tinyBuild Inc (LSE:TBLD), the indie game publisher, lost a fifth of its value on Tuesday after it said it expects to struggle to obtain profitability for the rest of the financial year, having suffered huge pre-tax losses in the first half.
Plans to release two new titles over the next six months have been hampered by headwinds such as tougher macroeconomic conditions, changes and new additions to an already crowded gaming industry and reduced revenues from subscription-based digital platform deals like Xbox Game Pass.
Considering this tough environment, tinyBuild has reiterated its already lowered guidance and said its management is fully focused on two new areas which the company views as important for its turnaround.
Firstly, the leadership hopes to hone in on the ‘1000-hour game model’, developing video games which can be replayed or take longer to complete, which in turn allows for a bigger franchise to be created, with sequels and spin-offs to attach to the IP.
Alex Nichiporchik, chief executive officer of tinyBuild, said in a company statement: "The speed of change in the video games industry is insane and we know we have to adapt quickly if we want to grow above peers. For this reason, we have been gradually shifting towards what we call the 1000-hour game.
"In a difficult environment, we continue to invest cautiously in higher-budget games that have the potential to become very large franchises. We are setting new company records in terms of wishlists on our new IP and leveraging our decentralised structure to fit the different reality of each development team, wherever they are in the world."
Secondly, the company wants to provide better transparency about its financial progress specific to each project it is working on, potentially a decision that is part of the choice to split the chief operating officer role amongst a wider group of staff members following Luke Burtis’ departure in March.
Sales for the first half dropped 19% to US$23.3 million, a result of weaker development service revenues and poor performance of a newly released game.
The company slipped to a pre-tax loss of US$31.9 million from a profit of US$6.8million in the year prior.
Shares in tinyBuild are currently trading at around 10p on Tuesday, down over 90% in the year-to-date.