Pearl Abyss Announced Shut Down Of Shadow Arena

The sunsetting of underperforming games at Pearl Abyss-owned studios continues. The South Korean game maker posted an announcement on Steam Friday that its Black Desert inspired battle royale game Shadow Arena would close operation on 10 August 2022.  The statement also appeared on the Shadow Arena website.

Greetings, this is Shadow Arena.  

Shadow Arena was first showcased at G-Star in November 2019. After completing the fourth CBT, it was released as early access on May 2020. Since then, we've walked a journey accompanied by players for 2 years and 8 months. 

Shadow Arena made its first debut as content in Black Desert. However, we decided to make Shadow Arena into a separate spin-off title and worked towards establishing it as a new kind of “action battle royale” for players who enjoy PvP games. 

Despite our efforts to introduce various elements to the game, we thought that Shadow Arena in its current state was inadequate in offering a unique experience. With deep consideration, we regret to inform you that the service of Shadow Arena will be terminated.

We would like sincerely thank all the players who have been in support of Shadow Arena as we deliver this news. 

Pearl Abyss also announced a shutdown schedule.

July 8, 2022 (Fri) 11:00 (UTC+9)

■ Game Download Unavailable 

- Downloading the Shadow Arena Client be unavailable via official website and Steam store.  

- Game service through previously downloaded client will be available until the service termination date.  

 

■ Termination of Gcoin Purchases 

- Gcoin purchases on the official website and in the Steam store will be unavailable.  

 

■ Shop Clearance Sale 

- All items in the shop will be available for 1 Silver. 

 

■ Final Season Begins 

- Final season’s Battle Pass rewards will be significantly higher than before. 

 

August 10, 2022 (Wed) 11:00 (UTC+9)

■ Game Service Termination 

- The game service through the official website and Steam launcher will be unavailable.  

 

■ Official Website Service Termination.  

- Shadow Arena’s official website will be terminated. 

- All posts on the community page will be deleted after termination.  

- Make sure to save any information you wish to store on your PC.  

- Customer Support regarding the refund process will still be available after service is terminated. 

- Users may create Pearl Abyss ID even after the service ends. 

 

■ Official Social Media and Community Channel Termination 

- The following official social media channels of Shadow Arena will be terminated. 

- Official Youtube, Twitch, Facebook, Twitter, Discord

- The Shadow Arena Steam Community will be terminated. 

Combined with last week's news about CCP shutting down all of its legacy virtual reality games brought over with the Icelandic company's sale to Pearl Abyss in October 2018, one can safely say the leadership of Pearl Abyss is closing all marginal financial operations.

EVE Online Concurrency At Lowest Level Since Blackout

The latest average concurrent users graph from Jester is out, and the news is not good, if not unexpected. At the end of June, the seven day average reached 17,000. 

The past 12 months

The difference between this year and last is in 2021 the numbers bottomed out during July. This year, the number of average users is poised to fall to 16,000. The 10% drop in concurrent logins due to sanctions following the Russian invasion of Ukraine certainly doesn't help matters.

2019 and The Chaos Era

The big factor that might inhibit a healthy comeback during the northern autumn season is the price hike implemented on 17 May. While the price increase may protect CCP's financial situation, fewer players in space may lead to more bored players. I've stated this for about a year now, but EVE really needs a proper expansion in order to maintain and perhaps even grow the player base. The company basically promised one by the end of the year. Hopefully we'll see something worth celebrating.

CCP Shuts Down Its VR Titles

The day finally came. CCP Games will no longer support its virtual reality titles EVE Valkyrie, EVE: Gunjack, EVE: Gunjack 2, and Sparc on 5 August 2021. The end of the line was obvious to all with the sale of CCP's Newcastle studio to Sumo Digital at the end of 2017.

Announcement of a dead game on dead forums

I'm not sure how much CCP spent to keep the game servers up, but apparently more than the games brought in. One thing we know for sure, however. With no new games on the horizon, we'll soon know just how EVE Online is doing financially. Probably in 2022.

