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.