Life by You cancellation tanks Paradox operating profit

The cancellation of Life by You and closure of developer Tectonic contributed to a 90 percent decrease in operating profit at Paradox Interactive during the second quarter of the fiscal year.

The Swedish publisher, known for working on strategy franchises like Stellaris, Cities: Skylines, and Crusader Kings, saw operating profit fall to SEK 28.9 million ($2.67 million) during Q2–a decrease of 90 percent year-on-year.

The company said write-downs of SEK 208 million impacted that total. Q2 revenue also fell by 22 percent year-over-year to SEK 575.8 million.

Paradox CEO Fredrik Wester said the company's core business continues to perform "very well," but suggested the cancellation of Life by You means it's ending the second quarter with "mixed feelings."

"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 meet our expectations," said Wester in an earnings release.

"Looking at the quarter's results, 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."

Paradox has endured a torrid time of late after a number of major releases failed to land. The company branded The Lamplighters League a "big disappointment" shortly after it launched October 2023 and said it would be writing down the project at a cost of SEK 248 million.

Cities: Skylines II also a point of concern

It's also "unhappy" with the performance and reception of Cities: Skylines II. The sequel, published by Paradox and developed by Colossal Order, sold over 1 million copies but has been hampered by a number of technical issues. Paradox admitted the city-builder didn't meet the quality levels it strives towards but pledged to continue supporting the project—although its rehabilitation attempts didn't quite have the desired effect.

As for Tectonic and Life by You, Paradox scrapped both the project and its developer in June in what Wester described as a "difficult and drastic move." At the time, the chief exec claimed the life sim wouldn't be able to meet expectations.

"A version that we'd be satisfied with is too far away, and therefore we are taking the difficult decision to cancel the release," he added. "Moving forward, we should perform at a much higher level."