Remedy Entertainment Oyj (REMEDY) Earnings Call Transcript & Summary

This meeting is being recorded.

Good afternoon, everyone. And welcome to Remedy's Full Year and Q4 earnings webinar. My name is Veli-Pekka Puolakanaho, and I manage the Investor Relations at Remedy. In today's webcast, we will go through Remedy's full year and Q4 2022 highlights and financial results. With me are Tero Virtala, Remedy's CEO; and Terhi Kauppi, Remedy's CFO. We will have a Q&A session after the presentation. Tero, the floor is yours.

Thank you, and welcome, everyone, also on my behalf. So looking at our last quarter of '22, our revenue decreased by 31%, being EUR 13.6 million. EBITDA decreased to EUR 2.8 million, mainly due to a significantly lower level of revenue than in the past comparison period in '21. It's good to say also that the '21 quarter 4 was a very exceptional one. Operating profit for the last quarter of '22 was EUR 2.1 million. Cash flow from operations, minus EUR 3.8 million. And then as an individual big event that we also announced in November, we signed a co-development and co-publishing agreement with 505 Games for the sequel of Control 2. Then looking at the whole year of '22, overall, the year went according to our own expectations. This year started a strong investment phase for Remedy, which can also be seen in '22 financial figures. Our revenue overall was approximately on the same level as in the previous year, decreasing by 2.5% to EUR 43.6 million; EBITDA was EUR 1.9 million; operating profit, minus EUR 0.6 million. Cash flow overall from operations was positive EUR 11.1 million. And then outside of the, just mentioned, Control 2 announcement earlier in the year, in April, we announced that we will pre-make Max Payne and Max Payne 2 with Rockstar Games. Then in May, a big step for us as a company, Remedy started trading -- or we transferred from First North Growth Market to official main list of NASDAQ Helsinki. Then as we will be later discussed once more, we lowered our revenue and operating result outlook in August for the year of '22. And based on all that, our Board of Directors now proposes a dividend of EUR 0.10 per share. If I look at from a bit higher level for the year '22 and how it innovates the landscape for this year and then for our future. Out of the 5 games that we now have in development, we are ourselves co-financing 4 games with our partners, and these 4 games are based on Remedy old brands. One of the 5 games, Max Payne, is owned by Rockstar Games and is fully funded by them. Now with more own investment in our own games, we say that we have started a stronger investment phase for us. This will also continue in '23. When our projects advance in their next stages during this year, our own investments will then also gradually increase. We now have deals in place with our publishing partner for all of these 5 games, supporting -- supported by the financing from these partners and with our own cash position being so strong, this enables our own investments. And importantly, our capabilities as a company, also to make these games happen according to our current road map are stronger than ever. So all in all, based on what we have done in '22, we are well prepared for this investment phase. And now when I look at the year '22 on an operational level, what has happened, what have we reached. We have been systematically building a company for years that can continue creating excellent gaming IPs and games. Games that will stand out in the market and succeed and utilize our unique strength, step-by-step still becoming long engaging and therefore, providing longer-term business opportunities. And in order for us to benefit then from all of that, we have also aimed at having a stronger position in the value chain. '22 was a highly important year in building that model for us. We had a number of key operational developments and successes that significantly strengthen us. We now have all the key elements in our hands that we need to successfully execute our road map of 5 games. What, for example, happened in '22 is that, first of all, we now have these 5 games in development. And with the November deal with 505 Games, we closed a partner -- publishing partner agreement and co-financing agreement for that fifth game as well. We now have the agreements in place for all of our games in our portfolio. And that portfolio is a balanced one. On one hand, we now have in development longer engaging single-player games that are closer to our historical strengths. And we also have the service-based multiplayer games taken, I would say, smartly -- which take, I would say, smartly into account our traditional strengths in narration and world building. And now when we are not going into BBB games but co-op games, we can also utilize these traditional strengths in a new context in multiplayer games. We also have now a strong cash position, increased own investments to our games, and that provides us all of these 5 games good royalty upsides going into the future. Also, these agreements have now set us a path to becoming a co-publisher in cooperation with Tencent and 505 Games for 3 of our games in development. Our core game