Shona Ghosh/Business Insider
A map of Mind Candy's 'Petlandia' virtual world at its London offices.
British startup Mind Candy saw its revenues more than halve in 2016, as it failed to recapture the early glory days of its hit kids' game "Moshi Monsters."
Mind Candy reported revenues of £3.43 million for the 12 months to 31 December, down from £7.2 million the prior year. It recorded a loss of £6.1 million, an improvement on the £10.4 million loss in 2015.
The firm couldn't guarantee it won't go bust at some point, saying there was "material uncertainty" over its future operations.
Mind Candy also cut three-quarters of its staff, with the employee count falling from 98 to 22 over the 12 months.
The once-hot London startup can blame one ongoing weakness for the big drop in revenue: Mobile.
Mobile revenue dropped from £3 million in 2015 to just £266,242 in 2016, the biggest decline anywhere in its business. Revenue from subscriptions also fell, dropping to £1.7 million during the year, from £2.9 million in 2015. The drop shows starkly how Mind Candy has struggled to create popular games on mobile. Its 2014 release, "World of Warriors" was acknowledged as "not a huge cash generator" by the company's founder Michael Acton Smith during a 2017 interview with Business Insider.
Shona Ghosh/Business Insider
At Mind Candy's peak, revenue was almost £47 million in 2012. "Moshi Monsters" was once hugely popular, and let young players take care of virtual pets online. But then followed a tough couple of years as Mind Candy failed to replicate Moshi Monsters' success on mobile. Its fortunes declined and Acton Smith eventually stepped down as CEO, though he remains involved.
Gaming veteran Ian Chambers took over in February 2016, and has pursued diversification. Mind Candy is still in kids' entertainment, but has branched out to personalised storybooks and new games. The firm avoided bankruptcy in April by securing $1.5 million (£1.2 million) in new investment and by renegotiating a loan agreement. Its total borrowings stand at £7.97 million, which will need to be repaid in 2019.
Chambers said in a statement: "After some well-publicized challenges, our focus for 2016 was operational efficiency, cost cutting, and setting a new strategic direction for the company. The business continued to stabilise during the year, and we launched new brands and products, including Petlandia and Moshi Monsters Egg Hunt. In the fourth quarter, we saw our monthly revenue grow year-over-year for the first time in several years.
"This positive momentum has continued throughout 2017 with the launch of Moshi Twilight Sleep Stories. Mind Candy continues to be a leader in creating family entertainment, and everyone involved with the business is optimistic about our progress. We are excited about the potential of our new initiatives as we head into 2018."