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Keywords Studios CEO predicts ‘supercharged years’ as new console cycle begins

Sony unveiled the latest iteration of its PlayStation console series, the PlayStation 5, last week following Microsoft's reveal of the Xbox Series X last year

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The coming release of a new generation of video game consoles, notably Sony’s PlayStation 5 and Microsoft Corp’s (NASDAQ:MSFT) Xbox Series X, is expected to bring several “supercharged years” for video game development service firms, according to Keywords Studios PLC (LON:KWS) boss Andrew Day.

Sony revealed the latest iteration of its PlayStation console series last week, shortly after Microsoft unveiled more details for the Xbox Series X after having unveiled the console initially back in 2019.

READ: Keywords Studios will come out of pandemic stronger than before, says Berenberg as it hikes target price

Speaking to Proactive, Day said that while the tail end of the current generation of video game consoles, in this case, the PlayStation 4 and the Xbox One, tended to see a “softening” in the market, the launch of new hardware would often lead to a refresh alongside a flurry of activity as video game developers moved to adapt their own projects to run on the new hardware.

He added that the new consoles will bring more demanding requirements for developers, which will provide “more opportunities” for companies like Keywords which offer services to help video game studios create their products and assist in areas such as design, engineering, translation and quality control.

The CEO also said that the firm is already involved in helping game developers adapt to the upcoming hardware and that due to the long lead-in times before a new console generation is announced, any disruption to its workstreams is likely to be “minimal”.

Looking ahead, Day said he expected the new cycle to see between “two to three years of increased business”, adding that he foresaw “no negatives” from the next step in video gaming technology

The old console generation will also have a part to play, Day said, as new game releases will often be part of a “dual flow” of titles that are released for both the old and new hardware.

The company could also see some additional opportunity from what the CEO calls “down-ressing”, reducing the resolution of a game so that it can run on lower-performing, older generation hardware.

Another London-listed firm that could receive a boost from the new console generation is Sumo Group PLC (LON:SUMO), a Sheffield-based providing development and visual design services to the video game industry.

Shares in Keywords were 2.4% higher at 1,706p in late-afternoon trading on Tuesday.

Quick facts: Keywords Studios PLC

Price: 2184 GBX

AIM:KWS
Market: AIM
Market Cap: £1.61 billion
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