Remedy Review of H1 2018

Key insights

6 takeaways

01
Remedy Entertainment reported H1 2018 revenue of 9.2 million euros, an 11.1% increase over the previous year, despite an EBIT loss of 0.4 million euros.See it on page 4
02
The company is transitioning to a multi-project development model, currently managing the CrossFire 2 campaign, the upcoming 2019 title Control, and an unnamed project in early planning.See it on page 5
03
Operating losses were driven by deliberate investments in intellectual property, expanded headcount to 185 professionals, and the relocation of headquarters to a new facility in Espoo.See it on page 4
04
Financial reporting remains conservative as the company does not activate product development costs, choosing instead to recognize all development expenditures as immediate expenses.See it on page 30
05
The proprietary Northlight engine is being refined to support long-term growth, including internal research into NVIDIA ray tracing technology to reduce dependency on external tools.See it on page 6
06
The strategic shift toward a multi-project structure is intended to strengthen the company’s position in the global AAA console and PC game markets by fostering long-lasting franchises.See it on page 15

Summary

Remedy Entertainment’s review of the first half of 2018 outlines a period of strategic investment and operational transition as the company shifts toward a multi-project development model. During this period, the Finland-based studio reported revenue of 9.2 million euros, representing an 11.1% increase compared to the previous year. However, the company recorded an EBIT of -0.4 million euros, a decline attributed to deliberate investments in intellectual property, expanded development teams, and the relocation of its headquarters to a custom-built facility in Espoo.

The company’s operational focus centers on three primary game projects. The single-player campaign for CrossFire 2 reached the polishing stage, while the new intellectual property Control was unveiled at E3 2018 to significant critical acclaim, with a scheduled release for 2019. Additionally, a third, unnamed project entered the early planning and partnership negotiation phase. These efforts are supported by the proprietary Northlight engine, which the company continues to refine, including research into NVIDIA’s ray tracing technology to reduce reliance on external tools.

Methodologically, the company maintains a conservative financial approach by not activating product development costs, meaning all development expenditures are recognized as expenses as they occur. This strategy, combined with a headcount increase to 185 professionals, reflects a commitment to scaling production capabilities. By transitioning from a single-project model to a multi-project structure, the company aims to strengthen its position in the global gaming value chain, moving toward the creation of long-lasting franchises. The review concludes that these investments in personnel and infrastructure are essential for sustaining long-term growth within the competitive AAA console and PC game markets.