Remedy Entertainment Oyj (REMEDY) Earnings Call Transcript & Summary

Hi, everyone, and welcome to Remedy's Capital Markets Day 2024. I am Liisa Eloranta, your host today and the Investor Relations Manager at the Remedy Entertainment. During the next 3 hours or so, we have a fantastic selection of presentations prepared for you presented by Remedy's core management team members. The presentations will shed light on the next phase of Remedy's strategy and offer financial targets together with explanations on how self-publishing works from the finance point of view. We will also get to hear deep dives into the production and commercialization of Remedy, games including an introduction to Northlight that powers our games. The final presentation will be an inspirational one, offering us insight into the creative side of game-making. After all the presentations, we will have plenty of time for questions and answers. Here are the disclaimers. Now let's start with the presentations. It is my pleasure to invite to the stage Remedy's CEO, Tero Virtala. Tero, the floor is yours.

Hello, everyone. I'm Tero Virtala, CEO of Remedy. It's a pleasure to be here with you. As the title of the presentation says, I will talk about where Remedy is now and what is our future direction. But before that, let me first summarize who we are and what makes Remedy so special. Next year, Remedy is 30 years old. Reaching that date in the competitive, fast-evolving games industry requires exceptional skills, skills that stand the best of time. It also requires an ability to change when the markets continuously evolve. And we have consistently proven that we have the skills and abilities by creating highly respected games like Max Payne, Alan Wake, Control. Making great games is hard, and it was exceptionally hard back in the days. In addition to developing the games, finding the required financing and access to global markets was an additional big challenge. We backed and leaned on publishing partners. And now for almost 3 decades, we have professionally worked with world-leading gaming companies and time after time gained their respect. This reputation and these partnerships are an asset to us also when we now, after 30 years, move into self-publishing. In 2016, we started the transformation to enable longer-term bigger growth. We continued making excellent games while step-by-step expanding our game creation skills so that we could also tap into selected other genres, audiences, and wider business potential. We started to build a multi-project organization to one day be able to launch games more frequently. And we aimed at taking a stronger role in the value chain to capture a bigger part of the value that our games can create. This first meant co-financing and owning control, then aiming for copublishing, with an idea that we would be building publishing capabilities, and when stars would align in the future, also self-publishing could be possible. Doing all this has taken time. We have learned, we have made changes, and improved. And along the way, we have had many successes. We built a new team and successfully launched Control. We collaborated with Smilegate on leading Asian free-to-play game, Crossfire. We bought back rights for Alan Wake, for partnerships and good collaboration with companies like Epic Games and Tencent. We listed Remedy to First North, developed and moved to NASDAQ Helsinki main list. We have raised capital to support our move higher up in the value chain. Teams have been built that now work in Alan Wake, Max Payne and FBC: Firebreak. And this list doesn't even cover the internal developments we have done. And we sometimes have seen that things don't work requiring us to take a step back, and we have made corrections to be stronger for the future. All this has taken time, to build an organization, capabilities, business model and financing to be able to realize the much bigger business potential we have. During the past years, in 2024 and 2024 -- 2023 and 2024, we launched Alan Wake 2 to great reception. We have concluded some of the big, long-in-the-making internal developments that now benefit all our game projects. We successfully carried out major business arrangements, buying back rights for Control, forming a true strategic cross-media partnership with Annapurna Pictures. We signed a good financing deal with Tencent in the midst of the challenging economic climate. Many important enablers for future success that we have been building for so long are now in place. With all that, we will end year 2024 stronger than we have ever been. Year 2025 will mark the start of a bigger growth era for us. Our biggest achievements are ahead of us. What this means in more detail and how we will make it happen, you will hear today. With that as a background, let's first have a look at where Remedy is now. We are a company focused on creating and commercializing distinctive, high-quality, AAA console and PC games that expand in the world-class entertainment franchises. We have 2 development studios, bigger 1 in the capital area of Finland, Espoo, and another 1 in Stockholm, Sweden. At the heart of Remedy is our international pool of workers, talents, our people. During the past years, we have grown to the size of 365 world-class talents. We don't anymore have bigger needs to grow our head count. This is the size we need to successfully advance 4 game projects. There is always some natural change in personnel, and we have special focus areas like publishing to which we selectively recruit people. For getting new talent, we are a respected and interesting employer. As an example, so far in '24, we have received almost 5,000 job applications, professionals interested in joining Remedy. 1% of these professionals have been selected to join us. As another example of our attractiveness, we were among the top 10 most attractive employers in Finland with some other highly respected companies. We can handpick the world-class talent and right personalities that fit our needs and for whom Remedy is a perfect match. With our people, teams, capabilities, we have made games loved by millions of gamers, games that have also won hundreds of respected industry awards. We have pushed the boundaries of creativity and technology. We have learned and built new competencies. Game by game, we have developed as a company. Doing all this has taken time. During the past 2 years, we concluded big developments and carried out major business arrangements. We finalized Alan Wake 2 and launched in great quality. We decided to cancel Project Vanguard even though it had started to show all the time improving progress. That decision gave us more focus and benefits to our other projects and why the portfolio have been clear. Internally, we have greatly improved our ways of working. We have taken into use major technology and tools developments. And we have strengthened our game teams. On commercial front, we acquired back full commercial rights for Control. We formed a new partnership with Annapurna Pictures. We made an additional financing agreement with Tencent. With all this, we now have games in development with significant potential. We are able to advance these game projects with clearly better development velocity than ever before. We have an outlook of steady release of good games for the upcoming years. And it's now clear that we are moving to self-publishing. All this has built us a position with which our next year's look really good. Starting from '25, we will start showing results of why we have been building Remedy into this form. When we look at our current game development pipeline, we have 3 announced games we are working on. FBC: Firebreak will launch next year, in '25. Control 2 is now in production readiness, moving to production next year. And Max Payne 1 and 2 remake is in production. There is always room and need to improve in how we work, and we keep on doing that. But with all the developments we have done, as I have said, we can already see the positive effects. We are able to advance multiple projects better than ever before in our history. During the next years, we will be launching on average 1 new game per year. In summary, we have developed well and have now the ability to create and launch excellent games more regularly, expand our franchises to new games and mediums, grow our audiences, and create much bigger commercial success. In order to discuss where we go from here, let's look at the global gaming market and selected viewpoints that are especially relevant for our future plans. Overall, gaming continues to be a massive market, the biggest entertainment vertical overall. Market has grown to close to USD 200 billion. Market went through a fast growth phase during the past 5 years, especially during pandemic, but still after that, market slowly keeps on growing. At the same time, the amount of players globally is over 3 billion people. Over 40% of world's population plays games. This tells why games that first succeed in their core markets always have expansion and growth opportunities also beyond their core audience. Out of the wider gaming market, our main focus at Remedy is on PC and console games. That is close to USD 100 billion market with hundreds of millions of players in the current generation platforms. While market has grown, there are more and more games and also different type of games. Players have more options to choose from, and they have become more selective on where they spend their time and money. The massive evergreen games and platforms have continued to grow even bigger than they were before and take part of the gaming audience's play line. We also still have the annual franchises with loyal fan bases. And naturally, there is always appetite from players for new games. At the same time, it's clear that breaking through with a new game has become harder. We were able to do that with Control and again with Alan Wake 2. But that is definitely not the case for everyone. Markets have polarized more, breaking through requires more than it used to. In a study of 1,500 games, 90% of play time spent to new games went to less than 50 titles. This means that even more than before, the game really needs to stand out to succeed. If a game then does stand out and can break through, then the opportunity is a big one. What are the opportunities for new games is an especially interesting viewpoint also considering Remedy's pipeline of new games for next years. There are plenty of opportunities. Even though breaking through requires more, there are a lot of new games that succeed. Players overall are playing different games. And if you avoid going head-to-head with industry's biggest service-based games, players play many different games, especially in many subgenres. Out of the overall gaming time spent on all games, 90% of total play time was divided between 400 games, which is a wide variety of different games. And while play time is one important aspect for any gaming company to take into account, it skewed towards free-to-play and service-based games. Another highly important aspect for us is to look at the market specifically for paid games. In 2023, 580 million units of games were sold in Steam. 300 million units of games in PlayStation. We had Xbox, Epic Games Store, other platforms on top of that. Far over 1 billion units of full games are sold per year. That is a huge amount of games sold. We at Remedy have great games out there and highly promising ones in development. Just carving out a slightly bigger part of that huge total pipe has a significant positive effect on our future. What are then the success factors for new games? What are the means which have clearly proven to increase the probability of a new game success? First of all, quality has always been important. Now the bar has risen even more. Due to the high amount of competition, one also needs to stand out from the crowd, offer something that others don't. Studies also show that long-term studio fame gathers following that supports sales. Power of IPs and franchises has always been a factor. However, like with quality, with the huge amount of competition for consumers' attention, the significance of known and familiar franchises has grown even more. As an example, over half of the top new games in '23 were installments in a known franchise. We have that basis now with Alan Wake and Control. What has recently also been witnessed in the gaming industry is more of the really big budget games that have unfortunately failed to meet their high sales expectations. Games with massive budgets often need even close to 10 million sold units to provide the targeted return on investment. That is difficult. At the same time, there are many games that report positively on their early phase sales, games that seem to be on track to commercial success with sales of few million units. These games typically are more focused in terms of player fantasies, genre, and, therefore, also with target audience. Reaching financial success with few million copies requires also well-managed budgets. We know that compared to many other AAA developers, we at Remedy are pretty efficient and make AAA games with budgets many couldn't do. Then there is multiplayer and social features, playing with friends, creating, serving, having games that are viewable something you can talk for a long time. This is not all the gamers, but these are more and more important, especially for younger generations and, therefore, also for future generations of players. We are tapping into this field with FBC: Firebreak with