A Failed Gamble: CCP Announces Layoffs

"In the 2011 winter expansion we‘ll certainly focus more than ever before on iterating and polishing up all the features that EVE has expanded to in the then eight years. What those specific systems are, I don‘t know as we haven‘t started the planning phase for that yet."

CCP Zulu, 16 July 2010

Back in June 2010, CCP announced a strategic decision to concentrate on developing Walking in Stations while putting a relatively small group of devs maintaining Flying in Space for 18 months.  With an $11.8 million loan due on 28 October 2011 (next Friday), CCP's management gambled that Incarna would bring in enough money to allow the company to continue to fully develop two new MMOs, DUST 514 and World of Darkness after the loan was paid off.  Yesterday, we learned that the gamble failed as CCP was forced to lay off 20% of its workforce. 

At one point earlier this year, I thought CCP would succeed.  CCP Soundwave's Team BFF got kudos for the new incursion feature and then became more popular by fixing many irritating features.  Another group, Team Gridlock, began a successful campaign to reduce lag that gained a lot of respect from null sec pilots.  And with CCP Sreegs beginning a War on Bots™ in March, all the signs were present for Incarna to explode and expand the popularity of Eve Online.

Instead, the only things that exploded were players' rage and video cards.  If CCP had been able to provide more than just the Minmatar Captain's Quarters, players may have accepted the new content.  But besides only having what some called the "Minmatar Forever Alone Closet", the CQ also caused some players video cards to melt.

Compounding the problem was the launch of the NeX store with a very bizarre pricing strategy ($70 for a monocle?) started getting people scratching their heads wondering at CCP's judgement.  But the protests really began with the leak of the Fearless newsletter.  With players believing their fears of the sale of "gold ammo" were about to become true, players began raging against the situation.  The situation became even worse with the leak of an internal email from CCP CEO Hilmar Peterssun stating:

"Currently we are seeing _very predictable feedback_ on what we are doing. Having the perspective of having done this for a decade, I can tell you that this is one of the moments where we look at what our players do and less of what they say. Innovation takes time to set in and the predictable reaction is always to resist change. " [emphasis added]

This became a rallying cry for players in justifying their not trusting anything CCP said.  Worse, from a business perspective, players took Hilmar at his word and began unsubbing.  The CCP business model that encourages players to pay for multiple accounts began to hurt as players could cancel 2 or 3 accounts and still be able to play the game and, perhaps more importantly, post anti-CCP remarks on the forums.  And since Hilmar stated that action was the only thing he would consider, players began to do exactly that if they did not leave the game entirely.

With the payment of the loan in October looming, I believe that CCP needed to see a rise in Eve subscriptions in order to continue paying for development of both DUST and WoD.  Instead, subscriptions declined.  We don't know how much, but in August alone the rolling 7-day average of peak concurrent users on Tranquility dropped by 10%.  If that drop in activity corresponded to lost subscriptions, that is possibly 35,000 subscriptions lost.  Or, in financial terms, a loss of $500,000.

Faced with that kind of loss, is it any wonder that Hilmar published his apology blog?  He screwed up.  But although I think many people suspected hard times were ahead, I was a bit shocked to hear about the layoffs yesterday while listening to Eve Radio.  The fact that World of Darkness took the brunt of the layoffs, upon reflection, came as little surprise.  If CCP could not release a multi-player environment like establishments, then I highly doubt that WoD was anywhere close to release.  The thing that came as a shock, though, were layoffs to Eve's community team.  CCP Fallout and CCP Zymurgist are confirmed losses.

In effect, CCP lost the gamble because they could not develop the Carbon game engine fast enough to allow avatars to walk in Eve's stations and thus ran out of time.  What follows are words of defeat:

"As we reexamine our outward relations, we are also taking time to reevaluate our internal goals. In doing so, we have come to the conclusion that we are attempting too many things for a company our size. Developing EVE expansions, DUST 514 and World of Darkness has stretched our resources too thin.

"Rather than allowing this to persist, we have made the decision to sharpen our focus. Sadly, this means reducing our staff. We estimate that around twenty percent of global positions will be affected by this process. These will be predominantly in our Atlanta, GA office, although select positions in our Reykjavik, Iceland office will be affected.

"We are very sad to lose some of our talented and dedicated colleagues to this necessary process. Naturally we are making every effort within our means to help them find alternative employment. Decisions like these are difficult for all those involved and extraordinarily sad for all of those whose lives are affected.

"Following this reorganization, we must do a better job by focusing on these priorities:

• For the immediate future, our mission is to enrich the vast EVE Universe by strengthening the continuous development of EVE Online while preparing to bring DUST 514 to market on the PS3. We do this in order to realize our ambitious and challenging plan of joining the two in a cross-platform, truly massive online world.

• World of Darkness will continue development with a significantly reduced team. This team will continue to iterate and expand on the gameplay and systems they have designed. We will also redeploy creative teams in Atlanta to support the launch of DUST 514.

"This will enable us to accelerate timeframes for new features and increase our ability to respond to community needs. The fruits of this realignment will be seen as early as this winter with the upcoming EVE Online expansions and the launch of DUST 514 private trials."

We shall see what the future holds and if CCP can meet these reduced goals or if they will need to cut back further.  But as many players rejoice that their game will get the work they longed to see, over a hundred people are receiving their notices of termination.  Kind of hard to rejoice as that is going on.