Playtika announced it would suspend its game development pipeline until the return on investment for new games is “economically feasible”.
Playtika’s President and CFO Craig Abrahams explained the news in their FY22 earnings call. They also discussed the reasons for the company’s decision to not accept an “evolving” industrial landscape.
Abrahams stated that the decision was part of a larger project with the goal of aligning “the company’s expense profile and revenue trends”. This has included actively managing costs and streamlining at all levels.
Abraham stated that “Based on the current market environment, we decided to temporarily suspend the new game development pipeline till the ROI for new gaming is economically feasible.” “The marketing math around the new game pipeline is not working right now.
This announcement comes after December’s news Playtika would be layingoff 600 employees, which amounts to 15% of its total workforce. It is also part of its “noncore” initiatives.
The studio stated that it would invest in its existing titles and increase its investments in other games via M&A.
Abrahams stated that Playtika would continue to create casual games at its Wooga studio. Playtika bought the Berlin-based company in 2018 to help it achieve its larger goal of diversifying into other games genres.
Robert Antokol, CEO of the company, stated that it was “challenging” year for mobile gaming.
Antokol stated, “I am proud about the way we have managed our business in a difficult year for mobile gaming.” We are creating immersive entertainment experiences that are personalized and engaging, thanks to our pioneering technological innovations and our unwavering ambition to inspire exploration and connectivity among our loyal players. This is how we have positioned ourselves as the industry’s top game operator.
For the three-month period ended 31 December, revenue for the business stood at $631.2m (PS527.8m/EUR594.1m), a 2.7% decrease from $649m achieved in Q4 2022.
Studio’s net income from this revenue was $87.5m, a decrease of 14.4%.
The financial results of Playtika’s largest casino games, Bingo Blitz (£155.1m) and Slotomania (£149.2m) were divergent during the quarter. Playtika’s bingo-themed offerings generated revenue of $155.1m. However, the company’s free-to-play slot game saw revenue drop 9.0% to $149.2m.
Abrahams stated that Slotomania was a “strategic priority” for the company and that Playtika was “focused upon stabilizing the game.”
Social casino-themed games saw a decline in revenue during Q4, dropping 8.6% annually.
Revenue for the full year
Playtika reported an increase of 1.6% in revenues to $2.61bn for the entire year.
The revenue costs at $735.7m fell by 0.9%. The second-highest quarter cost was sales and marketing, rising by 3.7% to $603.7m. The total income came to $471.4m after research and development costs of $472.3m and general administrative costs of $332.4m.
The net income for the year was $275.3m. This is 10.8% less than 2022 when you consider interest and other expenses of $110.6m.
Abrahams stated that the company made several strategic choices in FY22 to ensure its continued success. “Playtika’s long-lasting business model and the efficiency measures that we took over the past year put us in a strong place to continue creating value for our shareholders.”
The credit adjusted earnings before interest tax, depreciation, or amortization was $805.1m in the year, which is a decrease by 5.1%.
Playtika announced its financial results as well as a variety of non-financial metrics that are added indicators of its growth.
The number of daily-paying users was stable year over year, increasing slightly to 313,000 from 311,000 in the previous year.
However, the daily active users dropped significantly to 8.8million, compared to 10.3 million Playtika reported last year.
Playtika stated that its 2023 revenue is expected to be between $2.57bn – $2.62bn. EBITDA will be between $805m to $830m.