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Earnings Call Analysis
Summary
Q3-2023
In the third quarter, the company maintained a steady revenue stream of EUR 7.8 million, matching the previous year's numbers. Development fees comprised 86% of this revenue while royalties increased by EUR 0.7 million year-on-year, hitting EUR 1.5 million, primarily fueled by the successful launch of Alan Wake 2. The company continues to invest in its gaming portfolio, aiming for long-term growth and success by the end of 2025 through multiple successful game developments, including at least one major game.
Hello, everyone, and thank you for joining Remedy Entertainment Webinar. My name is Malieka parka, I manage the Investor Relations at Remedy. Today we'll go through Remedy's business review for January to September 2023. With me are Tero Virtala Remedy CEO; and Terhi Kauppi, Remedy CFO. We will have a Q&A session after the presentation. Tero, the floor is yours.
Thank you. So welcome, everyone, also on my behalf. See, the next slide. Okay. So first, shortly the third quarter highlights. Of course, overall, in the third quarter, finalizing Alan Wake 2 was the key focus for us. We managed to do that successfully launched the game last Friday and both critics and players have received the game really well. I will soon cover Alan Wake a bit more. But in relation to our quarter 3 numbers, it's good to remind that this is an investment year and our numbers reflect that. Our revenue decreased 1% being approximately on the same level as last year, EUR 7.8 million. Operating profit was EUR 5.5 million negative which was a clear decline from the past year. But as we have said, we are in an investment phase and the numbers are a reflection of that. We have 5 games in development at the moment, 4 of them are co-financed by us. High-quality games is the most important or highly important criteria for us in all of our game projects. We know that quality always with our games, events we will pay off and the game sales potential growth, the value of all game print increases, interested partners have towards Remedy. Our value in the talent market increases when we have high-quality games out there. One of the key phases for ensuring the final quality is in the later basis of our game productions. And this has also been the case with the recent Game Alan Wake 2, our own investments have been skewed in the late phases of the production to ensure its final quality. And these investments, as we have seen, have been inverted we have seen in the reception. In the third quarter, before the launch of Power Games, our Board of Directors decided on a new option plan. We were a full focused operational or finalizing Alan Wake 2 for its launch in October 27. In August, greeting into the loans, Alan Wake 2 Dark Place trailer debuted. And in September, we had an extensive briefing and exclusive and some demonstration. That was held for select global media, gaming media and influencers. Then going to the hot topic Alan Wake 2. It launched in October 7. And we definitely can now say that we had a successful launch. Alan Wake 2 has been a long project for us. There has been a lot of passion, a lot of ambition, but also I believe from our side that the game can be something tools as some. And this type of innovative, creative and business projects are never easy ones, but we have been following our vision now for 4 years, overcoming challenges along the way, learning and improving. And as a result of all that, we have all seen the magnificent reception the game has gotten. We have succeeded clearly in creating an exceptional game in master piece that we are really proud of. Before we talk a bit more on Alan Wake 2, let's watch the gameplay trailer, a preview trailer and remind everyone what Alan Wake 2 is. [Presentation] All right. So Alan Wake 2 launched last Friday. On the way towards the loans, the marketing, both from Remedy side and Epic side did a really good job. The interest and excitement that we saw for the game before its launch was the highest we have ever seen for any Remedy game before the launch. What was also important as we were approaching launch and the launch was that the interest and some support from the platform partners was true. We have had now in the launch day and across the first week and good visibility, both in the Epic game store as well as Xbox and PlayStation stores. And highly importantly, for any AAA game, the critics and reviewers have been love the game. When embargo lifted on Thursday. So the first reviews were out day before the launch, it was definitely an exciting moment in the office. What delights us is that Alan Wake 2 was praised on so many fronts on the store [indiscernible] Biswal, Gameplay, technical achievements to name a few. Original on Alan Wake 13 years ago, impressed in some fronts and left players to hold a bit more on some other fronts. TC has clearly been a major step forward in all the areas and has managed to tie all that together into an excellent experience. During development, we knew that we had a great game in our hands, but being able to make that truly happen, finalize and polish the game into a form that also makes others feel the same on quality is never easy. Now getting the verification that the game resonates with gaming audiences is highly important. On top of that, getting this overwhelmingly positive review has meant a lot to us. In relation to quality overall, being liked by the users and having a Metacritic score of about 90 across platforms is truly exceptional for any game developed by the frivolized space. Our type of things are being updated and batched also after once, but the quality stance that the AAA game gets at launch that was a lot. The quality perception of a game, what it gets at launch is pretty hard to change afterwards. And now we have the quality label and perception of a truly high point game. It will affect Alan Wake and Premarin in a positive manner for years to come. First of all, it affects gamers perception on Alan Wake and creates a good basis for good long-lasting sales. It strengthens Alan Wake brand and overall increases player interest to Alan Wake but also