Remedy relaunches Vanguard project and buries plans for F2P game

Translation: Original comment published in Finnish on 11/14/2023 at 6:15 am EET.

On Monday, Remedy announced that it is relaunching its free-to-play collaborative multiplayer project previously known as Vanguard, with Tencent as its publishing partner. Going forward, the project will be codenamed "Kestrel" and will be made into a premium game with a strong co-op multiplayer component.

Looking at the long game, we think the decision was the right one

We had long said that Vanguard was the biggest question mark in Remedy's investment story, as the company has no previous experience in developing games based on the F2P model. Thus, the decision to change the direction of the project and focus more on Remedy's proven strengths is a welcome decision from a risk management perspective. The decision will inevitably delay the release of the project from our current estimate (H2'26), but at the same time we believe it will improve the likelihood of success. Thus, looking back to the end of this decade, we see the decision as a positive one, although in the short term, moving the project back to the drawing board is not really a particularly positive driver. It is also worth remembering that Tencent has financed most of the development of Vanguard (we estimate Tencent's share at 70%), so the risks associated with the project have been limited for Remedy from the get-go.

In terms of development fees in the coming years, the decision is unlikely to have a major impact as Vanguard staff move on to other projects. At this point, Remedy did not indicate any possible changes to the production budget of the project, which we currently estimate to be around the mid-point of the range for a typical Remedy project (30-60 MEUR). It is possible that the development and publishing agreement with Tencent will undergo some changes as a result of the relaunch.

In any case, the project's royalty expectations will inevitably move somewhat further toward the end of this decade. We previously expected more significant royalty income from Vanguard from 2027 onwards. Our initial estimate is that the game could now be released in 2028, with other projects in the pipeline being released between 2025 and 2027. We will update our forecasts for the project in the near future.

Kestrel goes back to the conceptualization stage with a small team

The relaunch was decided when the project reached the end of the proof-of-concept phase, and when Remedy and Tencent then had time to assess the status of the project and its next steps. The project now returns to the conceptualization stage. Part of the former Vanguard development team will move on to work on Remedy's other ongoing projects (basically Condor and Max Payne). Kestrel's management and selected other members of the development team are focused on taking the project in a new direction from the conceptualization stage forward to create a premium game with a strong co-op multiplayer component. The new experience builds on Remedy's core strengths and is based on many of the features, content and themes already designed for Vanguard. Remedy's strengths in AAA games include strong and unique storytelling and the creation of memorable worlds and characters.

Publishing a big F2P game would have been a high-risk venture

Remedy and Tencent decided to relaunch the project because of the uncertainty and risks involved in creating a successful free-to-play game in a rapidly changing market. We fully share this view, and over the past year several multiplayer projects in development have been killed off by several game studios. For example, a while ago, Sony halved its previous target of 12 new service-based games by 2026. The F2P model on consoles really reared its head after the huge success of Fortnite in 2017, which has also seen a slight hiccup in revenue in the recent news cycle. The challenge for the F2P model on consoles is achieving sufficient scale, as usually only a small share of players spend money in the game. At the same time, with very high player quality standards, game development requires significant investment, the success of which is difficult to measure in advance. Remedy took several years to develop the Vanguard project with a relatively small team, so now a relaunch of the project can still be done at a reasonable cost compared to if the game had been in full production for longer. Moreover, Vanguard's development work will not be completely wasted, as the multiplayer features already developed can be used in Kestrel.