I keep having to remind myself that Daybreak’s parent is a public company once again, and a small enough one that Daybreak’s products aren’t hidden in the numbers but are big enough in the company to get highlighted at every report. EverQuest is a big name at Enad Global 7.
Fortunately I have a Google alert setup for Enad Global 7 which, unlike some of my other alerts, has proven effective at catching updates about the company. So early this week I got the nod that their Q2 2021 preliminary financials had been announced. The statement was short and sweet:
During the second quarter, we delivered a net revenue growth of 179%, EBITDA growth of 360% and meanwhile having successfully integrated the acquisitions we closed in the first quarter of 2021. With our rapid acquisition growth, we have digested, integrated and built up the necessary processes to continue our strategic focus. I am delighted to announce that the relaunch of MechWarrior 5 was profitable already after a couple of weeks. It was a testament of the collaboration power between the subsidiaries of the group.
There was also a slide deck investor presentation to go with the announcement. (The income statement covers much of the same ground.) Quite a bit of the deck was information previously shared. They did note that Daybreak’s seven titles account for 50% of the company’s revenue.
Daybreak, owner of 7 IP’s that are live and account for 50% of the revenue, mainly PC and Console. Distributed mainly through our own platform.
Elsewhere in the presentation they say that live games make up 50% of the revenue for 2020, which includes My Singing Monsters as the 8th title, so I am not sure how that breaks out.
And, as always, the like to talk about the strong IPs and long running titles that came with Daybreak.
Compared to that 16% of the revenue comes in via Innova’s 4Game platform which hosts titles licensed from other companies for distribution in the EU and CIS including Lineage II, Aion, and Ragnarok Online.
The presentation wasn’t big on news. The previously announced plan to migrate all their titles onto the 4Game platform was reconfirmed.
Not a big news day for EG7 really. A good financial report, some rah rah, and back to work.
As I was tracking down the financials I found that the same day a bomb dropped at EG7. Robin Flodin, the chipper, young, and enthusiastic CEO of EG7 that gave us all such good feels when the Daybreak acquisition was announced, was being given the boot, with Ji Ham of Daybreak stepping in to fill the role as acting CEO.
The Board of Enad Global 7 AB (publ) and Robin Flodin have agreed that effective immediately Robin will transition away from his current role as CEO of EG7 and will be replaced by the current CEO of Daybreak Game Company, EG7’s largest subsidiary, Ji Ham. During this transition Robin will stay on for six months to assist Ji as he assumes his new role within the EG7 family of companies. Ji will be appointed acting CEO of EG7 as a search for a permanent CEO has been initiated. Ji has an extensive background in both gaming and finance and has for the last six years been the CEO of Daybreak. During his tenure at Daybreak Ji has overseen extensive growth and profitability of the company.
Of course, this made hearts sink, and not just because some of us had crushes on Robin.
Ji Ham should have an entry on the IMDB given his ongoing acting roles. After Smed got the heave-ho from Daybreak, long time SOE exec Russel Shanks took over for a bit. But that did not last long and Daybreak quietly updated its information to indicate that Ji Ham had stepped in as acting president of Daybreak.
Nobody outside of the company was quite sure who he was. His profile over at Bloomberg, which has since been scrubbed from the site (classic Daybreak move), indicated that he was with Columbus Nova’s renewable fuels group, working closing with the Russian Renova Group, which owned Columbus Nova.
The profile probably disappeared during the 2018 panic when Daybreak tried to gaslight everybody , though “gaslighting” implies some subtlety and skill that was not present in the act, into believing that the company had never had anything to do with Renova, Columbus Nova, or any other Russians that might be facing sanctions from the US government. And that is what the Daybreak era reminds many people of, a regime of obvious lies.
So why is Ji Ham in and Robin Flodin out?
I suspect we’ll never know the real dynamics of the situation, but looking at the slide deck from the quarterly numbers, Robin didn’t own a lot of the company. The combined management and board of directors own 49% of the company, broken out like this:
I have pasted in the total ownership stake in the company for each individual (you might need to click on the image to view it full size to make those numbers readable) and in that mix that represents 49% of the company, Robin holds just 3.504% That is a lot of shares, but not enough to maintain any sort of control
Meanwhile our old Columbus Nova friends, Jason Epstein and Ji Ham, own more than 9% of the company. Add in the fact that Daybreak is responsible for 50% of EG7’s revenue and it probably isn’t a huge mystery as to how Jason Epstein and his partner Ji Ham got themselves in the driver’s seat again.
As for what it means… well, I am skeptical. The press release says this about Ji Ham:
During his tenure at Daybreak Ji has overseen extensive growth and profitability of the company
That seems to be, from the outside, counter factual.
From the outside Ji Ham’s tenure was one of cancelling new titles, shutting down old titles, laying off staff, and tarnishing the reputation of the company with outrageous historical revisionism. The company may have seen profits, but it wasn’t due to growth. Growth didn’t enter into it. Profits came by cutting costs and not investing in anything new, it came from maintaining the status quo at the cheapest possible rate.
Is that the future now holds for EG7? Have they finished with their growth through acquisition phase and moved to consolidation and profit seeking? Is Ji Ham being put on the throne to do to EG7 what he did to Daybreak?
Yes, I know he is “acting” CEO, but he was “acting” President and CEO at Daybreak too, and he had a long run in that role. He has recast his LinkedIn profile in the Daybreak tradition to indicate that he was CEO of the company since the date of Smed’s departure. There was no Russell Shanks, only Ji Ham. He did a modest attempt at downplaying the fact that he was deep in Columbus Nova, that company that never had nothing to do with Daybreak ever.
I suspect he hopes people think he worked for Canadian Northern Railway and not a Russian oligarch investment front.
I might be borrowing trouble here, taking the dimmest possible view of events, but back in December, when EG7 announced their acquisition of Daybreak with a vision of growth and investment, a lot of optimism bubbled up for the future of the company and its titles. That optimism came from the grim times that the Daybreak era represented, so bringing back the same actors to run the new show can hardly be expected to be received with enthusiastic applause.
Of course, some of that December optimism was likely misplaced, especially on the LOTRO front. Making a console silk purse, as the initial announcements hinted at, out of the sow’s ear that is LOTRO now… and that, honestly, LOTRO has always been… would require an investment in funds that would likely never see a return.
And who knows, maybe EG7 is still looking to expand and grow. Maybe Ji Ham will be given resources and instructions by the board to go in directions he could not when he was at the helm of Daybreak. Hey, maybe the “acting CEO” bit isn’t a lie, maybe the company is really looking for a new CEO and Ji Ham will be just a caretaker… though why he needs a six month transition from Robin Flodin raises some questions on that front, though likely it means Robin gets paid as CEO for another six months while not having anything to do after a week or two.
But it is concerning. It smacks of a return to the habits of Daybreak writ larger as they now apply to even more studios. As I said with the initial burst of optimism about EG7 I will now say about this dark turn; we will have to wait and see.
Addendum: As pointed out here in the comments, Robin Flodin apparently had problems during an interview he was giving on Swedish television where he couldn’t explain the difference between sales and revenue.
That Tweet, which I also linked in the comments, points to an article about the interview. Google translates the headline as, “Robin Flodin is forced to leave the position of CEO of EG7 after a high-profile interview.”
So the ascension of Ji Ham was perhaps not premeditated, though we have yet to see what it will mean in the long term.