our unique Remedy flavor. Then there is power of trans-media. Past years have brought some very good film and TV adaptations of gaming franchises. Done in the right way, this can both reengage fans and attract new audiences and players. We have exceptional depth in the worlds, characters, and stories we create. We have long believed that TV/film animations are opportunity for us. Now we have an exceptional chance with our partner, Annapurna. They are an expert in TV and film with an impressive track record. And of course, to succeed with new games, one needs the right type of marketing, right for that game and for that audience. That reaches the right way, players in the right way, gets their attention, and motivates them to buy the game. So overall, we definitely now have built a strong basis that enables us to launch great games regularly, games with potential to step-by-step reach bigger audiences and to achieve bigger commercial success. When we, at the same time, look at the gaming market, it's a massive market, but there is also a growing amount of competition for players' attention, time, and money. Franchises and games with the existing fan base, we'll be in an even stronger position than in the past. Gaming companies also need to be more selective on where they focus on, what is the target audience they aim for, how they position their games, and take all this into account in game development work. And successful companies have this ability to make excellent games that also have some special flavor to stand out from the crowd and, at the same time, offer that target audience what it values. When I now look at Remedy, the skills we have, our IPs and games, the way we work and keep on improving, partners we have, and most of all, our people, and teams, we have what it takes to grow our games in the work as entertainment franchises and as a business get into profitable growth. So you have now heard a lot of information. I hope you are still with me. Because next we will talk about how to make the profitable growth happen. Let's have a look at our strategy. What is the direction where Remedy goes from here towards 2030? There is so much good in remedy and what we can do, that we don't need to make radical changes. We have a strong basis to build on, but to gain bigger success, we have already started to make selected changes and developments. On a very high level, from here towards 2030, this is the direction where we go. We have, for a long time, been a highly regarded creative studio filled with world-class talent, able to do remarkable games. We have already had many successes, but our finance and commercial success doesn't yet represent the skills and potential we have. When we move towards 2030, we will continue being a creative powerhouse, drive the needed developments, and gain significant commercial success, in a way that is not onetime success but has put us into a sustainable, profitable growth track. We will become a highly regarded creative studio with sustainable, significant commercial success. To make that happen, we have 4 strategic pillars that act as our guidelines towards the future. We create and grow world-class gaming franchises. We make distinctive, category-leading games. We work in ways that enable successful productions. And we self-publish the games we own. Let's open up what these strategic pillars then mean to us. First of all, we have 2 business areas that support each other. We have our own franchises, Control and Alan Wake, both with their growth and expansion opportunities. They are also both set in the wider Remedy connected universe, which provides fans an additional layer and, for us, additional creative and commercial opportunity. And then we have a partner franchise. Max Payne is a perfect fit for us. Even though owned by Rockstar Games, Max Payne 1 and 2 were created by us that we love, many of our developers are passionate about. At the same time, the work for higher project on such major gaming IP with good royalty upside with an Steam partner like Rockstar Games is business-wise also a good balancing factor in our portfolio. And this project can both utilize and build the synergies in the same way that any other Remedy game does. With partner franchise, our primary goal is very clear and simple: to create an excellent, commercially successful Max Payne remake. While doing that, we are also building a strong Remedy action game theme, consisting of both long-term Remedy veterans and talented new Remedians. We don't speculate on what will happen after Max Payne. When we deliver the primary goal, excellent May Payne remake, we will definitely have good options in our hands, and we'll make decisions that are best for Remedy's future. In relation to Control and Alan Wake, we will grow them from great games to world-class entertainment franchises. What we now have is a strong and proven foundation. In the competitive gaming market, it's a rare skill and achievement to be able to establish a new IP like we did with Control, or to reestablish Alan Wake 13 years after the first game. These games have already gathered an impressive audience, well-known and appreciated by certain player groups, players who wait for what comes next. But with neither of these games, we haven't yet launched regular sequels, and therefore, haven't yet offered our fans a real, regular deepening and widening experience that would let them step-by-step get deeper into our gaming growth. However, the basis to make that happen in the next years is good. We will make Alan Wake and Control in the world-class franchises. We grow them via more regular sequels, make them highly appreciated by their wider target audience and also well-known by players overall. And we have a steadily growing profitable business around both franchises. When we talk about growing franchises, we talk about having new games at times growing the existing games. And also importantly, growing their audience and fan base and, of course, business. Both Alan Wake and Control have expansion opportunities. We carefully consider what's best for that game, its audience. We consult our partners. And then we make decisions what is the right opportunity and when. At the center of Alan Wake and Control will be excellent AAA games and sequels we make. The foundation we have created for both of these games, worlds, characters, stories, gameplay, they all provide opportunities for new spin-off games. FBC: Firebreak, as an example, originated as a spin-off gain to Control. Expansion to TV, film and animation are a clear opportunity as we have seen by some other games with Rich worlds. With our important strategic partnership with Annapurna Pictures, this opportunity just became a big step closer to reality. Annapurna is known -- Annapurna knows games and supports us with Control 2, and they are an expert in TV and film. Like us, they believe Alan Wake and Control have what it takes to successfully expand to new mediums. Each franchise expansion will have their specific goals depending on the expansion in question. But in any case, when we do those, they have to be great experiences in their specific mediums, and also then help us to grow the wider franchise and support our games. In relation specifically to the games we make, we are focused on developing console and PC games for core players. Platform-wise, we focus on platforms with bigger screens where we know our games will shine. Big-screen games for core players. To us, this means both single-player and multiplayer games. We naturally don't do any type of games but focus on specific genres that fit our skills, where we know we can excel and where the market opportunity for us is good. Business model-wise, we make premium games that players pay for. And each game has their post-launch plan, according to which we keep on serving these games and their audiences, which also then means additional sales opportunities. More specifically on platforms, yes, our main focus is on PC, PlayStation, Xbox. We naturally also follow potential other platform opportunities. We have some experience on Nintendo Switch with Alan Wake Remastered. We are bringing Control to Apple Mac hardware. For successful games, new platform opportunities arise, and we keep on evaluating them, still choosing carefully where we put our focus and when. And on top of these platforms and related marketplaces, there are subscription services like Game Pass and PlayStation Plus. In the future, we will see streaming services developing further. And our industry has traditionally had a new market expanding platform arriving every now and then. With great games owned and controlled by us, made with our in-house technology Northlight, we are in a good position to utilize these opportunities when they at some point open up. In building excellent games that also become commercial successes, a highly important principle for all our teams is smart creativity. It means that we need to balance creativity, production, technology and business. No individual part can flourish without the others. When all are aligned, big successes can be made. This is a high-level guiding principle from which many action initiatives have already been grown. As an example, you will in later presentations hear how we are production-wise steering and supporting our game development teams, how we increase communication on all levels, how both Northlight and our publishing team is more and more closely integrated to working with game development teams. The business-related guiding principle for our games is the minimum target of 100% return on investment per game. To support that goal, we have started to provide our people deeper understanding on business audience and genres they work in. We are conducting more and more systematically market research and audience testing that answers the needs of each specific game at different points of their development life cycle. And we still, of course, cherish the principle that we are a creative powerhouse. Making excellent AAA games is not the science that you can break the pure numbers. The aim is that we give our teams and people relevant info and wider context that supports them to make best choices in the game development work. And on top of that, we are renewing our leadership models and also our bonus systems, which take all this into account. We are iterative in how we design, plan, and make our games. Each game evaluates what we at Remedy already have and could build on. When we create then something new, we aim to make it so that it also more easily is usable by our other game projects. We both utilize and build synergies. With this, we can make great games more efficiently and using or more of what we already have allows our talents also to use more time in innovating and building the new elements in areas where it matters the most for that game and its audience. And of course, the highly important guideline and strategic decision is our move to self-publishing our own games. Since 2017 we have been strengthening our position in the value chain. We have been long time building selected publishing capabilities. This year we were able to buy back Control Fights from partnership with Annapurna Pictures and arrange financing with Tencent. With all that, we can now take the next step to self-publishing. Self-publishing does require more from us in terms of financing and publishing capabilities, but the share of revenues that then comes to us is also significantly higher. To put it all together on what we are aiming at, a key cornerstone is to have an organization that can create and launch games regularly, excellent games with good profit potential. That steady release of games means new great games with good sales potential. With Control, we have seen that high-quality distinctive games have long-term sales opportunities. So each new game, then also not just sales, but cross our catalog of selling games. And as these games will be self-published, it's fully in our hands to decide how we best continue to develop, support, market, sell our games and sell our portfolio of games. We will have more sales opportunities for each individual game and also more ways to boost the cross-sales between the games. With all the time growing game catalog, players will also more easily discover other Remedy games. And as a self-publisher, we have more means to support this discovery and also to happen. The larger game catalog cross our sales and profits by boosting the sales of many Remedy games. More games out there selling also all the time expands the audience that is aware of our games, that has played our games, and grows the fan base that wants to experience more of our games. In addition to growing fan base, each game also develop further the underlying worlds, characters, stories, game features, content of our games. Step by step the franchises grow stronger. With bigger fan base, stronger franchise, growing profits, our investment capabilities for future Remedy games and to their marketing are better and better. At the same time, as both the wider audience and core fan base is now bigger, we can count on certain part of that audience buying our next games. Risks for future game investments are actually smaller. This is the strengthening cycle that we will have, which we keep on strengthening with every new game launch. You have now been listening to me talking for a while. Thank you for that. This is a good point towards a video. And after that, you will hear more on our financials from our Chief Financial Officer, Santtu Kallionpaa. [Presentation]

