Devolver readily admits, its first half of 2023 was particularly calm with a total of 4 releases between January and June, only one of which was considered “important” internally, namely Terra Nil. For comparison, Devolver released 7 games in the first half of 2022. As a result, the back catalog did most of the work and represents 87% of the publisher’s revenue over the half (compared to 64% a year earlier) with figurehead the always successful Cult of the Lamb, but also Inscryption which always benefits from excellent word of mouth. The rest of the catalog can’t say the same, however, particularly three games released in 2022 that failed to live up to expectations. “ Devolver is working hard to drive sales of its catalog through a combination of new ports, additional DLC, strategic marketing and strategic pricing mechanisms “, we can read.
She has Devolver eyes
In this context, the turnover for the half-year is 41.4 million euros, down 17%, while the balance sheet remains in the red with an operational loss of 9 million euros and a net loss of 9.5 million euros, results similar to those of the same quarter a year earlier.
As announced at the beginning of August, Devolver has decided to postpone the release of certain titles with strong commercial potential until 2024 in order to give studios time to meet expectations. This is particularly the case of the promising The Plucky Squire. In addition to the recent Gunbrella, titles like Wizard With A Gun, The Talos Principle 2, KarmaZoo and Hellboy: Web of Wyrd are still expected in 2023.
“ The first half of 2023 was a reset for Devolver, with delays in new releases as we prioritize the quality and long-term potential of major titles planned for the second half of 2023 and 2024. Devolver DNA is to incur relatively small expenses for high-quality titles that stand the test of time. We look forward to returning to our normal release cadence for the remainder of 2023 and 2024, with big upcoming titles such as Wizard With A Gun and The Talos Principle 2, as well as The Plucky Squire and Baby Steps “, explains Executive Chairman Harry Miller.
Restructured at the start of the year, the subsidiary Good Shepherd Entertainment is also on track and signed with Rebellion to work on 2000 AD licenses, the catalog of which includes Judge Dredd, Rogue Trooper or ABC Warriors.
Devolver has more than 30 games in its pipeline to come over the next three years, including the big deal of signing Human Fall Flat 2, the sequel to a title that has sold more than 40 million copies. The publisher is aiming for a return to profitability this year, then profitable growth in 2024 and acceleration in 2025.
When subscriptions slip
Devolver is also putting its feet in the water when it comes to the issue of subscriptions like PlayStation Plus and Xbox Game Pass, which are obviously stagnating, which for studios can translate into unsatisfactory economic proposals . “ Following a period of strong growth in subscription contracts in 2021 and 2022, we expect the trend of reduced revenue from subscription contracts to continue in 2024. We expect to continue to decline subscription proposals. subscription agreements that undervalue title values and revenue opportunities in 2023 and 2024 “, we can read. If including major productions from the day of their release in a subscription like Game Pass can apparently cost the manufacturer up to $300 million, as noted estimated itself Microsoft in the recent leak of its documents, the site Games Industry had just published an article reporting a drop in generosity among manufacturers for more modest games.
“ The checks coming from Sony and Microsoft just aren’t as big as they used to be. And that creates problems if you focus on this segment of the market », Underlined Patrick O’Donnell, analyst at Goodbody. “TinyBuild has had the most exposure of all. Devolver has been exposed, but not as much,” he adds. This observation is certainly not unrelated to the signals sent for months by Mat Piscatella of Circana when he emphasizes that subscriptions are having more and more difficulty finding new members, at least on the American market. “ Finding new subscribers beyond the console owner base is proving very difficult », he confirmed recently.
Stagnating in a range from 45 to 48 million subscribers, the PlayStation Plus figures only support this observation. Sony and Microsoft have both opted for an increase in the prices of their subscriptions this year, even if the second named has greater potential in the long term since its Game Pass also targets PC and mobile players via the Xbox Cloud Gaming. In its fantasies revealed in broad daylight, Microsoft sees itself at the head of a kingdom of more than 100 million subscribers by 2030.