Daybreak and All Their Sins Remembered

What a week it has been for Daybreak.

That eye should be crying after this week…

First they get caught in a pretty big lie.  And it was a lie nobody expected so when they said it people immediately questioned it.

There is absolutely no question they were lying, it is just a matter of what they were lying about.

Either Columbus Nova was part of the purchase of Daybreak back in 2015, or the company has been misrepresenting that material fact repeatedly for the last three years.  Either there was some financial benefit for them lying over and over for three years or they have chosen to start lying now as a measure of expediency due to sanctions against Russian oligarchs.

And honestly I can’t decide which is correct, mostly because I can’t figure out who they might have tricked by lying for three years.  (As a side note, somehow the same “mistake” was made with Harmonix back in 2010 when press releases announced Columbus Nova was purchasing them, but now they also say it was Jason Epstein all along.)

And Daybreak can’t manage to fully close the door even with its own definitive, we’ve said all were going to say statement posted to all of the forums.  Quoting for truth, since they’ve gone in to edit this statement already like it was on Wikipedia:

Dear Daybreak Community,

There has been some confusion concerning Daybreak’s ownership and rumors about the state of the company that have circulated from a few online game websites, and we want to set the record straight. We assure you that these rumors are entirely false and that there’s no impact on our business or games in any way whatsoever.

From the get-go, Daybreak has been primarily owned by Jason Epstein, a longtime investor who also has investments in a variety of media properties. Jason acquired Daybreak (formerly SOE) in February 2015 and has been the executive chairman and majority owner of the company since that time.

We’re well aware of prior statements from Daybreak indicating our company was acquired by Columbus Nova. We have since clarified that the company was acquired by Jason Epstein when he was a partner at Columbus Nova, which he left in 2017. We’ve also taken steps to clarify those facts on our website and on third-party internet sites to ensure that all of the information currently made available is consistent and accurate.

We apologize for the previous miscommunication and hope that this clears up any confusion. As always, we greatly appreciate your continued support for our games, and we’ll continue to work hard to bring the best experiences to you.

So that settles it, right?  Maybe.  I just trip over the first sentence of the second paragraph:

From the get-go, Daybreak has been primarily owned by Jason Epstein…

When you feel the need to throw in the word “primarily” it does suggest that there were other owners.  Maybe it was Columbus Nova!  Maybe that was the bit Sony held onto.  Maybe it was a couple old ladies from Sheboygan.  We don’t know and Daybreak doesn’t seem in a mood to offer anything beyond a lame understatement of their actions over the last three years.

By the way, after Daybreak edited their Wikipedia article to take out any mention of Columbus Nova, somebody went back and added this:

Evidently wanting to distance itself from Columbus Nova, Daybreak started claiming in April of 2018 that the original press release was in error and that Jason Epstein purchased the company personally. It is not clear when exactly Columbus Nova, Daybreak, and Jason Epstein severed ties.

So yeah, their efforts haven’t exactly born the fruit for which they were likely hoping.

And the kicker is that it probably doesn’t matter.  Lying to us is futile and, as you can see, even counter-productive.  A wasted effort.  If the FBI wants to know who bought them they’ll find out.  I am sure they can subpoena Sony to see who signed the check and where the funds came from.  So the lesson here is, if somebody asks you if you’re going to be affected by sanctions on Russia, just say, “No.”  Don’t use that moment to bring up a tale about how you’ve never been owned by the company you’ve been telling everybody was the owner for the last three years.  It clearly will not turn out well.

That was enough silliness on Tuesday and I figured once Daybreak got their story straight and stopped trying to gaslight the internet we’d all wander off to fret about lockboxes or whatever the next story of the moment turned out to be.

But then yesterday another blow landed as we found out that Daybreak had a significant layoff, with a reported 70 or more people being let go.  Sure, that probably had more to do with how the company has been doing rather than anything related to Russian sanctions, but could the timing be any worse?  We’ve never been owned by that Russian company, Russian sanctions won’t have any effect on us, but we’re laying off a huge chunk of our staff.