Cloud Imperium Games Brings In $10.3 Million In June

Cloud Imperium Games, the makers of the not yet released games Star Citizen and Squadron 42, brought in almost $10.3 million in June 2022. For the first half of 2022, CIG received $58.7 million in starter packages, ship sales, and other digital purchases. Early this morning, the funding page reported total sales reached $485 million since October 2013.

The months of July through September are usually the weakest sales months for CIG. Last year, the company made under $12 million during the 3rd quarter. In 2022 though, I think CIG has a chance to reach $500 million in total sales by the end of September.

The CSM 17 Election Results

On Thursday, CCP announced the results of the election for the 17th iteration of the Council of Stellar Management. The winners (and the round of the election simulation they were elected) are below:

• Angry Mustache - Goonswarm Federation (Round 1)
• Arsia Elkin - Electus Matari (Round 34)
• Brisc Rubal - The Initiative. (Round 1)
• Jinx De'Caire - Brave Collective (Round 34)
• Kazanir - Goonswarm Federation (Round 1)
• Kenneth Feld - Pandemic Legion (Round 1)
• Luke Anninan - Fraternity. (Round 1)
• Mark Resurrectus - Turbofeed or Glory (Round 34) 
• Pandoralica - The Initiative. (Round 33)
• Storm Delay - Pandemic Horde (Round 28)

Turnout this year was 30,814 votes, a decline of  19.1% from CSM 16's 38,086 votes. Even when taking into account the player decline since the end of World War Bee 2/Beeitnam War, interest in voting is down. The average player user count during the CSM 16 election was approximately 20,000 accounts. During the election this year, the ACU number hovered around 18,000 for a decline of 10%. An alternative explanation is that many players, instead of abandoning the game, have switched from paying Omega accounts to free-to-play Alpha accounts. So instead of a loss of interest in the CSM, CCP lost even more money from its corporate wallet.

The results pretty much went as expected. Seven of the seats went to members of the five largest sov holding alliances in EVE. The eighth winning candidate from null sec, Kenneth Feld, is from the 12th largest sov holding alliance. The ninth winner, Arsia Elkin, is an incumbent. Incumbents tend to win, even those best known for role playing and factional warfare. The final winner, wormholer Mark Resurrectus, finished 12th last year and was primed to win with the collapse of Test Alliance Please Ignore following last year's war.

One of the questions I ask of potential CSM candidates is whether they can attract 1000 first place votes and over 2000 total votes. In the 10-year history of CSM elections conducted using the single transferrable vote system, only three who reached this number failed to win a seat: Nathan Jameson (1616/2430) and Banlish (1213/2173) in the CSM 8 election and Sort Dragon (1500/2321) in 2019. All seven candidates who achieved these numbers won this year.

One of the stories CCP tried to create on its streams was Pandoralica's popularity across the EVE player base lifting him to victory. But did Pando really come from far back to claim victory? Actually no. After the first round, Pando was in 12th place.

1. Kazanir (met quota, elected)
2. Angry Mustache (met quota, elected)
3. Luke Anninan (met quota, elected)
4. Kenneth Feld (met quota, elected)
5. Brisc Rubal (met quota, elected)
6. Storm Delay - 2551 votes
7. Mark Resurrectus - 1468 votes
8. Jinx De'Caire - 1343 votes
9. Arsia Elkin - 995 votes
10. Torvald Uruz - 862 votes
11. Alasker - 746 votes
12. Pandoralica - 744 votes

Pando had passed both Torvald Uruz and Alasker at the end of round 11 and the winners gradually pulled away for the win. Compared to the CSM 12 election, when Yukiko Kami came back to win a seat in the final round, this year's election was downright sedate.

Why I'm Not Excited About Voting For CSM 17

Today is the last full day for EVE Online players to vote for the latest edition of the Council of Stellar Management. Voting ends at downtime (1100 UTC) on Tuesday. CCP has set up a voting page where players can vote for up to 10 candidates.

I spent years covering CSM elections. But after the election of CSM 14 in 2019 I realized that with the introduction of the single transferrable vote system, the big null sec alliances were basically guaranteed 7-8 spots, with low sec, wormhole, and high sec candidates fighting over the last 2-3 seats.

