Paradox Interactive has gone through a rough patch over the past year.

After several delays, its highly awaited Vampire: The Masquerade – Bloodlines 2 changed hands in September 2023, with development moving from Hardsuit Labs to The Chinese Room.

Then a month later Paradox wrote down the development costs of The Lamplighters League just a week after launch, also confirming layoffs took place at its developer Harebrained Schemes. A week later, the two parties announced their split, with Paradox having previously acquired Harebrained in 2018.

Fast forward to 2024, and Paradox announced the cancellation of its life sim Life by You in June, as well as the closure of its developer, Paradox Tectonic. The Swedish company’s profits dropped 90% year-on-year off the back of this announcement.

Since then, Paradox also announced a third delay for Cities Skylines 2 on consoles, and that Prison Architect 2 was postponed indefinitely.

We sat down with deputy CEO Mattias Lilja last week, who didn’t shy away from addressing the issues the company has run into with Life By You, culture changes, and its overall strategy. We also discussed the situation with Vampire: The Masquerade – Bloodlines 2, which you can read here.

“Luck in a sense has to do with things we can and can’t control – and I’m interested in the parts that we can,” Mattias Lilja says as we mention Paradox’s string of bad luck and how it intends to course correct. “And it has a lot to do with: what games do we start and how do we start them? And how do we finance things?”

When taking risks on a project – taking the example of launching Paradox’s indie publishing branch, Arc – funding needs to be carefully considered, Lilja points out.

“Life by You was sort of outside our circle of competence – strategically a good idea, but we started it in a bad way and we financed it way too much before we knew enough about it”

“And then if we’re gonna start something that is bigger, it needs to be squarely in our circular competence,” he continues. “It needs to be a Cities or a Cities-like, or a GST [Grand Strategy game]. Then we know enough to take risks in a smart way. Because even if we release a game like Victoria 3 – that had struggles – it’s still a game that people want to play, that we can continue with. It’s not a huge success early on but it’s also a thing that we know a lot about.

“And [there’s] a difference I’d say between [that and], say, Life by You, which was sort of outside our circle of competence – strategically a good idea, but we started it in a bad way and we financed it way too much before we knew enough about it, I would say. So it has a lot to do with how we start projects and how we manage them over time, including the investment part.”

Making the right decisions for the future of Paradox also has to do with making sure the team knows its current fans, Lilja says, and making sure they answer the question “Who really wants this?” when starting a project.

“We should not end up in these places,” Lilja continues, talking about how gathering a critical mass of feedback can prevent situations like Life by You and The Lamplighters League from happening.

“A game like Vampire Bloodlines 2 is sort of outside our comfort zone. Life by You is on the edge, other games [like] Prison Architect I would say would be inside. So there is more of a ‘How do we ensure that they’re of the quality that players want and expect?’

“And then I think delays are to be expected. It’s unfortunate and we want to release things. And sometimes we’re a bit hot on the button and get [going] too soon. But I think the current sentiment on players punishes that really, really hard. So, I would expect us to delay more actually, to meet expectations. A good game doesn’t deserve a bad start.”

He adds: “With the circle of competence, we know what we’re doing, we understand the risks and also, if something goes wrong, we know how to fix it, which is maybe not so sure when you’re outside of your [core expertise]. So you don’t want to be heavily invested and [go] live and people are angry and we don’t really know exactly what we’re supposed to do. So we need to understand a bit more how we take risks from the business side, but then it has [also] to do with, ‘Do we do know the fans? Are we the fans?’ These two things need to meet.”

From an external perspective, Life by You seemed to be a title that fit Paradox’s expertise pretty well, and one that had market demand. The Sims 4’s community, among others, has a definite appetite for a new generation of sim game as it’s eagerly awaiting for a follow up (that may never come). So it felt like all the stars were aligned, we tell Lilja.

“We felt the same way you did, early on,” he answers. “This is a bet that I [thought] Paradox should take in the sense that we had core people that were good, that knew what [they’re doing, and] this is adjacent to what we do – it’s not Cities but it’s maybe one step further. So it made a lot of sense to us as a publisher to look at this. So we started in a place where I think we really should do this. Unfortunately, over time, we came to a place where the team did not…,” he pauses. “They weren’t able to pull it off I would say. And that’s not just on them. That’s absolutely also on us.

