Paradox Interactive Ab - ...if just one more expansion

[supremegod]

I really have to come and explain what I said, as I went and blurted out some one-liners in the heat of the moment. My main takeaway is still disappointment with the quarter.

@Verneri_Pulkkinen

Q1 is always a bit soft; this was the softest in years in terms of sales because there were few releases. But what caught my eye immediately is the free cash flow: 188 MSEK!

I agree that relative to market expectations the result was good, and I noticed the cash flow as well.

But what I’m worried about is this part shown in your table:

@Verneri_Pulkkinen

	Q1’24	Q2’24	Q3’24	Q4’24	Q1’25	Q2’25	Q3’25	Q4’25	Q1’26
Revenue	482	576	434	709	463,6	459	395	875	431

I personally like to look at revenue development through these “quiet” quarters because they are more comparable with each other, as major releases don’t distort the picture.

The Q1 trend has been downward since '24. In '23, the level was still roughly flat at ~476 MSEK. What should we make of this? Is the core business weakening? Are consumers just that cautious? In my book, EU5 should have been even more visible in this quarter’s figures.

I can accept the weakening of the core business given that we are at the bottom of the cycle in the sense that the core catalog is being renewed. At least according to my own thesis . _{psst… Stellaris 2 any moment now}. And from here, the plan is to launch onto the next growth path, and the DLCs will go BRRRRR again as they start properly pumping cash into the coffers.

[Vichy]

As a hardcore EU4 fan, I see no reason to upgrade to 5 for a long time yet. Wouldn’t it be worth investing a bit in quality if they want to sell new versions?

[Verneri_Pulkkinen]

@supremegod

The Q1 trend has been downward since '24. In '23, the level was still roughly flat at ~476 MSEK. What should we make of this? Is the core business weakening? Are consumers just that cautious? In my book, EU5 should have been even more clearly visible in this quarter’s figures.

As a dilettante, I forgot by the way that the strengthening of the krona ate 40-50 MSEK from the revenue. If the company reported currency-adjusted figures, growth would have been 2-3%.

Growth still came partly from Bloodlines, which will dry up according to them. On the other hand, among the core games, e.g., Cities Skylines 2 is developing well since it was taken over by their own studio, and e.g., Stellaris grew against a strong comparison period.

More info here, the livestream is still on.

Interim Report - Q1 | Paradox Interactive

@Vichy

As a hardcore EU4 fan, I don’t see any reason to upgrade to 5 for a long time to come. Should they invest a little in quality if they want to sell new versions?

Many others likely see it this way: EU IV has had about 8,300 daily players over the last 30 days, EU V about 7,070.

However, EU V was released as a functional game, which is a massive achievement for Paradox.

This is indeed one of the core questions regarding Paradox. Can Paradox manage to make good games that succeed? And will the new platforms of major game series (I’d rather call these platforms or live services than “games”) manage to challenge their predecessors, which have been under development for 10-15 years!

[poutapilvia]

The Paradox publisher sale has started on Steam, resulting in almost everything being on sale. It’s worth heading over to take a look!

As a consumer, I almost choked on my coffee again looking at the pricing of some products. For example, Stellaris: the latest “season pass” is being sold for 5x the price of the base game!

Could some Stellaris player please come and tell me if there is any sense in this at all?

(base game on the left and the latest add-on content on the right)

[Flouride]

I would say that there is some sense in that.

Get them hooked with the base game and then get the money from the customer with DLCs. Of course, whether that Season Pass is too expensive is another matter.

Personally, I play Stellaris actively every 2–3 years, and in between, I pick up years-old DLCs for a much cheaper price. I wouldn’t pay the price of a full game for the latest new content myself, and I’d rather just pick the pieces from the DLC packs that I actually need.

As I understand it, the Season Pass always includes species packs and such, which don’t really change the gaming experience all that much. You just pick up the two bigger packs at some point. Right now, in that bundle, the Nomads one is what’s interesting, and the rest is mostly filler. I think Nomads alone is around 20–30 euros.

But Paradox games definitely have their own fans for whom that package will surely sell. Either way, that DLC strategy produces results in the long run, as these games are played for years and people keep coming back to them again and again.

