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Tough quarter for Next Games as losses hit $12m and Our World is beset by "technical challenges"

Walking Dead titles said to be profitable, but lack of cash could hold back future development
Tough quarter for Next Games as losses hit $12m and Our World is beset by

Finnish developer Next Games had a tough quarter after it reported a loss of €10.7 million ($12m) for the three months ending September 30th 2018.

That’s a significant decline from the year prior where it claimed €2.1 million ($2.3m) in losses. Revenue was up 110 per cent year-on-year to €13.4 million ($15.1m).

Between January to September, revenue was down seven per cent compared to the previous year at €23.9 million ($27m). Losses grew to €18.7 million ($21m) for the nine-month period.

Challenging few months

The poor performance can be pinpointed to a number of factors. The Walking Dead: No Man’s Land continues to experience a decline in users and sales. New title, location-based AR game The Walking Dead: Our World, was also said to have performed below expectations following some “technical challenges” for the app.

The company claims that after a strong opening marketing campaign, such issues impacted the game’s functionality and led to users leaving and revenue declining.

At its peak, the game had 625,000 daily active users when it launched - Next Games’ combined DAU average for July to September ended up at 668,566.

Next Games claims the issues for Our World have now been addressed, but this has “slowed the game’s revenue development considerably”. The company is also now behind on its plans to recoup that marketing spend.

The studio maintains both its Walking Dead games are still profitable.

Looking ahead

As for the future, Next Games currently has the soft-launched Blade Runner 2049 mobile RPG and has also nabbed a new licence agreement with an entertainment company for another game.

These titles will require investment, however. As a result of underperformance of its existing portfolio, as well as a longer wait for ROI on marketing and higher-than-expected server costs, the company’s cash position has worsened.

This has put the company in a predicament where the revenue from its Walking Dead titles “will not cover the costs related to products in the development phase, before Our World revenue grows”.

“Strengthening Next Games’ cash position is important in order to secure the working capital needed to carry out future scaling of the business, and to develop and publish the products in the company’s development pipeline, according to plan,” said CMO Saara Bergström.

Next Games shares closed at their lowest ever price of €1.48 November 13th. The company finished its first day of trading following its 2017 IPO at €9.5.