A couple weeks back Enad Global 7 issued their financials for the first quarter of 2024 and I was doing something else… I think I was in Ione, CA that day… anyway, I am finally getting around to mentioning it.

Enad Global 7

Not that there is a lot to mention.  The report straight up says it was a quiet quarter with no major releases and an continued decline in users for Big Blue Bubble’s My Singing Monsters title that saw a huge surge in popularity about 18 months back.

• As expected, Q1 was a “quieter” quarter, reflecting limited planned releases
  • No major product and content releases for the period
  • MSM lower level performance as expected
  • Market weakness pressuring our 3rd party service business units

They didn’t even follow up on the Q4 2023 surprise announcement about the sale of the PlanetSide IP, though we did find out later that the IP somehow ended up with Toadman, another of EG7’s studios, leaving one to wonder what was going on.  No further details have been provided.

So earning were down in Q1 2024.  All that quiet.

The LTM side of the chart are the “last twelve months” totals marked every quarter, which is supposed to more indicative of how the company is doing overall than a strictly quarter focused view… and EG7 is down on that view as well.

Summing up the quarter in the chart they showed who was contributing to the bottom line.

Contributions to revenue by group

As noted above, My Singing Monsters was down, but our friends at Daybreak were chugging along as expected in a quarter with no big releases.

Earnings for Daybreak and Big Blue Bubble

Daybreak was even up a bit in Q1 and has held steady during the rise and decline of My Singing Monsters.  But Daybreak has a few “medium” events in 2024 to keep it going as this chart indicates.

The Plan for 2024… caveats excepted

The only “large” event for the year is MechWarrior 5: Clans.

As part of this quiet quarter EG7 took a moment to remind people that things are bad all over in  the video game market, but they are sticking to their goad of 3 Billion SEK in earnings in 2026, with that growth kicking in any minute now.

The promised future

We’ll see how that shakes out with the Q2 results.

But next up, on June 7th, is the first dividend payment, the reaction to capital management investors demanding that EG7 not hold cash reserves when they could be just handing that money to shareholders.  EG7 is taking a cautious approach to that, but the shareholder meeting coming up on June 19th will no doubt be a sounding as to whether to voracious maw of Wall Street is momentarily sated or if they will demand more.

Also, I missed when EG7 released their final 2023 company report.  That is worth a glance and I linked it at the end of the post along with all the usual suspects.  I did pull a couple of charts out just because I thought they were interesting.

The first is the staffing levels of the various units that are part of EG7, totaling up to 736 people.

Where the staff are at EG7

The Daybreak total at the end of 2023 was 264 people (about as many as I hear work on World of Warcraft these days) or about 36% of EG7’s total, broken out into the following groups:

• Daybreak – Standing Stone (LOTRO/DDO) – 60
• Daybreak – Developer & Publisher – 59
• Daybreak – Darkpaw (EQ/EQII) – 53
• Daybreak – Dimensional Ink (DCUO) – 49
• Daybreak – Rogue Planet (PlanetSide 2) – 27
• Daybreak – Magic Online – 16

And then there was a chart about some random demographic metrics for the company which they decided to report on.

Accident free in 2023

Cyber attacks were down, as were reported sick days.  I imagine those sick days were all reported in Europe where they require those sorts of benefits by law.  Meanwhile, female staff declined in a number of groups… though the seem to be sneaking in a new female member of the board as according to the report she was only elevated in 2024.  Details.

Anyway, EG7 made the “slow quarter” excuse, which you can do once in a while.  Now to see if they can light a fire under Q2.  If they don’t the capital management investors may start howling again for the company to be parted out and sold again.

Related:

• EG7 – Investor Relations Page
• EG7 – Q1 2024 Interim Report
• EG7 – Q1 2024 Investor Presentation
• EG7 – 2023 Annual Report
• Simply Wall St – There’s A Lot To Like About EG7’s Upcoming Dividend
• Massively OP – EG7 Q1 2024: Daybreak still mum on PlanetSide 2, new H1Z1 game hires lead designer
• Massively OP – EG7’s 2023 annual report claims Daybreak and SSG collectively count 264 staffers

In this “Year of Darkpaw” and all things Norrath, I haven’t spent much time writing about EverQuest II, the younger sibling of the EverQuest duo.  But it is part of the year with its 20th anniversary landing in November.

As part of the celebration on the EQII side of the house, there has been a planned special server on the roadmap since the start of the year, with June as a launch target.  We got a bit more info about the server in the April Producer’s Letter, which said it was going to take us back to 2006.

Anashti Sul – We’ll get to her in a bit

And while just being told that doesn’t feel like much, it is actually kind of a big statement.  Also, you might note, 2006 isn’t “20 years ago” so they are jumping ahead a bit in the life of the game.  As I noted at the time on the post over at Massively OP, 2006 means no going back to the original crafting and some of the other ideas that did not pan out very well at launch.

I am sure there are still a few purists out there who will bemoan the fact that we won’t be going back to four level combines to produce finished items and having to get crafting materials from two or three other professions to get anything done.  Having lived through it, I know the highs and the lows of that system.  In the end though, the reason cooking was so popular was you didn’t need to depend on anybody else.  As like as not trying to go back to that with the current client would be prohibitively expensive… and for a very short term benefit.

This server will unlock expansions fast enough that the first two years out of a 20 year progression will go by fast and we’d be to the current crafting system in no time.  So best not to bother if it is going away in any case.

As Bhagpuss said at one point, we’re going back to the era when Scott Hartsman was directing the show and the game went from trying to have a split personality that both acknowledged the old game and pretended it had nothing to do with it as it tried to forge a completely independent lore path.  But with the 2006 Echoes of Faydwer expansion the game got back on board and embraced its Norrath identity and sought to build on it, returning to old locations time and again.

And it was good.  Echoes of Faydwer was a big freaking deal, a welcome change in direction for the game that helped it find its place in the SOE ecosystem and probably got some early players to come back and commit to it.  This blog is just old enough that I was writing about Echoes of Faydwer at launch.

Echoes of Faydwer

See, just that little tidbit of information got me going on about it as a choice even though we hadn’t been told anything about the server rules itself.  But last week we got some actual meat, including the server name, Anashti Sul, which hearkens back to the Desert of Flames, the first EQII expansion… that is her picture up at the top of the post… and one of those that sought to blaze a new trail on the lore front.

So what have we been told?  Here is what we have so far:

• There will be no spell research.
• Krono will not be able to be consumed, traded, or sold on an Origins server.
• There will be a 6-week Beta to ensure we cover a wide breadth of testing.
• Attributes have restored secondary functionality, agility will help avoid melee attacks, intelligence will increase ability potency, strength will increase melee damage, and wisdom will grant extra resistance.
• All bosses will be original stat/buff packages.
• No weight. It could not be restored.
• Unlocks have not been decided yet, however we do have new forums, and we will be able to poll and discuss unlocks before we launch.
• No holiday events.
• There will be a marketplace, but it will be very limited.
• It will not be free trade.
• This server is on its own design depot.
  • This is the first time for this type of separation for EverQuest II.
  • It cannot be affected by Live design updates, and vice versa.
  • Code and Art are still across all server types, for a variety of reasons. For example, connections to external or shared resources such as Database, Authentication, etc. have completely changed over the years.
• Freeport and Qeynos are back to old school, in both appearance and functionality.
  • Livable neighborhoods, and their quests, are back! With the scope of the changes, these will need a lot of testing.
• No persistent instances.
• No tradeskill subcombines.
  • The current build is right after subcombines for crafting were removed.

That this is an “origins” server, a new type of special server, seems to say that the team is committing to the special nostalgia server concept more so than previously.  It is quartered off in its own “design depot” so likely doesn’t have to get updates in lock step with the live servers.

That means that they can go back to some old stuff.  Yes, we had the Isle of Refuge previously, but now we’re going to get original, old school Qeynos and Freeport, complete with the racial neighborhood ghettos… though I still feel that barbarians and dwarves got the short end of the stick being lumped together in one generic area while gnomes got a sprocket theme park.

No free trade, so there will be bind on pickup items from bosses, no holiday events, which would probably break with the older version of the cities, and a limited marketplace, which is the Darkpaw term for the cash shop.  I will be interested to see what is in that cash shop.

Krono, the Norrathian PLEX substitute, won’t be available on the server either.  You will have to grind mobs for you copper like everybody else.

Which reminds me, did mobs drop coins by 2006?  At launch SOE was extremely paranoid about the economy and inflation so mobs dropped no coins, only things that you might sell to a vendor later.  Will we start past that?

It is interesting that they couldn’t restore item (and coin) weight to the game.  But, like the old crafting system, it has ceased to be relevant by 2006.  Every time a new expansion lands everybody got big stat increases from gear, so strength stopped being much of a gate.  I was carrying around storage crates at one point, something that would drag your mobility down to nearly nil at launch, by the time Kunark hit in EQII.  It became something that merely punished low level players without being at all a limit at level cap, so I am not sad to see it is being left out.

The one thing left out is what the expansion unlock cadence will be.  I am sure it will move lickety split when compared to WoW progression servers, which are four and a half years in and only three expansions have dropped.  But will they move too fast?  It is a hard balance.

It all sounds interesting.  I am just not sure at this point whether it will be something I can commit to.  The game was solo friendly by 2006… another thing about 2004 is that beyond a certain point overland zones were balanced around group play… but it could also be pretty grindy.  I might find some time to peek in and look at the old versions on Qeynos and Freeport.

Related:

• Darkpaw – April 2024 Producer’s Letter
• Darkpaw – Anashti Sul Beta Announcement
• Darkpaw – How to Participate in Beta
• Inventory Full – Anashti Sul or She Who Could Not Be Destroyed

It is going to be one of those Fridays where I am going to uncork a bottle of frustration and rant a bit about various business deals and statements, each of which has managed to make me progressively more annoyed.  When I started this post I thought I might have to divert to Twitter to add in some of the more recent screw ups Elon has made.  But no, the video game industry continues to provide, and the main problem was limiting myself to a few stories and ranking them in the order of how likely they were to make my head explode.

• EG7 Sold PlanetSide and then What Happened?
  

