CCP has always milked EVE: Online for money. But it is no accident that development in EVE currently feels glacial and that features lists appear anemic. It’s all part of CCP’s continuing business strategy of using their flagship product to fund development in other areas. CCP used profits from EVE to acquire White Wolf, then used profits to develop World of Darkness, Dust 514, Gunjack, and Valkyrie. In that sense, CCP’s focus on sinking money into a non-EVE product is business as usual.
What’s different now is that after 19 years of tanked investments and failed diversification attempts, CCP has less money to throw around. CCP also has less profit to invest in further diversification projects because their corporate budget is zero sum, and they’ve had to raise capital from new investors. What this means is that CCP has less money to reinvest in EVE to help ensure a quality gaming experience, all while continuing to use capital to invest in other areas.
It is therefore no surprise that complaints have been mounting from EVE’s player base about a lack of new content in the virtual universe of New Eden. What is unusual is seeing past proponents of CCP, such as CSM 9 and 10 member Sugar Kyle, highlight the “decade of neglect” with all signs pointing to a dying EVE. It is also highly unusual that CCP game designers have started to publicly express frustration about their inability to address gameplay issues due to being short staffed and shuffled around to different teams. All of this is on the heels of the announcement of a return to named expansions with Citadel, although no timeline or features have been announced for the next expansion, if there even is another expansion on the horizon.
The answer then as to why CCP milks EVE to fund virtual reality (VR) is therefore pretty straightforward–EVE is CCP’s only product that generates revenue. If CCP re-invested in the EVE product itself to deliver a quality experience, the question of why they milk EVE for money wouldn’t be worth examining in any great detail.
What does make this worth exploring is that CCP is crassly positioning itself as a company to catch the VR wave by exploiting its existing customers and employees. In the process, CCP is at best neglecting EVE, and is at worst sending it into a tailspin.
THE SHIFT TO VR
CCP’s CEO Hilmar Pétursson has continued to distance himself from EVE. In a recent interview, Hilmar focused entirely on VR and made little mention of EVE. The recently canceled Dust 514 got more mention, and Hilmar made a point to claim credit for recent profits.
In the interview, Hilmar says, “We are much more gravitated to VR – that plays a lot more to our strengths. VR is a platform unto itself, so that has been a huge focus … we have become a bit of a content leader for VR, so these are the things we will be focused on going forward.” He then continues to stress that CCP will be “focusing more on VR.”
With regards to finances, Hilmar says, “[The layoffs in 2013 and focus on VR] combined have led to a record profit year in the history of the company last year. Our profit was over $20 million, and we also did a financing round at the end of the year where we raised $30 million.”
“We have Eve in Reykjavik” stands as the only direct mention of CCP’s flagship product in the interview.
This interview isn’t the only place where CCP’s focus on VR while ignoring EVE is evident. CCP’s website requires you to scroll all the way to the bottom to get to the EVE product, EVE occupies a subsidiary spot on their product page, and VR gets the sole spotlight on their company page. It isn’t a one-off hype interview by Hilmar pushing VR, but a conscious decision by CCP to bet, and bet big, on VR.
Long-time EVE fans may be surprised to see so little attention paid to CCP’s only revenue-positive product by CCP’s CEO and website. Fan might also be surprised at CCP’s singular focus on VR as the future given their inability to launch other successful products despite two decades and tens of millions of dollars worth of attempts.
The $30 million dollars of venture capital that Hilmar cites in the interview was earmarked entirely for VR–not EVE. That investment means that CCP is now majority owned by venture capital, and in a very real sense no longer controls its own destiny. Industry insiders have speculated that this new money and loss of controlling interest is the real reason behind Hilmar’s and CCP’s C-level move out of Iceland in favor of CCP’s new London office. Industry insiders go on to speculate that while it is true that London is more centrally located in a business sense than Reykjavik, the move also makes it far easier to replace CCP’s executive team–Hilmar included–with non-Icelandic personnel should they choose to do so. Some give this speculation more weight because CCP’s board fired or removed the entirety of CCP’s C-level in 2015, including Hilmar’s hand-picked COO, Jón Hörðdal.
HILMAR’S BIGGEST JESUS FEATURE
Unlike fans and customers who are driven by passion, the venture capital that now runs CCP is driven by one factor and one factor only–money. As CCP attempts to capitalize on their various investments, metrics and data trump vision and shared player history, employees become overhead instead of beloved assets, and everything gets assigned a price tag.
While I was on the CSM, I had a front-row seat to this conflict between player-devs and the business money side. It led to one of the most interesting moments of my tenure as CSM representative. Following the release of Phoebe and Fozziesov, I could see the measurable business metrics start sliding. So at the summer summit during one of the sessions with CCP’s EVE leadership, I asked, “Do you see Phoebe and Fozziesov as a success?”
