tinyBuild appears to be another studio to conduct layoffs. This comes just months after the publisher saw its shares plunge due to weaker-than-expected financial performance in the first half of 2023.
I Am Future: Cozy Apocalypse Survival
What happened?
As first reported by App2Top, citing the Telegram channel “Gamedev we deserve” (in Russian), the layoffs at tinyBuild allegedly affected employees at three studios located in Serbia. Here are some other details:
- The cuts affected from 10% to 30% of staff depending on the studio;
- The layoffs were reportedly made without warning — each employee affected by the decision was notified during a one-on-one call, after which their corporate account was blocked.
As can be seen on LinkedIn, at least 10 tinyBuild employees added the “Open to work” status and/or posted about looking for a new job last week. The messages were not only from workers located in Serbia, but also from those who worked in the Netherlands. However, the extent of the layoffs remains unclear.
tinyBuild sales director Michael Kuzmin later said that CEO Alex Nichiporchik will address the job cuts on December 5. Kuzmin noted that all layoffs were made “strictly in accordance with the laws of the countries wihere the employees were located, including good severance pay,” adding that it was a “difficult decision.”
In a trading update published today, Nichiporchik didn’t provide much details, but said it was “physically painful to part ways with colleagues after all the good work they put into the company.” He added that the “only reason to justify this decision is that the company has entered a pivotal stage and I am committed to do everything I can to ensure we get through this tough period.”
tinyBuild continues to struggle financially
- tinyBuild’s financial problems started earlier this year. It reported an operating loss of $31.9 million for the first half of 2023, compared to an operating profit of $6.8 million in the same period last year. Its EBITDA (earnings before interest, taxes, depreciation, and amortization) was also negative at -$1.2 million.
- “As CEO and a major shareholder, I am disappointed with the H1 performance,” Nichiporchik said back in June, citing lower contributions from deals with distribution platforms and underperformance of its subsidiaries Red Cerberus and Versus Evil. As a result, the company’s shares plunged nearly 80%.
- After that, tinyBuild announced that it may conduct a “targeted reorganization” of some studios and the impairment of certain assets. The company also decided to move away from third-party publishing and instead focus on games from its in-house studios.
- In 2023, tinyBuild released a dozen titles, including Punch Club 2, The Bookwalker: Thief of Tales, and I Am Future. However, it is unclear how many of those games were commercially successful for the publisher.
- In the new trading update mentioned above, the publisher noted that it expects its annual revenue to be between $40 million and $50 million (compared to $63 million in 2022).
- Versus Evil continues to underperform in the fourth quarter with the delay of three out of four games into 2024. In addition, tinyBuild will have to pay $3.5 million after settling its legal fight with the Versus Evil founder.
- The publisher is now “exploring near-term options to strengthen the balance sheet.” That’s why Nichiporchik supported the willingness to “underwrite an equity fundraise of new common shares” to raise up to $10 million.
- “We couldn’t overcome weak demand for video games and the sudden reversal of market dynamics that had favoured us over the previous years,” he said. “We innovated in marketing, refocused our catalogue, and adjusted the cost base as quickly as possible, and, despite these actions, it wasn’t enough in such a rapidly evolving market.”