Tuesday, December 10, 2019

EVE Online's Stormy 3rd Quarter

The Pearl Abyss investors call on 8 November basically ended the stream of data those outside CCP would receive for the third quarter of 2019. Designated "The Chaos Era" by CCP, the summer of 2019 was dominated by an event officially called "Blackout" and some wags labeled Hurricane Hilmar, CCP's design decisions were controversial with their effects of shaking up the game world. While most of the EVE commentariat and denizens on social media have moved on, I thought a look back at New Eden's stormy summer was in order.
First, we need to look at what CCP did over the summer of 2019. The developers did more than institute Blackout and conduct eight SKINs sales. Below is a timeline, minus SKIN sales, of what CCP did on the live server cluster during the third quarter.

12 July - Blackout begins.
As previously announced, local chat in all nullsec space is currently in delayed mode.

This means that it will behave as local chat in wormhole space, with pilots only appearing in the local population listing should they choose to post messages.

The duration of this blackout is undetermined, and we’ll be monitoring what effect this has on the cluster.
15-17 July - Multiple Character Training sale.
As part of a series of events that we'll be running over the Summer months, we're now offering pilots the chance to grab three months of Multiple Character Training for just $1 / €1 / £1 / RUB 29 when you buy 3 months of omega time.

17-25 July - Bonus Skill Point Week.
Log in every day throughout bonus skill point week between July 17 and July 25 to claim additional unallocated skillpoints that you can use to boost your training queue.

As an Alpha pilot, you'll be able to claim up to 200,000 skill points over the course of seven days, and as an Omega there's up to a massive 650,000 skill points up for grabs.

In addition to this, there's also standard and advanced cerebral accelerators that will speed up training times for a limited period.
24 July - Beginning of Skilling Spree
We're happy to announce that as of today's daily downtime through until daily downtime on August 21st, pilots will be able to earn up to 50,000 additional skill points per day by taking part in New Eden's first Skilling Spree as part of the Season of Skills.

Each day, pilots will receive one of three randomly selected challenges at during daily downtime that offer either 10,000, 25,000 or 50,000 skill points as a reward for destroying NPC vessels.

If the challenge is completed successfully, the skill points will be rewarded, and the pilot will receive a new challenge at the next daily downtime.

If the challenge is not completed successfully, it will be replaced by another that's randomly selected during the next daily downtime at 11:00 UTC.
25 July - Vexor Navy Issue rebalance and alpha account drone nerf. The VNI changes were designed to make the ship much less efficient at AFK ratting.
The Vexor Navy Issue has received a complete rework, re-imagining it as a ship with great damage application, powerful active armor defenses, and high dps if its pilot makes use of both turrets and drones...

A targeted set of changes have been made to somewhat reduce the levels of drone skills available to alpha clones. These changes are focused on our ongoing anti-botting efforts.

These changes to the alpha clone skill caps are:

  • Reducing Heavy Drone Operation from level IV to level III
  • Reducing Medium Drone Operation from level V to level IV
  • Reducing Drone Interfacing from level IV to level III
28-31 July - 15% off PLEX sale.
Celebrate the Season of Skills and get 15% off many selected PLEX packages in this limited time 72-hour sale ending 31 July at 11:00 UTC!
1 August - Changes to sales taxes and broker fees.
Changes to sales taxes and broker fees:
  • Maximum Sales Tax increase from 2% to 5%.
  • Minimum Sales Tax increase from 1% to 2.25%.
  • Maximum Brokers Fee increase for NPC stations from 3% to 5%.
  • Double the total maximum taxation from 5% to 10%.
  • Increased total minimum taxation on NPC structures from 3% to 5.25%.
  • Increase the minimum taxation on player owned structures by 125% from 1% to 2.25%
Changes to tax associated skills:
  • Accounting – Increase in reduction of sales tax from 10% per level to 11% per level.
  • Brokers Relations – Increase in reduction of costs associated with setting up a market order from 0.1% per level to 0.3% per level.
The total benefit from skills will increase from 2% (current benefit) to 4.75%, which translates to a total tax reduction (including standings benefits) of 47.5% instead of the current 40%.
13 AugustTriglavian Recon vessels have been sighted outside of Invasion zones.