Back in the EG7 Q4 2023 financials it was stated that the PlanteSide IP had been sold.  The actual mention was:

Daybreak successfully closed on the sale of a non-core IP for USD 5.9 million. The transaction provides EG7 with further improvement to its liquidity. This transaction will not affect EG7´s business plan and performance other than the P&L effect from the asset sale.

Closed a deal!  Sold the IP!  That must mean something, right?  A publicly held company can’t just straight up lie about this sort of thing, can they?

It came out later that PlanetSide was the IP in question and that the trademarks had been transferred to Bay Tower, a private equity firm, but that there was some sort of Jason Epstein connection in that and what the hell was that even about and what did it mean to the actual game, PlanetSide 2?  Let me just repost all the links from that point in time in case you are interested.

• • EG7 – Investor Relations Page
  • Massively OP – EG7 Q4 2023
  • Massively OP – Daybreak sold PlanetSide for $5.9M
  • Game Whisperer – PlanetSide IP sold to Shell Corporation
  • Inventory Full – Games for Sale
  • Massively OP – Daybreak’s DC Universe Online studio Dimensional Ink hit with layoffs
  • Gaming Idustry.biz – Daybreak confirms “less than 15” layoffs

And I guess we don’t know the answer to a lot of that, but apparently PlanetSide 2 has been moved within Enad Global 7 to fall under Toadman, the smallest of the EG7 studios, which posted a net loss of $5 million SEK in Q4 2023.

That toad looks like he works in capital management

So now they had PlanetSide 2, in contention for the worst performing title in the Daybreak stable, has been moved to the worst performing studio in EG7’s stable.

Yay?

Some coverage:

• • Massively OP – EG7 transfers PlanetSide 2 development from Daybreak to Toadman
  • MMO Bomb – Remember How Daybreak Sold the Planetside IP?

Still, I should not be too hard on Toadman as, on their site they say they have done work for hire for a range of Daybreak titles including PlanetSide 2 and might have been responsible for the console port.  Maybe them taking over PlanetSide 2 will mean a PlayStation 5 native client for the title?  Who knows?

Meanwhile, that still doesn’t answer the question about the IP being sold, who really owns it, why they bought it, what they plan to do with it, or what it means to EG7, though I suspect part of the sale must had included the right to keep using the IP for PlanetSide 2 because to do otherwise would have been insane.

• UbiSoft Says Screw You to fans of The Crew

Back on the first of the year I made a prediction that UbiSoft would do something that would piss me off, and thus help sustain me in my beyond two decades grudge against the studio.  And, of course, they obliged almost right away by declaring their Skull & Bones title a AAAA game.

But, just in case that wasn’t enough, we have how they are handling The Crew, their 2014 racing title, which they are pulling the plug on and removing from player libraries.  If you try to find the copy of The Crew you paid $60 for, UbiSoft will suggest maybe you should buy something new rather than playing that raggedy old title.  They managed to come across so badly that the whole thing is driving a call for game preservation.  Some coverage:

• Massively OP – Ubisoft pulls The Crew 1 from player libraries, encourages them to ‘check the store to pursue your adventures’
• Massively OP – Stop Killing Games is a modern games preservation initiative prompted by The Crew’s cynical sunset
• MMO Bomb – Ubisoft’s “The Crew” Fiasco Is Just One Example Of Why We Need Games Preservation And Physical Media

Now, live service games are always going to be problematic in this arena.  At some point the game will stop earning enough money to pay to keep the servers running… and keeping the servers running costs more than you probably imagine.

On the other hand, a title that charges full price up front better have a plan for when the servers go down.  The servers to support the back end portions of Pokemon Diamond & Pearl were taken down years ago, but I can dig out my old cobalt blue Nintendo DS Lite and STILL PLAY the core portion of those titles.

Saying “Screw you, buy another game!” and yoinking purchases out of player libraries is not a plan, it is a way to bring the wrath of fans down on you.

This is UbiSoft management just being their usual shitty selves.  Business as usual.  I vowed not to give them another nickel when they made it clear they hated their customers more than 20 years ago, and they continue to keep proving it every year for me.

• Mike Ybarra say Let Them Eat Tips!

I was vacillating between making this its own Quote of the Day post or just ignoring it completely because it was so dumb, then hit a middle ground an decided it fit into this piece.  Mike Ybarra, former head of Blizzard, thinks we should be able to tip devs if they make a good game.

That is pretty innocuous in and of itself.  A charmingly naive desire to reward somebody for making a good game would earn a pat on the head from many sources.

However, a former President of Blizzard who demonstrated no issue with paying women less than men for the same job, only giving a mild bleat when Jen Oneal resigned because she was being paid less as Co-President of Blizzard in partnership with Ybarra, and who was blatantly trying to gaslight employees by pleading poverty while cutting bonuses for those outside the executive management boys club, coming out with that sort of statement against the background of mass layoffs in the video game industry just proves he is either completely unaware of reality or a complete shitheel… though, as always, I have to add “why not both?”

People rightfully dogpiled on his since edited tweet to point out the many problems with his sentiment.  Leaving aside the whole “everybody wants tips these days” and the fact that any such mechanism would likely go to the publisher who would extract their cut before passing anything on to the people who did the actual work, the whole thing would encourage publishers and executives to keep industry salaries low by pointing out that tips were now considered part of the compensation package.

If you want to help somebody out, but another copy of an indie dev title you played the hell out of.  That will probably help somebody.  But tips… those will go into somebody elses’ pocket without a doubt.

Coverage:

• Massively OP – Former Blizzard boss Mike Ybarra thinks players should be able to tip developers for their work
• Rock Paper Shotgun – Former Blizzard boss reckons you should be able to tip developers ‘another $10 or $20’ on top of $70 games

Also, here’s to hoping Mike Ybarra fades into even greater irrelevance so I won’t feel the need to ever mention him again.

• The Strains of Im-Possibility Space

We got something of a two-fer from Jeff and Annie Delisi Strain, the husband and wife duo who run/ran Prytania Media which funded several game studios.

The first up was the abrupt closure of Crop Circle Games, which was shut down in late March with little notice and no severance for employees.  A publisher treating game devs as disposable trash?  Must be a day that ends in “Y” I guess.  Crop Circle’s site was replaced by a terse statement about being able to secure funding after two years.  Normal industry stuff, callous but no surprise.

The weird bit is that on April 4th Annie Delisi Strain appended a long rambling statement making the whole situation about herself and the fact that Kotaku reporter Ethan Gach was going to bring her health issues into a story (something that never happened and Kotaku denies was ever planned) that was so strange that even an AI wouldn’t be that incoherent.

Once that bizarre addition got some attention, the site was shut down completely, but not before I went and made sure the Internet Archive had backed it up.  When gaming execs show you who they really are, don’t let them memory hole it later.

Then, a week or so later, Jeff Strain announced another sudden studio shut down (images of his statement), Possibility Space, this time because he alleges that employees were leaking information about their project to the press.  The common thread here is again Kotaku, which was implicated as the reason, with their reporter Ethan Gach being named once more.

“Somebody leaked something so let’s burn the place down!” isn’t a normal business take.

Sure, the games industry isn’t doing well right now, contracting as it is from the pandemic highs when we all stayed home and added to our Steam library in search of distraction, so there are lots of reasons studios shut down.  But when your funding publisher shuts down two studios while attempting to blame one reporter at Kotaku… well, it feels more like the Strains live in some sort of paranoid bubble where Kotaku is out to get them.

• Pity Poor Naive Lars who Blew Up Embracer Group!  Oops!
  

Then we’re back to the Embracer Group, which has been struggling to survive by shutting down projects and laying of developers, all due to some extremely poor and dubious even at first glance business decisions made by CEO Lars Wingefors… who still has his job.

Embrace This

But in an interview over at IGN about Embracer Group Matthew Karch, who is CEO of Sabre Interactive, which managed to break free of the disaster that is Embracer, paints a picture of Lars merely being naive and feels that people are being unfair.  While the interview covers other topics, other sites like Game Developer immediately picked up apologist nature of Karch’s statements.  Incredulity was a common response.

The only things I can come up with for Karch’s narrative is that there is a non-disparagement aspect to his contract taking Sabre out of Embracer’s grip, that he doesn’t want to say anything that will come back to haunt him if/when he too turns out to be an incompetent boob and lays off a bunch of staff, or just solidarity among the capitalist class and feeling the need to protect themselves from all those greedy workers demanding to be paid, as they really eat into CEO bonus potential.

Anyway, back here on planet earth Lars Wingefors, whose compensation package no doubt dwarfs any of the people who actually make the things that Embracer sells, is paid based on the clearly flawed assumption that he is SO SMART AT BUSINESS.   Yet he foolishly bet on the line always going up despite obvious signs there was going to be a reduction in demand, negatively impacted the lives of thousands of people.   And in doing that, the only consequence he has suffered is being publicly called out for it… and dammit, Matthew Karch says that is going way too far!  CEO’s have feelings too man!

It is clearly too much to ask that a CEO be at all responsible for their decisions.  Accountability is for suckers.  Get a job where other people have to pay for your mistakes.

Maybe CEO should get tips.

• Random Rant about Private Equity

Then, not really on the topic of video games, I saw a nice article over at Vox about how private equity firms… also known as equity management and other innocuous terms… have been simply destroying everything they touch in the name of milking every last cent out of companies and then casting them aside to let them fail.

• Vox – What is private equity, and why is it killing everything you love?

They kick off with the example of Toys R Us and how it was bought stripped, and left to die as a deliberate business plan, but you can find many more examples.  The plan is to find the victim target for the same tactic, where a private equity firms buys it out, brings it private, loots it of all value, saddles it with debt, then had a final cash grab by going public with it again in the hope that a familiar name would fool people.

It happens over and over again and the firms that do it set everything up so they get the cash but bear none of the responsibility for what they have done.  Anyway, if you want to get mad, you can read that and how even Taylor Swift has had to fight the vultures of private equity.

There is the constrain refrain from the boss class in the US about “nobody wants to work anymore” that one can trace back over 100 years that is mostly a lament that people kind of expect to be able to live on their wages.

