Weaker subscription deals have hit indie publishers, says analyst

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Smaller subscription deals and the underperformance of certain titles have had a severe impact on Devolver and TinyBuild, says stockbroking firm Goodbody.

Both companies floated at the peak of the games business in 2021 and have seen their share prices plummet over the past two years. Devolver has seen its share price drop 92% since its peak in January 2022, while TinyBuild's has fallen 95%

"We have seen from Devolver and TinyBuild that subscription is under pressure at the moment," says Patrick O'Donnell, technology and video gaming analyst at Goodbody.

"The cheques coming from Sony and Microsoft are just not as big as they were. And that creates problems if you're concentrated on that side of the market.

"TinyBuild, of all of them, was most exposed. Devolver was exposed, but not quite as much."

The recent drop for Devolver followed the firm's decision to delay a number of big titles out of its current year. It has also suffered from poor year-on-year comparisons, as the publisher delivered a hit title last summer in Cult of the Lamb.

"Expectations for Devolver this financial year were $115 million to $120 million, and they've had to go back to $90 million. The majority of that is the delay of big releases into 2024. I think those are decision for the right reasons, although investors won't like it in the short term.

"Also, although their back catalogue is resilient, pricing is down 5%, and that’s hurt their EBITA. And they don't have the big games they need to offset that anymore."

"The cheques coming from Sony and Microsoft are just not as big as they were. And that creates problems if you're concentrated on that side of the market"

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