Back in late March, Remedy Entertainment published five reports detailing its internal developments from 2024.
In this post, we'll examine those documents, which include: the Annual Report 2024 (this will be our baseline), the Financial Statement and Board of Directors' Report 2023 (green), the Remuneration Report 2024 (blue), and the Corporate Governance Statement 2023 (purple).
If you're interested in the numbers, I recommend checking out the reports directly to ensure that you're getting the most accurate data. In our roundups, we look primarily at the company's changes, the projects it's working on, and the challenges and achievements it had in the reported time.
As always, the original reports were posted on the Remedy Investors website and emailed to subscribers on March 20th. On the same day, Tero Virtala (CEO), Terhi Kauppi (CFO), and Veli-Pekka Puolakanaho (Head of Corporate Development and IR) took part in a livestream to address the financial results from 2023 and answered questions from shareholders. You can watch the full broadcast, HERE.
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Highlights (Q4 2023)
Alan Wake 2 Expansions. In 2024, Remedy celebrated the release of both Alan Wake 2 story expansions; Night Springs in June and The Lake House in October.
Physical Editions. Exclusive for consoles, a physical edition of Alan Wake 2 was published by Epic Games in October. (Though not mentioned in the report, Limited Run also shipped a Collector's Edition for fans in December.)
FBC: Firebreak. Remedy revealed their first cooperative adventure, FBC: Firebreak in October. The title will also be the studio's first self-published game.
Control IP. The developers purchased full rights to Control back from 505 Games. The decision triggered Remedy's search for financial assistance as they plan to move into self-publishing. They later entered a strategic partnership with Annapurna in August.
Cross-Media Partnership. The partnership with Annapurna also included a cross-media contract for the Control and Alan Wake IPs. (In short, they have the rights to move forward with a live action TV show or movie set in those series. Those rights were previously with AMC but had expired.)
Tencent Loan. To further aid in their goal for self-publishing, Remedy entered into a convertible loan from Tencent to help with FBC: Firebreak (and later Control 2).
Internal Developments (Games)
Development Progress. FBC: Firebreak, Control 2 and Max Payne 1&2 Remake are all in full production.
Full Production. During the Full Production stage, the game teams will consist of +75 internal developers, with additional external staff (totalling up to 200, depending on the scale). The target duration for this stage is 15-26 months, although that will depend on scope. During this time frame progress is measured in two smaller subgroups; Alpha and Beta stage. In Alpha the team execute the production plan and focus on passing development gates/milestones to ensure on track schedules. In the Beta stage, the team focuses on QA and bugs to improve the player experience.
FBC: Firebreak. FBC: Firebreak's budget amounts to approximately EUR 30 million, with Remedy owning its IP. The game will be mid-priced, and scheduled for release in Summer 2025 (later revealed as June 17th) for PC (via Steam and Epic Games Store), Xbox Series S/X, and PS5. "The game is set to feature a series of "imaginative, highly replayable missions containing a variety of surprising twists and challenges, teamwork and strategy are at the heart of the game."
Control 2. Control 2's budget is set at EUR 50 million. Similar to FBC: Firebreak, Remedy owns IP and is set to self-publish on PC, PS5, and Xbox Series S/X. The game has moved onto full production in early 2025. Annapurna will finance 50% of the development costs.
Max Payne Remake Progress. Max Payne 1&2 Remake officially moved into "full production stage" during the Q2 2024, though exactly when we'll hear more about the project is down to the IP owner, Rockstar Games. Describing the experience, Virtala hopes, "Developing a remake of this cult classic is a fantastic opportunity for Remedy, and we are dedicated to bringing Max Payne back in a high-quality form for new and existing fans alike."
Royalties on Max Payne Remake. In the Annual Report 2024, Remedy adds further clarity to the Max Payne 1&2 contract stating, "under the development agreement, Remedy develops the game as a single title for PC, PS5, and Xbox Series X/S using its proprietary Northlight technology and tool set. The game's development budget is financed by Rockstar Games, the size of which is in line with a typical Remedy AAA-game production. Remedy has a royalty opportunity after Rockstar Games has recouped its development, marketing, and other costs for distributing and publishing the game."