[Verneri_Pulkkinen]

@poutapilvia

The Paradox publisher sale has started on Steam, which means almost everything is on sale. It’s worth taking a look

@Flouride

Hook them with the base game and then get the money from the customer with DLCs. Of course, whether that Season Pass is too expensive is another matter.

Yep, and that hook is quite valuable. Apparently, the full price for everything in Stellaris has already climbed to 394 euros! Now “only” 153 euros on sale.

This explains well why Paradox is capable of such abundant profitability.

EU V is also on sale for the first time as far as I know, -10% so not much.

[supremegod]

@Verneri_Pulkkinen

Yep, and that hook is quite pricey. Apparently, the full price for all of Stellaris has already climbed to 394 euros! Now on sale for “only” 153 euros.

I’m pretty sure this is entirely a marketing gimmick that steers people toward buying specifically the season pass or the monthly subscription. I’ve sometimes wondered why they keep this outrageously expensive option on display, and I couldn’t come up with any other reason than it pushing people toward smaller purchases and especially the sub.

[Verneri_Pulkkinen]

There has been a lot of talk in this thread about the development of Paradox’s player numbers. I noticed that Fredrik Wester shared this on LinkedIn three months ago.

The graph shows the concurrent players for all Paradox games. In practice, the player count is the most important indicator for Paradox, as the company certainly knows how to monetize its players successfully.

Visually, a slowdown in growth can be observed after 2022 and almost a stagnation after 2024, although the releases of Bloodlines 2 and EU V set new record peaks. Naturally, from the owners’ perspective, one would hope for growth to continue.

The graph also shows how steadily the player count behaves when the portfolio is broad, the player base is reasonably large (MAU = six million), and players are active. I bet that for a company like Remedy, which releases budget triple-A games with gaps of several years, the corresponding curve would be a low horizontal line punctuated by sharp spikes after new game releases.

This chart shows something we don’t talk about enough in games. It’s our...

Even on the back-slapping platform that is LinkedIn, the post received criticism, to which Wester responded humbly. Thumbs up to the CEO for taking feedback with an open mind.

[Flouride]

Exactly. I bought the base game back in the day for forty euros or whatever it cost. In total, I’ve spent about 150 euros on Stellaris over 10 years, even though I’ve bought all the DLCs when they’ve been ten euros or less. Same thing with Cities: Skylines. A large amount of money has been sunk into that as well over the years.

If I had more time or a more limited taste in games, Paradox would get even more money from me; now there simply isn’t enough time to sink endless hours into Paradox’s “forever games” if I want to play other games as well.

That is truly profitable business, especially since there are no other similar game studios.

If only they could get their other game production to work even decently and have a few hits in the mix.

[Pohjolan_Eka]

@poutapilvia

Victoria 3’s Great Wave received a mixed reception

The reception only got worse after players actually got to play the expansion:

The reason for the poor reception is probably obvious. They released a massive naval-themed update, and the result was that almost all AI nations delete their own navies right at the start of the game, and e.g., Great Britain goes through the entire 19th century without a navy

In my opinion, however, the reception is unnecessarily negative, because it’s clear to all true fans that you don’t touch Paradox expansions for the first month after release, and the games themselves should only be bought after a couple of years once the majority of bugs and poor mechanics have been fixed. It’s your own fault if you knowingly buy a broken game from a studio that always releases games broken.

[poutapilvia]

Yep!

In the case of Victoria 3, the poor role of the navy was the “elephant in the room.” Now, its role has been excellently improved, but it brought a couple of bugs along with it.

Well, once those are fixed, the player base will be free to give positive reviews again

Among other things, toll mechanisms were added to important straits. Because of this, I started a new Persia campaign yesterday so I can control a certain strait in the Persian Gulf…

I’ve been having fun!

[Verneri_Pulkkinen]

@Pohjolan_Eka

In my opinion, the reception is unnecessarily negative, because it is clear to all real fans that you don’t touch Paradox expansions for the first month after release, and the games are only worth buying after a couple of years once the majority of bugs and bad mechanics have been fixed. It’s your own fault if you knowingly buy a broken game from a studio that always releases games in a broken state.

@poutapilvia

Well, once those are fixed, the player base is allowed to give positive reviews again

This “special characteristic” of Paradox sets it apart from many other game companies.

