CD Projekt S.A. (CDR) Earnings Call Transcript & Summary

Well, there are several aspects. As you can see, we released Phantom Liberty and CP 2077. We launched it on various platforms. On PC, the game uses all state-of-the-art technologies. We are squeezing every last fraction out of the market available technologies. And hardly anyone does that, as compared to the games that we do. It's difficult to discuss stumbling blocks then. We work with the technologies that are available and do our best to squeeze every last drop, be it from consoles or from PCs. If anything new comes on the market, we will again do our best to deliver products that use these technologies. It's very difficult to squeeze out more out of the existing equipment than we did.

Another question about your future project. You believe you would be able to squeeze out more out of Unreal 5 than from out of RED engine.

It's a fairly complex question and a very multifaceted one. Again, first thing, the projects we're going to release on Unreal are a matter of the future. We're not discussing them yet and the technologies are progressing. What we can do in Cyberpunk now was not possible several years ago. So it's only natural that we'll do our best to keep our projects as the high-end ones. When you see a CD PROJEKT's game screenshot, you know this is something we developed. Are we going to be able to squeeze out more? Difficult to say. If you asked me 3 years ago, about what would we be able to achieve in Cyberpunk in 2023, I wouldn't have been able to answer, even though it took us quite long to develop this technology. And I guess this is the best answer I can give right now. We will do whatever is possible with a given technology and given time frame. These are going to be best-looking games on the market. That's the objective that we're not shying away from.

And the today's ambitions will be standard one soon, and we are happy being able to move these goalposts ahead.

Now question in the context of Quest Design. I want to talk you about language models and their role in interactivity for the user, as well as their role in game development and quest development. Your main advantage used to be deep stories, unique stories. But what Ubisoft announced recently makes us believe that the quest generation in their case, it's going to use these generative models. Are you going to follow in their path? Or are you still going to focus on human-driven content generation?

Well, first of all, we aim to use any new technology out there. We explore it even if we don't mention it outright, we explore all those innovations. And that's also the case of what you mentioned. We're seeking ways to use those methods to deliver best games ever. This never changes. But what's essential to us is that the games that we develop are ones where you can sense that the plots, requests and the characters were developed by designers who put in a lot of care and effort to generate that content and fine-tune it. Are the new language models and AI-driven ones going to enable us to do just that? If so, we're going to use them. If not, we are not. That's the answer I can give you right now. And throughout the industry, we are in this deep reflection mode and consideration of what is possible to output best games ever. That's always the goal. If they can be used, we will find these users for them, but to what extent? Time will tell.

Another question about Orion. Can you tell us something about that? We can read a lot on Twitter. That's why I'm asking you that question.

Well, I'm not sure what I could tell you. I know what I can't tell you, and not much is left. This is our next project. It is. It's going to be developed by our U.S. studio branch. That's where we're relocating too with key characters that key people who have worked on Patch 2.0 as well as Phantom Liberty. Igor Gorecki, our narrative director and some other people who are responsible for the main verticals in Cyberpunk 2077 and Phantom Liberty. But we're on this organization and recruitment stage right now, and there's not much more I can tell you. There are talks underway there are works underway, but it's all ahead of us.

And an unrelated question, maybe. Not a very technological one. But sometime back, you took a decision to make Cyberpunk a first-person game. Some players, however, would love to be able to switch to a third person perspective. I know it's not in line with your concept. But then, do you have any regrets about the decisions you've taken? Or are you perhaps considering providing that third person option for Orion, being able to toggle between the perspectives?

