Following the CEO's recent letter of apology promising a refocusing of development on in-space EVE features, news of highly requested features due for inclusion in EVE has gone a long way toward restoring confidence in CCP as a developer. With the return of ship spinning earlier this week and news of updates from hybrid turret rebalancing and implants being added to killmails to the release of the player-designed Tornado battlecruiser, the process of refocusing on EVE is well underway. Unfortunately, the good news of upcoming gameplay updates has been marred by the sobering reality that over 20% of CCP's worldwide staff have been laid off as part of the refocusing effort.
In this week's EVE Evolved, I look at the human casualties of the recent EVE drama and speak to an insider at CCP about what's going on within the company. Unless quotes or facts in this article are specifically attributed to this insider, they are my own views and opinions based on publicly available information.
From humble beginnings
Back in 1997, a team of ambitious Icelandic MMO fans officially founded the Crowd Control Productions company. With nothing more than a few keen minds full of ideas, the new company lacked the funds required to jump straight into MMO development. To finance its plans, the team designed and published the board game Hættuspil (translated as "Danger game") and used its business success to secure bank funds and private investment on good terms. The team hired for key positions and set about developing its dream game: EVE Online. Three years of hard work later, EVE launched to an initial burst of success, gaining over 30,000 subscribers in its first few months.
With over $450,000 US per month pouring into CCP's bank account, the money was ploughed back into development. New staff members were hired and the company moved to ever-bigger office spaces. Subscriptions rose steadily until summer of 2005, when EVE's popularity began to skyrocket. When Star Wars Galaxies' New Game Enhancements update unexpectedly hit in November of that year, EVE saw another spike in subscribers and continued to grow steadily for years to follow.
By the end of 2009, 350,000 active subscriptions were pouring a total revenue of over five million US dollars per month into the company. CCP was still on its path to world domination, having merged with White Wolf in 2006 and opened a China office in August 2009. With no publisher taking a large chunk of the profit, cash continued to be re-invested in expanding the business.
Overextending its reach
In some ways, CCP has been a victim of its own continued success. It was one of those rare companies that didn't have to give a big slice of the revenue to publishers or investors; as long as EVE subscriptions kept increasing year-on-year, CCP could have kept expanding indefinitely. Unfortunately, subscription income began to decline this year and I can't imagine the Incarna clothing in the new microtransaction store has made a significant number of sales. While CCP is still trotting out the 400,000 subscription number from early summer, the insider tells me that "the official word is that as of the week before the infamous apology, we had lost 8% of account volume."
Despite the drop in income, the job losses still came as a shock. While MMO studios have been known to let staff go under similar circumstances, none of them has had access to the full value of a massive, established and generally stable revenue stream like EVE's subscriptions. If CCP has been forced to let people go for financial reasons, that means the company didn't build up a financial buffer to secure its jobs against a worst-case scenario. CCP's 2010 financial report showed that the company was burning several million in cash reserves per year trying to develop EVE, DUST 514 and World of Darkness at the same time. A loan of $11.8M US was also marked as due for repayment next week on October 28th.
Reversing the trend
From the outside, it looks to me like CCP tried to develop three major projects at the same time but didn't have the income to organically support them all on EVE's subscription fees. The hope may have been to get at least one of the new projects to produce revenue before the unsustainable burn rate became a problem. This might actually explain why the Incarna expansion was a shameless microtransaction money-grab, as neither DUST 514 nor World of Darkness was in a position to generate revenue and CCP refuses to lease its in-house tools like the Carbon framework or the Jessica engine.
When Incarna not only failed to generate additional income but also caused subscriptions to drop, CCP may have had no choice but to cut staff costs enough to get the company's expenses below the income provided by EVE. If EVE subscriptions don't pick up again, my contact at CCP warns that "there is a plan for a second round of layoffs in December, depending on circumstances at that time." The most logical way to reverse the downward subscription trend and stabilise the revenue generated by the game would probably be to refocus development on the things current EVE players like, and thankfully that's exactly what CCP is doing. With any luck, the winter expansion will stem the bleeding and offer a stay of execution to developers whose jobs are still on the chopping block.
The big casualty of the layoffs was White Wolf, which merged with CCP in 2006 and became the company's Atlanta office. It's from there that the World of Darkness MMO is currently being created, but around half of the office's staff were among those laid off. The World of Darkness MMO was the reason White Wolf merged with CCP, and if that was in a written agreement, then it stands to reason development on the game has to continue with at least a skeleton crew.
As DUST 514 has already been scheduled for release in early 2012, development on it appears to be going full steam ahead. This does make sense from a financial point of view, as DUST should be near completion and a successful launch could provide the revenue needed to start work again properly on World of Darkness.
The development plans for the winter expansion have been deferred in favour of releasing small features like new ships and modules, and adding implants to killmails. "All prior release planning is basically in the trash," the insider told me, adding that "several people are getting carte blanche for teaming up on a feature basis, making little things with a measurable impact." He went on to explain that developers "simply do not have the plan or resources to deliver more than a first step this winter" but that they "also realise that people have heard too much bullshit" regarding iteration on features after the initial first steps are taken. The current development plans appear to be a genuine attempt to focus on EVE Online and give current players the in-space features they want.
Hilmar Veigar Pétursson apologised for the mistakes made when CCP ploughed ahead with risky plans that players, the CSM and even developers on the inside had raised concerns over. "Even now, higher-ups still talk down on players," the insider told me, "and say we have just hit a bump because some bad players refuse to see the awesomeness of our vision. We're told that it is not our fault." As a consequence of recent development plans not panning out as expected, EVE subscription levels have dropped, previously secure jobs have been distressingly lost, and morale among developers appears understandably low.
If anything positive comes out of this unfortunate loss of jobs, I hope it's that in the future CCP avoids gambling with the jobs of its developers by stretching itself too thin. It's an emotional time for those who have lost their jobs this week, and my sympathies truly go out to anyone affected. Although I normally like to keep the tone in my final thoughts positive, the sobering quote below comes courtesy of the insider at CCP, and I think it really highlights the human casualties of recent events:
"I had a grown man crying for an hour on Skype because he just got the keys to the apartment for which he put up a down-payment and a mortgage three days ago. We have colleagues with children, in despair. Many of us know full well that we too carry responsibility for where we are now; we should have spoken up and not stayed silent for so long. Those of us left will give it all we have, but we also realise that without players staying critical, there is not much we can do against management, which simply wants to pursue its own goals."
For players, the demand for more development time spent on in-space content and gameplay has been about supporting the game we love because we know it has the potential to be so much more than it already is. Players haven't been badmouthing EVE's recent development direction out of spite or an irrational want to see the game fail but rather out of a desperate desire to see it and the company that gave it life succeed. With the events of the past few months behind, it's great to see CCP rediscovering the strengths of EVE and its community. The coming months will show whether this new direction can restore faith in EVE Online and its development, provide the revenue needed to produce DUST 514 and World of Darkness, and put CCP back on the path to world domination.
Brendan "Nyphur" Drain is an early veteran of EVE Online and writer of the weekly EVE Evolved column here at Massively. The column covers anything and everything relating to EVE Online, from in-depth guides to speculative opinion pieces. If you have an idea for a column or guide, or you just want to message him, send an email to email@example.com.