Today Warner Bros. Discovery announced its financial results for the third quarter of calendar year 2024, and the performance of the gaming business looks rough.
Revenue for the gaming part of the Studios segment was down 31% year-on-year, compared to the same period last year in which Warner Bros. launched Mortal Kombat 1.
Expenses for the gaming segment actually increased 47% year-on-year driven by $122 million in impairments.
During the financial conference call, we heard from CEO David Zaslav, who did not hold back in describing the issues with the segment, adding that the company is now focusing on Hogwarts Legacy, Mortal Kombat, Game of Thrones, and Batman to improve its success ratio.
Even in an industry of hits and misses, we must acknowledge that our Studios business must deliver more consistency. This applies to our games business, which we recognize as substantially underperforming its potential right now.
We have four strong and profitable game franchises with loyal, global fans, Hogwarts Legacy, Mortal Kombat, Game of Thrones, and DC, in particular Batman, and we’re focusing our development efforts on those core franchises, with proven studios to improve our success ratio.
CFO Gunnar Wiedenfels provided more color on the issue and pointed the finger at MultiVersus.
“Results were impacted by Games, for which we took another 100 million dollar-plus impairment due to the underperforming releases, primarily MultiVersus this quarter, bringing total writedown year-to-date to over 300 million dollars in our games business, a key factor in ths year’s Studios profit decline.”
That being said, the company expects things to improve a bit in the current quarter. Wiedenfels mentioned that Q4 performance of the gaming business is predicted to be “flat to moderately better” year-on-year, as last year’s launch of Hogwarts Legacy on the switch is offset by lower costs.
During the Q&A section of the broadcast, Wiedenfels admitted that the performance of the gaming business “hasn’t been pretty” but the four franchises mentioned above are really powerful and have a “real constituency that loves them.” Focusing on them will bring a “real chance” for a steady gaming business.
We’re going to focus on those four primarily, and we’re gonna go away from trying to launch 10, 12, 15, 20 different games. I think we have a real chance with focus to have the gaming business be steady.
Earlier in the call, Zaslav pledged that over the next several years the game studios are expected to “deliver more consistency, resume industry-leading performance, and contribute substantially to business success.”
If you’re interested in financial results, other gaming companies have already announced their latest financial results, including Koei Tecmo, Capcom, Electronic Arts, Ubisoft, Microsoft, Konami, Marvelous, Nintendo, Bandai Namco, Take-Two, and Krafton.