Good afternoon. My name is Santtu Kallionpaa and I'm Remedy's CFO. In this presentation, I will tell how our business logic works, how we create value by self-publishing our games, and with scaling our business. Based on this, I will tell what is our financial ambition with the next phase of executing the strategy. And before discussing the future plans further, let's take a quick step back and a brief summary of where do we come from. Looking at our revenue development, we can see that the development fees have played a major part in the past. This is illustrated in the picture with dark-red color. Making projects with partners and publishers has been a good way to fund our operations, while we have been taking the steps towards the multi-project model and developing more ambitious games. Starting from the launch of Control in 2019, we have seen also significant game sales in our revenue figures. This is illustrated in the graph with lighter color. There have been several years with positive results in the past, but our profitability has been limited as we haven't been self-publishing. During the past 2 years, we have seen also negative EBIT figures. Year 2022 started a stronger growth in investment phase for us. And both years 2022 and 2023 wherein overall impacted by increased own investments in the game projects. Making a great quality Alan Wake 2 was a priority in 2023, and the game project required more personnel during the year than we had originally planned. Keeping a larger team in the game for a longer time led to the investment being higher and the result being more negative than was originally planned. In addition to that, in year 2023, the negative result was made worse by the write-off -- write-down of Project Vanguard to enable better focus for other projects. This year, the results still remains negative, but there is clear improvement compared to previous year. Then let's talk briefly about the size of our organization. In the game industry, there have been lots of layoffs and many studios have been reducing their workforce. We have been in a different position as we have not been overinvesting in the size of our organization, but we have been building the organization that we need to deliver great games longer term. Our organization size has been growing since 2020, which you can see in the graph as growing overall cost level and amount of full-time equivalent people. Going forward, we see that the size of our organization is now on a correct level, and we don't have significant additional increased needs in our cost structure. Also, our way to book the costs and activate part of the game project development, the balance sheet, has been and will be consistent and transparent. Taking Alan Wake 2 as an example, activated share of the costs in the balance sheet is limited. And when the project budget was exceeded in 2023, that share was not activated. Looking at our cash position development, our investments to future growth are visible during the year 2023, and the cash position had declined. During the latest reported quarter, our total cash position has turned to growth. And at the end of the third quarter, it was EUR 31.2 million. As we have announced earlier, we have also entered into a EUR 15 million convertible loan agreement with Tencent. And based on this, we have the needed funding to take the next steps in executing our strategy. Taking the 2019 published Control as an example of commercial success case, we have created completely new IP to the market and the game has sold, in 5 years, 4.5 million copies and keeps on selling. Control franchise fan base keeps growing over the time, and there is an existing fan base looking forward to future launches. Launching Control and its lifetime sales has been an excellent case for us. Back into 2017 when we made a deal on Control, we were not yet ready to take the self-publishing route. But as an example, had we been able to do that, our new criteria for delivering 100% return on investment target would have been clearly met. The best part is that, after purchasing back the Control IP rights in February '24, we have an opportunity to fully monetize it. Then let's explore some examples of how our business logic works from the profit and loss point of view. Earlier we have had several different publishing models in use and under evaluation. They have varied from working fully through publishers, making partner IPs, co-publishing, and self-publishing. And as Tero said, we have made a decision to self-publish the fully Remedy owned games. So let's focus on comparing self-publishing to a model where we would work with publishing partner, which has earlier been the primary model. Based on this, it's good to understand how the dynamics in our P&L are changing. In our next example, scenarios, we assume the overall game sales to be EUR 100 million, platform fees to be EUR 30 million, and the game development cost to be EUR 30 million. We also assume that EUR 10 million are needed in the marketing of the game. And I already here highlight that these figures are illustrative. In this first scenario, we are launching a game with a publisher with a recoup agreement in place. Recoup means that the cost of the game development is, from our point of view, fully covered already during the development phase, but it must be fully paid back together with marketing costs by the game sales before any royalty revenue is there. In this example, we get as revenue EUR 30 million as development fee already during the game project to cover our development cost, which is also visible in the table here. Then the next values are not visible on this slide as they have been on the publisher's end. From the game sales of EUR 100 million seen by the publisher, platform fees of EUR 30 million and marketing costs of EUR 10 million are deducted. Then development costs are recouped and the remaining EUR 30 million is shared with us and publisher. In this P&L, we end up having EUR 50 million as royalty income. Development fees and royalties together, our total revenue is EUR 45 million, as shown here. With this example, we end up having a profit of EUR 50 million and our return on investment is 50%. From a risk point of view, we would be well-covered, as well as the development costs are in this example paid by the publisher already during the project phase. Then let's add a scenario where Remedy is self-publishing the game alone. From a P&L point of view, it changes the dynamics of the figures as it means that we are booking the full game sales in our revenue. In this example, we are showing EUR 100 million of game sales in our revenue. As a new element in our P&L, we are showing platform fees of EUR 30 million following the game sales, and the marketing costs of EUR 10 million. With these -- with figures used in this example, we are ending up in EUR 30 million profit, which is double the profits compared to the previous scenario. Our return on investment is 75% when also our marketing investment is taken into the account. It means that we are carrying the full risk of the self-publishing, but at the same time, we are also having the full benefits. Self-publishing of FBC: Firebreak also follows this logic despite the figures here are only illustrative. Regarding our assumptions used in this model, we will double the assumed game sales to illustrate the scenario where the launched game would prove to be a hit and exceed its base business case assumptions and total sales would grow from EUR 100 million to EUR 200 million. Platform fees in this example will double following the double sales. Regarding the other used assumptions, game development costs will remain at EUR 30 million and marketing costs in EUR 10 million as in previous example. And then let's see how the dynamics of these models work in P&L. Starting from the new table on the left-hand side. When working with publisher in recoup model, we still get the same development fees of EUR 30 million, covering our development costs. From the EUR 200 million revenue seen by the publisher, EUR 60 million of platform fees, EUR 10 million of marketing costs and the EUR 30 million recoup are deducted. The remaining EUR 100 million are split equally between us and the publisher. And we end up having EUR 50 million as royalty revenue, and together with EUR 30 million of development, this leads to total revenue of EUR 80 million. Our profit is EUR 50 million and return on investment, 167%. Then let's look at the tables on the right-hand side. When we are in full self-publishing model on the right, our total revenue increases to EUR 200 million. We pay platform fees of EUR 60 million and the marketing cost of EUR 10 million. After deducting the original game development investment of EUR 30 million, we end up having EUR 100 million profit and return on investment is 2.5x the original game development and marketing investment. The key point to highlight here is that in case of the game proving to be a hit, when working with publisher, we don't get the full benefit. But in self-publishing, we are getting the full-scale effect of the sales. Let's still take another look on simulation and how operating fully in self-publishing model would work in an illustrative P&L. Platform fees are the only fully variable cost element in the P&L. They depend on the platforms used. The exact amount of the platform fees depend on the mix of sales coming from the different platforms. Another point regarding platform fees is that some platforms decrease their platform fee when games' cumulative sales exceed certain thresholds. That's why we can assume that, with higher sales figures, also the share of platform fees decrease. When the sales is scaling up as it could be in the case of a potential hit game, and the cost structure of the company is kept the same, there is potential for higher EBITDA and margin levels, as illustrated here. Of course, moving into self-publishing is not a model that suits for all game companies. To be able to execute it successfully, sufficient funding is needed. And as I said earlier, Remedy has that in place. In addition to funding sales publishing requires right skills, people, and correct partnerships. We have been building this over the years, as you will later today hear in the presentation by Johannes. Let's go deeper in how we plan to create value with our fully owned franchises, scaling our business with our current organization, and self-publishing unleashing the full profit potential. Major part of our current business has consisted of development fees. In addition to those, we have had royalties from partner projects. So far, we have not had significant owned game sales or other revenue streams. Development fees have been important when building our current business setup, However, now when we have the full organization with the needed capabilities in place, we are ready for the next steps, which means moving to self-publishing. In practice, it means that we aim to significantly increase Remedy game sales share of our revenue, while share of development fees is decreasing. Balancing the risk point of view, projects done with partners are always part of the toolbox in case we would need them. Now when we have 2 fully owned established franchises, it's possible we will also have other revenues like royalties related to use of our IPs. Let's move deeper into the anatomy of getting 100 percentage return on our investments. Understanding the sales potential for a game starts with understanding the size of the genre where the launch is planned. Second part is to understand how much there already are existing fans of our previous games, which we can assume to buy the new game. This, of course, requires being able to meet the expectations of the fans. Third element is how well we can attract new players by making our games easy to approach and launch them so that our audiences find them in PC and console environment. While doing all this in a realistic way, we are optimizing the game so that there is always potential for a major hit, which exceeds clearly the baseline sales estimates. Based on fully understood realistic sales potential, the scope of the project and the budget is set on the correct level so that the criteria for 100% return on investment is realistic to meet. For the project to be successful during the project phase, development velocity must be kept high with forward-looking planning, resolving potential problems before they delay the overall project. Also, the focus of the actual game development is kept on elements adding true value to the payers. We have significant synergy potential from utilizing our already existing library of technical and other assets, and of course, Northlight engine. While keeping in mind all these elements, the most important thing is that we are capable of making distinctive and great games. With totally understood sales potential and well-planned and executed project phase, we are able to deliver the 100% minimum return on investment target. When evaluating the business cases of the new games, balancing the risk is important part of it. At the start of a project, we make our game sales forecasts supported also by industry expert market research companies. And as the development progresses, our estimates on what the game sales could be are refined. However, in consumer entertainment business, there is always risk involved. No one can perfectly forecast the reception of the game and sales. We know our core audiences well. And based on this, we can build the business cases so that the probability for the game not being able to pay its investment facts during its lifetime is relatively small, as illustrated here on the graph on the left-hand side. Our target return on investment is 100%. As I said, the game budget is built so that it's realistic to reach. In addition to that, there is a good possibility for exceeding the target return on investment clearly. We are in a hit business. And as said, we optimize for every game launch to potential for this. Just to give a few examples of typical game projects and required sales for them to reach the 100% of it's lifetime return on investment. If we are developing a game with EUR 30 million budget to meet price point, we need to sell 3 million copies during its lifetime to meet the 100% return on investment target. This is a realistic amount. FBC: Firebreak would be an example of such game. Another example is a typical remedy AAA game developed with EUR 50 million budget, with self-publishing, meeting the minimum sales of 3 million to 4 million copies during its lifetime will deliver the return-on-investment target. Control 2 could be an example of such game. It's good to note that in these examples, we are soon to have additional revenue from the B2B deals related to games, and we are usually calculating the business cases for the projects to a time period of 3 to 5 years. So based on all this, let's move to our ambition. To sum it up, compared to where we are today, there is significant future potential to realize during the upcoming strategy period. We have our current portfolio of games, which is growing with every launch that we are making. With self-publishing, the future launches are having clearly higher profit potential than our previous launches. With a fully functioning organization with several projects in different production stages, supported with Northlight technology we have still synergy potential, which we can realize. Additionally, our franchises have also value outside traditional game medium and one great example of that is our strategic cooperation with Annapurna. Significant value of strong visibility of our franchises also outside games is that they bring new fans to our games and this will promote also game sales. All these elements are driving our profitability improvement longer term, but the most significant value comes from self-publishing our new game launches with fully owned franchises. We have stated earlier our upcoming game launches, FBC: Firebreak is a session-based multiplayer game, which will be launched in 2025. Just to give an example, in the U.S., around 80 percentage of men ages from 18 to 34 prefer shooter games. This gives an indication that the segment is growing longer term. The churn rate of the player-versus-environment shooter games has 130 million lifetime players. Based on our market data, there are an average of 13 million monthly active players in our relevant market area. As this type of game is a new of its kind to Remedy, it will attract completely new players, most likely young adults to our games, meaning that there is also a longer-term growth potential. FBC: Firebreak is also a great example of a game where we are utilizing the world that has been created for an already existing game. We believe it will be an interesting game also for the fans of control, who want to return to party familial places. We have also announced that Control 2 is on track to move from preproduction to the production phase during 2025. The game will be launched to the Action Adventure Role Playing Genre, which has 170 million lifetime players and 21 million monthly average players. The game has strong existing fan base already waiting for the game, and we believe it has a great potential to attract also completely new players. In addition to these 2 games, we have also the portfolio of the games already on the market based on our fully owned IPs, Control and Alan Wake and we have also ongoing partner IP project where we are making Max Payne 1 and 2 remake. As we have announced earlier today in stock market release, we are setting ourselves targets. We doubled the 24% revenue by 27% with continued growth beyond this milestone. We aim to EBITDA margin of 30 percentage by 2027 and maintain that minimum level throughout the strategy period. I will end my part here and Liisa will instruct us for the break. Thank you.

