In a not entirely unexpected move South Korean-based Pearl Abyss is looking to sell off its Icelandic subsidiary CCP Games. The South Korean financial & economic news Money Today Network broke the story based on an interview.
Pearl Abyss is putting its subsidiary CCP, which developed 'EVE Online', up for sale on the market. The reason is interpreted as CCP acquiring it for 250 billion won in anticipation of the fan base it secured through 'EVE Online' and expansion of its mobile platform, but it fell short of initial expectations.
According to an interview with Money Today Broadcasting MTN on the 19th, Pearl Abyss and CCP have selected an underwriter for the sale of CCP and are sounding out multiple game companies for their interest in acquiring it.
Pearl Abyss launched an IPO in September 2017 bringing in $165 million. The company used the proceeds primarily to fuel global expansion and invest in new game development. A significant portion went into scaling up operations, including establishing overseas subsidiaries and enhancing marketing efforts for Black Desert Online in international markets. They also channeled funds into developing new titles like Crimson Desert and DokeV, aiming to diversify their portfolio and reduce reliance on a single franchise.
The biggest acquisition occurred in September 2018 with the purchase of CCP Games. The initially announced purchase price of $425 million was reduced down to $225 million as the studio failed to meet certain financial conditions. For example, CCP and its new Chinese partner NetEase were unable to reestablish EVE Online service in China until the first half of 2020.
The biggest disappointment for Pearl Abyss probably was the failure of CCP to immediately launch a FPS game set in the EVE universe. Despite presenting a playable demo of a game known as Project Nova at EVE Vegas in October 2018, the project was shut down in February 2020. CCP continued to work on an FPS game, with EVE Vanguard currently listed but unavailable on Steam.
As often happens with financial drama involving CCP, a loan is involved.
In October 2023, the Group financed USD 50,000,000 from Pearl Abyss Corp. to repay the existing borrowings from banks and other financial institutions in a single loan agreement arranged by The Korea Development Bank. The interest period is 12 months and the interest rate is fixed at 4.6%. Interests are paid every anniversary but the loan principal is due in October 2026.
Any party purchasing CCP Games will also need to pay back the $50 million loan to Pearl Abyss. Something tells me the South Korean company can't afford to refinance the loan to its subsidiary as I honestly don't think CCP will have the ability to repay the loan on time.
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Game revenue since the IPO funded spending spree |
But while CCP's financial performance may not have met expectations, those of Pearl Abyss' cash cow in comparison utterly collapsed. One example was the cancellation of Tencent's contract to run Black Desert Mobile in China early. Instead of running through April 2025, service ended on 27 January. Since 2019, Black Desert revenue declined over 55% when converted to U.S. dollars. In comparison, CCP's game revenue increased by almost 25%.
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