Shares of Wakefield-based Team17 Group, a developer of video games and educational entertainment apps, fell as much as 40% on Friday after the firm said in a trading update that “certain titles within the games label are not meeting internal expectations.”

Team17 also said it “was too slow to address some project overspends and has faced some delays in implementing key cost initiatives at Team 17 games label.”

Further, the Wakefield firm said it is “also reviewing a number of titles, both under development and already launched, to assess the revenue potential in the current market environment, which is expected to result in impairments recognised in FY23.”

In its outlook, Team17 said: “While the important trading periods of Black Friday and Christmas are not yet complete, management believes the group remains well positioned with strong traction across its new release and back catalogue titles, and currently expects FY23 revenues to be modestly ahead of current market expectations.

“Despite this overall robust revenue performance, certain titles within the Games Label are not meeting internal expectations, resulting in a less favourable mix between higher margin own-IP titles and third-party titles (with higher royalty payments) than anticipated.

“In addition, the group was too slow to address some project overspends and has faced some delays in implementing key cost initiatives at Team 17 Games Label. These are now at advanced stages and will continue to bring benefits into next year.

“Management continues to be pleased with the performance of astragon and StoryToys.

“However, since the H1 results, and in the light of the post Covid-19 dynamics, management has re-evaluated the cost structure within Team17 Games Label to align with its core competencies as an indie game developer and publisher.

“In addition, it is also reviewing a number of titles, both under development and already launched, to assess the revenue potential in the current market environment, which is expected to result in impairments recognised in FY23.

“Consequently, the Group now expects to deliver full year adjusted EBITDA of at least £28.5m, which includes non-cash title impairments of up to £11.5m.”