3rd July 2021 Remedy's Q1 2021 Financial Report [Including Notes]

After announcing that the studio will be publishing its financial reports quarterly going forward, Remedy's first summary for 2021 is now available!

The report, published in May, covers the company's activity from January to March and clarifies the progress of internal game projects. The full version, along with a presentation by the studio's Tero Virtala (CEO) and and Terhi Kauppi (CFO), can be found on their investors' page, HERE.

As always, we're going to break down the main points of the report to best understand where the company stands and what its future plans are. 

The Setup / 2020 Achievements & 2021-2025 Studio Goals

Heading into 2021, Remedy had gone from working on-site to working remotely, a decision made by management in the early stages of the year following the spread of Covid-19 globally. Despite this, work continued on both DLC packs for Control, The Foundation and AWE which launched later that year. Crossfire X's Operation Spectre, a campaign developed by Remedy in collaboration with Smilegate and Microsoft was also teased at the Xbox Games Showcase in July. While it was a difficult year, there were also things to celebrate as 2021 also saw the twenty-fifth anniversary of the company and the tenth anniversary of Alan Wake, two significant milestones.

While many industries financially struggled throughout the pandemic, the gaming industry was one of the few that accidentally thrived, with more people seeking escapism in digital worlds. This also impacted Remedy which saw over two million copies of Control sold by the end of 2020, with the studio also maintaining a constant and strong share price. Throughout the year, Remedy worked on five main games, in fifteen separate projects, across ten platforms.

As we learned from Remedy's Capital Market Day from December 9th 2020, the studio publicly announced their new studio goals for the years ahead. While the previous few years have been dedicated to strengthening its position as a multi-project developer, the Board has established the key stepping stones that would define success internally going ahead. These goals include:

• Successful launch of well-received games, with the goal of one major hit.
• The growth of Remedy-owned IPs with long-term potential (e.g. spin-offs, sequels, or expansions)
• Strengthening the studio's position to select the ideal distribution for each project (e.g. self-financing, self-publishing, and working with partners).
• Strengthening Remedy's status and value within Europe.
• Maintaining a profitable and growing studio

Achievements (Q1 2021)

Control Ultimate Edition. Control launched on PlayStation 5 and Xbox Series X|S in the first few months of 2021, with the digital edition launching February 2nd, and the physical edition launching March 2nd. 

Subscription Services. Control reached new audiences with the Ultimate Edition launching on PlayStation+, and the base game launching on Xbox Game Pass and Humble Choice.

Vanguard. The Vanguard team are currently developing a fully playable build of their upcoming co-op free-to-play game. Internal playtesting continues, with the next phase of external playtesting starting.

Revenue. Revenue increased to €8.1 million, an increase of 3.4% over last year. Operating profit was calculated at €0.9 million. The company raised €41.4m in new shares and, combined with development payments from publishing partners and Control royalties, combined brought the value to €62.4m. Development payments were also much higher than in Q1 2020, presumably because of multiple projects entering the production stage.

Internal Developments (Q1 2021)

Current Projects. As of January 2021, Remedy has been working on Control (with 505Games), CrossfireX (with Smilegate Entertainment), two unannounced projects (with Epic Games), Vanguard, and a sixth unannounced new project. While not addressed in the financial report, in recent days, we've learned that 505Games has continued their partnership with Remedy to bring a four-player game set in the Control world, currently codenamed Condor. It is possible Condor is the sixth then-unannounced title.

Epic Game Projects. In collaboration with Epic Games, Remedy are working on a new AAA game and a smaller game set in the same world, which will be released for consoles and PC. Both projects are fully funded by the publishers, with net revenue split 50/50. At present, the smaller project is in full production, with the bigger title not that far behind, and due to enter full production soon.

State of the Studio (Q1 2021)

Studio Size. Remedy continued to see an increase in talent at the studio with 281 developers at the studio at the end of March, compared to 275 by the end of 2020. They are also working with 31 external development partners, bringing in an additional 370 people.

Control Dev Team. While almost all Control developers have moved onto new projects, Tero Virtala stated in his report that "there are still some platforms and storefronts to be explored" for the game. 

Crossfire Series. Remedy is predicting a "significant year for Smilegate's CrossfireX and HD" with both expected to launch in 2021. Crossfire HD will be a continuation of the series on PC, whereas CrossfireX will be launching on Xbox One and Xbox Series X|S.

Recruiting Talent. The studio has been piloting and evaluating new ways to attract and recruit talent.

Predictions For 2021 (Following Q1)

Game Releases. Remedy is expecting title launches later this year. 

Revenue. Revenue and operating profit expected to increase in the second half of 2021.

IP Ownership. The studio's goal going forward is to own three expanding game IPs, and to be able to either self-finance, self-publish, or work with external partners for upcoming projects.

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