Paradox Interactive's earnings dropped significantly by 90% following the cancellation of Life By You.
The publisher released its second-quarter financial results on Thursday, in which its profit fell to 28.9 million Swedish kronor ($2.6 million) compared with 292.9 million Swedish kronor ($27.1 million) during the same period last year.
Amortization of development costs for Life By You amounted to SEK 208 million ($19.2 million), which is included in operating profit.
Overall revenue fell 22% to SEK 575.8 million ($53.3 million) in the second quarter.
“We end the second quarter of the year with mixed feelings,” said Paradox Interactive CEO Fredrik Wester. “On the one hand, our core business has performed very well, but on the other hand, we made the difficult decision to cancel the launch of Life By You, as the game would not live up to expectations.”
“We have released several solid, high-quality expansions for our core games, which has a positive impact on revenue and provides good cash flow from operating activities. The bottom line is unfortunately weighed down by the write-down of Life By You. It is painful, but it gives us strong motivation to continue improving our operations.”
Wester added: “In 2021, we made significant changes to the way we invest in riskier projects, meaning we have not started new projects with the same combination of high risk and high costs as Life By You.”
Paradox cancelled Life By You last month due to the game failing to meet its and the community's expectations. It was set to be the debut title from internal studio Paradox Tectonic, formed in 2019 and led by former Electronic Arts executive vice president Rod Humble.
Paradox Tectonic closed as a result of the cancellation, which affected 24 employees.