At the end of day 2 of the 2026 EVE Fanfest convention Fenris Creations (the studio formerly known as CCP Games) held its keynote presentation. I watched the presentation live and am just going to go through some of the notes I took of the approximately hour and a half session.
First, Fenris does have two mobile games related to the EVE universe, the NetEase-run EVE Echoes and the internally built EVE Galaxy Conquest. A lot of people disregard the mobile games, but they do bring in a not insignificant amount of revenue. According to the group's recently released financial accounts for 2025Echoes probably brought in $4 million in 2025. And while no figure was given for Galaxy Conquest, cost of sales of $1.3 million lead me to believe mobile game revenue for the company was over 10% if not 15% of total game revenue. Thus, a subject to pay attention to.
EVE Echoes next expansion is titled Titan Descent. Galaxy Conquest was recently updated with pirate invasions, new ships, and a new map. Upcoming additions to GC are achievements, Gurista invasions, and relic explorations. And, like in EVE Online, the mobile game has its own player council.
Next up were player run tournaments in EVE Online. After a review of the Tuskers victory in Alliance Tournament XXI, Fenris announced host of AT XXII would be Amarr. Other player-run tournaments like Anger Gamex VII are supported by Fenris-created tools. Those tools should improve for the upcoming year's tournament season.
The EVE Partner program was mentioned, but I'm not sure exactly how much actually changed. The winners of the new content creator awards will be announced during the closing ceremonies.
Other partners besides players
I'm going to rush past the 1 billion scientific classifications EVE players have submitted over the past 10 years to Kickstarter news. Andrew Groen, the author of the Empires of EVE books, has a new project, The Archive. Covering the history of many MMORPGs besides EVE, the book has received enough support to be published. I backed the Empires of EVE books and just backed The Archive as well.
Now for the news most readers want to know: the summer expansion. Fenris Creations not only changed its name, but also the name format for EVE Online expansions. The next expansion, launching on 9 June, is Cradle of War. The trailer wasn't too bad.
Since I started playing EVE in 2009 I've heard players wanting to include high sec in factional warfare. With Cradle of War that long held wish is coming true in the form of military campaigns. Players no longer have to engage in PvP in order to participate in FW.
Expansion highlights
FW apparently will now have an in-game interface to track the progression of the war. Each empire will always have a military campaign running for players to which players can contribute. These campaigns are built on the freelance jobs system introduced to New Eden in the Legion expansion in May 2025.
For those wondering, all the changes planned will not show up in the CoW. The changes will take the next three expansions to implement.
Something I bet some will hate is the introduction of titles and achievements. A staple of MMORPGs not made in Iceland, I hope the system will complement the new starter space also coming in CoW. The region is known as Exordium and the 53-system region will be the first ever safe space in EVE.
Of course, every EVE expansion must have new ships. CoW will introduce another line of faction navy destroyers and four Tech 2 Command Carriers, one for each empire. More information about the ships was promised during Saturday's EVE Online keynote address.
The next major news came from EVE Vanguard. The Vanguard devs let the world know that the game would enter alpha on 7 July with the introduction of Operation Avalon. The alpha will also launch a new map for the extraction shooter set in the EVE universe. The alpha's first playtest period will run from July 7-20 and be available on Steam. Eventually the shooter will tie into EVE Online, with Operation Avalon introducing the first economic tie-ins between the two games.
The final game presented was the debut of EVE Frontier. For those wondering who gave the presentation, that was Frontier's Creative Director FC MaximumCats. The presentation was more of an introduction to the game than anything else, with MaximumCats perhaps going a little over the top in the roleplay department. For that I blame the influence of FC Burger.
I've watched MaximumCats presentation a couple of times now. The one time people in the audience seemed really interested was the possibility of using Frontier's hyper-modularity to create their own spaceships. I have the feeling I'll want to dig into the EVE Frontier keynote scheduled to stream on Twitch at 1400 UTC.
I don't want to go too far into some of Hilmar's takes on AI. He seemed to imply that AI programs like Deep Blue defeating Gary Kasparov and AlphaGo defeating Lee Sedol helped make the games more approachable to the general public, and more popular. If he is counting on such a thing happening with Google DeepMind's research into EVE Online, well, I think he took a wrong turn down the rabbit hole. But I can imagine Google DeepMind learning a lot of things about artificial intelligence studying EVE and its massive database of player interactions.
I didn't quite cover everything but the Fanfest keynote presentation is a general overview. The real details show up on the various keynotes covering EVE Online, EVE Vanguard, and EVE Frontier on Saturday.
Time really flies, so much so I almost forgot another anniversary. The acquisition of CCP Games by Pearl Abyss was finalized in mid-October 2018. I was at EVE Vegas seven days later and if someone had told those I was with the Icelandic studio would engage in more video game development than the much larger Pearl Abyss over the next six years, I think we would have laughed.
