Daybreak Revealed in Enad Global 7 Presentation

As I mentioned yesterday, we did not know much about Daybreak Game Company over its close to six years of existence.  It was a privately held firm and was reluctant to be straight with outsiders as to who even owned the company.  And before that, when it was SOE, its details were hidden within a giant conglomerate where it was such a small piece of the pie that it did not even get its own line item.

So having Daybreak purchased by a small public company, where it will be a large part of the pie and which needs to disclose details to the public means that we’re learning more about the company this week than we have known for ages.  Roll on Enad Global 7.

Enad Global 7

Yesterday’s press release about the acquisition gave us some fresh information and confirmed things we suspected, like the fact that Daybreak owned Standing Stone Games.  But there is more to be seen.  Over on their investor relations page you will find a presentation by EG7 about the state of Daybreak and its games that is stunning in its clarity after all these years.

It is so meaty that I downloaded it immediately lest it be posted in error and disappear.

The presentation starts by introducing EG7’s strategy and execution of their plan so far, which is an interesting read showing their acquisition pace up to this point.  And then there is the About Daybreak section, which starts with a nicely summarized history of the company.

Page 12 – a Brief History of SOE/Daybreak

Just enough detail I think.  A few side ventures are missing, and there is a whole book to be written about the strange path of H1Z1 over the last five years, but otherwise the basics are laid out.

They mention the licensed IPs the company has, as well as the valuable IPs Daybreak has created.

Page 14 – Valuable home grown IPs

EverQuest has booked about a billion dollars in revenue over its life.  Not bad.  A lot of games never come close to that number or 21 years of longevity.  The H1Z1 notes are a bit sad… inspired actually successful titles.  Sad enough that they stop mentioning H1Z1 after that.  And I still have a retort to that PlanetSide 2 world record which was a planned event and not any sort of organic player surge.

Cool stuff so far.  And then we get the real dirt!  Actual numbers about earnings and players.

Page 15 – Year to Date numbers as of Sep. 30, 2020

There are some surprises there, though not many.  We had been told that EverQuest was still pretty strong and it was implied that it was doing better than EverQuest II.  But now we know where EQII ranks in the overall lineup, which I guess is ahead of H1Z1, which doesn’t even get a mention.

And then there is DC Universe Online.  Smed, back in the day, told us that it was the top free to play game on PlayStation, and I guess it has held on to a solid base of players.  But if you want that all in chart form, there is a page for that.

Page 16 – Revenue and Earnings compared YTD through Sep. 30 2020

DC Universe Online has the highest revenues, but when it comes to earnings after expenses EverQuest is out in front.  That’s the joke.  A 21 year old game brings home the bacon.

Years ago Michael Zenke had been to SOE and was asking them about why they kept on with EverQuest when you could argue that EverQuest II was a better, or at least more up to date game.  He told me that EQ was so cheap to run that it was going to be profitable to keep going for a long, long time.  And here we are.

That DCUO isn’t at the top of the earnings is likely an indication that it remains strongest on the PlayStation, where it has to give Sony a cut of the revenue from the cash shop.

The presentation digs into further detail.  While the games still attract new players, a majority of the player base has been playing their game of choice for more than three years.

On the money front, the average monthly revenue per paying user for 2020 so far looks pretty strong.

Page 17 – ARPPU YTD through Sep. 30, 2020

Some whales out there spending money.  Of course, that is just the count among users that pay, and the conversion to paying user is important.

Page 17 – Payer conversion rate – YTD through Sep. 30, 2020

For EQ and EQII that probably translates largely to subscribers through the All Access program.  EQ just beats EQII on revenue because it has a lot more players.  Likewise, DCUO has the most players by far, so even at a much smaller conversion rate it makes more money.

I think the lesson here is more players is better if you want to survive.

The presentation also has some plans for the future.  They want to do an upgrade for DCUO to make it look and play better on the new generation of consoles by this time next year.  They also want to spruce up LOTRO as they see a possible boon in Amazon’s upcoming Lord of the Rings TV series.  There is even an unannounced new project.  Maybe it is related to the Marvel IP license Daybreak apparently holds.

