The Defense Crumbles: Pearl Abyss Stock Falls Another 21%

One of the benefits of owning an independent blog is the ability to go back and update stories I find interesting. The fall of the stock price of Pearl Abyss following the managerial buyout of CCP Games/Fenris Creations is one of those stories. When I last looked on 22 May Pearl Abyss stock had fallen to ₩46,050, the target price set by the analysts at JPMorgan. How has the price moved since then?

The price continued to slide

The price continued to fall. By the close of the KOSDAQ on Friday 5 June the stock had dropped another 12% down to ₩40,500 a share. On the following Monday the price crashed through ₩40,000 a share in afterhours trading over the weekend to open at ₩37,700. On Tuesday Pearl Abyss announced three measures designed to stabilize the stock price.

The first was the establishment of the company's first-ever annual cash dividend policy (the greater of ₩10 billion ($6.5 million) or 10% of net profit). 

Next came the retirement of roughly 1.4 million treasury shares (representing 50% of its holdings) three days later on Friday, June 12. When a company "retires" treasury shares, it permanently deletes them. These shares vanish from the books and Pearl Abyss can never reissue or resell them on the open market. By permanently shrinking the total pool of outstanding stock, Pearl Abyss structurally locked in a higher ownership percentage for every remaining shareholder and theoretically eliminated future dilution risk.

The third measure reinforced the retirement of the treasury shares. The company hired Korea Investment & Securities Co., Ltd to institute a buyback of ₩100 billion ($64.7 million) worth of Pearl Abyss shares. The buyback program is scheduled to last until December 2026.

At first the buyback worked as intended by creating a psychological price floor. The buyback news triggered a short-term rally, lifting the share price back up to ₩41,150 by the end of the trading day on 12 June.

Timeline of the price drop

But Pearl Abyss' plan didn't work as intended. Instead of jumping back in to purchase under-valued stock, institutional investors used the guaranteed buying volume from Korea Investment & Securities as a convenient exit door. They dumped their shares right into the company's own bids. Once the temporary buying window closed, the stock resumed its fall in value. 

And this is coming on today's article in GameRant that after three months user counts on Steam are down 95% from its all-time peak. So despite announcing Crimson Desert had reached 6 million units sold on 12 June, the rice has dropped another 12% over the past 12 calendar days.

The story of the fall of the stock price of Pearl Abyss began with the news of the sell-off of CCP Games (now Fenris Creations) on 29 April. The sales of Crimson Desert, now up to 6 million units, are now baked into the historic revenue calculations. MassivelyOP has noted that any meaningful DLC or major platform expansions for Crimson Desert are mapped out 1 to 2 years away. The next new game in the pipeline, DokeV, is 2-3 years away. Until the new content hits the market, Pearl Abyss needs to depend on the Black Desert franchise for the majority of its revenue for a significant amount of time.

I did get a quote from Gemini I liked about the near-to-mid term future of Pearl Abyss:

By divesting the steady, boring, predictable live-service subscription engine of EVE Online right at this moment, Pearl Abyss successfully turned themselves into a "pure-play" console/premium developer. The problem? The market hates gaps. Investors looked at the 2026–2028 pipeline, saw a multi-year structural drought where Black Desert has to carry the entire corporate overhead alone, and cleared out.

Whether that analysis is correct remains to be seen. But what is indisputable is that since the news of the departure of Fenris Creations from the Pearl Abyss family the stock price of PA's stock has declined 39.4%.

My Predictions For 2026

Another year, another time to make a fool of myself by making predictions for the upcoming year. Personally I had a fairly good year but I don't place a lot of value on my fortune-telling skill. But I really do need to go back and review the predictions I made for 2025 and try to do a better job foretelling 2026.

Crowd Control Productions - Last year I predicted two things. First, that the company would meet Pearl Abyss' expectations of having at least ₩20 billion in revenue for each quarter of 2025. CCP has achieved that level of revenue for the last six quarters and with the launch of the Revenant expansion I don't see that changing.

The second prediction is more problematic. I predicted CCP would see a 10% growth in revenue, meaning either ₩90 billion or $64 million for the year. Through the first three quarters the totals were ₩65.5 billion/$46.4 million. Given the strength of the Catalyst expansion I still have an outside shot of getting this prediction correct but won't know until the next investors' call in February.

For 2026 I may go full fanboi on my predictions. CCP will continue to meet the ₩20 billion per quarter revenue guidance given to investors. I am also going to place a lot of faith in Vanguard and set my revenue prediction for the year at ₩99.0 billion/$70.0 million.

EVE Online - Don't worry, some of my predictions that involve both EVE and a sequel game in the IP will be listed with the other game. I'm going to give myself a half-a-point for calling the summer expansions a hodge-podge of ideas although I think Legion was heavily aimed at null sec. I was dead wrong about the winter expansion concentrating on The Deathless Circle. Instead players got a mining/industrial themed expansion. Players got armed industrial ships, not tech 2 Deathless Circle pirate ships.

In 2026 I am expecting the summer expansion to consist of a hodge-podge of ideas that won't fit nicely into the theme of the winter expansion. The summer expansion will launch in June with the introduction of a new pirate epic arc coming in July. I'm guessing something involving The Deathless Circle but Upwell counts as a pirate faction, right?

For the winter expansion, I think wormholers will receive a major update. CCP hasn't expanded the lore of the Sleepers in a long time. Considering the Drifters killed Empress Jamyl I back in 2015, wormholes and the lore is probably overdue for an update.

Now for a couple of predictions based on Jester's charts. First, the ending average concurrent users in 2026. Jester's graph is showing a 7-day moving average at the beginning of December of over 28,000 accounts logged in at one time. The 30-day moving average is moving upward and almost at 26,000 accounts. I am going to predict that at some point in 2026 the 7-day moving average of concurrent users will exceed 30,000 accounts and the 30-day moving average will end the year over 28,000 concurrent users.

Jester also has another chart displaying the average number of concurrent users logged in per year. Through November the number for 2025 was 22,635, or about 100 accounts less than 2024's average. I'm going to make the wild prediction that Jester's chart shows over 24,000 in 2026. I call the prediction wild as the amount would be the highest average amount of accounts logged in during a year since 2014's 27,490.

One last prediction. In 2025 the peak concurrent user mark for the year reached 41,322. In 2026 I predict the number will reach 42,500. I know, not much of an increase. But the increase would give 2026 the highest yearly PCU since the move to Alpha clones in January 2017.

EVE Vanguard - CCP Games does not have the greatest record with first person shooters. Last year I predicted a successful test of Vanguard in November or December. I'll take the cross-over Operation Nemesis event in September and October as being close enough to count. But I'll also take my prediction of the developers as shying away from null sec as a miss.

I am going to go out on a limb and say that Vanguard will indeed launch on Steam sometime in the third quarter of 2026. The delays for CCP's FPS games dating back to EVE Vegas 2018 are over.