to our other games. And as a company, we are now an even more interesting partner to gaming industries, other players. Industries declares are looking for new games and partners to work with. Especially in AAA, it seems like the market will polarize even more. Big successes can succeed really big, but middle Crown succeeding there will be harder. The expectation for quality will just keep on increasing. And when we look at the landscape at the moment, based on our recent market research, there are now about 150 game development studios that are capable of developing a AAA game. Only about 30 of these are independent and can collaborate with any partner they like. Out of this 30 independent AAA capable studios, some are new studios with no launch game yet. Some are smaller, meaning that if they have now gaming development, they will not have an availability for years to come. Remedy stands among the few exceptional studios and with recent games like Control and Alan Wake, we continue to be a highly interesting partner for industries leading players. And the same interest and value is to also towards our own people and in recruitment market. So it's easy to say that we are fully taken and happy for the reception and launch of Alan Wake 2. None of that, of course, yet by itself guarantees the future commercial success but it sure gives a strong basis to build on both for Alan Wake 2 and our future games. Now in relation to Alan Wake 2 sales games nowadays sell for years in digital channels. It's only been a few days since we launched the Alan Wake 2. So it's still way too early to conclude anything on the game's long-term sales. However, launching a high-quality game that stands out and gets an excellent reception of course, builds a strong basis also for good long-term sales. Then on our other game portfolio. When we look at the other games, we have had good progress with Control 2, there is a lot of ambition for the game. And there are still areas where we need to pull this ambitious designs that we have before moving to next stage and scaling up the team. We will continue with Control 2 at the current proof-of-concept stage for the next few quarters. Condor, our co-operative multiplayer game has progressed now during the quarter from proof of concept stage to production readiness stage. Codename Vanguard has been progressing towards the proof-of-concept stage. This is a highly important phase for any game project and some of the core elements now start to be in place. This provides a good basis to evaluate where we are with the game and what will be the next stages of the project. This is what we are currently defining with our partner tension. Max Payne 1&2 remake has progressed during the quarter into products and production readiness phase. Team behind the game knows very well what they are aiming at. The team has clear plans on how to do it. And the game build is progressing with good velocity. We have already started to scale up that team. In Alan Wake 2, we will keep a team going into the future, doing updates, developing the 2 expansions to the game. However, that team will understand that we be clearly smaller than it was for the main game. We have now many excellent talents that will move from Alan Wake 2 to work on our other projects. Alan Wake 2 marks to be the first of the many great game launches enabled by our model that we have been building the multi-project model over the past years. In relation to our personnel at the heart of Remedy are, of course, our work as talent, our people. We continue to invest into them and make sure we have the work as balance and they have the means to efficiently utilize their expertise to make the great games that we can make. We are still active in the recruitment market, but it's more and more about marketed selective recruitments. Some positions that you can see, for example, in our webpage, are kept open as that type of talents are overall hard to find. And when an opportunity of arisws, we are interested. But overall, we don't any more need to grow our headcount in the same proportion as was the case in the past years. We have, at the moment, approximately 380 workers now supported by our external development capabilities and good partners on that front. Now when our recruitment needs are not going to be as big as they were in the past years, even more focus goes to supporting the professional development of our personal carrier progression, leadership training and how our team's overall work and collaborate all the time better. And to end this part of -- or my part of the presentation at this stage, I want to remind on Remedy's wider strategic context, where we come from where we are at the moment and where we are aiming to go. It's important, of course, that we succeed and aim to succeed each year, but the projects we developed are long ones taking 3 to 4 years on average to develop. And after they launch, they should sell at least the same amount of years. We have all the time had a wider strategic plan of where we aim to go in the long term, and this has been and continues to be a big transformation. So looking back 6 years ago, we started the transformation to be able to one day develop other engaging games on top of our unique strengths and to make multiple games instead of one in parallel and also we have these multi-games to getting stronger position in the value chat and get more out of the value that we create with our games. This transformation of the first phase took time. End of '22, we reached our goal to have a stronger organization and we could advance 5 game projects in parallel. This portfolio has also grown. It consists of larger engage longer engaging single-player gigs, also to our historical strengths, but also 2 service-based multiplayer games. And we have succeeded to build great partners for these games and have gained a stronger position overall in the value say. Out of the 5 games projects, 4 are based on Remedy on ground, Remedy gold publisher in 3 of these. And MaxSpain, which is not our IP is a [indiscernible], but this is a great match to our overall strength and portfolio. We also managed to build during the first long phase, a strong cash