The developer of Outriders has said Square Enix has yet to pay it a royalty fee, suggesting it has yet to break even.
In a financial statement, Polish company People Can Fly said that up to 16th August, it had not received royalties on the sale of the co-op-focused looter-shooter from publisher Square Enix.
Royalties would be paid to PCF if the net receipts from the sales of Outriders yielded the pre-agreed level of returns for Square Enix on the costs incurred relating to quality assurance, distribution and marketing. Essentially, the contract states PCF gets its royalties on profits only after Square Enix makes back its investment.
The deadline for this royalty payment from Square Enix was 45 days from the end of the calendar quarter and expired on 14th August. No payment was made on 15th August - the first business day following that day - leading PCF to conclude "there are no grounds for the publisher to pay royalties to the company for the period from 1st April 2021 through 30th June 2021". Outriders came out 1st April.
The suggestion here is Outriders failed to break even for Square Enix, but it seems PCF isn't sure exactly what happened - it accused Square Enix of not providing any information regarding the sales, income nor costs relating to the development and publishing of Outriders.
PCF president Sebastian Wojciechowski said: "We don't have any sales figures for Outriders - we estimate it at between two and three million units and assumed that this was a result that would ensure profitability for this project in the first quarter of sales. The lack of payment by the publisher probably means that, according to Square Enix, this is not the case."
Wojciechowski then went on to speculate about the cause of this revenue shortfall:
"Perhaps it was caused by some elements of Square Enix's sales policy, the details of which we do not know, such as partnerships concluded by the publisher with distribution platforms or entities offering Outriders as an addition to their products. Failure to achieve the level of profitability may also mean that the costs incurred by the publisher are higher than expected.
"But I don't want to speculate; we will analyse the situation further. It is worth noting, however, that such explanations take time and our influence on the publisher's position is limited."
The news comes as some surprise, given Square Enix talked up the success of Outriders soon after launch.
In May, Square Enix said Outriders was "poised to be the company's next big franchise" after 3.5 million unique players flocked to the experience in its first month. At least some of Outriders' success was attributed to its day-one launch on Xbox Game Pass.
Then in June, Square Enix said it was "pleasantly surprised" by the success of its new IP, stating "the digital sales ratio for the title have been very high", and insisted its "decision to make Outriders available with Microsoft's Xbox Game Pass as soon as the title launched also worked in [its] favour".
Microsoft teased the shooter was coming to Xbox Game Pass just a couple of weeks before release, and Outriders swiftly became one of the service's most high-profile offerings.
A few months later, Square Enix said that despite the "slight issues" with bugs and server instability, Outriders had "gotten off to a good start as a new IP".
Not good enough, perhaps? Eurogamer has contacted Square Enix for comment.
Looking to the future, Wojciechowski said "the sales tail" of Outriders "is ahead of us". PCF is working on supporting Outriders with more content, which will be revealed soon. The company is also "counting on" more promotion from Square Enix, and expects the first royalties from sales of Outriders to be paid out this year.
People Can Fly is currently working on the Dagger project for Take-Two Interactive, and the Gemini project, which is a new game for Square Enix. Awkward!
PCF said it's also working on a new game it intends to self-publish, which makes sense in the context of the issues with Square Enix.
"Working with the publisher has many advantages, but also its disadvantages - one of them is the low impact of PCF on sales activities and the incompleteness or - as in this case - the lack of data obtained from the publisher in this regard," Wojciechowski concluded.
"This is one of the reasons why, apart from working with publishers, we have decided to develop projects whose IP will remain the property of the company and which will be published by the company."
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