Video games business warns some of its titles have underperformed
Video games developer Team17 says some of its titles “are not meeting internal expectations”, as it releases a trading update and revised outlook for the current financial year ending 31 December 2023.
While it currently forecasts FY23 revenues to be modestly ahead of current market expectations, the group adds the under performance of certain titles within the Games Label have resulted in a less favourable mix between higher margin own-IP titles and third-party titles – with higher royalty payments – than anticipated.
Also, the Wakefield and Nottingham-based business say it was too slow to address some project overspends and has faced some delays in implementing key cost initiatives at Team 17 Games Label.
Team17s update notes: “Management continues to be pleased with the performance of astragon and StoryToys.
“However, since the H1 results, and in the light of the post Covid-19 dynamics, management has re-evaluated the cost structure within Team17 Games Label to align with its core competencies as an indie game developer and publisher.
“In addition, it is also reviewing a number of titles, both under development and already launched, to assess the revenue potential in the current market environment, which is expected to result in impairments recognised in FY23.
“Consequently, the group now expects to deliver full year adjusted EBITDA of at least £28.5m, which includes non-cash title impairments of up to £11.5m.
The business says it has a schedule of high-quality new releases planned across the group in 2024, while its back catalogue investments will continue to support revenue growth. It currently expects to see an improved underlying trading performance compared to FY23.