position. And according to our strategy, having collaboration with our partners started to invest also more of our own money to these games to gain the bigger benefits that we believe these games can create in the future. We are now in the midst of this investment phase. These investments are done to enable major growth opportunities in the future and an even stronger position to benefit from this growth. To aim the aim with all these investments and transformation is that during the phase that has now started between 2023 and 2027, we are building a company that has the ability to develop games and also live operating existing ones. The aim is that we can do game updates and new game launches proximally and long. We are building games that can have longer-lasting sales and so longer engaging game with recurring revenues with the model that we have with our future games, we have higher all of the upside that we have had in the past. And with the [indiscernible] we can also have a direct involvement in the game marketing and sales and an ability to even better build connect and serve our organic communities. Now Alan Wake 2 has just been launched this in many ways, has officially started this phase of our long-term strategy. With our multi-project model, we are not, of course, fully dependent on any one game but Alan Wake 2's launch has been a success. Of course, we start to face with this type of launch that gets an extremely highly doable. And therefore, will possibly radiate to us for the next years. It's a great start. How well the game we sell? It's still too early to grow conclusions [Indiscernible] a digital channel. However, of course, is a good start that fans and critics have appreciated it and thus give the game from basis for good longer days. But that's my part at this phase now more on the financials. Terhi?
Thank you, Tero, and good afternoon to everyone also on my behalf. Yes. So a little bit more about the financials for quarter 3 and year-to-date level. And our revenue in quarter 3 was EUR 7.8 million. And basically, it was flat against the comparison period. Out of that, total revenue, the development fees were 86% and royalty is 40%. Our royalties grew year-on-year by EUR 0.7 million to EUR 1.5 million due to Alan Wake 2 master, which fueled the regroup and thus started to generate realities for us. Development fees, on the other hand, decreased by 10% due to the development fees from Alan Wake 2 as the project was closed with completion as we now all know. And as seen here in this graph, there has been and there will be a quarterly variation in revenues and thus also in profitability. And as mentioned also by Tero, we are in the investment phase, and that is reflected in the profitability. For quarter 3, the EBIT was negative by EUR 5.5 million, and that's minus 70% of the revenue. The decrease in profitability was due to higher outsourcing staff and other operating expenses as well as lower level of capitalizations. Also, we started to depreciate Alan Wake 2 remastered games. Capitalizations since the game now generates royalties for us. Then on a year-to-date level, our revenue decreased by 21%, ending up to EUR 23.6 million. And here, our royalties decreased by 26% and profits decreased by 20%. And on a year-to-date level, our EBIT was negative by [ Audio Gap], and that's minus EUR 60 million. And also here, on year-to-date level, the decrease in profitability was clearly due to a lower level of revenue, but also due to higher started operating expenses as well as lower level of capitalizations and the start of depreciation for Alan Wake remaster in quarter 2. And about the cost elements, we also for transparency sake, present here the unmeet amounts of expenses. And our external work performed was on a somewhat higher level than in comparison period EUR 4.9 million versus EUR 4.5 million in comparison period. And in IFRS format, the need amounts are for a trade it. And the difference is utilization of external licenses there, we had a slight quarter increase. That's mainly due to the increase of about 5% in our own employees from 348 people from from 330 people from last year. And our capitalizations, were on 44% lower level than in comparison period. And that's mainly due to project Converse lower level of external development work. Our cash position operating cash flow was negative by EUR 5.1 million in quarter 3. In comparison period it was positive by EUR 4.7 million. We simply had a very much lower level of incoming payments from partners this quarter. As in profitability, also in cash flow, we have quarterly variation. And the total cash level was about EUR 32 million now end of quarter 3. We have so cash position to invest in our projects. And as we have done so, as like Tero mentioned and explained the strategy that is visible in the cash position development. But we are certainly on pass with the gas situation and as a normal course of business, monitoring it closely. And overall, we can see that the current profitability level is impacted by increased our own investments to product development. But this is to ensure our top line growth and in group profitability into the Opera and we have a large portfolio of projects. We have a subcontracting type agreement with drug store games from Spain. And we are working with [indiscernible] and Epic in a model where remedies wants the IV public partner development quarterly, and we share game shares profits. And then we have copublishing deals mid projects, Condor, Control 2 as well as Vanguard, and these are IPs on Remedy. And the higher we move up this week the more our models where the profitability of a game project is depending on game sales rather than the development fees received from the publishing partner. And if you look at the pluses and minuses related to the development phase, you see that in partner IP subcontracting, we usually have margin already during the development phase, but in other models, not. Also, it is worth reminding now as Alan Wake 2 is out that we need to first wait for the game to recoup its development fees paid by partner before we start to see any of the royalties in remedies end. And now Tero you can continue.