Thank you, Tero and Santtu. That was insightful. We'll take a 15-minute break now. For people participating online, please stay on the webcast. We'll be back with many interesting presentations soon. For people here live, maybe have a chat or grab a coffee. The toilets are here next to the stage. Let's continue in 15 minutes. [Break]

Welcome back to Remedy's Capital Market Day 2024. I hope you have enjoyed the afternoon so far. We will soon hear presentations on the production of games, Remedy's technology, self-publishing and Remedy's creative ambitions. It is my pleasure to introduce to you the next speaker. He's been at Remedy from the start and is currently the Chief Product Officer and Chair of the Board. Please join me in welcoming Markus Maki.

Thank you, Liisa, and welcome back to Remedy to the presentations. We are shifting the gears a bit from the CEOs and CFOs, Tero's and Santtu's presentation to the product focus now. And as Liisa said, I have now a dual role at the company. I'm Chairman of the Board and currently the Chief Product Officer and one of the founders, so almost 30 years at Remedy. And during the 30 years, I've had various roles in the company. And the logic always has been that kind of an entrepreneur at heart and always focused on strategically important areas that can at that specific point of the company's journey be the best help to move Remedy forwards. And a year ago, we agreed with Tero that my next focus would be to look at the studio's internal development and portfolio management. And that's what I'm going to talk about a bit today. So my topic is enabling an efficient move to self-publishing and regular game launches. And I'm going to talk about how we look at making games and all the project organization, more from the cultural aspect, I'm not going to bore you with complex processes or graphs, but how the culture affects this side and then go through some of the challenges and some of the key takeaways that we have learned. I think it's good to look also backwards and note that there's been a lot going on in the past 5 years, a lot more than ever before. So if you look further back from 2019, our previous game launch was in 2016 Quantum Break. So there was a 3-year gap. And as you can see from the picture, there's been quite a lot more happening since 2019 when we launched Control. And as Tero stated, this is going to continue and hopefully even accelerate, we are aiming for a state where we have, on average, one bigger game launch every year. But how do we get there? And what have we learned? So let's start by saying that running a multi-project studio efficiently is a very, very complex problem because every project either a little or a lot, and it depends, of course, on the projects, but most of these things are team dependencies. So the dependencies are super high. Also building the game leadership teams takes time. Team is usually a team when they've gelled together, sometimes that may mean that they have to go through the battle of shipping a game together. And you can't really add and grow by hiring new teams easily. You need to be able to grow people internally. And it's also a business where creative and technology meet and the landscape changes continuously and the bar rises. So how do you balance the creative ambitions to what we can do as a studio to what fulfills the player expectations and do it in a way where the business risks are somewhat manageable, like Santtu referred to in his presentation. To me, there are a few areas that I think we can improve on. So I think the really important thing is that we have to be aligned very deeply when we start the project. What's the creative ambition? And is it doable with the money and the team that we have available. Do we need new technology, for example, to make the game shine? What's the real audience size that we can really build and spend on? What can we expect -- how can we expect to find that audience? And what's the studio overall capability and our team availability. And only when we're aligned embark on the journey of making the great game. And for me, alignment comes from information. So ensuring that we efficiently share the picture with a wider group, where we are using the experts we have to go deep into the substance of the problems early and think of ourselves as one Remedy instead of single siloed projects and then, of course, spend the money and the effort, only when we are aligned and know what we need to build. These are, for me, the 4 key areas related to production and improving how we work at the studio. And these have been kind of the special focus on thinking that I've been promoting since I took over the position. And it's all with the goal of maximizing the potential of the games we do that they would become hit games. Going to talk shortly about each of these. So first of all, I think portfolio focus is really important. Having a portfolio that's more aligned on all levels is something that really reduces the otherwise complex operation of a multi-project studio. And this was one of the reasons we killed Project Vanguard earlier this year. It was a hard fit to the studio focus with a different engine and with a different business model. So now we are at 4 projects. This feels like a right amount for us at this point from many angles, from the talent side, from the company over a road map from our support function capabilities but it's also a good number to build on the synergies of between the games. And that's one area that we still have a lot of learning and we can improve on finding more synergies between the games and learning to take smaller but faster incremental steps in building our games rather than inventing the wheel too much for each game. And as Santtu also said, for our current portfolio and road map, we really don't need -- see a need to grow massively our talent pool in the coming 3 to 4 years. So the next focus will be about getting more velocity, getting synergies and reducing the waste in how we work which is a nice change from the growth focus that we've had. The other key topic, I would say, is making sure the studio and the projects are really well aligned and the information flows freely within the projects and between the projects and the studio. And the key tool for us is the stage gate model for this. I'm not going to go deep into the graphics here, but we've had a stage gate process for a long time, but the importance of it creating alignment, especially in the studio has increased as the number of projects that we operate with has grown. And it's also needed to support -- best support the marketing time lines and investments that self-publishing requires. It's a trigger point for some of them. It's also a critical tool for us to really align deeply where we are with the projects because the dependencies as said, are high. Changes in one project can affect all the other projects. For me, my mind has been on improving the preproduction phases as I feel that, that's an area where we can still do a lot better and do better quality preproductions for our games. And after that, I would say that there's plenty of proof that once we know what we're building, I know the Remedy team can execute it and execute it super well. All in all, the goal with this is for it to be the concrete template of best practices, how we make a game and the key decision points when we come together as a studio on all levels. And the support coming together as a studio, we've also added concrete measurements to this process. So as the shared vision of the game is the most important thing, when we hit end of stage in our process we have a few specified KPIs and measurements. It depends a bit on the stage where we are. But typically, and most importantly, there's always 2 things: the game leadership team calling together the whole company and presenting their vision or a creative update of the game and the team providing a build of the game for the entire company to play. Simplified, then we ask our team a few questions about the game and the concept and especially do they understand what we are building with that game. And the game team actually gets a score as well as open feedback, of course, but the score is important. And why do I focus on do we know what we are making and especially the ability of the game team to communicate what they're making. I focus on that because it's a research proven fact that games with a solid understandable vision throughout the development make not just the development easier, but they also produce commercially more successful products. We also support these interactions in some key stages by external concept or audience research or external play testing. And we, of course, do deeper dives into the plants versus team and capacity and scope. But the purpose for the process is to get the whole studio to the journey and understanding the games we are creating and maximize the potential that we make a hit game. Once we have the portfolio focused and we have a great vision and studio alignment on what we are building, the next big topic in my mind is leadership and planning. Basically, the meat and bones of how we work efficiently every day. Games are very complex projects where art and technology come together where technology and the goalposts move quickly and where the dependencies inside the project are easily deep and hard to manage where super smart people follow their passion every day and where the sun never sets on a project as work is truly global. They are not the easiest projects to plan on lead. So a few key points on how I see us approaching these challenges. First of all, we want our projects to have an operational independence and not work in a central committee model. because if it would be a central committee that the team basically here would have to decide everything and it would bog us down. But as we have multiple projects, it also means that we have more leaders in the studio than we used to have. That means that one of the key for our future success is growing our leaders, and that's a big focus for me. And as said, each project's plans affect the whole portfolio. So how do we manage the independence of the project versus the portfolio of needs. And for me, that information is the key. In a world where change is constant, my goal is really to ensure that we have the processes and culture to disseminate relevant information rapidly so that people can make the best decisions with the best context every day. And context is really important. Great leaders are always able to tell why. Making sure we know this why on all levels of the organization so that experts can apply their know-how and make the best decision every day. With good information, good leadership, leading into good decision-making, we are able to do better plans for our games and why that do better games more predictably. There's no silver bullet here. But for me, the target is clear, and we are working our way towards that every day. which leads me to the last point, continuous studio improvement. So game projects have their priorities. But as said, we also need to evolve as a whole studio. And I have a small but powerful team working on the studio level, improving how we work and taking these learnings to all of the projects as well. I won't go deep into it, but I'm just outlining a few areas that we are working on. So the team is driving the studio road map planning and communication. So what's happening outside of an individual project and how do these things fit together? And is there any change that we need to do to the projects. The team is driving talent planning in a centralized way, whether it's internal talent or external development talent based on the project needs and the studio's long-term strategic needs. The team is developing and maintaining project management tooling so that we can unify and optimize how we work in the projects and also share best practices between the teams. And the team is coordinating the project and studio alignment in the stage gate process. And finally, driving everything else that will make Remedy a better place from the production and process improvement point of view or even going concretely sometimes to help projects at a certain phase of planning if they need more experience and power. So that's kind of the 4 pillars that I'm driving on the portfolio management side at Remedy right now. Of course, there's lots of details and other topics as well, but these to me are the key points that improve how we work. And the better we get in these 4 areas, the more fun we're going to have building these games and the better productions will come out of the pipe more efficiently. And it's going to translate to games to audience will love even more. Work never ends, it's continuous improvement. Industry is evolving very rapidly, but I think we are on a great path as a studio. And with that, I'd like to hand over to our CTO, Mika Vehkala to talk about the key piece in our Studio's overall strengths, Northlight Technology and the Northlight team. And I have to say I had the CTO hat for a few decades, and I'm so super happy to have Mika now in that role. So welcome.

Right. Thank you, Markus. So indeed, I'm Mika Vehkala, CTO at Remedy. We've now heard presentations about strategy, finance and project portfolio. And let's talk about tech for a moment. So first, I'll be talking a bit about game engines and explaining, going through kind of briefly what are they really? Then I'll talk more specifically about Northlight and what it means to us as a studio. And finally, I'll talk briefly about collaboration with industry-leading partners. But first, let's take a look at what Northlight can deliver. [Presentation]

so that's, of course, just a glimpse of what is possible with Northlight. All right. Let's get started. So I would say that there's 3 major parts of game engines and using them and to get started is the run time part of engines and this is the most known part and maybe usually when people talk about game engines, this is what they refer to. This is what's shipped with the games, and it provides the core technology to run them, consists of various core systems, utilities, rendering technology and platform support. And this is the part that is indeed visible to our audience gamers. This is also where we have put a lot of effort into for Alan Wake 2 introducing, for example, new game object model, new scripting language and a new GPU-based rendering pipeline to mention a few of our larger efforts. Then we have content creation part. And there are all of the tools and services, including data transformation, which are used to create content for our games and are part of content pipelines, which I'll talk more about shortly. And lastly, there is infrastructure and back-end services, which have capabilities for our teams to create builds to test automation, record and analyze telemetry, collect analytics and allow to build online services. So now let's move on to the content pipeline. This is something that has been in our focus for the past several years and especially now for our upcoming games. Essentially, pipelines define how different type of content is created and brought into the game world. Content pipelines are made out of various stages. Usually, there are some third-party digital content creation tools that are used to create assets such as 3D models, animations, textures, sounds, et cetera. These need to be transformed to be usable by our tools. And then our tools are used to add in metadata, create derivative assets such as physics setups for 3D models and then finally, compose individual assets into larger collections eventually in the game worlds. Then all the data is transformed again to be optimized for run time. And finally, they make up the data that's used and seen in the game. Iteration speed of all of these various parts and the pipeline as a whole is crucial for ensuring high-quality and efficient production. And these pipelines also need to be designed and implemented in a way, that they allow large teams to work on content at the same time. You don't want to create coalitions where multiple people have different opinions or versions of the same data. And this is why efficiency of content pipeline has direct implications on game development costs, and this is why it's such an important part of our efforts at the moment. Game engines and content pipelines define game team composition and sets expectations on game team sizes. It limits and guides how creative vision can be implemented. It impacts how final game will look and feel and the more iterations you can do, the more polished the feel is, the more high-quality content, you can create, the more closely, it will be of the creative vision. And game teams need to understand all of the strengths and weaknesses so they can work with the technology and not against it. Since the importance of game development studio's ability to define and find our content pipeline is such a crucial part of creating gains efficiently, it's no wonder that many of today's best-selling games run on custom technology. Hitman from IO Interactive, Uncharted and The Last of Us from Naughty Dog, Marvel, Spiderman, Insomniac Games and so forth. Northlight, our very own game engine is a comprehensive focused state-of-the-art came engine developed in close collaboration with our game teams, it's made by Remedy for Remedy games and only for Remedy games. It provides at all-times functional technology basis and tools to develop our games, and we developed it in close collaboration with our game teams and crafts. Since all talent is in-house, it means that we can quickly tackle challenges and innovate based on game team needs. This may include workflows, content pipelines, base technology for game-specific features, optimization and platform support. And since the games we developed our done using outsourcing and co-development partners around the globe, as has been mentioned before, Northlight provides in addition provisioning of our tools and pipelines, telemetry for development time support, technical support in general and part of the onboarding. Due to the comprehensive set of technologies and services that Northlight provides working closely with game teams allows us to keep game programming teams also relatively small. Advantage of having full control of our content pipeline is that we can tailor them to our team needs, which in part is how Northlight enables Remedy to make games that stand out from the rest by looking and feeling unique. Outside of technology, Northlight team learns from working with every game and act as a sort of a conduit and a facilitator to make sure learnings and best practices are shared between game teams. We also do knowledge sharing with other studios and middleware vendors to help us to become even better at what we do. Sharing our experiences working with games and in solving technological challenges by preparing and giving talks in many of the game development conferences is important to us as we believe openness in this way is what fuels the rapid innovation in our industry. Also helping us in turn. And one of the advantages of having your own game engine and games with high-quality content is that we can have deeper collaboration with industry-leading partners and this allows us to be among the first to showcase latest technology innovations. Let's take a look at a few examples. We recently optimized and fine-tuned Alan Wake 2 for PlayStation 5 Pro at launch, showcasing Ray tracing and Sony's PlayStation Spectra Super Resolution tech. It's a great advertisement for our technology and great visibility for Alan Wake 2 during the Q4 holiday sales period this year. We've had a decade-long collaboration with NVIDIA's engineers where we have been co-developing state-of-the-art runtime rendering techniques, showcasing new features and groundbreaking technologies in our games such as hardware accelerated trade racing and deep learning and super sampling. And here, again, it gives us great visibility for our games in NVIDIA channels. In conclusion, I hope that I've been able to shed some light to what game engines are and how they provide foundations for making games. We believe that Northlight is integral part of our ability to make award-winning and unique games, which in addition allows us to have deeper collaboration with industry-leading partners. Our ongoing efforts is improving the efficiency of our various content pipelines and will be part of ensuring efficient game productions. Thank you from my part. Next up is Johannes Paloheimo, our Chief Commercial Officer.

