The first quarter of the financial year has been bad for many businesses, video game companies being one exception to this trend. Paradox Interactive have seen a 68% revenue increase compared to the equivalent period last year.
This is a huge number in itself but when you consider that their costs haven't proportionally increased, it leads to a 164% increase in operating profits, totalling more than £13.7 ($16.9) million for the quarter.
Paradox Interactive 2020 Financial Report
This quarter saw the release of three major expansions for Hearts of Iron IV, Cities: Skylines, and Stellaris, which also served to bolster sales at a time when sales were already being driven up by the lockdown. This compounded the usual sales boosts from new content, and this added to the general success of Europa Universalis IV and Surviving the Aftermath, which accounts for the majority of the profit.
Ebba Ljungerud, CEO of Paradox Interactive, made a long statement on the quarterly report, opening with "it is with mixed feelings that I present the first quarterly report of the year. The Covid-19 pandemic has impacted our society in a disturbing way, causing tragedies for individuals and families as it has for business. Covid-19 has also affected Paradox, albeit not as harshly as many other companies." However, she believes it's "still too early to say what long-term effects, if any, Covid-19 will have on our business and on the gaming industry in general."
This reflects the major theme of the Coronavirus - uncertainty. Right now nobody understands the long-term effects on the economy or society. What we may be able to surmise is that the gaming industry will come out stronger than many others, partly due to the extra reserves of cash being built up, and partly because once people begin to game, they usually keep it up.
Worldwide lockdown has introduced many millions of people to the enjoyment and escapism of gaming, and it's generally believed that this will bolster the industry overall.
During this time, Paradox launched a fundraiser through Steam that donated more than £400,000 ($500,000) to the UN COVID-19 Solidarity Response Fund. "During the quarter, we have tried to help those who have greater challenges than we do. Our efforts, among other things, have included financially supporting charities in Sweden, the Netherlands, and the US where we have a presence."
Paradox have also increased spending on game development by 57% compared to the same time last year. Overall, it looks like Paradox Interactive and the video game industry will come out of this crisis stronger than before, and much better than most. This is because the industry is largely digital, allowing workers to operate with high efficiency from home, while increased demand for games increases their cash reserves and playerbase for the time being.