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Mobile game companies have been seeing their revenues sink as the pandemic excitement has worn off and Apple’s push into privacy over targeted ads has taken hold.
But for the first nine months of 2022, Gameloft‘s revenues were $223 million (€215 million), up by 17.0% compared to the same period in 2021 in a sharply declining video game market that was down 9% in the same timeframe. How did that happen?
A lot of the success is due to Disney Dreamlight Valley, which is Gameloft’s first major title to debut on the PC and all the major console platforms. Alexandre Schweizer, chief financial officer at Gameloft in Paris, said in an interview with GamesBeat that the company’s strategic shift toward console-PC-mobile multiplatform games has been a success.
For the third quarter of 2022, Gameloft’s revenues reached an all-time high of $98.6 million (€95 million), up by 48.1% compared to the same period in 2021. Disney Dreamlight Valley debuted on the Nintendo Switch, PlayStation 4 and 5, Xbox One and Series X/S, Steam, Epic and Microsoft Store.
The game debuted in September in early access, and in its first ten days, Disney Dreamlight Valley hit a million installs and was the No. 1 game on Steam, Game Pass, and Nintendo Switch. Additional multi-platform games from Gameloft studios and positioned as GaaS (games as a service) will be launched in the coming years.
Disney Dreamlight Valley, Asphalt 9: Legends, Disney Magic Kingdoms, Dragon Mania Legends, and March of Empires accounted for 49% of Gameloft’s total revenues for the first nine months and were the five bestsellers of the period. Of course, that means mobile games are still a big part of Gameloft, which was started in 1999 by Ubisoft cofounder Michel Guillemot and thenwas acquiredy by media conglomerate Vivendi in 2016. Gameloft now has more than 3,500 employees.
“Three years ago, in January 2019, we decided to shift the strategy of the company,” Schweizer said. “We presented this shift in strategy to our shareholder, Vivendi, and decided to pivot some of our best teams towards PC and console games. And what you’re seeing right now is really the result of this shift in strategy.”
Thanks to the immediate success of Disney Dreamlight Valley, Gameloft’s off-mobile diversification is accelerating: console and PC revenues represented 26% of Gameloft’s total revenues for the first nine months of 2022. Gameloft has another Disney title, a racing game called Disney Speedstorm, in the works for the Nintendo Switch.
Other games are coming from different studios for the consoles and the PC.
“We have four or five games we are talking about,” Schweizer said. “We’re super excited and very happy with the fact that our first launch is a major success. In fact, it’s the biggest success we’ve ever had in terms of revenues, in the first 30 days of launch of a game.”
The transition wasn’t hard in one way. Schweizer pointed out that high-end iPhones are more powerful than Nintendo Switch systems, and so the mobile focus did not mean that the teams would have trouble hitting the quality requirements of the PC and console.
At the time of the pivot, Gameloft saw that the high end market on mobile was not as dynamic and profitable as it had been.
“We had clearly positioned on the high end segment of mobile gaming. And from 2017 to 2019, the hypercasual market made a significant impact on the market,” Schweizer said. “This triggered a discussion about our future. Do we go after this market? Do we change our DNA? Do we ask our developers to start working on hypercasual games? Or do we double down on our DNA and on our strength?”
The employees wanted to work on the most ambitious titles possible.
“Rather than to change the DNA of the company, we made the difficult decision,” Schweizer said.
That decision turned out to be a good one as hypercasual games started faltering during Apple’s privacy push in the past year and a half.
But Gameloft isn’t focusing on huge budgets. Rather, it is focusing on quality and games-as-a-service. And it will continue to launch mobile games, which are still 59% of its revenue. Disney Speedstorm is being built with the company’s in-house game engine and the company’s Asphalt studio in Barcelona.
“There are some games we where we feel it’s better to do it with our own engines,” Schweizer said.
Headcount has grown somewhat.
“We’ve been very fortunate to have our new strategy working well for us in terms of products and positioning,” he said. “We’re clearly overperforming. This is the due to the success that our games are having on Apple arcade, on PC and console platforms.”
But catalog sales of mobile games are slowing down, in part due to the downturn.
Of course, Schweizer said the company is aware of the risks for gaming from the macroeconomic downturn, with inflation, slower growth, and other problems in the world economy.
Schweizer said the company isn’t focused on virtual reality or augmented reality. But it is exploring blockchain, machine learning, and AI. The company doesn’t have anything planned for sure yet in blockchain or machine learning in the near future.
“We are still looking at this,” he said. “We’ve done a lot of R&D on this.”
The company has become a long-term partner with Disney and has been for more than 10 years.
“We really want to continue to work with them because we have a very strong relationships. But at the end of the day, we have our own franchises. I just want to be very clear on the fact that Disney Dreamlight Valley is not a one-off. It’s really the beginning of a new era for Gameloft where are we have a more balanced portfolio and revenue stream between mobile and PC and console. So you should look out for for the news flow coming out from Gameloft because I think we’re going to have pretty cool products coming out.”