“So we tried to see how we could get to a place where we release something that the fans would want. And unfortunately we ended up in a place where we can’t, we had to stop now because everything we do from this point on is going to, quite frankly, be more costly, and probably not solve the issues that we’re looking at.

“I would expect us to delay more actually, to meet expectations. A good game doesn’t deserve a bad start”

“And that is, of course, a massive failure on our part mostly as a publisher, not being able to steer that better and end up in that place. But again, we don’t stop games if we think that people will enjoy them – and we were pretty sure that releasing would be worse, as hard as that is to say. So we came to the conclusion that we needed to stop this now rather than make it worse. On the concept level? Sure. Strategically for Paradox? Absolutely. Execution? We were not on point.”

That’s not to say everything has been doom and gloom for Paradox, with its indie publishing efforts doing quite well. For instance, Game River’s Mechabellum launched at the end of September under the Paradox Arc label and has been received very well.

“We don’t want to stop doing those things.,” Lilja points out. “We just want to do it in a sensible way and also communicate that that’s what we’re doing. But we have a long view on it. We’re not really looking for ‘quick’.”

He later adds: “I would draw a circle about what we know, and then try to place what’s inside or outside that and be very careful if we’re on the edge, or outside that circle. That would be my sort of strategic approach.”

Paradox has experienced a lot of management change over the past few years, which could also explain the uncertainty over its strategy. Veteran CEO Fredrik Wester, who originally joined the company in 2003, stepped down in 2018 but remained as executive chairman of the board.

His replacement, Ebba Ljungerud, left in 2021 “due to differing views on the company’s strategy going forward.” This happened along the same time a report based on an employee survey revealed an alleged culture of bullying and gender discrimination at Paradox. Wester addressed the report and his own inappropriate behaviour that took place in a 2018 meeting – he clarified that the unspecified incident is not why he stepped down as CEO and also said in an interview with Breakit that Ljungerud’s departure had nothing to do with the report.

Lilja himself had a one-year hiatus and returned to the company he originally joined in 2009 around the same time, in September 2021. We ask him how Paradox Interactive’s culture has evolved since Wester rejoined as CEO after Ljungerud stepped down.

“We don’t stop games if we think that people will enjoy them – and we were pretty sure that releasing [Life by You] would be worse, as hard as that is to say”

“I think the question of culture is at the core of whether we are going to succeed or not,” he says. “You have culture, you have leadership, and then the strategy, [and] how we invest, right? These are the big components. It’s really important to look at that. We’re trying to go back to the culture that we had, but in an updated version of it, so we’re not looking for something new but we need to be a bigger company, more professional, but still retain some of the things that made us good to begin with, which has to do with listening to fans and trusting the devs. Those are the main ingredients in that soup.”

He notes that the company is smaller now than it was three years ago, by roughly 100 people (now standing at around 630 staff). But a lot of it has to do with the company’s culture evolving rather than layoffs, he says.

“Part of the course correct on the culture led to some people leaving. And I always fully understand why they left. We haven’t let that many people go. We’ve closed a few studios, but the majority of these people actually left of their own volition, when we told them about [the culture shift]. Because they were hired under different circumstances and were told that we’re gonna do certain things and then Fred [Wester] came back, I also came back at the same time, so there was a bit of a ‘Let’s focus, again, on what we know – who are we? Let’s not do too much of the other stuff, let’s grow slowly.’

“So I think it’s a bit back to basics, but of course in an updated [way]. We were 23 people when I started and everybody [knew] each other so you can have a very different type of culture and jargon and everybody knows it very well. When you’re 600+, you need to be fully aware that most people don’t know each other. But you still want the same sort of ingredients there, like high trust, close to the games, close to the fans, preferably being a fan yourself. So that’s sort of what we’re juggling here.”

“I think the question of culture is at the core of whether we are going to succeed or not”

He adds: “[It’s about] finding out what components of the past actually helped us, and what was just noise. We also need more people with different skill sets and different attitudes, backgrounds, etc.”

Looking ahead, Lilja says 2025 will see some of the projects we talked about come to fruition but also “some things we didn’t talk about.” He envisions the year to be a mix of what things were for the past couple of years but to pick up towards the end of 2025.

“I think at the end of 2025 and then maybe 2026, we’re gonna see the shift that we’re trying to make, the return to the core in the company and the core in the games,” he says. “It’s going to crystallise [in] 2025 and hopefully be very clear by 2026.”