Wednesday, April 24, 2024

Did Revenue Problems Force Star Citizen's Patch Alpha 3.23 To Ship Without Features?

I was watching Star Citizen YouTuber SaltEMike react to the Star Citizen Live video about hangars and cargo coming (or not coming) in patch Alpha 3.23 in the very near future. He mentioned something about senior lead gameplay engineer Chad McKinney, the developer featured in the video, was based out of the Los Angeles studio. I checked LinkedIn and, sure enough, McKinney is still listed as working out of Los Angeles. And then, to double-check myself, I went over to MassivelyOP. The site's Star Citizen beat reporter, Chris Neal, noted the following on why certain features would not ship in Alpha 3.23:
While stability concerns were the primary deciding factor, other considerations also played into the decision, such as the length of time to complete related cargo overhauling, revisions to kiosk UI and freight elevator design based on feedback, and personnel changes that required onboarding for developers.
Back on 14 March, Cloud Imperium Games' CEO and founder Chris Roberts noted in a Letter from the Chairman the closing of the Los Angeles studio for game development. Dismantling the studio where features like personal hangars and cargo gameplay were in development probably didn't help the team meet timing goals they had set out over a year in advance. Moving those functions to Austin or Montreal would definitely take some time, weeks if not months.

Now for the question I'm sure someone will bring up. Are advertised features missing because the CIG marketing machine finally couldn't raise the funds development demands? I'm going to say no. CIG's acquisition of Turbulent Media did not occur until July 2023, although signs are that upper management (read Chris Roberts) began the buyout in May 2023. Looking back further in history, CIG acquired 25% of Turbulent back in December 2019. I think the record is fairly clear that the Turbulent deal was part of a long-term plan to reduce development costs. After all, California is a very expensive place to do business and has seen a lot of outmigration of tech companies in recent years.

But money did play a role. As mentioned in Cloud Imperium's 2022 financial report, labor costs in the US were a concern.
This shows that salary costs increased in both territories: 6% up in the Rest of World and 16% up in the US. Development and G&A headcount increased in the Rest of the World by 18%, although a lot of that was at entry-level positions in G&A and Quality Assurance, required as Star Citizen progresses with added features, content, playability, and players. Also, performance-related bonuses in 2022 were not as high as in 2021 and thus the increase in Rest of World salaries did not match the increase in people, despite generous pay awards designed to help cope with the rising inflationary pressures felt throughout the economy.

In contrast, the US salary costs increased by 16% despite a reduction in development headcount and a moderate increase in G&A headcount, but additions were at the opposite end of the staff seniority spectrum with highly experienced personnel in each discipline being added to the group, and regarding development with senior experienced people often replacing the more junior roles that were vacated. Also, cost and wage inflation levels were high in both US office locations, which we aimed to keep pace with. [emphasis mine]
The developer headcount in Los Angeles and Austin was already decreasing due to the pressures of high labor costs in 2022, CIG's first year of recording sales exceeding $100 million. CIG was experiencing a systemic issue that required moving development efforts out of the US in general and Los Angeles in particular.

Of course, this brings up the age old question of what does management do when employees they are going to lay off in 6-9 months are working on important pieces of a game. CIG was in a position they would experience disruptions no matter what they did due to financial concerns. Probably the best move was not to promise features until closer to the planned release of Alpha 3.23.

But then, could Chris Roberts have afforded not to make the promises. As we found out with the submission of Cloud Imperium UK's 2022 financial paperwork, an investor had a put option exercisable in the first quarter of 2024. Did Roberts need to puff up the progress on Star Citizen at Citizen Con in order to encourage the investor to wait until the first quarter of 2028 to exercise the option? I'd say a non-zero possibility exists that was the case.

I picked the title of this post with care. I asked if revenue problems forced Star Citizen's patch Alpha 3.23 to ship without a couple of big items previously advertised. The answer to the question is no. The problem, in my opinion, is CIG's money management. In particular, setting up offices without a care of the economics of the situation. From a business perspective, I like that Cloud Imperium, if belatedly, took steps to reduce the development costs of its games. They just need to take the public relations hits for not delivering on "promised" content again.

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