Five years after going public on the London Stock Exchange, indie publisher Devolver Digital wants to go back to being a private company. In a message posted on the company’s website, Devolver’s board of directors delivered a frank assessment of the company’s current state, saying they believe it is undervalued—in large part because of inherent incompatibilities between the videogame industry and the stock market.
There’s plenty of procedural guffola to dig through in the announcement if that’s your thing, but what’s especially interesting to me are Devolver’s reasons for wanting to withdraw from the exchange. It’s possibly the most succinct ‘creating value for shareholders is going to kill us all’ filings I’ve ever read.
Devolver went public in November 2021, a move CEO Douglas Morin said at the time would “ensure our continued growth and support even more wonderful games. Most importantly, it will allow us to retain our culture.” But it seems that the opposite has happened: Devolver said in this new filing that in the years since then, the videogame industry has faced “significant disruption and volatility, characterised by widespread layoffs for studios and publishers, platform rationalisation and substantial impairments across the industry.”
As a result of that industry-wide instability, “Devolver has faced the ongoing challenge of delivering growth in line with market expectations despite those difficult sector conditions.” That in turn has seen the company’s valuation plummet, because “the lifetime and long-tail revenue delivery inherent in the videogames business” are essentially non-factors.
In case that’s not sufficiently clear, the filing goes on to state that Devolver’s value is linked to “the timing and scale” of new game releases, which are not always the most predictable things. That’s also incompatible with the market’s emphasis on “predictable, sequential growth,” the filing states, and Devolver “has at times faced increased pressure to deliver short-term market expectations that do not necessarily reflect the underlying long-term value creation potential of its portfolio and development pipeline.”
Going private isn’t just for the good of the games and those who love them: Devolver’s board also believes it can save roughly $1.6 million annually as a private company, for one thing, and its shares aren’t really seeing much trading action, so being on the market isn’t doing much good anyway.
But the emphasis is clearly on avoiding the pitfalls that responsibility to shareholders bring: the layoffs, cancellations, and studio closures that have characterized the last few years of the game industry. Actions are louder than words and all that, but after years of watching the videogame industry be relentlessly decimated because growth isn’t happening fast enough, I’ll take this as a start.
“Being private will allow the Devolver Digital team, especially the finance, legal, and executive team, to singularly focus on the long-term health of the company and less on satisfying the requirements of the public market, which have nothing to do with being a successful game publisher,” a Devolver rep said in a statement to GamesIndustry.
A vote on the proposal to take Devolver private again will happen in September.
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