Hello everyone, and thank you for joining Remedy Entertainment webinar. My name is Veli-Pekka Puolakanaho, and I manage the investor relations at Remedy. Today, we will go through Remedy's business review for Q3 2021. With me today are Tero Virtala, Remedy CEO, and Terhi Kauppi, Remedy CFO. We will have a Q&A session after the presentation. Tero, the floor is yours.
Thank you, Veli-Pekka Puolakanaho. Welcome on my behalf as well. In the Q3, our business progressed as planned. Numbers were in line with our expectations, and the outlook for the year remains unchanged. We expect revenue and operating profit to increase during 2021. Our revenue in the Q3 was EUR 7.4 million, which is a decrease of 25%, year-over-year. Operating profit was EUR 0.3 million, a decrease of 35%, sorry. Compared to comparison period in 2020, the decline was mainly related to two factors, Control royalties and Smilegate development fees.
In relation to Control, for a game that is two years old, Control royalties overall were still on a good level, but in the comparison period in 2020, they were exceptionally high, as that was the moment when Control Ultimate Edition launched on Steam for the first time. In relation to our partner, Smilegate, we have been polishing during this quarter the CrossFire story modes and preparing for the upcoming CrossFire launches. After years of full-scale development work, this is highly important and positive phase, both for us and Smilegate. However, in these final phases, there has been little development work remaining, and as this has been subcontracting, it has also then meant clearly less development fees. To put this into right perspective from Remedy's point of view, we outlined our updated strategy late 2020.
We then raised EUR 40 million in February to support in the execution of that strategy. Now, subcontracting projects like CrossFire can play a role for us also in the future, and partnership with Smilegate continues in any case as we will keep on supporting the story modes. However, now in this quarter, a lot of talented developers have been freeing up, and there are a lot of opportunities for these talented teams, both with Remedy-owned IPs and external IPs. This year overall is becoming, in any case, a good year for us. We have profitable business, very strong cash position, so we have redirected the freeing personnel to support selective other projects which have a very strong long-term fit with our strategic ambitions. Yes, in this quarter it has meant less development fees, but we have seen it as a right focus towards our longer-term objectives.
Additionally, in September, we announced Alan Wake Remastered, ready to be launched in October on PC on the Epic Games Store, Xbox, and as an important step, for the first time in Alan Wake's history, PlayStation consoles. Big milestone was also the bigger game made with Epic Games that proceeded into full production. Operationally, a really good development is that we started the next phase in strengthening our presence in Sweden, which, I will talk a bit more later in this presentation. As I just referred, an important context to many of the developments that we have been doing are the long-term growth plans and objectives that we have. The actions we do and have also done in this Q3 are taking us towards these objectives.
Our objective, as we outlined in our updated strategy already one year ago, is that by the end of 2025, we have created several successful games and at least one major hit game, a game that reaches the global top-selling charts and keeps on succeeding. As a company, we have unique creative skills and can create worlds, characters, stories that build powerful brands. We will own, by the end of 2025, at least three expanding game brands, all with long-term hit potential. By that time, we have strengthened our commercial capabilities so that we are free to select the right commercial successful model for each of the games. For some, it may be self-financing, self-publishing. For some others, it's working closely with our publishing partners. Of course, in our business at Remedy, great people continue to be a key focus.
We aim to be the most attractive gaming industry employer in Europe. To reach all these objectives while having a profitable and growing business, we keep on managing our risks well. Now, of course, in this road towards the objectives, the most concrete part are seen in our games portfolio. What games we are making, with what type of business models and partnerships, how these projects are progressing, and how they succeed when they one day launch. Currently, we have seven announced games and projects we have been working on. We've had good progress with all of them. Control just turned two years and keeps on selling. Control also built us a key franchise, and the development is now focused on two new Control-related games, Condor and a bigger new Control game. On CrossFire, as said, we are preparing with Smilegate for the upcoming launches.
