Kuju faces "painful" cost reductions as trading remains difficult

UK development group Kuju Entertainment is set to accelerate its program of restructuring and cost reductions over the coming weeks, in response to difficult market conditions and delays in the signing of two projects.

A statement issued by Kuju chairman Jonathan Newth at the company's AGM reports that two budgeted titles which the studio had originally expected to sign with publishers by the end of July have remained unsigned. "New budgeted projects are continuing to take longer to close than had been anticipated," explains Newth.

As a result, Kuju is now planning to extend its plans for restructuring, with Newth stating that "the restructuring and cost reduction will have to be deeper than was previously envisaged and this will be accelerated in coming weeks." This process, he admits, will be "painful both in terms of people and costs, and the results for the coming year will reflect this."

Commenting on the state of the market as a whole, Newth says that "the market for development of console games remains difficult", claiming that most major publishers have decreased the number of titles in the pipeline as a response to stringent concept approval processes by North American format holders.

He remains optimistic for the future, however, and mentions that the consolidation being experienced by UK development at present will create significant opportunities for Kuju in the medium term, even if it is contributing to the highly competitive environment causing trouble for the company in the short term.

Still, news of difficulties at Kuju is another blow for UK development, which has seen a number of studio closures and many staff reductions in the past couple of years. Kuju would generally be considered to be one of the more stable studios in the UK, with several products in the pipeline and publishing contracts with Microsoft (Train Simulator 2), THQ (Firewarrior) and most recently Konami in the bag.