DUST Search - Financial info

Avallo Kantor wrote:

It should be also noted that most of this conversation on how much DUST is making / losing is all speculation.

We have no solid numbers on the cost of DUST, nor any numbers on it's actual profit.
In that respect it's impossible to say if DUST is financially gaining, stable, or losing profit.

Making claims to any of the above would be based on no solid evidence, and is no better than
making guess work. What we do know is that CCP is profitable, and so long as they make money every year,
then they are free to chase after any long term projects they wish to, especially if they are working under the
assumption that these projects (such as the TV show) will yield high profits in a few years time.

Companies (that plan on lasting) always put large chunks of money into R&D, as this is generally the expense filed for any work that is done to ensure the future of the company, and the design of new features / expansions /products.

Seeing as they announced a TV show, a Comic series, and are releasing a new game it makes sense that most of the expenses related to meetings, development, planning, making the appropriate deals, would all be filed away in R&D costs, thus citing the number in the report. Especially since they probably got the director for it ahead of time.

Another thing to consider is that CCP IS donating money to such institutions as Planetary Industries, and these things, while a bit unorthodox could also be filed into R&D costs as well. But that's just wild speculation on my part.


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A'Real Fury D.A.R.K L.E.G.I.O.N D.E.F.I.A.N.C.E 208	Posted - 2013.06.23 20:28:00 - [1] - Quote Profit looks healthy but considering revenues are increasing year on year it is interesting that the profit for the period is decreasing in the last financial year. Also R&D costs have gone up significantly. My best guess based on these accounts is that Dust is currently a major financial drain on CCP and is not generating it's own profit at this point. Not unusual for a new product but it means that Dust 514 needs to start generating a profit quite soon and not remain a financial drain for years to come. If things continue as is it would not take much to wipe out an even bigger portion of that profit especially if they maintain the same spending as they are currently doing. This is based on an assumption that may be incorrect. That assumption is: R&D costs on Eve are fairly static as CCP knows what it is doing there and has a very experienced team and most of the additional costs are going on Dust where they have a much less experienced team and a much smaller player base spending less money on the game.
A'Real Fury D.A.R.K L.E.G.I.O.N D.E.F.I.A.N.C.E 211	Posted - 2013.06.24 09:52:00 - [2] - Quote Maken Tosch wrote: A'Real Fury wrote: Profit looks healthy but considering revenues are increasing year on year it is interesting that the profit for the period is decreasing in the last financial year. Also R&D costs have gone up significantly. My best guess based on these accounts is that Dust is currently a major financial drain on CCP and is not generating it's own profit at this point. Not unusual for a new product but it means that Dust 514 needs to start generating a profit quite soon and not remain a financial drain for years to come. If things continue as is it would not take much to wipe out an even bigger portion of that profit especially if they maintain the same spending as they are currently doing. This is based on an assumption that may be incorrect. That assumption is: R&D costs on Eve are fairly static as CCP knows what it is doing there and has a very experienced team and most of the additional costs are going on Dust where they have a much less experienced team and a much smaller player base spending less money on the game. One way to increase revenue from Dust is to allow players to trade directly with each other in addition to the merc-to-merc ISK transfers. This will generate a base model for a secondary market that CCP can rely on as AUR items become bought more often with cash to meet demand and as more players use them up to match up the supply. I agree that direct trade between players for aurum-to-isk items could increase revenue but based on player count and the operating expenses as presented in the financial year ending 31.12.2012 it would have a negligible impact on the bottom line. That is to say that Dust 514 would still be a money sink without a significant increase in the paying active player base. Please note that this is my best guess at how money is being spent on Dust and the returns they are getting back from the player base but it is still only a guess. CCP appears to be spending millions and only getting back tens of thousands in revenue from Dust. As others like to mention Dust 514 is not like COD and I agree. In COD once you complete COD ZZ you pretty much shut down the project and shift most of your resources and personnel to the next project. With Dust 514 this is not possible as this is basically a 10 year + project so if they want to maintain the tempo they currently have then they also need to maintain the level of resourcing and personnel as well. This in turn means that they will continue to spend millions and do you really believe they are even close to break even at this point? On the one hand things are good, the company was profitable, but on the other how many years can you imagine CCP spending money on a project that is eating a fair chunk of that profit and not showing any significant revenue at the moment. In fact it is not even showing any hope of a return on investment. CCP needs to find a means of significantly increasing the player base in the, relative, short term to make this project truly viable. I would say by the end of this year or next year at the very outside if they think the switch to the PS4 will be slow. Otherwise they really need to evaluate what future projects would give them a better return on investment e.g. re-invest back into Eve, which is profitable and growing, or start creating apps for tablets and smart phones or maybe convert dust into an RTS that goes onto a tablet or the PC. At the end of the day CCP is a business and needs to ensure that they get a good return on the money they spend on projects. Dust does not appear to be small potatoes, in terms of money spent, and as such presents a significant risk. Spending a few million on a project that is loosing a lot of money each year is fine if you are making 100s of millions in profit after expenses and taxes but quite different for a business whose profit for the period does not exceed 10 million. The current active player base is simply too small for this project to be profitable especially if they keep spending money as they are. Even if I am wrong on the figures and they are only spending 100s of thousands that is still far more than they are getting in revenue from this game. My hope is that I am wrong in my evaluation and the accounts for 31.12.2013 show a significant improvement over 2012.