But looking back, that's exactly what happened. Sure, the mobile game we played at the convention, EVE: War of Ascension, died a little-noticed death in 2019. My memory is a bit hazy, but CCP's new mobile game launched on Tuesday, EVE Galaxy Conquest, sounds a lot like the first planned mobile game set in the EVE universe.
CCP Games also partnered with Chinese gaming giant NetEase not only on running the Chinese EVE Online shard, but in producing a new mobile game. The transfer of the game from Tiancity was finally approved in March 2020, with the operation of Serenity restarting a couple of months later. But EVE: Echoes, the mobile game licensed and developed by NetEase, launched in August 2020. Looking back, these two moves worked to ensure 2019 was CCP Games worst revenue year under Pearl Abyss' ownership. Not bad for a studio many believed was dying at the beginning of 2018.
Future game development is being performed in-house. In addition to keeping EVE Online up-to-date with two expansions per year beginning at the end of 2022, the studio currently has two games undergoing player testing. The first, EVE Vanguard, is CCP's fourth attempt at creating a lasting first-person shooting game set in the EVE Universe. The game has undergone player testing all year and I would not be surprised if a release date was announced at the upcoming Fanfest in May.
The second game is EVE Frontier. The oft-derided blockchain-based MMORPG is currently under development having missed the "blockchain games as flavor-of-the-month" wave from a couple of years ago. While I'm under an NDA, I can say the Phase V playtest begins on 7 November.
On the other hand, CCP Games' parent company Pearl Abyss has not pumped out the content like the developers out of Iceland, Shanghai, and London. Of the three planned games the South Korean company announced, only Crimson Desert is still under active development. Work on DokeV was put on hold in order to concentrate on launching Crimson Desert. And as for Plan 8? The game is barely visible in the pipeline, at least on Pearl Abyss' quarterly earnings calls for investors.
Even on the publishing front our overlords in Anyang are playing catch-up to their not-so-newly acquired company. Much of the increases in profits over the past few years were due to moving the publishing of the Black Desert franchise internally. And as for China, Pearl Abyss switched in-country partnership to Tencent in May, which coincidently led to approval to operate Black Desert Online in China in June. BDO may begin operations in the world's second largest market at the end of 2024 or sometime in 2025.
I'm two weeks late to the party, but I haven't seen anyone make a big deal (or even mention) the 6th year anniversary of Pearl Abyss' acquisition of CCP Games. And given the need of CCP to go out and acquire on its own $40 million to help develop EVE Frontier, perhaps the oversight is warranted.
EVE Online's Equinox expansion, set to launch on 11 June 2024, is the game's fourth full expansion since the return of the content format in November 2022. The patch notes are fairly extensive and dense. I find reading lengthy patch notes rather boring, so I also like to go to other sources for information. For both the Viridian and Havoc expansions I wrote a series of posts based on the patch notes with other information added to hopefully make absorbing all the information less painful. This eleventh post in the series for Equinox will cover a topic the developers call ship emphasis.
Ship progression and UX improvements: Experience the thrill of unlocking a new ship with immediate notifications and get clear understanding on ship roles and prerequisites with the redesigned skill requirement panel. Elevate your initial interaction with new vessels with informative new ship cards and enhanced UX for boarding and naming ships.
Overall, the topic includes a lot of quality-of-life changes.
SHIP EMPHASIS
We want to make interacting with and progressing through ships in New Eden more digestible and inspiring. To that end we have implemented a variety of improvements for Equinox:
Assemble and Board action: The new default action when double-clicking on a packaged ship, which makes taking your new ship out for a spin just a bit easier.
Ship Unlock notifications: A new section in the Ship Tree shows off the ships you’ve recently managed to unlock, with badges indicating new entries until they are viewed.
Default Ship Naming: The rename ship popup now appears when assembling a ship, and default names are restructured to show the ship type name first.
Ship Card view: A new inventory view that displays the ship group, characteristics, and type name of your ships more clearly.
Skill Requirement Panel: Allows players to add skills to the queue, create skill plans, allocate skill points, and buy missing skillbooks. The component appears in the Fitting Window, Show Info, Ship Tree and Hangar views.
Seeing the ship tree updated to include The Society of Conscious Thought and CONCORD is welcome. SoCT ships are only handed out by CCP for celebrations and acquiring CONCORD is done through participating in Project Discovery. Including all ships in the game are probably more important for new players than veterans.
Ship Tree
Added pages for the Society of Conscious Thought and CONCORD ship lines to the Ship Tree.
Faction logos shown within the Ship Tree have been updated.
Finally, the developers put in changes to a subject I have had trouble with over the years.
Overhauled Ship Restrictions Windows
We want to make it more digestible for players before they head out to space what type of restrictions are on dungeons.
Ships are now sorted into collapsable sections by their group.
Ship icons are now shown alongside ships' names.
Ship entries can now be interacted with (e.g. right-click to open the Information window or Market details).
Only ships within the Ship Tree will be listed.
Added an option to search for a specific ship from those listed.
Added a filter option to show only ships that the current character can fly.
