Valheim 1.0 release data and the twofold effect

Valheim (published by Coffee Stain and developed by Iron Gate Studios) formally exited early access with the 1.0 release on September 9 on Steam, PS5, and Switch. The 1.0 release adds a new biome, Deep North, plus a lot of new content, including weapons, armor, trinkets, capes, crafting, building materials, and more. For full patch notes, see this link.

Coffee Stain owns 30% of the successful studio beyond its publisher relationship with Iron Gate. Therefore, the full release of Valheim benefits Coffee Stain in two ways: direct revenue through game sales, and through the value of ownership in the studio. We cover this in detail in our recent deep dive on the company.

We do not see 1.0 as a significant revenue catalyst because it is not a paid upgrade; everyone (about 17 million users) who owns the game from early access gets access to the update for free. New revenue will primarily come from console launches, but Valheim is inherently a PC game and popular because of mods, etc. However, we think this could shift sentiment positively, as it will show Coffee Stain's work and focus on creating lasting, scalable IPs (publishing on this one, but anyway). With 1.0 now out, we think Iron Gate will continue to build the world of Valheim, and we would expect some additional (paid) content in 2027. Given the install base, that will be a major revenue trigger and, obviously, that event was conditional on the 1.0 release. Reviews and user data continue to show Valheim's strength; let's look at the data.

Disclaimer

Not investment advice; for informational purposes only. The company discussed, Coffee Stain, is a holding in our public portfolio.

The game has received favorable critic reviews and currently stands at 89; however, it’s based on only 14 critic reviews. We expect to see some more in the coming days, but it seems like the game will land in the range of 87-91, which will likely be one of the highest-rated games in 2026.

Here are some quotes:

The only real criticism seems to be that it takes a long time to reach the new Deep North biome; we think this stems from the fact that so many have played and more or less viewed Valheim as a finalized game. However, this is the true launch, and making endgame content directly accessible would be strange. In Valheim, you are fighting the environment, and the Deep North is where it is the hardest, as it should be.

New Steam reviews remain favorable, with a +90 score. On the PlayStation Store, the user score stands at 4.85. One thing is sure: Valheim is a great game, loved by millions.

One of the best ways to approximate copies sold is to look at review counts. It varies by platform and game genre, but generally copies sold are somewhere in the range of 20-35x the number of reviews. A loved game like Valheim often receives a higher sold-to-review ratio. During its first month in early access, Valheim sold 5 million copies; Steam reviews for that period totaled 132.5k, meaning the sold-to-review ratio was about 38x.

One should also consider that some of the new reviews now on Steam might be from early access players coming back and finally leaving a review. Everything is a guessing game here, but we think a reasonable proxy for a sell-to-review ratio is around 30x.

For Steam, we see 1.5k new reviews on the 9th and 900 thus far on the 10th. PlayStation has 1.1k reviews; Switch is not available, and Xbox launched earlier. Using a 30x sell-to-review ratio, this suggests about 100k new copies sold in less than 24 hours on Steam and PlayStation. The biggest shadow number is Switch activity, which is a platform we feel fits the game very well.

Steam CCU rose to 168,093 on release day, and the peak on day 2 after release was 190,713. Day 2 being higher than release day strongly indicates we might see continued momentum. It will be interesting to see how this pans out, as weekends usually see the highest user activity. The user levels are quite similar to the numbers when Satisfactory entered 1.0 in September 2024. Some new players likley have helped, but the main driver is the game's strong replayability and older users wanting to experience the new content.

Management at Coffee Stain said in the latest earnings call that one should not have optimistic expectations for revenue generation, because the sheer number of copies sold already limits uptake from the 1.0 release. However, the release also adds to the IP's long-term value and increases the chances of additional monetization options.

So now that the game is finally fully launched, what happens next? We have looked into some hiring activity from Iron Gate, and we haven’t seen any strong indication that they are shifting focus from Valheim to a newly developed title. The studio has also indicated in interviews at Gamescom that their focus is on Valheim. Something new might be cooking, but it currently seems more likely they will keep expanding Valheim with additional content. Will that be through DLCs? We think that is highly likely, and something might already be in the works. In our view, it’s more conceivable we will see more Valheim in 2027. With the massive installed base, more biomes, etc., a paid DLC seems like a no-brainer, at least if one wants to make even more profits from the game.

With version 1.0 released, the Valheim IP's value increases and broadens. This lets the team focus on adding content rather than a full launch, likely boosting long-term sales. For Coffee Stain, ongoing growth in IP value generates revenue and increases Iron Gate Studio's worth. Our core thesis is that the market undervalues Coffee Stain's enterprise value by overlooking Iron Gate's holdings; in our view, a successful 1.0 launch brings revenue to Coffee Stain and, in the longer term, enhances Iron Gate's overall company value.

We think most value will come in the long term from the 1.0 release, rather than an immediate revenue increase. Our best estimate is that new launches will contribute about…