That's a great question. But there are no regrets on our part. I was one of the people who started developing the first prototypes of the same system for Cyberpunk using The Witcher technology. What we wanted to do was for Cyberpunk to have its own identity and to be noticeable as this different thing. These days, it's YouTube, Twitch and screenshots that sell games. And this is a way one can use to show that identity and individuality to players. First-person perspective helped Cyberpunk develop this identity a lot. We put in a lot of work in preparing this body presence, so that it would shine through this first-person perspective. You can see the outstretched hand or outstretched lens when you're sitting in a car seat, for instance. But that was not what your question was about, was it? I wanted to say though that the first-person perspective is the main characteristics for Cyberpunk and its perception by the players too. It's also noticeably different from The Witcher. And this helped us craft the product identity as such. This is also what Adam Badowski told us a long time ago when we were discussing the first-person perspective in Cyberpunk. As creatives, we also need to shift the mindset, not to stay in a rat. I don't want to give you examples, but you know there are many companies or IPs out there that are a bit like line production or copy paste production. We didn't want that to happen to us. We have put 3 games in The Witcher series, and we want to do something different. So there are no regrets. It was a very successful decision. We saw some of first-person perspective in Cyberpunk, it's even more visible in Phantom Liberty. Many journalists also noticed how characteristic it is as contrasted with other products out there on the market. I'm not going to quote any titles, but for Orion, we're yet to see.

No one asking about the future Orion and the competencies that we acquired when working on this expansion pack, we're going to discuss it later. And let's meet back here in 15 minutes for you to listen to a presentation on these very matters that are the most interesting to you, that is going to be a session with the Board members in 15 minutes, and now let's take a coffee break. Thank you. [Break]

So You were patient I think it was worth it. So on the one hand, we wanted to show you the fruit of our work for the last 2 years, and I hope this was interesting. But this was certainly relevant. And now I've heard that now from your perspective comes the east and statistics figures. Of course, I wouldn't call them simply figures. They are indeed relevant metrics. And now comes the time for the last time -- for the last part of the presentation, probably the most important for you, a meeting with the Management Board, a recap and a summary of the recent months and years. And I give the floor to Mr. Kicinski, the CEO.

I will be sharing the stage with Piotr Nielubowicz, Michal Nowakowski and Adam Badowski.. A long road led to today to the time we are -- in the place we are here. Since the premier in December 2020, we have been updating and honing the game. There were 2 breakthrough updates. The one was 15 -- 1.5. The first update that was issued with the PlayStation 5 version and Xbox X6. This was in February 2022. And then September last year, EDGERUNNERS update. This is the 1.6 update. So we linked this with the premiere of the EDGERUNNERS series on Netflix. Both updates where a huge success in supporting sales, especially the second one. We've seen a very visible upsurge in sales. But this wasn't the end. Here comes update 2.0 that brings the game to a new level. And it means that a lot of gamers are coming back to the game, but we also are recruiting new gamers. We are very proud of our work, and I would like to thank our team. This was an incredible piece of work. I mean, the game is phenomenal. We should all be very proud of it. This translates into sales. The main game is selling, it's selling great. Sorry, not yet. But this translates also into rating. Stream -- Stream is a PC platform and the ratings on Stream are credible because this is rated by the people who really bought the game. The level of recommendations of the game is 9 out of 10. The level is 87% for the last 30 days. This means that this will translate into sales, a new milestone has been reached 25 million copies of Cyberpunk 2077, the phenomenal Witcher 3 achieved a similar level in 4.5 -- in 4.5 years and here a little bit over 2 years. So we are selling far faster than we were selling The Witcher game. Phantom Liberty is the new update and the new expansion we've been talking about. It has been received very well. A great, great reaction. You see the media opinions on this slide, but we gave to the media the game in a version for every platform so that every journalist was -- would be able to play Phantom Liberty on any platform. And this led to very nice grades, a great reception, a great reaction, very massive. Of course, expansions don't gather that much attention as the main game. So Phantom Liberty is an expansion, but this is a huge expansion it is equivalent to a game in itself. It's similar in size to a stand-alone game. So the average rating on Metacritic, depending on the platform is around 90. So this is a very good result. I have problems with my mic. Now the gamers rated Phantom Liberty. So 90% of the gamers on Steam recommend Cyberpunk. We are very proud of it. And I'm handing it to Piotr, handing it over to Piotr.