development teams, the support teams, the external development capabilities, they have been significantly strengthened throughout the year, and the ways of working have improved. Based on that, we have seen good progress with our game projects and the underlying Northlight game and tool set has had several major advancements that will serve us this year and in the years to come. And people-wise, we had a successful year, both in attracting, retaining and developing our people. Then looking at our project portfolio, we now have these 5 games in development. At the center of the slide, is Alan Wake, and understandably, this is an important focus for us right now. Alan Wake 2 is in full production and launches this year. The game will soon have all the content in place, and it will be fully playable from start to finish. After that, we will move into polishing the experience. There is still a lot of work left, but we can already see the experience and quality this game can offer for the gamers. Alan Wake Remastered did not yet generate royalties, but marketing has been kept at low level. We expect the sales to increase with the release of Alan Wake 2 when new game player and new players of Alan Wake want to experience also the original story. Max Payne 1 and 2 remake was started in '22 and project has made good progress in the concept stage. In relation to Control, and especially Control 2, the game has progressed on all fronts with impressive steps. And as we move to '23, project advanced based on our internal stage-gate process from concept stage to proof of concept. Now both Control 2 and Max Payne have advanced in a way that they are ready to take more people when year '23 advances. This is very good. And as Alan Wake 2 comes closer to launch, most of the people freeing up will then move to Control 2 and Max Payne. Condor, the spinoff of Control, is a service-based co-op multiplayer game. The development has advanced on many fronts. And at the same time, we have been learning and also strengthening our internal team and how we develop efficiently this type of new game. We have also been looking at the market quite closely with our partner 505 Games, and there is clear demand and a lot of potential for co-op game. But the game has to still stand out from the competition and be a really good one. We are patiently working towards that with Condor. With Vanguard, in the fall '22, we chose to keep the game in the proof-of-concept phase longer and also announced that to the markets that we postponed the significant expansion of the development team in Vanguard until year '23. Now during the fall '22, the Vanguard team has been strengthened, ways of working have developed, and team has made good progress. This is a big free-to-play game we are building and we continue to work on core game play, wider meta game and in providing the game the Remedy-style, deeper narrative and world building in the context of free-to-play multiplayer game. In this portfolio, Condor and Vanguard overall are service-based multiplayer games and, in that sense, new type of games for Remedy. With the development that we have had, we know we can make great games out of them, but we also want to bring a new Remedy take on multiplayer games. This is to differentiate our games a bit more from competition and provide something new for gamers. All this requires a lot of learning and iteration and also patience. Good thing is that, step by step, we have been advancing also with this type of new games and can see that in the game build. Then looking at the people. At the heart of Remedy are, of course, world-class talent, our people. Developing 5 games and underlying Northlight technology and tool set requires world-class talent, good collaboration between our teams and efficient ways of working. We have that. And in relation to people, at the end of '22, we have 366 in-house talents. Our second studio in Stockholm, Sweden is in operation and supports us to the best gaming talent pool in that region. And while our talent's in-house focus on the most crucial parts of the game, we complement this with external development partners. They bring us their special expertise and also allow us to scale up the productions. All that is needed to develop our games, start launching them successfully and reaching the growth objectives we have. Now competition overall for talent in gaming industry is fierce. And I'm happy to say that we have continued to succeed very well on that front. Our recruitment has for years worked well. In '22, that was supported by COVID pandemic starting to ease up and world again opening. In '22, we almost doubled the number of new employees compared to year '21. But the other side, employee retention is equally important, and we were strong in this as well. Being able to retain people is naturally not a result of just 1 year of actions but an outcome of many good developments over a longer period of time, which makes me even happier. It tells that we have built something sustainable, which takes years, and it's also a long-term competitive advantage to us. To give some context to employee retention, as an example, already in 2021, employee turnover in wider