PlayWay's Q3: Coincidence or bad signs?
PlayWay's latests set of results seems disappointing. Let's dive into the root causes
On Wednesday, Playway presented its latest set of results. The results were, at first glance, underwhelming, but not unexpected, as the share price action of the last few months makes evident. Personally, I found them informative, but maybe not in the areas that would be expected.
But first, let's address the lack of growth or at least its appearance. Playway recorded a YoY revenue drop of 23% for the quarter, and that means a 3% drop YTD. That is probably the most disappointing figure for many people... but personally, I think it is expected, and mostly irrelevant.
There are two main reasons. For Playway (and, honestly for most editors), publisher sales are, along with premieres, the biggest revenue-generating moments. Sure, individual sales of some games linked to seasonal Steam events also help, but the publisher sales are the time when the editor can get something out of the existing catalog (plus trying to get people interested in long-running series with future sequels). Playway's publisher sale moved from the summer (July and August) to October.
And then, we have the premieres. Sure, there were some, but very minor ones. Let's see... :
Offroad Mechanic Simulator
Pool Cleaning Simulator
Delivery INC
Ship Graveyard 2
Space Mechanic Simulator
Music Store Simulator
CMS 21: China DLC
All in all, very small games, except for CMS21’s China DLC… which was apparently very poorly received. Excluding the DLC, estimated sales for all of them are below 10k copies, except for Ship Graveyard 2 (which should be above 50k at this point). Most of them seem to have been very low budget (and low expectations), so the lack of sales was expected. That said, Space Mechanic Simulator should have performed better, but a combination of an old wishlist and launch bugs seems to have affected sales.
Overall, I think this is a quarter that is representative of Playway’s strategy. One DLC for a major game (that didn’t work out that well, but subsequent ones seem to have) and 6 low-budget games. Of those, 4 seem to be around breakeven, one was a relevant failure (Space Mechanic Simulator1), and one a nice success in terms of return (Ship Graveyard 2’s cost was around PLN 600k, returning more than 4 times that so far) but small in terms of magnitude. The hit ratio was not great these 3 months, and there were no sales pushing prior existing games.
And still, a profit and more than 50% margins.
But that is not enough. Playway needs to grow to be a good investment at this price and to do so while keeping its cost-control culture intact. So let’s explore the increase in costs that is apparent in the latest report
More investment… and some cancellations

When we look at PlayWay’s cost in the quarter, the first thing that pops up is that while COGS are more or less in line with prior quarters2, there is a huge increase on operating expenses, and in particular in Other operating expenses. It is non-trivial (PLN 5.5 million vs 1 in the full first half) and explains away almost all the increase in fixed costs. The reason for these additional costs is not explained in the report, but given what is usually included there, I think we are seeing the cancellation of several projects and that is the cost of wiping its value from the WIP account in the balance sheet. That impression is further reinforced by the cash generation profile (just check the corrections epigraph). That said, it could also be caused by write-offs of games that were launched and did not do as expected, but given the balance sheet situation in H1 and the games that were launched in Q3, I am inclined to think these are cancellations or early write-offs of unfinished projects (because that write-off would probably be close to the full cost of the releases).
Other than that, costs seem more or less in line. So I think we can start talking about what happened after the 30th of September!
Latest releases, and the next few ones
As opposed to Q3, Q4 had some interesting releases pending. And I have to say that, so far, things are not looking that well. In my view, for these three months, there were 3 relevant releases (2 of which have happened)
Tribe: Primitive Builder was a relevant failure for PolySlash (where PlayWay has a 32% interest). Based on the reviews, looks like a good game, just no commercial traction whatsoever. With a relatively big budget for the group (PLN 2 million), that is a big blow for PolySlash. Not so much for PlayWay due to the size of the group, but it certainly failed to live up to expectations. So far, according to Gamalytics estimates, it has not passed 20k copies sold (and in the first few days it only sold 10k, so that is believable, if maybe slightly underestimated). To add insult to injury, PolySlash seems to be bent on trying to make it profitable through DLCs and ports which… well, doesn’t usually work.3
Thief Simulator 2 also looks like a failure to me right now but of a very different kind. This game had a fantastic return on investment. The cost was only PLN 1 million and it has grossed at least 8 times that (which is around 5, after taxes and Steam), and sold more than a hundred thousand copies, with similar numbers to the first entry of the series launch. And there lies the problem. The first installment didn’t have a mind-blowing launch but went on to sell a couple million copies over its lifetime (a bunch of them this year, heavily discounted, of course). The sequel should have had an easier time reaching its public, so sales should be more concentrated in the first few weeks. This probably means that, while the game made money, the opportunity to have another series joining the House Flipper / CMS pantheon as real money makers for the company was lost. The hope here is that it becomes a solid long-run seller, but its concurrent users history is worse than that of its predecessor. Well, at least it is a profitable failure.