Hi, everyone. I'm Johannes Paloheimo. I'm the Chief Commercial Officer here at Remedy. And I will be talking about our games, focus and target audience and self-publishing. But let's switch gears for a while and take a look at our games. And let's start with the Alan Wake franchise. So Alan Wake has become a well-recognized and established franchise among core survival horror gamers. Over its lifetime, Alan Wake have over 50 million players that have engaged with an Alan Wake game. And Alan Wake Remastered have sold to date over 1.7 million copies. Let's move over to Alan Wake 2. Alan Wake 2 has earned its place in the survival horror genre and is considered to be among the best survival horror games of all time. Alan Wake is frequently being mentioned in the company of Resident Evil and Silent Hill games. And we're very happy that the game has an extremely high completion rate, close to 40%, and this is incredibly good average completion rates for single-player AAA games is in the mid- to high 20% range. So this is a strong indicator of how engaged and invested our players are in the game. And the game has done critically very well, and we have also had good sales when taking into consideration how tough the AAA single-player market is these days. I'm really happy to announce that the game has had over 1.8 million units sold to date. This with a significantly higher average sales price than Control for the same period. And we expect the game to continue to sell well for a long time and do very well in the upcoming sales as we're entering a new phase of deeper discounts on all platforms. And as a last point on Alan Wake 2, it's worth reminding that the game is an Epic Game store exclusive. And with hindsight, we still believe that this was the right choice for the game. It is highly questionable that the game would have turned out to be the master piece, it is without the support of Epic. And with any other partner, Remedy would not have had the same level of freedom for future Alan Wake games. And had we kept the original budget, Remedy with earning royalties already from the game. Let's move over to Max Payne. So the original Max Payne IP was developed by Remedy. And since 2002, it has been owned by Take-Two and Rockstar. The Max Payne remake is a remedy developed game, and it's been funded and published by Rockstar Games. We have a great relationship with Rockstar and our development team is delivering well against the very high expectations set by Rockstar and Remedy on the project. Next, let's have a look at the Control franchise. So Control will be part of Remedy's back catalog from January next year as the remaining Control rights are reverting from 505 games then back to remedy. Product life cycle and back catalog management is an important part of managing our games long term, and it's an area where we have been investing in as part of our move into self-publishing. I'm also really glad to say that Control ultimate edition will be releasing on Apple Mac hardware on February 12, 2025 and we will also have a small update for Control in early 2025 with a few nice things that we will unlock for our players. So Control is a well-recognized game among enthusiast action-adventure gamers. The action of venture genre is a very competitive one, but it's one that can deliver very strong sales for hit games. Control is very fondly remembered and provides a great foundation for Control 2 to build upon. In August, we communicated that over 90 million players have played Control. And as Santtu mentioned earlier today, Control has sold over 4.5 million units which are 500,000 of those copies have been sold in its fifth year, which is a testament to that high-quality games keep on selling long after their initial release. We're very excited that FBC: Firebreak previously known as Project Condor was announced last month during Microsoft Partner showcase. So let's revisit that and have a look at the announcement trailer. [Presentation]

So FBC: Firebreak was very well received among co-op shooter and among Remedy core fans. The announcement received close to 80% of positive sentiment. And to put that into context, Alan Wake 2: The Lake House DLC announcement got a bit over 80% positive sentiment. We know some of our fans want to play single-player games, and that is great. We have more great single-player games coming. However, there is a surprisingly large audience who loves control that also likes to play co-op games with their friends. And we believe FBC: Firebreak will be a really fun experience for them, and for fans of the genre who have not tried a remedy game before. Announcing FBC: Firebreak kicked off a new era in Remedy's history. It's the first self-published multi-platform game by Remedy. It's the first multiplayer game, and we're reaching out to new gamer demographic for Remedy. And we're expanding into an exciting new genre, the co-obsession by Shooter genre is one of the fastest-growing market segments in the PC console space at the moment. FBC: Firebreak is one of the first high-profile titles that is coming day one to Game Pass and PlayStation Plus. It's great to have the support and backing of Microsoft and Sony. And these service deals are good ways for mitigating the risk of getting a large enough audience for a new multiplayer game, and they also help manage the financial risk in the business case. So as you've heard from our previous speakers today, a big theme and focus area for the studio is to better understand the fundamentals of the market segments we are operating in and to grow the audience for our games. Alan Wake and Control are well-known, established games among enthusiast PC and console gamers but not yet widely known among the wider gaming audience. Here are the 3 genres for Remedy owned games. We have survival horror for Alan Wake, action adventure, RPG for control and session-based co-op shooter for FBC: Firebreak. Max Payne Remake is not included here as its positioning and publishing is managed by Rockstar. Our aim is to ensure that each game has a clear positioning to a focused genre and that each genre has a large enough potential audience for our games to have a chance to also be financially successful. This also means we must become more disciplined in keeping to budgets and to the right investment levels for any given genre and cannot overspend in relation to the potential audience size. We have, over the years, been investing actively into external audience research and market research, and we have been investing into our own internal player research department to help our development teams to make better and more informed decisions on an ongoing basis when building a game for genre and a target audience in mind. So our ambition for the future is to be among the top games in our genre and become a must-have day one game in those genres. When Remedy releases a game, everyone who are into the genre should be talking about our games. A game release from Remedy should be an event that not only Remedy fans, but fans of the genre are eagerly waiting for. So how are we then going about to expanding our audience? As Tero mentioned in his presentation, we are focusing on developing our established franchises. And thanks to improvements in development velocity, we will be able to release sequels on a more frequent basis than before. This in itself will help us to build a bigger fan base and audience for our games over time. And in addition to this, I want to highlight 4 areas that will help us fuel the growth of our audience and our game franchises. First, as I mentioned previously, we want to better understand our target audience clearly position our games in its genre and ensure we are building games for a wide enough audience from the get-go. Second, we want to make it easier for our fans to sell our games to their friends and to utilize more mechanics that are geared towards drawing in new players by design. For example, features like co-op multiplayer or other social mechanics that encourage strong word-of-mouth and viral sharing. Thirdly, in order to grow our audience, we also want to go there where they are new players by expanding into new genres, new platforms and new territories. Original Control is a great example where we have expanded it onto a wide range of platforms and stores and FBC: Firebreak is a key game for us where we expand into a new genre where we can potentially reach the biggest audience so far. And finally, we want to build more awareness for our brands outside of gaming. To become known in the wider entertainment space, our strategic partnership with Annapurna is a major opportunity for us and something that we are extremely excited about. Eventually, self-publishing our games will push us to deliver across all of these areas. So next, let's have a look at what self-publishing means for Remedy. So in order for us to best understand why self-publishing will help us to create games for a wider audience. It's also important to understand the past and how Remedy has previously approached and operated in the publisher funded model. So in the publisher funded model, the way remedy have approached building our game concepts and game business cases can be explained in the following way. And this is a bit of an oversimplification, but it does highlight the difference in priority. It starts by Remedy creating a captivated creative pitch and games concept, which includes a budget ask. Then we would have taken that out and sell it to a potential publisher. Once the publisher have bought the concept, it is the publisher's responsibility to position and try to find a big enough audience for that game. And of the publishers, especially if they also our platform holders have strategic platform interest, making them more willing to take risks on creative projects with unknown commercial upsides. So with our previously released games, especially fully publisher funded projects, Remedy has not prioritized in building a game with a big enough audience and target audience in mind from the get-go, but our priority has been more on creating a compelling game concept for a publisher to find fund. But now as Remedy's funding, development and self-publishing of our games, we have to be more strategic and take into consideration from the get-go that we are building a game concept for a large enough audience with the right-sized budget because it is in our sole responsibility to ensure that the game is commercially viable and it will be a wise investment. So moving forward, building our publishing capabilities has not happened overnight. We have been involved in the publishing of our games since 2016 and Remedy's involvement with our publishing partners has grown over time. And this year is not the definitive list of publishing responsibilities, but it does illustrate how remedy how at remedy we have been building our capabilities and how our publishing responsibilities have grown over time. We have 3 guiding principles on how we want to approach self-publishing at Remedy. First, we want to have a focused internal team and internally own the critical publishing areas and achieve operational scale and global reach through key partners. We only publish our own games. And we only publish our own games because we want publishing to be closely integrated with our development teams throughout the life cycle of our games. Everyone developing our game should understand how we are publishing our games, how we are marketing our games as we have all the same goal of making our games as successful as possible. Remedy's internal self-publishing team is structured into 6 key units with their respective leaders. The recently established units are publishing and operations and product and analytics to meet future self-publishing needs. In the past year or so, we have doubled our team size from 9 to 18 in preparation for self-publishing our games and we will continue to make selected key hires where needed. The aim for our internal publishing headcount is to be a bit over 20 people. So self-publishing for Remedy does not mean that Remedy will be doing everything ourselves. As I mentioned, one of our guiding principles is to have a focused internal publishing team and achieve operational scale and global reach through selected key partners. We have, over the years, built a trusted network of vendors and partners, and we will continue building partnerships that we can leverage toward building the publishing operations globally. Be it related to marketing and PR services, sales and distribution, brand development or our latest partnership with Annapurna taking our game brands into mediums outside of games. And as we are in the very fortunate situation that we have development funding secured for both FBC: Firebreak and Control 2, there will be much more flexibility in the kind of partnerships we can make and partners are willing to tailor their approaches to our needs. So to recap, let's highlight some of the key benefits that self-publishing brings to us. First, as Santtu also mentioned in his presentation earlier today, self-publishing unlocks a larger, short- and long-term financial upside for our games. Working with an external publishers that fund your game cost the developer a lot in the end and even with the best publishing deals available in our market. Secondly, a publisher's and a developer's long-term strategic goals does eventually not always fully align as the publisher wants to maximize the return from their published portfolio but the developer wants to maximize the return from their own game. But as we are self-publishing, we will have the freedom to decide and execute on the best strategy for maximizing the return from our own game and to select partners that fully align with that strategy. Thirdly, by publishing our games ourselves, we get to building a closer integrations between game development and publishing to help align our games with a large enough target audience. We will also get closer to our players as we are eventually responsible for making the key decisions regarding updates and fixes based on player feedback and analytics. And finally, self-publishing will push and motivate the whole organization to think more commercially as we are solely responsible ourself for the financial success or failure of our games. Thank you, everyone.

