Cyberpunk 2077 expansion’s R1.65-billion development cost sends CD Projekt shares tumbling

Shares in Polish computer-game maker CD Projekt SA dropped as much as 8.2% on Friday, touching a 4-1/2-month low, on concern that profit could take a hit from the high cost of producing a recently released add-on feature to the Cyberpunk 2077 game.

The shares have lost about 11% in the past two days, erasing gains made since June when CD Projekt announced a Sept. 26 release date for Phantom Liberty, a paid add-on to the futuristic game.

On Thursday, the company said during an investor day that over 3 million copies of the add-on were sold in the first week, while sales of the original title totaled 25 million, up from 20 million units in Sept. 2022.

However, it said the total cost of production and marketing amounted to 370 million zloty (R1.65 billion), exceeding analyst expectations.

“The high production and marketing budget implies that the add-on hasn’t reached break-even yet,” Kacper Kopron, analyst at Trigon brokerage wrote in a research note. “What is more important, it may also show that investors underestimate the cost of future games.”

The change of investor sentiment contrasts with positive reviews of the add-on from media and players, allaying fears about poor quality that had been raised after the original game premiered in Dec. 2020.

The expansion, dubbed as “a full-blown sequel” to Cyberpunk 2077, was seen as the trigger to boosting CD Projekt’s sales in the coming quarters. Analysts surveyed by Bloomberg News had expected Phantom Liberty, priced at $29.99, to sell 3 million-4.5 million copies this year.

Kopron noted moreover that it could be another two years at least before the studio launches another major game. Witcher, a game based on a medieval role-playing franchise, is not expected by analysts until 2026.

On Thursday, the company failed to share details on the timeline for Witcher, though it said work is starting on another Cyberpunk and would be coordinated by its team in the US.

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Cyberpunk 2077 expansion’s R1.65-billion development cost sends CD Projekt shares tumbling