Tuesday, January 18, 2022

Microsoft To Buy Activision-Blizzard For $68.7 Billion

Microsoft is set to add another giant MMORPG to its portfolio of games with this morning's news the software giant is buying Activision-Blizzard. The maker of the XBox published a press release this morning. I'll post the beginning of the release below.

REDMOND, Wash. and Santa Monica, Calif. – Jan. 18, 2022 – With three billion people actively playing games today, and fueled by a new generation steeped in the joys of interactive entertainment, gaming is now the largest and fastest-growing form of entertainment. Today, Microsoft Corp. (Nasdaq: MSFT) announced plans to acquire Activision Blizzard Inc. (Nasdaq: ATVI), a leader in game development and interactive entertainment content publisher. This acquisition will accelerate the growth in Microsoft’s gaming business across mobile, PC, console and cloud and will provide building blocks for the metaverse.

Microsoft will acquire Activision Blizzard for $95.00 per share, in an all-cash transaction valued at $68.7 billion, inclusive of Activision Blizzard’s net cash. When the transaction closes, Microsoft will become the world’s third-largest gaming company by revenue, behind Tencent and Sony. The planned acquisition includes iconic franchises from the Activision, Blizzard and King studios like “Warcraft,” “Diablo,” “Overwatch,” “Call of Duty” and “Candy Crush,” in addition to global eSports activities through Major League Gaming. The company has studios around the word with nearly 10,000 employees.

Bobby Kotick will continue to serve as CEO of Activision Blizzard, and he and his team will maintain their focus on driving efforts to further strengthen the company’s culture and accelerate business growth. Once the deal closes, the Activision Blizzard business will report to Phil Spencer, CEO, Microsoft Gaming.

“Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms,” said Satya Nadella, chairman and CEO, Microsoft. “We’re investing deeply in world-class content, community and the cloud to usher in a new era of gaming that puts players and creators first and makes gaming safe, inclusive and accessible to all.”

“Players everywhere love Activision Blizzard games, and we believe the creative teams have their best work in front of them,” said Phil Spencer, CEO, Microsoft Gaming. “Together we will build a future where people can play the games they want, virtually anywhere they want.”

“For more than 30 years our incredibly talented teams have created some of the most successful games,” said Bobby Kotick, CEO, Activision Blizzard. “The combination of Activision Blizzard’s world-class talent and extraordinary franchises with Microsoft’s technology, distribution, access to talent, ambitious vision and shared commitment to gaming and inclusion will help ensure our continued success in an increasingly competitive industry.”

Mobile is the largest segment in gaming, with nearly 95% of all players globally enjoying games on mobile. Through great teams and great technology, Microsoft and Activision Blizzard will empower players to enjoy the most-immersive franchises, like “Halo” and “Warcraft,” virtually anywhere they want. And with games like “Candy Crush,” Activision Blizzard´s mobile business represents a significant presence and opportunity for Microsoft in this fast-growing segment.

The acquisition also bolsters Microsoft’s Game Pass portfolio with plans to launch Activision Blizzard games into Game Pass, which has reached a new milestone of over 25 million subscribers. With Activision Blizzard’s nearly 400 million monthly active players in 190 countries and three billion-dollar franchises, this acquisition will make Game Pass one of the most compelling and diverse lineups of gaming content in the industry. Upon close, Microsoft will have 30 internal game development studios, along with additional publishing and esports production capabilities.

The transaction is subject to customary closing conditions and completion of regulatory review and Activision Blizzard’s shareholder approval. The deal is expected to close in fiscal year 2023 and will be accretive to non-GAAP earnings per share upon close. The transaction has been approved by the boards of directors of both Microsoft and Activision Blizzard.

If the sale is approved by the several governments involved, Microsoft would own not only World of Warcraft, but also Elder Scrolls Online and Fallout 76. Microsoft's purchase of ZeniMax Media, the previous owner of the latter two games, was finalized in March 2021. I should add the ZeniMax deal took 6 months to finalize (it was announced in September 2020).

In 2014, Microsoft purchased Mojang, the studio that created Minecraft, for $2.5 billion. In that case, the deal was announced in September and finalized in November. Then again, Mojang was a much smaller company based in Sweden, not the United States. I expect the finalization of the sale to extend to the 6 month range, if not longer.

While a lot of people will obsess over the fate of Activision-Blizzard CEO Bobby Kotick, I'm not concerned. He's set for life whatever happens. The latest information I could find shows he owns about 4.3 million Activision-Blizzard shares and is worth $8 billion. Besides, the CEO of the company purchased usually sticks around for a set amount of time. 

I also want to point out two sentences that may concern some people.

This acquisition will accelerate the growth in Microsoft’s gaming business across mobile, PC, console and cloud and will provide building blocks for the metaverse...

“Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms,” said Satya Nadella, chairman and CEO, Microsoft.

