#23 GOŚĆ RAFAŁA IRZYŃSKIEGO: Adam Kiciński, CD Projekt S.A. (08.04.2016), część druga

Hey.

First of all, we want to invest the earned money in more games, in more projects. That is absolutely the most important thing. As I said in the previous part, we want to develop, we want to increase production capacity. That requires funds. Secondly, we can also consider co-investing in further projects at the marketing or distribution level in order to achieve even higher profitability. However, if after that we had a significant amount of cash left that we felt we could share with shareholders, then we would actually prefer, or we recommend as the management board, a share buyback rather than a dividend. The reasons are very simple. In a buyback, only those who want to participate do, while a dividend covers everyone. For example, I don't want a dividend. I know many people who don't want a dividend. If someone wants to, if the buyback actually happens, because first the general meeting must vote, and then the buyback will probably be optional. I don't see the buyback as something that just happens. We will consider when to do it, on what terms, if we have that possibility as the management board. But for example, as of today, I cannot imagine being interested in participating in a share buyback.

More and more signals of interest are reaching me, both from funds that have been interested in the company for a long time and from new funds. Yes, yes. And for some time now, we have been going on foreign roadshows, foreign funds are contacting us. We are very often presented to foreign funds that come to Poland as a sexy global company. And this interest is because The Witcher has become part of the mass consciousness of gamers worldwide, in the US. And that way it reaches managers or analysts. So we are noticed by Western funds. However, we don't have much to offer them. We are not listed on any other exchange besides Warsaw. Of course, they can buy in Warsaw, but they would probably prefer to buy at home, but the interest, yes, I confirm it is there.

But it's not about valuation, it's more about making such good games that players place us in that top three. Valuation is secondary. There's no point comparing to Electronic Arts or Activision. We run a different business. We make fewer games, we have a narrow catalog, and it's not about valuations. Besides, we believe that if we focus on games, on gamers, or on GOG, because at GOG we also focus on games, but on the entire catalog, then we will earn appropriately large money, and the valuation will follow. But we don't speculate in the company about what valuation we would like. That's not a topic of discussion at all.

GOG last year introduced GOG Galaxy, and that is a milestone in GOG's development. Until last year, GOG was a website where you could buy a game and download it to your computer by paying for it. Since last year, it is also an application that you can install on your computer, and within that application, in one environment, like in iTunes for example, you can buy games, install, uninstall, update. So the store or our offer moved from the internet directly to users' computers. And now we are working intensively to add new titles to GOG, because GOG specialized in classic, older titles, and was adding newer and newer titles. Now we have a fairly broad portfolio of new titles from independent creators. However, we still lack the blockbusters, the biggest games. We have our own, we have The Witcher sold with great success on GOG, but we don't yet have other big games on GOG, and that is needed to effectively compete with other digital distributors, because the competition is very precisely defined. So we are working on that. We declared in updating our strategy this year that we would like one such AAA game to be in GOG's catalog this year, a game not from our development studio. How does GOG perform in terms of financial results? Does it have a chance to further improve its profits? We assume so. GOG has been growing year over year since the very beginning, since 2008 when it was launched. Every year it has significantly higher revenues than the previous year. There are growth rates of at least several dozen percent. As for profits, the dynamics have decreased a bit in the last year, because we invested a lot in GOG Galaxy. But nonetheless, GOG has very good profitability. And we believe that digital distribution and our GOG within it has, from our perspective, unlimited possibilities, because this market is gigantic and still growing, and we still have a lot ahead of us. So we don't see any natural barriers for GOG that we could reach.

The most important thing is that we will continue to do what we have been doing successfully, which is games. However, we want to make even bigger games, a bit more. And we signaled that we will go even further beyond the game area when it comes to our two main brands, The Witcher and Cyberpunk. This is already happening, because when it comes to The Witcher, a whole range of non-game products have been created that are successful in their areas, but financially, of course, it's not the same scale as a game, but there are very good comics that are a big success in America, made in America. There is a whole range of high-quality merchandising products sold in two stores. We're talking about figurines, some gadgets. There is a very good board game that has had great success in the board game segment, and then there are the smaller games, well, not smaller, mobile games or free-to-play games that were experimental games so far. But that is also an area we are looking at very intensively. And there are also some areas where we haven't been at all yet, and we have some dreams there.

Not soon, some time still needs to pass, especially since we are talking about a perspective of the next six years, so you'll have to wait a bit. There is still a lot of work ahead of us.

We don't have the film rights, so that's not a question for us. Tomek Bagiński is working on a film, so please ask him. Platinum, we are not participating in this project, we keep our fingers crossed for them, we wish them the best, but it is their project, not ours.

Thank you.