To be fair, not all is grim. In the last few months, the near-term pipeline has started to look… well, interesting. The biggest releases of the last few months were Thief 2 and Contraband Police, in positions 101 and 93 in the Steam wishlist ranking just before launch. It is not an infallible metric, but unless the list is too old, or the early ratings tank, it is a reasonable proxy. Now, there are a bunch of releases expected for late 2023 (well, one really) and for 2024. Let’s see:
House Flipper 2 (19 in wishlist ranking): Key. House Flipper and CMS are the real money-makers for the group and a failure here could be crippling for PlayWay in the mid term. Coming out on December 14th!
Infection Free Zone (20): Part of Games Operators, so the percentage for the group is smaller, but interesting nonetheless.
Builders of Egypt (73) & Builders of Greece (189): The Builders series has an old wishlist (especially for BoE), but if things don’t drag much longer it can still make some noise!4
Robin Hood: Sherwood Builders (85): Not really a city builder, or an RPG, or a hunting game, or a combat game… it does remind me a bit of Tribe, which doesn’t bode well. But what do I know?
Holstin (109): Ultraviolent lo-fi survival horror set in 90s Poland. Honestly, I am hopeful.
And then a bunch titles that might end up doing well depending on a lot of things… Honeycomb (213), SWAT (217) & Cooking Simulator 2 (272) are the leaders of the pack for now
And last but not least, iterations over existing games can drive quite a bit of revenue. We have
A DLC for Contraband Police
Iterations on Simrail (which beat its all-time users’ peak after the last big update and is still on EA) and Uboat (still in EA as well)
New DLCs for CMS21
So we have at least 5 games with the potential to be relatively big launches for PlayWay in the coming year, with some potential big content updates for existing games to top it off.
Personally, I think the investment in development is about to pay off, but hey, everything could still be a massive flop. Let’s see!
So much so that it was featured in GameDiscoverCo explaining potential reasons for the flop. Atomic Jelly is left, I’m afraid, in pretty dire straits after this. They seem to have resources only for a few months, and I don’t see how they survive without further financial support from PlayWay (they already gave a small loan to finance the development of their next game)
Inventory changes as tracked by PlayWay in the report are somewhat higher, but the way PlayWay presents costs in its reports is… confusing, to say the least, from 2022 onwards. COGS and operating costs are presented together with an epigraph for third party costs that is spread around both. For details, check note 26 in 2022’s annual report. Numbers add up, it is nothing worrying. But it makes comparisons on a quarterly basis difficult, so the indirect method TIKR uses to calculate COGS is good enough.
PolySlash has several other games in the making, but most of them have close to no following as of now (Poly Gangs and Election Day aside… both of which have work on them stopped currently) and their balance sheet looks, in all honesty, dire. While Tribe provided some much-needed cash, I still don’t see how they survive this without a capital injection (baring a surprise hit with Lazarus or the Order of the Snake Scale). As in the case of Atomic Jelly, we can see that this industry is not for the faint of heart.
Despite the best efforts of the BoE main developer. Outdated Prologue still open to the public, radio silence for months, setting unrealistic dates only to blow past them (even in messages in Discord! What for, I wonder) and even airing disputes with the publisher in public. The poor man must be under a ton of stress to act that way, but I suspect it has already hurt the project significantly.