The irony in that is today it feels like nobody on Wall Street wants to run a business, they just want to get paid, either by demanding companies deliver all profits directly to them or through these private equity looting frenzies that destroy a company in the long term in order to get paid today.

We need more regulation in the market.  That’s it.  That’s the message.

It is going to be one of those Fridays where I am going to uncork a bottle of frustration and rant a bit about various business deals and statements, each of which has managed to make me progressively more annoyed.  When I started this post I thought I might have to divert to Twitter to add in some of the more recent screw ups Elon has made.  But no, the video game industry continues to provide, and the main problem was limiting myself to a few stories and ranking them in the order of how likely they were to make my head explode.

• EG7 Sold PlanetSide and then What Happened?
  

Back in the EG7 Q4 2023 financials it was stated that the PlanteSide IP had been sold.  The actual mention was:

Daybreak successfully closed on the sale of a non-core IP for USD 5.9 million. The transaction provides EG7 with further improvement to its liquidity. This transaction will not affect EG7´s business plan and performance other than the P&L effect from the asset sale.

Closed a deal!  Sold the IP!  That must mean something, right?  A publicly held company can’t just straight up lie about this sort of thing, can they?

It came out later that PlanetSide was the IP in question and that the trademarks had been transferred to Bay Tower, a private equity firm, but that there was some sort of Jason Epstein connection in that and what the hell was that even about and what did it mean to the actual game, PlanetSide 2?  Let me just repost all the links from that point in time in case you are interested.

• • EG7 – Investor Relations Page
  • Massively OP – EG7 Q4 2023
  • Massively OP – Daybreak sold PlanetSide for $5.9M
  • Game Whisperer – PlanetSide IP sold to Shell Corporation
  • Inventory Full – Games for Sale
  • Massively OP – Daybreak’s DC Universe Online studio Dimensional Ink hit with layoffs
  • Gaming Idustry.biz – Daybreak confirms “less than 15” layoffs

And I guess we don’t know the answer to a lot of that, but apparently PlanetSide 2 has been moved within Enad Global 7 to fall under Toadman, the smallest of the EG7 studios, which posted a net loss of $5 million SEK in Q4 2023.

That toad looks like he works in capital management

So now they had PlanetSide 2, in contention for the worst performing title in the Daybreak stable, has been moved to the worst performing studio in EG7’s stable.

Yay?

Some coverage:

• • Massively OP – EG7 transfers PlanetSide 2 development from Daybreak to Toadman
  • MMO Bomb – Remember How Daybreak Sold the Planetside IP?

Still, I should not be too hard on Toadman as, on their site they say they have done work for hire for a range of Daybreak titles including PlanetSide 2 and might have been responsible for the console port.  Maybe them taking over PlanetSide 2 will mean a PlayStation 5 native client for the title?  Who knows?

Meanwhile, that still doesn’t answer the question about the IP being sold, who really owns it, why they bought it, what they plan to do with it, or what it means to EG7, though I suspect part of the sale must had included the right to keep using the IP for PlanetSide 2 because to do otherwise would have been insane.

• UbiSoft Says Screw You to fans of The Crew

Back on the first of the year I made a prediction that UbiSoft would do something that would piss me off, and thus help sustain me in my beyond two decades grudge against the studio.  And, of course, they obliged almost right away by declaring their Skull & Bones title a AAAA game.

But, just in case that wasn’t enough, we have how they are handling The Crew, their 2014 racing title, which they are pulling the plug on and removing from player libraries.  If you try to find the copy of The Crew you paid $60 for, UbiSoft will suggest maybe you should buy something new rather than playing that raggedy old title.  They managed to come across so badly that the whole thing is driving a call for game preservation.  Some coverage:

• Massively OP – Ubisoft pulls The Crew 1 from player libraries, encourages them to ‘check the store to pursue your adventures’
• Massively OP – Stop Killing Games is a modern games preservation initiative prompted by The Crew’s cynical sunset
• MMO Bomb – Ubisoft’s “The Crew” Fiasco Is Just One Example Of Why We Need Games Preservation And Physical Media

Now, live service games are always going to be problematic in this arena.  At some point the game will stop earning enough money to pay to keep the servers running… and keeping the servers running costs more than you probably imagine.

On the other hand, a title that charges full price up front better have a plan for when the servers go down.  The servers to support the back end portions of Pokemon Diamond & Pearl were taken down years ago, but I can dig out my old cobalt blue Nintendo DS Lite and STILL PLAY the core portion of those titles.

Saying “Screw you, buy another game!” and yoinking purchases out of player libraries is not a plan, it is a way to bring the wrath of fans down on you.

This is UbiSoft management just being their usual shitty selves.  Business as usual.  I vowed not to give them another nickel when they made it clear they hated their customers more than 20 years ago, and they continue to keep proving it every year for me.

• Mike Ybarra say Let Them Eat Tips!

I was vacillating between making this its own Quote of the Day post or just ignoring it completely because it was so dumb, then hit a middle ground an decided it fit into this piece.  Mike Ybarra, former head of Blizzard, thinks we should be able to tip devs if they make a good game.

That is pretty innocuous in and of itself.  A charmingly naive desire to reward somebody for making a good game would earn a pat on the head from many sources.

However, a former President of Blizzard who demonstrated no issue with paying women less than men for the same job, only giving a mild bleat when Jen Oneal resigned because she was being paid less as Co-President of Blizzard in partnership with Ybarra, and who was blatantly trying to gaslight employees by pleading poverty while cutting bonuses for those outside the executive management boys club, coming out with that sort of statement against the background of mass layoffs in the video game industry just proves he is either completely unaware of reality or a complete shitheel… though, as always, I have to add “why not both?”

People rightfully dogpiled on his since edited tweet to point out the many problems with his sentiment.  Leaving aside the whole “everybody wants tips these days” and the fact that any such mechanism would likely go to the publisher who would extract their cut before passing anything on to the people who did the actual work, the whole thing would encourage publishers and executives to keep industry salaries low by pointing out that tips were now considered part of the compensation package.

If you want to help somebody out, but another copy of an indie dev title you played the hell out of.  That will probably help somebody.  But tips… those will go into somebody elses’ pocket without a doubt.

Coverage:

• Massively OP – Former Blizzard boss Mike Ybarra thinks players should be able to tip developers for their work
• Rock Paper Shotgun – Former Blizzard boss reckons you should be able to tip developers ‘another $10 or $20’ on top of $70 games

Also, here’s to hoping Mike Ybarra fades into even greater irrelevance so I won’t feel the need to ever mention him again.

• The Strains of Im-Possibility Space

We got something of a two-fer from Jeff and Annie Delisi Strain, the husband and wife duo who run/ran Prytania Media which funded several game studios.

The first up was the abrupt closure of Crop Circle Games, which was shut down in late March with little notice and no severance for employees.  A publisher treating game devs as disposable trash?  Must be a day that ends in “Y” I guess.  Crop Circle’s site was replaced by a terse statement about being able to secure funding after two years.  Normal industry stuff, callous but no surprise.

The weird bit is that on April 4th Annie Delisi Strain appended a long rambling statement making the whole situation about herself and the fact that Kotaku reporter Ethan Gach was going to bring her health issues into a story (something that never happened and Kotaku denies was ever planned) that was so strange that even an AI wouldn’t be that incoherent.

Once that bizarre addition got some attention, the site was shut down completely, but not before I went and made sure the Internet Archive had backed it up.  When gaming execs show you who they really are, don’t let them memory hole it later.

Then, a week or so later, Jeff Strain announced another sudden studio shut down (images of his statement), Possibility Space, this time because he alleges that employees were leaking information about their project to the press.  The common thread here is again Kotaku, which was implicated as the reason, with their reporter Ethan Gach being named once more.

“Somebody leaked something so let’s burn the place down!” isn’t a normal business take.

Sure, the games industry isn’t doing well right now, contracting as it is from the pandemic highs when we all stayed home and added to our Steam library in search of distraction, so there are lots of reasons studios shut down.  But when your funding publisher shuts down two studios while attempting to blame one reporter at Kotaku… well, it feels more like the Strains live in some sort of paranoid bubble where Kotaku is out to get them.

• Pity Poor Naive Lars who Blew Up Embracer Group!  Oops!
  

Then we’re back to the Embracer Group, which has been struggling to survive by shutting down projects and laying of developers, all due to some extremely poor and dubious even at first glance business decisions made by CEO Lars Wingefors… who still has his job.

Embrace This

But in an interview over at IGN about Embracer Group Matthew Karch, who is CEO of Sabre Interactive, which managed to break free of the disaster that is Embracer, paints a picture of Lars merely being naive and feels that people are being unfair.  While the interview covers other topics, other sites like Game Developer immediately picked up apologist nature of Karch’s statements.  Incredulity was a common response.

The only things I can come up with for Karch’s narrative is that there is a non-disparagement aspect to his contract taking Sabre out of Embracer’s grip, that he doesn’t want to say anything that will come back to haunt him if/when he too turns out to be an incompetent boob and lays off a bunch of staff, or just solidarity among the capitalist class and feeling the need to protect themselves from all those greedy workers demanding to be paid, as they really eat into CEO bonus potential.

Anyway, back here on planet earth Lars Wingefors, whose compensation package no doubt dwarfs any of the people who actually make the things that Embracer sells, is paid based on the clearly flawed assumption that he is SO SMART AT BUSINESS.   Yet he foolishly bet on the line always going up despite obvious signs there was going to be a reduction in demand, negatively impacted the lives of thousands of people.   And in doing that, the only consequence he has suffered is being publicly called out for it… and dammit, Matthew Karch says that is going way too far!  CEO’s have feelings too man!

It is clearly too much to ask that a CEO be at all responsible for their decisions.  Accountability is for suckers.  Get a job where other people have to pay for your mistakes.

Maybe CEO should get tips.

• Random Rant about Private Equity

Then, not really on the topic of video games, I saw a nice article over at Vox about how private equity firms… also known as equity management and other innocuous terms… have been simply destroying everything they touch in the name of milking every last cent out of companies and then casting them aside to let them fail.

• Vox – What is private equity, and why is it killing everything you love?

