Q&A: Codemasters' Cousens Talks U.S. Expansion, Acquisition Possibilities

Veteran British developer/publisher Codemasters is perhaps best known for the Colin McRae/DiRT racing series, but thanks to an influx of venture capital funding in recent years, it's making an attempt to expand worldwide in multiple areas. For example, the firm has launched PC MMOs such as Archlord and RF Online, and operates The Lord Of The Rings Online in Europe. In addition, it's funding high-profile next-gen titles such as Turning Point: Fall Of Liberty, as well as debuting Clive Barker's Jericho to mixed reviews last holiday season. Although the firm has thus far lacked a major worldwide hit, CEO Rod Cousens is still bullish on prospects for expansion. "I think, in terms of measuring us against the market, we're the fastest-growing," Cousens asserts. "Not in scale -- but we're recording the highest percentage revenue growth in the industry. For us, it's an exciting time and an exciting industry, where the future holds opportunities for all." Upbeat and genial, the CEO of the Guildford, UK publisher is putting his faith in the company's proprietary Ego Engine technology to support them in next-gen development. It's currently being used to develop Codemasters' upcoming Operation Flashpoint 2: Dragon Rising. But Cousens has no immediate plans to try to compete in the engine arena or to license the Ego Engine to competitors. However, he said, Codemasters might consider licensing it to aligned industries -- motor racing design or film, for example -- on a case by case basis. "Right now, though, we've got no ambition to give our competitive advantage away to anyone else," he says. "We think it’s an incredible asset for this company and I get fairly selfish about those things." Next-Gen's Long Lifecycle So how is Codemasters finding the next-gen development process, some three years in? In the previous console generation, this point in time might be considered the middle of the lifecycle -- but Cousens feels it's a different game this time around. "We're still in the early stages of making a general statement," he says. "It depends on the format, for example -- in real terms, the Wii is more or less an extension of GameCube technology. But if you're measuring it on PlayStation 3, we're still in the infancy." He continues, "Even allowing for the Xbox 360 being in its third year, it's still the very early stages," he adds. "I believe, as a consequence... as we're figuring out the architecture of the various formats, building on tools and technology libraries, games will get far more sophisticated, a richer experience." Cousens seems to believe in Sony's stated 10-year plan for the PS3, given that he describes it as infant alongside the Xbox 360's head start. And he agrees with the general sentiment that the PS3's architecture is comparatively much more complicated. But, he adds, "The interesting thing is, if you travel to Japan and talk to the development community there and you ask them their experiences, given that they've had something of a lead-time advantage over their Western counterparts, their position is that once you figure it out, it's beautiful." So despite Microsoft's market lead and a veritable Wii explosion, Cousens has a lot of faith in the PlayStation 3 as a formidable future contender, citing Sony's universal distribution strength in Europe and in emerging markets. "The battle for the current cycle is far from determined," Cousens says summarily. "It's all to play for and anyone's game as yet. For us as an independent software publisher, that's great." Will Codemasters Be Bought? But will Codemasters remain independent? Recent reports had suggested that the company may be seeking a buyer, but Cousens refutes this. "I don’t think we're looking to be bought out," he says. "I can't legislate the actions of others." He continues, "If actions of others involve a pretty aggressive acquisition strategy – and those are the indicators in the market, consolidation —t he fact remains that Codemasters' principle shareholder is a VC firm, and they will look at maximizing their value, either through an IPO or through a sale at some stage." Has Cousens received any notice that the investors are ready to make a move? Not yet, he says. "There’s no pressure on us to do that, no immediate timetable from an operational aspect." Right now, Cousens adds, his focus is on achieving further growth and building value. "Whether we whet the appetite of others to the extent that their coffers are unloaded to a high level remains to be seen." The Consolidation Question And what about that somewhat controversial market trend that seems to favor consolidation? We asked Cousens how he thinks it might impact the industry in the long term. "I've been in this industry for more than 25 years, and from the day I walked in, there's been talk of consolidation," he says. "The costs of doing business in the video games industry today are far more significant than they ever were, and so therefore having the resources behind you to support ambitious development projects are clearly beneficial." However, despite these benefits, Cousens sees the potential for adverse effects, too. "In saying that, if you look around and look at aligned industries such as music and motion pictures, and the consolidation in those industries, what happened is they essentially went through a period of stagnation. They missed out on consumer trends, and lifestyle trends." Cousens cites innovation on the part of smaller studios that helped buck the film industry's stagnation, and stressed its importance. "I think that you have to be careful to continue to innovate," he said. "And innovation will always come to the fore, and the challenge for the large conglomerate is not to be stifled by formulas and predictability and always to be on the lookout for innovation. And that makes us a pretty exciting prospect." How, in Cousens' opinion, is the game industry doing in the innovation department? Depends who you're talking about, he says. "Some people have managed creativity well, and some haven’t. Some have demonstrated a good track record of embracing creativity and building on it, and others have shown a unique ability to stifle consistently, to the point where it becomes vaporware." Drawing an analogy to the film industry again, Cousens says, "What is interesting is when you have independent movie makers like New Line and Miramax, and then you have Pixar being the largest shareholder in Disney – how is this allowed to happen, how do these incredible, well-funded brilliant conglomerates with every form of strategic thinking known to man at their disposal miss this? But they did." U.S. At The Fore For Codemasters, Cousens said he's confident in his team's creativity, prioritizing keeping the consumer engaged. One thing he feels is critical to the company's future growth is the development talent pool in the United States. "Obviously our ambition is to build our business in the U.S.," Cousens says. "And when I look at the marketplace, our best chances of doing so is working with the U.S. development community. And so we will look at that very closely." Concluded Cousens, "It could be building a studio or investing in acquisitions, but I do know that in terms of technology, they're at the fore. In terms of ideas, they're at the fore. And in terms of costs, they're at the fore. I look forward to working with them."