We have the two projects with Epic and Vanguard, our free-to-play co-op game. Let's have a look at some of these games and projects in a bit more detail. First, CrossFire. As has been said a number of times, but for those of you not yet familiar, we have collaborated with Smilegate now for over five years, developing story modes to their hugely successful CrossFire. Our story modes are related to two CrossFire games, CrossFire HD and CrossfireX. CrossFire HD is a continuation to CrossFire game in China. CrossfireX is going to be a new game launching on Xbox. Both of these games will include Remedy story modes, and both of these games therefore offer a royalty, a long-term royalty opportunity for us. We are now expecting these launches to happen soon.
For many reasons, yes, we are excited, and an interesting new phase is definitely starting for CrossFire. The exact timing of the launches is decided by Smilegate and Smilegate's publishing partners. When we look at Control. As I just said, Control launched a bit over two years ago. It became a success in the eyes of critics and players. We have expanded the game with content updates, and we have expanded into several new platforms. Control has sold well, and as a high-quality game, still keeps on selling, but naturally on a gradually declining trajectory. Control also established us a new franchise, new world with a lot of future expansion opportunities. With that as a basis, in June 2021, we announced a co-publishing and development agreement with our long-term Control partner, 505 Games. It's strategically a very significant step to us.
We keep on building and expanding the franchise. We go towards longer-lasting and longer-engaging games, and we also move higher in the value chain, building competencies for co-publishing the game with a trusted partner. In Q3, projects Condor and the bigger Control project have been progressing according to the plans that we have had. In relation to two games we have been making with Epic. In September, we announced that the smaller of these two Epic Games projects, Alan Wake Remastered, was completed and ready to be launched in October. Now, of course, launching a game for us is an important step always. Behind the curtain, operationally, we have been leading the project but used external development more than we have ever used in our project.
Building these external development capabilities has been one big achievement during this project, and it's a key part in building further our multi-project and production capabilities. Now, how did we succeed? Operationally, the game was made in time, in budget, and most importantly, in good quality. The game has been received positively by critics and players. Of course, a very important thing is that the sales of the game have started well. In relation to the bigger project with Epic, the project has moved in full production mode in August. In Vanguard, our long-lasting service-based cooperative multiplayer game that utilizes our world-building and narrative strengths. Development with the project is progressing well, and we have been gradually ramping the team further. We currently have 35 Remedians working on the game and also selected additional external developers and partners helping us.
Business-wise, we are currently actively negotiating and evaluating different partnership models and different partnership options. What we have been doing also all the time is continue to grow our world-class talent pool. To make high-quality, category-defining games, we of course need world-class talent. We currently at Remedy have 294 of these world-class talents handpicked from all around the world. We have always kept the recruitment bar high. We put a lot of effort into finding the best people for us and for our type of games with whom we can build high-performing development teams. During the COVID times overall, for all the companies, recruitment has slowed down a bit.
I would say that we have still succeeded to attract a good amount of new talent, while of course, we have been investing into our existing people and helping them to succeed and the teams in which they work to succeed. As a company, as has been said, we have ambitious long-term growth plans, and there is no question that we will need more talents also in the future. To expand these talent acquisition opportunities, early in 2021, we started piloting and evaluating new ways to attract and recruit talent that would be based outside of Finland. Sweden and Stockholm area were a special focus in that pilot. We have already for a long time had several Swedish employees working at Remedy. Sweden overall has over 6,000 gaming industry professionals.
big part of that in the Stockholm area, and most of all focused on PC and console games. Like our home base in Espoo, Finland, in the capital area of Finland, Stockholm is likewise one of the European game talent hubs. Early results during this year in Stockholm have been good. We now have 10 people working from the Stockholm area, consisting of high-talent senior developers. Now, in this Q3 of 2021, we have been making plans for the next phase in Stockholm, which will involve a formal presence and continued recruitment in 2022. We see that this is one additional means that will further boost our ability to attract world-class talent for the right roles that we need. Of course, we have also continued to develop our skills and partnerships with external development.
Adding to that we develop all the time our production capabilities, Northlight technology, our people and teams, the base of working. We are growing not just our talent pool, but our wider development capabilities. As we move to 2022 and beyond, we are continuing to expand in a way that best supports our growth objectives. This is done to make us all the time stronger as a category-defining creative super developer. A super developer that has rare skills in creating world-class gaming brands, who can out of these brands create distinctive benchmark-setting games. We have the teams and organization to develop multiple high-quality games at the same time, not just one game like many of the other AAA game developers can do. Remedy has also always been a highly appreciated partner.