I don't think I took the sentences out of context when I combined the two. Does this mean NFTs in WoW confirmed? With companies like Ubisoft, Square Enix, and Pearl Abyss jumping into the NFT/metaverse pool, is it a surprise that Microsoft would want to follow suit?

Monday, January 17, 2022

Playing The Interstellar Convergence: The EVE Online x Doctor Who Crossover Event

On Thursday EVE Online began the 18-day crossover event between the EVE Online and Doctor Who universes. I began playing on Thursday and through four days amassed 325 event points. Since I have a little experience with the event, I thought I'd post my initial thoughts.

Progress through Sunday night

The concept of the event is simple. Players explore and hack into special relic sites to find clues in the form of building material and blueprints. The clues are put together using industry to create filaments. The filaments are then used to travel to exploration pockets, where more clues are found. Eventually we encounter the Daleks and combat will occur, but I haven't progressed that far. I'm currently searching for clues to access the third level of exploration pocket. 

The sites don't just drop blueprints and building material. They also drop Peculiar Data Collections which sell for 10,000 ISK each to NPC buy orders on the market. The cans players hack can also drop Doctor Who themed items like sonic screwdrivers (Inactive Sonic Multitool) and jelly babies (Bag of Gelatinized Confectionary). I also found cerebral accelerators to speed up training.

Through four days, I have not had the opportunity to engage in combat with the Daleks. I hear the combat occurs in an arena, with players able to instantly travel to the other side by crossing the arena border. I do know that access to the arena is limited to tech 1, non-faction cruisers.

The challenges found in The Agency provide additional structure to the event. In addition to providing points to obtain prizes, the challenges encourage players to place items up for sale on the market. Not only does that provide a reminder to new players to get some ISK, but helps jump start an event-based economy.

I have to mention the technical difficulties I encountered along the way. On Thursday, a certain material required to build Curious filaments, which provide access to the first level of exploration pockets, did not drop in the game. The only source for the item was from event packs sold in the game's cash shop. The issue was resolved with a patch.

On Friday, an issue arose with the challenges. The challenges did not auto refresh, so only three challenges could be played. The bug was fixed at downtime with a patch.

On Saturday I experienced a very painful bug. I created an Enigmatic filament, but did not receive credit for completing a challenge. What I discovered is that using a blueprint where the items and output both point to a container does not count. Learn from my mistake. Make sure that all manufacture of items points to your item hangar.

Would I recommend participating in the event? Depends on the player. Anyone who really likes the probing and hacking mini-games should definitely participate. Other players, however, may find the content very grindy. I have described the event as "a bit of a slog". Also, I think brand new players will find the content very challenging at higher levels, which could add frustration to the grind.

I have to say I like the overall structure of the event. I plan on completing the event just to see what is at the end. Hopefully I get to destroy the Dalek menace and save Gallifrey. I'd also like to find a scarf along the way. I already found some jelly babies.

Thursday, January 13, 2022

Progodlegend Steps Down From The Council Of Stellar Management

Long wars in EVE tend to burn players out, especially those in leadership positions. Sitting on the Council of Stellar Management also leads to many players either leaving or reducing their activity in the game. Someone who falls in both groups is Test Alliance Please Ignore's progodlegend. Today, CCP announced his resignation from the CSM.

Civic-minded Capsuleers!

This week, CSM member progodlegend informed CCP of his intentions to resign his seat on CSM 16. This was done entirely by his own volition, and progodlegend resigns his seat in good standing. Given the duration of the term that he has served on, this will count against his term limits should he seek re-election in CSM 17 and beyond.

Based on CSM 16 election results, the next member-elect of CSM 16 is Arsia Elkin. Arsia has accepted the position as CSM 16 Council Member, completed necessary paperwork, attended her first weekly meeting, and is busy working with current members in the onboarding process for her new role. We expect great things from Arisa, and we’re excited to have her extensive knowledge enhance an already impressive CSM squad.

In other CSM related news - you can expect some CSM Summit news & updates soon™ as existing plans for an in-person summit (scheduled for this February) were postponed due to Omicron-related restrictions.

Below is the official resignation from progodlegend. Thank you, progod, for your time on the CSM and we wish you well on the slopes!

Over the next couple of months I will be actively avoiding most of my electronics while I live in the mountains and snowboard for a few months. As such it doesn’t make much sense for me to remain on the CSM. I informed CCP of my decision a few days ago, and as I understand it they will be giving the spot to Arsia. I thought she was an exceptional candidate during the election, and was happy to see her be in a position to take a spot if someone stepped down. I have no doubt she will do very well on the CSM.

I will be checking discord once a day, but otherwise I’ll be out of pocket for a few months. Don’t burn the place down while I’m gone.

