Team17 wants to dip into the ‘M&A market’ less than a year after layoffs

UK publisher Team17 is pursuing mergers and acquisitions to accelerate revenue growth. In its latest investor presentation, the studio explained it has a “strong balance sheet” that can support M&A optionality.

The company intends to select deals with an “indie focus” and said those moves are part of its mid-term plan. It’s an interesting tidbit considering Team17 has been through the wringer lately.

The company conducted a round of layoffs in October 2023 (Eurogamer reported that at least 50 people were made redundant) that appeared to largely impact the company’s QA team.

Those redundancies were made a few months after the departure of long-serving CEO Debbie Bestwick, whose tenure was rocked by allegations of poor working conditions within the studio.

Bestwick was replaced by current chief exec Steve Bell, who explained the company is tightening its focus on “core markets” such as indie, edutainment, and working simulation games.

“Our focus on creating a portfolio of games and apps with evergreen longevity, and leveraging our excellent lifecycle management capabilities, ideally positions us to capitalize on this and build a lifetime of play within our growing portfolio and player base,” said Bell in the company’s half-year fiscal report.

That report elaborated on the company’s M&A ambitions and explained Team17 sees a “clear opportunity to acquire quality assets, including established IP to support the back catalogue.”

“The Group is in the process of strengthening its internal structure and is making targeted senior hires (such as a Group Legal Director), which put it in a stronger position to fully scale and leverage attractive opportunities as they arise,” it added.

Team17 back catalog releases driving revenue growth

Team17 saw consolidated revenue increase by 11 percent to £80.6 million ($106.3 million) during the six-months ended June 30, 2024. It launched nine new titles (including three new apps) over that period, but noted those new releases only accounted for around 8 percent (£6.3 million) of total revenue.

Back catalog titles delivered 92 percent (£74 million) of total revenue “driven by excellent lifecycle management and consumer behavior”

Elaborating on how it intends to improve profitability and ROI moving forward, Team17 said it has already tightened cost controls and sharpened its greenlight process.

“The focus on cost control is Group-wide and a leaner cost base will support improved profitability over the mid-term. Total development costs fell 36 percent in the period. Administrative costs also fell, with the return of marketing costs to historic levels, a further indicator of the Group’s greater cost discipline,” states the fiscal report.

“We continue to implement strict controls and reviews as part of the greenlight process to ensure we identify the highest quality games that are primed for success, and the right games to complement our existing portfolio. Speed is essential to remain competitive, and with a framework in place to enable quicker decisions with fewer people involved, Games Label is now benefitting from a higher number of titles signed.”

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