With some of our future games, we continue collaborating with world-class publishing partners, but we systematically also keep on building the abilities to self-finance and self-publish some of our future games. We are a creative organization, and at the heart of Remedy are highly creative and empowered people and teams. We have always been and keep on being an attractive home to these world-class professionals. While we do this year on year, we are a profitable growth company that keeps on managing its risks well. Now let's talk more on the financials, and I'll hand over to our CFO, Terhi Kauppi.
Thank you, Tero, and good morning to everyone also on my behalf. Our revenue decreased year-on-year by 25% to EUR 7.4 million. This is due to decline both in royalties and in development fees. Royalties declined to EUR 2.1 million since although Control continues to bring in royalties, it is still a two-year-old game, and in comparison period, we had Control Ultimate Edition Steam launch, which resulted in especially high comparison period royalties. Development fees of EUR 5.3 million were somewhat lower than in comparison period. There was this decrease due to small game operations, but also positive effect from Project Condor development fees. Overall, this resulted as net a bit lower level of development fees.
Our royalties in this historical timeline have been mostly from one game only, and there has been fluctuation over quarters, as you can see. Royalties depend on game sales and are affected by seasonality, marketing, and discount campaigns. Also B2B deals have a significant role nowadays. Royalties present good potential for revenue growth and are of high margin, especially for Control, because its development costs were not capitalized nor depreciated. All the costs were booked as expenses before game launch. Development fees, on the other hand, are more stable in nature. They relate to work performed for the projects. Development fees are the basis of our revenue and expected to grow also over time, since our portfolio of project is further expanding. For Q3, the EBIT was EUR 0.3 million, and that's 3.9% of revenue.
It is important to remember that there has been EBIT fluctuation on a quarterly basis due to revenue fluctuation between quarters, and there will be also in future. Although the multi-project model should even out the fluctuation to some extent. The nature of our business is just such that there is and will be large pockets of revenue items, and the timing of those pockets cause periodic fluctuation because our cost base is steady and slowly growing. Operating cost level has also increased year-on-year due to much lesser COVID effect on costs than in comparison period. We are focusing on long-term growth and profitability, not sub-optimizing quarterly performance. This is possible because of our strong cash position. On year-to-date numbers, we are about at the same speed as in 2020. Revenue level being 7.3% behind comparison period.
Also in year-to-date numbers, there's decline both in royalties and development fees. We have high expectations for Q4 revenues, although they are subject to negotiations progressing as expected. For first nine months of this year, the EBIT was EUR 3.4 million, and that's 13.8% of revenue. It is on lower level than in 2021, but still on a good level. Running a multi-project model to generate really top-quality games requires the world-class talent, and we have invested to that to drive sustainable growth. Our cost base is increasing in a steady, controlled manner as we have continued to expand our projects and start new initiatives. This increase in resourcing is visible both in personnel expenses and in external development. Personnel expenses were EUR 5.7 million in Q3. That's EUR 0.8 million more than in comparison period.
External development was EUR 2.6 million. That's EUR 1 million more than one year ago. It is especially important for us to be able to utilize external development capabilities like we did with remastering in order to ensure scalability for our operative model. Capitalization of development costs are investments into our own IP development projects. Operative cash flow in Q3 was strong, EUR 4.6 million. As cost base is steady both from profitability and cash flow point of view, the differences in operative cash flow are mostly impacted by the timing of the incoming payments from royalties and from development fees. Year-to-date, operative cash flow was EUR 7.6 million versus EUR 8.8 million in comparison period, so on a good level as well.
Cash position total of EUR 64 million in the end of Q3 was impacted by financial investments of total of EUR 7 million to financial instruments with low risk. These were executed with the aim to neutralize effect of negative interest rates for cash in bank accounts. We have been growing our revenue steady. 2020 was a record year for us, now year-to-date 2021 revenue pillar is about at the same size as one year ago. We expect the Q4 revenues bringing in the revenue pillar for the full year over the last year's level. We are continuing working on our projects and having active negotiations around them, we expect this to contribute to a good Q4. It is essential for a video game developer to ensure on portfolio level smart partnering structures to balance risk and reward.
