Smaller game titles stretched by delays in crowded market, Embracer CEO says

Embracer AB

14/11/2024 09:13

By Jesus  Calero
       Nov 14 (Reuters) - Game development delays and extended
production timelines are straining video game companies, the CEO
of Embracer  EMBRACb.ST  said on Thursday, as publishers face
mounting costs and fewer new releases amid market saturation.
    Embracer, a major force in the gaming industry, owns more
than a hundred studios worldwide and is known for popular game
franchises like Tomb Raider, The Lord of the Rings and Kingdom
Come: Deliverance.
    "Games development have been taking longer time for most
companies in the industry to complete to the quality needed,"
CEO Lars Wingefors told Reuters, adding that particularly small
and mid-sized titles were struggling with delays and
underperformance.
    This trend puts pressure on companies' fixed cost bases,
resulting in narrower or negative profit margins if new content
fails to fill the pipeline.
    Embracer, like other gaming groups, benefited from growing
demand for video games during COVID-19 lockdowns, but has since
been hit by development delays, falling demand and poor
reception for some of its new titles.
    It confirmed on Thursday that some of its releases would
move past this fiscal year to optimize quality and revenue
windows, prioritizing strategic timing over immediate gains.
    French peer Ubisoft  UBIP.PA  said last month it expected a
39% drop in its third-quarter net bookings due to no new
releases, delays and underperformance of key titles.
    As average playtime declines worldwide, fewer titles and
studios are gaining a larger share of engagement, gaming
analytics firm Newzoo said in a report last July.
    At the same time, a higher share of playtime is going back
to classic games. 
    Wingefors said that retaining franchises like The Lord of
the Rings and Tomb Raider drives growth in both classic
single-player games and recurring revenue products, capitalizing
on strong fan engagement in an environment where launching new
IPs is increasingly difficult.
    "We had a great success of bringing older products back to
life again," he said.
    Embracer's shares have lost around 80% of their value from
their 2021 peak.

 (Reporting by Jesus Calero in Gdansk; editing by Milla Nissi)
 ((jesus.calero@thomsonreuters.com))