The year 2019 is also noted for an important event in the history of EVE: Blackout. One of the main purposes of the CSM is to serve as a sounding board to keep CCP from doing dumb things. Needless to say, the system somehow failed.

2019 was CCP's worst year over the last 10 years

I believe 2022 is a year in which nothing the CSM can say or due will prevent the developers from making major moves I will absolutely hate. We already know CCP plans to sell internet spaceships directly from the cash shop. 

MADE BY PLAYERS FOR PLAYERS

A new program will soon be introduced allowing you to manufacture or purchase items, making them available for other players to purchase. Players who participate will be rewarded with heraldry, which unlocks many cosmetic items that help you establish your individual and alliance identity in New Eden. This is all aimed to lean into EVE’s player-driven economy and provide more avenues to participate in the economy, and be rewarded.

The above is the plan CCP Swift told players about when CCP removed the Prospector's Pack from the cash shop. Can the CSM do anything about the plan? I don't think so.

In the upcoming year, CCP will do many things. The big issue for me is monetization. When CCP announced they were doubling down on selling ships in the cash shop, that signaled to me the developers will do whatever they think will bring in the most money. Nothing the CSM can say will have an effect.

Cloud Imperium Games Earns $20.7 Million In May

Just a quick post to record the remarkable month Cloud Imperium Games, the makers of Star Citizen and Squadron 42, had financially in May 2022. The month recorded the second highest month in ship & equipment sales in the 10 year history of CIG, registering $20.7 million. The catalyst for the revenue growth was the annual Invictus Flight Week ship sale with $14.8 million in sales over the 12 days of the event. Last month's revenue was only topped by the $21.5 million recorded in November 2021.

Through the end of May, the counter on the Roberts Space Industry website has increased $48.6 million so far in 2022. Over the 12-month period of 1 June 2021 to 31 May 2022, the amount publicly recorded increased by $104.8 million, cementing itself as the #1 sci-fi MMO, at least financially. No wonder other game companies are proceeding with their own plans to sell internet spaceships. 

Overall, the known total income reported by Cloud Imperium games over its 10 year history is $542.2 million split into three categories:

• Pledges/Counter: $474.7 million (through the end of May 2022)
• Subscriptions: $22.8 million (through the end of 2020)
• Other income: $44.7 million (through the end of 2020)

When including the $63.2 million in minority investment CIG accepted in 2018-2019, the total funding for Star Citizen and Squadron 42 so far is $605.4 million.

EVE Online's New Heraldry System Could Use A Touch Of Yoshi-P

Back in March, a kerfuffle occurred around CCP selling a package in the EVE Online cash shop that included a Retriever mining barge. The protests against selling internet spaceships directly for real world money like Star Citizen reached Twitch before finally subsiding. The protests faded when CCP Swift published an announcement CCP was pulling the Prospector Pack from the cash shop. His statement included the following passage.

One of the topics for Fanfest is a new project that we’re in the middle of developing, that will transform these and any future packs - a paradigm where packs of this type will be supplied by players, ensuring that any ship we offer to new players through sales, will have origins from actual player work in New Eden: Made for new players, by veterans. This feature will also not only supply each ship from the player base but allow the community to influence which ships will be put in these packs.

In effect, CCP intended to still sell ships for real world money, but would give players a chance to get a piece of the action. The move worked with selling ISK for money (PLEX) and skill points for cash (skill extractors/injectors), so why not ships?

At Fanfest CCP unveiled the heraldry system. In truth, they just announced an intention to create a new system that players might like. On day 1 of the event, we received a hint of what was to come.

HERALDING IN A NEW ERA OF IDENTITY AND SOCIAL INTERACTION

You will soon be able to display your unique identity and loyalty proudly on your ships and hangers through alliance logos, visual changes to your ships, holograms that reflect your social standings, killmarks, structure skins and other customizations attainable through InterBus credits, a new in-game currency.