gaming, media and entertainment industry was over 20% in many Western markets. We don't have the numbers yet for the year '22, but it has been higher than we know. However, at Remedy, our turnover is far, far lower year-by-year around 10%, like it was approximately in year '22. This tells that despite of a lot of alternatives for great people in our industry, our world-class talent likes to be with us. We are an attractive employer. We provide them interesting projects, gross development paths. And for us as a company, this gives a chance to build long-term, fully high-performing teams with top talents who know step by step, over time, their work, their colleagues better, leading into an even better performing deeds. With this accumulated expertise, they can then develop their own fields of work and better and better help us to succeed both short term and long term. And in order to support that, we naturally continue to provide opportunities for our people for professional development, career progress, leadership training, ways of working and with many other aspects of their work as well. We, as a result, now have 5 core game development teams, our technology team and set of important support teams in place. These teams are again stronger and also collaborate more efficiently than ever before. So summarizing the year '22 on an operational level. It was an important year in our longer-term development. We now have all the key elements in place to develop our road map of 5 games and succeed with them in the future. Reaching this point has been a long process. When we look at the past, in 2017, we started the transformation that one day we would be able to develop excellent longer-engaging games on top of our unique strengths, have ability to make this type of games and multiple games in parallel and, with this model, also step-by-step have a stronger position in the value chain and gain more of the benefits when our games then one day launch to the market and succeed. Overall, during the years, this move to multi-project model has been going well, but it's definitely not been easy. It is difficult move for any experienced gaming studio, and that is why so few have done it successfully, even though long-term benefits with this model are obvious. We at Remedy, we have also felt some growth pains when building our model over the years, as was partially evidenced in summer '22 with the additional time needed for the Vanguard project. But all the time, we have taken our learnings, made changes, improved and advanced. All this, it has taken time. Now in '22, we have reached our ambitious target to have a strong organization and ability to develop 5 big games in parallel. We now have a well-balanced, high-potential portfolio of 5 games. It consists of step-by-step, longer-engaging single-player games that, as I said earlier, they are closer to our historical strengths. But we also have 2 service-based multiplayer games. We have approached these new games basically and smartly going to co-op multiplayer, which is a more natural step to us than, for example, player-versus-player competitive multiplayer games. With this direction, we can utilize also more of the narrative world building expertise and bring something really new to this offering. We now have in place drastic world-class partners for all the 5 games. Partners that are the right ones to help us succeed exactly with these games. And we have now gained a stronger position in the value chain. Out of the 5 game projects we have, 4 are based on Remedy's own brand. Remedy is a co-publisher in 3 of these. Max Payne is a Rockstar IP, but an excellent addition to our portfolio. We also now have a strong cash position, have high potential games in development and really an ability to make them happen. According to our strategy, together with our partners, we have now started to invest also more of our own money to this games in order to gain bigger benefits once we start launching the games into the market. Looking at the future, this investment phase continues also in '23. Our strategy overall and these investments are done to enable major growth opportunities in the future and an even stronger position to benefit from this growth. We will now, based on this, have an ability to develop new games and, at the same time, live operate existing games in the coming years. We can have ongoing game updates and also new game launches every year. These games are longer-engaging, and that will mean that there is more opportunities for long-lasting recurring revenue. And with our higher position in the value chain, we are also having a higher royalty upside, higher potential to gain our part of that revenue. And with the co-publishing model, we have more defect involvement in how our games are marketed and sold and also a stronger ability to build or build communities, connect with these communities and serve these communities, which are so important, especially for service-based games. So all in all, it's been a big and important year for us, a lot of development, a lot of potential going further. But this was my part on the operational report. I'll now hand over to Terhi to talk more on the financials.