As our lovely colleagues have talked you through here today, games require long complex productions. Games are cutting-edge technological achievements. Games or hit business. We strive to create commercial hits. All of this is true. All of this is needed. All of this must be in balance for us to succeed. What else is true. Games are ambitious, passionate works of creative expression. Games are high-quality entertainment, what we create at Remedy is special, and we must never lose that.

The most talented people coming to Remedy, and we'll talk about the best game developers in the industry. They gravitate towards us because they are fans of our games, and they want to be a part of our future. That passion is key to our success. In regards to creating unique and distinctive experiences, we are among the best in the world. And when it comes to critical success, we are competing with the biggest studios out there. and we're succeeding. We're punching above our weight.

It's not enough to create a good game if it doesn't stand out. There are a lot of games out there, a lot of competition. We feel it's absolutely critical to create daringly unique and original experiences to stand out and capture attention. And then the game needs to be easy to step in, and there needs to be an exciting mystery and depth to keep you in. Alan Wake, Control and Firebreak are all set in the remedy connected universe. Now there are many fictional universes out there, of course but in games, an original universe that contains multiple franchisees is a unique concept. RCU is a world we all recognize on the service, our world really. We understand it. We feel emotionally connected to it. And yet, there is a secret hidden under the surface, waiting to be discovered. There are supernatural forces that give us a wide variety of gameplay there is a deep strain mystery to pursue. And there are horrifying supernatural entities to fight against.

We are building a roster of hero characters, a history of events and locations that lead to a larger world filled with captivating lore. And that lore is something our fans love digging into. Having said that, each game stands on their own feet. If you haven't played a Remedy game before, you should be able to jump into any of them and have fun. But for returning fans, there are tons of threads beneath the surface connecting to a larger story. This approach exposes players to a rich back-catalog of games, every product, a doorway into universe that keeps expanding into multiple forms of entertainment.

Beyond games, we now have a deal with Annapurna. They bring their prestige expertise in film, TV and animation. We bring our game stories, our universe and our vision for its future. This is a genuine equal partnership. We are in very early steps, but we believe this is the way forward to expand our universe and reach new audiences. We feel the time is right. There are finally wonderful examples of games expanding to linear media. The Last of Us, Fall Out, Arcane to name a few. We are excited to create something truly new and innovative across all these different mediums. We are hugely proud of the games we have made. But the way we see it, we are only getting started. There hasn't been a single boring day during this almost 30 years history at Remedy. Each new project is an exciting energizing opportunity for innovation. This is what making games is all about. You haven't seen anything yet.

Thank you.

Thank you very much.

You have now heard on how Remedy has developed, where we are now? What is our strategy for the future? What this means in relation to our games, production technology, creative commercial and what it means financially. It all tells on the road we have systematically traveled, a road that has taken us to disposition to a Remedy that is stronger than ever before. We can now start launching great games regularly. Games and the underlying franchises that will step-by-step with bigger audiences and achieve bigger commercial success with self-publishing that brings more of the value to us. Our biggest successes are in front of us. And these successes are no longer far away on the contrary. We are not anymore just taking steps towards the bigger success. Year 2025, you will see us taking a big leap. We will enter the bigger growth path. And on that path, we will make Remedy a highly regarded creative studio with sustainable commercial success. To do that, we follow 4 strategic pillars. We create and grow world-class gaming franchises. We make distinctive category-leading games. We work in ways that enable successful game productions, and we self-publish the games we own. These pillars act as our guidelines towards the future. And from these pillars, we divide concrete actions. With this strategy, executing well the games we now have in development we will profitably grow. Our target financially is that by year 2027, we doubled the '24 revenue with continued growth beyond this milestone. Our EBITDA margin is 30% by 2027, and we will maintain that minimum level throughout the strategic period until 2030. When considering remediation investments, there are 4 key points I want to highlight. In the massive global gaming market, we have a proven world-leading ability to create excellent distinctive, high-quality PC and console games. We have a highly promising portfolio of game projects, games out there all the time selling and 2 franchises Alan Wake and Control. These give us a very concrete, great growth potential, and we are not doing this alone. We work with strong partners like Rockstar Games, Epic Games, collaborate with platform owners like Sony and Microsoft have support from Tencent and now also have an exceptional new partner with Annapurna Pictures to help us expand also beyond games. With all the developments we have done and where we are now, we have a totally strong basis for profitable growth with more regular game launches. Many of these games being self-published and generating more value to us. So this is the end of the presentations. We will soon move to questions and answers. So stay tuned. But already at this point, big thank you for participating and following. I hope you have enjoyed and most of all, learned more on Remedy. Thank you.

That is it for the presentations. I hope you have enjoyed the afternoon with us.

Now it is time for the questions. [Operator Instructions] I think there are questions already in the front row. So let's kick off with that.

Thank you for the presentations. My name is Emil Immonen from Carnegie. Maybe to start with the games under development. I think Markus Maki mentioned, you have 4 main games -- is there a fourth new one? Or did you refer to Alan Wake?

I can take this one. So we have said that we have now built an organization that has 4 game teams, we are able to advance 4 games. We have 3 announced games. So there is also something new cooking up, but we haven't yet specified what it is.

Can you maybe tell us a little bit more how is the iterative process to find new games to develop?

Well, we don't want to go too deeply into what we will be making, but what the strategic says, one of the key guidelines for our strategy is to build Alan Wake and Control in the bigger ones. So definitely, when we are considering new games, we are looking at what we have built in those and what could be the means to take them further. What type of games we make, how we make them, that's then a question. Then at the same time, we do have a wide network with our partners. We do know that one of our special skills is also creating new IPs. So that then opens up a new avenue. But when we are thinking about the next strategies, we are weighing them against the strategic games that we have.

Okay. Then if I understood correctly, you want to pursue more self publishing is the thinking with all new games to primarily go with self publishing? Or are you, at this point, also thinking about partnership but also or copublisher or something along those lines?

Well, when we are talking about the Remedy-owned game, we have said that the plan is now to self-publish the games we own. Then at the same time, in a way, it's a huge market. There are new type of opportunities. So it's never a black and white question that do we do everything by ourselves or do we go for a partner. In a way, FBC: Fire break, yes, it is a self-published game. But as we have said, we have collaboration as an example, with Microsoft and Sony that provide access to audiences and visibility that we most likely could not get by ourselves. So for every game that we are doing, we are also considering partnership opportunities. And even though the primary food is self publishing, if good enough options come up, we see how that aligns with self-publishing.

Okay. One question then on the Annapurna partnership. How much are you counting on that in terms of financing at this point if we don't think about the Control game, but more the film aspect of it?

Well, in a way, we now know that we have a partner with whom it's very realistic that some good TV and film or animation adaptations will see daylight. They do take time. They have to be, in a way, really good quality productions that we one day will make. At this point, when we look, we know that they do have financial opportunities. Of course, Annapurna would not have entered into this unless they see that. But in a way, it's still, in a way, a bit further away. We have a good deal with Annapurna. We are very transparent in our partnership. They will see how our games do. We will see in a way how the TV film one day will do. And then we have a revenue-sharing arrangement. But I wouldn't yet speculate too much on the exact financials. But as Santtu say, there is a revenue upside for us as well.

It's Atte Riikola from Inderes. Maybe first about Alan Wake 2 sales. We know that the game got very high meta critics and it's been -- it's a really good game, but still it hasn't recouped its budget yet. So thinking about your return on investment expectation. Is it the sales going on with track that you're going to reach that ROI target or are you disappointed for the sales development this far?

I think Alan Wake 2 has -- the sales have 2 sides. On one hand, when the game is not yet profitable, are we happy? We are not happy. And every game that we make, especially with this quality level, they should be profitable faster. But then at the same time, as was said, by Johannes in his presentation is that the sales of Alan Wake 2 have actually been quite well in line with our original estimates. Yes, in a way, our productions didn't yet work as well as they do today, a few years back. In a way, we ended up over investing, investing more into the game, and therefore, the budget has been higher. So with the higher budget, this in a way, forecasted sales that we have followed hasn't yet been enough to recoup all the development costs. I wouldn't yet want to speculate what the long-term possibilities are. Markus referred that our business cases depend on the game are 3 to 5 years. So there is still a lot of time for Alan Wake 2 to sell. We have seen that control over 5 years has sold 4.45 million units and continues to sell. So we do think that Alan Wake 2 still has a lot of potential ahead of it.

Let's then talk about the Northlight engine. You have mentioned that there has been lots of development going under hood and improved your technology capabilities. So could you give us some examples how you can reap benefits of those developments in your future games.

Mika, would you like to join. We now have an expert here, so let's definitely tap into his thoughts.

All right. So yes, as I was mentioning in the presentation as well is that our focus has been -- of course, we're dividing to focus on many areas, but focus has been recently on the content pipelines and optimizing those. So that's actually a very long topic to go into a very great detail. But what it means is that, for example, recently, we have been -- or actually many years already and for now all the upcoming games that we are releasing with Control 2 and Max Payne 1 and 2 remakes where, for example, adopting a new base for our pipelines called Universal Scene Description by Pixar. And we are learning not only from others on the games industry, but also now games and film and movie are all in a way coming closer to each other in terms of how to create the content for all these different mediums. And this is something, for example, that we're focusing quite heavily on. Another aspect is that we've been investing a lot to our infrastructure. And this means is that we can very easily establish or like onboard a new co-development or outsourcing partner. So it means that it's very easy for us to ramp up and ramp down external teams. And then one part of this infrastructure is also that we are investing into being able to better catalog and flag all of our huge numbers of assets with easily searchable tags and allow our artists defined from the ever-growing library of these assets, if there's already something that has been created for one of the games and very easily then integrate that to be part of another game. So there's like not any single one thing that suddenly changes everything, but it's kind of a continuous effort on multiple avenues that tries to then basically make it possible for game teams to share assets knowledge and the technology that they also build on the game side. I hope that this answers in part of the question.

