The Embracer Group (aka THQ Nordic) has over 100 games currently in development and most of them have yet to be revealed to investors or consumers.
THQ Nordic's latest Q2'20 earnings report is jam-packed with interesting tidbits including earnings, in-development project pipelines, and an update on its studio headcount. Right now the company currently has 133 projects in development, and 79 of them, or 59%, are unannounced projects across its mighty stable of developers. This total is up 30 projects from last quarter--18 unannounced projects and 9 announced games--which clearly shows how much THQ Nordic is accelerating its plans.
The jump in projects comes from its recent acquisition spree, which saw studios like Metro developer 4A Games, New World Interactive, Pow Wow Studios, Palindrome interactive, Rare Earth Games, Vermila Studios, and DECA Games. New announced projects include the next Metro game, which 4A Games is currently developing alongside Saber and will have online multiplayer, alongside Dead Island 2 and Saints Row V, which should be released at some point.
Embracer has raised its investment into games development to an all-time high of SEK 457 million ($52.58 million), up 33% from Q2'19, and expects some of these projects to start delivering material revenues throughout the year.
Amortization and depreciation costs have also risen alongside this spike in developed games. Remember, games that are in development are intangible assets, so they are amortized, or quantified as a perceived loss in value (or a spent cost) A game that's in development is a cost and the longer it's in development, the more a company spends on it and the more perceived value it loses because it's not being sold on the market.
Amortization rises when new games are added to the development pipeline. It also rises the longer a game's in development. Something like Dead Island 2, for example, has a higher amortization cost because it's been in development for longer.
Amortizaiton costs of games was at 191 million SEK in the quarter, up 32% over Q2'19, due to the increased investment into new games development.
THQ Nordic says the expected value of completed games--that is the estimated revenue that will be generated from games that will be released soon--will be anywhere from 1.2 billion to 1.4 billion SEK for the entire yearly period. For Q2'20, the value of completed games was 253 million SEK, up a tremendous 143% year-over-year. This was driven by a slate of 9 games delivered across all of THQ's branches, including Deep Silver, Saber Interactive, and its own in-house teams.
"We continue to invest for long-term organic growth. Investments into new game development was SEK 457 million in the quarter and the number of ongoing development projects was 125, both all time high figures, 73 of these projects are yet to be announced. We expect to benefit from these growing investments in the years to come and we re-iterate the expected value of completed games in fiscal year 2020/21 to SEK 1,200-1,400 million," Embracer CEO Lars Wingefors said.
- > NEXT STORY: Saints Row V, Dead Island 2 may release in 2020, THQ financials hint
- < PREVIOUS STORY: No, Monster Energy didn't just reveal Xbox Series X's $599 price