Originally posted by Dunk Dinkle at https://dunkdinkle.medium.com/the-root-of-all-evil-487ae7807be3?source=rss-325cbe09ecdc——2.
tl;dr: Venture capitalists got their mind on their money and their money on their mind.
CCP was just bought by Pearl Abyss and it’s because the VC investors want their money out. It’s as simple as that.
When many companies start, they need cash to build until they generate revenue. Venture capitalists give startups money in return for partial ownership (stock) in the company. The VC get their money back in three ways; 1) the company goes public and the VC stock can be sold on the market, 2) the company gets bought and the VC is paid out in cash or stock in the acquiring company, or 3) the company gets enough cash to buy out the investors and remain private.
As companies grow, they often need more and more money and reach out to investors for additional money, this is called a funding round. Again, more stock of the company is given to investors in trade for the cash.
CCP has been running for 20 years and has multiple rounds of financing. All those investors want a return on their investment. CCP doesn’t meet the criteria to go public and doesn’t have money to buy out the investors, so they had two options; grow big and keep investors happy the their investment is growing in value more than cash can or sell themselves.
They tried to grow big, but ended up have to sell.
Remember EVE Valkyrie and the VR stuff? Yes? That was CCP’s hope for a stoppage time goal.
When the demo of VR space dogfighting was released, it created a huge wave of interest from the public and other VR companies. CCP raised a round of funding to pay for the VR development. The investors were hoping that the VR game would blow up huge and they’d have their own Fortnite style cash cow.
CCP dumped the money into development, partnered with hardware VR vendors, and made a huge marketing push. The game was fun. But the market for VR games just isn’t there. There was a huge effort at EVE Vegas to promote Valkyrie and stoke a media fire or garner some sort of market justification for continued spending.
However, the sales and adoption metrics were abysmal. In the view of the board of directors and investors the investment in VR was a waste and non-profitable, so CCP was told to kill Valkyrie and cut costs.
Right after EVE Vegas, the hammer fell. Layoffs, facility closing, drama, all the bad things.
Down to their last option, sale, CCP had to show that they were a profitable company, worthy of acquisition. CCP had to push hard to get to profitability without additional investment. You may have noticed the increase in SKINs and sales on other direct revenue products.
The investors wanted their money and a dance began. CCP, wanting to keep EVE a good place for their staff and players, and the investors who wanted their goddamn money and wanted the best price, regardless of what happened to EVE Online afterwards.
That brings us today.
Pearl Abyss now owns CCP and EVE Online. Pearl Abyss is accountable to their own board of directors and investors, who also want their goddamn money. It’s in Pearl Abyss’s best interest to keep EVE Online generating cash to paid down the debt incurred when buying CCP. But have no doubt, they will want CCP to make more money.
The majority shareholder in Pearl Abyss appears to be their founder, a game designer and gamer. How that makes a difference to EVE Online’s path remains to be seen.
For CCP, the immediate stress of the investors breathing down their neck is gone. There is a short breather before they have to deal with the new bosses, who will inevitably bring some changes to increase CCP’s profitability.
What happens next, no one fucking knows, despite the /r/Eve memes.
Take deep breath, relax, wear socks, and sell me some Crystalline Isogen-10.
