(Almost) One BILLION Dollars!

So, dear readers, I've been away from this blog since the end of EVE Vegas. In fact, I've been offline from EVE Online for a month. The reason: I had surgery immediately following that great event, and I took a break from my usual pastimes to recover.

For those curious about the personal details, I had developed a case of rhinophyma, common with people like me who are afflicted with rosacea. The only cure for this is to cauterize all the skin off one's nose and let it re-grow. As you might imagine, playing EVE Online and writing about it were not high on my priority list after getting a bloody wound burned into the middle of my face. However, in retrospect, I probably should have tried to write something, as I'm sure whatever I produced while under the effect of powerful narcotics would have made for some hysterical and entertaining reading.

I now have a slightly smaller nose after this re-sculpting, and the skin has grown back quite well, though it will be at least a couple more weeks until I'm fully fit for human observation again. For now, I have to keep it slathered in antibiotic ointment, which makes my snout look shiny and wet, like a dog. This amuses my ever-charming bride to no end.

But enough about my personal travails. A lot has happened to EVE Online in the last month. So much, in fact, that I've been perplexed about selecting a specific topic to comment upon. That is, until today.

CCP Games up for sale?

Today, Bloomberg reported that CCP is "exploring strategic options, including a sale of the business after receiving interest from potential bidders". The company's management team and outside investors are now actively evaluating whether or not to proceed with a transaction.

This news does not surprise me. Over the last couple of years, CCP's management team, led by Hilmar Veigar Pétursson, have made several decisive decisions to clean up the financial structure of the company, including writing off the entire $21.4 million World of Darkness project, improving operational efficiency (including, sadly, laying off some employees) and securing new outside funding. The result as been a much stronger balance sheet and earnings picture, which has been further enhanced by the success of new virtual reality (VR) games, EVE: Valkyrie and Gunjack.

In addition, the successful introduction of a "free to play" Alpha clone option in EVE Online has shown that CCP's flagship product still has a lot of life in it, and remains a solid base for company operations going forward.

In summary, CCP's business performance has never been better, which means there will never be a better time to cash in. And having worked with capital investment firms in my own career, I know the kind of pressure they can exert to move forward with transactions, so they can reap the desired rewards. CCP has at least three such firms, so poor Hilmar must be getting pushed hard on all sides to move forward with a sale.

Let's talk numbers

Don't feel too badly for Hilmar. The Bloomberg post also says "A sale of CCP could value the business at as much as 900 million euros ($955 million)".

That warrants repeating for emphasis: $955 million - almost a billion dollars.

As Captain John Rourke says in Clear Skies, "HOW much?"

With that kind of valuation, deciding not to sell would only make sense if Hilmar and his outside investors believed that they could earn significantly more in the future. But that is extremely speculative, and I don't think they will take the risk. Most likely, the company will be sold, and very, very soon.

If I were them, I'd take the money and run. And who can blame them?

Welcoming our new masters

Who might actually pay this kind of money for CCP Games? The Bloomberg article does not speculate on this point, and rightly so. Certainly the usual suspects come to mind: Sony, Electronic Arts, Microsoft, among others - but there could be a number of other players who might see snatching up CCP as a strategic move, especially if they place a premium value on the potential of VR entertainment, in which CCP has demonstrated leadership.

Honorable EVE Online player Chribba assures everyone that he is the likely purchaser of CCP Games - if only this were true!

Honorable EVE Online player Chribba assures everyone that he is the likely purchaser of CCP Games - if only this were true!

What new ownership might mean for EVE Online will depend entirely on the culture of the acquiring company. In my professional career, I've been involved in a couple dozen merger and acquisition integration projects, and I can tell you that about half of them go well - and the other half go badly wrong.

In my limited experience, how well an acquired firm performs after their company is purchased depends a lot on the degree of alignment of organizational cultures, as defined by how the respective firms make decisions. If one firm is a top-down, command and control culture, and the other is an individualistic, entrepreneurial culture, there is going to be a clash, which usually results in a lot of good people leaving, by choice or by force.

It's too early to predict how this will affect EVE Online, certainly. But given the size of the numbers that are at stake here, big changes for CCP - and potentially for our beloved game - are coming very soon indeed.

Fly safe! o7


Fanfest 2016 Opening Day Impressions

Today was the first day of Fanfest in Reykjavik. It was a bright, sunny and brisk morning, and I strolled into the Harpa conference center with enthusiastic anticipation. CCP Games stacked all the major keynote addresses into the first day, so that the developers would be free to chat openly with all the attendees during the remainder of the event. I was expecting to hear a lot of exciting news about plans for the future - both imminent and for the longer term.

Alas, I ended the day disappointed.

Some Good News

Make no mistake - there were some good bits of news presented. Hilmar set a good positive tone, as any good CEO should. CCP Games is in the best financial position in years, and a profitable CCP is good news for anyone who enjoys playing their games. There have been some solid successes in the company's virtual reality (VR) offerings, EVE:Gunjack and EVE:Valkyrie. The PC-based Project Nova is shaping up to be a better free-to-play replacement for the discontinued PS3-based DUST 514 first-person shooter. Even the discarded World of Darkness intellectual property found a suitable new home.

Regardless, I ended the day feeling disillusioned - even a little depressed.

I will not recap all of the details of the proceedings. You can go read Drackarn's solid first-day summary. Instead, this post will focus on why I left the Harpa at the end of the day in a dour mood, instead of feeling uplifted and excited.