Partnering terms do affect our growth and profitability in significant manner for years to come, so they cannot be. Due to our strong cash position, there is no need to sub-optimize for short-term performance. That was the financials, and now back to Tero.
Thank you, Terhi. On our outlook. Outlook for the full year 2021 remains unchanged. We expect our revenue and operating profit to increase during this year. As has been said, majority of the revenue and operating profit growth is expected now to materialize during this second half year period. Before we move into Q&A, as a summary, I can say that I'm very pleased with our progress overall as a studio. We now have seven games and projects that we are working on. To successfully work on this many games has required a lot of company-wide developments during the past years.
We have systematically been strengthening our project leadership teams, attracting new talent, supporting and developing our people, improving the base of work in number of teams, building new support functions for our game teams, developing our external development capabilities, advancing our technology and tools, and doing many other developments. In ambitious organizations like Remedy, that work will never be ready. Having this many projects already advancing well shows that a lot of good development has happened. Just to highlight the importance of this, in our industry, building a well-functioning, creatively strong AAA game studio, even for one game, is hard and takes a lot of time for any company in the world. Building a multi-project capable studio like we are is even harder.
We have been now on this multi-project and competence building road for five years, and are now seeing more and more signs on what we can do. What we have built are really hard-to-copy competencies that will give us even more and valuable competitive advantages and support in reaching our long-term objectives. On the basis of these competencies, we are now entering the next phase in Remedy's development. Control has already been out there for two years. We just launched the second live game, Alan Wake Remastered. CrossFire launches are now coming. In the next years, we will be launching games into the market step by step, which means that we will have more live royalty-generating games in our portfolio. At the same time, we have a portfolio of development projects, and the visibility into this games pipeline is good. All in all, future does look promising.
Thank you, Tero. Thank you, Terhi. For the audience, if you want to ask questions, you can type your question in the chat or request speaking turn by clicking Raise Hand in Zoom. In case you are participating by phone, dial star nine to request for a speaking turn. We are now ready for questions. In fact, we already have a couple of questions in the chat. First question is: what is your visibility into Q4 2021 earnings? Your 2021 guidance seems to require a very strong last quarter.
Well, as I concluded, the visibility into our games pipeline is good. Now, without going into detail into where we see, the revenue growth exactly coming, there are in a way. We have developed into a phase where there are multiple generic, revenue streams. First of all, we now have two games in the market. CrossFire launch is coming. Those provide, of course, the royalty opportunities from the consumer revenues. What we have seen important, in the live games is that the business-to-business opportunities, license fee opportunities have also increased quite significantly compared to the past years. We have more games in development. We have amount of announced games that we have, and as they have progressed, it means that, for example, games that have proceeded further into their life cycle, we have more people working.
Overall, it typically means that there are more development payments coming. As has been said, we also have games in which we don't yet have partners, in which we are now negotiating and choosing potential partners. The opportunities come from various different directions.
Good. Thank you, Tero. Is your outlook 2021 dependent on the launch of CrossFire projects?
Well, we can say, as I just referred, that there are a number of different segments where our revenues can build off, and we are not dependent on any one single partner or project.
Good. Is the Q3 2021 level of external development costs a good proxy for coming quarters?
Well, like we have said, we really want to ensure the scalability of our operating model, and that relies on our ability to utilize external development. Overall, if we are expanding the usage, I would say going forward, overall, in general terms, we want to increase that. It would mean that over years at least, that cost package should increase.
Thank you. A question on Control. Have you new Control DLCs in the pipeline? If so, then what is the timetable?
Well, with 505 Games, with our partner, we haven't announced anything new. Overall, if something like this would be in the works, the announcement would be related to the marketing plan that we have. The announcement would happen in a way that we could maximize the visibility in the eyes of the gamers and gaming media, gaming influencers. In that sense, overall, I couldn't say anything confirmative on these topics. What we have said is that, yes, we are supporting Control. Almost all of the developers have now moved to working on the new games in the Control franchise.