Thank you very much, Tero, and good afternoon to everyone also on my behalf. So let's look at a little bit more closely our financials. And yes, first of all, about our quarter 4 revenues. So our revenues decreased by 31%. And this decrease was mainly due to exceptionally strong comparison period. And that was due to the one-off revenues related to Vanguard and Alan Wake 2 [ booked ] then. On the other hand, the positive contributor was Control 2 development fees due to the contract we signed with 505 in quarter 4. Overall, our development fees were 92% of the total revenue, which means then the royalties was only 8%. And this was a little similar split than in comparison period. In quarter 4, our royalties decreased by EUR 400,000, and that's 27%. We didn't receive any royalties from Alan Wake Remastered yet, as mentioned, nor did we Crossfire. And looking a little bit further back, and as a reminder, again, there has been and there will be quarterly variation in revenues and thus also in profitability. The level of royalties has been decreasing in each quarter in '22 from comparison period. And overall, the total amount of royalties in '22 was only EUR 4.5 million compared to the level of EUR 8.7 million in '21. So then quarter 4 profitability. So of course, the revenue decrease impacted that. And our EBIT was EUR 2.1 million, and that's 15.6% of the revenue, whereas in comparison period, we had a very high EBIT level, EUR 8.2 million more due to the one-off revenue bookings to compensate past costs. The decrease in profitability was also impacted by the nature of the projects that we are working on currently. Since we are, like also Tero mentioned, financing a larger share ourselves during the project development phase to ensure future revenue shares, and that's a planned action from us. Then when looking at the total year '22, our revenue change was minus 2.5%. And on a yearly level, our royalties were 10% of the total revenue. And in comparison period in year '21, they were 19%. So overall, our development fees grew by 9%, whereas the royalties decreased by 49%. We are not disclosing the revenue split by projects, but we can say that there has been a big change in the revenue mix for the projects. And the key positive contributors on a yearly level to the growth of the development fees were the development fees from Max Payne 1 or 2 remake, Control 2 and Alan Wake 2. But at the same time, the development fees from Alan Wake Remastered, Vanguard and Crossfire as well as game royalties from Control decreased from the comparison period. And yes, Alan Wake Remastered did not yet generate royalties, neither did Crossfire. And at the moment, we do not have expectations for Crossfire royalties in our forecasts. And the profitability on a yearly level. So our EBIT decreased to EUR 600,000 minus. And that's then minus 1.3% of the revenue. Transitioning to a phase where we invest more in the game projects during the development phase, to ensure longer-term business upside, potential also means that we gradually hire more employees and utilize external development more than in past years. And the share we received from publishing partners in the form of development fees is then lower compared to the total level of investments. And about the cost structure changes briefly, taking into account the way IFRS requires the expenses to be netted, we can say that, yes, we are using more external development than outsourcing. And therefore, the materials and services expenses were 118.9% higher than a year ago, and that's been a significant increase. We continue to recruit more personnel and, in this format, our personnel expenses were 13.2% higher than '21. And after the pandemic restrictions now have eased, the level of other operating costs has normalized in a way. And there, we have almost 60% increase in other operating expenses than in the comparison period. And for the transparency's sake, we also present here the unnetted amounts of expenses. So the capitalizations are not netted here, but they are presented separately. And in these numbers, we can see that the external development fees increased by EUR 1.3 million to EUR 4.2 million, and that's 48%. And the main drivers here were Alan Wake 2 and Condor projects. And then personnel expenses, as unnetted, only had a slight 3.5% increase despite the increase of 14% in personnel due to the lower level of bonus accruals in year '22. Our capitalizations were on a 14% higher level in quarter 4 at the level of EUR 2 million. We have a strong cash position. Our operating cash flow was minus [ EUR 4.1 million ]. And there's always -- sorry, minus EUR 3.8 million. There's always a quarterly variation based on timing of incoming and outcome payments. And on yearly level, our operating cash flow was EUR 11.1 million versus EUR 6.1 million in previous year. So a significant increase. The total cash level was EUR 55.9 million, and that's the decrease of EUR 2.3 million during the full year of '22. We have been able to maintain a good cash position, and it allows us to invest into good quality games as planned. And when we raised the funds from the market in early '21, the intention was this: secure cash position and enabled us in investing in our own games. And as said, current profitability level is impacted by increased investments to product development and by composition of revenue, i.e., more risk in development and lower level of royalties. But overall, we see possibilities for our top line growth and improved profitability in the long run. And that in mind, we make operative revised decisions, although in short term, this impacts our numbers. And with the strong cash position, we build up the basis for our long-term success. We have a balanced portfolio of projects not only in terms of the kind of games we make but also in terms of which kind of agreements we have with our public -- partners. And we have a subcontracting tieback agreement with Rockstar Games for Max Payne remake, offsetting the discontinued operations project. And then we are working with 505 Games and Epic in a model where Remedy was the IP, publishing partner funds the development fully or partly, and we share games profits. And we are taking steps to our self-publishing in a risk-controlled manner by starting in co-publishing like with Project Condor, Vanguard and most recently, Control 2 with IPs owned Payne. We do not yet have any projects where Remedy would act as sole publisher, but this is a future opportunity. And here, we want to describe the sort of portfolio from the future potential point of view. And here, we have our projects split by the type they generate revenue for us and also taking into account the time line, how we are investing into different kind of game projects as the time advances. In subcontracting, we receive the development fees with margin and also have the possibility to game sales royalties. In partnership with publisher for our own IP, we share development fee burden and the royalty opportunity. The contracts type vary, but overall, the project profit depends on the game sales. Self-publishing potential in purely in game sales return and that potential in this model is, of course, clearly higher. And in regards to timing and depending on publisher agreement, there might be recouping of development fees before the royalty is paid to Remedy. And yes, still about the dividend, so our dividend proposal now is EUR 0.10 per share, which is made then to the Annual General Meeting. And now back to Tero Virtala.

