According to the agreement, the publisher should pay earned royalties within 45 days of the end of the calendar quarter, that is by 16 August 2021. However, no funds were credited to the Company’s account today.
This probably means that, according to Square Enix, after the first quarter of sales (April – June 2021) the game is yet to break even, and its sales revenues are still below the total costs of development (including quality assurance), distribution and promotion.
According to the publishing and development agreement between Square Enix and PCF Group S.A., the developer will be eligible for royalties after the publisher covers all costs related to the game.
“We do not have any details regarding Outriders’ sales. We estimated that between two and three million copies were sold and we believed that this result would push the project into the black as early as in the first quarter of sales. Given the absence of payments from the publisher, Square Enix do not see it that way.” comments Sebastian Wojciechowski, President of the Management Board of PCF Group S.A.
“Perhaps it was caused by some elements of Square Enix’s sales policies of which we are not aware, such as partnerships between the Publisher and distribution platforms or firms offering Outriders in bundles with their products. The failure to break even may also mean that the Publisher’s costs are higher than we anticipated. I would rather avoid speculating. We will continue to analyze the situation. It should be noted, however, that such analyses require time and our influence on the Publisher’s position is limited. The Publisher plays the leading role.” admits Wojciechowski.
“Outriders’ long tail sales are still ahead of us. We disclosed in our prospectus that we work on developer’s support and content expansion for the game and we hope that we will soon be able to give you the details. We also count on further promotional efforts of the Publisher. Despite this disappointment, we believe that the Company will receive the first royalties from Outriders sales this year. We will try to be as forthcoming and clear in our communication in this respect as our investors would expect us to. Having said that, one should keep in mind that our communication with the market is dictated by the business model in which we cooperate with the global Publisher.” – reminded Wojciechowski.
Outriders is a game that was released on 1 April 2021 after five years of development by the People Can Fly studio. It is an ambitious RPG shooter set in a dark science-fiction reality.
In May 2021 the Company and the game publisher Square Enix announced that more than 3.5 million of unique users played the game in the first month following its release. As of the release date the games was available “for free” to Xbox Game Pass subscribers.
Today, the People Can Fly studio works on new AAA games – project Dagger for Take-Two Interactive and project Gemini, a new game for Square Enix.
Also in May 2021 People Can Fly commenced preliminary work on other titles, including the development of a new game that is intended for self-publishing.
“Working with a publisher has many advantages but also some downsides, such as the marginal influence of PCF on sales activities and scarce data in this respect received from the publisher. This is why we have decided that, while continuing our cooperation with publishers, we will also develop projects that will remain our proprietary IP and that we will publish ourselves. When calculating profitability of the games developed under contracts with Publishers we only take into account the revenues from milestone payments received from the Publishers.” summarized Wojciechowski.