Thank you. What do you mean by Q4 negotiations progressing as expected? Which franchise does this relate to?
What we have been saying, for example, is that with Vanguard, we are having active considerations on what type of partnership models are there, what should be our focus, and we have said that there are also negotiations with potential options related to those. That's where we refer.
Good. Thank you. Another question on Vanguard. Has Vanguard passed proof of concept phase?
Well, Vanguard is progressing well. Now, Vanguard is still in the proof of concept phase, but it's a bit different approach than what we are having with our normal AAA games. In a way, the normal AAA games are a bit more. Even they, even though those games are step-by-step longer lasting and longer engaging, they are still more product-focused than service-focused. Our development process is very clear on these, in a way, AAA games we are developing. Vanguard is a free-to-play service-based game where the mentality is that one day we are launching the game, nothing will stop at this point. We continue developing the game, hopefully for years and years to come.
With Vanguard, we are applying some of the best practices from our own stage gate process, but also taking into account that it's a free-to-play service-based game, where it's a very iterative development, designs are being iterated, development is focused what is most important at that phase of the development. In that sense, what we are saying is that Vanguard is quite long in this, in a way, proof of concept phase. We have been able to prove already some of the key parts of the game, but now there are many layers that the free-to-play service-based game needs, so some areas of the game are progressing further into our development, into new development phases, while some new areas are the next being, in a way, proved.
When we are able to lock down these key parts into the game, then at some point in the future, the game will be out there to be tested by the players, and the development still continues.
One more question from the chat. Two more. Are the historical external development costs mostly related to Alan Wake Remastered?
Well, all of our projects use external development more or less, so it varies from project to project and from project phase to phase. That is something that we are having. In addition to that, we have also other external works, for example, with IT or for our game engine. It's difficult to say. In comparison to other project size, like building up a completely new AAA game and versus then the Alan Wake Remastered, I would say that, as the size of a project is, Alan Wake Remastered was smaller.
Good. There's one more question related to Alan Wake Remastered. What was the development budget for Alan Wake Remastered, and do we need to pay royalties to Microsoft before receiving revenues from that franchise?
Well, we haven't said in a way concrete numbers on the development budget, but what can be said is that it's significantly, of course, smaller than a big AAA game would have. What we have said already before that on average, a big AAA game may require three to four years of development time at Remedy. On average, for example, with Control, the big headcount, internal headcount was 100 people. Now, when we talk about, for example, Alan Wake Remastered, first of all, the development time was significantly faster, and then also the development team was clearly smaller. That gives in a way a guideline on the in a way, ballpark budgets that we would be talking about. Do we need to pay Microsoft any royalties?
No, we don't need to pay any more to Microsoft anything. We have a publishing deal with Epic Games Publishing, so Epic has been funding the development. Epic has been investing into marketing and can recoup the investments they have made, and after that, we are splitting the net revenues 50/50.
We actually have one question from a caller with a number ending 7380. Please, you are free to unmute and ask your question.
Hello? Can you hear me well?
Yes, loud and clear.
Perfect. It's Veikko Silvola from Danske Bank. Thank you for taking my questions. Now we've discussed great questions regarding, you know, Q4 and 2021 guidance, but maybe a few questions on the bigger picture. Other studios have mentioned that they have had some problems or slowdown in the game development processes due to the pandemic. Can you briefly discuss around this topic and has the pandemic slowed down the game development process at Remedy?
Well, there are two sides to that coin. I think, overall we were successful in early 2020 in moving into the remote mode. I think in a way that it wasn't a fortunate situation for any company, but for us, I think our projects were also on the stage of the life cycle where making this type of move didn't cause any critical issues. Now, what we have been learning is that projects in the very early phases that have small teams, the collaboration has been good also in the remote mode. Also projects that are, you know, later in the production phase, where all the designs are clear, have been succeeding quite well because it's about execution and implementation, and people pretty well know what has to be done.
