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Friday, March 15, 2024

Chris Roberts On The Cloud Imperium Layoffs

Yesterday Cloud Imperium Games founder and CEO Chris Roberts published a "Letter From The Chairman." Outside the annual CitizenCon event held every October, these posts are the main ways Roberts communicates with the fanbase for Squadron 42 and Star Citizen. Posted near the end of all the game related updates, Roberts addressed the layoffs in CIG's studios in the United States.

At the top of the interest scale, Roberts confirmed that Todd Papy, the former Persistent Universe Live Director, was fired for not relocating back to the U.K.

As part of this reorganization, we sadly waved goodbye to the Persistent Universe Live Director, Todd Papy as he had moved back to the US from the UK last year for family reasons, and after much soul searching, I determined that we cannot afford to have this role remote from the main team in Manchester for a good portion of the year. It is a sad moment, as Todd worked diligently for the last 9 years on Star Citizen, making many important contributions and providing excellent leadership of his teams. I wish him the best of luck and look forward to seeing what he does next.

Some might have thought Papy would have received a better send-off, but Roberts finally said some nice things about a key player in the development of Star Citizen while the main effort of the company was finishing Squadron 42. Rich Tyrer, the game director for Squadron 42, will also take over Papy's role. I will note that Roberts waited until SQ42 was declared "feature complete" and the developers from Star Citizen began to return to work on the MMO before firing Papy.

The more interesting tidbit in the Letter From The Chairman concerned the restructuring occurring in the United States. Game development in Los Angeles has ended.

As part of this, we made the difficult decision to ask the Los Angeles development team, which had increasingly been providing support for the main development teams based in Manchester, to relocate to join other teams, primarily in Manchester, but also in Austin and Montreal. Los Angeles, while shrinking, will still be an important office for the company, but one focusing on a business support role with Marketing, Finance, Legal and HR.

I am not sure the technical terminology, but for all practical purposes, CIG shut down its game studio in Los Angeles. Roberts noted that he himself has moved from Los Angeles to Austin.

I don't follow Star Citizen closely, but from everything I read up until now, the known layoffs were occurring in the Austin studio. Those laid off due to restructuring included Austin QA lead Vincent Sinatra, Austin senior QA analyst Andrew Rexroth, and level designer Dane Kubicka, also from Austin.

With the closing of the Los Angeles studio, I have to wonder if people in the Austin office were laid off in order to have space for developers willing to relocate from Los Angeles. Or, signaling worse financial news, the staff laid off in Austin were part of another restructuring move.

CIG is the company that just keeps feeding me stories about which to write. But I had to write about this one, if only because the game studio in Los Angeles is no more. And the closure also explains why this year's CitizenCon is being held in Manchester and not southern California in 2024.

Thursday, March 14, 2024

Reading Through Project Awakening's Latest Press Release

On Wednesday CCP issued a press release granting the general public some sort of idea what Project Awakening is all about. Since I'm a blogger and not a games journalist, I'm going to copy large portions of the press release into this post, but with a twist. After every paragraph, I'm going to give my thoughts. Interested? Let's begin.

REYKJAVIK, Iceland – March 13, 2024 – Today, CCP Games is excited to reveal the first details about Project Awakening and announce PHASE III, the next closed playtest for the in-development title set within the EVE Universe, starting May 21, 2024.

Interesting that the first paragraph provides useful information, namely that a closed playtest will occur in about two months.

With a 26-year studio history, Project Awakening represents the next step in CCP Games’ journey to create virtual worlds more meaningful than real life. Designed with player empowerment at its heart, Project Awakening is being developed as a single-shard survival experience built upon the principles of freedom, consequence, and mastery within a living universe. A universe that will evolve from the actions and efforts of its players.

