(Reuters) -Swedish gaming company Embracer reported a first-quarter operating profit that was well below analysts’ estimates on Thursday, flagging catalogue softness for the business developing games for PCs and consoles.
That softness was due to launches of competing games in the quarter that took players’ time and attention, leading to a slowdown in gamer acquisition for Embracer’s Kingdom Come Deliverance II, which was launched in February, it said.
WHY IT’S IMPORTANT
As the pandemic-era surge in gaming recedes, delayed game releases and rising PC and console prices, exacerbated by U.S. import duties, are dampening the industry’s growth.
Worsening consumer sentiment is also forcing video game developers to rethink their business models and the production process for their titles.
CONTEXT
Embracer, the owner of the Tomb Raider franchise, last year decided to split into three listed companies after being hit by development delays, weak demand and the collapse of a planned strategic partnership.
Last month, its French peer Ubisoft said it planned to split its business into “creative houses” based on specific genres, following a quarterly earnings miss.
BY THE NUMBERS
The gaming group reported an adjusted operating profit of 75 million Swedish crowns ($7.9 million) for its fiscal first quarter, compared to analysts’ consensus of 141 million crowns compiled by it.
($1 = 9.5418 Swedish crowns)
(Reporting by Vera Dvorakova and Leo Marchandon in Gdansk, editing by Milla Nissi-Prussak)
