CCP has been acquired. This is a good thing

The Icelandic developer and publisher of EVE Online has been acquired by the Korean game firm Pearl Abyss, best known for the MMO “Black Desert Online”.  My first reaction to this news was “finally”, my second reaction “who”?

So, CCP has been on the block for many years.  Privately invested companies are generally not designed to stay for decades, they go public, go under or get bought.  Launching an IPO for CCP was always a thing but with the abysmal record of CCP to launch anything other than EVE online, the company had established itself as a one-trick-pony.   One trick pony with ambition and vision but, well, one trick.  A strong, adult partner was always needed and the rumors had been EA, Viacom Activision Blizzard (edit: thanks Wilhelm, corrected) (owns Blizzard) and others.  CCP never had worthwhile marketing, flubbed on the very most basic money-making schemes (monocle gate, swag store, fan fiction…) and literally markets itself only to existing players.  Successfully, sure but CCP was running out of gas.  No console, no mobile platform, no “quick” game play mechanic, ageing infrastructure, decades old pull-down menu interfaces and much more betrays CCP as running way, way behind their times.  Every other company would have gone bust but the nature of EVE and our loyal fans kept it afloat.  Afloat.  Not more.  This was never enough.  I had hoped for an acquisition for years as it would bring a decision: either death by incompetence and greed to a massive marketing and structural shot in the arm.  Choose one but stop the slow coasting.

I know nothing of Pearl Abyss other than they are based in Korea and launched yet another WoW clone called Black Desert Online.  Apparently its successful in Asia but this is where my knowledge stops.  But the $425 mil sounded pretty high until I remembered an article from last year analyzing CCP’s 2016 cash flow position.  CCP had a record revenue of $86 mil, which makes brings us into the very comfortable 5x multiple.  In fact, it appears low for a tech platform buyout but I am sure, CCP’s investors are glad to have this done and over with.

Now what. My corp slack chatter is a mix of “omg, sky is falling, EVE is dying” to “wait and see” and “weee!!!”.  I personally offered a ISK 100mil bet that we have more EVE subscribers next year than today.  100mil is a lot for me, so don’t belittle that.  I have reasons to be optimistic:

• With a 5x multiple, Pearl Abyss banks that it generates at least the acquisition costs back in 5 years plus transaction fees, inflation, blah, blah.  Lets call it 6 years.  Stripping the company of its assets and relocating a few engineers will sink EVE (and hence CCP) and reduce the investment to zero.  I have been in buyouts just like that and am not saying its an impossible scenario but I am saying its unlikely.  Based on my personal experience, above $100mil transactions, professionals are involved.
• EVE has a proven, reasonably stable platform (really large battles and log in issues aside) and a loyal, very stress-resistant playerbase.  There also is no alternative game.  Star Citizen is nowhere and while No Man’s Sky has become MUCH better, its not a replacement for EVE.  No, there literally is nowhere to go other than the next PubG / Fortnite / Escape from Somewhere clone.
• Pearl Abyss knows the Korean market better than CCP.  I bet their first action is to properly translate the EVE client and market the living daylight out of the game in Korea.  EVE doesn’t have “shards”.  Any, really any marketing effort will be seen instantly in log in numbers (and revenue) and without much infrastructure investment. I.e. its a marketers dream.  Spend marketing dollars and receive bacon.  Ridiculously easy.  Make a swag store, hire @RixxJavix for it and blow the roof off, revenue-wise.
• In general, Korean markets are run entirely separately from other Asian markets but I assume that Pearl Abyss knows how to sell in Japan and maybe even China.   CCP’s relationship with its Chinese distributor have been strained for many reasons.  If (my hypothesis) Pearl Abyss has good relationships with “person-in-charge” in China, they could double the revenue nearly overnight.
• Lastly, why does Pearl Abyss buy CCP?  Not for some outdated spaceship game.  Not because CCP is a channel to market, has mobile or cross-platform experience.  No, its because there is no game company that can stage massive, multiple thousand player interactions.  We may complain about TiDi in a 1000v1000 encounter.  Any other game would bluescreen and die.  EVE is the only major title that allows this and this is the core of CCP’s IP.  Replace spaceships with horses or dragons, replace drones with pets, replace lasers with spells, it doesn’t matter.  CCP knows how to manage massive encounters like this.  I am super excited about this as it has the potential for an entirely new class of MMO, where gigantic, multi-day battles rage across virtual cities, landscapes and skies.

Yes yes, eventually EVE will die, really die, we all know this is inevitable.  But my bet is: not for 5-7 years (until cash is recouped) and then its replaced by something massive thats worth waiting and giving up EVE for.

And I have – so far – ISK 200mil 300 mil riding on it.  Go Pearl Abyss, make me rich.

 

Edit: More worthwhile reading about this

• Tagn