Thank you, Terhi. Yes, so based on all this, as has been now said, we are in an investment phase focusing on developing the 5 games we have, investing more also ourselves into them. And later this year, launching first of these 5 games, Alan Wake 2. Taking all this into account, we expect that in year '23 our revenue to decline from previous year and a negative operating result. Then just to remind where we are aiming at, our long-term objectives remain unchanged. We are aiming to create out of our road map, several successful games and at least 1 major hit game. Again, that reaches the global top-selling charts and can keep on succeeding. We have the unique creative skills and can create world's character stories that build powerful brands. We will own at least 3 expanding game plans, all with long-term hit potential. We will have commercial capabilities so that we can ourselves select the right commercial model for each model, be it one day self-financing, self-publishing or be it working with publishing partners, like we now have found as the best way forward. Great people continue to be a key focus for us. We aim to be the most attractive gaming industry employer in Europe and continue to invest to our people. And as has been said, we aim to create each of these objectives while having a growing business, aiming for profitability, and all the time managing our investments and risks well. So I think, that's it from our part. Veli, to Q&A.

Yes. Thank you, Tero. Thank you, Terhi. [Operator Instructions] We are ready for questions. And as a matter of fact, I can see that there's already a couple of questions in the Q&A. So let's take those first. There's a question. Will Remedy use core mechanics or perhaps a concept from Control 1 in Condor, meaning will it be more efficient that for Remedy to develop the game kind of use Vanguard -- reuse Vanguard and things like this?

Yes, there are definitely synergies. The meaning that definitely always with all the games is that we aim for excellent games. And the main premise was that the world of Control, a kind of highly intriguing, expanding world, in a way the oldest house provides, expanding opportunities for games and our strategic intent to go towards longer-lasting games, that built a strong foundation and basis for a co-op experience we saw. And with the early phase concepting that we had some of the prototyping that we did back in the day, it proved that there is a high potential in this. So that was always the main driver, that we can make a great game. Now in a way, making it in the world of Control, of course, then expands the brand, provide something new for fans and provides also a possibility to bring in new fans for the wider world of Control. That was a good, in a way, aim that we had. But then production-wise, we have seen that there are clear synergies and efficiency gains in production that we can reach. Actually before even going into the asset or content or our side, the #1 first synergy is just in the world and in the world building and some of the basic principles, how we make these worlds so immersive and, at the same time, mysterious and believable. Often that part, that early vision part or building may take quite a lot for new games, now Control already has it. It's been kind of like a very fast-stepping stone for the team to start focusing on the game play and experience and taking some of the existing designs as taken. Then definitely, the oldest house provides a strong basis. That's in a way a building a world, a shifting environment, a lot of them are ready made that we can utilize. But then, of course, it's a new type of experience, a co-op experience in a setting that was originally made for single-player purposes. So always certain type of adjustments, certain changes are going to be needed. But just based on that, I guess you already heard that, yes, there are a lot of synergies, especially on the world design, environment building, the content creation that has been done.