Good afternoon, ladies and gentlemen. Can you hear me? It is my great pleasure to tell you more about the figures. We have a set of statistics fresh from the oven about Cyberpunk. I want to ask you for your indulgence. Please don't -- I hope you won't mind that I will be looking at my notes, because I don't want to be -- make any mistakes as to the figures. The most important piece of information you've been waiting for is sales. Sales for the first week until the third of October, is 3 million copies. To contextualize this, we estimated how many gamers have now the game -- main game on PC or on the new consoles, all the platforms that allow you to play. It's 20 million, 20 million games -- gamers who either have the main games or have updated the old gen to new gen version. So 15% of all the gamers within 1 week, bought also the expansion. This is a phenomenal, a great result. This is just the beginning. Sales keep on climbing. But is the regional structure for sales. We have North America with almost 36% of sales, #2 1% lower Europe; third ranked Asia, a solid result of 23%. On this slide, you see the division into platforms where Phantom Liberty was bought. Of course, PC is the majority as usually, it's 2/3 of the sales. Then we have PS in 20% on Xbox, 13%. But I'm especially proud of one thing here. It's the result on GOG. GOG was responsible for 14% of the whole PC sales. So 10% of the general sales. And this means that GOG is the fourth platform in the ranking list in reaching the market. And this is similar to huge platforms like Xbox or PlayStation. A lot of gamers trusted us enough to buy Cyberpunk from us and then also Phantom Liberty. To sum up the scale of the project at its peak, there were 360 developers working on the project. And during the whole cycle, there were 10x more people involved in the project. This is a huge project. And this has led to a great expansion. And the budget was PLN 275 million. This is the budget that we assess. Currently, as of now, we are still booking costs, we are still closing the results within the third quarter. The final data will be available soon. This is only an estimate -- an initial estimate. We also spent on the information and marketing campaign, PLN 95 million. This is the cost, as you know, the campaign was in majority done by us using digital media. The campaign for the expansion also led to more interest in the main game. In the recent weeks, we've seen a surge in sales of Cyberpunk itself. And I believe that just like it was in the case of Witcher, the main game and the expansion will become long sellers for many years to come. Let me touch upon one technical issue. The way in which we will be settling in time, booking in time the expenditures on Cyberpunk around 275 million. After analysis of the situation, we came to the conclusion that Phantom Liberty and the future sales are intrinsically linked to the main game. Therefore, we would like to have them booked together. Therefore, we will sum up the value of the expenditures to produce Cyberpunk with the expenditures for next gen consoles, which was around PLN 178 million. To this value, we will add the PLN 275 million to produce the Phantom Liberty, which gives us around PLN 450 million. This is going to be depreciated from the third quarter on. This will be depreciated according to sales estimate in Q3, and we would like to depreciate the first 20% of these expenditures of the PLN 450 million. And then in Q4, the next 20%. The rest will be settled in time within 5 years in a decreasing manner year-on-year. This is all I wanted to share with you today. We will have a full summary of the results after the few year -- after the few days -- after the premier of Phantom Liberty we will have, at the end of November, a Q3 summary conference. And now I'm giving the floor to Mr. Badowski, Adam Badowski.