Wednesday, March 13, 2024

The Final Price Of Cloud Imperium's Acquisition Of Turbulent Media: $9.8 Million Canadian

Back in February I attempted to calculate how much money Cloud Imperium Games made (or lost) in 2023 and the revenues required to break even in 2024. As part of the effort I attempted to assess how much money CIG spent to acquire Turbulent Media, a key outsourcing partner working not only working on CIG's website infrastructure but parts of Star Citizen as well. The answer is in the financial accounts submitted to UK Companies House, but those were not received until 3 March and only posted on Monday. In their absence, I estimated the cost was $29.6 million USD. According to the documentation, I was off by a factor of 4.

Actual Transaction Cost, p36 of the 2022 accounts

According to the accounts:

Cloud Imperium UK Ltd. sold it's 25% shareholding in Turbulent Media Inc to 9491-4561 Quebec Inc on 2 July 2023 in exchange for 25% of the share capital of 9491-4561 Quebec Inc. Cloud Imperium UK Ltd. acquired the remaining 75% of 9491-4561 Quebec Inc on 2 July 2023 for a consideration including professional fees of $9,843,791 Canadian Dollars. The entity 9491-4561 Quebec Inc is the ultimate parent company of Turbulent Media Inc.

The conversion rate on 2 July 2023 puts the U.S. currency price at $7.4 million U.S. Dollars.

If I've read all CIG's available financial documents correctly, CIG did not pay the entire amount in cash. I estimated the 30,120 shared given to Turbulent's co-founders Marc Beaudet and Benoit Beausejour was worth approximately $1.3 million. That's assuming the value of CIG has not gone up over the last 6 years. If the value has gone up, the amount of cash needed to complete the sale goes down.

If CIG only needed up to $6 million to complete the acquisition then they either could have paid cash from the company's reserves or used its line of credit (possibly wrong terminology) with Coutts & Co. until the tax rebate from the U.K. government arrived. The small amount needed would mean CIG did not need to go to another bank, which is a good thing as Coutts & Co holds a charge over all of CIG's rights, title, and interest in Star Citizen and Squadron 42.

This post is a mea culpa for my previous bad estimate for the acquisition price of Turbulent Media by Cloud Imperium. I'll have to go back to my previous post and put in a correction. Getting the information straight from a document submitted to U.K. Companies House is a lot better than the information I tried to compile from sources on the Internet.

Tuesday, March 12, 2024

Cloud Imperium UK Ltd (Finally) Posts The Company's 2022 Annual Report and Financial Statement

Yesterday, Companies House posted the annual report and group financial statement for the year 2022 for Cloud Imperium UK Ltd, the company that controls all non-US operations. The lateness of the paperwork, stamped on 3 March, will probably result in a fine of £375. But the reason for the late submission is probably worth the cost.

The delayed filing included an adjustment for errors dating from 2015 to 2021. According to the document:

The Company has presented publishing costs as deferred costs under debtors: amounts falling due after more than a year in each accounting year in the period 1 January 2015 to 31 December 2021. The publishing costs should have been presented within cost of sales in the statement of comprehensive income.

The current year publishing costs have been correctly classified in cost of sales and the prior year comparatives as at 31 December 2021 have been restated to conform with current year presentation.

There are changes to the Company statement of comprehensive income. Company statement of financial position and company Statement of changes in equity as a result of this reclassification.

When people want to find out about Star Citizen, they visit the Roberts Space Industries website. What many may not realize is RSI is a real company whose full name is Roberts Space Industries International Limited, a subsidiary of Cloud Imperium. The adjustments in question concern RSI.

The adjustments

The aggregate amount of publishing costs incorrectly listed from January 2015 to December 2021 was a little under £5.6 million. The total impact to the cost of sales rose by £1.7 million in 2021.

Considering the subject involves Star Citizen, I am sure someone somewhere will list this as Chris Roberts running some sort of embezzlement scheme. From what I can see, that's not the case. Up until recently, the independent auditor looking at CIG's books was Saffery Champness LLP, who performed the audits of the reports and financial statements during the time in question. For the 2022 financial statement, CIG switched to PricewaterhouseCoopers LLP. A fresh set of eyes caught the mistake.

