GOG is losing money and refocusing on ‘handpicked selection of games’

CD Projekt says its GOG games storefront will put more focus on offering “a handpicked selection of games” and transfer some developers to other projects, following ongoing financial losses at the division.

“Regarding GOG, its performance does present a challenge, and recently we’ve taken measures to improve its financial standing,” CD Projekt CFO Piotr Nielubowicz told investors on a quarterly earnings call. “First and foremost, we’ve decided that GOG should focus more on its core business activity, which means offering a handpicked selection of games with its unique DRM-free philosophy. In line with this approach, there will be changes in the team structure.”

Nielubowicz said that some developers who’d been working on GOG’s online solutions will be transferred from the project. At the end of 2021, GOG is also leaving the Gwent consortium, a cross-division project related to CD Projekt’s The Witcher card game Gwent. This means it won’t bear any development costs or share any profits from the development consortium. CD Projekt previously called Gwent “the most important project of 2017 in the GOG.com segment.”

These latest statements came after disappointing financial results for GOG. The storefront saw a slight increase in revenue but a net loss of around $1.14 million in the last financial quarter. Overall, it’s lost about $2.21 million over the past three quarters compared to a $1.37 million profit over the same period in 2020. CD Projekt didn’t immediately reply to questions about how its new strategy might translate into changes to GOG’s features or catalog.

GOG launched in 2008 as Good Old Games, a platform built around selling hard-to-find classic games without digital rights management or DRM. Since then, it’s expanded into a more all-purpose storefront selling new third-party games and internal studio CD Projekt Red’s The Witcher 3 and Cyberpunk 2077, plus an online service called GOG Galaxy. But it’s also faced apparent financial problems before, laying off a reported 10 percent of its staff in 2019.

One staff member tied the earlier layoffs to increased competition in PC gaming storefronts, which has driven major platforms to lower the commission they take from developers. Valve’s Steam service has long dominated the market for computer game sales. At least one recent competitor, the Epic Games Store, isn’t expected to turn a profit until 2024. And Epic’s store is cushioned by revenue from the publisher’s blockbuster game Fortnite and Unreal game engine. Meanwhile, CD Projekt Red’s botched 2020 launch of Cyberpunk 2077 has put a damper on its recent earnings — although the company says it has seen renewed enthusiasm for the game and is “on track” to release a delayed update in early 2022.