Tag Archives: Magic The Gathering Online

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.

Related:

Friday Bullet Points about Acquisitions on Christmas Eve

At this point it is probably too late to worry about whether you’ve been naughty or nice in 2021, but there is still some time left before the fat man flies to touch on a few items I wanted to bring up but which didn’t seem worth a full post.

  • Daybreak and Magic the Gathering Online

The news hit yesterday that Daybreak, now always highlighted as a fully owned subsidiary of Enad Global 7, though with the Daybreak boss in as CEO you might ask who really owns who at this point, made a deal with Wizards of the Coast (owned by Hasbro now) to take over publishing and operational duties for Magic: The Gathering Online, the virtual version of the classic collectible card game.  The deal also includes the right to “develop” the title.

Magic the Gathering Online

Daybreak has had experience in the past with collectible card games, though those have all since been shut down.  According to the coverage at Massively OP, the deal means that the development team responsible for the title will become a studio under the Daybreak banner, as opposed to being folded into one of the current studios.

  • Crowfall Finds a New Home

In a classic “hide the message” move, it came out last Friday after the US markets had closed (the press release hit my inbox at 4:20pm Pacific time, so dude!) that Crowfall, a crowdfunded MMO that actually went live earlier this year, making it an exception to the rule for MMOs choosing that financing route, was to be acquired by Monumental, the studio which runs Mythgard.

Is this even still their logo?

Despite the after hours on a Friday press release, the news seemed promising for the title. While the Crowfall team ran a successful Kickstarter campaign back in 2015, bringing in more than $1.7 million, and managed to launch earlier this year, the game appeared to be struggling to find an audience.

According to coverage over at Massively OP, Monumental will be providing resources to improve the game and keep it going, as the title seemed to be foundering after its launch.

  • Perfect World Entertainment embraced by Embracer Group

Also in for an end of the year acquisition… companies are out doing their holiday shopping before the end of the fiscal year I guess… was Perfect World Entertainment, which had itself acquired Cryptic Studios (which created Neverwinter, Star Trek Online, and Champions Online, but which is probably best known for the late City of Heroes) and Runic Games (which did the Torchlight series, Hob, and Mythos) over the years.

Just down the street from EA HQ, though Cryptic is less than 2 miles from my house

The buyer is the Embracer Group, which also acquired Gearbox earlier this year.  PWE will be slotted in as part of Gearbox in the organization.

Since Embracer is publicly held, they had to do a report on the acquisition, which included fresh new details about some of the titles.  Not as in depth as what we got about Daybreak when EG7 acquired them last December, but still some data points including lifetime revenue and total player counts.

I suspect that format was chosen to give the titles the best possible look financially.  Star Trek Online, for example, was reported as having made $240 million over its life so far, with 4 million players trying the title.  That means the nearly 12 year old title has made about $20 million a year, but I imagine a good chunk of that was early on and includes box sales.  No word on what it, or any of the other PWE titles have been pulling in recently.  That the price was $125 million in cash and equity, less than half of what Daybreak sold for a year ago, one might infer that PWE titles would rank closer to the lower end of the Daybreak titles in gross revenue, and maybe even less in net profit due to some of them being licensed properties.