Thunderful Group ditches distributing business to focus entirely on game development and publishing

Another Swedish holding company continues to struggle financially. As part of its ongoing restructuring, Thunderful Group has decided to divest the remaining parts of its distribution business and simplify its strategy.

SteamWorld Heist II

What happened?

According to the official announcement, Thunderful Group will sell Amo Toys, Bergsala Aktiebolag, Thunderful 1, and Thunderful Solutions to Bergsala for SEK 634 million ($59.2 million). The deal is expected to close on June 28.

Founded in 1976, Bergsala is a Swedish distribution company mainly focused on releasing Nintendo games in the Nordic region. Its founder is Owe Bergsten, who is also the largest shareholder in Thunderful Group with a 25.49% stake.

“In order to decrease the debt burden and to obtain necessary liquidity to continue to execute its long-term strategy within the games segment, Thunderful Group has decided to divest the remaining part of the distribution operations,” the statement reads.

Thunderful noted that its game distribution business was affected by “macro-economic downturns, supply chain issues, inventory build-up, and losses generated by Nordic Game Supply.” The performance of the Games segment was largely impacted by a post-covid stagnation, lack of synergies between subsidiaries, and overinvestments made in the last few years.

As part of its new, simplified and clear strategy, Thunderful Group plans to become a “pure-play games company.” Its business will be centered around three segments:

• Publishing — publishing of first-party games and externally developed titles, plus back catalog revenues;
• Game development — development of first-party games based on own IPs;
• Co-development & partner services — internal development on behalf of external licensees and service/support for third-party developers.

Thunderful’s distribution business was focused on selling games, toys, merchandise, and accessories through partnerships with companies such as Nintendo, Take Two, and Konami.

Thunderful Group’s restructuring continues

On January 17, Thunderful announced a cost-cutting restructuring program that is expected to save SEK 90-100 million ($8.4-9.3 million) per year. The company noted that this will lead to cutting around 20% of its workforce.

“The need for Thunderful to enact these changes stems primarily from over-investments made in the last few years,” the company explained at the time. “These investments have proven unsustainable given the current industry climate, which has resulted in the Group being particularly affected by challenging market conditions.”

In addition to selling its distribution business, Thunderful has already divested three subsidiaries:

• Headup Games (Bridge Constructor) — sold to Microcuts Holding, a company led by Headup founder and CEO Dieter Schoeller;
• Nordic Game Supply (distributor) — sold to Handelsselskabet, a company owned by Nordic Game Supply acting CEO Henrik Mathiasen;
• Stage Clear Studios — closed (its portfolio included games like Shiny The Firefly, The Last Kids on Earth and the Staff of Doom, as well as co-development work on the FIFA and Dead Space series).

The holding company still has dozens of other subsidiaries, including Rising Star Games, Image & Form, Zoink, and Jumpship.

In late April, Thunderful saw its stock plunge more than 40% to SEK 2.07 ($0.19) plunged. On May 21, shortly after the announcement of distribution business divestment, the share price slightly recovered to SEK 2.16 ($0.20), but overall the company’s shares are down 56% since the beginning of 2024.

Thunderful Group is struggling financially

• According to its latest earnings release, Thunderful reached SEK 391.7 million ($36.6 million) in revenue in the first quarter ended March 31, 2024. This is down 27.7% year-over-year.
• Operating loss was SEK 184.4 million ($17.2 million), compared to an operating profit of SEK 19.2 million ($1.8 million) in the same period last year.
• Although its back catalog sales continued to grow in Q1, sales of last year’s SteamWorld Build “have not improved as we have hoped.”
• In Q1, the company decided to discontinue several game projects, resulting in write-downs of capitalized development costs of SEK 72 million ($6.7 million).
• As of March 31, Thunderful had four games in its publishing pipeline (e.g. ASKA, Replaced) and 12 titles in development from its internal studios, including SteamWorld Heist II.