Both the community manager and executive producer answered at length and enthusiastically in the affirmative, and I let them run through the platitudes before following up with, “Okay, that’s fantastic. So what do the numbers say? Are subs up? Are more new players joining? Is retention up? What do the measurable metrics look like?” There was an extended and awkward moment of silence before they admitted that no, none of those numbers were up, and that at best some parts were holding stable while other areas declined. So I then asked, “Okay, so given that the data indicates further decline, what framework are you using to justify to yourselves that recent design decisions are a success?”
I understand the impetus behind wanting to sell both outsiders and insiders on the success of features that have taken time, effort, and money to build, particularly if the investors and the board are already nervous about the ability of the company to turn their investment into profit. There is always the desire when numbers are low and trending downward to blame factors beyond their control as to why customers are no longer interested in the product they’re selling. “MMO’s have changed.” “Gamers no longer like space games.” “People don’t have enough time.” “It’s too hard.” “It’s summer.” And the list of excuses goes ever on. EVE is a complicated game with a complicated social structure, so it makes a great deal of sense that CCP would want to abandon its more cerebral product in favor of the arcade space shooter Valkyrie. Understanding a space shooter is easy, both for CCP’s management and for their new investors. There’s no need to pitch the subtle nuance of space politics, or explain the complexity of the economy. Spaceships, VR headset, pew pew. An easy pitch. But more than that, too.
VR is the ultimate Jesus feature for which Hilmar is so widely known. Rather than taking the time to engage, understand, and lead with the products he already has, he’s looking for the easy out, the next big thing to prove that EVE wasn’t a mistake, and to validate his leadership.
However, Hilmar’s single-minded focus on this Jesus feature in an emerging aspect of the video game industry makes very little sense. CCP controls a small but entirely unique niche in the gaming world and has no direct competition. CCP has a legion of rabid fans, many of whom have been playing for a decade. In addition to that, the video game industry itself keeps growing. There are millions more gamers in the world now than when EVE launched, and the game industry is bigger than the film industry. CCP has itself churned through millions of customers and potential customers. It would make a great deal of sense to invest in top-tier talent to make the most of their market position to capitalize on their strengths, but that’s not how CCP has ever operated.
Instead, CCP would regularly shunt resources from EVE to other product areas, with universally disastrous results. CCP attempted to produce an MMO based on World of Darkness, and canceled it after nine years of development and untold millions of dollars of investment. CCP’s founder and first CEO Thorolfur Beck said, “It must be one of the biggest write-offs in history, it’s frustrating to see the proceeds of Eve squandered so fruitlessly.” Then CCP’s FPS, Dust 514, failed. Years after World of Darkness was cancelled, CCP realized they did not have the ability to make money from their White Wolf acquisition, and that was sold off to Paradox. This broad-spectrum inability to make profitable investments in developing new products makes CCP-backed VR products a risky proposition–even if VR takes off.
There is of course no stigma in producing a high-quality, well-polished niche product. Building a product that your customers want and that is true to your vision as a corporate entity is a happy spot to be, and an even happier spot to be if there’s no competition. However, that’s not where CCP is. As Hilmar says, CCP wants to move on from EVE, and based on the numbers, their customers do too.
The data we have access to all paints the same picture, a picture of EVE in unprecedented decline. While we don’t have the data that CCP uses internally or the data the venture capital that controls CCP uses, there are a number of our own and public metrics and data sources that we can use to determine a great deal about EVE’s overall numbers. We can also correlate these numbers and tie them to historical data to make reasonable guesses and extract some meaning as to why CCP is neglecting EVE.
TMC publishes a fair amount of EVE articles, and we track hits, authors, and more. Our metrics across the board tend to correlate with peak concurrent users (PCU) and subscriber numbers, which makes intuitive sense. This is true for EN24 and CZ as well. After a brief spike during the war, traffic for all three websites resumed their downward movement across the board. I use the word resumed because a steady fall off in EVE-related traffic started with Phoebe and was exacerbated by Fozziesov. The war spike delayed that trend, but once that was over, it resumed and redoubled. An easy, if imprecise, method to track this correlation can be had at http://www.alexa.com/.
Another data set is streaming data from Twitch’s public API. EVE ranks at 110 on the list of most popular games to stream, with 515 average concurrent viewers, right behind Summoner’s War: Sky Arena. For comparison, League of Legends, ranked at number one, has a whopping 119,580 average concurrent viewers. In terms of highest total viewers ever, EVE’s rank is 1008 with 8027 viewers. The game ranked at 1007 is a game called 100% Orange Juice, which appears to be an anime board game of some sort. Regardless of the passion of its fans, EVE just isn’t that big and doesn’t draw that many eyeballs. From a TMC streaming perspective, we can also correlate game health to our internal show metrics. Those numbers go up during big events such as the last war, but otherwise have been dropping at roughly the same rate we’ve seen with the website post Phoebe and Fozziesov.