EVE Frontier - I didn't really make a lot of predictions for Frontier in 2025. I did predict another round of venture capital funding but as far as I know that didn't happen. I'll have to count the next prediction as partially correct. CCP did announce how the developers have upgraded the Carbon engine to use Python 3.12 but EVE Online has not switched to the new version of the engine yet.

I will predict for Fanfest 2026 that CCP will present a video showing all the client differences between Online and Frontier. However, the video may not make it to the main stage of Harpa. I will also predict the crypto currency for Frontier will not appear for sale in 2026. If I'm wrong that means Pearl Abyss is in financial trouble and Crimson Desert flopped.

The mobile games - I am going to predict neither EVE Echoes or EVE Galaxy Conquest will shut down in 2026. That's about as far as I feel comfortable predicting.

Pearl Abyss - I managed to only make a prediction about the company returning to profitability in 2025. Once again, we'll need to wait until the February investors' call as the company only had made a net profit of ₩6.8 billion through the first 9 months of 2025. Given recent history the numbers could dip back into the red.

I will make one additional prediction about the South Korean game maker. Expect total revenue in 2026 to fall between ₩550 billion and ₩600 billion.

Black Desert Online - Looks like I was wrong about the revenue Black Desert would bring into Pearl Abyss' coffers in 2025. I predicted a 10% decline down to ₩215.0 billion. The IP, however, bounced back with ₩197.4 billion in revenue through the first three quarters of the year. The Black Desert IP may even see an increase in revenue if Pearl Abyss announces Q4 revenue exceeding ₩52.4 billion. Once again, we'll need to wait on the investors' call in February.

Crimson Desert - I finally got a prediction involving Pearl Abyss' upcoming single-player RPG mostly correct. I posted that I expected Pearl Abyss to announce in November the game would release in the first half of 2026. Pearl Abyss made the announcement in September.

My only prediction for the game is that between 2.5 million and 3 million copies of the game will sell in 2026.

Cloud Imperium Games - What a difference the leadership shakeup at Cloud Imperium had in 2025. Last year I made 4 predictions about CIG and got two totally wrong. First, I predicted a slight decline in year-over-year cash shop revenue down to $113 million. CIG is on pace for $155 million in revenue, an increase of over 30%. I was also wrong about sales during Invictus and IAE only totalling $46.8 million, with actual sales for the two biggest events on the calendar bringing in $59 million. The 15% reduction in new account creation I predicted for 2025 turned into a 45% increase instead. 

One I got partially correct was the prediction involving additional outside funding. I predicted Tencent would receive a 5-10% share of CIG in exchange for becoming the company's publisher in China. Instead, Keith Calder paid $5 million to increase his holding in CIG up to 22.4%.

Finally, I did get the closing of the Los Angeles area studio correct. Not much of a prediction, honestly, but CIG did try to hide the complete shutdown of the office so it counts.

Looking into the future I will make a prediction that will affect the rest of my predictions about CIG: Squadron 42 will launch in the fourth quarter of 2026. Given that, cash shop sales will increase 10% in 2026 up to $170 million. The figure will reach much higher if Squadron 42 sales are included in the cash shop counter.

As for new account creation, I am going to fudge the prediction and just say CIG will set a new company record, exceeding 2022's amount of over 871,000 accounts. One million new accounts would not surprise me.

I am going to predict a minor story will emerge in 2026: publication costs. Between the new server meshing technology introduced in 2025 and a surge in interest in Star Citizen, I think the publication line item will hit $90-$100 million in 2026. I also think we will see the number fall within $50-$60 million in the 2024 financial report which CIG has not published as I compose this post.

Star Citizen - I only made one correct prediction for 2025 out of three attempts. I was correct when stating dynamic server meshing would not appear last year. But I was incorrect in my prediction that the alpha 3.24 branch of the game would stay on the production servers until Q2. Also, my prediction that Nyx would not appear in the game in 2025 was incorrect. Admittedly CIG rushed the system into the game without all its planets, but officially the system was launched in 2025.

For 2026 I predict more of the same. Dynamic server meshing will not appear. Nyx, the system I thought CIG would introduce in 2026, will cause some consternation among players. The system will not be considered finished by the end of the year. Perhaps most importantly the capacity of single shards will not exceed 1000 players. That prediction is not necessarily a negative prediction as currently shards are set to handle up to 600 players.

Squadron 42 - I only made one prediction about SQ42 for 2025: Chris Roberts would announce Tencent as the publisher for the game at CitizenCon. Of course I was wrong. For 2026 I will make two predictions. First, the game will launch globally in Q4 2026. Secondly, globally does not mean in the Peoples Republic of China. SQ42 will not launch on the mainland in 2026. Look for Tencent to act as the publisher sometime in 2027.

I should predict the number of units sold in 2026. I believe CIG will announce between 2.5 and 3 million units sold. An impressive figure until one realized that half the figure will have been presales from before 2023 when Squadron 42 sales were disabled on the RSI website.

And finally, Final Fantasy XIV.

As much as I play Final Fantasy XIV I don't really dig into the game as much as I ever did EVE Online. Last year I predicted we would find out at Fanfest in November that Yoshi-P would announce players would return to the Eastern lands to visit the frigid waters of The Blindfrost. Well, none of that happened, with the next Fanfest set for Anaheim in April.

Now for my predictions. The next expansion will take place in the South Sea islands, the original home of the Lalafell. Which means Krile will either serve as the expansion's star or be the ongoing thread holding the multi-expansion story arc together, much as Alphinaud did in the Hydaelyn–Zodiark Saga.

I asked last week which mainline Final Fantasy game I should play. If my prediction is correct, the 8.0 expansion will heavily reference Final Fantasy X, specifically Spira. I guess I know which Final Fantasy game I'm playing next.

I am also going to go out on a limb and say Final Fantasy XIV will not launch its next expansion in 2026. Looking at the historical timings I just can't see a launch happening in December. Expansion launches have always occurred at least 3 months after the Japanese Fanfest, and the next one is on Halloween and All Saints Day. That would lead to a launch of the next expansion no sooner than January or February 2027.

And so concludes another round of predictions. One of these days I'll get more than half the predictions right.

Pearl Abyss Q3 2025 Earnings Call

On Tuesday in South Korea, Pearl Abyss held its earnings call for the third quarter of 2025. The company experienced a quarter-over-quarter increase in revenue of 34.2%, from ₩79.6 billion ($56.8 million) in Q2 2025 to ₩106.8 billion ($77 million) in the third quarter. Year-over-year the company's third quarter revenue increased by 34.3%. 

From the Q3 2025 earnings call

Pearl Abyss also recorded both operating and net profits in the same quarter for the first time since the last three months of 2024. On the call the PA C-Suite indicated a large reason for the profits was due to foreign currency exchange effects and tax rebates. Of the ₩106.8 billion in operating revenue, only ₩100.3 billion came from either the Black Desert or EVE intellectual properties. The remaining ₩6.5 billion ($4.7 million) made up 22.4% of the company's net profit.

