The key objective of Remedy’s business model is to establish an improved position within the value chain.
Similar to Quantum Break, the single player company of CrossFire 2, which is currently in production, is developed for a brand owned by Remedy’s partner. From Remedy’s perspective, this represents an outsourcing model, where the partner pays Remedy for developing a game. In addition to traditional outsourcing, Remedy and other developers typically include royalty options in the agreements. This allows the developer to receive royalties when games enjoy success.
In line with its strategy, Remedy will continue to carry out projects together with suitable brands and partners while also creating and further developing in-house game brands. This approach requires more financial investments in game projects, which results in increased risks, yet also allows the company to share a greater portion of game sales profits. This allows Remedy to have stronger ownership of any sequels, and further development and utilization of brands, as well as any increased value related to the brands.
Remedy’s operations are based on a strong foundation of business know-how, understanding how the game industry works and a strong network of connections within the industry. Remedy has typically commercialized and financed games by signing partnership agreements with major partners, such as Microsoft and Smilegate. Traditionally, Remedy has focused on one large game project at a time with partners, while occasionally simultaneously working on another in-house brand.
According to Remedy’s strategy, the business model is being systematically developed towards a multi-project model, i.e. the ability to develop several high-quality games simultaneously. The multi-project model allows the company to introduce high-quality games to markets at a faster pace, without compromising quality.
The model is also used for scaling advantages and improved production efficiency. Remedy’s game development methods, Northlight® game technology and key game development support functions are easily scalable for larger production. Transitioning to the new model will require more staff, however, due to the scalability, the number of staff required is not as high as before. Adopting the new multi-project model will also reduce risks related to the success of an individual game and dependency on individual partners.
Remedy’s revenue model is based on three income flows:
- Steady income flow of development fees from the company’s publisher partners
- Royalty income from successful games owned by publisher partners and developed by Remedy
- Share of sales income from consumer sales of games owned by Remedy