They kick off with the example of Toys R Us and how it was bought stripped, and left to die as a deliberate business plan, but you can find many more examples.  The plan is to find the victim target for the same tactic, where a private equity firms buys it out, brings it private, loots it of all value, saddles it with debt, then had a final cash grab by going public with it again in the hope that a familiar name would fool people.

It happens over and over again and the firms that do it set everything up so they get the cash but bear none of the responsibility for what they have done.  Anyway, if you want to get mad, you can read that and how even Taylor Swift has had to fight the vultures of private equity.

There is the constrain refrain from the boss class in the US about “nobody wants to work anymore” that one can trace back over 100 years that is mostly a lament that people kind of expect to be able to live on their wages.

The irony in that is today it feels like nobody on Wall Street wants to run a business, they just want to get paid, either by demanding companies deliver all profits directly to them or through these private equity looting frenzies that destroy a company in the long term in order to get paid today.

We need more regulation in the market.  That’s it.  That’s the message.

Fippy Fest is coming!

Celebrating the Year of Darkpaw

Wait, what is Fippy Fest?

On Saturday, June 15th 2024, Enad Global 7… erm… Daybreak… no, not quite right… Darkpaw Games, the Enad Global 7 studio under the Daybreak Games… and I snicker every time I say that aloud as it sounds like “they break games” when I do… which is responsible for the two EverQuest titles, is holding a live online event to celebrate EverQuest, EverQuest II, which is part of the Year of Darkpaw events for the respective 25th and 20th anniversaries of the two titles this year.

Sorry, I may have gotten carried away and that last sentence somehow became a paragraph.

Sure, Blizzard can woo away Holly Longdale and borrow heavily from the EverQuest nostalgia playbook, but two can play at that game!

So Darkpaw is going to have an online Fanfest come June, their own version of BlizzConline I suppose, called Fippy Fest.

From the sound of it general access will be free and you will be able to watch the panels and such, but if you opt-in for paid access you will be able to aske questions live during the event as well as getting in-game items to commemorate the event.

But wait, there’s more.

For a few special individuals there will be tickets available to attend the event in person down in San Diego.  The number of tickets available for those wanting to attend live hasn’t been declared, the company has only said the following:

We are keeping the in-person event small and intimate as we delve back into the realm of in-person events.

This might be the first in-person Fanfest-like event since the end of the SOE days.  It has been at least a decade.  (There was some other “fans invited” event at their offices a few years back, but it felt a little more ad hoc.)

Depending how small they are keeping the in-person side of things, these tickets might be more exclusive than any BlizzCon ticket.

Anyway, tickets go on sale at 6pm Pacific time today.  No pricing has been announced yet.

In addition to Fippy Fest, Darkpaw has announced that they will be attending Pax East in March as well.  They are getting out there to celebrate the Year of Darkpaw.

Here is the link to purchase tickets:

• Fippy Fest Tickets

Sticker shock warning.  Digital tickets come in a variety of flavors with different rewards:

• Fan – $50
• Booster – $100
• Patron – $150
• VIP – $250

You do have to pick whether or not you want rewards for EverQuest or EverQuest II.

But if you want to attend in person the ticket will run you $1,500. over at Everbrite.

How badly do you want to go to this event?

Get the fuck out of here.  I mean, the digital event prices seem a bit steep, even if they are somewhat volentary.  You are paying to be able to ask questions live and for some in-game items.  But the price for in person… you really have to love Norrath if you’re going to put out that amount.

But, I am sure someone will pay it.

Related links, each title featuring its own item rewards:

• Daybreak – Introducing Fippy Fest 2024! (EverQuest version)
• Daybreak – Introducing Fippy Fest 2024! (EverQuest II version)
• Daybreak – Introducing Fippy Fest 2024 – Forum Thread (EverQuest version)
• Daybreak – Introducing Fippy Fest 2024 – Forum Thread (EverQuest II version)
• The EverQuest Show – Episode 24: PAX East and Fippy Fest

Fippy Fest is coming!

Celebrating the Year of Darkpaw

Wait, what is Fippy Fest?

On Saturday, June 15th 2024, Enad Global 7… erm… Daybreak… no, not quite right… Darkpaw Games, the Enad Global 7 studio under the Daybreak Games… and I snicker every time I say that aloud as it sounds like “they break games” when I do… which is responsible for the two EverQuest titles, is holding a live online event to celebrate EverQuest, EverQuest II, which is part of the Year of Darkpaw events for the respective 25th and 20th anniversaries of the two titles this year.

Sorry, I may have gotten carried away and that last sentence somehow became a paragraph.

Sure, Blizzard can woo away Holly Longdale and borrow heavily from the EverQuest nostalgia playbook, but two can play at that game!

So Darkpaw is going to have an online Fanfest come June, their own version of BlizzConline I suppose, called Fippy Fest.

From the sound of it general access will be free and you will be able to watch the panels and such, but if you opt-in for paid access you will be able to aske questions live during the event as well as getting in-game items to commemorate the event.

But wait, there’s more.

For a few special individuals there will be tickets available to attend the event in person down in San Diego.  The number of tickets available for those wanting to attend live hasn’t been declared, the company has only said the following:

We are keeping the in-person event small and intimate as we delve back into the realm of in-person events.

This might be the first in-person Fanfest-like event since the end of the SOE days.  It has been at least a decade.  (There was some other “fans invited” event at their offices a few years back, but it felt a little more ad hoc.)

Depending how small they are keeping the in-person side of things, these tickets might be more exclusive than any BlizzCon ticket.

Anyway, tickets go on sale at 6pm Pacific time today.  No pricing has been announced yet.

In addition to Fippy Fest, Darkpaw has announced that they will be attending Pax East in March as well.  They are getting out there to celebrate the Year of Darkpaw.

Here is the link to purchase tickets:

• Fippy Fest Tickets

Sticker shock warning.  Digital tickets come in a variety of flavors with different rewards:

• Fan – $50
• Booster – $100
• Patron – $150
• VIP – $250

You do have to pick whether or not you want rewards for EverQuest or EverQuest II.

But if you want to attend in person the ticket will run you $1,500. over at Everbrite.

How badly do you want to go to this event?

Get the fuck out of here.  I mean, the digital event prices seem a bit steep, even if they are somewhat volentary.  You are paying to be able to ask questions live and for some in-game items.  But the price for in person… you really have to love Norrath if you’re going to put out that amount.

But, I am sure someone will pay it.

Related links, each title featuring its own item rewards:

• Daybreak – Introducing Fippy Fest 2024! (EverQuest version)
• Daybreak – Introducing Fippy Fest 2024! (EverQuest II version)
• Daybreak – Introducing Fippy Fest 2024 – Forum Thread (EverQuest version)
• Daybreak – Introducing Fippy Fest 2024 – Forum Thread (EverQuest II version)
• The EverQuest Show – Episode 24: PAX East and Fippy Fest

On Tuesday Enad Global 7 released their Q4 2023 and overall 2023 financial results.  You can find the documents over on the investor relations site which I have linked at the bottom of the post.  These things always get tagged as “interim” or the like, but if they change anything they are going to have to do a filing and publicly announce it.

Enad Global 7

The overall message was something like, “We did okay, but things are tough all over.”  While they didn’t explicitly call out the pandemic income bubble, they talked about pain in the industry, the massive amount of layoffs, and the “irrational exuberence” of thinking the good times would continue to ramp up. (I am sure Alan Greenspan regrets that phrase to this day.)

While EG7 did better in 2023 than in 2022, that was largely carried by the sudden, surprise popularity of My Singing Monsters, which started in Q4 of 2022, but which has been tapering off every quarter since then.  So EG7’s forecast for 2024 is a decline in revenue.

EG7 Q4 2023 – Medium to Long-term Outlook

I am not sure what they base their 2026 forecast on, but clearly they are hoping they’ll turn out something big in 2025.  All they have on their plate is Mechwarrior and the revamp of H1Z1: Just Survive so far, leaving aside the usual round of expansions.  They are either hopelessly optimistic or have something else up their sleeve they’re not yet sharing, because they aren’t going to magic their way… gathering or otherwise… more than a 50% boost in revenues on that.

Meanwhile, looking at the revenue for the last five quarters and the cumulative revenue for the trailing twelve months, that Q4 2023 was not a winner for the company.

EG7 Q4 2024 – Revenue and Earnings

This is particularly grim when you consider that Q4 encompases the holidays, which is traditionally a peak quarter for video games AND when Daybreak launched expansions for EQ, EQII, and LOTRO in Q4, plus updates for its other titles, and the company was still down to its lowest ebb in a year.

That is why they have a grim outlook for 2024.  You can see how the two biggest games group in the company did in 2023.

EG7 Q4 2023 – Game Division Revenues

Daybreak was actually up in revenue slightly… again, not good enough for a quarter with expansions where things should be up a lot more… but was down on net earnings.  But it is Big Blue Bubble… very much a deflating bubble… and the falloff of My Singing Monsters that was dragging down the overall numbers from the games side of the house.  The whole reason that the company was even up in 2023 was the MSM spike, so as it falls the company overall declines, and there is nothing likely to replace it as a pillar of earnings.

One item that piqued interest all over was a bland comment in the interim report that said:

Daybreak successfully closed on the sale of a non-core IP for USD 5.9 million. The transaction provides EG7 with further improvement to its liquidity. This transaction will not affect EG7´s business plan and performance other than the P&L effect from the asset sale.

That led to a bunch of questions.  It turned out that the company sold off the PlanetSide IP, though what that actually means for the current PlanetSide 2 title, which is on PC, PlayStation 4, and XBox, is unclear.  It is also not clear who really bought the IP.  The copyright was transferred from Daybreak to Bay Tree Tower Limited on the 24th of last month, so there is some speculation that maybe the private equity firm Bay Tower bought it.  But there is no word on what the plan is.

I am a bit mixed on this sale.  The PlanetSide franchise was always Smed’s darling, propped up by his enthusiasm, but was always low on the revenue list, as EG7’s chart from last year points out.

Daybreak monthly gross revenue by title

Back in 2015 the creative director on the project described PlanetSide 2 as “really struggling” in a Reddit AMA, so I suppose it isn’t the biggest surprise that it was on the list to be cut.  The question is, “what happens next?”  There has been no word so far on what it means to the current title or the Rogue Planet studio within Daybreak that develops the game.