Another data set can be found at http://eve-offline.net/, which tracks PCU and average PCU. Let’s look at the last two weeks in EVE:
To get similarly low numbers, we have to go all the way back to 2006-2007:
And finally, over the lifetime of EVE:
To interpret these graphs, it’s necessary to do a bit of digging into the history and to what the numbers themselves mean. In 2006, EVE was riding high, growing year by year, and what would come to be known as The Great War was just kicking off. New empires were born every week, possibilities seemed endless, and the pages of PC Gamer were adorned with the story of the Guiding Hand Social Club’s heist. It is thus unfair and anachronistic to suggest that 20,000 PCU in 2016 means the same thing as 20,000 PCU in 2006–it doesn’t.
It’s also important to note the location of the Incarna crisis on the last graph. The Jita riots kicked off around June 25, 2011 and player rage would simmer even after Hilmar published his apology letter in October (Customers would learn later that Hilmar did not write and might never have even seen the apology letter attributed to him. It was instead, prerhaps appropriately, written by CCP’s fiction team), until the next expansion at the end of the year. The PCU during the Incarna crisis that so shellshocked CCP ran at about 33,000.
To further put these numbers in perspective, we know that in December 2006, EVE had 150,000 subscribers. Though CCP stopped announcing subscriber numbers in February 2013 when they announced that they’d broken half a million subscribers, assuming that gameplay patterns are similar, we can estimate that subscriber numbers now are similar, if not exactly the same, as they were in 2006. The possible–but likely–drop from 500,000 paying customers to 150,000 could be a legitimate business reason for CCP’s move away from EVE.
These numbers mean that–even in a best-case scenario–CCP has been losing subscription revenue at a rate far in excess of what triggered the Incarna panic within the company. CCP would in fact have to nearly double PCU for the game to be at Incarna crisis PCU.
Another source of data is https://www.reddit.com/r/eve/about/traffic/, a public set of stats that help show the popularity and interest in EVE generally. Again, this isn’t a perfect data set, but the trend lines match up with the others:
The data from /r/eve serves primarily as a measuring stick for overall broad-spectrum interest in the game. During high profile events that draw attention, traffic within the subreddit tends to go up. Since CCP has largely abandoned their own forums in favor of /r/eve, this includes events like patch note and releases and the like, but these bumps are far overshadowed by metagame events like the past war and major battles. Recent trends, which are most obvious in uniques per day and pageviews per day, display a distinct downward trend that shows no sign of abating. The post-war pageviews by month graph wouldn’t be unfamiliar to EVE players looking for the familiar slope of a failure cascade.
According to a presentation by CCP Ghost at Fanfest 2016, CCP attracted about 550,000 new customers the previous year. Of that number, roughly 225,000 people quit within two hours. We can then infer, based on the historical PCU data and continued downward pressure on all other metrics, that attrition was either high amongst that cohort, or that EVE lost a huge chunk of existing paying customers.
CCP itself has perfect data on all of this, but the correlation and multiple sources of data tell the same story–despite their best efforts, CCP is losing paying customers at a rate that outpaces the drop during the Incarna crisis, that vastly outpaces their ability to capture new customers, and that shows no signs whatsoever of reversing. Their game design direction isn’t in line with what their customers are looking for, those customers are voting with their wallets, and EVE continues to hemorrhage players.
How then is it that Hilmar is reporting record profits? Since it’s clearly so much worse, why don’t we see the panic of the Incarna crisis from CCP over the loss of customers or Incrana-like drastic measures to retain existing customers?
CCP ENTERS THE EA ERA
We know that CCP has significantly fewer customers than it did in in 2013, which means that CCP is making more money per person than they once were and have likely cut internal costs in various ways. Let’s examine the first part of that to start.
In 2013, CCP hired Sean Decker, formerly of Electronic Arts. At the time, feedback from CCP’s customer base on the hiring was largely negative, due in no small part to Decker’s focus and promotion on microtransactions at EA. It was at that time only two years removed from the microtransactions of designer jeans in the locked-down captain’s quarters of Incarna, and long-time fans feared that the EA model would be brought to EVE and that the overall direction of the game would suffer in favor of making a quick buck. Three years down the road, those fears have been made reality.