Thank you, Terhi. Okay. And our outlook is unchanged, remains the same. We are expecting a new decline from previous year and expecting a negative operating result. Our long-term [indiscernible] also remained the same by the end of 2025, the aim is that we have created several successful games and at least one major game but it is the close out of suncare and can keep on succeeding also. After that, the game has all the time been that we have the unique creative skills and can create the bircharacter store with the build powerful brands, and we will own at least 3 expanding game plans all with long-term [indiscernible].We have also, by that time, built the commercial capabilities so that we can select the right commercial model for each of our future games, be for some games, self-financing and sell publishing or be it or working with publishing partners. And we continue to focus on great people. We aim to be the most attractive gaming industry employer in Europe. And as has been said in Noongar, we aim to reach these objectives while having a profitable and growing business in which we also made our risk well. But that's it as an update, I think it's time for questions.
[Operator Instructions] So can you give us a rough prediction on the number of copies sold for Alan Wake 2 to in order to recoup
We don't open that's a conversation with our publishing partner EPIC because we haven't with Epic published either the exact development budjet or marketing budget that needs to be really good. But we have said that the development budget on average for Remedy game is between EUR 30 million and EUR 60 million. We have said that Alan Wake 2 has been the biggest game we have ever had. So it's easy to assess that this is on the high grade. And by that in way, I guess, people can make a rough estimate how many copies approximately a premium price game should sell in order to recoup, but we haven't published any more exact numbers.
Thank you. If Alan Wake 2 would not be a commercial success despite remarkable response from the gaming community, how should Remedy approach its priorities going forward?
don't speculate on that. I think it's way too early, and now especially when we have had a great response for the game. And in a way, even though we don't yet know how much Alan Wake will sell over the years I think the basis is good that it can succeed. And we are now with our partner also, of course, supporting the game, the main reality. But speculating at this point on this type of questions, we are not doing it.
Regarding the Alan Wake 2 budget, even though Remedy has not disclosed it, but as you said, between usually, they are between EUR 30 million and EUR 60 million. Is this specifically, I'm not talking about Alan Wake, is it only about the game production budget? Or is the marketing included in that?
That's the game development, but certain marketing then comes on top of that.
How much is the marketing usually?
Well, I'd say that usually, of course, it depends on the partner, it depends on the game. It depends whether we talk about product and the launch marketing or longer lasting. But overall, if we talk about people games, where a big part of the marketing is aimed for the launch and then supporting in a way a few months after that to begin the industry, we are talking about between 15% to 30% on top of the development budget. Then of course, there are those industry science where the marketing parts can equal the development, but that's not for us.
Is the plan to release a game in 2024 in intact?
Well, as I said in the presentation, when we were discussing the wider strategic context, the aim has all the time been that we are building ourselves an ability to be able to launch either a major expansion or a new game every year. And now that ability has been in building and we have that ability. But then whether we will launch a game between every 9 months, 12 months or 18 months, that's roughly the 1 year. But there are many factors then in play that we are with our partners evaluating what's the hind launch window for a game. Typically, in the end phases of the production, we also see if some additional time should be used to guarantee the high quality as was now innovate also with Alan Wake and it definitely paid off. And then also, what we need to now bear in mind to which we don't yet have the exact answer is that Alan Wake 2 has now gotten an exception of a good reception. And it may also open up new opportunities as we go towards next year. And just to say, comparison point, even though this is speculation, what happened with Control when we launched Control in August 2019 was that the game got a very good reception. And our original plan was to start developing the next game much earlier than eventually happened. But what happened was a very positive one for us because the interest for Control from different partners in the industry was growing. And actually, we could benefit from that for the next 1.5 years, creating different versions of Control, getting actually good business-to-business deals, expanding the game to new platforms and that not only require some people from the Control team, but also from our Northlight team and from our other support teams. So this is also an opportunity that we now need to keep an eye on and then evaluate if it will have some effect on some of the schedules that we have. But on average, the aim has been that we have been intentionally building the ability to approximately launch game every year. If just 9 months, 12 months, 18 months, that's approximately the rates.
