EG7 – that’s the Swedish games conglom that bought up Daybreak and then kinda got taken over by Daybreak, amusingly – released its year-end and Q4 2024 financial reports just ahead of the weekend, and it may put your head into a bit of a spin, or maybe that’s just us.
Readers will surely recall that back in November, EG7 was bragging up its Q3 results, specifically calling out Lord of the Rings Online, the EverQuest franchise, Palia, and DCUO as highlights, in addition to hopes for MechWarrior 5: Clans. However, in January, EG7 took an axe to the MechWarrior staff, laying off 38 workers after MW5: Clans underperformed the execs’ promises; moreover, EG7 shuttered Toadman, which left PlanetSide 2 fans in a panic for three weeks until Daybreak and whatever Toadman contractors it retained finally communicated with players to clarify that the game will continue.
So that is the atmosphere into which EG7 is now dropping these investor reports, as EG7 claims a “strong finish for the year” in its “best quarter for 2024.” The company once again highlights “Daybreak’s successful release of annual expansion packs for EverQuest, EverQuest 2 and Lord of the Rings Online.” However, the company reported a 16.2% year-over-year revenue decline, which it pinned on both the “prolonged market downturn” and MW5: Clans’ weak performance thanks to delays. The report also claims “Toadman failed to gain traction with its WFH efforts” (work-for-hire). Consequently, EG7 reiterates the closure of Toadman and downsizing for Piranha and Petrol.
Of course, our readers are chiefly interested in Daybreak’s performance. Revenue for the MMORPG unit were actually down slightly compared to Q3 2024 but up over Q4 2023. We’re also finally learning that Palia is being prepared for a Q2 launch (the Q4 report and investor call just says launch, while the annual report suggests it’s the console launch, so maybe both?); we knew 2025 was in the cards, but neither Daybreak (which bought S6) nor S6 has communicated this at all, so this is promising. And it sounds like the Daybreak-published Cold Iron game is finally coming in the back half of 2025 too.
“We are expecting to return to growth in 2025. In the first half of the year, Singularity 6 is aiming to bring its game, Palia, to a wider audience with releases across the latest generation consoles together with compelling new content update for the existing player base. Daybreak is working closely with Cold Iron and on track to bring its new game to
market later this year. The live service game portfolio from Daybreak and Big Blue Bubble should continue to provide a stable and predictable performance.”“For Q4, Daybreak contributed Net Revenue of SEK 198.5 (181.8) million, up 9.2 percent from the prior year, and Adjusted EBITDA of SEK 26.6 (29.1) million. Adjusted EBITDA margin amounted to 13.4 (16.0) percent. Daybreak’s portfolio performed in line with expectations for the period, led by EverQuest, which concluded a successful anniversary year with the release of two major content updates. The Lord of the Rings Online continues to see improved performance, driven by the launch of its new servers with updated ruleset earlier in the year. Both Magic: The Gathering Online and Dungeons & Dragons Online experienced increased player activity in 2024. It was a transition year for DC Universe Online with a new leadership team taking the reins with updated direction for the title as communicated early 2025. Under the new leadership, the annual content release schedule will expand from two to three chapters. Additionally, significant gameplay changes and monetization efforts are planned for 2025. Singularity 6 has been primarily focused on the development efforts for Palia’s release across the latest generation consoles planned for the first half of 2025. The collaboration with Cold Iron is also advancing towards a planned launch of its game later this year. With these developments, 2025 promises to be an exciting year for Daybreak, contributing significantly to EG7’s overall performance.”
A few more relevant bits from the investor call Q&A:
- CEO Ji Ham acknowledges the ongoing contraction of the games industry with capital drying up and suggests that it’s created a “buyer’s market” with a ton of cheap studios, so it’s prepared financing to scoop up good ones when it sees them. (S6 would be one of those.) He does say he believes the market is rebounding this year.
- Ham says Palia is “performing according to [Daybreak’s] underwriting” and is preparing a big update to coincide with the console release. Again, this messaging is still unclear, as the PC game is still in beta (par for the course, really), but we think they are trying to say the console launch is akin to the official launch. Ham says content has been light in the game over the last six months since the acquisition, but the team has been working on that big patch, which is meant to both bring in new players and bring back lapsed players.
- Cold Iron’s game is getting closer to the finish line. Ham won’t narrow down the release date other than later this year. No other details given.
- Ji Ham says it does actually expect to make a positive profit on MW5: Clans overall, it’s just lower than they expected.
- The company has not given up on a new H1Z1 game; it’s just not moving on it until Palia and the Cold Iron game come out.