Added an option to show restricted ships but highlight them as unusable.
A Ship Restrictions warning will now appear in the Info Panel objectives of relevant sites or missions tracked via AIR Opportunities:
Double-clicking this warning will open the Ship Restrictions window.
The warning will appear when en-route to a site or when within a site’s lobby area.
Last week I published a blog post covering CCP ehf.'s (aka CCP Games) financial statement for 2023. I just glossed over the statement for Pearl Abyss Iceland and it's $18.8 million loss for 2023. I did so because of two paragraphs, one in each financial statement. In CCP ehf.'s board of directors statement:
The Company's revenues in 2023 were USD 73.2 million compared to USD 68.6 million in the previous year. The net profit for the year amounted to USD 5.6 million compared to a net loss of USD 205 thousand in the previous year. New service revenue related to outsourced development work, along with general cost savings, are the main reasons for the change in net results between years. [emphasis mine]
Pearl Abyss Iceland ehf. is the holding company that owns CCP ehf. In greater detail:
Pearl Abyss Iceland ehf. is a holding company established in 2018. In October 2018 the Company bought all issued and outstanding shares in CCP ehf. CCP ehf. designs, develops, markets and operates immersive virtual worlds and games accessed over the internet. The Company is headquartered in Iceland and owns and operates subsidiaries in the United Kingdom, China, and the United States.
I'm not an accountant, but I would think the revenues of the holding company should either equal or exceed the revenues of each of the owned companies. Yet, here is the same paragraph from the Pearl Abyss Iceland filing.
The Group's revenues in 2023 were USD 56.0 millions compaired to USD 56.1 million in the previous year. The net loss for the year amounted to USD 18.8 millions compaired to a net loss of USD 70.1 million in the previous year. The main reason for the loss is inceased investment in projects under development as the Group expenses all development projects. [emphasis mine]
One of the perks of owning your own blog is the freedom to set your own deadlines and pick your own stories. So I decided to go down the rabbit hole of Pearl Abyss Iceland's 2023 Consolidated Financial Statements.
First, I looked at the top of each statement covering gross profit.
Where did the money go?
I found the missing $17 million dollars. CCP's "Other revenue" wasn't counted by Pearl Abyss Iceland. In fact, the total is $30 million over the last two years. So the question became, where did the money come from?
Going to note 4, the amount seems related to providing services. I would wager a lot of people did not expect that category to show up.
CCP's sources of revenue, 2023
The answer came from companies related to Pearl Abyss Iceland. Specifically Angelice Prime Foundation.
The companies owned or controlled by Pearl Abyss Iceland
PAI does not have an ownership stake in the company, but controls enough of its business that both PAI and CCP had to disclose the fact on their financial statements. How much business? According to CCP's financial statement, the company purchased $17,246,907 worth of goods and services in 2023 from CCP and a combined $29.8 million over 2022-2023.
The next question is, what is Angelice Prime Foundation? I could find very little information, but I have a feeling ex-CCP employees are involved. According to PAI's financial filings, Angelice Prime Foundation and its subsidiaries are involved in software development. Concord SSC is a direct reference to EVE, but Angelice Prime?
Angelice Prime apparently was a system in the Phoenix constellation of Fountain. I use the past term because the system did not survive to see the launch of EVE Online. The only trace left I could find was the below video.
EVE Online's first trailer made with actual gameplay
So the search leads back to the beta (or perhaps even the alpha) and the first game trailer featuring exploding spaceships back in 2002. But as far as I can tell, CCP did not begin doing enough business with Angelice Prime Foundation to need to declare the company in its financial statements until 2022.
Speaking of outside companies, we next come to NetEase. NetEase not only operates the EVE Online server shards operating in the People's Republic of China but developed and publishes EVE: Echoes worldwide as well.
Highlighting NetEase revenue
The deals with NetEase brought in 12.5% of Pear Abyss Iceland's revenue in 2023. But year-over-year the income fell 20.1%, from $8,792,803 in 2022 down to $7,021,654 in 2023.
I think the NetEase revenue falling 20.1% yet total revenue only declining by $135,000 is significant when evaluating the performance of EVE Online. For 2023, the line "Revenue from subscriptions and in-game sales" represents the financial performance of EVE on the global Tranquility server. Revenue in that category grew 3.2%. The global version of EVE performed a little better than that as in 2022 the category contained revenue from the virtual reality games CCP shut down in 2022.
Next comes the issue of debt. Specifically of borrowing money. For this subject I will include CCP as well as Pearl Abyss Iceland. In November 2021, CCP's $6.5 million loan from Pearl Abyss was extended by three years. In February 2023 the repayment scheduled was accelerated, with CCP paying its parent company $3.8 million in 2023 and will finish repaying the final $1.95 million in August of this year.
Pearl Abyss Iceland, at the same time, paid off its original loan from Korea Development Bank a year early.
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%.
The loan was originally due in October 2024. By paying off the loan and then taking out a new loan at new terms, they possibly received a better interest rate. At any rate, the next time Pearl Abyss Iceland needs to pay off a loan is in October 2026.