From the Q3 2025 earnings call

Overall, the revenue from the company's core game IPs rose 26.8% quarter-over-quarter to ₩100.3 billion ($74.3 million). Performance compared to Q3 2024 was even better, improving 34.6% year-over-year.

The big revenue gain came from the Black Desert IP. The ₩79.5 billion ($57.4 million) in revenue last quarter was a 44.8% increase over Q2 2025's sales and 47.2% over the third quarter of 2024. While console revenue in the previous quarter doubled following the release of the console version of BDO in June. However, the actual increase in revenue from ₩2.4 billion to ₩5.0 billion did not account for most of the increase. Instead the most likely reasons were the introduction of a new class, Wukong, and a new end game region, Edania.

In historical terms, Q3 revenue was the most since the beginning of Pearl Abyss self-publishing in 2021. In Q1 2021 the Black Desert IP recorded ₩82.9 billion ($74.4 million) in revenue. However, due to the weakening of the won vs the US dollar, revenue was the greatest since Q2 2022.

EVE IP revenue was pretty much as expected. Revenue fell 14.1% down to ₩20.8 billion ($15.0 million). In an interesting development Pearl Abyss did point out to the analysts on the call the decline was expected as the effect of the Legion expansion, released in May, began to wear off. However, the revenue did meet the guidance that the EVE IP would bring in at least ₩20 billion every quarter issued back on the Q2 2024 earnings call.

Finally, some news about Crimson Desert. The game is on track to release on 20 March 2026 (19 March 2026 in the west). The advertising for the launch will reach its peak beginning in January. The company's advertising spend already increased 29.5% QoQ and 52.7% YoY to ₩13.6 billion ($9.8 million) with the marketing efforts at all the video game shows attended. 

In Crimson Desert sales news, the biggest percentage of pre-sales is coming from console sales. Pearl Abyss speculated the reason was that the initial announcement was made on the Playstation Network.

EDIT - 13 November 2025 - For those looking for a transcript of the call, Croda has provided one in his coverage.

A note about currency conversions.

All currency conversions in this blog post were performed using the rates displayed on the Federal Reserve Bank of St. Louis website using the average quarterly exchange rate.

Pearl Abyss Q2 2025 Earnings Call

On Tuesday in South Korea, Pearl Abyss held its earnings call for the second quarter of 2025. The company experienced a quarter-over-quarter decrease in revenue of 4.9%, from ₩83.7 billion ($57.7 million) in Q1 2025 to ₩79.6 billion ($56.8 million) in the second quarter. Year-over-year the company's first quarter revenue decreased by 2.7%. 

From the Q2 2025 earnings call

For the fourth time out of the last five fiscal quarters Pearl Abyss ran at an operating loss. The ₩11.8 billion ($8.4 million) loss in the first quarter of the year puts the operating losses at ₩24 billion ($17.1 million) over the last 12 months. Pearl Abyss also recorded a net loss of ₩22.7 billion ($16.7 million) in the second quarter of 2025. For the first half of 2025 the company recorded a net loss of  ₩22.2 billion ($15.9 million) and operating loss of ₩17.0 billion ($12.0 million). 

The losses in the last quarter were attributed to foreign exchange effects as the South Korean won strengthened 2.9% against the U.S. dollar in Q2 2025 according to the Federal Reserve Bank of St. Louis. Perhaps the won strengthened a lot more against the euro and east Asian currencies.

IP and platform breakdowns are back

In a somewhat surprising development revenue breakdowns by game IP (Black Desert vs EVE) and platform returned on yesterday's call. For Black Desert the news was probably disappointing. Year-over-year Black Desert income fell by 8.5% down to last quarter's ₩54.9 billion ($39.2 million). Much of the decline can be attributed to the ending of the Black Desert Mobile service in China. The contract with TenCent to operate Black Desert Mobile in China was supposed to run until 26 April but due to poor performance TenCent and Pearl Abyss ended service for the game on 27 January. Mobile game revenue declined ₩6.2 billion ($8.2 million), or 36.3%, from Q2 2024 to Q2 2025.

Over the first half of 2025 Black Desert game revenue was ₩117.9 billion ($82.6 million), a decline of 7.0% in South Korean won. Since the Pearl Abyss representatives on the call said foreign exchange affects affected profitability, I also calculated the decline in terms of the U.S. dollar came out as a decline of 12.0%.

The bright spot on the call was the news about the EVE IP. In Korean won the EVE IP had its highest revenue total of ₩24.2 billion ($17.3 million), a year-over-year increase of 12.0%. In terms of won the EVE IP recorded the highest quarterly revenue total since Pearl Abyss acquired CCP Games in October 2018. The U.S. dollar figure is the highest since the EVE IP brought in $17.9 million in the third quarter of 2020. 

On the call, Pearl Abyss indicated last quarter was EVE Online's most successful quarter in terms of revenue since 2016. In that year CCP Games introduced the free-to-play Alpha clone option in EVE in the final quarter of 2016.

Finally no earnings call is complete without news of the development of Crimson Desert. The CEO of Pearl Abyss Heo Jin-young gave an update on the development and marketing of the long-delayed game. Currently Crimson Desert is undergoing voiceover work and console certification. Pearl Abyss intends to attend Gamescon and PAX East in August and the Tokyo Game Show at the end of September. However, the game will not launch in the final three months of 2025 as originally stated but sometime in the first quarter of 2026.  While the company has an internal date in mind the date will not be revealed at Gamescom.

The update led to only a single question asked by the investment analysts on the call. Heo Jin-young was asked about the possibility of Crimson Desert's release being delayed past the first quarter of 2026. The Pearl Abyss CEO was directly asked "how can we trust you and your company" about any release date after all of the delays over the past several years.

According to the Korean business site Chosun Biz the markets did not respond well to the earnings call.

The market reacted coldly to this announcement. As of 9:46 a.m., Pearl Abyss's stock price plummeted by 9,050 won (-23.15%) to 30,050 won, dropping more than 20% in early trading.

Pearl Abyss has seen multiple delays in its release since its first announcement in 2019. The industry assesses that this schedule change has diminished the likelihood of a performance rebound by the end of the year, and there are concerns that further delays could make it even harder to recover investor sentiment. According to the financial information firm FnGuide, Pearl Abyss was expected to achieve a revenue of 540 billion won and an operating profit of 114.8 billion won this year, but this delay makes it difficult to meet those projections.

As seen during the call, through the first half of 2025 Pearl Abyss has achieved revenue of 163.3 billion won and an operating loss of 17 billion won. And with the delay of Crimson Desert's release into 2026 I don't see a way how the South Korean game maker can come close to meeting market expectations.

Update: 13 Aug 2025: 1300 GMT - At the end of the trading day, Pearl Abyss stock fell 24% since the previous day's close. That represents a loss of ₩581.1 billion ($421.2 million) in the value of Pearl Abyss' market cap.

Pearl Abyss stock price - 13 August 2025

Pearl Abyss Plans To Sell Off CCP Games

In a not entirely unexpected move South Korean-based Pearl Abyss is looking to sell off its Icelandic subsidiary CCP Games. The South Korean financial & economic news Money Today Network broke the story based on an interview.

