(This submission comes to us from the host of Open Comms and Talking In Stations shows, and Pandemic Legion member, Dirk MacGirk.)
Yet again we come to the summer. There may be no seasons in space, but summer in the northern hemisphere is a time when the world of EVE Online slows down. And when EVE slows down, the topic of declining activity and EVE’s health tends to be one of the recurrent topics of consideration.
Normally, I wouldn’t bother to comment about what seems to be such a played out subject, and perhaps I should have stayed my hand in this case as well. However, Sion Kumitomo recently penned a piece that raised a few eyebrows. His wasn’t alone in terms of commentary on the state of the game. The 77th edition of Blog Banter, a compilation of blogs, took up the topic of the health of the game a day or two earlier. However, Sion’s article did contain some larger claims that drew my attention, namely that revenues from EVE Online are being used to fund other endeavors at CCP Games.
I’ve been saying for several years now that EVE Online is a cash cow and cows get deservedly milked. They get milked to cover the administrative costs of the company, service corporate debt, and yes, to fund research and development into future growth engines for the company. Whereas EVE Online is a product, CCP Games is a company. Products are not expected to survive indefinitely. They are subject to a life cycle, albeit one that can be extended, but survive so long as they remain economically viable. On the other hand, a company expects to remain an ongoing concern, preferably one that is growing profits for its shareholders.
I’m not sure there was much of a surprise in Sion’s article. The topics of EVE Online’s health and the financial health of CCP Games have been subjects of constant commentary for years. “EVE is Dying” has become a meme. As NoizyGamer pointed out in 2014, the first documented utterance of “EVE is Dying” dates back to July 30, 2003. Was this an “EVE is Dying” article? I don’t think so. It was a lengthier than most, more detailed than most, commentary about one player’s view of the state of the game, the focus of the developer (CCP Games), and the level of development resources dedicated to EVE Online. Those are topics we should all care about, and quite frankly, given the plethora of articles and conversations related to those issues over the years, we do. Now don’t get me wrong, there are multiple details that can be debated, even debunked, as there always are in just about anything written about EVE Online. But at its core, there is simply nothing new about any of these topics being discussed. Sion’s article wasn’t the first and it certainly won’t be the last. EVE has a passionate player base that has views that range well beyond that of the space-pixel universe of New Eden.
The other area that drew my attention was the drama the article seemed to raise when it was released. In spite of all the similar commentaries that came before it, the reaction to it from some members of the community was swift and pointed. Some didn’t appreciate the tone, the perception of axe grinding, the fact that the author used anecdotal evidence (related to website, Twitch and reddit traffic), and what I will agree was the out-of-context use of quotes by Sugar Kyle and CCP Fozzie. Perhaps he did have a nefarious agenda born of the meta. Perhaps it was just click bait. But having read so many articles about EVE is Dying, the state of the game, or CCP’s corporate ambitions, I try and consider the claims and couldn’t care less that this was written by Sion or some less public contributor. But honestly, if any other author had written this very same piece it probably would have passed like a ship in the night.
Now none of this is a defense of the article itself. I think the article is wrong on a number of issues, most notably that CCP’s focus on Virtual Reality is somehow detracting from needed development in EVE Online.
The article begins by stating, “development in EVE currently feels glacial and that features lists appear anemic.” I disagree. While some players may not like the changes that have hit the client in the last 12-18 months, the change in the sovereignty system, the introduction of Citadels and the revamp to capitals were substantial in terms of development time and resources. In the midst of that we’ve also received brand new additions in the form of Tactical and Command Destroyers, numerous modules, as well as new PVE content in the form of Drifters and the various PVE events such as the Crimson Harvest, Operation Frostline and the recent Shadow of the Serpent. Let’s not forget about the module tiericide that has taken place, or the countless “little things” that have come from all dev teams over this period of time.
Yeah, I hated the Phoebe jump changes too. It still pains me, but the fact is that the aggregate changes that have taken place in the last 12-18 months, have been rather considerable. The pace may have seemed glacial at times, but I blame that more on the change in release cadence than the actual scope of deliverables over a similar 12-18 month period during the era of expansions. If we want to talk about glacial, we can certainly go back to the 3 years following the Incarna expansion when CCP spent roughly 3 years “fixing things”. Yes, CCP has made mistakes along the way. Not everything works as planned or as individuals or groups would prefer. Some changes may be outright stupid (cough: nullified interceptors), but I’m not sure disagreeable decisions are an issue of insufficient development resources. Bad decisions, perceived or real, are not rectified by simply throwing more money at the problem.