Perhaps out of order, but deferred revenue increased in 2023. Deferred subscription revenue from outstanding subscription time rose by 10.4%. Unused in-game purchases (i.e. items like PLEX) rose by 41.5% in value. Given that in 2021 those values were $2,950,492 and $4,075,423 respectively and one could theorize interest in EVE Online increased in 2023.
Deferred revenue includes money for the Project Awakening crypto-currency
The final topic concerns the planned Web3 game currently code named Project Awakening. In 2023, PAI collected $27.5 million in sales from token warrants, aka crypto currency. Added to 2022's total of $10 million and the Group currently owns $37.5 million in token that sits as deferred revenue. When the $40 million round of venture capital investment is included, outside funding of Project Awakening finished 2023 at $77.5 million.
Pearl Abyss Iceland is working to make a Web3 game based on the EVE intellectual property a reality. While the effort began in 2022, I don't believe the rules under which PAI and CCP is operating are fairly understood. For my own benefit if for no other reason I will copy the relevant portions of the consolidated report below.
3.18 Accounting policy for crypto assets
The Group is developing a blockchain-based network and planning to issue crypto tokens on the network upon completion of the development. The token to be issued on the blockchain network by the Group is a utility token.
I believe this is a definition to give anyone who knows anything about crypto-games, combined with a little accounting.
3.18.1 Sales of token warrant
The Group has sold warrants to purchase utility tokens. Because the Group has the promise to transfer goods and services in the future, the Group intends to recognize revenue when the tokens have been delivered and used.
The warrants cannot be settled net in cash or another financial instrument, or by exchanging financial instruments, and the warrants are purchased and held for the purpose of the receipt or delivery of the token. Because the Group didn't designate the warrants as measured at fair value through profit or less, IFRS 9, Financial Instruments, is not applied to the warrants. The contract liabilities for the sales of token warrants are recognized as the fair value of the consideration received at initial recognition and not evaluated at fair value subsequently.
Basically, this part explains why the token warrants are listed under deferred income.
3.18.2 Employee token incentive plan
The Group granted options to purchase the tokens to the current employees in service as of the grant date. The options shall vest when the employee renders service for the vesting period. When employees exercise the option and pay the exercise price, employees are given tokens, on the other hand, employees in the Chinese office are given a cash bonus equivalent to the fair value of the token at the time of exercise.
The fair value of the cash bonus in the Chinese office is recognized as salaries and other long-term employee benefits liabilities over the vesting period. The measurement of the token option plan, a non-monetary benefit, is not described under IAS 19, Employee Benefits, hence the Group derived the accounting policies using the guidance in IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors.
An expense is described as decreases in assets, or increases in liabilities, that result in decreases in equity, other than those relating to distributions to holders of equity claims. The Group develops an accounting policy that measures the net marginal cost related to employee token options as salaries and other long-term employee benefits liabilities and recognizes the expense over the vesting period of the option.
I've heard of employee stock option plans, but never heard of an employee crypto-currency plan. I guess the dream is to duplicate the tech boom of the 1990s for employees with the next big thing. I just had two thoughts. First, won't PAI and CCP have to show how many employees participated for how much in crypto in future releases? And the second one is more obvious. Will PAI allow employees to play Project Awakening when the game goes live?
3.18.3 Other crypto assets
The Group holds other crypto assets (such as Ethereum and etc.) for various business purposes. The Group does not hold other crypto assets for sale in the normal course of business but holds them for various business purposes. Because the crypto assets held by the Group are identifiable non-monetary assets that have no physical substance and are controlled by the Group, the crypto assets are recognized as other intangible assets in accordance with IAS 38. A cost model is applied after initial recognition and impairment tests are conducted at the end of each reporting period using fair value less costs of disposal.
And finally the rules for all other non-Project Awakening crypto currencies.
My final thought on the report is I feel a lot better about Pearl Abyss Iceland's finances and the future of EVE Online than I did in May 2022. I see evidence of the two expansions a year development model paying dividends. Small dividends perhaps, but still trending in a positive direction. And the efforts to become a leader in Web3/blockchain gaming apparently isn't syphoning money away from EVE. In addition to $40 million in outside investment money raised to develop Project Awakening, PAI and CCP have sold through the end of 2023 $37.5 million in warrant tokens to fund the new currency. Plus, CCP ehf will have paid off its last loan in August 2024 and PAI's next financial deadline is in October 2026. Overall, I liked what I read.
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.
On Wednesday morning in Korea (Tuesday in North America), Pearl Abyss held its earnings call for the first quarter of 2021. Overall, Pearl Abyss' operating revenue fell ₩4.7 billion ($4.2 million), or 4.5% from the previous quarter. Year over year, the South Korean game company saw revenue fall 24.2%.