Not covered in the report or presentation were the recent layoffs, though EG7 reported that the total of those let go was “less than 15” from the EverQuest, Dungeons & Dragons Online, DC Universe Online, and Lord of the Rings Online teams.  So call it between 4 and 14 people laid off I guess?  Why say “less than 15” if it isn’t 14?  I don’t know.  Nobody from PlanetSide 2 was on the list I guess, but given the previous paragraph, I’m not even sure that they work for EG7 any more.

Also not addressed were the “major shareholder” demands I mentioned in Sunday’s post, though the presentation was likely already done and legally vetted before then, so wasn’t going to change.

It was clearly stated that EG7 will begin to execute on its shareholder value plan, where by 50% of net profits will be earmarked for dividends or stock buy backs.

Finally, Ji Ham’s acting career continues at EG7, where he remains acting CEO

And there we go.  Now to see what happens to EG7 in 2024 as their winter of major shareholder discontent grows.  Will they sell off anything else to keep the wolves of Wall Street at bay?  Or will they start shopping the company around as has been demanded?  And if they do, who would buy it?

Related

• EG7 – Investor Relations Page
• Massively OP – EG7 Q4 2023
• Massively OP – Daybreak sold PlanetSide for $5.9M
• Game Whisperer – PlanetSide IP sold to Shell Corporation
• Inventory Full – Games for Sale
• Massively OP – Daybreak’s DC Universe Online studio Dimensional Ink hit with layoffs
• Gaming Idustry.biz – Daybreak confirms “less than 15” layoffs

Well, I dug into the EverQuest 2024 roadmap a bit previously, so I suppose I should give its younger sibling its due as well.  I was going to do this the same week as I did EQ and then things happened and now suddenly we’re in the middle of February.  How does this happen?  Also, happy Mardi Gras!

EQ and EQII Celebrating in 2024

I am not sure how to process an EQ/EQII image that doesn’t include Firiona Vie and Antonia Bayle.

EverQuest II will be celebrating its own big milestone come November when, just a couple weeks ahead of World of Warcraft, it will turn 20 years old.  So the EQII roadmap is also a celebratory exercise, or should be.

EverQuest II 2024 Roadmap

As with the EverQuest 2024 roadmap, it is a little dense on the text front, making it difficult to read even if you click on and expand that image to full size.

But Daybreak has a forum post that breaks it out into a more accessible format.  I am going to work from that.

I am also going to do what I did with the EverQuest roadmap, which is filter out all the recurring monthly swag store, give away, sound track, forum question, and like entries that are somewhat apart from playing the game itself.

The one exception is raid unlocks that come with the monthly Masquerades of Divinity anniversary events.  Those feel like in-game content.

So what does 2024 look like?

January:

• Zimara Breadth: Crested Expanse [Raid] unlocked

February:

• Aether Wroughtlands: The Delves [Raid] unlocked
• Erollisi Day event returns
• Varsoon unlocks The Shadow Odyssey Mid-Content
  • The Emperor’s Athenaeum, Kurn’s Tower, Munzok’s Material Bastion, Ward of Elements, Miragul’s Planar Shard, Shard of Love

March:

• Chronoportal Phenomenon event returns
• HAPPY 25th ANNIVERSARY EVERQUEST!
• Brewday Festival event returns
• Beast’r Eggstravaganza event returns
• Game Update 125 Beta opens
• DirectX 11 API Port on Test Server

April:

• Bristlebane Day event returns
• Game Update 125 launches
• Varsoon unlocks Sentinel’s Fate

May:

• DirectX 11 API Port launches
• New TLE Server Beta opens
  • This is not a TLE, like Varsoon, this will be a different experience. We will be announcing more details soon
• Patches of Pride event returns

June:

• Summer Jubilee’s Tinkerfest event returns
• Summer Jubilee’s Scorched Sky event returns
• New TLE Server launches
• Varsoon unlocks Sentinel’s Fate Mid-Content
  • The Icy Keep: Retribution, Underfoot Depths, Zraxth’s Unseen Arcanum

July:

• nothing

August:

• Extra Life incentives announcement
• Summer Jubilee’s Oceansfull Festival event returns
• Game Update 126 Beta opens
• Game Update 126 launches
• Expansion Prelude begins
• Varsoon unlocks Destiny of Velious

September:

• New Panda, Panda, Panda content

October:

• EverQuest II’s 21st expansion beta + Pre-Order opens
• Nights of the Dead event returns

November:

• Heroes’ Festival event returns
• HAPPY 20th ANNIVERSARY EVERQUEST II
• Extra Life Game Day
• EverQuest II’s 21st expansion launches

December:

• Frostfell event returns

As with EverQuest, that is not a bad year.  But is it a special year?

The major technical update will be the move to DirectX 11.  There will be a new special rules server rolled out in June.  I am sure there will be some special events on the anniversary itself, and there are the monthly cosmetic things that can be earned as part of the Year of Darkpaw.

But otherwise the year is kind of normal.  We get the usual series of holiday events, there is the big game update, and then the annual expansion.  I suppose it says something good about the game that all of that is “normal” and not extraordinary.

Anyway, we shall see if Daybreak has anything else to add on top of what they have on the roadmap.

Remember how happy we all were when Enad Global 7 bought Daybreak and how upbeat and happy Robin Floodin was about the future of the company?  The irony of this is that I suspect we will soon look back on the Columbus Nova years… I mean Daybreak years… of being a privately held company as a time of stability.

Enad Global 7

I mean yes, Jason Epstein, Ji Ham, and the executive crew there were at best uncommunicative and at worst bald face liars, incapable of investing in any new development, content to live off the milk that the herd of games they bought from SOE could provide.  But now that Daybreak is part of a publicly held company, things look like they could get much worse.

Of course Jason Epstein and Ji Ham engineered that and turned the whole thing into a reverse merger, so I won’t be praising them.  This is all a situation of their making.  I will merely be irked at the fact that, like Bobby Kotick, they will profit greatly from the misery of their staff and customers.

What am I even on about here?  Let me go back a bit.

Last May a capital management group Alta Fox made a series of demands of the EG7 board of directors.  Alta Fox wanted dividends and stock buy backs, and they wanted EG7 relisted on the NASDAQ exchange in the US.  The former would be immediate money in their pocket while the latter would make it much easier to scam restail investors… I mean would make the stock more accessible to a wide range of investor likely leading to a higher price.

And the board at EG7 acceded to those demands.

They announced a very aggressive dividend and stock buyback plan, dedicated a minimum of all profits towards that.  That is now money that will not be available to develop new products… which, I guess was kind of a faint hope given the history of the board leadership and their run at Daybreak… but will be earmarked to enrich shareholders.

That isn’t necessarily the worst thing.  The stock market existed for decades on dividends as its primary driver and reward for investors.  It is only in times where companies promise infinitely increasing share prices that we are headed towards a truly epic economic fuck up. (Avert your eyes from all those companies doing stock buy backs in a vain attempt to keep up that sort of promise.  I am sure it will work out well this time!)

And EG7 has shown signs that it has been working on a move to NASDAQ… though, technically they are already part of the NASDAQ, they are just traded under the First North Growth North NASDAQ umbrella, which limits the company’s reach, so really they want to be in a more central part of the exchange, and probably one that does valuations in US dollars… by making changes in the organization to support such an effort.  (NASDAQ runs what one might consider the second tier stock exchange in the US, behind the New York Stock Exchage, but is where a lot of US tech companies go public because the requirements are less stringent.  It is where VCs take their investments to cash out.)

So investors like Alta Fox should be happy, right?  Right?!

No, never.  Well, it doesn’t help that EG7’s stock price has been down of late.  I guess they haven’t laid off enough people yet.

But the third thing that Alta Fox was demanding was a top to bottom review of the company with selling the company as one of the possible outcomes.

Well, over at GamesIndustry.biz there is a report that a major shareholder is demanding the sale of EG7.

The story doesn’t identify which shareholder, which seems like journalist malpractice… I mean serioulsy, WTF… but I don’t think we have to think tooooo hard to take a stab at which capital management firm might be making such a demand.  To paraphrase the Deep Throat, “Follow the winging.”

Why now?

On Tuesday EG7 will be holding its quarterly earning call to cover Q4 2023 and 2023 overall.

This is clearly an attempt to put some public pressure on the company.  If they answer questions as part of the call, and they generally do, the question of selling the company will now be at the top of the list.  An evasive answer will be given to this question, a prepared one, but the board will be on notice and a bunch of news stories will feature the possible sale of the company in headlines, which will further reinforce the idea that it will happen.

Meanwhile, the major shareholder will be publicly on again about how the EG7 stock is undervalued, down 80% from its all time high… a high that happened during the Covid bubble and which was so clearly unsustainable that even I was wondering aloud how gaming companies were going to deal with the post-pandemic reality when things went back to “normal” and revenue fell… and how it is the cheapest video game stock around.

That will serve to boost the share price for them for a bit.  Even a hint of blood in the water will bring the sharks.  But eventually the company will have to actively explore selling to a competitor or put forth a plan to please shareholders that does not involve a sale.

Not selling means more dividends and more stock buy backs and getting on a better stage in the NASDAQ domain.  But they are already doing that and can only do so much more.  The only real recourse is to abandon all they new game development plans they spoke about last year and dump the cash at the feet of the investors.  But even that probably won’t be enough.

Which leaves selling… which itself is a bleak prospect.  There are two questions there, who would buy EG7 and what would happen next?

The who is grim.

I mean, you’d love Microsoft or EA or Sony or somebody, if not big at least healthy, would buy them.  But what do those companies need with EG7’s little camp of misfit toys?

No, if you go back to a post I did about who could have bought CCP back in 2018 besides Pearl Abyss, you will see a range of second tier brand exploiters whose plan is always to buy themselves into revenue growth (on Wall Street, every asset is assumed to be worth exactly what you paid for it, so any revenue you get is an increase) by purchasing companies and cutting them down to the minimum viable staff possible to keep them going.