Alan Wake & Control's Future. On the topic of Alan Wake and Control, Virtala reiterated the company's commitment to continuing with both owned IPs. His letter reads, "We continue to have a special focus on our two established franchises: Control and Alan Wake, which are linked through the Remedy Connected Universe. Growing and expanding these franchises and self-publishing the upcoming games will play a key part in our future."
Alan Wake 2. Released in October 2023, Alan Wake 2 has since recouped its development and marketing costs, exceeding two million units sold. In 2024, Remedy developed and released two expansions for the game; Night Springs and The Lake House.
Control IP. Remedy acquired full rights to the Control franchise from 505Games in February 2024. In his letter, Virtala states, "This is a significant positive step for us. While 505 Games was the right partner in 2017, the franchise and our ambitions have grown since. We see that the way to grow the Control franchise is with a different business model and a partner." The Board of Directors Report further add that "Cash flow from investing activities in 2024 contains two of the three instalments related to acquisition of Control franchise publishing rights." Control has sold over 4.5 million units by the end of 2024 generating net revenue of over EUR 100m.
Internal Outcome of "Kestral". The studio made the heavy decision to discontinue their project, codenamed Kestrel. In his letter, Virtala stated that the outcome allowed "us focus to develop further our other game projects". In the Board of Directors Report, they state that "As Remedy had recognized EUR 7.2 million impairment loss in the result of 2023 as giving Kestrel a fresh start after rebooting it and renaming it from codename Vanguard, the cancellation didn’t generate any impairment loss for year 2024."
State of the Studio (Developers & Personnel)
Personnel. At the end of 2024, Remedy was formed of 367 developers (up from 352 in 2023). Together, the team consists of talent from 36 different countries, spread over two studios. There are an additional 27 external developers (working on the projects but not employed by Remedy), bringing the full total to 394.
Gender. Employee gender spilt is 75% male, 25% female, and 1% non-binary or other.
Average Age. The average age of a developer at the studio is 36.
Internal Self-Publishing Team. To prepare for FBC: Firebreak's launch, the internal self-publishing team was doubled in 2024, to around 20 people, "structured into six units with their respective leaders".
Application & Turnover. In total, Remedy received approximately 5000 job applications throughout the past year. As a result, they onboarded 57 new developers throughout the year, and had an employee turnover rate at 8.9%.
Self-Publishing Guiding Principles. There are three "guiding principles" when it comes to self-publishing at the studio: 1) focused internal team with operation scale and global reach through selected key partners (a little wordy, though an acronym might not improve matters), 2) only published own games, and 3) publishing to be as closely integrated with dev teams throughout production.
"One Remedy". The studio's "One Remedy" culture focuses on three pillars as guidelines in daily work life, following an internal study conducted in 2023. The pillars are; 1) Camaraderie, 2) Pioneering Spirit and 3) Smart Creativity. The report states that, "We believe that diversity, equity, inclusion and wellbeing are the cornerstones of creativity and success."
Board of Directors. Board of directors include Markus Mäki (chair), Kaisa Salakka, Kai Tavakka, Sonja Ängeslevä, Henri Österlund, and Jussi Laakkonen. The salary for the Chairman of the Board of Directors if 4,500 EUR per month. Other members are paid 3,000 EUR per month. There was 100% attendance for all board members throughout 2024. Remedy’s Board has adopted a Board Composition and Diversity Policy, which includes different lengths of tenure and a balanced representation of women and men (as recommended by the CG Code). Membership requires 1) excellent video game industry knowledge, 2) Relevant governance and leadership experience and 3) Appropriate financial experience. They also need to be in a position where they can devote enough time to Board work.
Core Management. The core management team consists of Tero Virtala (Chief Executive Officer), Markus Mäki (CPO), Sami Järvi (Creative Director), Santtu Kallionpää (CFO), Mikael Kasurinen (Creative Director), Johannes Paloheimo (CCO), and Mika Vehkala (CTO). Two manager have left the studio in 2024; Terhi Kauppi (CFO, until July), and Christopher Schmitz (COO until May).
