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Conclusion
Empire's pre-IPO history is ironically,
principally one of steady, controlled growth. Until May 2000, the Company had grown entirely organically, a feat it had achieved by remaining focused on the market niches it knew best. Because of this, the Company
was able to remain a profitable player in the flight sim market whilst others (for example, Hasbro/Microprose) were forced to withdraw and it also carved itself niches in the pinball and cricket sim markets.
Adopting this strategy, the Company was able to release a more or less constant flow of relatively low cost/risk product and although unit sales rarely exceeded 300,000 per title, its rigorous cost controls allowed
the Company to generate (albeit small) profits on most of its titles.
However, since floating, raising expansion capital and moving into the mass-market video games sector, Empire has been unable to retain its
smooth growth profile. Its problems appear to stem from both an inability (or possibly reluctance) to shed its niche publishing mentality combined with the usual publisher afflictions of poor development management
and slippage. The result was three profits warnings in as many years and significant loss of investor faith as a result. FY03 saw a welcome (albeit accounting policy change-strengthened) return to marginal
profitability but the Company, since then, has been almost entirely reliant upon its bank facility.
The Company has begun to (and some would argue forced to) evolve into a value publishing operation focused
largely on mid and budget-priced releases with a small number of full-price releases whether the market will support them. Within this category it has established several successful brands (Big Mother Truckers, Ford
Racing, Flat Out) although its intentions to build upon this could be ruined by the Company's precarious financial position. Indeed, this continual financial weakness has undoubtedly contributed to the Company's
decision to entertain acquisition offers.
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