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Conclusion
The games development business model is
one that is made appealing not by the publisher advances that comprise most developers' turnover nor the modest margin that some developers make on them but by the upside potential that comes from best-selling
releases. Argonaut, who received a £5.3m net royalty cheque from a single SKU in February 2002,
is evidence of this potential. The quality of product and the volume of this product flow will determine the extent to which this potential can be realised. Bits, which has been around for nearly as long as Argonaut, has proven itself a capable handheld games developer but has yet to establish itself as a premium quality console games developer. With even the larger and more commercially successful developers finding publishing deals increasingly difficult to conclude expeditiously, smaller developers are finding life particularly tough as evidenced by the cancellation of a key Bits product and the resultant profits warning. The European games development market has moved from a period of considerable proliferation during the late 90s to one of rapid consolidation with developers going under or being bought at an unprecedented rate. Bits won a reprieve with the signing of its Constantine game to SCi but this failed to sell in volume and ultimately failed to secure the Company's future as a traditional games developer. Fortune dropped a new opportunity on Bits which identified a niche in the online gambling market following the creation of an online gambling game in 2005. Seizing on the opportunity and the investor interest that sprung up, Bits has shed its traditional games development skin and re-emerged following a revitalising £1.5m fund raising in early 2006, as a gambling company.
As a gambling company, Bits now falls outside of Games Investors' research remit and so coverage has now ceased.
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