Hello. During my part, I will draw your attention to what we learned while designing Phantom Liberty. That's why I have decided to screen the game at the same time. I want to tell you about the premier of Phantom Liberty and about the 2.0 update that premiered at the same time. But in the context of the whole road that leads from 2020 to today, I wanted to say that the 2.0 update is not the most recent because today, around 12 noon, we have 2.01 that was published. As you've probably heard during the first part of today's presentation, during this meeting, after the premiere of the main game of Cyberpunk 2077, we drastically changed our approach to production and to development of our product. Phantom Liberty is the first game produced in the new methodology. I know it's an expansion, but it's a huge expansion. So like we've already said, this is comparable to a standalone game. This has given us a more holistic approach to production and to design. We are more aware of where we are at a given point and the most tangible effect and a sign of success is that the game was fully playable months before the premier. What were the consequences? Well, first of all, we could focus on polishing some elements of the game, removing critical bugs, critical errors and also on coordinating the work of different teams. At the end of the work, there's post production and one of the stages of post production, it's something that starts just after finishing the plot. It's localization. As you know, the game is available in 19 languages, of which we have 10 languages with full cast of actors with voice over. And this is something that happens at the end of the creation of the game. So when this situation in production is more stable, then of course, the quality of the translation is higher. Of course, post production never has enough time. They always have to work in a rush. And then we also have cooperation with the production teams, the teams that worked on the game and their cooperation with sales and promotion. Like I said, we were very aware of the high quality of the product we were about to deliver and that the gamers would get. Let me focus on what we learned in the process, but let's go back to The Witcher first. As we developed The Witcher's IP, we achieved -- we reached a number of milestones in the studio. First of all, we defined what the modern RPG is,, because this is the core business of our company. During the premier and while working on Wild Hunt, we linked 2 things -- 2 aspects of the game that theoretically could not be linked or one might think. So the deep narration and story telling and an open world. It was far from being easy and benign. Maybe I'm not being modest, but we have set a high bar, a standard, and we also have a very nice visual layout, a very nice visual design. Pawel mentioned it. As you know, open world games are extremely complex. They require modern technological solutions. I'm going to go back to that when I'm going to speak about our cooperation with NVIDIA. When working on Phantom Liberty, we came very close to dynamic games of the FPP and first-person shooter games. Of course, we are specialized in storytelling games in RPGs, but we also had to learn a lot about new solutions. We had to gain new skills, especially around gameplay. Gameplay is how the player interacts with various game elements and what drives their enjoyment. When working on this release. So we had to come up with and develop many complex game play mechanisms. First of all, developing the city vertically and horizontally, a perpetually active one. Simulating traffic for a city that never sleeps. As well as many aspects related to UX design that is, most of the equipment we have in the games, such as vehicles or weapons have almost real functionalities. What's also essential to me is that in the first-person mode, designing place interactions of the game, requires millisecond range of precision. There's also a lot of knowledge that we've acquired. But generally speaking, I'm convinced that when one develops immersive role-playing games, they experience transfers very well to any genre. When working on Phantom Liberty, we cooperated with the largest market technology providers. Pawel has talked a lot about our cooperation with NVIDIA. But actually, what we came up with was a rendering model that is unique. Many industry experts believe Phantom Liberty to be the best-looking and the most technologically complex title out on the market right now. We set a new benchmark for the industry. And when talking about technology, over the course of the transformation, we decided to change the engine to 95 and with all thoughts, I want to stress this was not the least path of resistance. This was a consequence of us wishing to work with Epic engineers to adjust their engine to meet our needs. We are a company that has creativity at its core, not just developing arts, locations and quests. But also, as our attitude to development tools and processes as well as technological solutions accompanying all that. We believe that the core of this engine, we have so many interesting solutions that would have taken years for us to implement. We want to build on that to add our innovative solutions on top of that engine, while maintaining various types of insider knowledge that we keep at our studio. The next thing that we developed was consolidating a team aimed to collect telemetric data and analyze it. In the future, this will help us take more conscious game design and feature design choices. Another essential matter for us is that our games and our world and their impact on the popular culture. Michal Nowakowski is going to tell you more about that later. But what I wanted to signal is that our games are not our ultimate purpose. What we want to develop is IP in the worlds that impacts the popular culture. And here, again, I wanted to reference back the world of music. When developing The Witcher, we developed a benchmark on what a fantasy game was supposed to sound like. Again, in Cyberpunk, we have dozens of songs by various artists that are now very popular in streaming services. All these things constitute knowledge that we're going to reuse in our future projects. And now commenting on the future. We always stress the immense potential of Cyberpunk that we want to build on. This is 1 of our 3 IPs, apart from Witcher and Hadar, we're going to hear more about Hadar today. As a result, we decided not to develop any more add-ons for CP 2077, but rather to start designing a full sequel to the game and the Project Orion code name. This project is on a conceptual design level right now. And it is going to be designed by a team of veterans who were responsible for fine-tuning Cyberpunk 2077 and designing Phantom Liberty. We're going to work out of North America, Vancouver and Boston locations. Team leadership are already there. And late in 2024, we're going to work with teams comprising several dozen people while as a target, half of the developers are going to work out of Northern U.S. and another half out of Poland. This is it from me. Now let me invite Michal Nowakowski to tell us more about the future of our franchise. Thank you.