State of the Studio (Investments & Future Prospects)
Development Fees. Development fees totalled EUR 28.7 million for 2023, with Remedy investing in long-term projects and success. The average salary of a Remedy employee is EUR 63,852. Board members are paid EUR 3,000 per month, with The Chairman of the Board of Directors (Markus Mäki) paid EUR 4,500.
Royalties. Remedy continued to receive royalties from Alan Wake Remastered. In the third quarter of 2023, the project had officially recouped its developmental and marketing costs.
Revenue. Revenue in 2024 was EUR 50,7 M (compared to 33.9M EUR in 2023)
Target Revenue. By the end of 2027, Remedy aims to double the 2024 revenue and reach an EBITDA margin of 30% by 2027.
Operating Expenses. While we don't tend to report on numbers, there are some interesting notes from the operating expenses. Marketing costs in 2024 were almost a third of the total cost of travel expenses for 2023 (EUR 254,000 compared to EUR 832,000). Office space costs rose from EUR 291,000 to EUR 665,000, which may have been the result of the Stockholm team moving into their newly furnished studio.
Development Investments. Virtala stated 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."
Recap / 2021-2025 Studio Goals
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:
To create several successful games, with the goal of at least one major hit.
To own at least three expanding game brands with "long-term hit potential".
Strengthening the studio's position to select the ideal distribution for each project (e.g. self-financing and working with partners).
Strengthening Remedy's status and value within Europe.
Maintaining a profitable and growing studio with "well-managed risks".
Operating Expenses. While we don't tend to report on numbers, there are some interesting notes from the operating expenses. Marketing costs in 2024 were almost a third of the total cost of travel expenses for 2023 (EUR 254,000 compared to EUR 832,000). Office space costs rose from EUR 291,000 to EUR 665,000, which may have been the result of the Stockholm team moving into their newly furnished studio.
Development Investments. Virtala stated 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."
Five Year Plan. Between 2025 to 2030, Remedy aims to launch on average one new game every year, working on four game projects simultaneously.
Self-Publishing. The focus going forward is very much on self-publishing. In his letter in the Annual Report, Virtala stated that " Self-publishing gives us the freedom to decide and execute on the best strategy for maximizing the return from our games, and to select partners that fully align with our strategy. It also enables closer collaboration between the creative, technology, production and business functions." They aim to introduce the new publishing model for all Remedy owned IPs.
Financial Risk for Self-Publishing. On the topic of financial risk for the self-publishing mode, the report states that "Self-publishing has the highest financial risk but also the greatest revenue potential through game royalties." Self-publishing forces the studio to understand market segments and target audiences more closely. They have been investing in external audience and market research as well as an internal player research department.
Commercial Models. Going forward, the report lists two commercial models as a source of game sales: 1) premium fixed priced games with possible DLC (more traditional, e.g. Alan Wake 2) and 2) Fixed-priced games with a service element (mid-price games with longer game expansions, e.g. FBC: Firebreak.)
Sustainability. Sustainability efforts include integrating accessibility considerations better into production plans, implementing a DEI focused to identify strengths and improvements, and taken initial steps with the Sustainable Games Alliance to help promote and help sustainable business practices. (While not mentioned in the report, sustainability reporting is something that is becoming legislation, so expect a lot more talk about it in the future.)
Recap / 2021-2025 Studio Goals
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:
To create several successful games, with the goal of at least one major hit.
To own at least three expanding game brands with "long-term hit potential".
Strengthening the studio's position to select the ideal distribution for each project (e.g. self-financing and working with partners).
Strengthening Remedy's status and value within Europe.
Maintaining a profitable and growing studio with "well-managed risks".
The following dates have been confirmed for future financial disclosures: April 29th (Q1 2024 Business Review), August 9th (H1 2024 Financial Report), and November 1 (Q3 2024 Business Review)