InterBus credits can only be earned in game. They can never be traded between Characters, sold and do not have a fixed exchange rate to any other currencies.

A nice beginning, but watching the keynote, I had the feeling the new system would involve a bit of monetization. The day 2 news article went into further detail.

MORE ON HERALDRY AND INTERBUS CREDITS

The coming heraldry system lets you show off your achievements by displaying logos, visual changes to your ships, holograms that reflect your social standings, killmarks, structure skins and other customizations. You’ll be able to purchase those items with InterBus credits, which are earned by doing activities in-game. Those activities could be as simple as a daily challenges or events, or something more complicated. In almost every case, the activities will be focused on the social and interacting with fellow pilots.

To go along with this there’s a new unified fitting window coming that will combine heraldry and modules.

We’re also aiming to establish strong, healthy corporations, giving their members plenty of activities and goals, while providing more tools for corps to recruit, train and retain new pilots as they grow their member base.

We’ll also be helping corp leaders streamline their corp’s activities by making InterBus credits, taxable (though they won’t be tradable). We’ll also be giving corporations the tools to automate these arduous bookkeeping tasks with two optional taxes, LP Tax (on earned LP) and Value Tax (on sold goods on the market), in addition to the new Spreadsheets in Space tool mentioned in yesterday’s keynote that exports data directly from EVE into Microsoft excel.

This is all to help strengthen corporations in New Eden.

I think one of the most asked questions was: why not put these items in the cash shop? The answer came in the next section of the day 2 article.

MADE BY PLAYERS FOR PLAYERS

A new program will soon be introduced allowing you to manufacture or purchase items, making them available for other players to purchase. Players who participate will be rewarded with heraldry, which unlocks many cosmetic items that help you establish your individual and alliance identity in New Eden. This is all aimed to lean into EVE’s player-driven economy and provide more avenues to participate in the economy, and be rewarded.

Yes, the plan to sell spaceships directly from the cash shop became clear. Players would acquire or build ships and trade them for InterBus credits to get the sweet, sweet heraldry items. CCP will then sell the ships in the cash shop for real world cash.

I would really like options to obtain heraldry items without engaging in primary market real money trading. CCP is still working through what the system will eventually look like. I expect to hear something in 5-6 months from now. Hopefully CCP isn't too proud to look at other games for ideas. 

I think my current primary game, Final Fantasy XIV, does a good job with its Free Company system. Free Companies (FCs) are FFXIV's name for guilds or corporations. The game has a version of InterBus credits called, simply enough, company credits.

Company credits are used to increase a Free Company's rank as well as buy perks for the FC and its members. Credits are earned by performing the following activities.

• Inviting New Members
• Crafting anything High Quality
• Gathering anything High Quality(?)
• Undertaking supply and provisioning missions with your Grand Company
• Completing FATEs
• Completing Duties
• Completing Quests
• Earning Achievements

Basically, most any basic gameplay function an FC member does earns a free company credits. The system never shows player the credits they generate, so their is no sense of loss. Also, the system incentivizes FC leadership to maintain an active FC. The more active the FC, the more credits generated.

Players get more from the generation of company credits than the ability to put the FC's crest on their gear. FC leadership can purchase buffs that affect all members for 24 hours. The buffs range from increasing experience in combat, crafting, and gathering to buffing stats associated with those activities. Probably my favorite buff is the transportation buff that reduces fast travel fees by 20-40%, depending on the rank of the buff. That one buff can save players thousands of gil every week.

I realize CCP's effort is a work in progress, but I am concerned about this statement. 

You’ll be able to purchase those items with InterBus credits, which are earned by doing activities in-game. Those activities could be as simple as a daily challenges or events, or something more complicated. In almost every case, the activities will be focused on the social and interacting with fellow pilots. [emphasis mine]

Focusing on the social and interacting with fellow pilots is CCP language for PvP activity. I get the feeling, especially since the beginning of 2019, that CCP would like people to play EVE a certain way. I fear people who shy away from PvP and don't join fair sized groups probably won't get much out of the new system. If those people leave the game, well ... CCP didn't want those type of players anyway.

