More Layoffs Reported At Cloud Imperium Games

Apparently Cloud Imperium Games, developers of the upcoming full loot, PvP sandbox MMORPG Star Citizen, didn't wait to see the financial results of this year's Intergalactic Aerospace Expo before making decisions on the size of its workforce for 2025. According to Insider Gaming's Tom Henderson, CIG started laying off staff a few days ago.

The original claims were made by a former CIG employee who then locked his Twitter account (now known as X). Those claims I totally disregard as uncredible and possibly the result of a bitter former employee looking to strike back at his former employer.

What I do find credible is Henderson's reporting that his sources indicate up to 12 employees, mostly from the QA department, were let go. Henderson has earned some credibility with his reporting on the layoffs at the beginning of 2024 at CIG's North American offices as well as the CitizenCon crunch story at the beginning of October. In other words, Henderson has more credibility than some random Twitter user with an axe to grind who locks away his allegations so others cannot check the story.

I find the story of the layoffs credible from a different direction. CIG is currently on pace to bring in as much money this year as the company did in 2022. According to CIG's financial report for 2022, the company turned a profit of $1.3 million with somewhere between 15%-20% less staff than today. Since employee costs make up a huge portion of the budget, figure overall costs are 15%-20% higher in 2024 than 2022, even after the approximately 10% force reduction at the beginning of the year.

With cash shop sales apparently plateauing between $110-$120 million per year, CIG probably needs to cut costs to stay in business. But cutting QA? From everything I've read and watched, one thing not done to excess is quality assurance. I realize CIG's customer base does a lot of QA work on Star Citizen, but these cuts may cut too close to the bone in the long-run. Then again, Chris Roberts may still be salty about what happened during the Squadron 42 demo at CitizenCon.

Cloud Imperium Games' Sales Down 28.7% YoY In November 2024

While expected, Cloud Imperium Games posted another 25%+ year-over-year decline in cash shop sales in November according to the CCU Game dashboard. Last month's total of $20.3 million in cash shop sales was a 28.7% decline compared to November 2023's figure of $28.4 million. For the year the company's sales revenue is a few thousand dollars short of $98 million, down $11.2 million, or 10.2% for from the first 11 months of 2023.

For those who keep track of new accounts (aka "new citizens"), November's 61,068 was 33.9% less than the total of 92,395 in November 2023. For the year, new account creation is down 30.4% for the first 11 months of 2024 compared to the same period in 2023.

Overall, the recorded sales tracked on the CCU Game dashboard is $755.3 million since the launch of the Kickstarter in October 2012. But Cloud Imperium has additional funding sources not tracked by the dashboard. Overall, the company has recorded $853.9 million in confirmed revenue (the funding page & the 2022 financial report).

• Sales/Pledges: $755.3 million (through 30 November 2024)
• Subscriptions: $33.0 million (through 31 December 2022)
• All other sources: $65.6 million (through 31 December 2022)

In addition, the company has received a total of $63.25 million in outside investment. According to the 2022 financial report, $4.8 million of the amount was returned to investors in 2020. Including the outside investment money, the total amount raised by CIG to create Squadron 42 and Star Citizen is $917.2 million, or $912.4 million when excluding the returned funds.

I started this post with the word "While expected" for a reason. Because after my November update, I found out CIG had shifted some dates for the Intergalactic Aerospace Expo into December. Through the first 9 days of the event, sales this year were $414,000, or 2.7%, ahead of last year's pace.

Here is my take from 7 November upon hearing of the event's shift into December

Cloud Imperium announced the IAE will run from Nov 22-Dec 5. This shifts Star Citizen's biggest ship sale partially into December. Expect YoY revenue in November to drop from $28.4 million to $18-$22 million and rise in December from $8.4 million up to $14-$18 million. 1/2

— Noizy (@noizygamer.bsky.social) November 7, 2024 at 11:09 AM

I'm projecting sales for Q4 to fall between $42 million and $50 million. While not matching last year's performance, it will be CIG's second highest sales quarter in its 12 year history. However, those sales would see CIG either match last year's sales total or fall as much as 7% short of 2023. 2/2

— Noizy (@noizygamer.bsky.social) November 7, 2024 at 11:13 AM

Will CIG's cash shop sales this year surpass those of 2023? The prospect becomes less likely each day. Here are the December sales totals CIG needs to achieve to meet certain metrics of success.

• Match December 2023 sales: $8.3 million
• Match Total 2022 sales: $16.2 million
• Match Total 2023 sales: $19.6 million
• Match Q4 2023 sales: $22 million
• Match 2022 Total spending: $31.5 million

I threw in the final category of matching 2022's total spending to highlight that ship sales don't pay all the bills for CIG. Also, despite news of post-CitizenCon layoffs amongst the QA staff, headcount at CIG is still probably between 15%-20% greater today than in 2022, meaning total expenses probably increased by that much as well.