Playtika said it will not be launching any new titles until the marketing landscape “fundamentally changes” as it reported its Q422 results today.
Instead, it will be focusing future investments on “high growth potential studios”, citing the example of its $25m investment in Fiona’s Farm developer Ace Games, made in November 2022.
Explaining the decision, Playtika president and CFO Craig Abrahams said that while its Wooga studio continues to evaluate new games, it won’t actually be launching any for the foreseeable future.
“While we saw that our new games received positive feedback from our players and achieved strong retention numbers, the marketing environment and increasing CPIs for new games made it challenging for us to scale these games profitably,” he said.
“Based on the current marketing environment, we made the decision to temporarily suspend our new game development pipeline until the ROI for new games is economically viable.”
“We continue to focus our marketing efforts on higher quality traffic sources and generating ROI driven by our scale and AI technology,” he continued. “Our marketing strategy of combining our UA efforts with offline campaigns is a competitive advantage for Playtika, and we will continue to maintain our focus on Tier-1 markets, and shifting more of our UA spending to our growth titles.”
Later in the following conference call Abrahams added:
“In terms of the new game pipeline, we continued to develop great games throughout 2022 with great retention and monetisation metrics. The real big difference from years past was the cost of installations, and with the CPI going up so much the math around return on investment just wasn’t working. And so until that fundamentally changes, we don’t believe it’s prudent for us to invest significant dollars into new game development.”
Some further highlights from elsewhere in the financials here:
- Q4 revenue was down 2.7% year-on-year to $631.2m
- Casual game revenue was up 2.7% YOY
- Bingo Blitz revenue was up 18.4% YOY to $155.1m
- Solitaire Grand Harvest revenue was up 18.7% YOY to $72.8m
- Social casino games revenue was down 8.6% YOY
- …this was mostly due to Slotomania revenue dropping 9% YOY to $149.2m
Full FY 2022:
- Overall revenue was up 1.3% YOY to $2.616bn
- Credit adjusted EBITDA was down YOY to $805.1m compared to $848.7m the prior year
- Free cash flow was down to $383.7m compared to $452.1m in the prior year
- FY23 revenue is expected to be between $2.570-$2.620bn, compared to $2.616bn in FY22
- Credit adjusted EBITDA expected to be between $805-$830m compared to $805.1m in FY22
- Capital expenditures expected to be between $115-$120m compared to $110m in FY22
Playtika has rarely been out of the headlines in the last year, having closed Best Fiends studio Seriously, laid off over 600 staff and launched a takeover bid for Rovio in January this year.