There are a couple of players possible I suppose… Tencent maybe… and we should probably all be happy that Embracer’s management has screwed the pooch so badly that they won’t be acquiring and destroying any more companies in the near future.  But companies like Gamigo still lurk out there.

The upside of Gamigo is that the titles would survive for a while.  It might do well to heed the annual question over at Massively OP about which is the most vulnerable title at Daybreak.  Somebody like Gamigo buys EG7, then H1Z1 is closed pretty much right away and we start betting on which of the lowest performing titles is next on the block.  (I would bet on DDO, if only because there is overhead going to pay Hasbro for the use of the license.)

So, just to sum this up in a cheery way, the paths forward seem to be:

• EG7 abandons any pretense of new titles and just shovels profit into dividends and stock buy backs in an attempt to sate the cavernous maw of capitalism.
• EG7 is sold to a competitor that maybe keeps most of the title active, but staff is cut and a maitenance mode existence is likely the happiest outcome.

Anyway, we shall see how pessimistic I am really being come Tuesday.  Who knows, maybe EG7 made bank in Q4 and the stock price will go up and the situation will be saved for the moment, allowing us to retain the oft abused hope that we’ll see another EverQuest title.

It could happen, right?  Right?

On Tuesday Enad Global 7 released their Q4 2023 and overall 2023 financial results.  You can find the documents over on the investor relations site which I have linked at the bottom of the post.  These things always get tagged as “interim” or the like, but if they change anything they are going to have to do a filing and publicly announce it.

Enad Global 7

The overall message was something like, “We did okay, but things are tough all over.”  While they didn’t explicitly call out the pandemic income bubble, they talked about pain in the industry, the massive amount of layoffs, and the “irrational exuberence” of thinking the good times would continue to ramp up. (I am sure Alan Greenspan regrets that phrase to this day.)

While EG7 did better in 2023 than in 2022, that was largely carried by the sudden, surprise popularity of My Singing Monsters, which started in Q4 of 2022, but which has been tapering off every quarter since then.  So EG7’s forecast for 2024 is a decline in revenue.

EG7 Q4 2023 – Medium to Long-term Outlook

I am not sure what they base their 2026 forecast on, but clearly they are hoping they’ll turn out something big in 2025.  All they have on their plate is Mechwarrior and the revamp of H1Z1: Just Survive so far, leaving aside the usual round of expansions.  They are either hopelessly optimistic or have something else up their sleeve they’re not yet sharing, because they aren’t going to magic their way… gathering or otherwise… more than a 50% boost in revenues on that.

Meanwhile, looking at the revenue for the last five quarters and the cumulative revenue for the trailing twelve months, that Q4 2023 was not a winner for the company.

EG7 Q4 2024 – Revenue and Earnings

This is particularly grim when you consider that Q4 encompases the holidays, which is traditionally a peak quarter for video games AND when Daybreak launched expansions for EQ, EQII, and LOTRO in Q4, plus updates for its other titles, and the company was still down to its lowest ebb in a year.

That is why they have a grim outlook for 2024.  You can see how the two biggest games group in the company did in 2023.

EG7 Q4 2023 – Game Division Revenues

Daybreak was actually up in revenue slightly… again, not good enough for a quarter with expansions where things should be up a lot more… but was down on net earnings.  But it is Big Blue Bubble… very much a deflating bubble… and the falloff of My Singing Monsters that was dragging down the overall numbers from the games side of the house.  The whole reason that the company was even up in 2023 was the MSM spike, so as it falls the company overall declines, and there is nothing likely to replace it as a pillar of earnings.

One item that piqued interest all over was a bland comment in the interim report that said:

Daybreak successfully closed on the sale of a non-core IP for USD 5.9 million. The transaction provides EG7 with further improvement to its liquidity. This transaction will not affect EG7´s business plan and performance other than the P&L effect from the asset sale.

That led to a bunch of questions.  It turned out that the company sold off the PlanetSide IP, though what that actually means for the current PlanetSide 2 title, which is on PC, PlayStation 4, and XBox, is unclear.  It is also not clear who really bought the IP.  The copyright was transferred from Daybreak to Bay Tree Tower Limited on the 24th of last month, so there is some speculation that maybe the private equity firm Bay Tower bought it.  But there is no word on what the plan is.

I am a bit mixed on this sale.  The PlanetSide franchise was always Smed’s darling, propped up by his enthusiasm, but was always low on the revenue list, as EG7’s chart from last year points out.

Daybreak monthly gross revenue by title

Back in 2015 the creative director on the project described PlanetSide 2 as “really struggling” in a Reddit AMA, so I suppose it isn’t the biggest surprise that it was on the list to be cut.  The question is, “what happens next?”  There has been no word so far on what it means to the current title or the Rogue Planet studio within Daybreak that develops the game.

Not covered in the report or presentation were the recent layoffs, though EG7 reported that the total of those let go was “less than 15” from the EverQuest, Dungeons & Dragons Online, DC Universe Online, and Lord of the Rings Online teams.  So call it between 4 and 14 people laid off I guess?  Why say “less than 15” if it isn’t 14?  I don’t know.  Nobody from PlanetSide 2 was on the list I guess, but given the previous paragraph, I’m not even sure that they work for EG7 any more.

Also not addressed were the “major shareholder” demands I mentioned in Sunday’s post, though the presentation was likely already done and legally vetted before then, so wasn’t going to change.

It was clearly stated that EG7 will begin to execute on its shareholder value plan, where by 50% of net profits will be earmarked for dividends or stock buy backs.

Finally, Ji Ham’s acting career continues at EG7, where he remains acting CEO

And there we go.  Now to see what happens to EG7 in 2024 as their winter of major shareholder discontent grows.  Will they sell off anything else to keep the wolves of Wall Street at bay?  Or will they start shopping the company around as has been demanded?  And if they do, who would buy it?

Related

• EG7 – Investor Relations Page
• Massively OP – EG7 Q4 2023
• Massively OP – Daybreak sold PlanetSide for $5.9M
• Game Whisperer – PlanetSide IP sold to Shell Corporation
• Inventory Full – Games for Sale
• Massively OP – Daybreak’s DC Universe Online studio Dimensional Ink hit with layoffs
• Gaming Idustry.biz – Daybreak confirms “less than 15” layoffs

Well, I dug into the EverQuest 2024 roadmap a bit previously, so I suppose I should give its younger sibling its due as well.  I was going to do this the same week as I did EQ and then things happened and now suddenly we’re in the middle of February.  How does this happen?  Also, happy Mardi Gras!

EQ and EQII Celebrating in 2024

I am not sure how to process an EQ/EQII image that doesn’t include Firiona Vie and Antonia Bayle.

EverQuest II will be celebrating its own big milestone come November when, just a couple weeks ahead of World of Warcraft, it will turn 20 years old.  So the EQII roadmap is also a celebratory exercise, or should be.

EverQuest II 2024 Roadmap

As with the EverQuest 2024 roadmap, it is a little dense on the text front, making it difficult to read even if you click on and expand that image to full size.

But Daybreak has a forum post that breaks it out into a more accessible format.  I am going to work from that.

I am also going to do what I did with the EverQuest roadmap, which is filter out all the recurring monthly swag store, give away, sound track, forum question, and like entries that are somewhat apart from playing the game itself.

The one exception is raid unlocks that come with the monthly Masquerades of Divinity anniversary events.  Those feel like in-game content.

So what does 2024 look like?

January:

• Zimara Breadth: Crested Expanse [Raid] unlocked

February:

• Aether Wroughtlands: The Delves [Raid] unlocked
• Erollisi Day event returns
• Varsoon unlocks The Shadow Odyssey Mid-Content
  • The Emperor’s Athenaeum, Kurn’s Tower, Munzok’s Material Bastion, Ward of Elements, Miragul’s Planar Shard, Shard of Love

March:

• Chronoportal Phenomenon event returns
• HAPPY 25th ANNIVERSARY EVERQUEST!
• Brewday Festival event returns
• Beast’r Eggstravaganza event returns
• Game Update 125 Beta opens
• DirectX 11 API Port on Test Server

April:

• Bristlebane Day event returns
• Game Update 125 launches
• Varsoon unlocks Sentinel’s Fate

May:

• DirectX 11 API Port launches
• New TLE Server Beta opens
  • This is not a TLE, like Varsoon, this will be a different experience. We will be announcing more details soon
• Patches of Pride event returns

June:

• Summer Jubilee’s Tinkerfest event returns
• Summer Jubilee’s Scorched Sky event returns
• New TLE Server launches
• Varsoon unlocks Sentinel’s Fate Mid-Content
  • The Icy Keep: Retribution, Underfoot Depths, Zraxth’s Unseen Arcanum

July:

• nothing

August:

• Extra Life incentives announcement
• Summer Jubilee’s Oceansfull Festival event returns
• Game Update 126 Beta opens
• Game Update 126 launches
• Expansion Prelude begins
• Varsoon unlocks Destiny of Velious

September:

• New Panda, Panda, Panda content

October:

• EverQuest II’s 21st expansion beta + Pre-Order opens
• Nights of the Dead event returns

November:

• Heroes’ Festival event returns
• HAPPY 20th ANNIVERSARY EVERQUEST II
• Extra Life Game Day
• EverQuest II’s 21st expansion launches

December:

• Frostfell event returns

As with EverQuest, that is not a bad year.  But is it a special year?

The major technical update will be the move to DirectX 11.  There will be a new special rules server rolled out in June.  I am sure there will be some special events on the anniversary itself, and there are the monthly cosmetic things that can be earned as part of the Year of Darkpaw.

But otherwise the year is kind of normal.  We get the usual series of holiday events, there is the big game update, and then the annual expansion.  I suppose it says something good about the game that all of that is “normal” and not extraordinary.

Anyway, we shall see if Daybreak has anything else to add on top of what they have on the roadmap.

Remember how happy we all were when Enad Global 7 bought Daybreak and how upbeat and happy Robin Floodin was about the future of the company?  The irony of this is that I suspect we will soon look back on the Columbus Nova years… I mean Daybreak years… of being a privately held company as a time of stability.

Enad Global 7

I mean yes, Jason Epstein, Ji Ham, and the executive crew there were at best uncommunicative and at worst bald face liars, incapable of investing in any new development, content to live off the milk that the herd of games they bought from SOE could provide.  But now that Daybreak is part of a publicly held company, things look like they could get much worse.