Pearl Abyss is putting its subsidiary CCP, which developed 'EVE Online', up for sale on the market. The reason is interpreted as CCP acquiring it for 250 billion won in anticipation of the fan base it secured through 'EVE Online' and expansion of its mobile platform, but it fell short of initial expectations.

According to an interview with Money Today Broadcasting MTN on the 19th, Pearl Abyss and CCP have selected an underwriter for the sale of CCP and are sounding out multiple game companies for their interest in acquiring it.

Pearl Abyss launched an IPO in September 2017 bringing in $165 million. The company used the proceeds primarily to fuel global expansion and invest in new game development. A significant portion went into scaling up operations, including establishing overseas subsidiaries and enhancing marketing efforts for Black Desert Online in international markets. They also channeled funds into developing new titles like Crimson Desert and DokeV, aiming to diversify their portfolio and reduce reliance on a single franchise.

The biggest acquisition occurred in September 2018 with the purchase of CCP Games. The initially announced purchase price of $425 million was reduced down to $225 million as the studio failed to meet certain financial conditions. For example, CCP and its new Chinese partner NetEase were unable to reestablish EVE Online service in China until the first half of 2020. 

The biggest disappointment for Pearl Abyss probably was the failure of CCP to immediately launch a FPS game set in the EVE universe. Despite presenting a playable demo of a game known as Project Nova at EVE Vegas in October 2018, the project was shut down in February 2020. CCP continued to work on an FPS game, with EVE Vanguard currently listed but unavailable on Steam.

As often happens with financial drama involving CCP, a loan is involved.

In October 2023, the Group financed USD 50,000,000 from Pearl Abyss Corp. to repay the existing borrowings from banks and other financial institutions in a single loan agreement arranged by The Korea Development Bank. The interest period is 12 months and the interest rate is fixed at 4.6%. Interests are paid every anniversary but the loan principal is due in October 2026.

Any party purchasing CCP Games will also need to pay back the $50 million loan to Pearl Abyss. Something tells me the South Korean company can't afford to refinance the loan to its subsidiary as I honestly don't think CCP will have the ability to repay the loan on time.

Game revenue since the IPO funded spending spree

But while CCP's financial performance may not have met expectations, those of Pearl Abyss' cash cow in comparison utterly collapsed. One example was the cancellation of Tencent's contract to run Black Desert Mobile in China early. Instead of running through April 2025, service ended on 27 January. Since 2019, Black Desert revenue declined over 55% when converted to U.S. dollars. In comparison, CCP's game revenue increased by almost 25%. 

The same holds true concerning game development. While producing two mobile games with two other games under development six years later is probably not what Pearl Abyss expected, CCP outperformed the South Korean studio. Crimson Desert was supposed to launch in the second half of 2021 and is now expected to launch in the fourth quarter of 2025. Pearl Abyss also had to cancel development of DokeV and Plan 8 until Crimson Desert is complete. In fact, Pearl Abyss' ability to support CCP's development efforts is limited, as was shown by the Icelandic studio's reaching out to outside venture capitalists for funding to develop EVE Frontier.

Now for my hot takes. Who do I think will purchase CCP Games? Cross off the list any Chinese company like Tencent or NetEase. The hottest reason for acquiring CCP is EVE Frontier. The Chinese Communist Party is not a big fan of cryptocurrencies, having banned them in September 2021.

The People’s Bank of China, the country’s central bank, said Friday that cryptocurrency transactions are illegal, saying such currencies “do not have legal tender status” and therefore “cannot be circulated as currency in the market.”

In a statement, the bank said that bitcoin and other virtual currency transactions have disrupted economic and financial order, contributing to a rise in “money laundering, illegal fund-raising, fraud, pyramid schemes, and other illegal and criminal activities.”

Crypto transactions are now considered criminal financial activity in China, the bank said, and the country will “resolutely curb the hype of virtual currency transactions, severely crack down on illegal financial activities and illegal criminal activities related to virtual currencies, protect the safety of the people’s property in accordance with the law, and make every effort to maintain economic and financial order and social stability.”

Any door the Chinese government leaves open for people to move wealth out of the country tends to lead to a stampede.

According to the Chainalysis Blockchain data platform, more than $50 billion worth of cryptocurrency left East Asian accounts to areas outside the region between 2019 and 2020. As China has an outsized presence in East Asian cryptocurrency exchanges, Chainalysis staff believe that much of this net outflow of cryptocurrency was actually capital flight from China. Although Chainalysis does not have a definitive figure for how much capital fled China between 2019 and 2020, they estimate that it could be as high as $50 billion.

If not one of the giants out of China, then who? My guess is a venture capital firm heavily interested in cryptocurrencies. Andreessen Horowitz led a $40 million round of funding just to be involved in the project. Would another group want to own the whole thing?

I do want to conclude with a final question I haven't seen asked. Is Pearl Abyss preparing itself for sale? In hindsight the sale of CCP's Newcastle office at the end of 2017 was a prelude to selling itself to Pearl Abyss. Selling its VR studio to Sumo Digital cleared away some business Pearl Abyss didn't want to deal with. Would selling off a studio developing a blockchain game clear the way for Tencent to purchase Pearl Abyss?

Pearl Abyss Q1 2025 Earnings Call

On Tuesday in South Korea, Pearl Abyss held its earnings call for the first quarter of 2025. The company experienced a quarter-over-quarter decrease in revenue of 20.4%, from ₩95.7 billion ($68.5 million) in Q4 2024 to ₩83.7.7 billion ($57.7 million) in the first quarter. Year-over-year the company's first quarter revenue decreased by 2%. 

For the third time out of the last four fiscal quarters Pearl Abyss ran at an operating loss. The ₩5.2 billion ($3.6 million) loss in the first quarter of the year puts the operating losses at ₩18 billion (-$12.9 million) over the last 12 months. Pearl Abyss did manage to pull off a net profit of ₩500 million ($300,000) in the first quarter.

In non-gaming revenue Pearl Abyss saw a drop of revenue from Pearl Abyss Capital of ₩4.4 billion ($3 million) due to lack of activity. The large net profit in Q4 2024 was a one-time event due to FX (foreign exchange) gains plus a revaulation of some of the company's assets. The drop in net profits in the first quarter were the numbers retreating back to the norm.

But the biggest decline in revenue was due to the ending of the Black Desert Mobile service in China. The contract with TenCent to operate Black Desert Mobile in China was supposed to run until 26 April but due to poor performance TenCent and Pearl Abyss ended service for the game on 27 January.

While the company removed platform data this quarter, the earnings call PowerPoint presentation still had revenue breakouts by region. While North American/EU (+2.2%) and Korea (+1.8%) experienced small gains, the rest of Asia region experienced a quarter-over-quarter decline of 32.8%, a drop of ₩8.9 billion ($6.9 million). Pearl Abyss no longer breaks down revenue by game franchise but one can assume most if not all the revenue decline is due to the ending of BDM service in China.

