Deal in Focus: Oxford Capital leads $5m round for Outplay

Dundee is the birthplace of two of the gaming industry's most recognisable titles; the blockbuster Grand Theft Auto series and the addictive 90s sensation, Lemmings. It is also the home of Outplay Entertainment, the mobile games developer whose titles include Bubble Blaze and Monster Legacy.

Outplay was recently the subject of an Oxford Capital-led $5m funding round. The company focuses on free-to-play games, whereby users have free access to most gameplay elements within a title with the option to make in-app purchases of additional virtual goods. It is a model that Oxford Capital had actively been looking to invest in.

"It's a huge global market without borders that's growing at a significant rate," says Oxford Capital's Martyn Holman, who has taken a seat on the Outplay board. "There's a big trend in the gaming industry towards mobile and within that there's a move from traditional paid-for apps towards free-to-play games."

Dundee's explosive gaming hub marks UK as increasingly influential player in this market

From a revenue point of view, free-to-play games present different challenges to more conventional gaming models. Holman explains that Outplay is well positioned to meet those challenges: "The keys to success are efficiently acquiring and then monetising your customers. We like the economics of Outplay, there's a great team in place to deliver success, they have consistently improved the monetisation story throughout their evolution and they are now moving into new genres."

Existing backer Pentech – which provided seed funding to the company in February 2011 and also took part in a $4m round in November 2012, according to unquote" data – introduced Oxford Capital to Outplay. According to Holman, the deal is the fruit of maintaining a "good network of relationships within the growth capital end of the investment spectrum". He adds: "We generally like to work together through syndicated investment deals and then cover the funding requirements of the companies through to ultimate exits."

The seeds for the investment were sown in January, explains Outplay's CEO Douglas Hare, who describes the process as "speedy". Holman adds: "We became involved quite late in the process. We initially had a discussion in the first few weeks of this year. There was other interest in the round, so we had to move quite efficiently."

Influential player
Hare anticipates extensive investment in the gaming industry in Dundee throughout the coming years: "The UK, and Scotland in particular, has had a significant influence on the games industry. There are a number of companies in Dundee alone* – many of them in the 10-30 headcount range. There's so much room for growth in the industry and we're only at the beginning of the journey. It doesn't take too many reasonably performing games to transform any one of the companies around us."

The industry in the city has grown from the success of games developer DMA Design, explains Hare, which developed the famous Grand Theft Auto and Lemmings titles. In 2000, DMA moved to Edinburgh before being rebranded as Rockstar North. Today, publicly-traded Rockstar is the biggest player in the Scottish gaming industry. With a headcount of 65, Outplay is the second largest, according to Hare.

He describes how DMA's high profile attracted talented developers and future entrepreneurs to Dundee, which was then followed by the introduction of bespoke game-focused courses at the city's Abertay University. The courses have become "a feeder into the industry," says Hare. "You have people coming through who have specific games industry experience in a team environment, as opposed to arts or computer science qualifications. They have already been exposed to the real-world challenges that making games presents."

With Oxford Capital's investment enabling Outplay to expand its team, it is quite possible that Abertay University graduates might soon find themselves developing free-to-play games.

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