For the first three quarters of 2023, the producer and publisher of computer games reported PLN 34.28 million in revenue, EBITDA of PLN 1.66 million and net profit of over PLN 1.35 million.
In the third quarter, 11 bit studios generated sales of PLN 9.5 million, with EBITDA at minus PLN 1.28 million. The company incurred a net loss of PLN 2.66 million in the period, primarily due to (non-cash) costs of revaluation of its holding of 116,787 shares in Starward Industries, which saw a lacklustre stock performance in the summer quarter.
11 bit studios poorer financials compared with the corresponding period of 2022 stem from declining sales of games from the Company’s portfolio, a consequence of their natural ageing. “It has been over four years since our last major release, Children of Morta. At the same time, we are stepping up investment in new games, both proprietary productions and those in our publishing portfolio, which translates into higher operating costs. In the first nine months of this year, we spent as much as PLN 41.99 million on game investments,” says Przemysław Marszał, the Company’s CEO.
Despite the recent negative trend, Mr Marszał is optimistic about a turnaround in financial results in the upcoming periods. “We have a strong footing for this. After a few years of ‘’dormancy’, we are moving ahead with our planned game releases, starting from the fourth quarter,” announces Mr Marszał. He acknowledges that although the sales of The Invincible, developed by Starward Industries and launched on November 6th 2023, were below expectations in the lead-up to and aftermath of the release, the positive reviews, especially from gamers, and impressive popularity on Steam (with the title featuring on more than 550,000 wishlists) warrant an assumption that the game will successfully monetise in the long term.
In the fourth quarter, 11 bit studios decided to delay the release of The Thaumaturge, initially scheduled for December 5th 2023, to February 20th 2024. “The additional time gained with this postponement will allow the development studio, Fool’s Theory, in which we hold 40 percent of shares, to refine the product, enhancing its commercial and sales potential. Our marketing department will use these extra weeks for more impactful promotion of The Thaumaturge, a game of the popular RPG genre,” explains the company representative.
Mr Marszał stands by his statements made during the June Investor Conference that the first half of 2024 will abound in new games from 11 bit studios portfolio. Fans can expect, apart from The Thaumaturge, INDIKA, an ambitious game project produced by Odd Meter of Kazakhstan. The next two releases will be the Company’s proprietary titles: Frostpunk 2 and The Alters. “The market debuts of these titles will be a key driver of 11 bit studios financial performance not only next year but also in years to come. Both productions were showcased at media-only presentations during the Gamescom trade fair in Cologne, Germany, in August, receiving exceptionally positive feedback. We firmly believe that they will have an equally positive reception from gamers, who are actively adding both games to their wishlists on Steam,” says Mr Marszał.
Behind the scenes, work is progressing on the development of Project 8 (working name), another item on 11 bit studios proprietary production list, and games from the publishing portfolio: Botin and Ava. The Company plans to start their promotion in 2024 as the releases are scheduled for 2025.