Personally, I can now say I followed the story to its conclusion, unless the UK government takes further action. A quick read-through of the document did show a couple of tidbits I need to write about. After that, I can put CIG's year of 2022 behind me.

Monday, March 11, 2024

Will The Next EVE Online Expansion Address Learning Attributes?

I've wondered when CCP would begin dropping hints about the planned spring expansion for EVE Online. Apparently the wait is over.
Partially Corrupted Cryschips generated some interest are a new item introduced for the pre-launch event.
This advanced cryschip is configured to store holographic data but has been heavily corrupted and partially wiped by a security protocol. In this instance the protocol was violently interrupted and some fragmentary data may remain accessible amongst the vast quantity of randomized information on this cryschip.

With just the right approach it may be possible to track down and decode what remains, thereby accessing a coherent data stream. Curious capsuleers may profit by trying data retrieval and seeing if something clicks.
The new items showed up on Hoboleaks with 120 entries in the table. The items are no longer hidden as players are finding the items and piecing them together.

What was found as of Saturday

Looking at the images found so far, the next expansion may incorporate a revamp of learning attributes. Usually changes are sent to players in encrypted form and from what I see, attributes are at least getting a revamp. And if attributes are getting a revamp, so are learning implants. Learning implants are often credited with inhibiting PvP because players don't want to fight with expensive learning implants in their clones. Is this a time the developers may address this complaint I've heard for 15 years?

Expansions always invite speculation. Introducing change through in-game means helps fulfill the exploration urge in many players. Now, when do we get the name of the expansion and a launch date?

Thursday, March 7, 2024

Looking At Star Citizen Through Clarke's Third Law

“Any sufficiently advanced technology is indistinguishable from magic.”

Clarke's Third Law

I am sure fans of Chris Roberts, the head of Cloud Imperium Games, love the Arthur C. Clarke's Second Law: 

“The only way of discovering the limits of the possible is to venture a little way past them into the impossible.”

Describes the entire Squadron 42/Star Citizen project, started in 2012, perfectly, doesn't it? And the first law also seems relevant:

“When a distinguished but elderly scientist states that something is possible, he is almost certainly right. When he states that something is impossible, he is very probably wrong.”

Replace "elderly scientist" with "video game executive" and the original pitch video makes a lot of sense.


But I'm thinking of Clarke's more famous Third Law, “Any sufficiently advanced technology is indistinguishable from magic.” Because as we approach the launch of Squadron 42 sometime in the next year or so, Roberts' Star Citizen universe becomes real enough to begin making comparisons to another sci-fi simulator, EVE Online.

No, I'm not referring to the ability of CCP to easily host fights an order of magnitude larger than the Star Citizen servers maximum capacity. At this point, I'm referring to how far in the future each game's universe is in terms of time. Based on the dates I see placed on events such as CitizenCon, the Star Citizen universe is set 900 years in the future. New Eden, the cluster in which EVE Online takes place, is set 20,000 years into the future. So while the space combat in Squadron 42 and Star Citizen is designed with Newtonian physics in mind, no one had ever heard of Sir Isaac Newton in the EVE universe. Instead, EVE spaceships use a different set of rules, referred to as "enhanced physics".


I looked for an example where the technology between the Newtonian world of Star Citizen and that of the PEG spaceships of New Eden partially matched. The example I came up with is cargo hauling. In Star Citizen, the current king of hauling is the MISC Hull C. With the ability to carry 4,600 m3 of cargo, the ship sells for $500 in the Star Citizen cash shop. A comparable ship in EVE is the Wreathe one of the oldest ships, at least lore-wise, from the Minmatar Republic. When doing a playthrough on a free-to-play account with limited skills, I could fit almost 4,940 m3 of cargo in the ship. The ship cost no real life money as the initial career agent missions will hand out a couple of such ships. If I really wanted to buy the ship and all its fittings, I'd estimate the real world cost is 50 cents to $1 if I purchased PLEX. The ship itself is not sold in the EVE cash shop.