While no further mention was made of the feature, the Triglavian Recon vessels would go on to ruin the day of many players who were either AFK or botting.

21 August - End of Skilling Spree.

23-26 August - Final bonus skillpoint weekend of the Season of Skills.
From August 23 - August 26th, pilots who log in can claim free skill point rewards.

During this time, pilots who have an Alpha state clone will be able to claim up to 75,000 skill points, while those who have an Omega clone will be able to claim up to 250,000.
26 August - Launch of WoW Classic

While not an action of CCP, the launch of the WoW Classic servers is a relevant event in the timeline.

10 September - Changes to cyno mechanics.

Cynosural Field Generator I now only able to be fit to Force Recon Ships and Black Ops Battleships.
Added Industrial Cynosural Field Generator.
  • Can be fit by Industrials, Deep Space Transports and Blockade Runners.
  • Industrial Cynosural Fields can be jumped to by Jump Freighters and Black Ops Battleships.
  • Requires Cynosural Field Theory I to activate.
Added 50% bonus to Cynosural Field Duration for Black Ops Battleships.
16 September - Blackout ends.

How does one evaluate the changes CCP made in the game and their efforts to combat player loss during a traditional slow time? I came up with a list of key performance indicators in July, but I added to the list since then. The first is the last data that became available, the financial performance of the EVE IP in Q3 2019.

From Pearl Abyss Q3 2019 Investors Call

The financial performance is the basis of everything else. No matter how good the game, if people don't spend money to play, the servers will shut down. CCP has reason to celebrate the 3rd quarter results. Despite shaking up the sandbox and causing player discontent, revenue only fell 2% quarter-over-quarter. Not bad considering the summer is the period of lowest player activity. Throw in the launch of WoW Classic in late August and the numbers are better than I expected.

Two additional factors probably mean that CCP will not shy away from making radical change in the future. The first is that the EVE IP outperformed the Black Desert IP on a percentage basis. While the EVE IP experienced a 2% decline in operating revenue, Pearl Abyss' flagship product saw revenue drop by 12.8%. The second is probably worthy of further study. CCP made ₩100 million ($86,000 USD) more in the 3rd quarter than in Q1 2019. Outside of CCP, I'm not sure how many would have expected that result.

Jester's Trek concurrency graph
The next key performance indicator is average user concurrency. The statistic is addressed second not because of the importance of ACU, but as a reminder that ACU is not a reliable indicator of the financial performance of EVE Online. The ACU dropped a lot more than 2% from June to August. By the middle of September, the drop was closer to 20%.

The timing of the drop in average concurrent users showed the power of skill point giveaways. Even with Blackout in effect, concurrency remained relatively stable until the second half of August, when the final skill point promotion ended at downtime on 26 August. The launch of WoW Classic, also on 26 August, exaggerated the natural drop as players had an alternative game to play.

The drop in concurrent users was not insignificant. In games that rely on sources of income besides subscriptions, game companies want to keep the big spenders, commonly called whales, happy. If whales feel a game is dead, they will move to a game which is more active. Moving from the general to the specific, a populated New Eden means more ships to shoot, which keeps the whales occupied. More importantly from a financial perspective, more ships in space means a greater chance of whales losing their ships in pixelated explosions. If a whale loses a ship, out comes the credit card to buy PLEX to replace the ship. More ship explosions mean more revenue for CCP.

Matters started off promising in the third quarter as all three security bands saw increased rates of player ship explosions in July. But in August, player ship losses began to decline in low and null sec, with all three areas experiencing declines in September. Overall, the daily ship losses from June to September dropped 8.1% in high sec, 17.9% in low sec, and 22.6% in null sec.

Despite the massive drop in player ships exploding, players engaged in PvP in null sec reported an increased sense of satisfaction with the activity. While the destruction figures in the monthly economic reports includes more than just ship losses, the figures show a huge jump in destruction in null sec from June to July of 19.5%. In August, however, the daily value destroyed in null sec declined to below the rate in the first five months of 2019, even without region data from Cache available for that period. By September, the rate had dropped 11.6% from the June daily average. Perhaps more worrying, the drop in player ship losses in null sec continued to fall, both in ships exploding (-6.9%) and the value destroyed (-2.7%).

