Warner Bros. Gaming Revenue Plunges 48% in Q1 2025 as Release Drought Takes Its Toll

Warner Bros. Discovery (WBD) has released its financial results for Q1 2025, showing mixed performance across different business segments. However, we will focus solely on the gaming division of Warner Bros., which has faced challenges in its recent history.

Games Revenue Performance:

• Games revenue decreased 48% ex-FX compared to prior year quarter

Key Factors Affecting Games Revenue:

• No new game releases in the current quarter (Q1 2025)

• Prior year quarter (Q1 2024) included the release of Suicide Squad: Kill the Justice League

• Lower carryover revenue compared to prior year

  • Prior year benefited from continued sales of Hogwarts Legacy

  • Prior year benefited from continued sales of Mortal Kombat 1

Cost Management in Games Segment:

• Games content expense decreased 66% ex-FX

• Primary drivers of decreased expenses:

  • No impairment charges in the current quarter

  • Prior year quarter included impairment related to Suicide Squad: Kill the Justice League

  • Lower overall games revenue requiring less associated costs

Financial Context:

• Games performance contributed to the overall 25% ex-FX decrease in content revenues for Warner Bros. Discovery

• Games segment is part of the Studios division, which saw improved adjusted EBITDA despite revenue decreases (likely because of the huge success of the Minecraft movie - $900 million box office)

Additional Notes:

• No specific mention of upcoming game releases in the financial report or in the shareholder letter

• No specific gaming titles highlighted for the current quarter's performance

According to Bloomberg, Warner Bros. Games has canceled its Wonder Woman game and closed three studios—Monolith Productions, Player First Games, and WB San Diego—as part of a significant restructuring announced on February 25, 2025. However, financial reports do not mention these changes.

This move aligns with Warner Bros.' strategic focus on four key franchises: Harry Potter, Mortal Kombat, DC (mainly Batman), and Game of Thrones, after a difficult 2024 marked by financial setbacks from titles like Suicide Squad: Kill the Justice League ($200 million writedown) and MultiVersus ($100 million writedown).

A sequel to the 2023 hit Hogwarts Legacy, which sold over 34 million copies and was the top-selling game of its year, is reportedly in active development at Avalanche Software. Last year, WB Games president David Haddad confirmed it as a "very big priority," with no specific release date but a likely release window of 2027 or later, considering typical development timelines.

The sequel is also said to include narrative connections to HBO’s upcoming Harry Potter TV series.

Rocksteady Studios is reportedly developing a new single-player Batman game, following the failure of the live-service Suicide Squad: Kill the Justice League. Although WB Games has not confirmed this, various job listings indicate otherwise. This return to single-player games aligns with fan demand and Zaslav’s emphasis on Batman as a core franchise.