Remedy - Suomen AAA-pelien ylpeys (Osa 2)

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Another positive aspect from the report is also that the cost level has practically not increased in 2024, even though for the first time, two games were kept in production. This is excellent news for the future bottom line, if cost growth remains moderate or reasonable in the future.

Of course, one hopes that employees have enough bread on the table so that leaving for competitors is not too tempting, but on the other hand, those who have been on board in recent years will likely receive a nice carrot from options and other bonuses, if the company’s earnings and growth turnaround succeeds.

The company also stated in the CMD that it does not expect significant growth in personnel or x-dev costs in the coming years, which I was and still am somewhat skeptical about, but this year certainly builds some confidence regarding this claim.

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Third consecutive loss-making year and AW2 flopped, but the company tries to talk about the future when they don’t want to honestly discuss how poor the performance has been in connection with the financial statements. Without Take-Two and Annapurna development fees, the company would now be lambasted. Royalties are still ridiculously low. Financial position stable for now. I am lowering my target price from 9€ to 7€.

Firebreak: The game’s positioning and communication have been carefully considered to ensure the best possible reception in a competitive genre.

I don’t know what kind of stuff Tero and his colleagues are popping in their office, but I can only guess it’s something other than tap water. Positioning and communication have been subpar so far, as no one still knows what the game is, nor have they even heard of it. It’s still unclear to me what the genre even is (PvE extraction shooter?).

Firebreak: They [external parties] tested match-making and other technical components to provide the team with data and insights to support the development of the final product.

Usually, information about these beta tests has stated that the game’s reception was positive. I interpret this to mean that the feedback has been negative, so they don’t want to disclose it.

For example, among players, the AW Lake House DLC is a really big disappointment, and even bribed media representatives didn’t care for it, but still Remedy describes the reception as follows:
Remedy and Epic Games released The Lake House expansion for Alan Wake 2 on October 22, which received a positive reception.

Control 2 moved into full production

This likely means that Firebreak is practically complete, as resources have shifted to Control’s development. It also confirms that they no longer want to spend money or time on it, and it will just be dumped onto the market, hoping for the best.

If and when Firebreak flops, it would be the third failure in a row. Usually, game companies in the market are shut down after one or at most two flops, but for some strange reason, the market still believes in this company and thinks that profits will be made in the 2040s.

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The game sold 2 million copies and it flopped? How much should it have sold not to flop? How do you define flopping?

From your own link, this image:

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A 6.9 rating is, in your opinion, a really big disappointment?

This hyperbole is starting to get a bit comical.

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I don’t know who took those substances, but having played through the game, I disagree with almost everything. About that Firebreak communication, I can’t say anything, nor do I have the competence to assess how it should be properly handled in games of that style. Probably a strong hype close to release so it doesn’t get forgotten?

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You lowered your target price to 7 euros, which results in a market value of 95 million. However, in your opinion, the value of all components you have written now and previously is either zero or negative. How did you still arrive at that 95 million value?

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In 2025, there should be income from at least several sources:

  1. Max Payne development fees
  2. Control 2 development fees
  3. Alan Wake 2 royalties
  4. Smaller amounts of royalties from Control, Alan Wake Remake, and the original version of Alan Wake (yes, this has also been “surprisingly” high on Steam). Presumably, we’re still talking about millions annually from these combined in 2025. And yes, Quantum Break also sells something occasionally, if Remedy gets any royalties from it.
  5. FBC: Firebreak payments from Sony and Microsoft, game sales, and probably some microtransactions.
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I wouldn’t want to paint grey clouds today, but regarding Firebreak’s release date and attention, unfortunately, Elden Ring’s “Nightreign” just got its preorder trailer, and the release date was confirmed as May 30, 2025. Extensive network tests, if I recall correctly, also begin this week for Nightreign, which will further increase awareness of the game.