And maybe I can, in a way, also add into that one in a way, quite basic principle, that's good to understand is that when in the past, as Markus said, we launched Quantum Break in 2016. Then we launched Control in 2019. Then Alan Wake 2 came in 2023. So if we would be launching games in 3 to 4 years, the underlying market keeps on changing. The platforms are changing. There are new technologies even though we could also, in that world, utilize our existing technology, we cannot take it back of the box that easily, but it always requires a lot of additional work. Now when we will have more regular games, games that are coming close to each other can actually more directly built on the same basis. And those smaller adjustments are always been helping the next game in line. So that in itself also brings us efficiencies.

If you don't mind, now that we are on the topic of Northlight's, there's an online question related to it. So you mentioned you're able to relatively -- have relatively small size game programmer teams. Can you provide some insight on the size of your Northlight Engine team or teams? And how has it evolved over time?

Well, Northlight team has been growing, of course, as the company has been growing, but we are kind of following the same principle is that we are very selectively and carefully hiring whenever we identify that there's a need on some of these areas. And the same applies that Northlight has now grown already, I would say, maybe a year back to a size that we feel comfortable supporting now the 4 different game teams that we have. And I don't think that there's currently any need to be growing that either.

Yes, yes. But we can say that number as well. It's approximately 60 people working on Northlight. So out of the 306 different Remedians, it's, I would say, a good but still quite efficient team size.

And it's possible, of course, to have a team that is still relatively, I would say, compact because we are such a focused effort. So Northlight is indeed made only for Remedy games, so we are constantly taking effort in making sure that everything that we have is exactly what we need and nothing but we need. So keeping everything as lean and mean as possible.

I think there was not a single mention about AI in any of your presentation. So could you just give a brief recap of that? What's Remedy's view on AI in the game development?

Mika can answer, Markus, could you also join because there is a lot that we have been studying and actually using over 2 years.

I can start may be a bit and then if you want to continue then.

Yes, it's okay. Yes, you can start.

so AI -- so of course, AI is a very wide topic. So there's like -- that would be the game AI side, but let's [indiscernible] know that. So if you talk about the recent models like all the LLMs and what have you -- so of course, Remedy has been using various AI models and techniques already way before kind of the recent emergence and interest towards these LLMs has even happened and we are constantly following and working with our partners, all the partners that we mentioned to look for opportunities that this can give. And we are actually using some of the tools that are kind of more popular and that suit our needs at the moment. But I would still say that how would I put it like we are very carefully and with keen eye following what happens. And we have a dedicated person at the company that is constantly following and kind of prototyping and looking for these opportunities, but also not rushing into these things and trying to change everything just because there's some kind of a tech demo or like a nice case out there. It's a bit of a difficult. Yes. Maybe Markus can add to this. It's a bit of a difficult question to answer in either way.

Yes. I think this could be a topic of a whole discussion like for an hour. But -- as Mika said, we've been using AI since 2015 with our facial animation solution, where it was an excellent solution that allowed us to do more and better for our games. We could do more minutes of very high-quality facial animation without the kind of very, I would say, dull work of manually tracking motion capture to a human face. And these kind of applications are the things that AI is very suited for and best for not taking over the creativity, but enabling us to have more creativity and content in the games. But making games is a very specialized business. We have about 20 different specialized crafts in our company from environment art to audio to animation, to cinematics and so on. And finding an AI solution that actually enhances and makes our work more efficient to each of these different areas where maybe the yearly budget is of spend is EUR 1 million or a few hundred thousand only. How do you find an efficient AI solution that boost that to another level is not a trivial problem in the current ecosystem. So it's also, it's kind of -- it's not very easy to find something that like AI doesn't just make a level for you or it doesn't make a game for you. You have to find these solutions where the human creativity can be helped and enhanced by a generative network. And yes.

I would say that indeed, it's like you can find now and we are using different models and services to enhance individual kind of more senior and expert users. But what really will be then if that can be found and that happens, what would make a change really is that we find something that even maybe only improves 10% of the efficiency for a very large team, like, let's say, 100 people and we can make it 10% more efficient for them. But this is something that is still, I would say, not in the horizon.

Then there is the kind of the legalities part and something that a lot of the companies have been like out there have been working on is kind of reproducing what we do as humans. And obviously, we have liked to use real actors in our games. And that -- and I'm sure everybody has seen kind of the commotion and the discussion on this course between Hollywood and Generative AI. And the legalities on that side are not clear. The legalities of who owns what is generated by an LLM is not clear in any jurisdiction. So there's also the legal side of things that as a small company, it's going to be very risky for us to push to the unknown, I would say, at this point. So we have even found some solutions that could work and for some specific use cases that could work and make our developers life easier or save us some money, but then it has the legal aspect that actually is so much work to solve that it actually mitigates all the benefits that we could get from the technology.

But as was said, we are all the time following. We are prototyping. We are finding the solutions. I find it unlikely that we will find miraculously, in a way, one overarching solution, but most likely the specific needs step-by-step.

All right. Then about your profitability target. If you think about you're going to reach the 30% EBITDA in 2027, what kind of free cash flow you are planning to make on that year? So because, of course, we know that the profitability can be affected if you capitalize more costs?

Well, we haven't been disclosing any cash flow target for that year. But we think that when we are setting the target in EBITDA, it's actually quite good proxy of how the ongoing business contributes to the operating cash flow of the company. And then there are investment cash flow separately. But we don't just disclose any separate cash flow target.

Is there any other questions from the audience? So maybe we continue with the online ones. Yes. We'll take a few online, and then we'll be back with the live questions if there are any. So we've been discussing self-publishing a lot. So maybe a bit of a recap, but what sort of costs and investments are related and how will this be funded?

Well, I think one background was what was shown in our illustrative example of self-publishing where the case example was the EUR 30 million development cost and EUR 10 million for marketing. That's actually the marketing is on the higher-level spectrum. In a way, typically, we've seen in the industry that if you have big game projects in a way the marketing investment can be up to 30%, sometimes even more if it's an established big IP of the total budget. But in a way, in comparison still to the development part, the marketing specific marketing investments are not that high and the funding we now have and our forecast for our future, they take into account, I would say, a good level of marketing investments that we can take. Then when we look at the development of our capabilities, our Chief Commercial Officer, Johannes explained that our publishing team is now 18 people. We are doing some selective hiring, but still the total team size is only going to be a bit over 20 people. So that's also a very manageable cost base.

Yes. Related to self-publishing again, how effective will you be at marketing as self-publisher versus going with the larger publishers?

I think we will be very efficient, and we will be on the spot on what we are doing because who else would have better understanding on the games we are making and where you heard how systematically we are nowadays studying the audience, how we are positioning our games. We understand the gamers we are after what they are looking for, what our games can offer, and we can tailor our marketing directly to them. We can work with our development teams to take those assets and ways that best in a way attract those audiences. I think in that sense, we will be spot on to be efficient and reaching the people we need. But as was also said, in a way, it's highly important that we are able to make these plans and understand what we need. We will do some core parts, but then we do have over 10 years of expertise of working with different in a way, partners on specific areas. We have seen a number of partners that our publishers have been using in the past. So we are also using a network of partners to complement our skills on areas where it doesn't make sense to build an internal team.

So is EUR 10 million marketing budget realistic for a multi-platform AAA launch?

Well, realistic, I would say that I said, especially when we talk about, in a way, because it was an illustrative example. I think a good example with these numbers to understand how publishing could work. Now as I said, in a way, the actual development. But marketing budget that we will have, we have not yet disclosed that. But when we are talking about multiplayer games that has service, in a way, that has social elements that has innovated the potential to continue growing and developing also after the launch. It's good to understand that it doesn't make sense to put all eggs in the same basket, meaning, in a way, put all the marketing dollars at one point of time. We will use a sufficient good innovate marketing in the early phases for the launch we are going to see how the game picks up in a way where the next opportunities are, and this type of games should always have certain reserve, then also for later faces. And we are doing that in a way for this type of game, if it would be EUR 10 million, I think it would be more than enough. I think many of these type of games can do also with a bit more manageable budgets.

Yes. So a lot of benefits and positive sides, but can you talk us through the main risks in self-publishing and how to mitigate those?

Well, I think -- I think overall, when talking about self-publishing, many gaming companies are thinking about that should we self-publish our games and in a way others are asking that why aren't you already self-publishing. And cutting through the noise in the competed in a way, entertainment sector, actually for any consumer products, in a way, that's a challenge in itself, and it's much easier said than done becoming a self-publisher for your games. It's not just about having the required funds, it's also having the required teams and the expertise in these teams on what should be done for what type of a game that's typically the biggest bit for all that self-publishing companies have that they may have in a way, their first game or second game or third game, but first one that they are self-publishing and they are not able to do it well enough. In a way, yes, in today's world, you do need to have at launch in a way, good partnerships with the platform holders, who will provide you visibility and in a way proper placement on the stores but some, in a way, early phase publishers only rely on that. And that's then a major risk. It has to be, in a way, not in the hands of the partners, but in our hands to secure that we get the attention, we get the visibility via our marketing efforts and then when our publishers can provide something additional, it actually brings it to a different level. So I think from there comes a lot of the risks. And with our pedigree and history of already 10 years developing it, we are managing many parts of that. Then in a way, what's the biggest risk? People often say that marketing doesn't succeed. But if we have a good quality game that stands out, if we are able to do the right type of marketing we are doing exactly the right things. Then there always is the question that what if, in a way, a big risk for many games, what if a big kind of like breakthrough game hit game launch is exactly on the same window. We are avoiding that with partnering in a way and having a close collaboration with the platform partners. In a way, even though they are not publicly known, when we know that we have a good game in our hands, it does bring value to the platform holders to the marketplace in a way they don't want our game to launch exactly at the same time as some of the industry's biggest games. So that's one risk that has to be in a way avoided. And that's what we are doing.

I'd like to give a possibility for our live audience to ask some questions. Please raise your hand if you have any. I think the front row is going at it again.

One more question maybe on the publishing side and your return on investment target of 100%. What kind of payback time are you planning there?

Well, I think we have been commenting in the presentation that we usually calculate the business cases, the time period of 3 to 5 years. So within that business case period, we believe that the 100% return on investment is realistic to reach.

Can you comment on how you see maybe games usually sell a lot in the beginning. So at what time should games cover their development and marketing expenses and then how it translates to the 100%?

Well, I'd say that it's also good to highlight that this is the minimum target we have. This is still a heat business. So a good success can actually reach that 100% quite fast. And if it does, then it most likely will bring much higher return on investment, in a way, of course, we know that, as Johannes explained, we want to make our game launches an event. So the aim definitely is that when our games launch, they are of really good quality at launch. They, in a way, have the potential to start selling well from the day 1. And we are expecting that to happen. So we are not specifying when do we expect our games to break even. But definitely, the expectation is that, that will happen quite soon when we are able to do games with managed budget with right type of marketing.

About those B2B deals with the platform holders, I know you cannot say anything about the specific deal with FBC: Fire Break. But in general, if you look at a couple of years back, we have seen in public, there has been pretty lucrative deals for some games in this platform. So can you just comment, has there been any change compared to those deals that we have seen? Is it still similar kind of levels?