Why the big difference in price for a ship with similar capabilities between the two games. I'd say the advanced technology of New Eden, some 22,000 years in Star Citizen's future, makes all the difference in the world. Not only is the ship much more easier to obtain, but the technology of the New Eden cluster, especially its economy, is much more advanced as well. One might even call the difference magical.

BitCraft Announced Alpha For 2 April 2024

This morning I woke up to an interesting announcement on a Discord server. A game from Clockwork Labs called BitCraft is launching its first alpha on 2 April 2024. Here is the trailer.


The game looks okay for an alpha, but why am I following BitCraft? Admittedly the game is not my usual type of game. The tie-in for me is that CCP Games is financially invested in the studio developing the game. According to Crunchbase, in April 2022 CCP Games participated in a $22 million round of funding led by Andreessen Horowitz, the same company that led the $40 million funding round for Project Awakening.

I figure I should keep an eye on BitCraft, especially since one of the co-founders of Clockwork Labs isn't exactly the biggest fan of blockchain technology in video games.

Wednesday, March 6, 2024

How I Convert Pearl Abyss Financial Numbers To U.S. Dollars

I don't think the fact that the large majority of the readership of The Nosy Gamer lives in the United States would surprise many people. But considering I mainly write about a game made by Icelandic developers owned by a South Korean company does present a challenge. How do I report the financial numbers in U.S. dollars instead of South Korean won? 

Fortunately, CCP ehf, the official name for CCP Games, uses the U.S. dollar as its functional currency and has since 2007. But that just leaves a dilemma with Pearl Abyss' quarterly earnings calls. CCP records its finances in U.S. dollars. The information is sent to Pearl Abyss' corporate headquarters in Anyang, South Korea, where the currency is converted to the won and placed in Power Point decks. I then convert the figure back to dollars for my articles on the earnings calls.

To even get close to the original figure, I turn to the Federal Reserve Bank of St. Louis. Amongst the economic data available on the site is a chart showing the quarterly conversion rate of the won to the dollar as calculated by the Organization for Economic Co-operation and Development. I take the quarterly exchange rate, plug it into a Google Sheet I maintain with all the Pearl Abyss data I've extracted from the earnings calls, and get my conversions. Easy.


South Korean won (KRW) in billions, USD in millions

I've double checked the conversions by adding up the quarterly conversions of EVE IP revenue with the actual reported data from CCP's publicly available records filed with the the Icelandic Revenue and Customs agency. In three of the four previous years, the amount of USD calculated from the earnings calls was only 0.3% larger than the ones found in the tax documents. In only one year, 2021, was the number in the earnings calls lower (by 0.1%). Honestly, I consider the approximately $100 thousand discrepancy for the year a rounding error.

I should add the table above is for EVE IP data only. In 2022, overall CCP ehf. revenue was $68.6 million due to $12.5 million in "revenue from supply of services", which occurred somewhere in "South and Central America, the Caribbean, Africa, Australia and Oceania".

Hopefully this little article will explain just where all my U.S. dollar figures come from when the won is involved.

Monday, March 4, 2024

February 2024 Activity In EVE Online

With the next EVE Online expansion scheduled for sometime in the second quarter of 2024, the game hopefully will retain the players the developers attracted over the last three expansions while shifting focus to null security space. With the ramp up to the next, as yet unnamed expansion just around the corner, how has the Havoc expansion performed so far?

Jester's Graph, 1 March 2023 to 29 February 2024

Looking at Jester's average concurrent user graph, the EVE player base is acting similar to last year. The 7-day rolling average is hovering around 23,000 accounts. While down from its post-Havoc launch peak of around 24,500, the game is still significantly up from the approximately 19,000 recorded during the run of the Viridian expansion.