From Wikipedia:

Elden Ring Nightreign is a cooperative action role-playing game set in a procedurally generated version of Limgrave, the first open-world area of Elden Ring. While the game has a singleplayer mode, it is intended to be played by teams of three players who collaborate over three in-game days to prepare for the final boss.[1] Similar to battle royale games, Nightreign features a shrinking gameplay area which resets after players defeat the minor boss at the end of each in-game day.[2]

The Elden Ring IP is so massive and its predecessor such an enormous success (~30M copies) that it’s hard to imagine that the release of this Elden Ring co-op spinoff wouldn’t affect all games that are forced to release their games near the same release window - especially co-op games.

It is already the #4 most wishlisted game on Steam, with an estimated nearly 2M wishlists on Steam alone. (Source: Gamalytic)

We will eagerly follow which release window FBC-Firebreak ends up in. As it stands, at least the May-June release window seems challenging due to Nightreign. Killing Floor 3 is coming at the end of March. Monster Hunter: Wilds might get its release window today at State of Play.

In light of current information, perhaps late April would seem to be the best release window for Firebreak. Let’s hope that the traditional release window curse, which has become all too familiar to Remedy, doesn’t strike again. Time will tell.

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I’m raising my bid and setting my own price target to 3 euros :joy_cat:

If there wasn’t a multi-project model, the company wouldn’t have made a single euro after AW2’s completion. Considering that, the model works well, and suitable deals can be made to balance expenses.

AW2’s flopping cannot be talked about; it has sold well compared to its genre counterparts, and royalties are always paid in arrears.

I don’t even bother to comment on disparaging FBC; it always shows what comes of it.

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My 0.02€ on marketing Firebreak:
For a co-op PvE shooter like Firebreak, a long and detailed campaign might not necessarily be the most effective choice. It’s also not advisable to market too early. If the launch date is still many months away, a game trailer mentioned by a friend might already be forgotten by the release date. Especially since this is the first self-published game, it’s actually worth putting all efforts into a compact campaign just before launch and increasing the volume even more after the release.

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Here is a fresh Remedy company report from Ate after Q4. :slight_smile:

We reiterate our Buy recommendation for Remedy and a target price of 19.0 euros. The company’s Q4 figures were better than our expectations, and game projects are progressing well in production. Based on the outlook, the company’s operating profit is expected to turn positive already this year, although the future reception of FBC: Firebreak is still a key variable here. In the big picture, medium-term earnings expectations are weighted towards 2027, when Control 2, which has just entered full production, is very likely to be released. Compared to the earnings potential after this, the current valuation of the stock looks attractive in our opinion.

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Insider purchase: Board member Kai Tavakka acquired 6000 pcs of Remedy yesterday at a price of €13.80. That is, for €82,000.

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If anyone was perhaps waiting for it, there was no FBC Firebreak material in the State of Play last night.

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At least double. A successful game should cover its development costs within the launch window; now it took almost 1.5 years.

Remedy claims to be a quality company, and thus the target level for each release is 9. It’s been a while since my school days, but a seven was rarely celebrated or considered a successful performance.

A company’s most important task is to generate profit. Remedy has failed to do so for the past three years, and this year’s guidance is that they might make a profit.

I understand that even this forum, for example, is somewhat skeptical about Firebreak, but you should already be a little concerned that there isn’t much strong confidence emanating from Remedy’s side regarding the project either. Just look at the Inderes interview, for example, where Tero squirms when trying to describe the expectations set for the game.

What would you personally pay for a game company employing nearly 400 people, which consistently makes losses and owns only two C-tier IPs, and whose true value is based on Sami Järvi, who would retire quite quickly after an acquisition?

I personally find it difficult to give this equation a price tag of over 100 million euros, especially in this market where AAA game sales are declining and competition for consumers’ time is at an all-time high. The company’s solution to market challenges is self-publishing, for which there is no evidence yet.

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Metacritic user reviews are not school grades (4-10), but are on a scale of 0-10. So a seven is quite good, not average like in school grades. And those few zeros and ones from angry users lower the average quite significantly compared to if they had to give a four.

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Except that unfortunately, game reviewers use that scale incorrectly. A 7 is practically an average game and a 5 is already terrible crap.