The plans and view of the combined company are something as well.  As far as revenue goes, EG7 buying Daybreak pretty much doubles the size of the company in staff and revenue.

Page 27 – YTD revenue for EG7 groups

That is a big bite.  Daybreak’s ongoing success will very much influence EG7’s success.  They aren’t buying the company to neglect it.

While the era of the Jason Epstein Daybreak will end on December 31st, Daybreak will continue to exist as an entity withing EG7.  Within the corporate structure the Daybreak stuff will have its own area.

Page 28 – The Daybreak Structure

I am curious as to whether or not that was the actual structure within Daybreak today simply being grafted on to the EG7 tree.  I know Jen Chan let slip at one point about working with the SSG team on some things. (No location for Cold Iron Studios on that chart though, so no idea still if it was part of the sale and too small to mention, was folded in with Dimensional Ink due to the Cryptic background of both groups, or was retained by Jason Epstein.)

As for why keep that structure, that is certainly the best plan for the short term.  When you have an asset that needs to keep performing you do not introduce chaos as your first step in integrating.  Things will likely change over time.

Daybreak itself will likely remain a legal entity for a long time.  Having been through many mergers and acquisitions over the last 30 years… on average that has happened in a way that involved me directly about every three years over that time… there are a lot of reasons to not simply dissolve a corporate entity.  There are a lot of contracts and agreements made in the name of that company that have to be transferred over time, and the other side of the agreement doesn’t care about the change.  So you wait until a contract comes up for renewal and then you transfer it to the new owning company.  That can easily take a decade to work itself out.

And Daybreak, for all its foibles over the last six years, remains the unifying identity for the teams under it.  That is who they are in the EG7 ecosystem.

Page 24 – EG7’s world wide organization

That big owlbear eye that is the Daybreak logo will be looking out at us for a while longer.

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12 thoughts on “Daybreak Revealed in Enad Global 7 Presentation

  1. Wilhelm Arcturus Post author

    @Ula – Zenke wasn’t clear on that, just that it was cheap, but I suspect it doesn’t require as many resources at the server side and the tools to create content and maintain the game are all pretty well established. The limitations inherent in the old design probably means it is just easier to create new content for, so probably fewer staff hours are required. It also doesn’t seem to suffer from quite so many problems as its younger sibling, again no doubt due to simplicity. (I went and found the comment and linked it in the post. It isn’t very detailed.)

    Liked by 1 person

  2. SynCaine

    Really interesting, wish more companies shared this kind of info (I get why they don’t, but it would be nice).

    All of the numbers surprise me in that they are higher than I expected. 66k people playing EQ1 still is really significant for a genre that is ‘dead’, and for a game that is so old.

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  3. Wilhelm Arcturus Post author

    @SynCaine – And it isn’t just 66K people playing EQ, those are actual subscribers, people paying the $15 a month to be there and play. Once again, it shows that an online game can be viable business without getting into the millions of subscribers. If it brought in $11.5 million in the first three quarters, then it ought to be on track for $15 million for the full year, plus whatever money they make selling the new expansion. I hope we get numbers on expansion sell through.

    It is also interesting to see which games have a large percentage of subscribers. EQII has a high percentage of players who subscribe, so a small but dedicated following, while DCUO has a very small number of subscribers relative to its total base, though that is likely because the subscription is only available on the PC and it does very well on the console side of things where the cash shop is the only revenue stream.

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  4. bhagpuss

    Fascinating information. Like SynCaine, I wish more companies would release this kind of detail. The EQII figures are interesting. It’s a relatively small playerbase but they spend a relatively large amount. I’m pretty sure EQII players would say that’s because the game has been steadily converted into pay-to-win at the top end. If you’re in a raid guild in EQII you pretty much have to spend well over the monthly sub just to hold steady. EG7 seem quite excited by that. I wonder how much we’ll see of those (very unpopular) tactics in the other games in future?

    That aside, the best part of all of this is that the games have clearly gone to a company that sees them as an ongoing, live asset. EG7 may or not turn out to be good at running them but at least I think we’re safe in saying they’re going to try to run them, not prep them for sale and move them on.