A Good Day for Null-Sec

If you are part of the 15 percent of EVE Online players who operate mostly in 0.0 space, you undoubtedly liked everything you heard in CCP Seagull's EVE Online keynote session:

  • New big citadels to play with and explode
  • New pirate capital ships with absurd bonuses
  • New capabilities for the Rorqual industrial capital ship, with cool new mining drones
  • New industrial and drilling structures coming soon
  • More interesting gameplay coming for warfare links soon

And then there is the CSM XI election - or should we rename the Council of Stellar Management to the "Council of Null-Sec Dudes, plus Steve Ronuken"? The turnout for CSM XI was the lowest in six years, and as a result, the null-sec power blocs and affiliates secured every slot except one.

Good for the null-sec blocs - they all voted as instructed. It's just too bad that CSM XI already fails as a representative body for the entire EVE Online player base. In the past, the majority of CSM positions were won by null-sec candidates, but at least there were token representatives for w-space, low-sec, high-sec and other interests in the game. The CSM XI team will be all null-sec, all the time - except for Steve.

I feel sorry for Steve.

Not Much for the Rest of Us

If you are part of the 85 percent of EVE Online players who don't principally play in null-sec space (using CCP Quant's statistics), then you probably felt like me, and were left wondering, "Is that it?"

Apparently, we are "somewhere in the middle" of CCP Seagull's development roadmap, shown with a line bisecting a vague timeline. I learned exactly nothing from this, except that we are "somewhere in the middle" of something happening sometime - maybe. Hopefully.

So, we are "right about there" in CCP Seagull's development roadmap, as shown by the line - whatever that means. (Image stolen with apologies to  Drackarn from his post .)

So, we are "right about there" in CCP Seagull's development roadmap, as shown by the line - whatever that means. (Image stolen with apologies to Drackarn from his post.)

I did like the news about the phone application in development - soon, high-sec corps will finally be able to get instant mobile notifications whenever there's a new griefdec. So, that's something, I guess.

Oh, and mining barges and exhumers are getting a makeover. Yay.

Perhaps the topical presentations and roundtable discussions tomorrow and Saturday will make me feel a little better. But for today, as a former high-sec based industrialist and now wormhole explorer and pacifist space hippie, I'm feeling a little ignored. Perhaps we in the unimportant 85 percent of the player base should just leave Fanfest to the 0.0 crowd, as it seems to be so inordinately oriented to that elite and exclusive audience.

Really, I'm not bitter. Do I sound bitter?

Well, perhaps I am, a little.

A Few Nice Highlights

One bright spot was the introduction of CCP Ghost, who will be tackling the new player experience (NPE). Ghost impressed me as a smart man with an interesting background and a fresh outside perspective. Here is someone who seems to understand the importance of story, and how players can build an emotional attachment to their characters as they develop within the story of EVE Online, to the point that they can then start to make their own stories. His presentation was short on details, but I liked what I heard. I'm planning to join the NPE roundtable discussion, and will hopefully learn more.

My charming bride and I also had a chance to try out the Project Arena prototype, which was a lot of fun. Think of Tron flying disc fighting and you get the idea - a very good VR experience.

I also enjoyed Andrew Groen's session about his book, A History of the Great Empires of New Eden. I also got him to sign my copy.

What will the rest of Fanfest bring?

Regardless, my high hopes to be wowed in the opening keynote addresses of Fanfest 2016 were dashed. Perhaps my expectations were too high. Perhaps the focus of Fanfest really is on just the most vocal null-sec devotees, and not on any of the remaining player base, and I just didn't know - hard to believe since this is my fifth Fanfest trip, and I've never really felt that way before, but I guess it's possible. Or perhaps I'll hear a few bits of news in the next two days that make me feel like CCP hasn't forgotten players like me.

We shall see. I will share what I discover here, so stay tuned.

Fly safe! o7

Who'd a' thunk it?

My friend and fellow EVE Online blogger, Noizy, alerted us to this report on an Icelandic news website: http://vb.is/frettir/hagnadur-ccp-aldrei-meiri/125413/

Roughly translated:

The company yielded US$20.7 million profit last year, equivalent to about 2.7 billion ISK. In 2014 the company generated a loss of 8.7 billion ISK, but this year was a great [return on] investment. Dismissing the game World of Darkness had a significant impact on the income statement. According to CCP, the company's profit, cash balance and financial position has never been stronger.
CCP sales declined by $2.9 million compared to last year - it was $65.7 million last year. Operating profit amounted to $20.6 million and EBITDA was $31 million, compared to $9.7 million in 2014.
The balance sheet was also transformed last year. At the beginning of the year, equity was negative $15.3 million, but this year accounted to a positive $35.5 million. Liabilities decreased by over $4 million and stood at $44.4 million at year-end. Assets amounted to $79.9 million by year-end, of which cash was $56.2 million.
In November of last year, it was reported that the enterprise fund New Enterprise Associates invested new equity in CCP Games in the amount of $30 million, or almost 4 billion ISK in cash.

In a nutshell, revenue went down 4 percent (insert the obligatory "OH MY GOD - EVE IS DYING!" alarmist statement here), but profits tripled, compared to last year.

By taking the burden of the ill-fated World of Darkness project off the back of the company, CCP's financial condition improved dramatically from a very negative to a very positive position. Obviously, this has encouraged outside investment, especially with the potential of EVE: Valkyrie and other virtual reality offerings poised to generate potentially significant revenues next year.

The business condition and outlook for CCP Games has never been brighter. Kudos to the entire management team - you made some tough decisions and they are obviously paying off.

To those negative naysayers who feel strangely compelled to issue a never-ending litany of dire "EVE is dying" and "CCP is doomed" warnings, please put a sock in it. CCP is making good money, and won't be going away anytime soon.

Who'd a' thunk it?

Fly safe! o7