And MMORPG.com threw a bit more fuel on that fire with a rumor about Daybreak possibly being acquired by another company… at which point Jason Epstein would drop out of the picture… maybe… he might be there as well.  That story felt really thin, and given that the author also said that Daybreak acquired Standing Stone Games, I wouldn’t give it much credence.  After all, we know that it was Jason Epstein who acquired Standing Stone… erm… no… Daybreak got into a deal to be Standing Stone’s publisher, a deal that seemed to bring almost no benefit to Lord of the Rings Online or Dungeons & Dragons Online so far as I could tell.  But Daybreak didn’t buy them.  I don’t know who actually owns Standing Stone Games though.  It could be Jason Epstein though.  I wouldn’t cross him off the list.  He is a busy guy.

Anyway, it was enough to make a long time fan of the Norrath feel more than a bit defeated.

I mean, I am used to having the weight of SOE and then Daybreak’s foibles drag me down.  To be a fan of theirs is to suffer.  So instead of posting a piece I already had written about the EverQuest Agnarr server launching the Planes of Power expansion and how that is the centerpiece of their locked-in-time plans for this retro server, I am spewing out text about yet another bad turn in the life of this company and its games.

What is going to happen?  What does the future hold?

My gut says that there is value in the EverQuest franchise and that, run properly, EQ and EQII could be a nice little niche money spinners wherever they end up.  I had been feeling that Norrath was doing better than anybody had a right to expect under Daybreak, with yearly expansions and content updates in between.  But with layoffs is that at an end?

I guess DC Universe Online is safe, being that it is said to bring in a reliable revenue stream.  But PlanetSide 2 has been troublesome in the past and H1Z1… or whatever name it has now… was looking pretty good, right up until the point that it got trampled in the fight between PUBG and Fortnite over the battle royale space.  Now it is going onto the PS4, but will they bother bringing it to China?  And it feels like Just Survive just won’t.

And this one-two punch of lies and layoffs has brought up all the old resentments and recriminations in the rather close knit world of MMORPG gamers.  So it seems to be the time for some to replay every grievance from the past, from the NGE and the fall of SWG to the false hopes of The Agency to the replay of false hopes and the faked demos of EverQuest Next to the early death of Landmark and every foible big and small in between.

There is a lot of resentment and feelings of betrayal when you look back down the road the company has traveled.  Every game shut down, every bad decision they had to reverse on after announcing, every upbeat demo or announcement followed by months of silence, every update that didn’t meet expectations, every bug that lingers for year after year, every nutty side project that ate up dev time only to be abandoned… it all adds up.  Also, that ProSieben thing.  How could I forget that?

Games don’t last forever.  Mistakes happen.  Bad decisions get made.  Every feature, no matter how bad, is somebody’s favorite.  You’re always going to piss somebody off no matter what you do.  But Daybreak over the years feels like it has done more than its share of all of that, and it isn’t a big company like EA or Blizzard where they can piss people off and get past it by launching another Battlefront title or WoW expansion that will sell millions of copies.

It feels like we’re getting to the end of the story of SOE and Daybreak.  Maybe not today, or even this year, but things are headed in that direction.  They’re maintaining the old titles, but the only hope from the new was H1Z1 and it seems to have fallen by the wayside in the genre it helped spark.  There might be a new title in the works, but having to lay off so many people is going to impact something.

What do you do?  Do you cut back on supporting the old base?  No more expansions for EQ and EQII?  That brings in money and keeps the old base there.  But if you don’t work on something new then the future is set as an ever dwindling player base will lead to an every smaller staff and an eventual shut down.

Not a good week to be a fan of any of Daybreak’s remaining products.

Maybe I’ll feel better about all of this tomorrow and put up that Agnarr post.

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8 thoughts on “Daybreak and All Their Sins Remembered

  1. RohanV

    This tangentially touches on my work domain, so I’d like to offer an interpretation where Daybreak is not lying.