The comment regarding Vanguard gives a hint that scrapping this project could be an option. Is this reading in too much?
Well, that's quite a diffrent conclusion. I think I said it in the presentation that now when we have 5 projects, we have had our stage-gate model in development now for years. And I think in the past, we didn't fully succeed in following that model. But the proof of concept phase is one of the key phases on any project that we are now more and more diligently following. In proof of concept, the intent is that when we have clarity on the concept in the earlier phase, we understand what type of game we are making. We understand what are the biggest question mark and riskiest part, what's the core experience of the game going to be? So in proof of concept, the intent is that we have the core experience playable and some of the riskiest parts also proven. So we are definitely always in proff of concept pace. And before the proof of concept phase with our partners closely evaluating where we are with the game, what works, what doesn't work. And typically always some changes happen in the proof-of-concept phase for any project that we have. But something into conclusions that are we scrubbing the project, it doesn't mean that, but overall, in a way that should be one option for any game project. Of course, this is too far. It's just a natural routing that would be what we said that we are with our partners evaluating the projects very closely when we become closer to proof of concept phase.
Then Terhi, cash flow from operations was minus EUR 16.1 million for January, September, and the cash position is now down to EUR 21.7 million. Do you have the balance sheet required or does Remedy have the balance sheet required to keep investing into the multi-project model if Alan Wake 2 would not record as quickly as planned.
Yes. First of all, I would like to say that the cash position is actually is visible as a cash in the balance sheet. And in addition, we have EUR 10 million as some liquidity investments. So it's actually EUR 32 million. But yes, when we gather the funds from the market, we said that, okay, we are catering the funds to invest more and investing more means using cash. So it was obvious that we will use the cash and now we have used it to have to a certain extent. So that should not be a surprise as such. But of course, then as a kind of normal course of business, if not every day, every week and surely every month, we are updating our forecast revenue, expenses and cash flow. So surely, we are making the -- so the calculations so that we understand every day the situation the best we can. And surely, the game sales is one crucial part of forecasting. So every day, we learn more and we know more about Alan Wake 2 commercial success. And like eased, now it's way too early to say we anything. But at some point, we know more and then we will update the models. And surely, we see something that is requiring action we were surely doing.
Is Q4 usually more development heavy than the other quarters as a year?
Led by development heavy.
Development fee heavy, referring probably to our last previous history when we've had quite a lot support.
Yes. I think it's not like based on a certain quarter of a calendar year. It's more like when do our projects have such milestones that then would like end up having high incoming developments per.
Yes, yes. And I think what has affected when we are looking at our past historical numbers is also that if we have closed the deal in a certain quarter, then in some deals, it may be that our partners are also participating in the already accrued development payments that have happened. And therefore, we may have bigger individual lump sums that are for certain quarter.
But it's not related to Alan Wake.
No it's not.
How do you view the relationship between risk and return on capital in projects? Budgets are getting bigger and bigger. All will Remedy make sure that projects are high positive ROI for both the publisher and the developer in the future?
Well, I can start. You can then continue. But overall, we, of course we are a creative organization. We understand our target audiences and the segments in which we operate quite well that what are typically the criteria for succes, then we make our business cases internally that what type of game we are making was a realistic revenue expectation that we can have and how do the -- how does the scope and investments then relate to that. Then so far, we have seen that partnering with a strong industry player that brings in a way, additional commercial expertise into play has been our way. And then in the early phases in a way the game is being evaluated also by our partner. So I think that said a certain way basis on top of which we believe that the success can be built. And then in the end, this is entertainment business. This is a quite heat-driven business in which we are. What we can then affect is that we are in a way, optimizing the game, doing market research and what can be still adjusted is slightly in the game design that it benefits the needs and desires of that target audience. But then it's also that we know that we can make and we need to make a game that stands out then differentiate in that market and most of all, that it can be of high quality. Quality is one of the key drivers for potential longer-term sales. Then together with our partners, we need to make sure that the marketing plans are such and the marketing execution is such that our game gets the attention and in a way of feed is wide enough audience and can succeed. These are the things that we are doing. And of course, there is always risk involved, and we are doing creative business innovation and doing also taking also some risks in order to then reach higher return.