The phase of the development that has been maybe a bit more challenging has been in between, when in a way the overall vision of the game is clear, the key parts of the design are clear. We start to ramp up the team, but in a way the devil is often in the details, so some of the designs are not yet clear, and to clarify those, you know, a cross-team collaboration is needed. Definitely that collaboration is easier when people are, if not full-time in the office, at least partly in the office. So in that sense, what we have been actually doing throughout the whole COVID time is that, quite significant part of our personnel has been two to three days in the office in any case. In a way, the COVID time definitely has not supported.
It hasn't made, in a way, in the early phases even that part more efficient. In a way, I would say that we have been able to avoid any dramatic negative effects. Now, when I said that there are two sides of the coin, it is that now when we have been able to build the remote capabilities, in a way the hybrid model, what it means for us has become all the time clearer. What we have been able to do is to start the recruitment also outside of Finland and onboarding people, and that has actually been supporting us in getting pretty senior talents that at least during this COVID time would not have been possible to get into Finland.
Interesting. Great. Well, maybe then related to this topic is kind of senior talent abroad. How has that started well in Sweden? Obviously the competition is tough for the best talent, and talent is very scarce. Where are these talent coming from? Are they moving from another Swedish company to work for Remedy? Or, where do you get the new personnel in Sweden, for example?
Well, so far it has been that we have been able to attract, you know, a senior talent. You know, senior talent, as you said, there is a lot of competition for talent. If you are an experienced game developer, there are plenty of companies willing to take you, so in a way, those people are normally not free, but they are at the moment employed by some other companies. What we see as our strength is that we are making, in a way, really high quality games, unique games. One of the key drivers definitely is that experienced game developers, they are looking at the company and seeing that what type of games is that company making. Are they that type of games that motivate them?
Are the kind of like past experiences such that the company can create outstanding games? Does it signal that the colleagues that you would have in that company are also world-class developers? The recruitment process has to work well, that we are able to clearly, transparently show what is Remedy, how we work, let these potential new candidates discuss with their future colleagues and understand what the team dynamics would be. Then of course, all the practicalities. What are the benefits we offer? Kind of like what is the financial side that we are able to provide? What type of personal development opportunities we can offer? I think overall, when you look at this big picture, Remedy is a really lucrative employer, an interesting one for the senior talent.
Now what's also, I think, playing into our advantage, at least in this early phase, for example, in Sweden. Sweden is a big game development hub overall, with 6,000 people working in the games industry, while Finland is having about 3,000, being still a significant hub in the European scale. Now, Finland mainly has absolutely experienced developers, but coming from the mobile experience. Sweden, on the other hand, has for a long time had a bigger focus on PC and console games, so that already makes the potential pool bit larger for us. Now what we are looking, we are not looking to hire immediately 100 or 200 people. We are looking to have some tens of people and, in order to get that amount of people from this large pool, I think the opportunities are good.
Great. That sounds very interesting, and obviously it's critical for you to, you know, get the access to this talent pool as you have such ambitious multi-project plans for the future. [crosstalk] Maybe then regarding a bit, you know, around this topic also. One thing that's been very heavily, you know, very topical subject at least very recently here in gaming is the culture of a game development studio. Do you measure your culture, or how do you work around this culture thing so that these kind of problems wouldn't raise, as they have raised in some other studios?
Yeah. Yeah. I think you are in a way raising up a highly important topic. I think overall, of course, in the Western world, but in game industry as well, as we have seen, in a way it has become clearer that there are many parts in our industry, and there have been companies where these things haven't been in order. I think we haven't been doing this for years solely to avoid these things. We have been doing number of things for our people and personnel-wise for years because we believe it's the right way to support our people, and it's based on values that we believe are the right ones for Remedy.
What it has meant already for years is that first of all, for all of our people, in a way, we have always had quite clear strategy. We have the values that we are expecting our people to know. What we have had is also a very well-working supervisor organization, where every single person has a permanent home in a discipline-placed supervisory organization. People are mainly working for game projects, so they actually have also then this, in a way, one-year, two-year home in their game project. That alone creates a situation where people always have two channels in which they need to and they can speak out. What we have on top of that is our HR function, which we have been developing all the time.