Of course Jason Epstein and Ji Ham engineered that and turned the whole thing into a reverse merger, so I won’t be praising them.  This is all a situation of their making.  I will merely be irked at the fact that, like Bobby Kotick, they will profit greatly from the misery of their staff and customers.

What am I even on about here?  Let me go back a bit.

Last May a capital management group Alta Fox made a series of demands of the EG7 board of directors.  Alta Fox wanted dividends and stock buy backs, and they wanted EG7 relisted on the NASDAQ exchange in the US.  The former would be immediate money in their pocket while the latter would make it much easier to scam restail investors… I mean would make the stock more accessible to a wide range of investor likely leading to a higher price.

And the board at EG7 acceded to those demands.

They announced a very aggressive dividend and stock buyback plan, dedicated a minimum of all profits towards that.  That is now money that will not be available to develop new products… which, I guess was kind of a faint hope given the history of the board leadership and their run at Daybreak… but will be earmarked to enrich shareholders.

That isn’t necessarily the worst thing.  The stock market existed for decades on dividends as its primary driver and reward for investors.  It is only in times where companies promise infinitely increasing share prices that we are headed towards a truly epic economic fuck up. (Avert your eyes from all those companies doing stock buy backs in a vain attempt to keep up that sort of promise.  I am sure it will work out well this time!)

And EG7 has shown signs that it has been working on a move to NASDAQ… though, technically they are already part of the NASDAQ, they are just traded under the First North Growth North NASDAQ umbrella, which limits the company’s reach, so really they want to be in a more central part of the exchange, and probably one that does valuations in US dollars… by making changes in the organization to support such an effort.  (NASDAQ runs what one might consider the second tier stock exchange in the US, behind the New York Stock Exchage, but is where a lot of US tech companies go public because the requirements are less stringent.  It is where VCs take their investments to cash out.)

So investors like Alta Fox should be happy, right?  Right?!

No, never.  Well, it doesn’t help that EG7’s stock price has been down of late.  I guess they haven’t laid off enough people yet.

But the third thing that Alta Fox was demanding was a top to bottom review of the company with selling the company as one of the possible outcomes.

Well, over at GamesIndustry.biz there is a report that a major shareholder is demanding the sale of EG7.

The story doesn’t identify which shareholder, which seems like journalist malpractice… I mean serioulsy, WTF… but I don’t think we have to think tooooo hard to take a stab at which capital management firm might be making such a demand.  To paraphrase the Deep Throat, “Follow the winging.”

Why now?

On Tuesday EG7 will be holding its quarterly earning call to cover Q4 2023 and 2023 overall.

This is clearly an attempt to put some public pressure on the company.  If they answer questions as part of the call, and they generally do, the question of selling the company will now be at the top of the list.  An evasive answer will be given to this question, a prepared one, but the board will be on notice and a bunch of news stories will feature the possible sale of the company in headlines, which will further reinforce the idea that it will happen.

Meanwhile, the major shareholder will be publicly on again about how the EG7 stock is undervalued, down 80% from its all time high… a high that happened during the Covid bubble and which was so clearly unsustainable that even I was wondering aloud how gaming companies were going to deal with the post-pandemic reality when things went back to “normal” and revenue fell… and how it is the cheapest video game stock around.

That will serve to boost the share price for them for a bit.  Even a hint of blood in the water will bring the sharks.  But eventually the company will have to actively explore selling to a competitor or put forth a plan to please shareholders that does not involve a sale.

Not selling means more dividends and more stock buy backs and getting on a better stage in the NASDAQ domain.  But they are already doing that and can only do so much more.  The only real recourse is to abandon all they new game development plans they spoke about last year and dump the cash at the feet of the investors.  But even that probably won’t be enough.

Which leaves selling… which itself is a bleak prospect.  There are two questions there, who would buy EG7 and what would happen next?

The who is grim.

I mean, you’d love Microsoft or EA or Sony or somebody, if not big at least healthy, would buy them.  But what do those companies need with EG7’s little camp of misfit toys?

No, if you go back to a post I did about who could have bought CCP back in 2018 besides Pearl Abyss, you will see a range of second tier brand exploiters whose plan is always to buy themselves into revenue growth (on Wall Street, every asset is assumed to be worth exactly what you paid for it, so any revenue you get is an increase) by purchasing companies and cutting them down to the minimum viable staff possible to keep them going.

There are a couple of players possible I suppose… Tencent maybe… and we should probably all be happy that Embracer’s management has screwed the pooch so badly that they won’t be acquiring and destroying any more companies in the near future.  But companies like Gamigo still lurk out there.

The upside of Gamigo is that the titles would survive for a while.  It might do well to heed the annual question over at Massively OP about which is the most vulnerable title at Daybreak.  Somebody like Gamigo buys EG7, then H1Z1 is closed pretty much right away and we start betting on which of the lowest performing titles is next on the block.  (I would bet on DDO, if only because there is overhead going to pay Hasbro for the use of the license.)

So, just to sum this up in a cheery way, the paths forward seem to be:

• EG7 abandons any pretense of new titles and just shovels profit into dividends and stock buy backs in an attempt to sate the cavernous maw of capitalism.
• EG7 is sold to a competitor that maybe keeps most of the title active, but staff is cut and a maitenance mode existence is likely the happiest outcome.

Anyway, we shall see how pessimistic I am really being come Tuesday.  Who knows, maybe EG7 made bank in Q4 and the stock price will go up and the situation will be saved for the moment, allowing us to retain the oft abused hope that we’ll see another EverQuest title.

It could happen, right?  Right?

On Tuesday Enad Global 7 released their Q4 2023 and overall 2023 financial results.  You can find the documents over on the investor relations site which I have linked at the bottom of the post.  These things always get tagged as “interim” or the like, but if they change anything they are going to have to do a filing and publicly announce it.

Enad Global 7

The overall message was something like, “We did okay, but things are tough all over.”  While they didn’t explicitly call out the pandemic income bubble, they talked about pain in the industry, the massive amount of layoffs, and the “irrational exuberence” of thinking the good times would continue to ramp up. (I am sure Alan Greenspan regrets that phrase to this day.)

While EG7 did better in 2023 than in 2022, that was largely carried by the sudden, surprise popularity of My Singing Monsters, which started in Q4 of 2022, but which has been tapering off every quarter since then.  So EG7’s forecast for 2024 is a decline in revenue.

EG7 Q4 2023 – Medium to Long-term Outlook

I am not sure what they base their 2026 forecast on, but clearly they are hoping they’ll turn out something big in 2025.  All they have on their plate is Mechwarrior and the revamp of H1Z1: Just Survive so far, leaving aside the usual round of expansions.  They are either hopelessly optimistic or have something else up their sleeve they’re not yet sharing, because they aren’t going to magic their way… gathering or otherwise… more than a 50% boost in revenues on that.

Meanwhile, looking at the revenue for the last five quarters and the cumulative revenue for the trailing twelve months, that Q4 2023 was not a winner for the company.

EG7 Q4 2024 – Revenue and Earnings

This is particularly grim when you consider that Q4 encompases the holidays, which is traditionally a peak quarter for video games AND when Daybreak launched expansions for EQ, EQII, and LOTRO in Q4, plus updates for its other titles, and the company was still down to its lowest ebb in a year.

That is why they have a grim outlook for 2024.  You can see how the two biggest games group in the company did in 2023.

EG7 Q4 2023 – Game Division Revenues

Daybreak was actually up in revenue slightly… again, not good enough for a quarter with expansions where things should be up a lot more… but was down on net earnings.  But it is Big Blue Bubble… very much a deflating bubble… and the falloff of My Singing Monsters that was dragging down the overall numbers from the games side of the house.  The whole reason that the company was even up in 2023 was the MSM spike, so as it falls the company overall declines, and there is nothing likely to replace it as a pillar of earnings.

One item that piqued interest all over was a bland comment in the interim report that said:

Daybreak successfully closed on the sale of a non-core IP for USD 5.9 million. The transaction provides EG7 with further improvement to its liquidity. This transaction will not affect EG7´s business plan and performance other than the P&L effect from the asset sale.

That led to a bunch of questions.  It turned out that the company sold off the PlanetSide IP, though what that actually means for the current PlanetSide 2 title, which is on PC, PlayStation 4, and XBox, is unclear.  It is also not clear who really bought the IP.  The copyright was transferred from Daybreak to Bay Tree Tower Limited on the 24th of last month, so there is some speculation that maybe the private equity firm Bay Tower bought it.  But there is no word on what the plan is.

I am a bit mixed on this sale.  The PlanetSide franchise was always Smed’s darling, propped up by his enthusiasm, but was always low on the revenue list, as EG7’s chart from last year points out.

Daybreak monthly gross revenue by title

Back in 2015 the creative director on the project described PlanetSide 2 as “really struggling” in a Reddit AMA, so I suppose it isn’t the biggest surprise that it was on the list to be cut.  The question is, “what happens next?”  There has been no word so far on what it means to the current title or the Rogue Planet studio within Daybreak that develops the game.

Not covered in the report or presentation were the recent layoffs, though EG7 reported that the total of those let go was “less than 15” from the EverQuest, Dungeons & Dragons Online, DC Universe Online, and Lord of the Rings Online teams.  So call it between 4 and 14 people laid off I guess?  Why say “less than 15” if it isn’t 14?  I don’t know.  Nobody from PlanetSide 2 was on the list I guess, but given the previous paragraph, I’m not even sure that they work for EG7 any more.

Also not addressed were the “major shareholder” demands I mentioned in Sunday’s post, though the presentation was likely already done and legally vetted before then, so wasn’t going to change.

It was clearly stated that EG7 will begin to execute on its shareholder value plan, where by 50% of net profits will be earmarked for dividends or stock buy backs.

Finally, Ji Ham’s acting career continues at EG7, where he remains acting CEO

And there we go.  Now to see what happens to EG7 in 2024 as their winter of major shareholder discontent grows.  Will they sell off anything else to keep the wolves of Wall Street at bay?  Or will they start shopping the company around as has been demanded?  And if they do, who would buy it?

