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Autodesk Buys Bitsquid to Improve 3D Gaming

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To strengthen its position in the 3D game development space, Autodesk Inc. (ADSK) recently acquired Bitsquid AB, the Swedish creator of the Bitsquid 3D game engine. However, the financial details of the deal were not made public.

Autodesk has confirmed that it will continue to work with the various studios using Bitsquid to create games for next-generation consoles and PCs. Further, Autodesk has also acquired the team behind Bitsquid to utilize their expertise and experience for the development of a new 3D game engine.

The Bitsquid engine has been used in a variety of games such as Paradox Interactive's War of the Roses and the upcoming PS4 top-down shooter Helldivers. Meanwhile, the hired Bitsquid team will also help to create new tools for real-time 3D visualization that can be used outside the gaming industry, in spheres such as architecture, manufacturing, construction and film.

Autodesk has adopted an aggressive acquisition strategy to develop its business over the last couple of years. The company acquired Graitec and made fourteen business combination and technology acquisitions during fiscal 2014 for a total consideration of $176.7 million.

The company continues to expand its product portfolio through the acquisitions of small start-ups that are easy to integrate into its own business line. We believe that Autodesk will continue to do so in order to expand its offerings over the long term.

We believe that Autodesk’s new cloud-based offerings are gaining traction. Moreover, the business transition to the cloud-based services will boost the company’s profitability, going forward. Additionally, the company’s focus on expanding its mobile applications for both Apple’s (AAPL) iOS and Google’s (GOOGL) Android platform will further drive market share, going forward.

Autodesk continues to make investments in its portfolio and recently expanded its solutions to include new functionalities like composite analysis technology for its simulation offering. As a result of these investments, the company is seeing greater penetration in industries like aerospace and automotive.

However, increasing competition from Adobe (ADBE) is a concern. Moreover, continued investments in new products are expected to hurt margins in the near term.

Currently, Autodesk has a Zacks Rank #2 (Buy).

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