When running for CSM 16, Arsia stated she wanted to concentrate on four main areas:

  1. Low Security Sapce/Faction Warfare
  2. Ship/Module Balance
  3. Story/Lore Visibility and Use as Content Generator
  4. New Player Experience

The following description of Arsia is taken from her campaign thread:

I’m predominantly a roleplaying PvPer who has been playing the game for around 11 years. I started the Arsia character (my ‘main’ and first successful character) in mid 2010 after failing to get into the game a few times during some trial accounts spaced out a couple years apart. I started my Eve life as an explorer and ran around high sec and then low sec sort of without many true goals until I got into Faction Warfare (FW) in 2012. I had started the character intending to RP but was mostly quiet and stayed to myself until I started interacting with other RPers in the context of FW.

A little while after getting into Faction Warfare on the Amarr side, I joined PIE (Praetoria Imperialis Excubitoris). Back then I played fairly casually and just logged on and kerfuffled around the warzone a few times a month. To this day I think Eve is a good game to play casually (even if I’m fairly not casual at this point). Over my years I began to develop some FCing capabilities within the context of FW but stayed mostly casual and quiet until the Amarr Succession Trials in 2015. In the Succession Trials I was on Mitara Newelle’s team and we became the Sarum champions, breezing through the preliminaries and had a respectable showing in the tournament, falling short one win of making the finals.

After the tournament I was pretty burnt out from the practice and emotional toll of the whole thing. I played very little in 2016. In 2017 I came back pretty strong in the middle of the year and started streaming. I started to become very not casual at this point. My corp was small and had little to no activity in my timezone most of the time, so I started a weekly semi-public fleet that ended up running every Friday evening until early 2020. My public fleet grew over time and started getting more ambitious. We had a citadels in Sifilar and Sahtogas at times and the public fleet formed to defend it alongside the Amarr RPers in LUMEN and PIE. I also spent some time as a director and co-executor of LUMEN (Khimi Harar) from the character Lyra North-Onren after it was formed because ARC didn’t like the corp SFRIM participating in my fleets because it wanted to remain politically neutral and my fleets were Amarr aligned at the time.

In addition to roaming, I also got involved with an increasing number of medium sized fights and campaigns around the cluster. Some of them were done with various RP or FW groups working together and some were done with the public fleet and reaching out to friends around the game. But without getting into the specific details of all the various campaigns I’ve been involved in over the years, the main theme of most of my campaigns has been either kerfuffles over RP politics/events or a bunch of smaller groups banding together to fight a bigger group.

In late 2019, after some RP events that went in an in-character forum thread I made started a major war over game world news, I left PIE. After the Triglavian Invasions started, I served as an FC for the EDENCOM side and was involved in many system sieges and fights in low security and liminal invasion systems. Arsia (who had formally defected) joined Electus Matari where I still am now. I am thinking of starting to do semi-public fleets again and working towards new goals now on the Minmatar side of the RP spectrum. Since I’ve joined there’s been quite a few medium to large sized fights in low sec centered around Snuffed Out’s burning of our FW regions or defenses of our structures or allied structures from various groups. Lately, we’ve been practicing for the Anger Games where we’re participating as the team ‘If All Else Fails.’ Additionally, I still regularly stream and am part of the Eve Online Partner Program. I also am a regular Sunday co-host on Talking in Stations. As far as null goes, I consider myself politically neutral in regards to all null security blocs and mostly use it as a playground for roaming. I use wormholes (especially Thera) predominantly for moving around between regions of space quickly. I do have some opinions and experience regarding high security wars.

While I no longer cover the CSM as extensively as I once did, a member resigning is something worth mentioning.

Tuesday, January 11, 2022

Here Is Why The EVE Online X Doctor Who Crossover Event Looks Bad

Today, released not only the patch notes for today's content drop, but advice for new players on how to prepare for the Doctor Who crossover event. Aside from defect fixes, the patch introduced the following:


  • Reworked the music in exploration sites, mostly to avoid two music tracks playing in parallel. As a side effect some sites will now have no music at all.


  • Saving shared Skill Plans creates a copy to Personal Skill Plan.


  • The support for DirectX 9 has been removed. This means that the EVE client can no longer be started on PCs, which do not support DirectX 11. More details can be found in this dev blog.

User Interface:

  • 🤝 Filaments are now saved as part of ship fitting.
  • 🤝 Added a button to go directly to fitting simulator from the Show Info window of a ship.
  • 🤝 Added the ability to have quick access to adjust fleet formation.
  • Improved Help Pointers

By comparison, the Doctor Who article contains six EVE Academy videos plus a lot of advice I would have loved when I began playing back in 2009. We even received recommendations for the ships to use. For exploration, the ship of choice is the Magnate. For combat, the article recommends four tech 1 cruisers: the Rupture, Omen, Caracal, and Vexor. I don't believe we have any information on the Dalek ships we will need to fight.

By themselves, the above subjects are unremarkable. The problem comes when adding context. Back in November, CCP announced economic changes that would lead to the end of the Scarcity Era. After player feedback from testing on Singularity, many changes were altered or put on hold. As we saw today, none of the economic gameplay issues were addressed in today's patch.

