Things aren't looking good for Square Enix. Following the bombshell news earlier this week that the Japanese publisher is offloading a suite of 50+ IP to the Embracer Group, it was revealed that it would be keeping three of its non-Japanese IP for the foreseeable; Just Cause, Life Is Strange, and Outriders.
Whilst we don't have intimiate breakdowns of how the first two IP in that list have performed for the publisher, it's safe to say – as legacy brands – they're quite popular; Life is Strange has carved out a niche for itself since the first game launched back in 2015, and Just Cause has always found a place in gaming communities since its first game in 2006.
Outriders, though, is a different story. We heard last year that developer People Can Fly didn’t receive royalties from Outriders, and that there were some issues with the profitability of the game.
Today, a new financial report from People Can Fly has confirmed that the game didn't turn a profit in 2021 – its launch year. Despite launching in April, the documents note that Square Enix has yet to make revenue that exceeds the cost of development, marketing, and distribution for the title.
The document states that, to this date, People Can Fly still hasn't recieved royalties from Outriders sales, since the game has not been profitable enough for Square Enix to begin that part of the development agreement.
"The group received no royalties from the publisher for the period to December 31 2021, which means that as at the reporting date 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 appears People Can Fly expects sales to remain low enough that Square Enix will never reach a threshold in which royalty payments will be necessary.
There can be no assurance that net proceeds from the sale of Outriders in future periods will be sufficient for the publisher to recover the costs incurred and to pay royalties to the group.
Given that we've recently heard reports that Square Enix lost about $200 million on the Marvel's Avengers and Guardians of the Galaxy games, it's interesting to read this financial report... and consider that Square Enix retains the Outriders IP. It could just be that Square cannot sell on the IP at the moment because the publisher is still bound in contract to People Can Fly – whether or not the company will try another game in the series, or pursue further DLC plans, remains to be seen.
It's going to be an interesting future for Square Enix. We've already examined why the company would sell off Tomb Raider, a series with 88 million lifetime sales, for so cheap. And we've thought about what Legacy of Kain and Gex may look like under new ownership (as owned by a company that might even – shock horror! – acknowledge their existence).
Outriders released on April 1 for PC, PS4, PS5, Stadia, Xbox One, and Xbox Series X/S. Its Worldslayer expansion – coming with a new campaign, new subclasses, and a new endgame – launches on June 30.