Yes, pretty much so. I would just like maybe conclude that overall, of course, we need to make sure that the markets stay rational in relation to the game sales opportunities as such.
Good. Are both revenue strips, i.e., development fees and royalties expected to grow in the coming years or are the development fees expected to be lower. Do we strive for profitable growth per year as a financial goal.
Well, we are not speculating now with our numbers going forward, not surely. But as presented, what our strategy and aim is that we would move like towards higher position in the value chain. And what we have done is like the copublishing for example, and maybe possibly in some days, self-publishing. So meaning that overall, over the projects on a company level, we strive to bash the position where the -- more of the revenue share comes from royalties and the development is on a general level.
How much do you think the head count will need to increase in the coming year, i.e., 2024?
Well, we haven't said it exactly in public. We have our own plans. What I said in the presentation is that we are selectively growing. We are looking for certain talent still. But in proportion, what we were in the past, where the headcount could grow by 25% 30% even more percent or even more than that. We don't now need to grow it anymore at that base. It's more like targeted recruitment that is now being done slight increase, but not in the level that we had in the past.
How is the work to establish an organization that can release potentially 1 game per year going whilst keeping the Remedy quality and formula impact in these games. Are you qualified first?
Well, overall, I can say that it's been developing well. We can now see that we had 5 games in development when we look ourselves 1, 2 years ago, but we were clearly less people. Now we are almost 400 pretty talented people at Remedy. Our external development capabilities have grown significantly, and we have established external development partners. Our own Norlite technology has taken big steps forward. We have invested and developed a lot our internal ways of working and collaboration. So overall, our competencies to develop games and develop multiple games have grown quite significantly. And now in Alan Wake 2 launched definitely good quality. We are continuing with Alan Wake, but it's going to be on the 2 expansions supporting the game with a much smaller team. And in fact, with this cron organization and more competencies, we are not focusing on 5 new games, but 4 new games. So that definitely gives a better basis than to in a way, drive these projects further. And of course, I don't think that the work never ends but the game industry is driving foreign business innovations. There is always room to improve and we keep on doing that. But overall, the possibility is to do that even more successful in the future are again better.
Which of the 4 projects under development will benefit most from the available resources from Alan Wake 2 production?
Well, it's they are all benefiting, of course, when we have so many talented people freeing up. But we said also in our release, and I said in the presentation that as an example, the Max Payne 1&2, we make has now progressed in the products on readiness states. We have already started to scale up that team. So that's in a way one clear example that's directly now benefiting from that.
And then there's a couple of sales-related questions. Could you say anything about the start of the sales in comparison to previous launches? Is unlike the fastest selling Remedy game ever?
We are not speculating. It's too early, and this is also something that we -- then at some point when we will tell something about the game sales that's done in collaboration with our publishing partner Epic.
When is this?
Let's not speculate on that. That's been decided with our publishing partner.
You see the development phase for Max Payne 1&2 remake being as long as the development phase was for Alan Wake 2 or is it actually considerably shorter?
We haven't. We haven't innovated our partner there with Rockstar Games. We haven't published any information on that. But we have said that on average, the AAA games was on average the marketing part and typically these type of big games take 3 to 4 years to develop.
Yes. Congratulations on a great Alan Wake 2 launch. How are you going to make sure that the people at Remedy may want to stay and achieve even more in the future with new projects, for instance, Control 2 after such a great release of Alan Wake 2.
