By Jesus Calero

(Reuters) - Game development delays and extended production timelines are straining video game companies, the CEO of Embracer said on Thursday, as publishers face mounting costs and fewer new releases amid market saturation.

Embracer, a major force in the gaming industry, owns more than a hundred studios worldwide and is known for popular game franchises like Tomb Raider, The Lord of the Rings and Kingdom Come: Deliverance.

"Games development have been taking longer time for most companies in the industry to complete to the quality needed," CEO Lars Wingefors told Reuters, adding that particularly small and mid-sized titles were struggling with delays and underperformance.

This trend puts pressure on companies' fixed cost bases, resulting in narrower or negative profit margins if new content fails to fill the pipeline.

Embracer, like other gaming groups, benefited from growing demand for video games during COVID-19 lockdowns, but has since been hit by development delays, falling demand and poor reception for some of its new titles.

It confirmed on Thursday that some of its releases would move past this fiscal year to optimize quality and revenue windows, prioritizing strategic timing over immediate gains.

French peer Ubisoft said last month it expected a 39% drop in its third-quarter net bookings due to no new releases, delays and underperformance of key titles.

As average playtime declines worldwide, fewer titles and studios are gaining a larger share of engagement, gaming analytics firm Newzoo said in a report last July.

At the same time, a higher share of playtime is going back to classic games.

Wingefors said that retaining franchises like The Lord of the Rings and Tomb Raider drives growth in both classic single-player games and recurring revenue products, capitalizing on strong fan engagement in an environment where launching new IPs is increasingly difficult.

"We had a great success of bringing older products back to life again," he said.

Embracer's shares have lost around 80% of their value from their 2021 peak.

(Reporting by Jesus Calero in Gdansk; editing by Milla Nissi)