CD Projekt RED (CDPR) has today released its financial earnings statement for Q1 2019, reporting steady growth for both the publisher and its distribution client GOG. The company mainly attributes results to the continued success of The Witcher 3: Wild Hunt and its expansion, and also provided some updates on future plans and projects.
“The earnings reported by the CD PROJEKT Capital Group in Q1 2019 were primarily driven by sales of The Witcher 3: Wild Hunt together with its expansions – Hearts of Stone and Blood and Wine, sold separately as well as in the Game of the Year Edition bundle. Activities related to GWENT and Thronebreaker also had a significant impact on the Group’s revenues.”
The below graphic compares Q1 2019 to previous quarters dating back to 2011:
And here we see a comparison of GOG’s performance with last year’s results, highlighting its measured growth.
CDPR’s supporting commentary highlighted some interesting takeaways from the report’s key data, as did CEO Adam Kicińsk’s conference presentation and accompanying video. These are as follows:
As it gears up for E3, CDPR is looking to make a big impression with Cyberpunk 2077. The company believes the IP is already well placed to succeed in the market.
Top-notch development quality along with further effective marketing activities surrounding the release of Cyberpunk 2077, PR activities, hype building and involvement in fostering a strong gamer community will all significantly affect the market performance of the upcoming product,” CD Projekt Red writes in their financial statement of Q1 2019.
Check out our more detailed breakdown of Cyberpunk 2077 tidbits from the report here.
Of its GWENT multiplayer card game, CDPR stated that the company had been “collaborating on rolling out new technologies while expanding their respective skill sets and experience with managing online services.
These technologies and the associated know-how are of strategic importance for the Group and its future development and publishing capabilities.”
GOG’s customer pool continues to “grow at a steady pace” and CDPR expects that maintaining “the current high sales volume should be supported by the customers’ increasing tendency.”
Also, growth “depends on seeking additional brand-new products.”
The report reminded investors of its plans for the upcoming GOG 2.0, which is to incorporate social features that allow a more streamlined experience, which was inspired by the “fragmentation of the gaming market” observed by the company.
CDPR refers to this year’s E3 trade show presence as the “most important” in the company’s history.
“Our presence at the fair itself, as Adam Badowski announced yesterday, will consist of two components. We will be present in roughly the same place as last year, except this year we are going to occupy three segments rather than two,” said CEO Adam Kicińsk.
Notably, he later mentioned in a Q&A discussion that the company is “also preparing certain surprises” beyond what has been announced for the show so far.
Speaking of the recently announced CDPR merchandise store, Kicińsk said of the initiative that it was one motivated by a “satisfaction to be able to present our fans with the opportunity to purchase gadgets inspired by our games directly from us.”
He continued saying:
“We want this merchandise to match our games in terms of quality. The launch was very successful; we sold nearly our entire stock right out of the gate, so of course we’re busy restocking most items. The store’s impact on our bottom line is relatively limited but we intend to expand it in preparation for the launch of Cyberpunk.”
Indeed, he reiterated that they “expect to turn a profit on this, but compared to profits generated by sales of our games – both existing and upcoming – the contribution of the store cannot be referred to as significant.”
Risk & Q&A Questions
Asked as to whether Chinese regulations would impact CDPR’s bottom line, Kicińsk said that might be the case if there are restrictions placed on Steam and GOG. The Chinese market, however, is not a major for CDPR, as its games have always been targeted at the western market.
The exception is GWENT, which was designed to breach the Chinese market. But we’re told that GWENT is not a major contributor to CDPR profit so far.
As for Cyberpunk 2077, it’s a game that’s also expected to sell best in the western market, so again, the potential impact of Chinese regulation restrictions is not a huge concern.
Asked about VR for Skyrim and Cyberpunk 2077, CDPR answered that although rudimentary support could be added, a full VR mode requires extensive reworking of a game. In the case of either The Witcher 3 or Cyberpunk 2077, the answer was “we’re not moving in that direction right now.”