Now, perhaps expecting CCP to revamp their plans in time for a January release is unfair. But the Doctor Who crossover is launching as scheduled on Thursday. I've heard a lot of complaining that what the game needs is more concentration on problems and less on obvious monetization ideas. In a small way, this week's content drops won't help.

Wednesday, January 5, 2022

EVE Online, Doctor Who, and The Interstellar Convergence

In my time, I have participated in several cross-over events in Final Fantasy XIV. I did the first Nier: Automata raid to get the 2B glamour set. I completed the Final Fantasy XV event to get the opportunity to purchase the Regalia Type-G mount. Between completing the Stormblood expansion and beginning Shadowbringers, I ground out the Yo-Kai Watch event. Somewhere along the way I ran through The Maiden's Rhaposdy, a cross-over with Final Fantasy XI. I even did the return of the Dragon Quest X event, Breaking Brick Mountains, this summer. So I think I know a little something about cross-over events.

One cross-over I never expected was one from Pearl Abyss' UK-based studio, CCP Games, and BBC Studios, a commercial subsidiary of the BBC Group. I'll copy/paste the press release below:

REYKJAVÍK – January 4, 2022 – CCP Games and BBC Studios have joined forces for EVE Online x Doctor Who, an original crossover event between the beloved action-adventure series Doctor Who and the free-to-play deep space-faring MMO EVE Online. Universes will collide as Capsuleers and Whovians face the Daleks together in massive space battles in EVE Online x Doctor Who starting 13 January until 1 February.

EVE Online is a free-to-play, community-driven spaceship MMO game where players can choose their own path among the stars from countless options, developed by CCP Games in Reykjavik. The game first launched in 2003 and has since gained recognition for its scale, complexity, and the world record-breaking exploits of its online community. EVE Online is one of the most critically acclaimed MMORPG intellectual properties (IPs) in time and space, and one of the most extensive works of science fiction in the world.

“2022 will be off to an (inter)stellar start with EVE Online x Doctor Who,” said Bergur Finnbogason, EVE Online’s Creative Director. “We are always pushing the boundaries of what is possible in EVE Online. Collaborating with BBC Studios gives us the opportunity to pay homage to an iconic series that has inspired us at CCP. We hope you’ll join us in New Eden on January 13 to see what happens when galaxies collide!”

“EVE Online x Doctor Who not only brings two iconic universes together, but also the passionate Whovians with the just-as-passionate pilots of New Eden,” said Kevin Jorge, Senior Producer at BBC Studios, “By bringing the fanbases together, the already massive battles of EVE Online are sure to become even more explosive. Only time will tell if New Eden’s fiercest pilots have what it takes to challenge the might of the Daleks.”

EVE Online x Doctor Who introduces new, Gallifrey-themed space where players will search for artifacts from Doctor Who’s Great Time War. The artifacts will provide players with clues to track down the infamous Daleks and face them in an interstellar battle of the ages. Players who survive the fight will reap unique rewards that they can take back to New Eden. Additionally, a login campaign with skill points and Doctor Who-themed items will be available to all players throughout the duration of the event.

EVE Online x Doctor Who is the first major collaboration for the spaceship MMO, reaching a new milestone in CCP’s journey to expand New Eden’s horizons and welcome fresh players into its storied universe. EVE Online has seen incredible growth over the course of 18 years, reaching more than 24 million active users in 2021. CCP recently overhauled EVE’s new player experience, making it a perfect time for rookie pilots to start their journey in EVE Online.

That's right. An EVE Online/Doctor Who cross-over event. A game famous for not allowing pink spaceships because it would clash with the artistic vision of the designers is now introducing an alien species, the Daleks. CCP posted additional information on its website.

The EVE Online x Doctor Who crossover will take place as an entirely original in-game event, called The Interstellar Convergence. Set before the Time Lords’ 400-year-long conflict with the Daleks, ‘The Last Great Time War ’, this very special EVE event will run for over three weeks until 1 February. The Interstellar Convergence will be unlike any other EVE event before it, introducing a beguiling mystery, a trail of clues, multiple challenges, themed items, and even a vibrant new area of space.

Unearth Doctor Who-related artifacts and use them to track down the Dalek menace. Face off against the infamous evildoers in an interstellar battle of the ages and claim Doctor Who-inspired rewards to take back to New Eden.

To find out more about the threat that is coming to the New Eden star cluster, keep an eye on the EVE Online news page, social channels, and more. There’s much to be learned about how wormhole-like phenomena have been taking ships from New Eden to an unknown area of space littered with wrecks of unknown vessels – and traces of others that have moved on. But what do those traces mean? And what does this have to do with the Daleks? Discover more starting 13 January!

