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Game developer Playside Studios (ASX:PLY) has today confirmed it is kicking off an operational restructure with redundancies saving an immediate $1.5 million.
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The company also believes those redundancies could end up saving $4 to 5 million per year, which is a fairly significant amount coming from cut wages alone from a smallish company.
Given redundancies usually start with cutting fat from the top and then whittling down, the news implies that high-paid devs part of the tech team bringing forward Playside’s products, such as a Game of Thrones PC title, may be the first to go.
That could explain why shares fell nearly -3% in afternoon trades despite redundancies and cost savings generally being beneficial. However, it could also be that Playside is still waiting for contracts for work. (Realistically, it’s both.)
In late January, the company revealed 1HFY25 revenue of $28.5M; down -21% from the pcp. But it also flagged that several work-for-hire contract negotiations with counterparties were “deferred later into the 2025 calendar year.”
So far, it’s early April, and those contracts haven’t come to the fore yet. For the unaware, work-for-hire contracts in this context effectively mean new game titles and IP Playside can pick up with the permission of their respective creators, and then profit off as if it were their own.
Between the lines, one may be left to wonder if Playside is offering undesirable terms to lock in such contracts. It’s obviously a pretty sweet deal for Playside.
The company says its flagship IP developments are untouched by all of this – presumably Dumb Ways to Die and Game of Thrones – and that FY25 guidance is unchanged. But that FY25 guidance was never great to begin with.
It originally tanked the share price, around six months after shares hit a 27mth high.
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“Management is intent on optimising the Company’s cost base in order to ensure that successful delivery of major Original IP projects from FY26 onward results in high levels of cash flow generation that can support sustainable growth in the business,” Playside wrote on Wednesday.
They’d better hope they stick to that. Clearly, shareholders aren’t playing games.
PLY last traded at 17.5cps.
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