Finally on the subject of profits, the company's CFO did point towards CCP Games' development of two games, EVE Frontier and EVE Vanguard, as another reason for the quarter's operating loss.

The analysts on the call were told of various initiatives designed to increase revenue. Black Desert Console is expected to finish work on porting the game to the current generation of consoles (PS5 & XBox XIS) and release the updated game on 26 June.

For EVE, while the presentation did tout the upcoming Legion expansion, Pearl Abyss chose to make EVE Frontier a bigger focus than normal for a game from CCP. I think progress on a blockchain game is supposed to make investors forget some of the pain surrounding Crimson Desert.

According to the C-Suite members on the call, development of the long-delayed game is in the last stages of preparing to launch. These steps include final voiceover work and certification for consoles. Expect full scale marketing efforts to begin in June to include a new demo build to use at game shows.

Note: The conversion of the QoQ revenue loss in the rest of Asia has been corrected from $11.5 million to $6.9 million.

Pearl Abyss Q4 2024 Earnings Call

On Tuesday in South Korea, Pearl Abyss held its earnings call for the fourth quarter of 2024. The company experienced a quarter-over-quarter increase in revenue of 20.4%, from ₩79.5 billion ($58.6 million) in Q3 to ₩95.7 billion ($68.5 million) in Q4. Year-over-year the company's fourth quarter revenue increased by 13.4%. For the entire year, revenue increased 2.7% from ₩333.5 billion ($255.5 million) in 2023 to ₩342.4 billion ($251.0 million) in 2024.

Despite bouncing back with a ₩2.4 billion ($1.7 million) operating profit in the fourth quarter, Pearl Abyss suffered an operating loss of ₩12.1 billion ($8.8 million) for 2024. This is the second year in a row the company posted an operating loss, as the South Korean game studio posted a 16.4 billion ($12.4 million) loss in 2023.

Pearl Abyss did post a net profit of ₩61 billion ($44 million) in 2024, thanks in large part to a ₩46.8 billion ($33.5 million) net profit in the final quarter of the year. While I wondered how the company made a ₩46.8 billion net profit on ₩95.7 billion in revenue, an analyst brought up a different question. Pearl Abyss claimed ₩53.3 billion ($38.1 million) in financial income but only ₩46.8 billion in net profit. The analyst was told the amount came from FX (foreign exchange) gains for Q4 plus a revaulation of some of the company's assets. All told game revenue only made up 59.4% of Pearl Abyss' income in the fourth quarter. I was left wondering if not for the weakening of the South Korean won would the company have recorded a second straight year of losing money.

A bigger surprise on the call was Pearl Abyss changing the way it reports revenue. No longer is game revenue broken down between the Black Desert and EVE franchises. Instead, the revenue is broken down between game and non-game (Pearl Abyss Capital) revenue. When asked by an analyst for a breakdown between the Black Desert and EVE game revenue, the reply was the breakdown was similar to the 3rd quarter numbers. 

I believe this marks a point where Black Desert revenues, even with the launch of Black Desert Online in China last quarter, are so poor the company's leadership has decided to hide the numbers. The leading reason I believe Black Desert is doing poorly financially is the failure of the Pearl Abyss leadership to tout a successful entry into the Chinese market. At the same time CCP Games not only launched an EVE Online expansion, but a new mobile game, EVE Galaxy Conquest as well. Noticeably, Galaxy Conquest was not mentioned once.

One game under development mentioned on the call was EVE Frontier. I don't know if there was a problem with the translation but apparently the blockchain-based game "is in its last stages of completion." I think when a transcription of the call is provided the wording may change. If not, Pearl Abyss really buried the lede.

Finally, the subject of Crimson Desert. Pearl Abyss confirmed on the call that "late 2025" means the fourth quarter. Still, I think at least one analyst was skeptical. Another wanted to know how many devs were working on the next scheduled game, DokeV. Pearl Abyss replied that all resources were working on completing Crimson Desert but that DokeV shouldn't take that long afterwards to publish.

A note about currency conversions.

All currency conversions in this blog post were performed using the rates displayed on the Federal Reserve Bank of St. Louis website using the average quarterly exchange rate. As a check on the accuracy of the methodology, I compared the revenue amounts listed on the quarterly investment calls of 2023 with the actual figure from the tax filings released by the Icelandic taxing authority. For 2023 I came up with revenues of $55,865,000 and the actual game revenue reported to the Icelandic government was $55,735,000. The difference was 0.2% more, in case the accuracy of the methodology is a concern.

Pearl Abyss Q3 2024 Earnings Call

On Tuesday in South Korea, Pearl Abyss held its earnings call for the third quarter of 2024. The company experienced a quarter-over-quarter revenue decline of 2.8% down to ₩79.5 billion ($58.6 million). Year-over-year the company's revenue has declined 6.3% compared to Q3 2023's revenue of ₩84.9 billion ($64.7 million). 

The drop in revenue alone doesn't tell the full story of Pearl Abyss' poor financial performance in the third quarter. In the third quarter, the company posted a operating loss of ₩9.2 billion ($6.8 million). Over the past four quarters, the company has posted losses in three, totaling ₩19.9 billion ($14.7 million). 

The operating loss translated into a net loss of ₩7.8 billion ($5.8 million). In response to a question from one of the investment analysts, a member from the Pearl Abyss C-suite explained the company had experienced a couple of one-time expenses that contributed to the losses. The first was ₩2.5 billion spent on responding to a tax audit from the South Korean government. The other was ₩500 million in increased electrical costs for air conditioning during the summer's abnormally warm summer.

While the second net loss over the last four quarters, Pearl Abyss has shown a profit of ₩9.2 billion ($7.2 million) over the period. 

In another piece of news, ₩5.0 billion, or 6.3% of Pearl Abyss' revenue did not come from game revenue associated with its two main intellectual properties. In the past Pearl Abyss has posted significant revenue from its financial division. Apparently the same happened again in the third quarter, although none of the investment analysts on the call asked about the subject.

In a look at the Black Desert IP revenue fell from the previous quarter by 10%, down to ₩54.0 billion ($39.8 million). The year-over-year decline was steeper, with the quarter's revenue down 21% from the ₩68.4 billion ($52.1 million) posted in the third quarter of 2023. The financial picture in the fourth quarter looks rosier as Tencent began Black Desert Online service in the People's Republic of China on 24 October. Additional sales are possible as the company plans special events to celebrate the 10th anniversary in December.

The picture was brighter for the games set in the EVE universe. Quarter-over-quarter sales fell 5.1% down to ₩20.5 billion ($15.1 million) in the third quarter. But year-over-year sales rose 28.1% compared to Q3 2023's mark of ₩16.0 billion ($12.2 million), meeting the revenue expectations set on the Q2 earnings call.

Revenue should rise for the EVE IP in the upcoming quarter. In addition to the bi-annual EVE Online expansion launching today, the new mobile game, EVE Galaxy Conquest, launched globally on 29 October. In addition, two games under development, EVE Vanguard and EVE Frontier were mentioned on the call. In response to token sales concerning CCP's blockchain-based MMORPG, the Pearl Abyss CEO referred all such queries to CCP.

