Outriders Developer Says Square Enix Yet to Pay Royalties

Outriders development studio People Can Fly says publisher Square Enix has yet to pay it a royalty fee, suggesting the game has not yet broken even.

In a financial statement published Monday, People Can Fly said royalties from the sales of Outriders were set to be paid once Square Enix had recouped costs related to quality assurance, distribution and marketing. The deadline for this royalty payment was 45 days from the end of the calendar quarter, which comes out to Aug. 14.

As no payment was made Aug. 15, People Can Fly concluded, "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 April 1.

The lack of payment suggests Outriders has yet to break even for Square Enix despite 3.5 million unique players in its first month and a day one release on Xbox Game Pass. People Can Fly CEO Sebastian Wojciechowski says his company isn't sure exactly what happened.

"We do not have any sales figures for Outriders – we estimate sales to be between 2 and 3 million copies and we assumed that this result would make the project profitable already in the first quarter of sales. The lack of payment from the publisher probably means that in Square Enix’s opinion this is not the case after all."

Wojciechowski then offered a possible explanation for the lack of revenue.

"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."

Square Enix had previously described the Game Pass deal as justified by the player acquisition and digital sales it brought, with president Yosuke Matsuda saying the company had been "pleasantly surprised," by the high ratio of digital sales and number of active users. That was during a full-year financial results briefing May 13.

On May 19, a Square Enix press release said that Outriders, "...is on track to become the company's next major franchise," given the size of its player base at launch.

In his statement, Wojciechowski reminded investors that Outriders was only at the start of its planned lifecycle, as the studio aims to continue supporting and promoting it with help from Square Enix. He expects the first royalties from Outriders to be paid out later this year.