My first thought was, "How much is Pearl Abyss paying the BBC for the tie-in?" My second thought was, "How desperate is the BBC for funds to agree to the tie-in?" While the two intellectual properties are both science fiction titles, the similarities end there. EVE Online is about massive conflicts solved with force, while The Doctor is known for solving problems with his intellect. 

On Monday I posted about Tranquility's poor concurrency numbers and how in 2016 CCP turned to the freemium model to boost its finances. The model in 2022 more than ever ties itself to in-game events. By hosting a cross-promotion with another intellectual property, CCP may fulfill one of Pearl Abyss' long-term goals of attracting new players to it's MMORPG games. I'm not sure how well such an event will work. I'll have to watch the VOD from Ashterothi's live stream on which CCP Fozzie and CCP Swift appeared to give further details of the event.

One concern is the inclusion of NFTs into the event. Not only has Pearl Abyss told investors they are exploring NFTs, but BBC Studios has a history of involvement with NFT-based games as well. BBC Studios teamed with Reality Gaming Group to publish an NFT card game, Doctor Who - Worlds Apart. However, CCP Swift stated on Twitter the event would not include NFTs.

I plan on participating in the event, just to see how it works out. I also intend to watch the concurrency numbers fairly closely to see the popularity of the event. For now, I plan on keeping an open mind until events prove otherwise.

Monday, January 3, 2022

Looking Back At EVE Online's 2021 Concurrency Numbers

I once wrote a blog post commemorating the "Eve is dying!" meme that has existed since shortly after the launch of the game in 2003. Normally, I dismiss such talk as the normal ignorance expected from places like the EVE sub-Reddit. But last year talk from Pearl Abyss' earnings calls began shaking my confidence in the game's future. On the November call, an investment analyst for one of the big firms brought up the subject of turning EVE into a "play-to-earn" game. Don't think the C-suite folks on the call didn't take notice, if such a move was not already in the works. Pearl Abyss also told the analysts on the call that the NFTs introduced in the Alliance Tournament were just the first the Korean company intended to implement into its games.

Ripard Teg's Average Concurrent Users for 2021

While the handwriting is on the wall, the implementation of the changes will take some time. How much time may depend on continued player engagement with EVE. After peaking in late February with around 24,000 average users logged into Tranquility at any one time, activity finished the year with an ACU count of approximately 20,000 users. One can look at the situation as a glass half-full or half-empty. The optimist can look at the numbers and point out that players did come back after the bout of war-weariness during the summer and increased by 17-18%. A pessimist can note the current average concurrent user count is 10% below the numbers seen in the months before the COVID pandemic lockdowns in 2020.

I get a chuckle out of reading the occasional chicken little proclaim on r/eve that the number of players on Tranquility are the lowest since 2006. But one does not need to go back 15 years to see similar numbers to today's. The year 2016 is a much better comparison point.

Ripard Teg's Average Concurrent Users for 2016

From September through November 2016, the ACU was very similar, if not slightly below, the numbers seen today. But on 15 November 2016, CCP played its ace-in-the-hole: the Alpha and Omega freemium business model. CCP, with the introduction of the Chaos Era and Blackout in 2019, almost threw the advantage away two years early. According to the C-Suite executives on the Q1 2020 earnings call, Pearl Abyss stepped in to stabilize and improve the situation.
EVE Online is also maintaining stable performance. EVE Online -- which was known as the most difficult MMO game -- had the most important challenge, which was to motivate the interest of early users. Using Black Desert know-how and experience from EVE Online, many improvements were made. And accordingly, we saw a meaningful increase of new users. EVE Online, which is in its 17th year of launching, shows through many indexes that a well-made MMO game has a very long lifespan value.
Pearl Abyss has soured on MMORPGs, particularly due to the stumbles of Black Desert Mobile. Crimson Desert and DokeV are no longer MMORPGs. The Korean game maker also needs revenue, especially with the launch of Crimson Desert indefinitely delayed. With the player numbers now back to pre-Alpha clone levels after 5 years, I really hoped the studio in Reykjavik could produce an expansion level patch to bring some excitement back to the game. Because if the tide doesn't turn soon, I foresee a future of NFTs and other content current players won't enjoy.

Friday, December 31, 2021

What My Year-End Review Taught Me About EVE Online

This last post of the year will look back on CCP's look back on my year playing EVE Online. Every year CCP sends out a personalized video summarizing a player's activity in the game. The video showed my activity across all of my Omega accounts. I didn't play very much this year. At least, I thought I hadn't played much. Watching the video, I discovered I ranked fairly highly in a few categories. Looking at those categories told me something about the state of EVE Online at the end of 2021.

Skill points gained across 3 accounts

The first item that struck me was my ranking for the number of skill points acquired over 2021. I have 3 paid accounts that I kept training all year. I didn't buy any skill injectors or packages with skill points. I did, however, take advantage of every login event that gave out skill points. By doing those things, I wound up in the top 6% of players, not just accounts, who gained skill points in 2021.

