Alan Wake 2 has yet to generate royalties, Remedy forms new team to manage its game portfolio

Remedy Entertainment has reported its financial results for the second quarter ended June 30, 2024. The Finnish studio also provided an update on games in its development pipeline.

Alan Wake 2

Financial highlights

• According to its H1 report, Remedy reached €10.3 million in revenue in the second quarter, up 16.2% year-over-year. Its first-half revenue grew 33.7% to €21.1 million.
• Operating loss was €3.2 million, an improvement from €4.8 million in Q2 2023. H1 loss reached €5.3 million, compared to €10.4 million in the same period last year.

• Development fees from partners were the main source of revenue in the second quarter, accounting for 91% of the total. This is mainly to higher fees from the Max Payne 1&2 remake, which is developed in partnership with Rockstar.
• Royalties from sales of already released games (mainly Control and Alan Wake Remastered) amounted to just €912k in Q2.

Remedy has yet to see revenue from Alan Wake 2

• According to CEO Tero Virtala, Alan Wake 2 “did not yet generate royalties.”
• The game was fully funded by Epic Games, and Remedy will be entitled to 50% of net revenue after the Epic fully recoups its investment. As of February 2024, AW2 sold 1.3 million copies globally, meaning it was still not enough to generate revenue for the studio.
• In March, Virtala told investors that Alan Wake 2 “has already recouped a significant part of the investments made by Epic Games Publishing, and we expect the game to be a meaningful revenue and profitability driver for the year.”
• The game’s budget remains undisclosed, but Finnish analysts estimated the total at €70 million, of which €50 million were development costs.

Games in development and future plans

In May, Remedy canceled Project Kestrel (originally codenamed Vangaurd), a free-to-play multiplayer game that was co-financed by Tencent. According to Virtala, “this brought increased focus and better development synergies and enabled us to move experienced developers into other game projects.”

In addition to supporting Alan Wake 2 and developing The Lake House expansion, Remedy has three games in its pipeline:

• Codename Condor (4-player co-op spin-off to Control) — now in full production*, the team has worked on several maps and mission types, as well as organized internal and limited playtesting;
• Control 2 — went from the proof-of-concept stage to the production readiness stage*, with the team reaching an “important milestone in delivering a build of the game that showcased several important features in playable form”;
• Max Payne 1&2 remake — now in full production, with Remedy saying that the team “has been working towards developing the game to an early functional state from beginning to end while focusing on key differentiating gameplay features.”

*Note: According to Remedy’s own definition, the production readiness stage is about defining the needed tools, establishing the team (50-70 devs), and finalizing the production plan, while the full production phase (up to 200 people, including external staff) means the game needs 1-2 years to reach the Alpha stage, and Beta requires another 3-6 months of polishing.

Remedy also formed a new dedicated team to manage its portfolio of already released games to “ensure we look after our games as well as possible and service our player base.”