It seemed like an odd decision at the time, when indie publisher Devolver (Hotline Miami, Talos Principle, Baby Steps) announced it was going to launch an IPO. Listing itself on the London Stock Exchange’s Alternative Investment Market in 2021, valued at $950 million, Devolver’s CEO Douglas Morin said at the time, “An IPO is the right choice for us to ensure our continued growth and support even more wonderful games.” Today, Game Developer reports, Devolver intends to delist and become a private company once more, because “The global video games industry has undergone a period of significant disruption and volatility.” It also happens to be the case that the company’s shares are currently valued at just $44.6 million, a colossal 95.3 percent wipeout.
In a statement posted to investors on August 6, Devolver laid out its plan to get delisted from the UK-based stock exchange, as well as “a proposed return of capital of up to $5.0 million of cash to Qualifying Shareholders and holders of Depositary Interests by way of a Tender Offer, subject to approval by Shareholders.” This is a very different type of language for a company that is best known for its outlandish stunts, maverick advertising campaigns, and a deliberately offensive fictional CFO spokesperson in the form of Fork Parker.
In a far more serious frame of mind, Devolver explained its rationale for the volte-face was based on the volatile nature of the games industry over the last few years, “characterized by widespread layoffs for studios and publishers, platform rationalization and substantial impairments across the industry.” It adds,
Devolver has during this time navigated a number of operational and market headwinds, including several impairments of underperforming titles amid an increasingly competitive and unpredictable market environment. As a publicly-quoted company, Devolver has faced the ongoing challenge of delivering growth in line with market expectations despite those difficult sector conditions, resulting in a valuation disconnect that does not take account of the lifetime and long-tail revenue delivery inherent in the video games business.
The company believes it will save $1.6 million each year by going private again, and argues that its current share price (which has plunged to just 7.15p ($0.10) overnight since the announcement) isn’t representative of Devolver’s actual value, the market failing to reward the publisher’s financial success over the last few years.
It did seem extraordinarily strange for such a relatively small company, that exclusively trades in indie games like Shotgun Cop Man and Gunbrella, to attempt to go public, but it came hot on the heels of Devolver’s enormous success with Fall Guys in 2020, bringing in $150 million, and seeing developers Mediatonic bought by Epic in March 2021. That rush of cash perhaps caused some bizarre financial decisions. We’ve reached out to Devolver to ask about why that earlier decision was made, how it plans to afford buying itself back, and whether this will affect its publishing plans for the future. This is the statement we received in response:
The purpose is simple and positive. 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.
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