One of the accepted truths in EVE is that most players have multiple accounts. But do they really? If someone with three accounts is in the top 6% of players, then I don't think they're are that many people with more than three Omega accounts. Of course, the flip side is also true. Perhaps so many players bounce off of EVE within the first few hours that my position is artificially inflated.

My participation in events

Next is my ranking in the category "Agency & Events". I know I mostly logged in for the events, but I really don't think I participated in eight. Four or five sure, but I took a pass on some of the faction events. So does CCP count participation in an event as only logging into the character select screen? Because I know I only did that for 2-3 events.

And a top 8% ranking in number of event points earned? I really wonder how many players actually participate in the events. I even had a higher ranking in the category than for skill points earned.

Travel in known space

Finally, my travel raised an eyebrow. I only averaged 20-25 jumps per week in 2021, which isn't a lot. My travel in low security space, with only 206 jumps, still managed to rank in the top 24% of players. We always hear about how low sec is dying, but that is an awfully low number to still rank in the top quartile of players in the category. But I don't know how to get more people to enter the space.

I've finished the Endwalker MSQ so I should have more time to play EVE in 2022. In that sense, these year-in-review videos work as they give me goals to try to surpass next year. But the data also reveals some things which I don't think are good signs. With my playtime in the game in 2021, I should not appear near the top of anything.

Wednesday, December 29, 2021

Cloud Imperium's 2020 Financial Statement

Last week Cloud Imperium released its annual financial statement on its website. The statement covers the 2020 calendar year. Observers had a preview of the company's performance with the release of Cloud Imperium UK Ltd.'s financial statement by Companies House in October. I did a quick review at the time, but the statement did not include information form the United States. 

Cloud Imperium had a very good year financially in 2020. For the first time since 2014, income outpaced costs.

One figure I found puzzling was the $4.8 million reduction in minority investment. The report stated:

During 2020 the group made a return on capital of ($4.8M) worldwide, ($1.3M) in the Rest of World and ($3.5M) in the US. Much of this was to pay down accelerated taxes and fees arising from the structuring of the group and some was a return on the minority investment made to date, with net inward investment to date at the end of 2020 still equivalent to $58.4M.

We know from the UK financial statement that the $1.3 million in the Rest of the World was paid out as a dividend to shareholders. I'm not sure how much of the $3.5 million in the US went to taxes and how much went to paying shareholders. I got the impression from the earlier financial release that shareholders would also receive a payment from the US part of the business. As it is, the $4.8 million in payments reduces the $7.8 million in profit down to $2.5 million for the year. Although, as the report states, "...the surplus show here will not translate into an accounting profit when applying revenue recognition and other accounting conventions".

Income generation in 2020 was the best ever for Cloud Imperium. Overall, income increased by $27.4 million, or 45.2%. The report summed up income as follows:

2020 was a record year for income with pledges up 62% to $77M and subscriptions up 29% to $4.7M. Other income was down 31% at $6.5M, owing to the end of the US incentives program that we only qualified for during our initial years of US growth.

A couple of points about Cloud Imperium's income stood out. The first is the cumulative total of the Pledges/Counter category. Adding the yearly total from 2012 to 2020, the amount of ship sales and packages comes out to $337.8 million. But the counter on the website at the beginning of 2021 read approximately $340 million. The report does contain a disclaimer about the amount of the category:

This line is taken directly from our daily published Funding Stats Counter, showing the net receipts from our backers and customers. However due to exchange differences and small items that are not included in the counter, such as collected shipping costs on physical goods, the counter does not completely represent all revenue received.

I do have to point out that the discrepancy between the total in the report and the total on the website, $2.1 million, is almost the total raised during the original fundraising effort on Kickstarter. Which would make sense from an accounting point of view. Cloud Imperium could not count the funds from Kickstarter as sales of digital goods, which is what the category actually measures.

The second point concerns the Other Income category. The report attributes the decline in revenue from the category to Cloud Imperium no longer qualifying for government incentives. The remaining total of $6.5 million lines up with the £4.7 million Cloud Imperium UK Ltd. received in 2020 in the form of the video games tax credit. With that knowledge, we can say that 89% of Cloud Imperium's profits in 2020 came from payments from the UK government.

The total income over the course of Cloud Imperium's existence through the end of 2020 was $405.3 million split into the three categories:

Pledges/Counter: $337.8 million
Subscriptions: $22.8 million
Other income: $44.7 million

With only a couple of days left in 2021, the Pledges/Counter shows over $85 million in sales in 2021. The odds are that when the financial report for 2021 is released next December, the total amount of income will reach $500 million. And that amount will not include the $58.4 million listed as minority investment.

