Paradox CEO admits ‘wrong calls’ after Life by You cancellation and Tectonic closure

Disappointing financial report for the company

Paradox Interactive

Paradox Interactive has released its interim report for the second quarter of the ongoing year and it’s become the cause of much self-reflection for the company. Revenues were down by 22% in comparison to last year, operating profit went down by 90%.

Paradox CEO Fredrik Wester, who’d already written in connection with the previous financial report that they’d have “to do better”, admitted that the company had made some “wrong calls” when deciding its investment targets.

“It is clear that we have made the wrong calls in several projects, especially outside of our core, and this must change,” he wrote. “We have areas here where we need to improve, for example in production, quality and risk assessment. 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.”

He added: “We have taken steps forward in those efforts. Recently, much of our focus is on achieving the right quality and taking the right risk in all types of projects. But more needs to be done. No change for the better can be too small or too big, even if it is work that will take time.”

Life by You is one of the biggest items in the report: Paradox has officially canceled the project, giving up on making a competitor to The Sims and closing down Paradox Tectonic, the studio that had worked on the game in California. This resulted in a write-down of about $19.2 million USD.

Wester wrote that he had “mixed feelings” about the second quarter: “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.”

Just like in the Q1 report, the core business provided the bright light of hope on the horizon. “And amid the well-deserved self-criticism,” Wester wrote, “it is worth reminding ourselves that we have solid footing, because the foundation of our business is doing well. Our in-house developed core games continue to deliver good content that players have appreciated.”

Crusader Kings 3, Hearts of Iron 4, Victoria 3, Stellaris, and Triumph Studios’ Age of Wonders 4 were named as Q2’s biggest revenue drivers.

He also had some nice things to say about Cities: Skylines 2, which “has picked up momentum” and took “several steps in the right direction,” though Wester warned that it was “far too early to claim victory” yet.

“Despite great annoyance at our own mistakes, we have faith. Paradox's future is bright, but we need to roll up our sleeves and work hard to fully realize the potential,” Wester concluded in an attempt to rally the troops.