry grow even bigger for everyone else.”
While game developers are intriguing entrepreneurs, the industry itself is unique and ever-changing. This dynamism is both because of ever-changing technology and ever-evolving distribution methods.
“The business of video games is so dynamic,” Rhys described. “It has both cyclical elements and brand new factors often introduced as a result of technological innovation. The industry has so many stakeholders and a relatively complex value chain. There is so much change and disruption. Every six months or so you have to step back and ask yourself if the old assumptions still apply. And when those old assumptions no longer work for you, you have to parse the new reality, whatever it may be.”
“There is nothing more exciting than working in video games,” he concluded.
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