Related

• EG7 – Investor Relations Page
• Massively OP – EG7 Q4 2023
• Massively OP – Daybreak sold PlanetSide for $5.9M
• Game Whisperer – PlanetSide IP sold to Shell Corporation
• Inventory Full – Games for Sale
• Massively OP – Daybreak’s DC Universe Online studio Dimensional Ink hit with layoffs
• Gaming Idustry.biz – Daybreak confirms “less than 15” layoffs

Well, I dug into the EverQuest 2024 roadmap a bit previously, so I suppose I should give its younger sibling its due as well.  I was going to do this the same week as I did EQ and then things happened and now suddenly we’re in the middle of February.  How does this happen?  Also, happy Mardi Gras!

EQ and EQII Celebrating in 2024

I am not sure how to process an EQ/EQII image that doesn’t include Firiona Vie and Antonia Bayle.

EverQuest II will be celebrating its own big milestone come November when, just a couple weeks ahead of World of Warcraft, it will turn 20 years old.  So the EQII roadmap is also a celebratory exercise, or should be.

EverQuest II 2024 Roadmap

As with the EverQuest 2024 roadmap, it is a little dense on the text front, making it difficult to read even if you click on and expand that image to full size.

But Daybreak has a forum post that breaks it out into a more accessible format.  I am going to work from that.

I am also going to do what I did with the EverQuest roadmap, which is filter out all the recurring monthly swag store, give away, sound track, forum question, and like entries that are somewhat apart from playing the game itself.

The one exception is raid unlocks that come with the monthly Masquerades of Divinity anniversary events.  Those feel like in-game content.

So what does 2024 look like?

January:

• Zimara Breadth: Crested Expanse [Raid] unlocked

February:

• Aether Wroughtlands: The Delves [Raid] unlocked
• Erollisi Day event returns
• Varsoon unlocks The Shadow Odyssey Mid-Content
  • The Emperor’s Athenaeum, Kurn’s Tower, Munzok’s Material Bastion, Ward of Elements, Miragul’s Planar Shard, Shard of Love

March:

• Chronoportal Phenomenon event returns
• HAPPY 25th ANNIVERSARY EVERQUEST!
• Brewday Festival event returns
• Beast’r Eggstravaganza event returns
• Game Update 125 Beta opens
• DirectX 11 API Port on Test Server

April:

• Bristlebane Day event returns
• Game Update 125 launches
• Varsoon unlocks Sentinel’s Fate

May:

• DirectX 11 API Port launches
• New TLE Server Beta opens
  • This is not a TLE, like Varsoon, this will be a different experience. We will be announcing more details soon
• Patches of Pride event returns

June:

• Summer Jubilee’s Tinkerfest event returns
• Summer Jubilee’s Scorched Sky event returns
• New TLE Server launches
• Varsoon unlocks Sentinel’s Fate Mid-Content
  • The Icy Keep: Retribution, Underfoot Depths, Zraxth’s Unseen Arcanum

July:

• nothing

August:

• Extra Life incentives announcement
• Summer Jubilee’s Oceansfull Festival event returns
• Game Update 126 Beta opens
• Game Update 126 launches
• Expansion Prelude begins
• Varsoon unlocks Destiny of Velious

September:

• New Panda, Panda, Panda content

October:

• EverQuest II’s 21st expansion beta + Pre-Order opens
• Nights of the Dead event returns

November:

• Heroes’ Festival event returns
• HAPPY 20th ANNIVERSARY EVERQUEST II
• Extra Life Game Day
• EverQuest II’s 21st expansion launches

December:

• Frostfell event returns

As with EverQuest, that is not a bad year.  But is it a special year?

The major technical update will be the move to DirectX 11.  There will be a new special rules server rolled out in June.  I am sure there will be some special events on the anniversary itself, and there are the monthly cosmetic things that can be earned as part of the Year of Darkpaw.

But otherwise the year is kind of normal.  We get the usual series of holiday events, there is the big game update, and then the annual expansion.  I suppose it says something good about the game that all of that is “normal” and not extraordinary.

Anyway, we shall see if Daybreak has anything else to add on top of what they have on the roadmap.

Remember how happy we all were when Enad Global 7 bought Daybreak and how upbeat and happy Robin Floodin was about the future of the company?  The irony of this is that I suspect we will soon look back on the Columbus Nova years… I mean Daybreak years… of being a privately held company as a time of stability.

Enad Global 7

I mean yes, Jason Epstein, Ji Ham, and the executive crew there were at best uncommunicative and at worst bald face liars, incapable of investing in any new development, content to live off the milk that the herd of games they bought from SOE could provide.  But now that Daybreak is part of a publicly held company, things look like they could get much worse.

Of course Jason Epstein and Ji Ham engineered that and turned the whole thing into a reverse merger, so I won’t be praising them.  This is all a situation of their making.  I will merely be irked at the fact that, like Bobby Kotick, they will profit greatly from the misery of their staff and customers.

What am I even on about here?  Let me go back a bit.

Last May a capital management group Alta Fox made a series of demands of the EG7 board of directors.  Alta Fox wanted dividends and stock buy backs, and they wanted EG7 relisted on the NASDAQ exchange in the US.  The former would be immediate money in their pocket while the latter would make it much easier to scam restail investors… I mean would make the stock more accessible to a wide range of investor likely leading to a higher price.

And the board at EG7 acceded to those demands.

They announced a very aggressive dividend and stock buyback plan, dedicated a minimum of all profits towards that.  That is now money that will not be available to develop new products… which, I guess was kind of a faint hope given the history of the board leadership and their run at Daybreak… but will be earmarked to enrich shareholders.

That isn’t necessarily the worst thing.  The stock market existed for decades on dividends as its primary driver and reward for investors.  It is only in times where companies promise infinitely increasing share prices that we are headed towards a truly epic economic fuck up. (Avert your eyes from all those companies doing stock buy backs in a vain attempt to keep up that sort of promise.  I am sure it will work out well this time!)

And EG7 has shown signs that it has been working on a move to NASDAQ… though, technically they are already part of the NASDAQ, they are just traded under the First North Growth North NASDAQ umbrella, which limits the company’s reach, so really they want to be in a more central part of the exchange, and probably one that does valuations in US dollars… by making changes in the organization to support such an effort.  (NASDAQ runs what one might consider the second tier stock exchange in the US, behind the New York Stock Exchage, but is where a lot of US tech companies go public because the requirements are less stringent.  It is where VCs take their investments to cash out.)

So investors like Alta Fox should be happy, right?  Right?!

No, never.  Well, it doesn’t help that EG7’s stock price has been down of late.  I guess they haven’t laid off enough people yet.

But the third thing that Alta Fox was demanding was a top to bottom review of the company with selling the company as one of the possible outcomes.

Well, over at GamesIndustry.biz there is a report that a major shareholder is demanding the sale of EG7.

The story doesn’t identify which shareholder, which seems like journalist malpractice… I mean serioulsy, WTF… but I don’t think we have to think tooooo hard to take a stab at which capital management firm might be making such a demand.  To paraphrase the Deep Throat, “Follow the winging.”

Why now?

On Tuesday EG7 will be holding its quarterly earning call to cover Q4 2023 and 2023 overall.

This is clearly an attempt to put some public pressure on the company.  If they answer questions as part of the call, and they generally do, the question of selling the company will now be at the top of the list.  An evasive answer will be given to this question, a prepared one, but the board will be on notice and a bunch of news stories will feature the possible sale of the company in headlines, which will further reinforce the idea that it will happen.

Meanwhile, the major shareholder will be publicly on again about how the EG7 stock is undervalued, down 80% from its all time high… a high that happened during the Covid bubble and which was so clearly unsustainable that even I was wondering aloud how gaming companies were going to deal with the post-pandemic reality when things went back to “normal” and revenue fell… and how it is the cheapest video game stock around.

That will serve to boost the share price for them for a bit.  Even a hint of blood in the water will bring the sharks.  But eventually the company will have to actively explore selling to a competitor or put forth a plan to please shareholders that does not involve a sale.

Not selling means more dividends and more stock buy backs and getting on a better stage in the NASDAQ domain.  But they are already doing that and can only do so much more.  The only real recourse is to abandon all they new game development plans they spoke about last year and dump the cash at the feet of the investors.  But even that probably won’t be enough.

Which leaves selling… which itself is a bleak prospect.  There are two questions there, who would buy EG7 and what would happen next?

The who is grim.

I mean, you’d love Microsoft or EA or Sony or somebody, if not big at least healthy, would buy them.  But what do those companies need with EG7’s little camp of misfit toys?

No, if you go back to a post I did about who could have bought CCP back in 2018 besides Pearl Abyss, you will see a range of second tier brand exploiters whose plan is always to buy themselves into revenue growth (on Wall Street, every asset is assumed to be worth exactly what you paid for it, so any revenue you get is an increase) by purchasing companies and cutting them down to the minimum viable staff possible to keep them going.

There are a couple of players possible I suppose… Tencent maybe… and we should probably all be happy that Embracer’s management has screwed the pooch so badly that they won’t be acquiring and destroying any more companies in the near future.  But companies like Gamigo still lurk out there.

The upside of Gamigo is that the titles would survive for a while.  It might do well to heed the annual question over at Massively OP about which is the most vulnerable title at Daybreak.  Somebody like Gamigo buys EG7, then H1Z1 is closed pretty much right away and we start betting on which of the lowest performing titles is next on the block.  (I would bet on DDO, if only because there is overhead going to pay Hasbro for the use of the license.)

So, just to sum this up in a cheery way, the paths forward seem to be:

• EG7 abandons any pretense of new titles and just shovels profit into dividends and stock buy backs in an attempt to sate the cavernous maw of capitalism.
• EG7 is sold to a competitor that maybe keeps most of the title active, but staff is cut and a maitenance mode existence is likely the happiest outcome.

Anyway, we shall see how pessimistic I am really being come Tuesday.  Who knows, maybe EG7 made bank in Q4 and the stock price will go up and the situation will be saved for the moment, allowing us to retain the oft abused hope that we’ll see another EverQuest title.

It could happen, right?  Right?