They Did What? WHEN?
NOPE NOPE NOPE. INFO FROM CCP’S FINANCIALS HAS CHANGED
MY OUTLOOK ON THIS. BLOG POST TOMORROW WILL COVER
HOW AND WHY THE BLOG BELOW IS MORE OR LESS COMPLETELY
So we all missed it. I didn’t see any commentary on it, I didn’t see anyone talking it up much on twitter, even TMC missed the implications on their article about the big plex sale on Amazon. And I can’t say it’s really THAT surprising, but I’m surprised nonetheless.
First let’s go back to the first blog I wrote that was linked by outside sites. Here. The short, short version is: CCP operates off large cash loan that run October – October. In June 2011 they had gotten so far behind the curve that they didn’t have the money to pay back the loans, and they were losing $500k a month developing Dust 514. If you look around on my site, or consult your memory, you will find that CCP ended up selling a ton of plex at a discount, and then firing 25% of their staff.
So last week, Amazon put plex on sale. Big time. There was even a much smaller discount on CCP’s site. People cashed in. The price cratered from 600 Million on 9-24 to 550 million on the 29th. Currently it has slid back up to 574 million, but a lot of people probably built quite a tidy stockpile of gametime or Plex at a discount.
More importantly, however, this is a big red flag for CCP’s health as a company. It says that once again, for the second time (at least) in the last three years, CCP has run into a major cash flow problem that prevents them from paying back their loan on time, which would burn their credit rating, and make the next loan much more difficult to acquire.
This one wasn’t as big a shortfall, it didn’t seem to require quite as many drastic measures, but that does not make it less disturbing. Back in 2011 CCP could have cut off Dust and/or WoD, or severely curtailed them to limit the damage going forward, and they did, as well as cutting down on staff and other drastic measures. In 2013 Dust is open for business and shuttering it would look just awful, and likely cut off a lot of potential for investments should CCP’s owners want to go that route. WoD isn’t exactly getting so much money that there’s anything meaningful to cut at this point, and CCP has seen so many devs leave this year that they probably don’t have a lot of fat to trim on that end of the budget.
I may be overstating things, and this year, unlike in 2011, I don’t have CCP’s financials sitting on my desktop letting me look through for the details. However a sale like this is a bad sign. A discount that deep means CCP is getting a lot less money in return for getting cash now. Instead of getting whatever their take is on $50 bucks from amazon, they get their take of $37.50. A 25% hit, and they still owe 30 days / plex. Sure not all plex are redeemed for game time, but I bet a lot more are when the isk price drops. This means CCP knows that rather than getting an average of $16.66 per player plexing, they are going to get $12.50 (minus Amazon’s take) and that they are ok with that as long as it fixes their cash flow problems. That’s fine, that’s a business decision, but to have to make that decision at the end of September, with loan repayments to make, and in a situation where there’s no really good choices to raise money… No bueno. No Bueno.
And that’s what we missed. We missed that CCP is, if not struggling financially, than at least staggering a bit, at a time when their resources to cure that stagger are extremely limited.