Results for third quarter of 2018

UPDATED with full report

CDProjekt
- sales revenue: down to 67m PLN from 85m PLN (GOG: 28m, 42% of revenue)
- sales cost were stable, operating expenses up: net profit now 15m PLN instead of 36m PLN (GOG: loss of 0.5m)
- cash flow almost completely reinvested into research and development
- assets increased 1%
- still expanding: but another building adjacent to the office for 13m PLN
- revenue by country for 2018 so far
-- Poland 4% (2018: 8%)
-- Europe 30% (29%)
-- North America 58% (53%)
-- South America 1% (1%)
-- Asia 6% (6%)
-- Australia 2% (2%)
-- Africa <1% (<1%)
- video game sales: physical 2.9m PLN, digital 63m PLN

GOG
- sales revenue 28m PLN, 42% of CDProjekt's revenue
- sales revenue slightly increased year-on-year in total, but 22% for non-CDPR games
- development expenditures more than doubled y/y

Thank you for the summary. To summarize it: GOG made a small loss in profit in the third quarter (which might even be normal for third quarter) and sales increased slightly. Also they heavily invested (surely not into the community forum).

It seems the exponential growth phase for GOG is long since over.
They are not very profitable (at least not in Q3 of 2018).
They might even be falling behind further compared to Steam (if Steam continues to grow).
But they are kind of a strong pillar of CDP acting as a stabilizer with a steady stream of revenues.
Nevertheless they are investing in something (hopefully in more games, probably in the Galaxy client, hopefully not in DRM, surely not in the forum, maybe in making some games fit for mobile devices). What might it be?

Future growth of GOG won't come easy and CDP will probably mostly rely on the success of upcoming game releases for generating profit.

In the past, GOG's development expenditures covered Galaxy, Gwent and some tasks for CDPR (network related coding, don't remember anymore if web development was also included).

Will be interesting to see how successful their Winter/X-mas sale will be given it's more and more about indies these days.

Update the post with some info from the full report (previous info was just from the presentation).

Not so good for GoG this year.

Net Profit:
3rd quarter 2018: 561,000 PLN loss (-$147,000)
3rd quarter 2017: 1,931,000 PLN profit ($507,000)

1st 3 quarters 2018: 1,739,000 PLN loss (-$457,000)
1st 3 quarters 2017: 14,499,000 PLN profit ($3,806,000)

Sales Revenues:
3rd quarter 2018: 28,109,000 PLN ($7,377,000)
3rd quarter 2017: 33,415,000 PLN ($8,770,000)
Down: 5,306,000 PLN ($1,393,000)

1st 3 quarters 2018: 92,685,000 PLN ($24,325,000)
1st 3 quarters 2017: 129,146,000 PLN ($33,894,000)
Down: 36,461,000 PLN ($9,307,000)

So, it looks like the losses have two major factors.
1) CDPR products took a nosedive. Non-CDPR products are actually up in aggregated USD.
2) PLN increased in value vs. the U.S. Dollar and because most of GoG's sales are in USD, they took a hit. Each U.S. Dollar in sales brought in 7% less PLN this year due to exchange rates.

One substantial note I see is this:

"Further growth of activities in the GOG.com segment, including the potential to acquire unique know-how and experience, and to fully exploit the Company’s technological expertise, will be influenced by the Company’s involvement in the GWENT project, where GOG.com is responsible, among others, for the server and networking infrastructure. This involvement, particularly as relates to applying GOG Galaxy in support of free-to-play online games, marks GOG.com’s first foray into an entirely new market segment. The technologies and experience gained in this project will, in the Board’s opinion, substantially affect further growth prospects as well as the Group’s future products. "

This makes it sound as if CD Projekt will be developing additional free-to-play games (which wouldn't be surprising), and that more such games may come to GOG (which would be surprising if they aren't CD Projekt titles).

The impression I get is GOG is going for the long game, not quick gains.

This doesn't really look like growth to me. A few more such years and GOG will arrive again where they started.

In a way it is and in another way it isn't.

They say that their revenue is growing when you only count their external clients (meaning all non-CDPR titles). The part that is disturbing is that they cannot turn a profit without CDPR titles. They credited Gwent last year for their incredible profit margin, now that sales (microtransactions) have dropped off, I wonder how much the extra infrastructure might be costing them now instead. Is this a repeat of flash-in-pan MMO titles, where they are briefly popular and profitable but then when their popularity wanes, they start bleeding money until they close the servers?

Add SCPMs quote and it looks as if the new direction for GoG is to try to repeat Gwent's early success with free-to-play, pay-to-win titles with profit based on microtransactions. Not to mention that online servers are state-of-the-art DRM with is against GoG's promoted tenets.

I really doubt something passe might help them. MMO are old news now.

Whatever form these new free-to-play games take, all such games are server based to enforce their microtransactions. And at some point in their life cycles, their popularity will wain to the point that maintaining servers costs more than the money coming in. It's why so many MMO's die and why multi-player servers eventually get closed.

some suggestions to get gog financially profitable:

gog community market for trading cards, skins...and good old gaming boxes
GoG Levels for uplifting the hugely beloved Profiles
gogLINK (for streaming DRMfree Games on your TV)
gogTROLLER (playing TeenAgent on your TV with Controller...awesome!)
gogMERCHANDISE...T-Shirts, Coffee Mugs, Mouse Pads...hell yeah, bring em out, we want em all!









and releasing Skyrim...and Civilization 5...and Bioshock...and TeenAgent 2 (gog exclusive)


BAM!!!! - GOG NUMBER 1
Thank me later.

So basically you want GOG to implement Steams manipulative tactics to dupe people into brand loyalty?

So, there is such a thing as being a bit too open. ;) It's a shame that GOG has trouble getting any kind of positive mention in gaming media (did anyone even cover the fact that the Soldier of Fortune games were liberated from rights hell?) CD Projekt's quote that GOG was "incomparably" smaller than Steam meanwhile got endless coverage, with journalists thankful that it flunked so that they can have all their eggs in one basket. I'm not sure why CD Projekt didn't time the release to be closer to the console release and then just wait it out, because like it or not, console releases still bring in more money than PC, from every pie chart I've seen devs post. Witcher 3 did boat-loads more money on consoles than PC.
A lot of folks in the comments sections of the articles actually mention that their problem wasn't so much the GOG exclusivity as it was that Thronebreaker just wasn't their type of game, the price tag was seen as too high, or that the timing was poor with the vast majority of attention being directed towards RDR2 (even Fallout 76 is struggling).
Really, a big problem is that GOG itself just isn't getting much in the way of media coverage, social or traditional, believe me, I'm looking for it. CD Projekt and GOG really need to be out there doing more interviews, promoting sales and games (not just CD Projekt's but stuff they helped bring back or games that debuted DRM-free on GOG), and talking about behind-the-scenes work, their mission and future plans. There's no shortage of budding journalists, streamers, and other partners to work with. GOG also aren't doing as much with the community as they used to (remember how they would talk about what publishers they dreamed of having, their letters to Santa, surveys, contests, Q&As, and so on?). Developing community and (non-negative) media visibility is also an important part of growth. I'm not pessimistic about the future, but GOG still has quite a distance to go.