In 2020, Cloud Imperium increased spending by over 10% for the third consecutive year. The report gave a breakdown of last year's 14.8% overall increase:

In 2020, Cloud Imperium continued to grow its expenses and company profile. Costs increased by 10% over 2019 to $74.8M and capital expenditure, at $6.1M, was 150% up on 2019, impacted by the purchase of the perpetual Company CryEngine license for use not just in our current games, but also for potential use in any future projects that CIG might develop. The breakdown of the expenditure is commented upon below. 2020 was an unusual year in which we had to transition to work from home for much of the year and be agile with our development plans. We accelerated much-needed investment into our publishing and security disciplines, in part due to the increased customer engagement but also due to the distributed nature of our operations during the pandemic.

While headcount increased 15.1% from the end of 2019 to the end of 2020, the increased payroll costs only accounted for $4.2 million of the $10.4 million overall increase in spending. Of course, increasing headcount doesn't just increase salaries paid. The acquisition of new offices in Frankfurt and Manchester will not show up on the financial reports until the 2021 report comes out next December.

Perhaps the biggest revelation in the report is the news about Cloud Imperium's continued use of CryEngine.

Capex spend in 2020 was significantly up on 2019, which in part was driven by the headcount increase, but in the year we also purchased a perpetual worldwide license for use of the CryEngine, which provides us greater flexibility in how we develop and deploy the engine within our existing and planned future business.

The purchase of the engine license from Crytek seems to resolve the lawsuit filed against Cloud Imperium. Observers may remember that Cloud Imperium claimed to have switched to Lumberyard and no longer used CryEngine. Apparently such reports were incorrect.

The financial future of Cloud Imperium is a lot brighter now than at the time the 2019 report was released. Not only did the company post a profit in 2020, but the amount on the pledges counter for 2021 is actually greater than the 2020 operating costs. The main question now is whether the leadership at Cloud Imperium will manage the resources at its disposal prudently as to remain operating in the black.

Thursday, December 23, 2021

CCP's War On Illicit RMT: The Winter Status Update And The Hazard Discount

Last week CCP published its "Winter Status Update" which resulted in a lot of discussion. I was asked by a few people about a claim made in the conclusion of the dev blog.

The foundations of the EVE ecosystem are strong. PLEX prices have stabilized, stockpiles are healthy, great strides have been made in the war against botting (as evidenced by the skyrocketing RMT ISK price), and there are more ways to earn a living. The foundation allows us to build with more confidence and add more sand to the sandbox. What players can expect from now on is an increase in ship production, capitals out in space, new exciting strategic goals for small, medium, and large fleets – and more.

Was the price of ISK on the secondary markets (aka black or grey markets) really skyrocketing? Not at the time of the publication of the dev blog. I blame the delay in the publication of the dev blog, as the price on the black market did rise in late October and early November. Based on the buyer reviews on the RMT site Player Auctions, the 7-day moving average price of 1 billion ISK sold rose from $6.44/billion on 12 October to $8.66/billion on 12 November. I think a 34.5% increase in price over the course of a month could qualify as a skyrocketing price. However, by the time CCP released the dev blog on 14 December, the price had declined back down to $7.18/billion ISK. 

One of the problems with just looking at the sale price of illicitly sold ISK is the wide variation of prices. Over the course of 2021, the average price of ISK sold on Player Auctions varied by $2.39/billion with no discernable trend throughout the year.

A better metric to determine whether cost is affecting the sale of illicit ISK is the hazard discount. The hazard discount is the amount of a price reduction ISK sellers must offer buyers relative to the price of ISK purchased through CCP-approved means (aka the primary market) in order to entice those buyers into risking CCP banning all of their accounts.

During the period of time I believe the dev blog referred to as having skyrocketing secondary market, the price for ISK in The Forge also declined. The 7-day moving average of the value of ISK sold in Jita 4-4 and the TTT Keepstar also declined by 5%, from $13.06/billion ISK on 12 October, to $12.40/billion ISK on 12 November. But by the publication date of the dev blog, the value of ISK sold in The Forge rose back up to $13.12/billion ISK.

Overall, the hazard discount dropped 43.4% from 12 October to 12 November. People who were willing to risk CCP suspending or banning their accounts to save $33 by purchasing 5 billion ISK on the secondary market weren't so eager to do so when the savings dropped to under $19.

The hazard discount can also take into account the percentage of savings by buying ISK off the secondary markets. In our period of interest, the percentage the ISK price was under the value of ISK sold in markets in The Forge dropped from 50.6% on 12 October down to 30.2% on 12 November. The result was a big drop in ISK sales on PA. Sales had recovered in early December but were slumping again on 14 December with the hazard discount percentage at 45.3%

Now, I didn't address the "we're doing good against botting because the price of RMT ISK went up" argument. Does that mean CCP is doing bad because the price of ISK on the grey and black markets went back down? A pretty silly argument, in my opinion. More important is whether sales are going down. If the review data I collect from the Player Auctions website is any indication, the answer is yes.