I really hope that CCP follows the philosophy of FFXIV's Producer and Director Naoki Yoshida. Final Fantasy XIV tries to provide content for everyone, even PvPers. He decided to make the game more friendly to solo players in an effort to make FFXIV welcoming to more Final Fantasy fans. 

If Yoshida is still looking to reach out for more players, hopefully CCP will do the same. I know the top leadership of CCP thinks EVE should attract a certain type of player and wants to cater to those people. Hopefully certain important people learned with Blackout in 2019 that abandoning the so-called carebear is financially harmful. We'll find out with how CCP handles the new heraldry system.

MMORPGs Are A Marathon, Not A Sprint

A lot of players are complaining now, but EVE Online really is a remarkable game. How many games last 19 years with continuous development? Thanks to Croda of marketsforISK, we have financial records for CCP and its successor, Pearl Abyss Iceland, going back to 2012. 

Game revenue, mostly generated from EVE Online

Over the last 10 years, games using the EVE IP, primarily EVE Online, generated $636 million in revenue. Last year's $63.8 million was slightly over the 10-year average of $63.6 million. Of course, 2021's revenue includes $10 million from EVE Echoes. But EVE Echoes was not the only other game besides EVE Online published by CCP. Since 2014, CCP published DUST 514, EVE: Valkyrie, EVE: Gunjack, and Sparc.

While we don't have records for 2003-2011, I think I can safely say the EVE IP has generated over $1 billion, if EVE Online itself hasn't recorded $1 billion in revenue since its launch in May 2003. Given CCP's beginning as a small indie studio founded on a rock in the middle of the North Atlantic, creating a $1 billion IP is a pretty good accomplishment.

If people think EVE Online is sick and in danger of dying, then what do we say about New World? The Amazon Games' game started out strong, with a peak of 913,027 users at least trying to log into the game on the first day. Much better than EVE's all-time peak of 65,303 on the game's 10th anniversary. But seven months after launch, New World's numbers were lower than EVE's.

EVE Online vs New World yesterday

Yesterday, New World has a high water mark of 22,779 accounts. EVE-Offline.net recorded a peak concurrent user number of 27,401 on the Tranquility shard for EVE Online. Including the Chinese Serenity shard would push the number over 30,000.

As for sales, how is New World doing? According to VG Insights, Amazon Games had sold 6.8 million units for $162.9 million. Pretty good money, surpassing what EVE Online has made for Pearl Abyss. The question is, how much longer will New World keep going? The game's monetization is limited to cosmetic items with no subscription options, so sales of units needs to continue. 

Slowing sales for New World

According to VG Insights, Amazon has sold 35,000 copies of the game over the past 30 days. At an estimated $37.56 per copy, that runs to $1.3 million. As a comparison, the EVE IP averaged $5 million per month in the first 3 months of 2022.

One final comparison. Yesterday, nine years after EVE's peak concurrent user mark, yesterday's PCU was down 58%. New World, on the other hand, was down 97.5% from its peak concurrent users set 7 months ago.

Ideally, player logins increase after launch of a new MMORPG. In EVE's case, player numbers grew for 10 years. But after only 7 months, New World had declined to a point below EVE's numbers after 19 years. Apparently, EVE is making more money now as well.

Pearl Abyss Q1 2022 Earnings Call

Some view the world like the glass is half-full. When looking at the results of Pearl Abyss' first quarter 2022 earnings call, an optimistic person might say the South Korean game maker did better than expected. Two analysts wrote their expectations for the call on BusinessKorea last week:

Pearl Abyss is expected to have posted sales of KRW88.8bn (-12.0% YoY,-24.7% QoQ) and operating loss of KRW1bn (negative swing YoY and QoQ, operating margin of -1.1%) for 1Q22. The company should have swung to a loss owing to sales drop and labor cost hikes from new hires, despite declines in marketing spend and other expenses. Sales likely fell QoQ due to high base effect created by Pearl Abyss Capital’s one-off investment gains booked in 4Q21.

Pearl Abyss didn't do quite that poorly, as the slide below shows.

