CD Projekt Cyberpunk 2077
Analysis

Can CD Projekt Recover from the Cyberpunk 2077 Disaster?

CD Projekt, based in Poland, is the developer and publisher of Cyberpunk 2077.  The company has been around for many years, but DFC Intelligence first became interested in them when they launched Good Old Games/GOG.com back in 2008.

Good Old Games was designed as a digital distribution service for PC games along the lines of Steam.  The twist was they focused on older IP.  DFC did an analysis of the GOG and CD Projekt back in 2009.  At the time our focus was entirely on the distribution angle.

However, CD Projekt was also getting into game development.  In 2007 they published The Witcher based on a Polish series of novels.  In 2015, CD Projekt’s fortunes soared with the launch of The Witcher 3.

Outside of the Witcher franchise, CD Projekt’s track record is limited.  Gwent: The Witcher Card Game launched in 2018 but had limited impact.

The company’s big new release was Cyberpunk 2077 which has been in development for years.  Anticipation for this game was huge, especially after it took away multiple game awards at E3 2018.

Originally Cyperpunk 2077 was scheduled to launch in April 2020, it was moved to September, November and finally December 10, 2020, when it actually launched.

Unfortunately, it is clear that the game was simply not ready.  The pressure was on CD Projekt to get the game out the door and the final release was filled with bugs, especially for the console versions.

CD Projekt has been forced to apologize and more importantly for investors the stock has been hammered and class action lawsuits are in the works.

The big issue is not that the game was filled with bugs.  Bugs can be fixed in after launch patches.  The problem with Cyberpunk 2077 was its poor launch took everyone by surprise.  Up until the day of launch everything looked like the game was finished and lived up to its reputation.

Lots of people got burned by the poor quality of Cyberpunk 2077.  Of course, consumers were disappointed, but they were offered refunds and patches should eventually fix many issues.  The longer term impact is on the media, reviewers, and analysts who supported the game.  In addition, there are the distributors, including retailers, Warner Bros, Bandai Namco, as well as Microsoft and Sony, who certified Cyberpunk 2077 for launch on their platforms.

In an investor call in September, DFC Intelligence expressed skepticism that Cyberpunk 2077 would launch in 2020.  On December 9, 2020, a day before the launch, DFC did a call with over 100 institutional investors where we stated that it looked like Cyberpunk 2077 lived up to its reputation and was going to be one of the biggest video game launches of all-time.  In other words, we bought the hype.

Launching a game for console systems requires a seal of approval from the manufacturer, in this case Sony and Microsoft.  The seal basically assures that console products are not filled with bugs and glitches.

The initial reviews for Cyberpunk 2077 were stellar.  However, it turns out most reviewers were playing the PC version, not the bug-ridden console versions.  Post release reviews have been corrected and now on Metacritic the PC version ranks substantially higher than the console versions.

What stands out is that the entire fiasco could have been avoided with some basic marketing and public relations.  Obviously delaying the game or just releasing the PC version would have been the best step.

However, releasing the console versions filed with bugs would have even been okay if consumers knew what they were getting into.  In today’s market video game consumers are smart and willing to accept early access to games filled with bugs.  However, they want to be told upfront that they are playing an unfinished product.  Of course, it would have been nice if reviewers, analyst, and distributors had also been made aware of the issue.

CD Projekt Cyberpunk 2077

CD Projekt stock dropped 50% in December.  This is unacceptable for a company launching a flagship, defining product.  A larger public company would have been able to avoid this with basic public relations and marketing.

The irony is that while CD Projekt’s reputation has been stained, Cyberpunk 2077 is likely to still be a huge long-term success.  The bugs should eventually be fixed ,and many consumers are still interested.  There will be opportunities to rerelease the game for PlayStation 5 and Xbox Series S/X.

Unfortunately, CD Projekt’s reputation has been tarnished.  The company now becomes one to watch as an acquisition candidate.  This was clearly the case where the marketing and publishing of a larger company would have worked wonders.

Prior to the launch of Cyberpunk 2077, Microsoft was frequently mentioned as a potential purchaser of CD Projekt.  However, Microsoft acquired ZeniMax for $7.5 billion in September 2020 so they may not be in a rush to do another big acquisition.

An acquisition of CD Projekt would be a risky bet.  Even as the stock has fallen, CD Projekt is valued about the same as ZeniMax or French publisher Ubisoft.  However, there could be several company’s willing to take that risk.

The main lesson to learn from Cyberpunk 2077 is that the publisher role of managing distribution, marketing and public relations is still an important one.  In an online world the general quality of formal, big event product releases has declined.  Many would argue that the importance of doing a major release promotion has declined.  The launch of Cyberpunk 2077 shows otherwise.

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