Player vs environment activity reacted much differently than PvP activity. Data from Dotlan Maps shows that the rate of NPCs killed declined, particularly in null sec (-38.1%), in the first half of 2019. During the third quarter, the daily average of NPCs killed in null sec precipitously dropped in July and August before improving slightly in September. Still, the rate at which players killed NPC ships declined another 60.3% from June to September. High sec barely compensated, with comparatively slight rises in NPC kill rates in the first two months of the quarter, falling back down to the June rate in the final month.

While Dotlan can show ratting activity, we must go to the monthly economic reports to find mining activity in null sec. The increase in value for both bounties and mining from May to June is exaggerated a bit due to no regional data in the MER for Cache for the first 5 months of 2019. Even with the missing data, the value of NPC bounties collected in null fell 24.2% and ore mined by 15.9%. in the first half of 2019. The decline accelerated with the changes introduced in the third quarter, with the average daily value of ore mined falling 59.4%, and bounties collected by 73.2% from June to September.

The numbers for September probably did not change for two reasons. The first was the launch of WoW Classic. With PvE-centric players already negatively impacted for weeks, an exodus to such an anticipated release was not unexpected. The second were the changes to the cyno mechanics. Most of the major null sec alliances pulled their capitals, including Rorquals, from for a few weeks while they tested out the changes.

Looking at the growth and contraction of the money supply, I see two interesting facts. The first is the money supply has a strong correlation with the active ISK delta. For those new to the monthly economic reports, the active ISK delta is calculated as the amount of ISK added to the economy from returning players minus the amount of ISK subtracted from the economy from departing players. Departing players are the biggest currency faucet not only in EVE, but in most MMORPGs. In the first half of 2019, the money supply in New Eden grew 3 out of 6 months, increasing overall by 34.3 trillion ISK, or 2.6%. In the third quarter, the ISK supply dropped a total of 122.6 trillion, or 9.0%.

The second fact was the steady decrease in the ISK faucet throughout 2019. In the first 6 months, the monthly ISK faucet dropped by 34.8%. In the 3rd quarter, the rate of decrease almost doubled, dropping 31.8% over 3 months.

From the October 2019 Monthly Economic Report
Will all the indicators falling, one would expect to find a rather serious economic contraction occurred in the 3rd quarter. The three-year economic indices graph from the October MER bears this out. Due to the way the chart is produced, I do not have the actual index numbers available. Also, due to missing data in 2017, I cannot reproduce the chart independently. What I can do is point out that the indices peaked between May and August. By the end of September, all the indices had fallen below their values at the beginning of the year.

The final key performance indicator to look at is the PLEX market in The Forge. Not only is PLEX a valuable commodity, but a cartel of major null sec alliances gets a cut of a significant portion of PLEX sales as well. Instead of just looking at individual PLEX, the chart above looks at the daily average volume of sales of Omega time (500 PLEX) and how much ISK a player would need to earn to afford to play EVE on an Omega account for free.

A surprising fact emerged looking at sales throughout the first 10 months of 2019. The tax changes on 1 August really didn't have a significant impact on the PLEX market. The high point in sales volume occurred in March with an average of 3512 months of game time traded each day. The average daily price of 500 PLEX peaked at 2,154,866,258 ISK in May 2019.

For the third quarter, the average price of one month of game time dropped 14.4% from June to September, from 2,036,823,794 ISK down to 1,743,294,737 ISK. The amount of game time sold each day plummeted, however. The quantity of PLEX traded dropped from 3050 months of game time each day in June down to 2218 months in September. While the price stabilized by the end of the quarter, the sales volume continued to decline into October.

At the end of the day, I can't help but feel like a giant storm landed in New Eden, sat in null sec for 2 months, and then moved on. The number of ships exploding declined. The ISK made from PvE activity in null sec declined. All the economic indices published by CCP declined. Perhaps the biggest shock, the amount of PLEX traded daily in The Forge declined 27.3% at a time the ISK price declined 14.4% Yet, despite epic levels of disruption, CCP only saw revenues fall 2% quarter-over-quarter. As a game, EVE never fails to surprise me. The third quarter of 2019 was another one of those times.

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