Star Game Company Born in IT Desert Poland, CD Projekt [Hidden Industry Story]

Started as a game distributor in Poland where illegal copying was rampant
Released 'The Witcher' after 5 years of development
Achieved 2nd largest market cap among European game companies

Logo of Polish game company 'CD Projekt'. / Photo by Wikipedia capture

[Asia Economy Reporter Lim Juhyung] As the global pandemic of the novel coronavirus infection (COVID-19) has emphasized the importance of non-face-to-face businesses, game development companies are also receiving great attention. Europe, home to gaming industry powerhouses such as Germany, the United Kingdom, and France, is no exception to this trend.

Among them, the most notable game company in Europe this year was not from the traditional Western European gaming powerhouses but from Poland, an Eastern European country: 'CD Projekt (CDPR)'. CDPR, which rose to stardom as an IT company with the single game franchise 'The Witcher,' recorded the highest market capitalization among European gaming companies for a time in May this year, attracting enthusiastic interest from investors. What is the secret to CDPR's success?

Marcin Iwi?ski, co-founder and CEO who established CDPR in 1994 in Warsaw, the capital of Poland. / Photo by YouTube Capture

◆A Game Distributor Born in the IT Frontier Poland

CDPR was founded in 1994 in Warsaw, the capital of Poland, by Marcin Iwi?ski and Michał Kici?ski, who were high school friends at the time.

At that time, Poland was in a transitional period from a communist regime to a liberal democratic society following the '1989 Revolution.' As a result, the Polish market was flooded with the latest consumer goods such as games and luxury items made in the US and Europe, but the concept of copyright was insufficient, leading to rampant illegal copying. It was an IT frontier.

During this period, Iwi?ski and Kici?ski, who developed a strong interest after encountering Western video games, ambitiously decided to establish a game distribution company to properly introduce games to the Polish market.

The two started their business as so-called 'peddlers,' buying hundreds of game CDs by sending letters to American game sellers and reselling them in the Polish market. By 1999, they had reached the level of localizing foreign games into Polish and selling them directly.

However, their dream was not limited to simply creating an official game distribution network within Poland. CEO Iwi?ski foresaw that CDPR could maintain its growth only by producing and selling games themselves.

Former Polish Prime Minister Donald Tusk gifted a 'The Witcher 2' CD package when former U.S. President Barack Obama visited Poland in 2011. / Photo by Internet Community Capture

◆Achieving No.1 Market Capitalization Among European Game Companies with 'The Witcher' Development

CEO Iwi?ski purchased the rights to the novels of Andrzej Sapkowski, Poland's 'national fantasy novelist,' for $9,500 (approximately 10.5 million KRW) and began developing CDPR's first game, 'The Witcher,' based on them.

'The Witcher' was developed over five years from 2002 to 2007 with about 100 employees and a budget of approximately 10 billion KRW. At the time, CDPR was just a small game distributor, so it was a big gamble, but when the game was released in 2007, it received critical and public acclaim and sold 2 million copies.

Riding on the commercial success of 'The Witcher,' CDPR accelerated the development of sequels. 'The Witcher 2,' released in 2011, sold over 10 million copies in just one week. Notably, then-Prime Minister Donald Tusk presented a 'Witcher 2' CD package as a commemorative gift when former U.S. President Barack Obama visited Poland that same year.

'The Witcher 3,' released in 2015, became CDPR's bestseller with cumulative sales of 30 million copies over five years. As of last year, CDPR recorded sales of 521.2 million zloty (approximately 152.8 billion KRW) and operating profit of 189.1 million zloty (approximately 55.4 billion KRW). On May 18, CDPR briefly reached a market capitalization of 8.3663 billion euros (approximately 10.99 trillion KRW), ranking first among European game companies. All these achievements were made with just one game franchise, The Witcher.

Released in 2015, "The Witcher 3" achieved great success, sweeping more than 200 awards at various ceremonies and selling over 10 million copies. / Photo by Internet Community Capture

◆"CDPR's Business Model is Making Money with Honesty and Integrity"

CDPR cites its 'consumer-friendly policy' as the secret to its success. Rather than maximizing operating profit in the short term, building long-term trust with consumers is a more stable business model.

In fact, CDPR is known for adopting sales policies that favor consumers. A representative example is the release of 'Enhanced Editions' that supplement content and improvements of previously released games, which were distributed free of charge to customers who had already purchased the games.

Also, after receiving concerns that DRM (digital rights management) software, which game companies apply to prevent illegal copying of content, degrades computer performance, CDPR abandoned its use. This decision prioritized consumer experience over potential losses from illegal copying.

Regarding this, CEO Iwi?ski emphasized in an interview with a foreign media outlet before the release of 'The Witcher 3,' "Many companies operate their business from a short-term perspective. They are famous for a 'hit-and-run' strategy," but added, "We do not do business that way."

He continued, "We have provided many additional services that could have been monetized to consumers for free. By doing so, we earn respect from consumers. Making money with honesty and integrity is our business model," he explained.