The financial situation was complicated by the company taking over the publishing of Black Desert Online from Kakao in North America and Europe in February. On the call, Pearl Abyss disclosed that while bringing in ₩20 billion from the North American and European markets from 25 February to 31 March, the company could only recognize 46% of that revenue on its books. The company expects the numbers to return to normal in the second quarter.
For the fourth consecutive quarter, the Black Desert IP recorded a drop in revenue. While the 1.8% decrease from Q3 may seem minor, year-over-year Black Desert has experienced a quarterly revenue drop of 30.1%. The EVE IP experienced a drop of 7.9% compared to the previous quarter. Pearl Abyss attributed the drop to "slightly weaker mobile revenue." On the positive side, EVE Online and EVE Echoes still recorded a 23.1% increase in revenue compared to Q1 2020.
EVE Echoes is not the only mobile game doing poorly. Once again, financial analysts brought up the poor performance of Black Desert Mobile. Converting the percentages of revenue by platform to actual won amounts shows why the analysts are so concerned. Doing so shows quarterly mobile game revenue has dropped by almost 50% since the first quarter of 2020. In contrast, PC-based revenue is up 14.6% over the same time.
While Pearl Abyss plans on launching EVE Echoes in China sometime during the second quarter, Black Desert Mobile doesn't really seem to have much on offer over the next few months. The Kunoichi class was introduced on 27 April.
Performing the same calculations show Pearl Abyss' plan to increase revenue in North America and Europe by self-publishing Black Desert Online in those regions is working. Revenue for Q1 increased 13% compared to the final quarter of 2020. The region showing the biggest weakness for Pearl Abyss is Asia. Revenue from the region was down 20% quarter-over-quarter.
The final interesting part of the earnings call concerned upcoming games. Early on the call, Pearl Abyss mentioned CCP's London studio is working on a "sci-fi multiplayer shooter". No other information was disclosed. The other point of interest was when the release period for Crimson Desert was stated as "by 2022." The language change from stating definitively in Q4 2021 caused some concern among the analysts on the call. Pearl Abyss did mention the studio would provide more information on the game, including a release date, at events during the summer.
Pearl Abyss held a call for investors covering its fourth quarter 2020 & full year 2020 financial results on Tuesday. One economic point Pearl Abyss brought up in the call was the strengthening value of the South Korean won (KRW) vs global currencies in the fourth quarter. Left unsaid was a callout about the U.S. dollar, which fell 6.9% against the won in Q4. While in better shape, the euro did fall 2.5% against the won in the same period. When converting KRW to USD in this post, I will use the historical exchange rates found on xe.com.
In 2020, operating revenue decline by 8.8%, or ₩47 billion, compared to 2019. On the positive side, PA's operating profit rose ₩6 billion (4%) over the same period as the company's operating profit margin increased from 28% to 32%.
Q4 2020 was not a good quarter for Pearl Abyss financially. Revenue fell by ₩14 billion (11.9%) quarter-over-quarter (QoQ) and ₩16.8 billion compared to the fourth quarter of 2019. As might be expected with the growing strength of the won vs major western currencies like the dollar & euro, the largest loss of revenue occurred in North America and Europe. Revenue in the western countries fell 15.9% QoQ, from ₩52.9 billion ($45.3 million) down to ₩44.5 billion ($40.9 million). Year-over-year figures painted a brighter picture, as revenue grew from ₩42.1 billion to ₩44.5 billion (5.7%).
Of even bigger concern is the drop in mobile gaming revenue. Mobile games in total accounted for a ₩10.3 billion drop in income from Q3 (₩51.7 billion, $44.2 million) to Q4 (₩41.4 billion, $38.0 million). A 19.9% drop in revenue represents a lot more than the rising strength of the won. The imposition of stricter lockdowns in many parts of the world due to the COVID-19 pandemic in Q4 is probably another major cause of the decline. In the pre-COVID world of Q4 2019, mobile games made up 54% of PA's revenue. In Q4 2020, that had declined down to 40%. The resulting 36.2% decline in YoY revenue (₩23.5 billion) was more than PC and console products could make up.
A breakdown of Pearl Abyss' two IPs shows both experienced double-digit revenue percentage losses quarter-over-quarter. Black Desert fell by 12.3%, from ₩96.4 billion ($82.3 million) to ₩84.4 billion ($77.5 million). Meanwhile, the EVE IP declined 10.3%, from ₩21.3 billion ($18.2 million) to ₩19.1 billion ($17.5 million). The big difference between the two franchises were the year-over-year numbers. Black Desert experienced a revenue drop of 21.7% while EVE revenue increased 54%.
Overall in 2020, Black Desert brought in ₩410 billion ($349 million) in 2020, a 14% decrease from 2019's total of ₩477.3 billion ($410.6 million). EVE did slightly better, relatively speaking. CCP improved upon its 2019 revenue total of ₩56.4 billion ($48.5 million) by 30.5%, earning ₩73.6 billion ($63.2 million) for the year.