Thanks, Adam, and good afternoon, everyone. It's a pleasure seeing you in this semi-dark room, but still -- and just like Adam said, I'll do my best to discuss the future of the Cyberpunk franchise, namely what is outside of the game, as we've heard a lot about the game itself already. What do we understand is the franchise. It's the brand and how we shape it outside of the core game. Let me stress again, whenever you consider us, you think of us as game developers. That's true. But that's not the full truth. We want to be popular culture developers. With games at the core of all the development, true, but we want to be even more bold in moving beyond just that. In particular, in terms of revenue streams, obviously, these various areas are not equal in weight, but they are all more than relevant because of their fan base impact and a way for us to communicate with our fan base. When talking about Cyberpunk 2077, it's even more relevant, given that for this brand, we own all fields we have used, use now and will continue to use to further grow our franchise, and that's one of our strategic objectives. We discussed that in our strategic update in October last year, if I'm correct. And one of our most recent moves outside of the game was Cyberpunk EdgeRunners, this project idea dates back to 2017 when we were discussing entering the cinematics field, and all them not to buy them more than we can [indiscernible], we decided to move into animation and anime genre because Cyberpunk in general, used to be linked very closely to the Japanese animation. That's why in 2017 and '18, we started working with the Japanese Trigger Studio, which culminated in the 2022 release of the EdgeRunners series on the Netflix platform. This, combined with the EdgeRunners update, that is the 1.6 patch, drove our sales in Q3 2022 and also brought us a new wave of fans. Just like I mentioned, though, EdgeRunners is not our only move beyond our core and into the franchise world. Our franchise wheel that we discussed in the strategic update in October 2022, has more there have been efforts before the release during and after the release, and we're going to see even more in the time between the Phantom Liberty release and the Orion projects release -- the sequel to Cyberpunk 2077. We aim to continue that not we land and not already and we continue with our learning -- we believe however I will able to be even more effective and impactful. Here you have many examples of what we achieved already that this music, the physical release, but also the 3 platform releases book by [indiscernible] random stuff the comic books Big City Dreams in particular with Bartosz Sztybor and Krzysztof Ostrowski and the Hugo awards nomination, it's relevant in that for fantasy and Sci-fi, the Hugo awards are an equivalent to the mainstream of Oscars or the Golder Globes. And this was the first ever nomination for Polish artists this has never happened before, and the awards are handed out at the WorldCon so we're very proud, even with the nomination of coming back to our merch we had gaming chairs, shoes, cast iron, car models, figuring and many others, where we felt we were the most impactful was actually the animation and the cinematic teams, we also aimed at feature movies. And some time ago, we already started working with Hollywood based producer company, autonomous content. They were involved in True Detective and Mr. Robot, but also Spotlight or The Revenant with Leonardo DiCaprio academy award nominee. They work with Garret Kemble, David Levine and Ryan Schwartz that people involved in Game of Thrones, the HBO series for the first few seasons, and that's the team that's going to work with us also in our cinematic efforts aimed at a live-action format. There aren't many more details that will be available at this stage. So we need to ask for a bit more patience, but we will share these details as they become available. My presentation is slowly coming to an end, but let me share a cool number too. You may have already done the addition in your head, but let's share that nonetheless. As I mentioned, that our sales for the main game Cyberpunk 2077 was 25 million copies, not including 3 million copies for the expansion. And if you add that to our other sales mainly in The Witcher franchise, that's a total of a 100 million copies of our games sold. We're very proud with that number, and we hope to grow it even more in the coming years with you as witnesses. This is it from me, but now let me invite Adam Kicinski to the stage.

