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JoWooD Sees Large Loss For Quarter, Despite Revenue Boost

Officials from Austrian-headquartered publisher JoWooD, maker of games including the Gothic RPG series and the forthcoming Stargate console game, have annou...
Officials from Austrian-headquartered publisher JoWooD, maker of games including the Gothic RPG series and the forthcoming Stargate console game, have announced the company’s financial results for the first quarter of 2005. The results showed turnover up by 34 percent to €2.4 million ($3.1m), but a larger consolidated loss of €3.7 million ($4.8m) for the quarter, one in which no new game was released, a disappointing result for the publisher. Though traditionally a weak quarter for many game companies (though JoWood did point to positive cashflow of €0.54 million ($0.70m) for the quarter), the company particularly noticed significant product sell-through depreciation over the year, with back catalogue titles failing to bring in the same proportion of revenue as in previous years. Interestingly, this is similar to the reason given by Electronic Arts for its recent sales disappointments, suggesting that the shelf life of video games may be shortening for many publishers. Analysts are suggesting that this may be as a result of the increase in franchises which are updated every year – a phenomenon that has now moved far beyond merely sports titles. The increasing numbers of games on store shelves have also been pointed to as a possible cause of these issues. Going forward, however, JoWood has recently signed several new distribution deals with Koch Media for the German speaking markets – where it is one of the largest publishers – based on new titles for 2005/2006, and also recently signed a deal with Capcom for U.S./Japanese publishing rights to PlayStation action title Legend of Kay. The company also intends to rationalize by restructuring, a move which will see a sharp dip in the company’s use of external freelancers (JoWood currently employs 178 people, 54 of which are freelance, and many of which are testers), as well as general cost and process optimization.

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