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But angry users still slap a zero or a one on the game, not the five that a disappointed critic would give.

That’s why games that divide opinions usually have a very low average user rating compared to the critics’ average.

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This is absolutely true. Regarding user reviews, that system is very broken - either the game is unpopular and the average approaches zero, or it’s good and then it hovers near ten. :slight_smile:

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The significance of a single “flopped” expansion, in my opinion, is rather small. It’s a bit like a 9-season series that gets worse towards the end. You still watch it if you’ve liked the series and watched the previous 8 seasons. In discussions, this 9th season will surely be criticized, but the product will still be recommended. The same applies to the game; the expansion is unlikely to be recommended for purchase, but if you really like the game, you’ll still be interested.

The main game itself is a huge success in terms of reviews, and in my opinion, the sales tails of quality story games are long, as I myself have bought old classics and still enjoyed the games years after launch. So far, sales have been disappointing, but I haven’t bought it myself either, as my computer’s specs aren’t enough for the experience I want. So why wouldn’t others also wait for cheaper hardware and, naturally, sale prices for the game?

The stock market is a gamble, and game companies are an even bigger gamble, but future games will decide everything, and in my opinion, we are currently on a stable footing moving forward. This year, AW2 will start bringing money to the company, and in my opinion, if the co-op game can just break even in a couple of years, I’ll be satisfied. The first video clip left such an uninspiring taste. So my expectations are quite negative, but I acknowledge a minimal chance of success, because the appearance etc. of co-op games doesn’t matter at all if the game feels fun with friends.

10 years from now, I have strong faith in the company, which holds Control + AW, games that have found a reasonable position in the gaming market, and in my opinion, the possibility of major flops has also significantly decreased for this reason.

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In my opinion, AW2 cannot really be called a flop either. A flop, however, requires that the product itself is also somehow bad. AW2 has definitely not reached the audience that many, including myself, expected. There are many reasons for this, and certainly one of the biggest is Epic Game Store exclusivity on PC.

However, if we compare the game’s content to Control, I believe Remedy has shown strong development from Control to AW2.

Let’s compare, for example, the percentages of players who have completed the game.

Control - In the first half of 2020, I had written down that the “Take Control” trophy, which is awarded upon completing the game, had been achieved by 25% of players. At this stage, Control had not been available on any Gamepass or the then-current PS Now service.

Currently, with the game having been through all streaming services and distributed on PS+ service, the old Control version has achieved the trophy for 16.3% and the Control Ultimate Edition for 20.6%.

Alan Wake 2 - Has not yet been on any Gamepass or similar services, and on Playstation, there is a one-hour trial where the game can be tried for free, thus also allowing players to earn trophies.

Currently, the “His Way Out” trophy has been achieved by 37.7% of players. This percentage has slightly decreased during Christmas, as in November last year, the trophy had been achieved by 39.6% of players.

It should also be noted that Control’s main story playthrough time is about 11 hours, while Alan Wake 2’s is about 19 hours. Considering this longer playtime, the completion percentage is tremendously good. And when we also consider that the game can be tried for free for an hour, it also tells us how many of these trials have converted into purchases.

The Platinum trophy in AW2 has been achieved by 9.7% of players, while in Control, it has been achieved by 6.7%.

Based on these justifications, I do not consider AW2 a flop, even if the financial outcome has not been ideal. I still believe that a high-quality game and content will grow the RCU’s core fanbase, which in the long run is the most important growth for reducing future financial risks.

By the end of this year or early next year, we will certainly start to see AW2 in streaming services for the first time. It would be interesting to know if the data Remedy has on player retention has any impact on the price that can be negotiated in B2B deals.

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As previously discussed, there aren’t many games like AW2 (at least good ones) available. Although the target audience is somewhat narrow, this has the potential to sell for a long time. The AW fanbase has certainly grown nicely, and if AW3 ever goes into production, good marketing before its release could potentially boost sales of the preceding game as well. Now, every copy sold brings royalties into Remedy’s coffers.

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