Current-gen game delays stifle Keywords growth

Current-gen game delays stifle Keywords growth
Craig Chapple

By Craig Chapple

September 20th 2013 at 10:02AM

Publishers holding back game development to focus on PS4 and Xbox One releases

UK QA and localisation firm Keywords Studios, which recently went public, says a delay in publishers releasing current-gen titles as they prepare for next-gen consoles is affecting its revenue targets.

The company launched an initial public offering on the alternative investments market (AIM) in July, and had expected a strong drive in the second half of 2013 on the back of a plethora of game releases on current and then next-gen consoles.

In a trading update however the firm said anticipated levels of activity in recent months had been lower than expected as developers and publishers hold off on releasing their games.

It claims publishers are holding fire to invest in PS4 and Xbox One content, and to also allow time for the focus on next-gen consoles to die down.

Keywords also stated the scaling back of launch territories for the PS4 and Xbox One had also affected its business.

The PS4 is set to launch in the US on November 15th, and in Europe on November 29th, while the hardware will land in Asia territories during December. Japan won’t receive the console until February 22nd.

The Xbox One had been set to launch on November 22nd in 21 countries, but was scaled back to 13 territories including the US, UK, France, Germany and Ireland.

“Given the intense industry focus on these simultaneous major new console launches, several publishers have very recently chosen to defer launches of current generation console titles in order to focus financial resources and capacity on new generation games and be able to launch at a time when marketing current generation games will achieve a better share of attention,” read a statement.

“In addition, the late timing of the launches offers fewer opportunities for further game franchises to be launched ahead of the key Christmas sales period.”

Despite the lower than expected activity in the game industry, Keywords said it still expected to expand its market share, but expects to report similar profits to the last fiscal year.

Following its admission to the London Stock Exchange the market cap of the business stood at £49.2m, and had a placing price of 123p. This raised estimated gross proceeds of £28m, including £19m receivable by the firm.

Keywords currently has a market cap of £58.65 million.

“Notwithstanding the hiatus caused by the timing of the simultaneous launch of two new consoles in an unprecedented launch cycle, we have made considerable progress in strengthening our market share and in the development of our Seattle business from a standing start to employing 60 people,” said Keywords chief exec Andrew Day.

“While it has proven difficult to predict the exact timetable of forthcoming launches, 2014 is expected to be a year of significant activity for the games industry leaving us well placed for substantial growth in the year ahead.”