The most questions, however, were asked about Crimson Desert. The Pearl Abyss leadership spent a lot of time deflecting questions about the game, probably to not overshadow any upcoming announcement coming up at G-STAR this weekend starting on Thursday in Busan. After a question about the demo at G-STAR, the analyst was told to go to the convention floor and play it himself. I think the question might have struck a nerve as those on the call had already been told the playable demo at G-STAR would basically be the same one presented at Gamescom except with one additional boss.

Some questions about Crimson Desert were answered on the call. For example, the 22% increase in advertising expenditures up to ₩8.9 billion ($6.6 million) was mostly due to increased costs associated with attending game shows and other events to introduce the game to the public. Also, the studio is still considering multi-player modes as well as downloadable content to keep revenue up after the game's first year on the market. When Crimson Desert was first introduced a multi-player mode was included as a feature.

Pearl Abyss Q1 2024 Earnings Call

On Thursday in South Korea, Pearl Abyss held its earnings call for the first quarter of 2024. The big news was the performance of the Black Desert intellectual property, with a revenue increase of 11.1% to ₩66.8 billion ($50.2 million). But overall, the company's operating revenue only increased by ₩1 billion to ₩85.4 billion ($64.2 million), a 1.2% quarter-over-quarter increase. Compared to the first quarter of 2023, the company recorded a 0.5% decrease in revenue.

From the presentation

Pearl Abyss returned to profitability in the first quarter, recording a net profit of ₩12.8 billion ($9.6 million) and an operating profit of ₩600 million ($500,000). Year over year, net profits were up 36.2% while the operating profit declined 45%. The percentage made the operating profit decline sound scarier, as the decline in won was only ₩500 million ($400,000).

From the presentation

To tell the story of the Black Desert IP, we need to look at the EVE IP revenue first. As pointed out by Pearl Abyss Chief Financial Officer Joh Seokwoo, the EVE IP suffered a quarter-over-quarter revenue decline of 9.5%, down to ₩18 billion ($13.5 million).  Puzzlingly, he did not point out the year-over-year increase of 6.5%, a total increase of ₩1.1 billion ($200,000). The switch of CCP Games' strategy of releasing two expansions per year may establish a pattern of revenue peaks in the second and fourth quarters of every year, falling back in the first and third quarters. If so, then looking at revenue year-over-year may have more relevance than the quarter-over-quarter numbers.

Now to the improved performance of the Black Desert IP. Quarter-over-quarter, Black Desert revenue increased ₩6.7 billion ($4.7 million) up to ₩66.8 billion ($50.2 million). Year-over-year, Black Desert revenue declined slightly, down ₩700 million or 1%.

What raises eyebrows is the platform data. Converting the percentages to currency totals, mobile revenue increase from ₩9.6 billion ($12.7 million) in Q4 2023 to ₩22 billion ($29.3 million) in the first quarter of 2024. Most, if not all, of the increase is attributable to Black Desert Mobile.

Looking at PC revenue, performing the percentage to actual conversion results in a quarter-over-quarter revenue decline of 11.9%, from ₩66.4 billion ($87.7 million) down to ₩58.5 billion ($77.8 million). Assuming all of the EVE IP revenue decline occurred on PC platforms, then Black Desert Online on PC saw a decline of ₩6 billion ($4.5 million). The question is why? Is the answer similar to the EVE IP's? That is, no new content while the mobile version received more due to new content pushed to mobile after the PC and console versions received the updates? 

Upcoming highlights according to Pearl Abyss

Perhaps one of the most important points came from what the investment analysts on the call did not ask. No questions about Project Awakening, despite the presentation trying to highlight the Web3 project on the call. Is this an indication that this type of project is no longer the flavor-of-the-month?

The analysts seemed interested in two subjects. The first is the progress of introducing the PC version of Black Desert Online into the People's Republic of China. The latest progress report is that all paperwork was turned into the authorities and the waiting begins for approval.

Stepping outside the presentation, Pearl Abyss' optimism in not misplaced. In January, the Chinese government approved 115 new video game titles, the largest amount in 18 months. Pearl Abyss' partner in the People's Republic, Snail Games China, is not the biggest player in the Chinese market but has not incurred the wrath of the regime either. 

The other topic of interest was the development of Crimson Desert. Marketing efforts will begin as the game finishes development. Expect a big marketing effort to begin at GamesCom in August. Not only will the company reveal a new gameplay video but also provide demos for attendees to play as well.

The analysts were also informed that the marketing plans include an appearance at G-Star, a major video game event held in South Korea in mid-November. If the marketing team is including G-Star in their plans, Crimson Desert will probably not launch before December 2024. Given Pearl Abyss is a South Korean company, I suspect the announcement of Crimson Desert's launch date occur then.

One question an analyst asked was whether Crimson Desert would launch as a console exclusive, like Final Fantasy XVI launched as a Sony Playstation exclusive last year. The representatives from Pearl Abyss neatly sidestepped the question, but I received the impression the answer was no. Then again, that was just an impression.

I should add one last item of interest. While the analysts did not ask about ongoing projects currently in public testing like EVE: Vanguard or EVE: Galaxy Conquest, questions were asked about DokeV. The project was mentioned unprompted in the main portion of the call, but during the Q&A portion of the call Pearl Abyss reiterated development of the game will not really ramp up until Crimson Desert is released.

A note about currency conversions.

All currency conversions in this blog post were performed using the rates displayed on the Federal Reserve Bank of St. Louis website using the average quarterly exchange rate. As a check on the accuracy of the methodology, I compared the revenue amounts listed on the quarterly investment calls of 2023 with the actual figure from the tax filings released by the Icelandic taxing authority this week. For 2023 I came up with revenues of $55,865,000 and the actual game revenue reported to the Icelandic government was $55,735,000. The difference was 0.2% more, in case the accuracy of the methodology is a concern.

Looking Back At Five Years Of Pearl Abyss Earnings Calls

Listening in on the Pearl Abyss 4th quarter earnings call for 2023, I noticed something unusual. Unlike in past years, the presentation was missing a look back at data from previous years. Which got me to thinking, "Just how bad were things in Anyang?" I did make some comparisons to 2022 to show the company had another sub-par year.

But then I got to thinking. What if I looked at the data going back to 2019, the first full year CCP Games was owned by Pearl Abyss. The years 2018 and 2019 were great years for the South Korean game company. Black Desert Mobile launched in South Korea, Japan and Taiwan in February 2018. In October, the company finalized the deal for CCP Games, makers of EVE Online. In 2019, Pearl Abyss launched Black Desert Online on the Xbox One in March and the Playstation 4 in August. The company finished the year by launching Black Desert Mobile in North America, Europe, and the rest of Asia in December.

