TinyBuild lowers revenue forecasts, settles legal dispute with Versus Evil
Update: Reports claim up to 30% of staff laid off across three studios
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Original story, December 5, 2023: Hello Neighbor publisher TinyBuild has lowered its revenue forecasts for the fiscal year following "unusually weak trading in October."
In an update to investors, the company said it was currently trading below expectations in Q4, and now expects revenues to be between $40 million and $50 million for the full year.
Similarly, TinyBuild does not expect to meet its previous targeted cash position of $10 million to $20 million by the end of December, having ended November at $5.7 million with no debt.
The publisher noted that, since the company's half-year results were published in September, the games market has "deteriorated further."
It also revealed negotiations of multiple large contracts have been extended and may not be signed before the end of 2023, if at all. Reaching the top end of its lowered revenue forecast is depending on these contracts being signed and December trading meeting expectations.
The forecasts have also been impacted by Versus Evil delaying three out of four games that were originally planned for release in the second half of this year, including Drop Bear Bytes' Broken Roads.
TinyBuild told its investors the publisher's outlook for fiscal year 2024 "remains cautious," but adds the upcoming launch of certain titles next year "gives reason for optimism."
In his own comments, CEO Alex Nichiporchik said the company could not overcome "weak demand for video games and the sudden reversal of market dynamics" that had favoured TinyBuild in previous years.
He also added that it had been "physically painful to part ways with colleagues after all the good work they put into the company," suggesting TinyBuild is one of the many publishers suffering layoffs in 2023.
GamesIndustry.biz has reached out for clarification.
TinyBuild also used this trading update to inform investors that it has settled a legal dispute between the company and Versus Evil, as well as its general manager Steve Escalante.
Versus Evil and its QA studio Red Cerberus were acquired by TinyBuild in 2021. Escalante, Versus Evil's head of production James Lance and previous owner Stall Proof LLC later filed legal claims against TinyBuild, claiming it had breached three obligations of the purchase agreement.
Specifically, the claimants alleged that TinyBuild had filed to make "timely capital contributions" to Versus Evil during fiscal years 2022 and 2023, that it had not released funds held back under the terms of the agreement, and that it failed to provide promised material support.
Meanwhile, Escalante made a claim of its own, alleging that TinyBuild failed to pay him the promised $3 million in shares and options in a timely manner.
TinyBuild has agreed to pay the claimants $3.5 million in case, in addition to legal costs.
Update, December 6, 2023: TinyBuild has declined to comment to GamesIndustry.biz. However, other outlets appear to have found more information about the layoffs.
As spotted by Game World Observer, Telegram channel Gamedev We Deserve claim redundancies have affected between 10% and 30% of the workforce at three studios across Serbia.