I'm very happy standing to a number with so many zeros at the end. But actually, our reason for being is different than just the numbers. It's to enrich popular culture is to tell stories to remember, it's to tell stories that will stay with our players for years and enrich their lives. That's our reason for being. The numbers only concern if we're on the right path to that -- and actually, they're pretty good in doing so. I can remember this path from the very start. I joined a company my brother Michal started together with Marcin Iwinski. I was the first employee and back then, we imported best versions of games -- CD games from the West. If we were successful, we were able to sell several dozen copies of a single title. Then we became a local published share and our localization of Baldur's Gate sold at 18 million copies. I'm sorry, 18 thousand copies, of course, I need to like scale back to that path. Then we started developing the first Witcher game, and we were dreaming about selling 1 million copies but thought that number was unattainable. We reached that 1 year after the first release, and now we're at 100 million copies of games CD Projekt RED sold out of what we produced. And the selling it seems we have reproducible pattern for success. Each game we put on the market, each expansion we put on the market succeed. It's not an easy fit, but we know what we want and implementing that creates a solid base for future growth. It's also a moment for reflection. Next year, I will have been with CD Projekt for 30 years. And I decided -- to apply for a supervisory board position to enter the supervisory board at the start of 2025, I will remain on the management board for another year and 3 months. But the first transformative step is that in the next 3 months, I will shift to Chief Strategy Officer position and will again have a joint CEO position. This call because we've had that for many years Adam Badowski and Michal Nowakowski are going to jointly adopt the CEO position.

Okay. We both have our mics. I don't think we need the remote control. Let's keep it short and sweet. After this announcement of by a, but we've just heard about this story, there's not much to add. This is a huge challenge for both of us. I hope this is going to be fun. But this is also, of course, an obligation that we have towards our team, throughout the world, towards the gamers who will buy our game and play our games, but also, of course, towards the investors. We never forget about them. In the company, we will simply be continuing what is nice in the company. What we like in it, but we also have huge ambition. We want to reach new summits, and we want to get there. I encourage you to follow what we do in creating and shipping pop culture in the future, and I hope we meet at next conference.

This is not time to present our policy or our strategy. The time will come to do that. But -- maybe we haven't been so long, we haven't been here 30 years, but 20 something. We are also some of the builders of the foundation of this company. I want to promise you that in spite of this change, the foundation, the main principles behind the price reputation will be maintained. We will be fair to business, to gamers. We will create very deep mature immersive games. Quality will always remain the most important for us. All our business decisions or our artistic decisions will be based on these principles, and I hope we will give you shitload of entertainment. This is my objective, and this is a object.

This change is natural or supernatural or supernatural. Adam and me have been in charge of [indiscernible] RED for years. The studio now has grown so much. But it's almost the whole business [indiscernible]. So basically, this is a continuation of something that started years ago, this is a fully natural change and the company remains entrusted to good, the best hands available. Thank you very much. And now time for a Q&A. Piotr will join us. Perhaps there will be some financial questions. Well, this is a given.

Yes. We already have a financial question, we'll go to it. We already have a number of questions that come from our online participants. So let's split this part. So if you want to ask a question first on site, please go ahead.

Two questions. Financial question -- the first 1 is about the coefficient of conversion. So the 15% for the expansion. In The Witcher, the best expansion had 20% to 25% even, but this is during the whole life cycle of the product. The question is what was the coefficient for The Witcher expansions after 1 week. This is going to be a nice benchmark for us. The marketing budget, PLN 95 million, you mentioned PLN 95 million in communication budget. The majority probably in Q3, but I wanted to ask you about what part of the expenditure was incurred until Q2. So how much have we already seen in the results on how much it goes to Q2, Q3?

The first question first. We try to get that information about sales of Witcher expansion after 1 week. After 7 or 8 years, it wasn't impossible to mine it out. Most of the reports we get are granulated by month. So we are unable to compare it by week. The 20% that you mentioned is a figure, I remember very well. We were very proud of it. We were proud after a few months as far as I remember, this was after releasing the game of the year version that also has both expansions. And this was, I think, half year -- half year, 6 months after the second expansion. There was only 6 months before expansion on an expansion 2, it's very difficult to compare. What's a good perspective to raise the scale of the success of the expansion is relation to the number of main games for 15% after 7 days or so it's a nice achievement. What part of the expenditures about the -- related to the expansion was incurred until end of Q2, we haven't yet reported this. It didn't burden the results because it was a -- it was visible in the balance sheet as development budget that we don't break down into other parts.

