Team17 Group PLC (AIM:TM17) told investors it continued to trade above management expectation through the second half of 2021 whilst also announcing a pair of new acquisitions with a potential total deal value of around £60mln.
The publisher of indie games and ‘edutainment’ said full year revenue and earnings (adjusted EBTIDA) will be ahead of its prior expectations and ahead of 2020, which was previously described as benefitting from “a significant one-off benefit across the whole back catalogue” driven by the pandemic triggered surge in gaming.
“The company has therefore entered FY 2022 with confidence,” Team17 said in a statement, adding: “We continue to monitor the pandemic and the broader macro-economic environment and expect these to remain key considerations across H1 2022 and beyond.”
Team17 this morning announced the separate acquisitions of tactical World War 2 first-person shooter Hell Let Loose (HLL), up until now a third-party game published via the company’s platform, and US-based subscription gaming indie publisher The Label.
Hell Let Loose
It is paying £31mln to acquire the HLL intellectual property of HLL, comprising £19.75mln in cash and £11.25mln of shares, plus up to £15mln of contingent earn out based on performance over the coming years.
HLL was developed by indie studio Black Matter. It has ‘over six million owners’ and a highly engaged community, the company highlighted. It is available across multiple platforms, launched via Microsoft Windows in 2019 and more recently added to Playstation 5 and Xbox in the fourth quarter of 2021.
According to Team17, the deal provides the opportunity to extend the lifecycle of the existing game, including further downloadable content, potential sequels, and other commercial opportunities for a franchise.
“Hell Let Loose has quickly become a highly credible and innovative multiplayer tactical first-person shooter supported by a very passionate and highly engaged community with over six million players,” said Team17 chief executive Michael Pattison.
“We firmly believe Hell Let Loose can become the definitive large-scale team-based military simulation.
"This acquisition represents an important next step in our strategy to expand our ownership of IP that is not only of the highest quality, but importantly has long-term growth potential."
The Label
Team17’s deal for The Label marks a move into subscription-based gaming, which is a relatively new but potentially fast-growing revenue model for the industry to be driven by Apple’s Arcade platform along with the likes of Netflix and Google.
The London-listed company is acquiring San Francisco based publisher for an initial US$24mln (£17.76mln), with US$18mln (£13.32mln) paid in cash and US$6mln (£4.44mln) in shares, plus up to US16mln (£11.84mln) of earn out tied to performance over a three-year period.
It is described as a “significant strategic milestone” that extends Team17’s reach into high growth mobile subscription segment of the games industry.
The Label was a launch partner to both Apple and Google as they launched their respective subscription gaming services, and, according to Team17, the business is considered a pioneer within the subscription games market.
The company highlighted that subscription gaming is forecast to grow to be worth more than US$11bn per year by the end of 2025.
It is expected to be a margin enhancing and earnings accretive deal in the first full year of ownership.
"We are absolutely thrilled to be joining forces with The Label's entrepreneurial team, who are true pioneers in the delivery of quality mobile subscription games and technology,” said Michael Pattison, Team17 chief executive.
“We are excited to tap into their unrivalled market and gaming experience to further take advantage of this growing market.
"The Label is a fantastic addition to the Team17 family, creating an indie game powerhouse across PC, console and mobile platforms.”