Thank you. A follow-up question related to Condor, can we say something about the cooperative element in the game? For instance, how many players can play and any color on that?

No, no, no. I wouldn't go at all into the deeper details. Those are then reserved when we one day are ready to start announcing a bit more and enticing the fans into the world of Condor as well.

Good. Then there's a question related to the report, could you open up a little bit on your growth pains in 2022 that you were mentioning in the CEO review. Has there been big changes with your game leadership roles and outsourcing partners?

I wouldn't say that they are big ones because -- in many ways, we have been really patient in building our multi-project model. We started it in the early 2017. One could say already in the end phases of 2016. So we have taken almost 6 years to reach this point. But we also understood that it's been difficult for any AAA gaming studio. I think all along, we have been making the right choices, trying to build more and more autonomous in leadership teams, management using management roles as guiding the strategic directions, trying to support the teams, being able to balance the cross project needs and conflicts that always at times [ high speed variant ] technology prioritization or staffing needs. We have been building the centralized units, how they could work. So all along we have been advancing on many fronts. But now I think that the final big learnings and changes we have had in '22 and it's, in many ways, related to the fact that this is now the moment when we had the aimed 5 projects in production. We now finally have the core leadership teams that can advance their projects well and the teams that are able to take their projects quite well formed. That was the state already in early part of '22. But then at the same time, this was also the first year when in this wide multi-project model, we had 1 big production in a way, Alan Wake 2 in full production mode. And out of these 5 projects, we need to keep in mind that 3 are more traditional, or 2 of them, Alan Wake 2, Max Payne, very much more story-focused game. Control was taking us to a new direction, but we have a team that's now making a sequel of that. So in many ways, these 3 games are closer to our historical strengths or the strengths that we have built during the past years. And 2 of the games are very new ones, service-based multiplayer games that also require us to learn more and develop new skills. So when we take all that into account, I think, especially in Vanguard, we saw in the summertime that even though a lot of good progress had happened, it was proceeding too slowly. Some of the key elements were not found out. And it was mainly a learning point for us also in developing this type of new games that the leadership team needed to be a slightly different one than we have in some of our other projects and we also discovered some of the key developers that the project still required. And in the full time, we were able to fulfill that. But then with the 5 projects with quite autonomous leadership teams, it has been a learning point for us also that what's the right way for us as a company management to oversee and at times guide the projects and then together with the project teams, early on, identify the really big topics that need to be sorted out rather earlier than later. And then also what are the ways how we balance the portfolio with these different requirements for technology, for the staffing needs, for scheduling and especially doing that early enough so that the projects can take these into account in their planning. And then there have been -- these have been developments. And then we have had really good developments in the ways that our projects work. There are some benchmarks that we have been using, some models that work in one project we have taken into other projects. But we have also seen the importance of doing some adjustments when we have a different type of gain, then actually the benchmarking works in a certain way, but what's the level of freedom that we have now given to the teams to adjust the model exactly for their teams and their project needs. And then the cross-team collaborations that we are having with the production support functions and the games. So I would say a number of developments, but what I'm happy about is that we have been able to go into this detailed level in the areas that we have developed. And now end of last year, we could already see -- we had, had progress in these projects all the time, but now the progress is clearly accelerating, and that's good.

Are we able to utilize freed up capacity after the launch of Alan Wake 2 in Vanguard and Condor or are these projects needs somewhat different?

As I mentioned earlier, most of the freeing up personnel will go to Control 2 and Max Payne remakes. Definitely, many of these talents in different disciplines that can be utilized also in Condor and Vanguard. But the needs in those projects for the people that are freeing up are not that heavy. Overall, in Condor, the development team, especially when we are utilizing the world of Control, the needs are slightly lower. And then Vanguard is being developed with Unreal and therefore, also the personal needs and talent needs are a bit different than Vanguard in any case, already has, I would say, medium-sized team that is able to take a lot of the development further. But yes, some freeing up talent most likely will go to Condor. Some will call the Vanguard, but most of them still to Control 2 and Max Payne.