Yes, Internet question now. There are 2 questions. 2 well, the first probably was short. So what are your estimates. What is the estimate of the Management Board for the next premiers of the next games after the break? And the second question -- you mentioned that Phantom Liberty should become a long seller, what will be the marketing investments related to maintaining the sales. And when will the company stop supporting Phantom Liberty in terms of marketing expenditures. Could you please compare it also to the expenditures of the expansion to Witcher 3.

Well, the short answer is we are giving you yet any date for the releases. I mean it's not time yet, but this is usually at the beginning of the marketing campaign and none of the coming games are at that stage yet.

The marketing campaign, the majority of the market campaign happens around the premier then in Q3 in September and probably a few weeks after the premier, so in October. At the same time, so this is where the majority of the budget will be spent. The budget is PLN 95 million. Now support of communication with the gamer just like in the case of The Witcher, we will be active for years. We want to be active in all the products accompany our activity and also all the works or the other, so the movies, et cetera. So everything that is connected to the franchise.

I congratulate you on those figures. It's nice to hear. A question about the product that I didn't hear what product? And the second question is about production. You said the Polaris in preproduction, does production last 4 years? Or I mean, a similar game to Polaris -- what -- how long would it take? And another question about the cost. I remember during the annual conference you said you had increased remuneration by 27%, and that was supposed to be a similar increase. This year, so what are the plans for next year because I think the budget will have to go up.

The first question, what was the game of the year. What plans do you have about Game of the Year Okay. Now in terms of new addition, collective edition, we don't know the name yet, but when time comes will let you know. Well, Witcher 3, it took some time to do it. But we don't want to compare it because perhaps we will adopt a new approach, a different approach than in The Witcher. You don't have to compare it to The Witcher until we release the full addition. We do have some intentions, but it's not a time to discuss them.

And second question was about Polaris. It's a very good question about how long we are going to produce Polaris. It's not that easy to calculate, and we are not yet divulging any dates.

The third question, there was -- asked about an increase in remuneration. You said you increased them by 27% in 2022? And what is the way ahead.

We didn't guide or we didn't divulge any information about any plans about raises. For now, we have nothing to add.

Let me add 1 thing. This year, thanks to vote during the general assembly, we have a new share option -- stock option plan, and it's going to be used as an element of the remuneration policy in the rate policy. It concerns 200 people in the company. And in the remuneration mix, this is also going to be -- there's going to be an option package to.

You mentioned building pop culture and you stressed on genres. This was also something that basically was driving the sales of Cyberpunk. Do you have any more plans here.

Yes, we do have plans. That's why we are starting operating with anonymous content. We want things to happen. A lot is happening. A lot is planned. Trigger was in 2018, but started in 2022. So -- for a number of years, we did not speak about this because it wasn't ready. There are plans, we'd rather keep quiet until there is something to speak about until there is really something to discuss some concrete announcements. When the time comes, we'll tell you. I know I keep repeating it. But yes, the general direction is this to go this way. This is strategically important for us. What's also important is that Trigger our partner has certain rules for announcing projects. We have to be compliant with this.

Life action question, how long does it take to finish the project?

There's no simple recipe about how long. We were here now -- we were even before we look through a number of scripts, we were considering them, but this had to be stopped due to the offers, strike in Hollywood. As you know, the strike is over. So we can go back to reading some scripts. Some concrete steps have been taken, but we can't yet tell you who is going to do what at what time, usually it takes years. It's not something that going to happen overnight.

I have a question to Piotr Nielubowicz, probably could you please elaborate on the depreciation scheme for Phantom Liberty, how does it compare to the previous depreciation approach you have?

In The Witcher we had a completely different methodology namely. We didn't adopt a scheme of depreciation, but this was done on a current manner. We depreciated the expenditure towards the income now. We have adopted a new methodology that follows the current MSR, we have to foresee the future sales and then make an average, simplify. And based on the forecast, we have to adapt the distribution of our depreciation amount. What I can say is we have Q3, Q4 with 20%. The remaining 60% will be depreciated within 5 years. It's unlike for Cyberpunk, we have now better visibility. After the premier without the proper quality of data about monetization of Cyberpunk, we adopted a flat distribution. Now we think this distribution should be decreasing year-by-year. How it's going to decrease, what is going to be the inclination angle of this curve. Well, it depends on Phantom Liberty, and we will adapt the model for the next months or quarters.