Pearl Abyss' 2023 financial performance

Don't minimize the financial effect such activity has on CCP Games' finances. As we learned from Pearl Abyss' fourth quarter 2023 earnings call, quarter-over-quarter, EVE IP revenue was up 24.3% to 19.9 billion ($15.1 million). Year-over-year, revenue was up by 15%. If the trend continues, CCP Games will continue to shine before investors, hopefully meaning any cuts will pass over the developers in Reykjavik. Hilmar, though, will still need to move his office to a different location.

We may have a new metric for the health of the game: low sec player deaths. For the 14th time in the past 16 months over 200 thousand player-owned ships died in low security space. Year-over-year, the number of ships destroyed, 219,598, almost matched the previous year's total when leap year after accounting for leap year. For the year, ships are dying in low sec at a slightly faster clip than in 2023.


One area with huge growth was ratting in null security space. The 183,576,926 NPCs that died at the hands of players was a 32.4% increase in the number racked up in February 2023. The continued growth in PvE is helping to fuel CCP's revenue growth.


What I've seen over the last few months is evidence CCP has gotten low security space in a much better place after years of neglect. But with null sec economic activity expanding after the Scarcity Era, the switch in development focus to null sec after three low sec themed expansions makes sense. Hopefully whatever ideas the developers have for null sec will work out as well as the ones introduced in Uprising, Viridian, and Havoc.

Friday, March 1, 2024

Cloud Imperium Games Posts Sales Of $4.8 Million In February 2024

Cloud Imperium Games recorded $4.8 million in sales in January 2024 according to the CCU Game - Star Citizen dashboard. Last month's total represents a year-over-year increase of 12.9% in revenue over February 2023's figure of $4.2 million.

February represented a recovery of sorts from January's disappointing sales performance. So far in 2024, revenue is down 15.1%, or $1.8 million. Overall, though, the trend is positive as CIG has now recorded year-over-year increases in sales revenue in 5 of the last 6 months. 

Overall, CIG has raised $766.2 million from confirmed sources (the funding page & the 2022 financial report). The income breaks down as follows:

  • Sales/Pledges: $667.6 million (through 29 February 2024)
  • Subscriptions: $33.0 million (through 31 December 2022)
  • All other sources: $65.6 million (through 31 December 2022)

In addition, CIG received $63.25 million in investor funding in 2018 and 2019, bringing the total confirmed funding of the project up to $829.4 million. Of the total through the end of 2022, $1.4 million was paid out to investors as dividends.

Following the acquisition of Turbulent in 2023, I expected efforts to reduce staff in the United States to cut down on costs. The biggest name apparently affected was Todd Papy, who left his position as live game director after nine years at CIG. But others, including level designer Dane Kubicka, Austin QA lead Vincent Sinatra and Austin senior QA analyst Andrew Rexroth, posted to LinkedIn they had been made redundant due to a restructuring.

In a statement to GamesIndustry.biz, CIG confirmed layoffs occurred.

"As part of our normal processes, we regularly look for ways to make our operations more efficient, which can include restructuring in order to place a position closer to the team it supports," it said.

"Now that we are back in office and seeing the progress and quality of work when our teams are in-person working together, we have decided to co-locate as much development as possible, which has resulted in some minor staffing changes as we move some development positions closer to their core teams.

"As a result of this consolidation, a small number of positions were eliminated and we continue to recruit for key roles within the company."

I noted last month my belief CIG recorded the biggest net losses in the company's 12 year history, although we won't know for sure until the company releases its 2023 financial report in December. The fact that CIG's 2022 financial report has not appeared on UK Companies House as of the posting of this article is also possibly a negative sign of CIG's financial health. Also, while pre-sales of Squadron 42 would likely plug any financial hole, the company's sales so far in 2024 is not helping matters.