The Financial Implications For Cloud Imperium From CitizenCon 2024

I don't play Star Citizen, and with the latest news out of this year's CitizenCon, I probably never will. But the annual event had some financial implications for the future of Cloud Imperium Games I couldn't miss. I thought I'd take the time to record my observations.

2025 will be a rough year - The announcement of Squadron 42 not launching until the year 2026 shook up all my calculations about Cloud Imperium. Before, no matter what my estimates of the company's revenue, CIG would release a game in 2025 bringing in hundreds of millions of dollars of revenue and setting the company up to continue for a few more years. 

Now, I'm reviewing my calculations wondering if CIG will need to perform another round of layoffs in the United States to reduce costs. Shutting down the Los Angeles studio seems like an obvious move to get away from California's high cost of living and rigorous tax regime. Bringing on another outside investor to get the company through to SQ42's release now seems realistic.

Don't expect a mass movement of SQ42 devs to work on Star Citizen - I watched the final panel of CitizenCon with awe. The company's vision of Star Citizen on commercial release of the game is audacious in its vision. But that comes with a price. I honestly do not see how Cloud Imperium ships Star Citizen to the public before CitizenCon 2031. 

The implications are clear. Not only is CIG counting on Squadron 42 to bring in loads of money, SQ42's sequels will need to do so as well. I've watched some Star Citizen content creators complain about SQ42 diverting resources from work on Star Citizen. I have bad news for them. If they want adequate funding for Star Citizen development, don't expect a permanent internal shift in developers between the games to occur. 

No more sales exploiting LTI - Over the years I've observed a phenomenon called LTI token sales. Players will purchase a small, relatively cheap item with lifetime or limited time insurance and then "melt" the item down for store credit to buy an actually desired ship, transferring the insurance from the cheap item to the desired object. So items that normally would not attract much interest generate millions of dollars in sales.

Did CIG change the importance of LTI to future buyers of its internet spaceships? The company came out with a post on the official forums to clarify the implementation of warranties and the impact on LTI.

Vehicles Attributed Through the Website, and not Earned In-Game

UNCHANGED PLAN: All insurance will last for varying durations, just like it's always have supposed to. (No change.)

UNCHANGED PLAN: Level 1 is chassis and original, purchase-included components only and is the insurance that has always been offered since the project began. (No change.)

UNCHANGED PLAN: [EDIT HERE WITH CORRECTED INFO BECAUSE I'M OLD AND OUT OF PRACTICE AND I SHARED SUPER-DUPER OLD THINKING ORIGINALLY] If your vehicle is destroyed without insurance, the intention is that there will be an additional in-game cost to recovering it, but it remains on your account and accessible forever. There will be ways to track its duration in game when the system is implemented, and a warning when you summon your vehicle if it is without active insurance. The choice to operate without insurance will be deliberate, very noticeable, and entirely yours. (No change.)

UNCHANGED PLAN, AND UNIQUE TO WEBSITE PROMOTIONS: Lifetime duration means you never have to bother with renewing it in-game. All other durations are intended to be renewed through in-game means once the system is fully implemented. This has always been chassis and stock components, meaning it is Level 1 insurance with a lifetime duration. (No change.)

FUTURE NEW ADDITIONAL OPTION: Level 2 adds custom components coverage to chassis. This is new and cool and especially important in a universe with massive crafting options and will be addable in game.

FUTURE NEW ADDITIONAL OPTION: Level 3 adds coverage to all your upcoming ship decorations, and still includes chassis and custom components, which is awesome and will be addable in game.

How will the change impact future ship sales and future revenue. I have the feeling revenue will decline as buyers do not choose the more expensive packages including insurance for any except the most expensive ships. I think the attraction of LTI was not losing ships purchased with real world money. The new system ensures that does not occur.

Expect more frequent ship and vehicle sales - I haven't just paid attention to the content at CitizenCon. I also watched the revenue roll in from the sales associated with the event. CIG failed to hold a sale a week ahead of CitizenCon like they did in 2023. Currently I estimate this month's cash shop revenue to be down at least $5 million from October 2023's total of $14.6 million.

But reduced revenue from not repeating the previous year's sales isn't the only cause for my belief. Comparing last year's CitizenCon (including the days before and after) to the similar period this year (October 18-21), sales were down this year. The 4-day period of October 20-23, 2023 saw cash shop revenue hit $4.4 million. This year, the cash shop revenue only reached $3.7 million.

Of course, one data point does not make a pattern. But if we see similar sales performance for next month's International Aerospace Expo, then expect to see more ship and vehicle sales in 2025.