Let me go back to the motivation of the incentive program. In the B part, your objective for 2023-'26, from today's perspective, after the reception of this expansion. Do you think this is a very ambitious, ambitious or rather achievable objectives to [indiscernible].

I think yes, we always have very ambitious objectives and this 1 is no exception. Did you want to add something? No?

Tomasz Rodak. I wanted to ask about your current view on how long the marketing campaigns for your game should be? I know you changed your mind sometimes longer, sometimes shorter for Cyberpunk in 2018 when there was a big [indiscernible] 2018. And then almost 3 years after that at the end of 2020 came Cyberpunk and the Premier, -- what -- how do you see it now for Polaris? How early are we going to stop?

I want to correct 1 thing. The tweet the, the [indiscernible] the beep. It wasn't the beginning of the marketing campaign. It was an information campaign. The marketing campaign for us is actual actions with money spent that are meant at presenting the products and the games to the game. PR campaign information. Of course, that happens earlier. We want to inform our gamers about what we do, what we are doing, what we are working on. I am not going to give you a date for Polaris or Orion at point in time, but this is going to start earlier than the marketing campaign. If you call it a marketing campaign, it's fine, but for us, it isn't. The real marketing campaign, the promotion when we push money, when we spend money on promoting the game. There isn't one good answer in our view -- so every project that for a new game irrespective of whether it has previous part or no it should be more or less 1 year not more. So when we started the actual -- the real campaign of Cyberpunk, we didn't now about the delay, obviously. So it wasn't intended in this way, obviously. But around 1 year, this is how long it takes to promote 1 game. It doesn't have to be 12 months. It's not exact size. It can be 9 months with an expansion. This is slightly shorter.

So the streams are not over, let me take one of the online questions about something as I mentioned already. Can we estimate the size of the team to be working on Orion. Can we assume that the average team member is going to earn significantly more than the current average remuneration paid to developers at the CD product.

The latter is related to the averages and also to us developing a American studio right? Well, answering the first no. It's a part of our transformation. You want to work in effective teams and large teams are not necessarily the most effective. We're also shift to a model involving contract-based work. It's difficult to discuss the size of the core team. We will take these decisions towards the end of 2024, when we'll be way more advanced in work income preproduction on the game content.

And as to your second question well, it's a natural consequence of things with the fuel of North America. With North American market being more costly as compared to Europe -- Eastern Europe in particular the averages will obviously go up. Now the last question.

A brief follow-up to the marketing campaign question, but now for information campaign Cyberpunk, you showed the first materials back in 2013, if I'm correct. Now looking at the net new coming projects. Are you also able to show us something very early on? Or would you rather wait much longer with this sort of information?

To give you a convoluted answer, when talking about 2013, we did reveal as we thought we were going to produce earlier. If we knew it was going to be delayed, we would probably have held on to the materials longer. Now when talking about when we are going to stuff we show you so when we have cool stuff to show off, and when the circumstances are right, so that we don't do a reveal at a random moment. We used to build up after that to get adequate response. But first and foremost of all, we need to have a value that we want to showcase, and presents to the players.

The situation back then was very unique in terms of circumstances. We were known for our The Witcher production already. And we knew we had a huge marketing and promotional campaign from Witcher 3 ahead of us, so we decided to notify players about the next upcoming projects because on the occasion of the Witcher 3 campaign, we wanted to promote this next direction we were going to take. Thank you. Thank you so much. Thanks.

And now a brief invitation from me. Please move to our main buildings, just next door the less official part or even a celebratory glass of something to celebrate the PLN 100 million is going to happen. I also heard that some of you would enjoy a tour of our studio, I will be more than happy to be guide those of you who wish. [Statements in English on this transcript were spoken by an interpreter present on the live call.]