The ₩541.5 billion ($464.9 million) Pearl Abyss year 2019 proved to be Pearl Abyss' high water mark in terms of revenue. The only new game published by PA was EVE: Echoes from CCP Games collaboration with NetEase in China in 2020. The problems with developing Crimson Desert, originally due to launch in Q4 2021, stopped up the development pipeline in South Korea. A second planned game, DokeV, has not yet received major development work.

The lack of new game development is apparent in the 4 years of declining revenue since 2019. The ₩333.5 billion in revenue recorded in 2023 was a 38.4% decline over 4 years. The drop in video game revenue was worse than the chart above shows, as in both 2021 (₩40.8 billion) and 2022 (₩20.2 billion) non-gaming revenue made up a significant portion of corporate income.

Similarly, the South Korean game maker's profits have also tumbled over the last 4 years. The peak profit of ₩150.9 billion ($128.7 million) in 2019 fell 89.8% down to ₩15.4 billion ($12 million) in 2023. Worse, the company recorded a loss in 2022. As for the operating profits, last year's ₩16.4 billion operating loss of probably explains the need of CCP Games to seek outside investors to develop its web3/blockchain game Project Awakening.

Looking at the performance of the intellectual properties, CCP Games and EVE are not to blame for the fall in revenue. Admittedly, 2019 was CCP Games worst year revenue-wise since the $46.5 million recorded in 2008. The Icelandic game studio did have the excuse of not being able to operate in China that year. Once the Serenity server resumed service, along with the launch of EVE: Echoes, in 2020, the EVE IP has averaged a steady ₩73 billion in revenue from 2020 to 2023. Not great, but probably surpassing the expectations of the Pearl Abyss executives in Anyang.

The Black Desert games, on the other hand, have seen revenue fall 47.7%, from ₩483.1 billion ($414.8 million) in 2019 down to ₩252.5 billion ($193.5 million) in 2023. The question is, why?

Looked at by region, revenue from North America and Europe has made up a bigger share of Pearl Abyss' business over the five year period. The share from NA/EU almost doubled, from 28.9% in 2019 to 55.9% in 2023. But the shift has more to do with failures to maintain revenue in South Korean and the rest of Asia as opposed to success in the west. Revenue in South Korea fell 56.1% and in the rest of Asia by 70.2% during the past five years. In the effort to gain market share in North America and Europe, did Pearl Abyss neglect Asia?

In one way, the answer is yes. The biggest fall in revenue comes from mobile games, of which Black Desert Mobile is the clear leader. In 2019, Black Desert Mobile was the clear income driver for Pearl Abyss, bringing in ₩323.5 billion ($376.4 million). For comparison Black Desert Mobile brought in ₩10 billion less than all of Pearl Abyss recorded in revenue for 2023. Last year, BDM and EVE: Echoes combined for ₩49.7 billion, a drop of 84.6% in mobile games revenue over five years.

The revenue by platform chart also shows a problem that fans of the now-cancelled game DUST 514 would recognize. Pearl Abyss launched Black Desert Online on the Xbox One and Playstation 4 in 2019. In 2020, both Microsoft and Sony launched the next generation of consoles. My understanding is that while BDO is playable on the current generation of game consoles, the experience is not as good as playing on the previous generation's hardware. Since 2020, console revenue is down 67%, from ₩54.7 billion ($64.8 million) in 2020 to ₩18 billion ($23.4 million) in 2023. No wonder Pearl Abyss executives on the latest call mentioned upgrading the console experience was a priority in order to improve corporate income.

Stepping back like I have today, I realize just how much Pearl Abyss' failure to deliver Crimson Desert in a timely manner hurt the company. Not only has PA not received any income from the game, but I now believe the plan was to port the game over to mobile, thus reviving a major source of income. 

The delay on Crimson Desert development also impacted the development of DokeV, which cannot enter production until Crimson Desert is finished. And expect DokeV to also receive a port to mobile platforms. 

To top all the problems off, Pearl Abyss probably planned for Crimson Desert development to finish before upgrading Black Desert Online to efficiently run on the current generation of gaming consoles. The problem is, development of Crimson Desert, originally planned to release in the fourth quarter of 2021, is still ongoing.

As I conclude composing this post, I have a question. When the acquisition of CCP Games by Pearl Abyss was going down in 2018, did anyone still in management foresee this situation occurring 5 years later? I say current because, based on some things I heard while in Reykjavik for Fanfest in 2018, some people did. Those people, though, left the company before the sale was announced.

Pearl Abyss Q4 2023 Earnings Call

On Thursday morning Seoul time, Pearl Abyss held its earnings call for the 4th Quarter of 2023. The big news is that the South Korean company was in the black in 2023, with a net profit of ₩15.6 billion ($12.1 million). In 2022 the South Korean game maker lost ₩41.1 billion ($35.6 million). Still, operating revenue fell 13.6%, from ₩386 billion ($298.8 million) in 2022 down to ₩333.5 billion ($255.5 million) in 2023.

Black Desert did not have a particularly good year in 2023. For the year, all the games in IP earned ₩255.5 billion ($193.5 million), a decline of 13.8% from 2022's ₩293 billion ($227.3 million). Year over year, Black Desert revenue dropped by 15.6% in the fourth quarter compared to Q4 2022.

By comparison, the EVE IP was the star of the earnings call. Quarter-over-quarter, EVE IP revenue was up 24.3% to 19.9 billion ($15.1 million) in the fourth quarter. Year-over-year, revenue was up by 15%. For the entire year, though, EVE IP revenue was essentially flat. The ₩73 billion ($55.9 million) was only 0.7% greater than 2022's 72.5 billion ($56.3 million). And due to currency fluxuations, revenue in US dollars was down by 0.7% in 2023. Still, with the fourth quarter recording the highest amount of users in EVE in 5 years, the executives on the call highlighted the EVE IP more than in any other call since I began covering the Pearl Abyss earnings calls at the beginning of 2019.

When the subject came to growth opportunities, the IPs created by Pearl Abyss didn't sound too promising. The PC version of Black Desert Online might receive government approval to enter the Chinese market. The executives also talked about porting Black Desert over to the next generation of consoles. The company is also looking to add additional content for The Land of the Morning Light expansion and some sort of new PvP-centric activity in BDO.

Of course, the wet blanket over any excitement is the continued state of development of Crimson Desert. Despite talk of putting on "the finishing touches", the only major activity concretely planned for 2024 is a major marketing push in the second half of the year. While not coming out and admitting such, don't expect Crimson Desert to launch until 2025.

No, the excitement lay with the projects under development at CCP. EVE: Vanguard, the first person shooter undergoing player testing, was touted a few times as an effort to extend the life of a 20-year-old game. The only possible bump in the road was the disclosure that CCP's London office will move to another location. But is that due to the need to cut costs or because the existing space is too small?

CCP does have a game that will fully launch in 2024: EVE: Galaxy Conquest. The mobile game is currently in localized testing and is expected to launch sometime this year. 

And finally comes the blockchain game, Project Awakening. We have not heard a lot about the game since its initial reveal last year. But the Pearl Abyss executives teased CCP would showcase the game during the first half of the year.