Well, this is a highly competed innovate the competition for talent in the industry has been high and most likely continues to be high. We have succeeded in that front during the past years, really well. Remedy's an attractive employer, the projects we do interest brokes developers a lot. We have also, as was shown in the presentation and as we have been repeating every quarter, we put a lot of effort into our people, operations, we keep on supporting our people. So overall, I think that we have been doing a lot of good things on that front, and we keep on doing that, that's benefiting from us. Now another thing which is more maybe on the psychological side is that quite often in our industry, one of the strongest commitments, committing in a way factors is that the teams that make a success typically want to continue working together and want to make our motivated to continue working and make an even bigger success going into the future. At the same time, in a way, people who have been doing such an exceptional game, of course, in their seas that will solve for the rest of their lives, and they will have a even more opportunities if they would like to look for opportunities elsewhere. And now it's our task to keep on doing the good work that we have done at Remeedy so that they want to stay here also at the moment. I wouldn't say in a way I like to say that is fortunate. But what we now see in the recruitment market is that many gaming companies are really cautious. There have been a lot of layoffs in the industry. Many companies are downsizing. So actually, there aren't at the moment so many open positions and opportunities for talents. And when we just had such a good launch with Alan Wake 2, I think even though it's an unfortunate situation for many other companies, I think this now plays in our favor that most likely innovate the interest for some people that might be considering some other options is a bit lower when they know in a way how the economy looks for many other gaming companies, many other markets and when we have just had this good success.
Have Remedy had a big staff turnover or hasn't changed?
We have, overall, our staff turnover has been for years either less than about half of the industry average. So there is definitely there is turnover as in any gaming company, but I think in that front, we have been outboarding many other companies.
What kind of performance is required from Alan Wake 2 for it to be a profitable project for Epic Games?
We haven't released innovate the exact budget amounts or marketing budgets with the Epic. So I can't comment more on that than access to earlier said.
Now that Alan Wake 2 has been published, does Remedy have the capacity to take on new projects?
Maybe one day in the long-term future. But as I just said, now we have the multi-project for model up and running. We have had 5 projects. One of this is now going to be with a smaller team supporting Alan Wake 2. There are updates. We are listening to the community in a way what they are saying. We have innovated all things that we are bringing out as updates. We have 2 expansions, but that's going to be a smaller team. And now we want to make sure that the other projects we, at the moment have can advance in the planned way. And then one day in the future, we will then consider potential new projects.
Tero can you provide some color -- some further color on what's happening with Control 2? The game is still expected to be a proof of concept phase for the next quarters despite resources being freed up from Alan Wake?
Well, both of the Alan Wake 2 was a massive step forward from Alan Wake 1. Control was a big success for us and now in a way the ambitions for Control 2 are big as well. And overall, we have an experience score team working on that. It has been progressing well on many fronts. But there are still things that the team wants to wants to make sure that they are in place so that when we one day move to next projects, in a way all the key elements would have been pooled and we can be more certain that in a way faces with bigger team sizes don't need to turn back anymore but can continue with the execution. I think we are taking the smart learnings from our past projects where we, in the past, progressed too early to larger team sizes. And then when we learned in a way some of the open designs with bigger teams, it was costly and it was slow to change the direction. I think the Control 2 team is now making exactly the right things. And as we saw with Alan Wake 2 eventually when we have the really high-quality game, that's the goal where we are aiming at the Control 2 has this exactly same goal in mind.
Then one more question to Terhi and one more to Tero. Terhi, in order for Remedy to move forward level move up a level in the business model, i.e., towards self publishing. What kind of cash capital position would we need to cover both OpEx and CapEx?
Yes. Surely, it depends on a portfolio level where we are. What are the other projects we are having then going forward. And as described, we are aiming for a kind of a balanced portfolio model. So we would have also most likely subcontracting type of projects where we make typically matching also during the development phase. Projects where we share the revenues and the risks and then the model where we would take the full risk and then also the for. So it's not like an I could say a certain number for cash positions or so.
Tero, then finally and briefly, Northlight game engine. Do we aim to develop all or most of our games with it? Any plans to license it to other game development companies?
We have about 60 people working on Northlight, and it's a focus in impact really powerful one. It has the tools very efficient ones now with the new iteration, especially for our type of games and it's a major part of Remedy. All of our 5 games are now being made a bit more like that continues to be a key part of our strategy, but it's for our games. In a way, we are a creative organization. We are a game developer. That's what we know we can do excellently. We have the technology and tools that can serve power games. We have excellent collaboration models and all the time in a way, involve those internally. But then we don't have any plans to license it externally. That would be a completely different type of business with completely different type of operational requirements. And we think that when we succeed in the gaming business and games we do, that's going to provide enough growth opportunities for a long time into the future.
Thank you. I think that was all the questions for today. Thank you for the call and the questions. We will be back with the next earnings webinar that is on financial statements release 2023 on February 9, 2024. That's all for now. Thank you, and have a great week.