Upcoming for 2021, Pearl Abyss is looking to improve PvP in Black Desert. For PC and consoles, PA is looking to what sounds like 10-character pre-made parties to go into PvP areas. For Black Desert Mobile, that game will soon receive its biggest PvP upgrade patch. Pearl Abyss will also begin self-publishing Black Desert Online in North America and Europe beginning 25 February. PA expects self-publishing will result in greater revenue growth as the NA/EU region accounts for 50% of BDO accounts.
For EVE, PA would like to expand into the Asian market, and pointed to the December introduction of a Japanese client as part of the effort. Players can expect a greater effort to introduce content attractive to Asian players into the game in the upcoming year. Earlier this month, Pearl Abyss received a license from the Chinese government to operate EVE Echoes in China and is working quickly to launch the game in the world's largest mobile games market.
Pearl Abyss also spoke more about Crimson Desert. Listeners were told that PA planned on concentrating on single-player console games. For those who don't know, Crimson Desert is a planned single-player game with a multi-players option and not an MMORPG. Two upcoming games, DokeV and Plan 8, are still on schedule to launch in 2022 and 2023, respectively.
The analysts on the call seemed particularly worried about Pearl Abyss' ability to publish its upcoming games as scheduled. Once again, an analyst asked about the timing of the launch of Crimson Desert. Pearl Abyss assured the analyst that the company was devoting all its resources to ensuring Crimson Desert launches in Q4 2021. But that assurance then brought a question about how the effort of launching Crimson Desert will affect the timed launches of other games in the pipeline. This concern by investors into PA launching games on-time will hopefully not result in games launching before fully ready.
Those are the highlights of the call as I saw them. Hopefully the information will come in handy as Pearl Abyss moves forward into 2021.
Yesterday Pearl Abyss held its earnings results presentation for the third quarter of 2020. Logging onto the call, my big concern was how the EVE IP, especially EVE Echoes, did in the third quarter. After skimming over the presentation, my next question was, "What happened to Black Desert?" The third question became the main concern of the financial analysts on the call: Crimson Desert.
First, a look at Pearl Abyss' overall revenue. Right off the bat the numbers don't look strong. Revenue declined 10.2% compared to the second quarter of 2020 and 11.7% from Q3 2019. Converted to U.S. dollars, Pearl Abyss experienced a drop of $12 million from the second quarter. The operating profit declined almost $10 million, or 20%, from the previous quarter. One bright spot was the net profit increasing 17.8%, or $3.8 million quarter over quarter, although that did represent a decline of 43.6% compared to the same quarter in 2019.
With the release of EVE Echoes in August and a full quarter of operations in China, the EVE IP figured to generate increased revenue. The ₩21.3 billion ($19.1 million) earned in the third quarter represents a 12.7% ($2.1 million) increase over the second quarter and 45.9% ($6 million) year-over-year increase. Pearl Abyss stated on the call the increases were due to an increase of 30% spent by "royal core users" and an increase in revenue from China. The term "royal core users" seems a translation problem and probably references a return of players in Omega status paying subscriptions.
The major news is that revenue dropped for the Black Desert by 13.7% quarter-over-quarter and 19.4% year-over-year. Pearl Abyss gave two main reasons for the decline. The first is a seasonal reason. Just as EVE traditionally has a third quarter decline, so does Black Desert. The other reason is a decline in console sales. Black Desert Online released on consoles in August 2019 and thus sales spiked during Q3 2019. PA announced that PC sales increased by 11% year-over-year in the third quarter. The company's leadership believes that sales will pick up again with the release of the next generation of consoles at the end of 2020.
A question came up from one of the analysts on the call about whether Pearl Abyss is planning on self-publishing in North America and Europe in the future. PA has moved over the last year or two to self-publish games in Asia and has had some financial success in doing so. The leadership on the call noted that they are considering the option and that publishing contracts are set to expire in 2021. In a related note, Pearl Abyss also noted they have begun to sell their games in retail stores and not just digitally. The distribution in brick and mortar stores sounds a bit chaotic record-keeping wise, but sales were described as "quite good."
Besides the financial performance of Black Desert, the topic the analysts on the call seemed most interested in was Crimson Desert. Perhaps in a sign that production of the game is going well, Pearl Abyss answered several questions.
Crimson Desert is still on track for a Q4 2021 release, as the studio has over 100 developers working on the game. PA believes the game will do better financially than BDO due to lessons learned in creating Black Desert, the use of a new game engine, and a better storyline. One of the reasons for the optimism is that PA is creating Crimson Desert from the ground up to launch on both the PC and consoles. Black Desert was originally created for the PC and was ported over to consoles four years later. Thus, players will find things like the UI less clunky on both platforms.
Players will get a chance to learn more about Crimson Desert at an upcoming event in December. While PA deflected the analysts questions about the event, Pearl Abyss did confirm that the event would feature a reveal of in-game play.
One concern about Crimson Desert is that PA will not commit to cross-platform play between consoles and PC. While games like Elder Scrolls Online also do not support cross-platform play, industry leader Final Fantasy XIV does. Can a game proclaiming itself the best in the MMORPG genre fail to have cross-platform play in 2021? Time will tell.
