Team17, the developer and publisher known for the Worms series, has issued a profit warning, anticipating a downturn in profits despite revenues expected to exceed market forecasts. The company has faced challenges with certain games underperforming and a costly mix of owned IP and third-party games with higher royalty payments. Alongside these financial difficulties, Team17 has admitted to delays in addressing overspending and cost management.

In response to these financial challenges, Team17 has initiated layoffs with the consultation process concluding soon, and CEO Michael Pattison is set to depart. The company is currently reviewing its game lineup for necessary impairments, projecting an £11.5 million impairment charge for the fiscal year ending December 2023. Titles under scrutiny include recently released and upcoming games such as Dredge, Moving Out 2, Headbangers, Ship of Fools, as well as future releases Classified: France 44, Earthless, and Conscript.

Looking forward, Team17 remains optimistic about the financial year 2024, with a strong slate of new releases and ongoing investment in their back catalog expected to drive revenue growth and an improved trading performance compared to 2023.

This news reflects a broader trend of financial strain within the UK video game industry, with companies like Frontier Developments, Sega-owned Creative Assembly, and Fall Guys developer Mediatonic also facing layoffs and economic challenges in 2023.

Team17’s shares have seen a significant drop, particularly following the latest announcement of their financial troubles. Nonetheless, the company is focused on a turnaround strategy hoping to regain its footing in 2024.