Q&A: Kabatznik On FlatOut Growth For Empire/Strategy First

Silverstar Holdings' Clive Kabatznik has been making an intriguing play into game publishing of late, purchasing both North America's Strategy First (Disciples) from bankruptcy court and the UK's Empire Interactive (FlatOut) for a $7.2 million deal, both in the past two years. What's the next move for the diversified South African entrepreneur whose public-traded company has previously invested in semi-conductor company Magnolia Broadband, and even recently sold an interest in a fantasy sports website? Gamasutra caught up with Kabatznik to find out. Silverstar's Overall Strategy? When questioned on Silverstar Holdings' plans for the video game space, Kabatznik was enthusiastic about growth, even alluding to possible acquisitions in the future, commenting: “In the long term, we think that there is a definite opportunity for us to acquire middle market game publishers from within the $5 to 50 million revenue space.” He added: “With the big companies consolidating into giants, small to medium sized companies have had a hard time getting attention in terms of acquisitions. We think that there is a very real opportunity to combine businesses for reasonable prices in order to give us the advantage of being larger within the game space.” One of these very game companies is Strategy First, which was rescued from bankruptcy by Silverstar Holdings in April 2005. Since then, the company has gone on to expand beyond its traditional niche PC strategy game borders to include digital distribution, as well as a pair of recently announced Nintendo DS titles - Disciples II DS and Warlords DS. Strategy First's Niche DS Horizon Kabatznik reveals that the company also plans to ship Jagged Alliance 3 and Disciples II for the PC later this year, and that Strategy First's efforts for the DS handheld will continue beyond these two releases, with Jagged Alliance DS to follow in the next six months as well. “These games will be adapted for the DS market, and will feature gameplay that is modified to suit the portable market as well as the capabilities of the DS handheld,” noted the CEO, adding, “We believe the DS market is large enough and that there is a significant niche within the game space for these sorts of strategy games.” Kabatznik also offered no presumptions that these games will be anything more than niche releases for the DS, noting, “These games might not be the most popular releases, or appeal to everyone out there, but we believe there is a place for them in the market. In addition, we have spoken to retailers and members of the community, and are discovering that because the DS market is so large, there is an appetite for these sorts of games.” Xbox Live Arcade Possibilities? Interestingly, while Strategy First is recognized for its strategic offerings, Kabatznik noted that the company is entertaining the idea of expanding into the casual games space, as well as other platforms. When questioned as to the possibility of releasing titles on services such as Xbox Live Arcade, for example, the executive noted: “We are looking at it, but not in the short turn. I can see Strategy First getting involved in the casual games market, before moving to bigger platforms. We we need to break out of the strategy PC niche, and in the short term term I see us being publishers of casual games that feed into our strengths in digital platforms.” Into The Digital Empire Another of Silverstar's video game acquisitions came in October 2006 with the purchase of European publisher Empire Interactive (FlatOut 2, Taito Legends). Given the diversity of Empire's console and budget game offerings compared to the relative niche catalogue of Strategy First, Kabatznik explained that he intends to keep the companies separate. “Most likely Strategy First will be left to its own devices,” commented Kabatznik. “They have been fairly niche in the past, whereas Empire is a more fully fledged publisher.” However,” he continued, “there are skill sets within Strategy First that are applicable to Empire. Where Strategy First has been ahead of the curve in digital distribution, we are finding that their capabilities within the digital space are very appropriate of Empire, and thus very valuable. This is something that Empire wasn't doing, and there is a skill set within Strategy First for that.” Empire's 'Big Franchise' Next-Gen Plans Empire officials recently announced plans to bring Bugbear's racing franchise FlatOut to the Xbox 360 this year with the tentatively titled FlatOut Ultimate Carnage, and Kabatznik commented that, for now, this is the only title planned by Empire for the newest crop of consoles. “Right now we are looking at our 2008 release schedule,” noted the executive when asked about any other titles in development for next-gen consoles. “Empire has a number of big franchises, and right now we are looking at a number of candidates. I'm sure that by fiscal 2008 there will be something on the market for next-gen platforms”. With regard to FlatOut's release for the Xbox 360, Silverstar Holdings is looking into publishing alternatives for the game, but the title may ship in North America via another publisher, since Empire only publishes games in Europe right now. Previous FlatOut titles were published by Vivendi in the U.S. “We are looking at all alternatives, but [Empire] was already fairly far along in the process when we picked them up,” stated Kabatznik. “At this point, my guess would be that the game would be released similar to how it was done in the past, such as licensed to another publisher. Right now it's probably a bit premature for us to self publish the title.” Overall, though, it seems like that Kabatznik is planning for continued expansion, including moving further into console publishing in North America. It's going to be interesting to see how his dual publishing acquisitions pay off over the next few months and years.