Remedy Capital Markets Day 2024: Business Logic and Value Creation

Key insights

8 slides

New direction

Remedy is shifting to a self-publishing model to capture higher margins.

The company is transitioning from a model reliant on development fees and partner royalties. This pivot aims for long-term value creation and profitability.

Page 22 of the report — See it on page 22

Return potential

Self-publishing creates non-linear returns, with ROI increasing from 75% to 250% if sales double.

Financial modeling indicates that profit margin expands rapidly as game sales increase. This is because the studio avoids sharing revenue with external partners.

It's like owning a bakery versus selling through a distributor; more sales mean a much bigger slice of the pie for you.

Profit expansion. Self-publishing creates non-linear returns, with potential ROI increasing from 75% to 250% if game sales double from 100 million to 200 million euros.

See it on page 20

75% to 250%

Potential ROI increase if game sales double from 100 million to 200 million euros.

Initial game sales: 100 million euros
Doubled game sales: 200 million euros

1 / 8

Ask AI about this report

Summary

The Remedy Capital Markets Day 2024 presentation outlines a strategic pivot toward self-publishing as the primary engine for long-term value creation and profitability. By transitioning from a model reliant on development fees and partner royalties to one where the studio retains full ownership and publishing control, the company aims to capture significantly higher margins. The core thesis posits that self-publishing, while requiring greater upfront investment and risk, offers superior financial upside as sales volume scales, with the potential to reach an EBITDA margin of 30% by 2027.

Financial modeling within the presentation demonstrates that self-publishing creates a non-linear return on investment. As game sales increase, the profit margin expands rapidly because the studio avoids sharing revenue with external partners. Illustrative data suggests that doubling game sales from 100 million to 200 million euros can increase the return on investment from 75% to 250%. To support this, the company has stabilized its organizational size and personnel costs, focusing instead on optimizing development velocity and leveraging the longevity of established intellectual properties like the Control franchise, which has sold 4.5 million copies over five years.

The strategy relies on a disciplined approach to risk management, targeting a 100% return on investment for new projects. This is supported by specific sales targets for upcoming titles, such as Firebreak and Control 2, which require lifetime sales of 3 to 4 million units to meet these benchmarks. By balancing a portfolio of self-published titles with partner-funded projects, the company intends to double its 2024 revenue by 2027. This growth is expected to be driven by the long-tail sales of existing games and the successful execution of new, high-quality, genre-defining titles.