    By default,each partner invests some money into the partnership. The partnership then goes out and invests in a company (this is called a “deal”). Profits and losses from that deal are allocated to each partner in proportion to the original amount invested.

    Normally, each partner puts the money up front when the partnership is formed and each partner participates in each successive deal. There’s some fun math involved when partners invest more money into the partnership or withdraw money, but by and large this principle holds.

    However, a partner does not have to participate in a specific deal. She can refuse specific deals, and gets no profit or loss from that specific deal. Or possibly she wants to participate in a greater or lesser manner than normal. The partnership agreement will detail how often, or under what circumstances a partner can refuse. Also, sometimes a partner cannot legally participate in a specific deal, so she’s kept out of it.

    It’s possible that Jason Epstein was the only partner in Columbus Nova who was willing to participate in the Daybreak deal. He fronted all the money, and would get all the profit or loss. If this is the case, Columbus Nova would pretty much just act as Epstein’s agent, and it is reasonable to say that Daybreak was acquired by Jason Epstein. It’s also just as reasonably to say that Columbus Nova acquired Daybreak. It’s a matter of perspective.

    Now, I obviously have no insider knowledge of how things went down. But this is an interpretation which roughly matches all the statements made, and without anyone explicitly lying about things.

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  3. Wilhelm Arcturus Post author

    @RohanV – The problem with that scenario is that, while it could really be the case, it doesn’t explain or excuse Daybreak’s recent behavior. In the scenario above where either Jason Epstein or Columbus Nova could be said to have acquired Daybreak, I don’t think you get to pick one story, run with it for three years, then suddenly claim it was a mistake and that the other possible scenario was that all that ever applied without somebody legitimately checking if your pants were even then on fire. Being that they are privately held, we’ll likely never know the real answer unless the government shows up and impounds the company.

    Anyway, Daybreak’s biggest problem is credibility with its installed base. This week has been yet another blow to that credibility because even if there was a scenario where they could claim they were technically telling the truth… or merely lied by omission… their behavior has made them look like they are lying and now they are worse off than before.

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  4. Bhagpuss

    I’m probably going to post something about this tomorrow, if I can summon up the willpower. I’m glad you went over it in depth because I can just link to you for the facts and then editorialize. I certainly don’t want to try and untangle it myself.

    The whole farrago has been insane. I would be willing to believe it’s the result of one person having the business equivalent of a psychotic episode. It seems that all DBG really need to do was issue an innocuous PR statement along the lines of “We have no reason to believe the sanctions will impact our games” and everyone would have wandered off looking for someone else to burn. Given that almost everything they’ve done since the takeover has been measured to the point of boredom this current Smedleyesque self-immolation is incomprehensible. Come to think of it, Smed’s keeping awfully quiet…

    The layoffs may be just bad timing but even though H1Z1 is in freefall there’s the PS4 launch coming. I would be more inclined to believe that whoever does actually pay the bills is aware that a major source of funding is about to become unavailable, perhaps sometine in early June…

    As I have said repeatedly, as a player I have found the period of DBG ownership – whoever the legal owner may be – to have been one the most enjoyable, stable and productive in the history of the EQ franchise. I would have been very happy for whoever runs the thing to have carried on as they were indefinitely. Since that clearly is no longer an option I would not be dismayed to see the IPs sold. It does depend who might buy them though.

    The most ironic part of all this is that the sanctions are probably going to turn out to have no direct impact on DBG whatsoever. There’s an excellent post on the PS2 forums by someone who clearly knows how these things work explaining why DBG, even if it is wholly owned by Columbus Nova, is unlikely to feature in any specific, targeted action by the U.S. authorities. Once again, I can’t see why they couldn’t have just kept quiet and carried on as if nothing was going to happen because it probably never was. Someone panicked, obviously.

    Also, who *does* own Standing Stone? I was never clear on that.

