Paradox Interactive, the creator of Cities Skylines, Stellaris, Crusader Kings, and Europa Universalis, is in dire straits right now with plummeting profits as confirmed by the release of its quarterly financial statements on Thursday, July 26. The results of the second quarter of 2024 reveal that the profits of the company have dropped from $27.1 million last year to only $2.6 million year-over-year.
This massive drop comes out to be a reduction of 90% and although there are multiple reasons for why this is happening, there are two that deserve most of the blame. Firstly, Paradox Interactive has canceled its upcoming life simulator game Life By You, which has resulted in a loss of $19.3 million. The second reason is the rocky launch of Cities Skyline 2, which was plagued with issues upon release, and the company has been trying to fix it up ever since.
Another thing that the financial statements of Paradox Interactive show is that the year-over-year revenue has also fallen, but this drop isn’t as steep as the profits. Last year, the revenue was $68.3 million, and this year it is $53.3 million, which comes out to a drop of 22%.
The CEO of Paradox Interactive, Fredrik Wester, says he has mixed feelings about the current standing of the company. On the one hand, the core business is doing perfectly fine, but on the other, the cancelation of such a large-scale project so deep into development also took its toll. The decision to cancel Life By You was a difficult one, but the game was falling short of the developer’s vision.
Judging by the write-down of Life By You, it seems that Paradox Interactive should be fine in the long term and should recover from this setback. The developer has multiple games with considerable fan followings. Wester says that the company has good cash flows from operating activities and even if the write-down weighs down the profit, it will motivate the team to work even harder in the future.
