Things are not looking good for Square Enix. Following the explosive news earlier this week that the Japanese publisher is offloading a pool of over 50 IPs to the Embracer Group, it was revealed that it would be keeping three of its non-Japanese IPs for the foreseeable future; Just Cause, Life Is Strange and Outriders.
While we don’t have intimate breakdowns of how the top two IPs on that editor’s list have performed, it’s safe to say that as legacy brands, they’re pretty popular; Life is Strange has carved a niche for itself since the first game was released in 2015, and Just Cause has always found a place in gaming communities ever since its first game in 2006.
Outriders, however, is a different story. We heard last year that developer People Can Fly received no royalties from Outriders and that there were some issues with the game’s profitability.
Today, a new financial report from People Can Fly has confirmed that the game did not make a profit in 2021, its year of release. Despite the April release, the documents note that Square Enix has yet to generate revenue that exceeds the cost of developing, marketing and distributing the title.
The document states that, to date, People Can Fly has not yet received any royalties from sales of Outriders, as the game has not been profitable enough for Square Enix to start that part of the development deal.
“The group received no royalties from the publisher for the period through December 31, 2021, meaning that, as of the reporting date, the net proceeds from the sale of Outriders were insufficient to recover the costs and expenses incurred by the publisher. to develop, distribute and promote the title.”
What’s worse is that it seems that People Can Fly expects sales to stay low enough that Square Enix will never reach a threshold where royalty payments are necessary.
There can be no guarantee that the net proceeds from the sale of Outriders in future periods will be sufficient for the publisher to recover costs incurred and pay royalties to the group.
Given that we recently heard reports that Square Enix lost around $200 million on the Marvel’s Avengers and Guardians of the Galaxy games, it’s interesting to read this financial report…and to consider that Square Enix retains the intellectual property of Outriders. It could be that Square can’t sell the IP right now because the publisher is still contractually bound to People Can Fly; Whether or not the company will try another game in the series, or pursue more DLC plans, remains to be seen. .
It will be an interesting future for Square Enix. We’ve already examined why the company would sell Tomb Raider, a series with 88 million lifetime sales, for so little money. And we thought about what Legacy of Kain and Gex would look like under new ownership (as owned by a company that might even, surprisingly, acknowledge their existence).
Outriders released on April 1 for PC, PS4, PS5, Stadia, Xbox One, and Xbox Series X/S. Its Worldslayer expansion, which comes with a new campaign, new subclasses, and a new ending, launches on June 30.