As for CCP’s focus on expanding its presence into Virtual Reality, I’m not convinced we have evidence that this has in any way held back development of EVE Online. As with any of the past projects that CCP has embarked upon outside of EVE Online, there is absolutely no telling whether the funds that were used by milking the EVE-O cash cow would have found their way into EVE. Its just as feasible that, in the absence of potentially higher-return ventures, CCP would have decided to pay down debt or feed the investors a return by way of dividends. There is simply no indication that further increases in the development budget of EVE Online would have been the appropriate use for this money. As much as we would all like to believe that making the game “better” would directly translate into increased subscriptions, revenues or activity, that might not be the case. The fact is that some players believe right now that EVE is in the best place it ever has been. If that is the case then why aren’t the numbers improving? Perhaps it is because we are experiencing something more structural that is associated with the broader market that EVE inhabits, or with the advanced age of the game and its players; the overall environment of EVE, rather than just the sandbox that CCP has created. Throwing money at that problem isn’t necessarily the answer.
Finally, with regard to the claim of milking EVE to support VR, there is the issue of the $30 million investment from New Enterprise Associates and Novator Partners. According to the press release issued 12 Nov 2015, “The investment will be used to further position the company to drive innovation in VR as the technology begins to transform the entertainment industry.” This investment into the company, notably the VR side of the business, would indicate that not only is CCP confident in their VR venture, but so are outside institutional investors. Perhaps EVE did support the initial foray into the venture, but it now appears that real money sees the growth potential and came to the table in exchange for equity. Sion is correct in questioning what that institutional ownership stake means for the future of the company. Venture capital and private equity firms aren’t interested in cash cows throwing off dividends. These companies are interested in results and growth. However, CCP Games has been majority owned by institutional investors since at least 2010, which was a consideration for some of us when CCP was forced to write-down millions in 2013-2014. However, since that time the company has downsized, restructured their debt, received a sizeable investment, and reported record breaking profits in 2015 despite a decline in total revenue. While CCP may no longer be a cottage-industry company and subject to investor demands, the company appears healthier than ever.
As for CCP’s corporate focus, it is not surprising in the least, nor should it be seen as an abandonment of EVE Online, that CEO Hilmar Pétursson and his team are hell bent on pushing VR hard and fast. Significant investment is being made and CCP holds more than just a niche position in the burgeoning industry. The window of opportunity is now. One cannot decry the failures of past ventures, and then turn around and condemn what appears to be an appropriate business decision. Given it’s position in the product life cycle, that of a late-mature/early-decline stage product, EVE Online no longer demands the same level of attention from corporate leadership as it once did. Even if EVE were still growing in terms of revenues, it is marginal at best, and based on incremental gains from secondary income streams. The potential for high octane growth for the company is tied to Virtual Reality. Thus it is absolutely in the corporate interest of management to focus on this area in terms of how they position the company for the future. That includes where C-suite management spends it’s time, which products it actively promotes to the industry, and the position of the products on the website. If you want to promote yourself as a cutting edge company to the industry, to potential investors, you simply do not position the cutting edge side of the business behind that of a 13-year old product.
As a player of EVE Online, I do not begrudge the company one bit for having milked it’s proverbial cash cow to support growth ventures that will bring CCP Games into the future. Does that mean EVE will be left in the pasture to wander off into the night and die? Absolutely not. Significant company resources continue to be dedicated to the game, both in terms of development as well as in support of the community, in spite of its declining growth potential. If CCP were truly seeking to simply ring up numbers, they could take EVE down a path that opens it up much more broadly to the casual masses. Yet they have not done this. Instead, they are generating supplemental income from areas where some players seem keen to oblige. Merely raising the specter of micro transactions, or hires from Electronic Arts is not an indication that EVE is heading down a slippery slope towards free-to-play or pay-to-win. Maybe that does eventually come to pass and we can debate it at the time. Hopefully our CSM is doing its job. But for now, the incremental growth from PLEX and Aurum-based items is better than increases in subscription fees, and does not appear to be having a deleterious effect on the game. Should that change I am quite certain that we can gear up for Summer of Rage part deux when the time comes.
I tried very hard to avoid white knighting the state of the game when writing this commentary, despite the listing of changes and additions made in the last 12-18 months. That was merely evidence to support the counter claim that quite a bit of actual development has taken place, even if the biggest portions seemed to land all at once. I’m not going to fanboi and say, as some do, that EVE is in the best place it has ever been. From a technical standpoint it may be. EVE may be a “better” game in many ways than it was in some bygone era. Players will have varying opinions on that matter. The fact is that there is a lot more going on here than the shape of the sandbox and the perceived quality of the sand. Sion is correct that the metrics do matter, but it is these metrics that help to drive fundamental corporate decisions of where best to allocate limited resources. Where I believe that he is incorrect is in thinking that EVE is held back due to lack of resources. CCP needs to continue pushing forward and innovating as a company while at the same time properly caring for its aging, but still relevant, source of steady funding.
This article originally appeared on TheMittani.com, written by Dirk MacGirk.