Thursday, December 16, 2021

Square Enix Halts Sales Of Final Fantasy XIV And Other Endwalker News

Last night Naoki Yoshida, the producer and director of Final Fantasy XIV, issued another letter to players explaining the company's actions to address the many issues surrounding the launch of the Endwalker expansion.

First, Square Enix is increasing the amount of game time affected players will receive as compensation for the state of the login servers.

We are aware that the long waiting times to log into the game are preventing players from playing, and for this, we sincerely apologize. In response to this, we recently granted 7 days of game time, but now we will also be granting an additional 14 days.

This will apply to all players (including those with multiple accounts) who own the full version of the game and have an active subscription as of Tuesday, December 21, at 12:00 a.m. (PST), which is the scheduled release date for Patch 6.01. Further details regarding eligibility will be announced separately.

If I read the passage correctly, players subscribed to play FFXIV at the start of early access on 3 December will now receive 21 days of game time as compensation.

Square Enix is also halting all digital sales of FFXIV and suspending new players from taking advantage of the free trial.

Players are currently experiencing extremely long wait times due to the dense concentration of play hours which far exceed our server capacity, especially during the peak times, and so we have decided to temporarily suspend the sale and delivery of FINAL FANTASY XIV Starter Edition and Complete Edition. Additionally, although those with an active subscription are prioritized to log in, Free Trial players are unable to log in outside of late night and early morning hours, and so we will also temporarily suspend new registrations for the Free Trial.

These temporary suspensions will be phased in over the next few days as we work with our retail partners. We will be coordinating with them as swiftly as possible, but please bear in mind that this will be a gradual process.

Another reason for an apology is the Error 2002 bug that kicks players out of the login queue. From personal experience, the 2002 error is the most annoying bug of the whole Endwalker launch experience. The requirement to babysit the computer to ensure the ability to login is frustrating. Apparently, the end to the issue is close at hand.

In regards to Error 2002 that occurs during login queues, outside of causes related to unstable connections, we have confirmed a bug. This bug was part of a login-related program created back in FFXIV version 1.0, and thanks to the reports and tests carried out by many of our players, we were able to identify the cause of the problem. We apologize for not being able to identify the issue on our end and thank you all for submitting detailed reports regarding this matter.

Although the code for fixing this bug is already prepared, applying the fix will require patching the game client, which will be addressed in Patch 6.01, scheduled for Tuesday, December 21. As this issue occurs while waiting in the queue for a very long time, we considered releasing the patch ahead of schedule, but in the end decided to include it in Patch 6.01, as there is already a lot of new code in the pipeline for the patch and interrupting the process of verifying them may lead to other bugs. We apologize for the inconvenience and ask for your patience a bit longer.

Another issue is the release of Patch 6.05, scheduled for 4 January 2022. The major feature of the patch is release of the savage version of the Endwalker's big raid, Pandæmonium: Asphodelos (Savage). At this point, trying to release the patch without the raid will lead to other issues down the road.

We understand that there are concerns about World First races and first week progression, but Patch 6.05 will add a number of new elements, such as the addition of a new Allagan tomestone, new crafting recipes, as well as the new treasure hunt dungeon, the Excitatron 6000.

Many players are looking forward to content aside from high-end duties, and furthermore, considering the balance of the rewards and item levels from said content, we cannot withhold only Pandæmonium: Asphodelos (Savage), and rebalancing these would delay the patch release by several weeks and would affect Patch 6.1 and beyond.

Yoshida also gave an update on infrastructure updates. Earlier in 2021 he had discussed adding a new data center for Oceania and the addition of new worlds to existing data centers. Due to the world-wide semiconductor shortage, Square Enix has not succeeded in procuring the server equipment necessary to implement the changes.

We are considering adding servers to each region, especially plans for a large-scale addition in North America and Europe, and will be looking at the number of servers, infrastructure construction time, power issues, and server rack situation to see if we should do this sequentially or in one big push. Either way, the plan is to introduce a large number of additions, which we intend to carry out quickly and safely with as minimal inconvenience to our players as possible, and we will follow up regarding this matter as we progress.

Hopefully Square Enix will have a roadmap for the actions it can present to players by the end of January.

Finally, a lot of people have lost their accounts due to using some shady services to access the game.

After reviewing the details of these inquiries, we found that the accounts involved are being accessed from the same environment as those used by a group of people who are believed to be providing suspicious services. As a result, these accounts were determined to be using suspicious services that temporarily access user accounts to log in and make payments or create accounts on their behalf, and were blocked from payment and code registrations as a part of fraud prevention.

Such suspicious services may have a history of theft or other fraudulent credit card activity, and we cannot do anything other than safeguard against such activity and cannot restore those accounts.

As a reminder, we ask you to refrain from using such suspicious services, for your own good.

All things considered, a decent update to keep players informed about the issues and what Square Enix is doing to address them. I wish the issues weren't happening, though.