Looks like gog.com was 1/3 of revenue but was an operating lost. Revenue did increase but loss grew faster than revenue which is not a good sign. Also they have started production of the box version of cyberpunk so it is pretty close to release.
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Despite gog poor performance they consider it critical for selling their own games.
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almost missed this near the end - basically it sounds like they wrote off gwent losses against gog.com:
Commentary regarding the results of GOG.com
During the third quarter of 2019 the value of Revenues from sales of goods and materials (corresponding to the basic activity
profile of GOG.com, i.e. digital distribution of videogames via the GOG.com online platform and the GOG GALAXY application)
increased by 12% compared to the reference period (from 27 388 thousand PLN to 30 580 thousand PLN). This increase in sales,
coupled with greater profit margins, resulted in an increase in taxable profit from sales of goods and materials to 9 391 thousand
PLN, i.e. 17% more than during the reference period in 2018.
The reported revenues from sales of goods and materials mainly reflect distribution of goods licensed from external suppliers. In
this scope, in terms of revenues, Q3 2019 was the best-ever third quarter in GOG.com’s history.
Compared to Q3 2018 an increase was also observed in Revenues from sales of products, mostly corresponding to GOG.com’s
share in sales carried out in the framework of GWENT: The Witcher Card Game and Thronebreaker: The Witcher Tales (governed
by the relevant consortium agreement). Nevertheless, the volume of sales attributable to both of these projects was lower than in
Q1 and Q2. This is mainly due to the fact that the release of the third expansion – Iron Judgement – was scheduled for 2 October,
i.e. after the balance sheet date; consequently, revenues associated with this expansion (including preorders placed in the third
quarter) will be recognized during the final quarter of the year. Note that the preceding expansions were released in the first and
second quarter respectively (Crimson Curse – 28 March; Novigrad – 27 June).
During the reporting period, (i.e. during the third quarter of 2019), future period sales reported by GOG.com corresponding to
preorders – mainly of Cyberpunk 2077 (not reportable in Q3 2019) increased by 4 032 thousand PLN.
A new cost item appearing in the current period (compared to the reference period in 2018) was the Cost of products and services
sold, resulting mainly from depreciation of past development expenses related to GWENT: The Witcher Card Game and
Thronebreaker: The Witcher Tales.
The reported increase (by 1 111 thousand PLN) in Selling costs (compared to the third quarter of the previous year) was mostly due
to costs related to the GWENT project, including the promotion, upkeep and further development of the game. Since the release
of the full version of GWENT, which took place in October 2018, the Group has ceased to capitalize further development expenses
related to the game. Following transition to this new project phase, expenses incurred by the GWENT development team are
recognized directly as selling costs (this concerns maintenance and development costs, including work on the game’s mobile
edition – note that the iOS version was released on 29 October, i.e. after the close of the reporting period).
The surplus of GWENT-related costs attributable to the GOG.com segment in line with the consortium agreement (including costs
incurred during the third quarter of 2019 as well as depreciation of past development expenses) over the corresponding revenues
negatively affected the segment’s current-period result. Concurrently, GOG.com carried on with intensive development work on
the important GOG GALAXY 2.0 project. The initial release of this new technology, carried out in the framework of closed beta
tests, occurred on 24 June 2019, met with enthusiastic reception on the part of invitees. Activities related directly to digital
distribution of videogames on the GOG.com platform and in the GOG GALAXY application – i.e. the core business activities of the
GOG.com segment – retained their upward trend, ensuring a positive net result for the whole GOG.com segment in Q3 2019.