If Take-Two were to release GTA VI and the reviews were negative, it would be a disaster.

When Paradox releases an expansion for a game (or even a new game) and the reviews are negative, the next question is whether the poor reviews are due to fixable bugs or if the game is fundamentally bad at its core.

Cf. Cities Skylines 2, which is now being properly overhauled following a studio change. Yet it’s a game released in 2023!

And because players expect nothing but excellence, Paradox’s “beta philosophy” stirs up emotions.

But those games would never be released if they were polished to perfection. They are so complex, and the player base’s needs are diverse and contradictory to satisfy.

I’ve sometimes wondered, when Wester comments in earnings calls that some game/expansion received a good reception while on Steam the reviews are red and orange, what this is actually based on. On the other hand, he also openly admits if things go south, like with Lampfighters or whatever it was a few years ago, and more recently Bloodlines 2 missing the mark.

However, the game studio sees from the data how players behave.

For example, in EU V, there are negative reviews from players who have played hundreds of hours. Average games aren’t necessarily played for even 10 hours! How can you play hundreds of hours without liking the game? Surely it worked in some way? These are likely the kinds of things Paradox has to weigh when considering whether players enjoy the game or not.

In this first one, the player has played the game for 932 hours!

Of course, the expectation for Paradox games is that they can be played for thousands of hours.

[supremegod]

@Verneri_Pulkkinen

For example, in EU V, there are negative reviews from players who have played hundreds of hours. Average games aren’t necessarily played for even 10 hours! How can you play hundreds of hours without liking the game? Surely it worked in some way? These are likely the kinds of things they have to weigh at Paradox when considering whether players enjoy the game or not.

This also provides one data point to track: how reviews are distributed among those who have played over 100 hours. At launch, I followed how those with over 10 and 100 hours played rated the game, and I was worried then when their satisfaction was around 50%.

Now, after a long time, I took another look at that and was pleased to notice that their satisfaction has also grown with the updates, as it should.

pssst.

[poutapilvia]

The expansions and content for Europa Universalis V received more detail on the Paradox forums.

Tomorrow, Fate of the Phoenix will indeed drop, which might move the share price.

[Flouride]

Certainly, the vast majority of the customer base understands that it is virtually impossible to fully beta test these games without the involvement of the actual audience.

The scale, depth, and complexity of these games are at such a level that you would have to sink an absolutely insane amount of money into testing if you wanted to release a bug-free product.

Of course, some people don’t seem to grasp this fact even after the fifth game and who knows how many thousands of hours played.

[Pohjolan_Eka]

They’ve had open betas before when developers had downtime and needed to hunt down those harder-to-detect bugs. But now that these season passes have been introduced, the problem is no longer in the testing itself, but in the fact that new nominal features must be crammed into the release regardless of their functionality, because the release date was decided long in advance. For example, V3 saw three hotfixes in two days, and even after those, they haven’t managed to get the game working because the amount of broken features is so massive:

There’s another hotfix coming this week, and hopefully on Thursday they will publish a public roadmap stating when they plan to restore the game’s core functionalities:

If all your game mechanics are broken and multiplayer crashes within like a minute of playing just by clicking anywhere on the screen, then every single QA tester has definitely flagged it. The fault lies somewhere else entirely than the claim that the game supposedly couldn’t be tested anywhere else but in production

[poutapilvia]

To support the forecasts for the rest of the year

[supremegod]

@poutapilvia

Tomorrow is the drop for Fate of the Phoenix, which might move the share price.

I hope it doesn’t move the share price

Quickly digging through the reviews, it doesn’t seem to have much depth and is poorly optimized. And it’s expensive considering it only affects the Byzantines. Interesting that in CK3, this same kind of thing was accepted without question.

[Pohjolan_Eka]

Waiting for Paradox’s apology

[exai]

I think this comic about Dota used to be shared back in the day:

This is quarterly economy at its finest, comrades! The release calendar is pretty much set once the season pass goes on sale, and once the date is locked in, it’s full steam ahead. Content is released exactly when decided with sales, marketing, and finance—not an hour off. When a real salesman sells, production factors are just in the way.

But the world keeps spinning; this is how it has always been, more or less. Great Wave actually reminds me of the old Paradox.