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  5. Archey

    That info makes me think this is less like a Gamigo acquisition and more like Pearl Abyss: letting them maintain control while having a steady hand on the tiller, and also that they know the intangible value of what they have.

    In addition, their other sub companies seem to have clever/playful names, but with actual track records. So that bodes well too in my opinion.

    On a side note, I noticed that Enad is “Dane” backward, and Sweden is really close to Denmark. I wonder if that means anything..

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  6. Redbeard

    I believe this might make it easier for Standing Stone to keep the LotR license. That’s always a favorite topic of LOTRO people in gen chat, so this might put a few people’s minds at ease. What I did find interesting is that LOTRO actually does hold its own in the charts. Not the highest, not the lowest, but steady. There are some really dedicated fans of the game there.

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  7. Anonymous

    About the comment of all those members being subscribers.
    Daybreak sold all access lifetime passes a few years ago. They sold about 5000 of those iirc.
    I severely doubt that EQ2 has an active player base of more than 1500 people. Their servers are ghost towns.

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  8. Simon

    I thought I recognized the name Antimatter games. They’ve made a bunch of successful shooters: Killing Floor is probably most successful one. But they also made the Rising Storm series of games. Their work has a reputation for very high quality. Rising Storm are considered to be the “thinking man’s” shooters I believe.

    So Enad’s portfolio of games seems to be pretty stellar. I assume if you looked at the other game companies they’d have games of equal quality. That seems to bode well for their sheperding of the Daybreak properties.

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  9. Wilhelm Arcturus Post author

    @Simon – Given that Antimatter is grouped up with other studios on that chart that brought in about a third of what Daybreak has so far this year, I am guessing that “thinking” isn’t a big shooter demographic.

    @Anon – Daybreak sold no more than 10K lifetime subs for $299 each in December of 2018, a deal that was across the big four of their games that are on the chart above. So it isn’t like it was 10K EQ2 players only. But they are still paying customers, hence subscribers. The same holds for LOTRO as well, where they have sold many lifetime subscriptions. I bought mine in April 2007, so got a hell of a deal. And, while my own average paid per month is now ridiculously small, a lifetime subscriber tends to be more engaged and likely to buy other things, like expansions. I hope that EG7 has some details about expansion purchases in the Q4 results.

    The people who bought the Daybreak deal in late 2018 are just now reaching what might be considered the break-even point for tossing in $299, so they are still as valuable as somebody who subscribers in six month increments up to this point. And even then, those people are only counted in the monthly average users total if they log in.

    It would be fair to ask how much overlap there is between the subscribers for some of these games, or how many total subscribers the company has. Since the subscription covers the main four, how many of those in the monthly subscribers are counted under both EQ and EQ2? When I subscribe I tend to at least log into both.

    As for EQ2’s population, the number on their slide matches what Feldon who runs the EQ2 Census doesn’t object to it.

    EQ2 Norrath is a big place and probably has too many servers still. Live should probably be Antonia Bayle and one other combined server. Their retro servers are also much less popular that the EQ versions, likely because EQ2 has nowhere near the installed base of the older game. EQ was the big fish from launch until WoW. EQ2 has had to live in the shadow of both of those games as well as through some dev ideas that were… charitably… a waste of time.

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  10. Eric Sandall

    Wait, how can can Planetside 2 claim the most players in a single battle in a single session when EvE Online has topped that several times, e.g. In 2014 https://en.wikipedia.org/wiki/Bloodbath_of_B-R5RB:
    > The total number of players in the B-R5RB system peaked at 2,670, which was less than the previously largest battle in Eve at 6VDT-H, which had 4,070 players in the main battle.
    They’re lying and using old data, Guiness World Records is a joke in accuracy, or both. :)

    Like

  11. Wilhelm Arcturus Post author

    @Eric Sandall – The GWR for PlanetSide 2 is apparently for a first person shooter specifically and not an overall PvP game. Or so the tale is told, but Daybreak tends to omit the specific bits when they speak of it.

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