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  5. RohanV

    Legally, the answer is unequivocal. If my scenario is correct, Jason Epstein owns Daybreak. Jason Epstein has always owned Daybreak. If Columbus Nova is a regular partnership, then it doesn’t own anything and ownership entirely belongs to the partners. That’s the difference between partnerships and corporations. Saying “partnership ABCDE bought 100 shares of X” is just shorthand for saying, “Partner A bought 20 shares of X. Partner B bought 20 shares …. Partner E bought 20 shares of X”.

    But it’s common shorthand. Daybreak was probably approached by Columbus Nova and treated Columbus Nova as if it were a entity. The deal was probably brokered by Columbus Nova’s employees and lawyers. But if, say, your lawyer acts as your agent and buys something on your behalf, you still own it.

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  6. Wilhelm Arcturus Post author

    @RohanV – I get what you’re saying. But if Epstein concluded the initial deal as a partner in Columbus Nova, to the point that the deal was announced as being by Columbus Nova, then Epstein leaves Columbus Nova, taking Daybreak with him, it still sounds disingenuous to, at that point, claim that Columbus Nova was never part of the deal and that it was just a mistake you’re correcting three years after the fact. It wasn’t some ill informed outsider who brought the Columbus Nova name into it, to the point of putting them as the parent company in things like the privacy agreement, but Daybreak and Epstein themselves.

    But that is getting down into splitting hairs. When you have to says, “Technically this was never the case…” then you’ve likely been lying by omission.

    Anyway it is how Daybreak has behaved this week is the real problem. They should have just said “no” when asked if sanctions were going to have any impact on them, not start denying that they were ever associated with Columbus Nova and demanding that Massively OP remove any reference to CN. They have become a headline over at Ars Technica due to stupidity.

    @Bhagpuss – Who owns Standing Stone Games, LLC? (Not to be confused with Standing Stone Gaming, LLC, founded in 1999.) And who owns Broadsword Online Games, Inc. while we’re at it? The former is registered in Delaware, which wants money to tell me anything, while the later is incorporated in Virginia. The office of the Secretary of State of Virginia has the most quaint system on their web site that is essentially their ancient command line interface moved onto a web page. They tell me that the registering party was Rob Denton, formerly of EA/BioWare and a founder level person with Mythic back in the day.

    What neither site or any public record is going to tell us is what sort of contract either has with the holders of the rights to their games, WB and EA. I am sure there is some steep profit sharing and regular licensing fee to be paid. It would be interesting to know what that was and how much sway WB or EA hold over the day to day business of their vassals.

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  7. Wilhelm Arcturus Post author

    The Ars Technica article seems to be getting some response. And unnamed source is telling them that that “Daybreak was actually purchased in 2015 by Jason Epstein through his wholly-owned LLC, Inception Acquisitions.” That is interesting, if true, but goes right back to the question of how come everybody who was part of the buyout kept saying Columbus Nova. There is some rationalization behind it, but it is the sort of thing that makes you wonder why they couldn’t get the facts straight in the first place. You would think Daybreak internal would know who bought them.

    And then the same source says that Columbus Nova has nothing to do with Renova, an assertion that has some problems of its own.

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  8. Bhagpuss

    The Ars Nova piece is interesting indeed, not least because, if true, the statements made by their unidentified DBG source actually go some way to explaining the behavior of the last few days, which, as I said, otherwise looks like actual madness. Taken with RohanV’s comments about partnerships above, it becomes not only possible but believable to see a situation where a number of individuals and entities were nested in such a way, making use of each other’s available resources while referring to their various constituent parts in a shorthand (or offhand) manner that made sense to insiders but would mislead anyone not in the loop.

    I refer again to the PS2 forum thread where someone convincingly argues that DBG is and never was in danger of being included in the coming US Govt. sanctions, though. Even if in the end the new version of the takeover turns out to be the factually correct version and the version Smedley trotted out three years ago the false, the two things that matter to players are whether the sanctions apply and, if they don’t, whether whoever owns the company has the wherwithal, post sanctions, to continue to run the company profitably and keep the servers up.

    That we will know in June.

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