Okay, Pearl Abyss brought in ₩91.4 billion ($75.5 million), beating expectations by 3%. But after the one-time revenue claim from Pearl Abyss Capital at the end of 2021, revenue was expected to plummet from the last quarter of 2021. And while drops in operating profit and net profit fell off a cliff, at least PA had profits to claim.

Gaming revenue rose in the first quarter, up 4.3% from the Q4 2021 total of ₩85.4 billion ($72.7 million) to ₩89.1 billion ($73.6 million). Before continuing, I need to explain why the U.S. dollar total only went up 0.1% instead of 4.3%. The South Korean won is weakening against currencies like the dollar, British pound, and Chinese yuan. In the rest of the article, the won to dollar valuation is calculated using the exchange rate on the last working day of the quarter as found on Xe. So as we can see, the dropping value of the won is boosting Pearl Abyss' profits.

We can do the same with Black Desert IP revenue. Year-over-year, Black Desert revenue dropped from ₩82.9 billion ($73.2 million) in Q1 2021 down to ₩70.9 billion ($58.6 million) in Q1 2022, a 14.5% decline in revenue. The Black Desert IP did post a quarter-over-quarter gain of 5.8%, from ₩67 billion ($56.3 million) up to ₩70.9 billion ($58.6 million).

The EVE IP revenue looked very steady over the last year, with revenue rising 3.4% from Q1 2021's total of ₩17.6 billion ($16.2 million) up to last quarter's ₩18.2 billion ($15 million). Oh, oh. Now we can really see the effects of the weakening won. If converted to U.S. dollars, the 3.4% year-over-year gain turns into a 7.4% revenue decline. 

Continuing on, EVE revenue remained "steady" from Q4 2021 to Q1 2022, only falling 1.1%. Even doing the won to dollar conversion doesn't show a big drop, as EVE brought in ₩18.4 billion ($15.5 million) in the final quarter of 2021.

At this point the pessimist takes over. With revenues inflated by the steadily weakening won, what are Pearl Abyss' plans to increase revenue? The April launch of Black Desert Mobile in China was disappointing not only to the analysts on the call, but to Pearl Abyss as well. From the tone of the call, the real possibility exists that Pearl Abyss will launch no games in 2022.

The analysts tried to get the Pearl Abyss leadership to let them know if Crimson Desert would launch in 2022. The answer was basically, "You'll find out when we tell the public." Listeners on the call were also told that the studio was concentrating on Crimson Desert, which means DokeV most likely will launch after the Black Desert spin-off. One analyst even asked about the upcoming Black Clover mobile game mentioned on the February earnings call. Despite telling analysts three months ago the game would launch in the second half of 2022, the analyst could not get Pearl Abyss to confirm if the timing still held.

About the only big news that might happen in 2022 is Pearl Abyss self-publishing Black Desert Online in South America. The move would mean the South Korean studio would now self-publish around the globe. Perhaps more importantly, every time Pearl Abyss self-publishes BDO in a region, its revenues increase for a time.

New Pearl Abyss CEO Jin-young Heo did answer a question about the future of Pearl Abyss. Below is a transcription of the translated answer.

You also asked us about the direction of our new business going forward. And we are planning many things. For example, we have DokeV that uses the metaverse platform as well as others that use the web 3 platform so we are seeing the market trends. And to successfully launch Crimson Desert in line with the Western biggest market, the console market, and also to make DokeV into a metaverse platform and to showcase this to the market. And to have a new project which I have before mentioned, using the current market trends of blockchain and web 3.0 using the EVE IP. So we believe as a game development studio we are going to focus more on these and that will be our task going forward. 

I would love to get a transcription of the Korean language portion, as I believe subtle but important differences exist. For example, in the passage above, the translator used the term "EVE IP", while the CEO used the actual term "EVE Online." Korean and English speakers may walk away from the call with two impressions of what Pearl Abyss plans for the future. 

In today's trading, Pearl Abyss stock declined 6%, finishing the day at ₩57,500. So far in 2022, Pearl Abyss stock has declined 57.1% in value.