HR, which is having continuous discussions both with project leadership and with the supervisory organization. What HR has already for a few years introduced in the company is also an employment engagement tool called Peakon. What it provides for us is that we are following, in a way, a psychological model which is breaking down the employee engagement into 10 different drivers, which overall define how well an employee is engaged to its employer. That is then based on approximately 50 questions that we are asking about twice a year, kind of like split into different, in a way, categories. This questionnaire that goes to our employees is anonymous. People can anonymously answer these, and they can also freeform, in a way, report if they are seeing any issues, if they have any questions.
With HR, the management is on a monthly basis going through this anonymous feedback, potential issues, potential questions that we are having. We are following, in a way, this employee engagement and the feedback we are having, and we are able to pinpoint. We are not able to identify who has been the person bringing out a potential topic, but we are able to identify to which team and discipline it's related. Overall, these measures have been really important things for us when we have been saying that we want to be the best employer in the games industry in Europe. The main driver has been that we believe it's the right way to do. We believe it's a really big support in helping us to support our people to develop and succeed.
At the same time, now when these type of issues have been raising up, we have seen that probably it's also been a precaution that we didn't even understand that has helped us to tackle potential issues before they even become issues.
Great. Thank you so much for color on that. I guess just final question from me, I'll stop then. Regarding 2020 revenue and, you know, the outlook for 2020, just so that I get it right, is it so that your this kind of subcontractor revenue is going to be a bit less during 2022 as there are no Smilegate projects ongoing? Just thinking about the revenue dynamics of 2022. What are the main components there? Other royalties or the subcontractor fees, or how should I look at it?
We haven't outlined that in detail. What I said already in my presentation is that we are not saying no to potential new subcontracting projects, but they need to have, again, a really good strategic fit to our long-term goals, big opportunity, but also a project that would be fit to our type of games and give us synergies when we are building certain competencies that we see all Remedy games are needing in the future. In that sense, it's possible that we would have also in the future a subcontracting project. What that could be, is it with Smilegate? Is it with someone else? Our year is at the moment forming to be a good one in any case. We are not in a hurry to, in a way, deciding that.
There are plenty of opportunities available, but one of the scariest resources in our industry are the talented developers, and especially these big, talented teams who together are able to build these games. Once we commit this type of a team to a project, it's a three, four-year commitment easily. In that sense, in a way, we are now seeing what the opportunities are, and once we are certain that, in a way, what is the right one for us, in the bigger context of reaching our goals, then we will go for that. We will see that bit later.
Great. Okay. That's all from me, so thank you very much for your time.
Thank you.
Thank you.
We have couple of questions more. Will you redeploy Smilegate development resources into internal projects or look for an additional third-party project work?
Well, as was just said, in a way the external development work, subcontracting, that's one opportunity. There are a lot of external opportunities available. On the other hand, as you saw, we have, in a way, ongoing projects, also our own IP opportunities, and we didn't specify exactly what projects we have been redirecting our people, but they are the projects that we see as a very strong strategic fit to our future ambitions.
There are a couple of a little bit tempting questions on Alan Wake Remastered game. Have we started receiving royalties? On the other hand, have Epic recouped the investment in Alan Wake Remastered already?
Well, the game started to sell in early October, so we are quite still in early phase overall in the sales life cycle. What we've said that before we start to receive revenues, there is the recoup of the development fees and the marketing before the revenue share starts. That's all we can say at this moment.
Thank you, Terhi. One final question regarding Vanguard. Will Vanguard have seasonal new content, maps, extended story or new characters? There's a lot of interest.
[crosstalk] Well, we will then, in a way. Vanguard is in development. We have quite a clear design what that involves, and it's a free-to-play service-based game, so definitely, in a way, we are not trying to reinvent the wheel in every place, but in a way we're also learning from the models that other successful service-based games are making. In a way, yes, of course, in a way, as a service-based game, there are going to be many elements that we think are good for the game and are serving the players in the right way. What those exactly are, that is then, in a way, the future will show, and we will be then later in the life cycle of the project, revealing a bit more on that.
Good. Apparently, there are no more questions, so thank you everyone for the call and the questions. This is all for now. Have a nice weekend, everyone. Thank you.
Thank you.
Thank you.