It's been a rough time for Paradox. Bloodlines 2 has been a (wrong kind of) nightmare, it cut ties with Harebrained Schemes after Lamplighters League underperformed, Cities: Skylines 2 came out with a raft of tech bugs, Millennia disappointed, and, of course, the company totally canned its Sims competitor Life by You and shuttered the studio making it.
So it's not surprising that the company's Interim Report, released today, contains the kind of news that will make you suck air through your teeth. The good news? The company was still operating at a profit in its second quarter, which lasted from April 1 to June 30 this year. The bad news? It was only by the skin of its teeth, and only really thanks to its homegrown stalwarts—CK3, Victoria 3, Hearts of Iron 4—rather than any of the risks it's taken in the last few years. Though Age of Wonders 4, from Triumph Studios, has also done well for Paradox.
The headline number is a decrease in operating profit of 90%, from 293 million Swedish kronor ($27 million) in the second quarter of 2023 to a mere 37 million kronor ($3.4 million) in 2024's. That's mostly down to—you guessed it—the cancellation of Life by You and the write-down of its development costs, which hit Paradox for some 208 million kronor ($19.2 million). Paradox's profit for the quarter after tax and other "financial items" was 27 million kronor ($2.5 million), down 88.5% on last year's second quarter.
I'm no financial whizzkid, but none of that sounds like a direction you want your company's finances to trend in, and it sounds like Paradox CEO Fredrik Wester agrees. In comments accompanying the report, Wester says "We end the second quarter of the year with mixed feelings," which feels like a very delicate way to put it. "On the one hand, our core business has performed very well, but on the other hand, we made the difficult decision to cancel the release of Life by You, as the game would not be able to meet our expectations."
It really sounds like Wester, who returned for another stint as Paradox CEO in 2021, views some if not all of its riskier projects in the last several years as boondoggles. "It is clear we have made the wrong calls in several projects," he continues, "especially outside of our core, and this must change."
Both the report and Wester call out Paradox's in-house "core games"—its ever-popular grand strategy titles—for continuing to do well even while the riskier games it's published falter, and it sounds like we might be in for fewer projects like Life by You and more like, perhaps, Europa Universalis 5, which it sees as a more surefire bet.
"In 2021, we made major changes to how we invest in riskier projects, which means that we have not started new projects with the same combination of high risk and high costs as Life by You," writers Wester, adding later that "amid the well-deserved self-criticism, it is worth reminding ourselves that we have solid footing, because the foundation of our business is doing well."
Still, that's not to say Paradox is set to turn completely inwards. Wester notes that Cities: Skylines 2 "has picked up momentum" in the wake of "sweeping changes to systems and many additions that players have enjoyed."
In other words, Wester makes it sound like Paradox wants to focus more on its strengths and less on big swings after repeated bruisings from projects outside its wheelhouse. Of course, Bloodlines 2 is yet to come out and is very much not in-keeping with Paradox's usual fare. Perhaps I shouldn't read into it, but it's tough to read Wester's comments as a statement of confidence in the game. As a Bloodlines 1 lover, though, I'm ready and willing to be surprised.
"Despite great annoyance at our own mistakes," says Wester, "we have faith. Paradox's future is bright, but we need to roll up our sleeves and work hard to fully realize the potential." We'll hear more about what the company has to say in the report's presentation on YouTube at 6 am PDT / 9 am EDT / 2 pm BST / 3 pm CEST today.
