Enad Global 7 Posts Strong Q4 2021 Results with High Hopes for MTGO

Enad Global 7 posted their Q4 2021 and overall 2021 financial results this week.

Enad Global 7

As reported elsewhere, it was a good quarter for the company, with revenue up significantly.

While services made a huge leap in revenue, with the split between services and games being 60/40 in Q4 2021, the whole revenue stack for Q4 2021 dwarfs what it was for Q4 2020 when EG7 was in the process of acquiring Daybreak.

EG7 Q4 2021 slide 8

That said, while Daybreak remains the dominant part of EG7’s game segment, and grew slightly in Q4, I do wonder why it didn’t grow more.

Q3 vs Q4 Games Revenue

Those values are in Swedish Krona, but it is close enough to equal to the US Dollar at the moment as to make no difference for a chart.  Q4 saw Daybreak launch three expansions, with Lord of the Rings Online, EverQuest, and EverQuest II selling virtual boxes with price points as high as $250 for the super deluxe friends and family packs, which would at least lead me to assume that Q4 ought to see a significant bump.  I mean, you don’t ship content packages like that unless they are making you money.

Now, I don’t have the same chart break out for Q2 for a direct, ongoing comparison, and maybe they account for pre-orders in Q3 rather than Q4 (though generally you only count revenue when you deliver a product), but it is still something that makes you wonder.

Anyway, the classes I took on finance and accounting were all more than 30 years ago at this point, so my opinions do not carry a lot of weight.

Instead, I’ll move on to the forward looking statements, as there is a slide dedicated to EG7’s 2022 plans.

EG7 Q4 2021 slide 16

In the short term they have a couple of games in the pipeline.  They are also expecting Lord of the Rings Online to see an uptick due to Amazon’s The Lord of the Rings: The Rings of Power streaming series, which is slated to premier in September.

Then there is Magic The Gathering Online, which I will get to in a moment, along with some mergers and acquisitions they have going.  I wonder who is left worth buying?

While the business focus is “2022,” the last time around things in the medium term seemed more likely to come to pass in 2023.  Big updates for LOTRO and DCUO were previously mentioned, so MTGO is the new piece in that picture.

And then there is the long term, which looks somewhat different that it did in the Q3 2021 presentation, with a promise of new products based on EverQuest and H1Z1, along with DCUO.  That is new.  I am not sure what it means, and after the folly of EverQuest Next I am not about to get invested in any fantasies about what it might mean, but there it is.  And H1Z1?  They can’t let that go, but there is still nobody actually working on it either last I heard, so I don’t even know where to go with that.

Missing is any reference to the Mavel IP MMO being developed, mentioned as part of the Q3 2021 presentation, which was probably the most widely reported thing EG7 has ever announced.  It is mentioned in passing in the Ji Ham statement at the top of the interim financial report, but that isn’t exactly top billing, so that might be far enough out that they don’t want to wear out its popularity too quickly.

And then there is Magic the Gathering Online, which gets a slide all to itself.

EG7 Q4 2021 Slide 4

EG7 announced this deal back in December, and we’re getting a little more detail now.

“Acquihire” generally means to buy another company to get their development team as opposed to their product line, though given that this is being billed as a license deal with no upfront purchase (free to play acquisitions!),  “aquihire” might be the wrong term, but I am not sure what the right word would be.

But the result is that the team that was working on MTGO now works for Daybreak and are carrying on developing and supporting the live game.  EG7 is highlighting this, and it is a big deal with some revenue heft behind it.

But deals like this don’t happen when a title is doing super awesome and revenue is expected to keep growing.  Magic the Gathering Arena, which is available on mobile devices, as opposed to the Windows only MTGO, is said to be the new hotness for digital MTG fans, with a superior business model and all that.

I am not saying that EG7 is being too optimistic.  MTGO is still a substantial business and an immediate addition to their revenue stream.  They are winning on this deal from day one.  And there is no doubt a solid, core player base invested (literally and figuratively) in this title.  But there is a reason that this deal isn’t getting anything close to the amount of press the Marvel IP announcement did.

Anyway, that is 2021 for EG7.  On to 2022.

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2 thoughts on “Enad Global 7 Posts Strong Q4 2021 Results with High Hopes for MTGO

  1. bhagpuss

    I thought it sounded reasonably encouraging. If I had to guess, I wouldn’t be surprised if the EQII expansion underperformed. Of all the main titles, it’s EQII that feels the most fragile, which is a shame because it’s also the one I play the most.

    Everquest will be fine for a good while longer, I would expect , as will DCUO. Planetside 2 seems to be having a resurgence. EQII, though, although I think it’s definitely moving in a more veteran-friendly direction, might already have ticked off too many paying customers. I hope not.

    It is curious how they consistently tease something coming for the EQ IP but never really even hint at what it might be. I get that they don’t want another EQNext disaster but some kind of idea of at least what sort of product they’re thinking of might be nice. That said, a finished product with a release date would be better than any amount of pre-production chatter. I won’t hold my breath, in any case.

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