Moshi Monster developer Mind Candy plunged from an annual profit of £10.1 million in 2012 to a loss of £2.8 million for the year ending December 31, 2013, its latest financial report has revealed.
The annual accounts, submitted to Companies House, note that intangible assets doubled during that period, from £2.8 million to £6 million, but also acknowledges the need for the company's new ventures, notably the recently released World of Warriors and photo-app PopJam, must succeed if the firm is to turn its fortunes around. Revenues from World of Warriors are expected to primarily originate in the game's in-app purchases, but plans are also in place for the sort of licensing activities which saw Moshi Monsters become such a success.
Annual revenues for the company were down from £46.9 million for 2012 to £30.6 million in 2013, with Moshi subscriber revenues falling from £19.8 million in 2012 to £13.2 the year after. Nonetheless, the release says that Moshi Monsters is still very much the firm's "flagship IP", despite dwindling numbers and revenue.
"Moshi Monsters is our flagship IP and it has been very successful with over 80 million players in 250 countries worldwide, both online and in physical products such as award winning toys, trading cards, a number 1 UK kids magazine, OS games, a gold music album and a box office movie.
"World of Warriors is our second major IP and will launch as a mobile app in late 2014. The brand will be sparked to life digitally but then expand rapidly into a wide range of physical products. PopJam (formerly Jelly Chat) is our creative community and distribution platform. Our vision is to inspire, empower, and entertain all the kids in the world by connecting them with all the things they love."
"2013 has been a year of transition and investment in the future for Mind Candy. Touchscreen devices are now a much more popular way for children to consume entertainment than websites"
"2013 has been a year of transition and investment in the future for Mind Candy," the release continues. "Touchscreen devices are now a much more popular way for children to consume entertainment than websites. We have launched multiple Moshi branded apps (Moshi Monsters Village, Talking Poppet, Moshi Karts, Moshling Rescue and the Moshi Music app) but while download numbers have been strong we have yet to find a commercial model that works at scale. Creating commercially successful mobile products in the highly competitive app store has proved extremely difficult.
"Mind Candy has transitioned from being a one product to a multi-product company and invested heavily in new brands. We have therefore more than doubled our intangible assets to £6.Om in 2013 from £2.8m in 2012. In 2013 we laid the foundations to build a strong, diverse business with a multiple portfolio of brands."
For former CEO Michael Acton Smith, who stood down amidst rumours of failing confidence from the board, the transition from web-based subscriptions to an app-store environment has been a difficult one.
"We do have 8 Moshi apps and they get good download numbers," he said, "but it's very difficult to commercialize kids products in the app store. Web subscription was better.
"Moshi had a great run for 5 years. Some kids still love it but many have moved on to others things. Shift of web to mobile was a double hit for the company. We still want to nurture it but it won't generate the same revenues."