British publisher Team17 is pursuing mergers and acquisitions to accelerate revenue growth. In his latest presentation to investorsThe firm said it has a “strong balance sheet” that can support the M&A option.
The company is looking to select deals with an “indie focus,” and has said that these moves are part of its medium-term plan. It’s an interesting detail, considering that Team17 has been put to the test lately.
The company conducted a round of layoffs in October 2023 (Eurogamer reported that at least 50 people have been laid off) which appeared to have a significant impact on the company's QA team.
These layoffs were made just months after the departure of longtime CEO Debbie Bestwickwhose mandate was shaken by allegations of poor working conditions inside the studio.
Bestwick has been replaced by current CEO Steve Bell, who said the company is focusing its attention on “core markets” such as indie, edutainment and workplace simulation games.
“Our goal of building a portfolio of games and apps with timeless longevity and leveraging our excellent lifecycle management capabilities positions us ideally to capitalize on this and build a life of play within our portfolio and our growing player base,” Bell said in the company's half-yearly fiscal report.
The report elaborated on the company’s M&A ambitions and explained that Team17 sees “a clear opportunity to acquire quality assets, including established intellectual property, to support its back catalogue.”
“The Group is strengthening its internal structure and making targeted senior hires (such as a Group Legal Director), which will put it in a stronger position to scale up and take full advantage of the exciting opportunities that arise,” he added.
Team17 Back-Catalog Releases Drive Revenue Growth
Team17 saw consolidated revenues rise 11 percent to £80.6 million ($106.3 million) in the six months ended June 30, 2024. It launched nine new titles (including three new apps) in that period, but noted that those new releases only accounted for about 8 percent (£6.3 million) of total revenues.
Back catalogue titles generated 92 per cent (£74m) of total revenue “driven by excellent lifecycle management and consumer behaviour”
Detailing how it plans to improve profitability and ROI going forward, Team17 said it has already tightened cost controls and refined its approval process.
“The focus on cost control is on the entire Group and a leaner cost base will support improved profitability in the medium term. Total development costs fell by 36 percent in the period. Administrative costs also fell, with marketing costs returning to historical levels, a further indicator of the Group's increased cost discipline,” the fiscal report states.
“We continue to implement rigorous checks and reviews as part of the greenlight process to ensure we identify the highest quality games that are poised for success and the right games to complement our existing portfolio. Speed is essential to staying competitive and with a framework in place to enable faster decisions with fewer people involved, Games Label is now benefiting from a greater number of signed titles.”