Yesterday NetEase announced the mobile game based on EVE Online, EVE Echoes, will launch in the middle of August 2020. The game is scheduled to release on both the Apple and Google app stores.
One concern with new games is monetization. The developers from NetEase stated that the game would use the same monetization as EVE Online. That means the Alpha/Omega account system, PLEX sales, and cosmetics such as ship SKINs.
From reading the Twitch chat, one of the benefits of an Omega account is off-line auto-pilot. The devs explained that off-line auto-pilot allows players to close down the game but still have their ship flying through space. The benefit of the feature is to free up system resources on the phone and save on battery life.
One of the big differences between EVE Echoes and EVE Online concerns outposts. Known as citadels in EVE Online, outposts perform the same function as citadels. Two differences most PC players will notice is that the structures are owned by individual players, not corporations. The reason is pretty simple. NetEase created the outposts before creating the corporation system. Indeed, the corporation system is still under development. The second is outposts is limited to low and null security space. Sorry high sec players.
EVE Echoes will also introduce players to an ancient race, the Yan Jung. NetEase is bringing them to the fore. Here is what we know about the Yan Jung.
According to Sebast Mathon, the Yan Jung nation immigrated into New Eden through the EVE Gate and settled in the Deltole system, especially on Deltole V and VI, which seem to have been much more inhabitable back then. The Yan Jung were, judging from the remains of Yan Jung technology found in the archaeological record, masters of advanced gravitronic technology and force field theories. Yan Jung archaeological sites can be found in the Algintal Constellation within Gallente Federation space.
One thing the developers noted is that the the game has a more "Oriental look", which makes sense since the east Asian market (China, South Korea, Japan) is where mobile games are extremely popular.
And of course, no EVE event is complete without a trailer. I have embedded the cinematic below.
Today, Pearl Abyss held its Q2 2020 earnings call for investors. After a down last quarter of 2019, caused in large part due to an accounting change with the console version of Black Desert Online, the South Korean game studio continued on its upward trajectory.
From PA Q1 2020 Earnings Call
Quarter over quarter, Pearl Abyss increased its operating revenue by ₩16.6 billion, or 14.2%. Operating profit also increased 28.3%. While the net profit remained relatively flat, only increasing ₩200 million, the figure was still a 242.6% increase over Q1 2019. One of the analysts on the call asked about the factors in Black Desert Online's growth in 2020 and was told that the COVID-19 pandemic did play a role in the revenue increases.
From PA Q1 2020 Earnings Call
Usually EVE Online is an afterthought in the earnings calls. But a 15% increase in earnings in the first quarter meant Pearl Abyss needed to say something. PA's Chief Financial Officer Cho Seok-woo made the following statement to the listeners. The English translation is probably not the most elegant.
EVE Online is also maintaining stable performance. EVE Online -- which was known as the most difficult MMO game -- had the most important challenge, which was to motivate the interest of early users. Using Black Desert know-how and experience from EVE Online, many improvements were made. And accordingly, we saw a meaningful increase of new users. EVE Online, which is in its 17th year of launching, shows through many indexes that a well-made MMO game has a very long lifespan value.
To my knowledge, the above is the first public statement that Pearl Abyss employees and not just CCP developers are involved in the development of EVE Online. I'm sure many players who frequent social media will find the statement a surprise.
Why make the statement at all? One possible reason involves a slight miscalculation that slipped into the Q4 2019 earnings call held in February. The revenue for the EVE IP was reported as ₩15.6 billion, or over 25% more than the actual figure of ₩12.4 billion. By proactively giving the analysts an explanation of why the EVE IP's revenue was what it was, Pearl Abyss could forestall any embarrassing questions. In the end, the analysts decided they had more important things about which to inquire.
The Q4 revenue overstatement also plays a role in reevaluating the effects of The Blackout. Referred to on the blog as Hurricane Hilmar, the event was a two-month experiment with changing the local chat channels in null security space to work like chat in wormholes. Initially, Hurricane Hilmar, while wrecking havoc inside EVE, seemed to not have affected the financial situation of the game. Indeed, after February's earnings call, observers believed that the EVE IP income grew 4.7% from the second quarter of 2019 to the fourth. Instead, revenue actually dropped 16.8% with a drop of 15.1% in the quarter after The Blackout was lifted. What made the situation worse is that the third quarter is normally the period with the least amount of activity in EVE. After a performance like that, one might expect the parent company to come in and give its newly acquired studio a hand.
The last part of the presentation involved an update on future games. In the second quarter, Pearl Abyss will launch Shadow Arena next Thursday. The other three games under development received generalized release dates. Crimson Desert is scheduled to launch in Q4 2021, DokeV in 2022, and Plan 8 in 2023. When asked about the later than expected release date for Crimson Desert, Pearl Abyss explained that the delay is due to an internal reorganization. The other reason given is that the Korean studio is developing both PC and console versions of both Crimson Desert and DokeV simultaneously.