Pearl Abyss Mid-Q3 2023 News For Investors

We are a little over halfway through the third quarter of 2023 so I thought would take a little time to highlight a few events I think will show up on Pearl Abyss Q3 2023 earnings call. With the company's stock price falling 18% since the Q2 2023 earnings call on 10 August, I thought now is a good time to look at news that might interest investors.

Pearl Abyss' stock price still up 14.5% for 2023

Going back to the beginning of the quarter, CCP Games announced the renewal of its agreement with NetEase to publish EVE Online in China. 

REYKJAVÍK, Iceland – July 5, 2023 – CCP Games, the renowned creator of the iconic sci-fi spacefaring MMORPG EVE Online, is pleased to announce the renewal of its publishing license with NetEase Games, a leading international developer and publisher. This agreement reaffirms NetEase Games' role as the exclusive publishing partner for EVE Online in China, ensuring a seamless gaming experience for Chinese players.

Over the past five years, NetEase Games and CCP Games have witnessed the remarkable achievements of EVE Online in the Chinese gaming market, captivating players with its expansive universe and immersive gameplay. With this renewed partnership, the stage is set for an even more exciting chapter in the game’s history. It solidifies the commitment of both companies to delivering exceptional gameplay, enhancing the player experience, and fostering a thriving community.

“We are thrilled to continue our partnership with NetEase Games and build upon the success we have achieved together,” said Bing Xi, General Manager of CCP Games' Shanghai studio. “The renewal of our publishing license represents a new era for EVE Online in China, and we are committed to delivering unforgettable experiences and further engaging our passionate player base.”

If the agreement works like most typical agreements in China, the extension ensures Chinese players will have the ability to play behind the Great Firewall until October 2028. More importantly for investors, EVE will not see revenue drop precipitously down to 2019 levels for the foreseeable future.

Next comes an event the investment analysts have asked for years. A new gameplay trailer for Crimson Desert was unveiled at GamesCom yesterday.

While some gaming websites gushed over the video, apparently the footage did not impress investors. The stock price fell over 14% in today's trading.

Finally, a little more bad news for the quarter. New Black Desert Online content for consoles suffered a delay extending into the fourth quarter. (h/t MassivelyOP)

A lot of our Console Adventurers and Community have been wondering about the next content update schedule - especially Maegu Awakening and Mythical Horse updates. So, we would like to take some time to address the current situation and agenda through this GM Note.

The Land of the Morning Light update released on Black Desert Console this past July 26 (Wed). Previously we mentioned this region features new content providing more cutscene-oriented storylines and unique combat styles. In order to provide the best gameplay environment, ample time and continuous optimization work is needed.

To keep our promise to deliver content as quickly as possible, the team has been working diligently. However, judging by our current pace, we expect the optimization period to continue through September.

Hence, we regret to inform you that our planned release timeline for the content in question has been delayed.

We plan to release Maegu Awakening and Mythical Horse updates as soon as our team feels that the optimization process has reached the appropriate levels. Our current target is the maintenance on October 4 (Wed).

I think most can understand the disappointment in not getting cool new mounts. But the Maegu Awakening refers to one of the two advanced sets of skill sets available to the new Maegu class at level 56. That's right, BDO's console version has a gimped version of its newest class. News that might, but not necessarily will, lead to decreased revenue for the third quarter.

Hopefully this quick recap of Pearl Abyss news over the past 7 weeks or so is interesting. For those involved in EVE Online, the health of the company that purchased CCP Games in 2019 is of interest.

Pearl Abyss Q2 2023 Earnings Call

On Tuesday morning Seoul time, Pearl Abyss held its earnings call for the second quarter of 2023. The South Korean video game maker posted revenues of ₩78.4 billion ($59.6 million). The amount was an 8.6% decline from the first quarter of 2023 and a year-over-year (YoY) drop of 16.6% compared to Q2 2022.

From the Q2 2023 PA Investors Presentation

A bigger issue than declining revenues was the profits turned to losses again. In Q2, Pearl Abyss experienced an operating loss of ₩14.1 billion ($10.7 million) and net loss of ₩4.4 billion ($3.3 million) for the months of April, May, and June. For the first half of 2023, Pearl Abyss posted an operating loss of ₩13 billion ($9.9 million) but was in the black with a net profit of ₩5 billion ($3.8 million). The second quarter of the year was also the second time in the last 3 quarters Pearl Abyss has posted a net loss. In Q4 2022 the South Korean company posted a loss of ₩100.3 billion ($73.8 million).

The executives on the call explained the losses were caused by two factors. The lesser reason seemed caused by the time of year. This is the third year in a row Pearl Abyss has experienced an operating loss in the second quarter. In 2021, Pearl Abyss experienced a Q2 operating loss of ₩6 billion ($5.3 million) and in Q2 2022 the company lost another ₩4.2 billion ($3.3 million). 

The biggest reason the executives claimed, however, was the stiff competition Black Desert Online faced on consoles and Black Desert Mobile experienced on mobile devices. Despite the Land of the Morning Light expansion, a new class (Maegu) on consoles and a new zone (Everfrost) and class (Guardian) on mobile, sales dropped in the second quarter by 16.3%, down to ₩56.5 billion ($42.9 million). Year-over-year, Black Desert IP sales dropped 24%.

From the Q2 2023 PA Investors Presentation

The bright spot for Pearl Abyss was the financial performance of the EVE IP. Sales for the quarter clocked in at ₩20.2 billion ($15.4 million), a 19.5% increase over the first quarter of 2023 and a 14.8% increase year-over-year increase. The only other quarter the EVE IP brought in over ₩20 billion in revenue while owned by Pearl Abyss was the third quarter of 2020 when the game brought in ₩21.3 billion. Even taking into account the devaluation of the won vs the dollar, revenue in April, May, and June equaled the total posted in the last quarter of 2021 when talk of NFTs and play-to-earn mechanics were first uttered by CCP leadership.

When asked why EVE and its Viridian expansion was able to succeed in an environment where Black Desert struggled, the Pearl Abyss executives said that EVE did not face any competition. Perhaps the statement did not translate well, but the feeling expressed was that EVE had an easy time and its success shouldn't have been a surprise.

Once again, the investment analysts on the call wanted to know about the future of Pearl Abyss' two new intellectual properties, Crimson Desert and DokeV. While Crimson Desert is not only supposed to launch in the second half of 2023 but show game footage at GamesCon, the analysts sounded a bit skeptical. When asked point blank whether Crimson Desert would launch in 2023, the executives hedged in their answer and stated they would do their best to ensure the game launched as soon as possible. The launch date slipping into 2024 seems a distinct possibility.

Finally, the rumors about core development staff for DokeV leaving Pearl Abyss back in 2022 still has an analyst from JPMorgan concerned. At least, I could not find any other negative stories about the game floating around the English-language gaming press. The executives said that they were concentrating on finishing up Crimson Desert and they expected that since DokeV and Crimson Desert would share the same game engine, DokeV would be developed fairly quickly.