Any [sic] further speculation turns into conspiracy theory land. The theories could range from CIG is doing a price hike to coincide with the beginning of Invictus Launch Week tomorrow to the lawyers telling CIG to stop selling Squadron 42 NOW!!!. But the fact that, as I write this post, the pledge page issue has last for over 16 hours does lead to some speculation. CIG not fixing a problem that prevents people from giving them money is very unlike them.
Over the weekend I went down a rabbit hole researching a question concerning Cloud Imperium Games' finances. I just wanted to know the official date of CIG's acquisition of Turbulent Media Inc., the Quebec-based software company purchased by CIG in 2023. The press release for the purchase was dated 13 July 2023, but I knew the actual date was earlier. What follows is something I would have considered a conspiracy theory close to a year ago.
I now believe the lawyers did tell CIG to stop selling pre-orders of Squadron 42 immediately on either 17 May or 18 May and the web hosting staff just yanked the page off the web servers. Why? Because while the merger certificate was registered on 2 July 2023, the initial declaration and certificate of constitution were both submitted on 19 May 2023.
Looking a little farther, we see the new entity that would become Turbulent Media Inc. was registered on 19 May 2023.
Finally, we see the ultimate purchaser was Chris Roberts through Cloud Imperium UK Ltd.
The description of the transaction, "More than 50% up to 75% of voting rights" fits with the facts as previous to the acquisition, CIG had acquired a 25% share of Turbulent in 2020.
In hindsight, I now see why the webmasters maintaining the Roberts Space Industries website might not be told in advance about the need to take down the Squadron 42 sales page. I'm pretty sure Turbulent is in charge of maintaining the site. As CIG posted back in July 2023:
As is well known, the initial response to the Star Citizen campaign was beyond any of our expectations; so much so that our quickly built site couldn’t handle the sheer interest of people backing the project! We opened a parallel campaign 10 days later on Kickstarter to help ease the demand on our site, but we realized we had seriously underestimated our need for a robust website with a scalable platform better suited to a much larger audience. Luckily, one of our early external development partners in Montreal introduced us to Turbulent.
Pretty quickly we realized that we were working with a talented, agile, and innovative web-development company. More than that, we found a group of developers who shared our ambition and vision to disrupt the industry.
The agility we needed at the start of this project (and that we still need today) didn’t faze Turbulent. They innovated solutions and, later in our relationship, invented new technologies, methods, and software to support our completely different approach to game development, whether it was supporting the incredible fluidity of our eco-system or enabling us to communicate and showcase our developers’ progress. Features such as our Concierge program, Issue Council, Telemetry system, Community Hub, Galactapedia, Roadmap, award-winning StarMap, and Spectrum social network are some of the public-facing elements that Turbulent built. And, behind the scenes, Benoit and his team started to help us publish features and functions, like our launcher, and in more recent times, the team has been a core part of our efforts on cloud services, Persistent Entity Streaming, and Server Meshing.
I imagine the brain trust at CIG, and possibly at Turbulent, didn't want questions raised amongst the rank-and-file until the acquisition was almost complete. From my personal experience, telling the people in charge of the website to yank the page and not worry about the resulting errors definitely would raise questions. But preparing a smooth transition probably would have raised questions earlier among a larger group of employees.
The timing is circumstantial, but why would CIG stop selling pre-orders for Squadron 42? My guess is that CIG is using the proceeds from the sale of Squadron 42 as collateral for the loan required to purchase Turbulent. My estimate is the size of the loan is probably somewhere in the $35-$40 million range. The sale of 1 million copies of the game should cover that amount if the sale price is $70 per copy.
If CIG has to pay a bank all sales of Squadron 42 until the loan is paid off, then the brain trust at CIG would want to charge $70 per copy of the game instead of the $45 per copy CIG had been charging. But my theory has one major flaw. The line of credit CIG established with Coutts & Co in 2017. According to the latest available financial accounts filed with Companies House, what I am calling the line of credit was still active in 2021.
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| From CIG's 2021 Accounts |
PC Gamer N contacted CIG at the time and reported the following about the loan:
And that is where the complexities begin. As explained by Cloud Imperium Games’s co-founder and vice-chairman Ortwin Freyermuth on the forums, this collateral “specifically excludes Star Citizen” referring only to single-player portion Squadron 42 (which is what Foundry 42 are making, if you didn’t catch the name link). He also explains that the loan is to cover an advance on a tax rebate:
“Foundry 42 and its parent company Cloud Imperium Games UK Ltd. have elected to partner with Coutts, a highly regarded, very selective, and specialized UK banking institution, to obtain a regular advance against this rebate, which will allow us to avoid converting unnecessarily other currencies into GBP. We obviously incur a significant part of our expenditures in GBP while our collections are mostly in USD and EUR. Given today’s low interest rates versus the ongoing and uncertain currency fluctuations, this is simply a smart money management move, which we implemented upon recommendation of our financial advisors.” [emphasis mine]
If the loan/line of credit with Coutts is still in effect, the theory of using sales of Squadron 42 to help finance the acquisition of Turbulent goes out the window. But the information available is over two years old because CIG did not submit its 2022 financial accounts with UK Companies House on time.
Given the facts available, the scenario I described above seems likely. Perhaps CIG obtained the financing of the loan to purchase Turbulent from Coutts, making the scenario more plausible. Of course, due to CIG's practice of trying to submit its paperwork as late as possible, interested observers will not have access to the 2023 financial accounts probably until December 2024 or January 2025 at the earliest.
So for now, I'm declaring the case of the disappearing sales page for Squadron 42 closed. The solution was the lawyers ordered the takedown in connection with the acquisition of Turbulent by Cloud Imperium. I just wish I didn't have to wait a year to see if my analysis is correct.
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