SA game developer to cut jobs after big loss
The struggling company, which previously said it employed more than 160 developers, informed the ASX on Tuesday that it would immediately implement “cost control” measures in a bid to break even. cash by the third quarter of fiscal year 23 (January).
Among the reported measures are a “reduction of FTEs in the development and administration teams”, as well as “tighter control of costs in all areas of the company” and “significant savings” in the IT and subscriptions.
The company, chaired by former ABC boss Michelle Guthrie, expects the strategy to deliver an “initial recurring cost savings of approximately $350,000 per month”.
InDaily asked Mighty Kingdom how many employees would be laid off during this round of cost-cutting and was told that the company doesn’t have a “definitive number” yet.
“Mighty Kingdom has entered a consultation phase with its staff and at this stage we do not have a definitive figure,” the company said in a statement on Wednesday.
“We will continue to work on this process with the staff group over the next few days.”
In its ASX statement, Mighty Kingdom insisted that the job losses would have a “limited impact on the company’s discretionary project milestones” and said the overall changes were intended to “[delivering] a more sustainable economic model.
Gaming workers’ union Gaming Workers Australia said it was “working with members affected by this announcement”.
“We are in consultation with Mighty Kingdom and strongly defend our members,” the union said on Twitter.
“For confidentiality reasons, we cannot comment on individual cases. Anyone impacted by this announcement who has not already done so should contact us immediately for a private discussion.
The move comes after Mighty Kingdom – Adelaide’s largest independent games developer that has historically focused on mobile titles – reported a net loss of $10.86 million in the financial year last month. 22, up 51% from its loss of $7.14 million in FY21.
The company’s preliminary final report showed that last year it spent more than double its total revenue ($4.89 million) on staff salaries ($12.39 million).
The company has been under significant financial pressure this year due to game release delays, surprisingly poor sales results and a slump in the share price, which closed at $0.03c on Thursday – vs. 0.26c when listed on the ASX in April 2021.
Mighty Kingdom’s financial situation came to a head in July when its quarterly cash flow report showed it only had $3.96 million in funding available for future operating activities – enough for the support for just over three months.
Layoffs seemed almost inevitable after the company announced a major restructuring on August 4 and announced cost-cutting measures to address its negative cash flow problem. It is also undertaking an equity offering to raise $7 million in working capital.
Mighty Kingdom CEO Phil Mayes conceded the company had been through a “very disappointing period from both a business and shareholder perspective”, with the restructuring representing a “very significant change in outlook future of Mighty Kingdom”.
The company has also named three former media executives to its board as part of the restructuring and has now created a finance sub-committee to “help ensure accurate guidance going forward”.
In its ASX statement on Tuesday, the company said it had made “significant progress” in securing more work for hire and co-development revenue.
“After a thorough internal review, we are implementing cost reduction initiatives that we view as a turning point in the company’s progress toward balanced cash flow and future profitability,” CEO Mayes told the ASX.
“This process, coupled with a strong increase in revenue expected by the end of this timeline, will ensure that our employees are placed in the best possible positions and are able to work as efficiently as possible to deliver returns for shareholders.
“We look forward to the positive effect these changes will have as we leverage our creative team and world-class reputation to create long-term value for our shareholders.”
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