Playtika to freeze development of new games until it becomes 'economically valuable' again

Playtika has released a report for the fiscal year ended December 31, 2022. The Israeli publisher has also decided to temporarily suspend its game development pipeline, which means no new launches in the near future.

What happened?

• Craig Abrahams, the president and CFO of Playtika, opened up about the company’s plans during an earnings call. One of the key takeaways was the announced shift in strategy for new game development.
• Playtika’s German subsidiary Wooga, known for games like June’s Journey and Switchcraft, will continue to evaluate new mobile titles that are currently in the making. However, the company will halt all launches.
• “While we saw that our new games received positive feedback from our players and achieved strong retention numbers, the marketing environment and increasing CPIs for new games made it challenging for us to scale these games profitably,” Abrahams said.
• Playtika will start launching new titles again only when the ROI for them is “economically valuable.”
• Answering questions from investors, Abrahams cited the increase in the cost of installations as one of the main reasons. So “until that fundamentally changes,” the company has no plans to invest money in new game development.
• Instead, Playtika is looking for other growth opportunities such as backing third-party studios. For example, it invested $25 million in Fiona’s Farm developer Ace Games in the fourth quarter.
• “I think where we find great product teams with great products, we will make investments and be strategic about it,” Abrahams explained. “But in terms of the new game pipeline, the mathematics around marketing just doesn’t work right now.”
• In December, Playtika laid off over 600 employees after shutting down three games. This was part of a broader restructuring, which included closing non-core initiatives and consolidating some of its in-hosue studios.

Playtika’s financial results for 2022

• In 2022, Playtika reached $2.61 billion in revenue, up 1.2% year-over-year.
• Net income was $275.3 million, down 10.7% year-over-year.
• As for the fourth quarter alone, Playtika posted revenue of $631.2 million (-2.7% YoY) and net income of $87.5 million (-14.4% YoY).
• Although social casino games revenue fell 8.6% in Q4, casual titles showed a 2.7% growth.

The number of daily active users and other performance metrics

• Bingo Blitz was the main revenue driver in the quarter, generating $155.1 million (+18.4%). It is followed by Slotomania ($149.2 million, -9%) and Solitaire Grand Harvest ($72.8 million, +18.7%).
• For 2023, Playtika expects to reach $2.57-2.62 billion in revenue.