Good. Then there's a question more for Terhi, probably. What is the purpose of the EUR 7 million investments into equity funds?

Yes, it was to neutralize the effect of negative interest rates when we gathered EUR 41.5 million from the market. So financial investments to neutralize that. Of course, then the interest situation has changed.

We could actually continue with you because there's a question. Did control benefit from B2B deals in Q4 2022?

Yes, I said, we are not sort of disclosing those or even like telling the details about our revenue split as such. But we could say that the B2B deals have become sort of more or less a steady source of revenues in Control. So yes, but that's not like exceptional.

Then another question related to game launches. Is the macroeconomic environment something that we take into consideration when considering the launch date for a game?

No, no. That's -- of course, with our publishing partners, we are following how the economy is developing. But it's quite a low-priority consideration. We know that the overall gaming market is strong, long-term video gaming market continues to grow. We know that the games we have in development, they are step-by-step long-lasting. Digital distribution is the dominant, distribution and sales channel order games, really good quality games, longer-engaging games. They will sell for a long time. It's not anymore about creating the highest potential sales within the first month or first few months. So we are definitely having an eye for the long-term potential with every single game that we are launching. Rather the exact launch window is being defined on the potential competition in the same size that we are having. And what do we see as the highest potential for the audience -- highest potential launch window for the audience here after.

Continuing with the game launches, there's a question with Condor and Vanguard still in proof of concept stage. Is it realistic to assume a AAA game launch also in 2024?

I'm not talking about -- anything about Vanguard or Condor. It's just that we have said as a company that we are aiming to launch -- make 1 new game launch per year. So definitely, it's realistic.

Then on Alan Wake 2, there's a question. How happy are we with the project on a scale of 1 to 10?

I don't want to give any numerical evaluation. That's also as always all subjective. But we are happy how it's going. We know -- I have no doubt that it's going to be a distinctive high-quality game that will please our fans and gamers overall. It's still in development phase. And in a way, we have a big team working on that, a lot of partners. So definitely the game is not yet ready. There is still work to be done. We are soon in a situation where we have all the content in place and that means that the whole gaming experience, whole game can be played from A to Z, from start to finish. But then the important part of balancing everything, polishing everything, making it the exceptional, excellent experience, it can starts and that also contains a lot of work and still -- full focus on that. But we are very excited, that I can say.

Nice to see you building the hype. There is a question, do you believe that the fan base for Alan Wake 2 or Alan Wake is big enough considering the games budget?

The fan base for this type of games is big, no question of that. It's -- but the game market overall, be it Alan Wake, be it Control, be it any game, any big game, AAA game, the difference are [ very ] segments of the gaming market, they are quite polarized. It's not winner takes all, but it is a fact that if you are able to reach kind of like the top positions in the chart, you can have huge success. If you are in the medium kind of like part of the chart, they're not that good. So the fact is that the thing that we can affect most is to ensure that it's going to be -- when we launch in '23, it's going to be an excellent high-quality game.

Are you planning to showcase something in Game Developer Conference or E3?

No public speculation on that, the marketing always has to be -- the marketing plans go in a way that we are able to sometimes surprise, sometimes provide what the fans expect, but most of all, it's a very systematic work also on that front, when do we start marketing and in what way.

Good. Then there's few other questions related to projects. Tero said that or you said that we have learned from the past while building up the multi-project model. What were the sort of key earnings from the Crossfire projects?