A'Real Fury D.A.R.K L.E.G.I.O.N D.E.F.I.A.N.C.E 211	Posted - 2013.06.24 09:57:00 - [3] - Quote Glori Jinn wrote: Guildo Crow wrote: Off topic. But seriously, 30 million in salaries for 500 people is expensive? what are you nuts!? That's pretty average, below average I'd say. honest. Yikes! I want to work where you work then please!... G Considering the business they are in it isn't actually a lot of money. They will have quite a few well paid and highly skilled developers on payroll since this is the core of the business. This is ignoring the fact that most senior managers and directors will generally expect salaries well above the average for a member of staff in that business.
A'Real Fury D.A.R.K L.E.G.I.O.N D.E.F.I.A.N.C.E 214	Posted - 2013.06.25 16:48:00 - [4] - Quote @Maken Tosch I will not argue with your knowledge of previous fanfests or Eve lore in general as it far exceeds my own. However, I can not imagine that they can maintain the losses they are currently making on Dust unless you are looking at a truly massive increase in the player base on Eve Online that more than cover that cost. Loss leaders are only created when it actually increases your total profit for the company as a whole. Maybe it will and we won't know until they publish their accounts for the period ending 31.12.2013. But based on the limited increase in the player base upto now I can not imagine that there has been a big jump in new subscriptions for Eve as a result of Dust. It should also be noted that only a few people in any group will migrate from Dust to Eve, and stay, as the games are very different. However, at the moment there is a very real problem with New player retention and if CCP can not hold on to them then the chances of these players picking up Eve approach nil. The core of loss leaders, in this specific case, is to bring in new customers and sell them other things, Eve Online, while they are here in Dust. Current customers in this scenario do not contribute anything since they have already bought the other product from CCP. To be honest, we the current players, are no longer the target market. Any of us who would take up Eve have and we have also made the transition into the open battle environment without quitting so it is not us that CCP should be concerned with. The target group is the new players and their reasons for picking up the game and either continuing to play or quitting. CCP needs to cater to these new players and work out a strategy to keep them. If CCP has created Dust as a bridge to Eve then they are failing unfortunately as new players are not staying long enough to learn about New Eden at least indicated by the static and/or declining number of people logging in. Yes some of the decline is the fact that it is summer but numbers haven't changed significantly since open beta got into full swing. Please note that becoming profitable is not the sole objective as CCP also needs to recover the costs of producing the game I.e. if dust makes a loss of 3 million a year and then in the 5th year makes a profit of 1 million then they still lost 11 million over this 5 year period. 11 million that could have been used for something else. In time they could recover that money but you would be talking decades unless they manage a very big increase in the player base, Eve or Dust, who then proceed to spend lots and lots of money consistently every year.
A'Real Fury D.A.R.K L.E.G.I.O.N D.E.F.I.A.N.C.E 214	Posted - 2013.06.25 18:29:00 - [5] - Quote Avallo Kantor wrote: It should be also noted that most of this conversation on how much DUST is making / losing is all speculation. We have no solid numbers on the cost of DUST, nor any numbers on it's actual profit. In that respect it's impossible to say if DUST is financially gaining, stable, or losing profit. Making claims to any of the above would be based on no solid evidence, and is no better than making guess work. What we do know is that CCP is profitable, and so long as they make money every year, then they are free to chase after any long term projects they wish to, especially if they are working under the assumption that these projects (such as the TV show) will yield high profits in a few years time. Companies (that plan on lasting) always put large chunks of money into R&D, as this is generally the expense filed for any work that is done to ensure the future of the company, and the design of new features / expansions /products. Seeing as they announced a TV show, a Comic series, and are releasing a new game it makes sense that most of the expenses related to meetings, development, planning, making the appropriate deals, would all be filed away in R&D costs, thus citing the number in the report. Especially since they probably got the director for it ahead of time. Another thing to consider is that CCP IS donating money to such institutions as Planetary Industries, and these things, while a bit unorthodox could also be filed into R&D costs as well. But that's just wild speculation on my part. You are right this is all highly speculative and I doubt we will ever gain access to the kind of figures that could answer our questions conclusively but the correlation in the increase in R&D costs in 2012 and the introduction of the closed beta is interesting. But how much of that budget went to Dust as compared to the other projects you have mentioned will currently remain unknown. Likewise how much revenue Dust is generating is guesswork but it is based on approx player count so it is not a completly wild guess. To your last point CCPs goodwill payments remains unchanged between 2011 and 2012 so does not contribute to the increase in R&D costs.