Remedy Entertainment, the studio behind Alan Wake 2, announced their revenues for the fourth quarter declined by over 24% despite the release of Alan Wake 2.
A screenshot from Alan Wake II (2023), Remedy
In the company’s recently released financial statements, it reveals, “Revenue decreased by 24.4% to EUR 10.3 (13.6) million.”
Not only did quarterly revenue decline by over 24%, but the company’s yearly revenue declined as well. Remedy reported, “revenue decreased by 22.2% to EUR 33.9 (43.6) million.”
A screenshot from Alan Wake II (2023), Remedy
This comes after the company released Alan Wake 2 at the end of October 2023. According to Remedy the game sold 1 million units by the end of December 2023 and has added another 300,000 units sold by the beginning of February 2024.
Those sales numbers are not enough for the game to break even. The company’s CEO Tero Virtala stated, “The sales of Alan Wake 2 started well despite a competitive launch window and an overall exceptional number of great game launches throughout the year. Alan Wake 2, as a digital only release, had sold over 1 million units by the end of the fourth quarter of 2023 making it the fastest selling Remedy game. I want to thank the development team for their incredible effort in getting Alan Wake 2 done.”
However, he then revealed, “As Control proved, a great quality game can have excellent longtail sales and we expect this to be the case with Alan Wake 2 as well. 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.”
A screenshot from Alan Wake II (2023), Remedy
Virtala also revealed the costs for the game seemingly ballooned at the end of the game’s development, which impacted other projects in their development stages.
He said, “Alan Wake 2 is the largest and most ambitious project undertaken by Remedy. Finalizing the game with a high quality was a priority and required more personnel during the year than originally planned, which in turn delayed our other projects moving to the next development stages. The successful launch of Alan Wake 2 freed up talents for other game projects, resulting in improved development velocity.”
Despite the seemingly increased costs at the end of the game’s development and the fact that the game has not broken even yet, Virtala shared the company plans to double down on what they are now viewing as a franchise.
He said, “With Alan Wake and Control we now have two established franchises, and our ambition is to grow them into franchises that have high brand recognition, steadily growing user base, more regular cadence of sequels and an ability to generate revenues and profits at a high level.”
To this end, the company claims expanding their Alan Wake franchise as well as Control are key for the company’s future. The report states, “We have two established own franchises, Control and Alan Wake, which are linked through the Remedy Connected Universe. Growing and expanding these franchises will be a key part of our future. In addition, we work with a partner franchise Max Payne that was originally created by Remedy.”
A screenshot from Alan Wake II (2023), Remedy
As for why the company’s revenue declined so much despite the release of Alan Wake 2, Virtala explained, “Our full year 2023 revenue and profitability were impacted by significantly increased investments in our own game projects, and the impairment charge related to codename Vanguard.”
He added, “Out of the five games we had in development during the year, we co-financed four that are based on Remedy-owned brands, whereas Max Payne1&2 remake is fully funded by the IP owner and publishing partner Rockstar Games. In the fourth quarter of 2023, revenue and profitability declined from the comparable period.”
Furthermore, he shared a game they had in development with Tencent was scrapped, “In November we announced a reboot to Codename Vanguard, renamed Codename Kestrel. The requirements for a successful new free-to-play game have clearly increased during the past years. Despite the promising progress during the first half of the year, we decided with Tencent that the potential was not there. Kestrel returned to a concept stage. As a result, we wrote off all the capitalized Vanguard development costs, impacting the profitability of the fourth quarter and full year 2023 by EUR -7.2 million.”
A screenshot from Alan Wake II (2023), Remedy Entertainment
While Remedy appears to be optimistic that sales for Alan Wake 2 will continue to perform well in the long-term, the game is part of a major controversy and growing boycott of games with consultant Sweet Baby Inc. attached.
Game Developer’s Alessandro Filari revealed Sweet Baby Inc. CEO Kim Belair was heavily involved in Alan Wake 2 writing in November 2023, “For creating Saga Anderson, the developers at Remedy took a different approach compared to the process behind other hero characters, resulting in a more organic creative collaboration across different disciplines at Remedy Entertainment and outside parties. Along with working with story and narrative consultant Kim Belair of Sweet Baby Inc. to refine the character voice and story arc, the key creatives of Alan Wake 2 also worked extensively with the actress playing Saga Anderson, Melanie Liburd, who offered suggestions and other insights that led to the Saga Anderson seen in the final game.”
In fact, Game Director Kyle Rowley appeared to confirm how important Sweet Baby Inc.’s involvement was, “I think that it took us a long time to find Saga. It was an interesting process, we had an idea in our head on what that character could be, but then, as the character evolves over time, being open to changing her based on input from the actors and from external sources really opened things up for us. I think that’s important for us as a studio to be okay with, because we don’t do it very often for our characters, this idea of how to create a new hero character, so it is kind of a big moment for us, and it was definitely interesting for me going through that process.”
Kim Belair via InclusionFX YouTube
What do you make of this financial report from Remedy?