CCP also had a little news. The Chinese government approved Netease running the EVE server in China on 12 March and officially launched on 27 April. But unlike for all the other games in development, PA was unwilling to give a lot of details about CCP's mobile game being developed by Netease. After questioning by the analysts, PA directed them to the watch the stream on Sunday (17 May).
That's my look at the latest Pearl Abyss earnings call. Soon the information under the EVE IP will no longer contain information about just EVE Online. I found the call very interesting, filling in parts of the EVE story. Because in EVE, the game doesn't stop at the monitor's edge.
CCP managed to drop some news before the beginning of the convention today. The biggest news, of course, is the announcement that EVE: Echoes will enter beta in December.
GUANGZHOU, China and REYKJAVÍK, Iceland – Oct. 24, 2019 – NetEase Games and CCP Games today announced that the open beta for EVE Echoes, the authentic EVE Online experience for mobile devices, will go live this December. Developed by NetEase Games in conjunction with CCP Games, EVE Echoes was unveiled last year and will be available to demo for the first time at EVE Vegas in Las Vegas, Nevada, this weekend.
In celebration of the open beta announcement, new assets, an official website, and social media channels are now live for EVE Echoes.
“We’re very excited for the first public outing of EVE Echoes, the next revolutionary step in mobile MMO gaming,” said Hilmar V. Petursson, CEO of CCP Games. “I can’t wait to see the reaction from our core PC players, who will no doubt recognize the unparalleled scale and sophisticated gameplay of EVE Online’s virtual world running through the veins of EVE Echoes.”
“CCP Games is a pioneer in space MMOs, and will make its mark on the industry even further by expanding the EVE experience to mobile with EVE Echoes,” said Ethan Wang, Vice President of NetEase, Inc. “Combining CCP’s leadership in game design with our NeoX game engine and leadership in game publishing will no doubt create a spacefaring sandbox MMO for mobile devices unlike anything seen before.”
EVE Echoes brings the vast, interstellar EVE universe from PC to the palm of your hand. Built using NetEase Games’ proprietary NeoX graphics engine, EVE Echoes stays true to CCP’s hallmark EVE Online design principles and immerses pilots in beautiful starry skies and across boundless star fields. Pilots must collect resources, manufacture items, and explore thousands of uncharted planets to write their own history in pursuit of galactic glory. A realistic social system enables players to join and lead corporations, form coalitions, capture rival territories, engage in intergalactic combat, and much more across thousands of planetary systems.
I know, copy/pasting press releases is a bad practice. Pearl Abyss purchased CCP Games for the EVE Online IP and EVE: Echoes is the first chance for the investment to pay off for the South Korean game company. I passed up a chance to sign up for a hands-on demonstration yesterday, mainly because I didn't know my schedule for Saturday. Although I don't play mobile games, I should attend one of the 30-minute demonstrations so I can report first-hand on how the game feels.
The next biggest news is CCP will release the Korean-language client for EVE Online on 14 November, the first day of the giant G-STAR 2019 conference. Making a Korean-language client once CCP Games was purchased by Peal Abyss seemed a foregone conclusion. Announcing the launch of the client at G-STAR indicates some sort of marketing push will occur in association with the announcement.
One thing I can confidently say is that those who choose to just look at the daily peak concurrent user (PCU) count will probably not notice a difference. The effect of any Korean player influx will occur during the slow, Australian time zone. An influx of 20,000 new Korean accounts could result in a rise of up to 3,000 accounts in the daily average concurrent user (ACU) number. That many new players could also result in time-zone tanking becoming a much less viable strategy.
The next set of noteworthy news is the announcement of the replacement for the Crimson Harvest this year. Gone is the tale of Bloody Omar and The Blood Raiders. Last year's event began on 23 October and ran for two weeks. This year, CCP chose to go with a much less lore-friendly title, EVE's Halloweeen Horrors. The event introduces as yet undisclosed changes to combat interceptors.
Beware of roaming wolf packs at Halloween! An upgrade to Combat Interceptors in EVE Online means more damage, more fittings and more reason to jump into these ships for some Trick or Treat action!
In a first I can recall, the holiday event will have a dedicated PvP component.
This Halloween it will definitely pay to undock and go on a spine-chilling rampage as there will be a shocking PVP event from 11:00 UTC on 29 October to 11:00 UTC on 5 November. Tune in to the EVE Vegas live stream on Twitch for more details!
Or course, the event has a daily log-in component as well.
From 11:00 UTC on 28 October to 11:00 UTC on 3 November, every pilot that logs into the game will receive rewards that range from free Skill Points to limited SKINs. We promise that there is nothing to be afraid of.
No word if the current daily skill points for NPC kills event will continue to run.
In a few hours EVE Vegas officially begins. I'll try to write up as much news as I can. I do have the disadvantage of being on-site, so I may wind up watching the VOD from CCP's Twitch channel to see what I missed.
