Paradox Interactive profits drop 90% due to Life By You cancellation

Paradox Interactive's profits have significantly dropped by 90% following the cancellation of Life By You.

The publisher released its second quarter financial results on Thursday, in which it saw profits drop to SEK 28.9 million ($2.6 million) compared to SEK 292.9 million ($27.1 million) during the same period last year.

Write-downs of development costs for Life By You amounted to SEK 208 million ($19.2 million), which are included in the operating profits.

As for overall revenue, it fell by 22% to SEK 575.8 million ($53.3 million) during the second quarter.

"We end the second quarter of the year with mixed feelings," said Paradox Interactive CEO Fredrik Wester. "On the one hand, our core business has performed very well, but on the other hand, we made the difficult decision to cancel the release of Life By You, as the game would not be able to reach expectations."

"We've released several strong expansions with good quality to our core games, which has a positive impact on the top line and provides a good cash flow from operating activities. The bottom line is sadly weighed down by the write-down of Life By You. It is painful but gives us a strong motivation to further improve our operations."

Wester added: "In 2021, we made major changes to how we invest in riskier projects, which means that we have not started new projects with the same combination of high risk and high costs as Life By You."

Paradox cancelled Life By You last month, due to the game not meeting its or the community's expectations. It was due to be the debut title of internal studio Paradox Tectonic, formed in 2019 and led by former Electronic Arts executive vice president Rod Humble.

Paradox Tectonic was shuttered as a result of the cancellation, which affected 24 employees.