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

WRONG.

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.

I'm using it every time I can

I’m using it every time I can

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About Corelin

An Eve playing Fool who occasionally writes about the shenanigans he and his minions get up to.

Posted on October 6, 2013, in CCP Hijinx, Things You Should Know About. Bookmark the permalink. 6 Comments.

  1. I think you missed something. It appears that the top price for a PLEX that CCP wishes to maintain is 600 million ISK. Last year Dr Eyjog intervened in the market when the faction warfare exploit was occurring and everyone was getting rich. At that time he dumped 2000 PLEX onto the market to keep the price down until the fix could be deployed.

    This year is different. CCP didn’t deploy a faulty system; they started the dual training for a PLEX option. I’m going to guess that a lot of people wanted to use the option and not pay RL cash. That drove prices up. But because this is a systemic problem, not an exploit, dumping the rest of Dr Eyjog’s PLEX fund into the market wasn’t a viable long term option. But a sale does work. The sale is in response to increased demand for a service, not subscriptions. And when the pent up demand for training players’ alts is satisfied and demand goes down, the sale can end.

    Now, whether the dual training option was instituted because of the loan and CCP was running short on cash, THAT I can’t answer.

    • I know they plan to control plex prices, but to have it just happen to need to be controlled right before the bills are due is a bit further than my suspension of disbelief can be pushed.

    • And… they also started Dust which they had to think would bring in a good amount of money. I dont think its brought in any great amount of money. I’m going to post more tonight/tomorrow after i’ve looked over their financials

  2. I can tell you haven’t visited the account managment page in a while. At one point towards teh beginning of the summer, they were offering reactivation incentives of 9.99 per month if you paid for a full year subscription.

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