Shortly after Decker was hired, EVE saw an explosion of custom skins that has continued unabated to this day. Designer jeans and clothes purchased with real money made a comeback even though all pretense of walking in stations where other players might see your dapper attire had long since been shelved. Indeed, CCP wagered that players would want to spend money on aesthetic features, even if no one else could see them during regular gameplay. It turned out that they bet correctly, and that a subset of players were more than willing to pay for virtual garments and custom ship skins.
CCP took some flak over skins and clothes, which they countered by talking at length about the specialized time required to build these assets. Shortly after that, an embarrassing bug that allowed any skin to be applied to any ship torpedoed CCP’s credibility regarding the difficulty of skin design on a per ship basis, and it was readily apparent that CCP was using skin sales and other microtransactions to supplement dipping subscriber numbers.
Additional microtransactions made their way to New Eden this year when CCP brought skill injectors to the game. This has allowed gambling kingpins to inject $28,000 worth of skill points to do what previously would have been impossible–it allowed them to max out their characters’ skills.
Microtransactions rely on some players spending heavily to balance out those who do not, but that’s primarily a model used in a free-to-play environment. In EVE’s subscription-based environment, microtransactions represent additional income above baseline subscriber numbers and are a large portion of the additional income Hilmar reported in his interview. Decker is very clearly getting his way in setting the direction of EVE. Microtransactions are on the rise, new clothes continue to be made, and new skins are churned out even as player numbers continue to dip and design teams run short staffed. CCP’s art team is now by far the biggest team at the company.
As if Decker’s drive to gut the old spirit of EVE nickel by nickel wasn’t enough, CCP hired another EA marketing executive this year, Maria Sayans, as its chief customer officer. In addition to the doubling down of the microtransaction model this hire represented, it also represented a further shift away from EVE toward VR. While Sayans made no mention of EVE at all, she did say, “I can’t think of a better place to be a part of the VR revolution than CCP. The company’s early leadership in VR and pioneering status in online gaming is quickly translating into real results and we aim to build on and extend that in the coming years.” Again, it’s abundantly clear where CCP’s focus is.
CCP is dedicated to continue traveling the EA route, and some members of the CSM say it indicates CCP’s desire to take EVE into a full microtransaction free-to-play model. There is nothing intrinsically wrong with microtransactions or free-to-play models, and regardless, the argument of if such a model is appropriate to EVE is beyond the scope of this piece. Despite the merits or lack thereof of a microtransaction free-to-play model, what matters is that EVE is itself not in a healthy place. Subscriber numbers are dropping, real money investment in EVE itself has tapered off, and the drive to build a quality product has been supplanted by the desire to make enough money from EVE to survive until the VR explosion carries the company to the next big thing. Which, undoubtedly, will also be funded by microtransactions.
In addition to microtransactions, CCP has cut costs by having multiple rounds of layoffs, by not replacing personnel that depart the company, and by paying rock-bottom industry wages. Cost-cutting measures aren’t limited to human factors, however. For the first time ever, CCP’s server hardware update did not implement cutting-edge technology, and caused some to question why CCP was skimping on their infrastructure. CCP also started shutting offices and consolidating locations.
The other possibility for why CCP isn’t investing in more manpower and better technology for EVE is because they’ve settled into the reality of lower subscriber numbers and don’t believe the investment is warranted with the promise of the endless riches of VR. This is perhaps reasonable, but it does mean that EVE fans will continue to have to wait longer between smaller content updates as their subscription dollars are funneled into VR.
This explanation would also fit with the lack of panic at CCP about the plummeting PCU, and the lack of desire to provide EVE with resources and leadership to properly execute a long-term vision. In the EA model, as long as the company is making money, that’s all that matters. Player social structures, long-term ties, and player history don’t factor into calculations at all. EVE isn’t Battlefield though, and EA doesn’t run gigantic single-shard games that rely on players to create the totality of the content. A highly complex social game requires customers to play and engage with each other, not just engage with CCP and their pocket books. So as the number of players plummets, so too does the social complexity and the possibility of creating dynamic and meaningful stories. Currently, EVE is on the trajectory to lose social critical mass while still delivering profit.
To be clear, this is not another way of saying that EVE is dying. As long as CCP can continue to cut costs and as long as microtransaction whales can keep the lights on, EVE will exist. What made EVE special, and the feeling of endless possibility that existed in 2006, will however be long dead.
As Hilmar hints and the data indicates, the business reality is that EVE has been put on life support maintenance mode to be milked for VR. CCP has very publicly moved on, and with the above data, we have reasonable guesses as to why they have done so. The race is on to keep EVE alive and making money long enough to reap the rewards of all that investment in VR.
Editors Note: This was originally written by Sion Kumitomo for TheMittani.com