That's a good question. Because the partnership with Smilegate and Crossfire plays a big and important role in our past years' development, especially in the early phases of the multi-project model. We started this whole model when we had the first Crossfire operation in development and we started developing Control. And I think, first of all, it showed us early on the importance in the portfolio to have also projects with the different business risk profile. And back in the days, when we were just trying our kind of like those in the water, that was the right way for the multi-project model when we have 2 or 3 projects. I think having 1 project that we could forecast quite well into the future with our partner with Smilegate was highly important one. And at the same time, I think Crossfire when we started the collaboration was a huge success in the Chinese market. And we started making a single player experience for an audience that was not back in the day familiar with single-player games to a game that was mainly successful in China and some of the other -- some developing countries. So I think when the market and audience was not familiar to us, it was a lot of iteration and going back and forth in finding the right design for these operations. And then at the same time, when Crossfire was primarily a multiplayer, free-to-play multiplayer experience, developing something completely new to that, in a way, required a lot. And we had our learnings and Smilegate was an excellent partner, but their focus on that type of military order free-to-play games, when we together with Smilegate saw that we will not continue our collaboration, and we started looking for a new project, I think the big learning was that we should take as our next project, the project that still few steps closer to our original and traditional strengths of adventure, action, historically place of all. But with still, step-by-step can take us into longer-lasting experience. And with all these learnings, they played a big role when we had a lot of options that with whom would we make a potential subcontracting project because we wanted to have a 1. And it played a big role how we then ended up having a Max Payne and definitely in a way, Max Payne being very close to what we know and what our team wants to make.

Will Remedy be taking more games into development during 2023 to 2024 in addition to the 5 projects that we already have?

Well, we have just said that currently, full focus is on the 5 games. We don't, at the moment, need anything more. We now have capabilities to advance these 5 games. And already, these 5 games provide so much future opportunities for us. We now have the first game launching this year. So all eyes are on that. And we will be -- we want to make sure that now this year, our projects are proceeding well, and we have a successful launch of Alan Wake 2. Then who knows what the forthcoming years and years to come will bring to us. But I would say that, at the moment, a full focus on these 5 games.

Is it possible for us to have several games in full production phase at the same time simultaneously?

Now we have 5 games. At this very moment, with 5 games, we cannot yet have 2 games in full production. Quite soon, when we continue how we have now developed, our recruitments are continuing, quite soon we could have. But at the moment, it's still the model that we are having. And I think going a long way into the future, it's also one of the big efficiency gains that we are able to advance our projects in slightly different phases. And then when people start freeing up, they can move to those projects that are already knocking the door of the next phase. And then when we move people into the projects, we are also more certain that our capital, our investments are used smartly.

Thank you. Then finally, there's one more question. Will you change your stage gate process model to be better fit development for -- specifically for live service games? Do we need to change the structure in the development teams for these types of games. And do these live service, live operated games, do they need a different type of skills for people that we hire?

Our stage gate model, kind of like when we go -- when we look under the hood of the stage scale model, it's already very much adapted for the needs of each individual project. But on a high level, the stage gate model, what we need to solve in the early mandate phase or in the kind of like concept phase or proof of concept phase, that have we identified the key risks of the projects, have we addressed them what is the game vision, what is the target audience? What are the key pillars? Have we proven these key pillars in the game build? This type of high-level games, they apply for each project. But then in order to make that concrete, they are always converted into more exact questions that are relevant for that project. So in the kind of like development phase, when we are going towards the first launch for the hands of the players, I think the stage gate more works very well to all of our projects. Then after the first launch, which in some in a way service-based games may actually be [ bet the ] launches, then definitely the stage gate process will differ for the live operated games in comparison to bigger products that are being developed by the first launch comes so much. Then do you need to change the structure of the development teams when we go into the live op phase, definitely, there are going to be team structure changes in that phase. Are you recruiting people with different skill sets? We have been doing that already for a long time. Vanguard has now been in development for 4 years. We do those earnings when we started Condor and still we have been progressing patiently with Condor. And one of the reasons is that we have taken our time to build a balanced team that has certain experienced old-time Remedians but also many new skills that are required for this type of service-based games. And it's not just about finding these people, but then giving these people enough time to really form a well-functioning team that can then pull off the ambitious projects that we have.

Good. Thank you. I think this is all. That was the last question. So thank you, everyone, for the call and the questions. We will be back with the next earnings webinar on April 26. That's all for now. Have a great weekend, everyone.