That's actually a good question. No, it's no more a similar environment in a way the market has become more competed. And when we look back 3 to 4 years, during the pandemic, the whole industry was growing, all the companies were focusing on growth and new businesses, attracting new users. In a way, the interest rates were 0, so actually, in a way, doing future investments were actually very lucrative to do. At the same time, there was in a way hot competition on the future of Netflix of gaming. So all this was playing into a direction that the investment and B2B deal sizes. In those days, they were really high and not just high, but in a way, these platform holders were investing into a number of games. There are still good opportunities nowadays because they have clearly kind of like [ grow ] to be services that have their place in the industry. They are all the time in a way, slowly growing. So these in a way, service providers, they definitely have a need and interest to have good games in their services, but they are also more selective. I think in a way, when we saw publicly that some of the giant games had huge deals. I think in a way, closing that type of deals is going to be much more difficult in the coming years than it was. But then for the in a way medium-sized deals where we have also been operating, I think there are opportunities for those, but it's going to be fewer games than before. And we are then also taking that into account in our forecast.

We know...

Do you still have a question?

Maybe 1 more.

One more then we move on.

Yes. Maybe just a little bit of a philosophical question, but we know that you have the unique Remedy flavor in your games and of course, it's somewhat affecting the audience that you're targeting. So how you are basically balancing between the creative unique vision and the commercial -- commercial side of the games, I think it might be sometimes internal battle between those things.

There is. And -- but in a way, it has both sides. If managed correctly, it will end up in the great games that are, as our creative leaders said, that are accessible and engaging. And if in a way, driven too strongly with that angle, it can become also alienating. So -- and as you saw from our presentations, you saw our creative leaders talking about in a way balancing these different aspects of production creativity business technology. That's one of the driving forces. And the good thing is that Remedy is not a team of juniors. We are experienced people, smart people, and we have systems in place that motivate everyone to in a way go into the same direction. Our people want to create creative masterpieces that also become big successes in the industry. Everyone knows that financial success is actually 1 meter for successful games. And it's also the way how we ensure that we can make even greater masterpieces in the future. So that overhaul is an important philosophical basis and cultural basis for our teams, and it's -- we are well aligned on that. Now another thing is that I think the way we are doing and aiming with Alan Wake, with Control is that there is that, in a way, certain some might call weirdness. We say it's the special Remedy flavor that it also helps our games to stand out. And it's good to also bear in mind that when we look at entertainment, who would have said 20, 30 years ago that the superheroes for Marvels that have only been having their adventures in comic-book would one day be in this level in a way, mass-level entertainment. And it's very typical that if you are able to do your unique staff correctly, then the niche market of today can actually be growing into the mass market of tomorrow. And we definitely believe that our franchises have that potential.

Thank you for the presentations today. I have 2 questions. I'll start with the shorter one. So regarding the Alan Wake 2 sales, over 1.8 million units sold today, could you specify that as of today at the end of a certain month?

It's -- I would say, it's today, in a way, not sure if it was on Friday or today, but very specifically, you could say today.

And my second question, looking at the cost side of the business in the -- especially looking forward to the next few years. So you said that the organization itself would not expect more significant growth. But how about when entering let's say, Max Payne remakes and Control 2 might maybe both be in production at the same time. How do you see the materials and services side, especially the external development, do you see that the those costs would significantly grow in the next few years?

Well, I would say that they are included in the cost structure, what we talk when we are referring to the organization. So there should be no significant increased needs in the cost structure.

Then let's take some online questions now. Related to the financial target, what is the target EBIT for 2027?

Yes. This time, we chose to give target in EBITDA. And the reason for that is that there is no variation from the amount of depreciation included in EBITDA. So we don't have currently a specific target for EBIT.

The -- what we could say is that with the depreciations, we have been very transparent. We have been explaining it in a way, and we continue being that. So it will be quite clear for everyone and to, in a way, make their estimates.

Then a few questions related to portfolio and maybe some new things there. Are you considering live service titles as an addition to your portfolio?

Well, life service is often interpreted in very different ways. If that refers to in a way those -- in a way, big free-to-play service-based games that in a way can live and continue creating 4, 5, 10, 15 years. We don't, at the moment, have those. We had that in development with Vanguard but then when we look at kind of like take a step back, I would say that all the in a way, multiplayer games, all the games that have, in a way, some more systemic elements, they have the possibility to have these service-based elements that give a basis for these games to continue developing more actively also after the launch. And with these games, then we can evaluate after the first year if there still is enough sales, if the audience is active enough, and we have plans for the second year, if it still continues to develop, we can continue that development for the third year. So I think FPC: Firebreak is a good example of a game that has that potential. But if as in the industry often needs the reference for live games is the free-to-play and service-based games, we are not at the moment focused on that.

Yes, let's continue with FBC: Firebreak. So it's a type of game Remedy has never made before. Are you learning anything from its production, maybe tech-wise? And can we expect new gameplay elements in other games, especially in the area of multiplayer?

Well, we have been learning a lot, and we know that we don't have that often game launches that when our game launches, it has to be fun and of good quality. Getting into this stage where we are, in a way, feeling the fun and seeing that the game is in the right track. It's in full production. It will launch next year. We wouldn't be here unless we knew that is going to be a good game. Getting here, as Marcus referred, our preproductions have taken a bit too long and also Firebreak or the previously non-Condor have been a long time in the development. So in a way, we have been learning a lot. We have been learning a lot on multiplayer on in a way social elements of the game on the meta game structures that we need to develop to these games in a way, there are many elements on which we game development-wise have been learning. In a way, it was mentioned, the technology part, also the online components are with Northlight, we have been learning and developing those. And then definitely, overall, in a way, how this type of games align with our other portfolio, we have been learning as well. And it's been actually a very interesting learning that now when we then finally had the right team working on this game, the development started to progress well. In a way we are able to rely on many of the world elements created in Control. There are a lot of synergies that we have gained. But one interesting fact has been that when managing the portfolio, some of the in a way most bottlenecks crafts that we have had are those types of crafts that we need in the end phases of a game project, be it cinematic, speed, lightening. And actually, these are the type of crafts that we don't need so heavily in multiplayer games. So there has been an interesting balancing factor and learning also for us portfolio-wise, how these type of games actually fit to us.

There is one more online question related to one of Santtu's slides. So clarification on one of your slides, you showed the share of players per various regions. Do your games penetrate those different markets according to those global shares that you showed? Or do you have unique distribution of players or shares. So for example, bigger share in the U.S. or something like that.

The figures on our slide, they were basically global figures, excluding China and India, and that we see as a kind of a most relevant market area for our games.

Perfect. Would we have some closing questions from the live audience, please.

It's Matias from [indiscernible]. Thanks again for exceptionally good Markets Day, so Capital Markets Day. I would just have asked regarding your IPs. It's clear now that when we look back 30 years that you've been able to build quite exceptional IPs, and it's really remarkable. Considering now going forward, over the next strategy period over 5 years. I would assume at least that you focus a little bit more on existing IPs and not have so much focus on coming up with new IPs, maybe I'm wrong. But linked to that, it would be interesting for me to know has it ever been a topic or discussion within remedy to acquire or in collaboration with someone owning already an IP that could fit into survival horror or some other generated fits Remedy that you would kind of enter a IP in that way.

That's actually -- that's a really good question. In a way, of course, with our in a way, with our history of having been able to create in a way really remarkable IPs. IPs that have potential, we do get a lot of, in a way, collaboration possibilities, mostly they have been related to someone owning the IP and actually not having been able to develop it further and could we help with that and start working on it. But the owning an IP, if the IP has in a way proven potential, everyone knows in the entertainment industry that it has so much value, but very few people are willing to then discuss on actually selling that IP at least with the valuations that we would have been able to pay. But we have had, in a way, this type of proposals. And in a way, sometimes, yes, there is a discussion of co-owned IP but that's a tricky road because then it should be a partner with whom in a way, you are already that closely linked that you know everything works and you are going to work with that partner for 10 or 20 years and it's guaranteed. Otherwise, if at some point in a way, our road split in a way a co-owned property becomes a challenge. And then there is the additional thing when we look at Remedy as a company, how do we build most value for us. We have the unique ability 1 day in the future, we have that we will create and grow our franchises. It's intentionally there the word create as well. Even though our main focus definitely is on growing Alan Wake and Control. This is a long-term game. Our strategic period is 5 years. In a way after that comes the second, in a way, next strategic period, at some point of the future, I would say that, yes, one day, we are definitely interested again on considering creating something new. But at the moment, I think the main focus is on growing the franchises.

A couple of more just technical questions maybe to Santtu. You said -- or I think maybe it was Johannes that said that around Alan Wake 2 to that it's now been sold 1.8 million copies. And if we wouldn't consider the cost going over budget, it would already earn royalties. So with that, I assume that Epic also took part of the over budget costs? Like was it under the...

Some parts, but there were also in a way -- there were in a way quite big investments also on our side. We haven't specified with what the numbers exactly are.

Yes. Okay. Yes. And then the last one, considering now that we have, for the last years seen mainly co-publishing deals, and it's clear to us that you kind of capitalized the part of the development costs, which is not covered by the partner. So looking back at '23 and '24 and investments that you have made. What would those then be? Is it like -- is it depreciation from previously capitalized development costs? Or what -- you see what I mean because if you capitalize your own development costs, then it would, in my view, have more or less 0 impact. So how would you explain these...

I can maybe give an answer on a bit more general level, not giving exact figures. But basically, when we are talking about the game development budgets, they include direct and indirect part. And what I mean with direct part, it's basically direct work done to certain game development projects and direct outsourcing related to the project. And then indirect part means basically everything that the game project needs, but it's not directly done work for the project like, having rents for our studios, like having the support organization in place. What we can activate if we are fully in self-publishing. It's only this direct part of the cost. So when we are talking about the game development budgets, they are not all ending up in our balance sheet not even in the self-publishing model.

If I may continue, because my understanding has been that the quite significant losses or P&L losses in '23 and now in '24 has been explained mainly by investments. So are those the investments besides these capitalized costs, development costs. How would you...

Yes, I can give another example that maybe answers more to the 2023 losses. We said in the presentation that when Alan Wake 2 was exceeding its original business case budget, we didn't activate that part that they exceeded the budget. Basically, it means that now going forward, and looking at our balance sheet, we have limited amount of Alan Wake activated cost on the balance sheet. So when the recoup happens, there is also financial upside waiting based on that.

And then the last technical questions when it comes to the DLCs now coming on Alan Wake, are they also part of the agreement. So we will also have recoup activities there?

Yes. Yes. It's in a way recoup on the development costs that have gone into the game. Okay. Or recoup on those costs that Epic has paid.

Yes, for the DLCs.

But in a way, in many senses, we got the last development payments from Epic a long time ago. So in practice, in a way, the DLC costs have been paid by us.

All right. I think we are done with the questions for now. There is an e-mail address where you can send, if you have some more questions, it's shown on the screen now. So thank you, everyone. That ends our Capital Markets Day 2024. So as I said, if you have more questions, please don't hesitate to be in touch later on, and the e-mail is now shown. To online participants, we warmly thank you for participating and wish you a fantastic day. We will now close the webcast.