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Perfect World Q3 2014 earnings Report - Profits Down - U.S. Holdings Blamed

crypticarmsmancrypticarmsman Member Posts: 3,229 Arc User
http://www.prnewswire.com/news-releases/perfect-world-announces-third-quarter-2014-unaudited-financial-results-300001342.html

From the Report:
"In view of U.S. subsidiary's recent performance and near-term business outlook that are below our expectations, we recognized acquisition-related impairments in this quarter. However, we are still confident in the long-term prospects of our U.S. subsidiary given its strong R&D and operational capabilities as well as promising pipeline. With our extensive overseas network that covers more than 100 countries and regions around the world, we remain committed to further expanding our overseas penetration and bolstering our global presence."

The gaming site 'Massively' also reported:
Perfect World declined to comment on the performance of Neverwinter's Q3 console launch. It did note that it is localizing the fantasy MMO for China, where the company has seen its concurrent user numbers drop from 778,000 to 623,000 inside of a year.

It makes one wonder just how successful STO and NeverWinter (the two main U.S. 'Holdings' have actually been of late, So, as the Chinese managers of perfect World continue to direct PWE to take their U.S. games further in the direction of the 'Asian Grinder' paradigm; their concurrent player numbers drop and their profit decreases...

What will Perfect World management take away from this turn of events in their U.S. subsidiaries run by PWE? Will PWE/Cryptic renew the STO IP rights with CBS when the current licensing term ends?
Post edited by Unknown User on
Formerly known as Armsman from June 2008 to June 20, 2012
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Comments

  • dpsloss88dpsloss88 Member Posts: 765 Arc User
    edited November 2014
    Doesn't seem like the CBS license is exclusive. There have been at least 2 other Star Trek MMOs announced in the last 4 years though I don't think any of them went live...
  • jam3s1701jam3s1701 Member Posts: 1,825 Arc User
    edited November 2014
    Well since Cryptic Studios is a LTD company and not a P(ublic)LC there is no way to tell how well they are performing from things like share price etc etc....

    Lets just say that Cryptic being a holding and not the main company means it is holding its own and making a profit otherwise it would have been put up for sale long ago!.

    and in all seriousness this is like the TENTH post about the doom that Cryptic is failing blah blah blah ive read in the last few days...

    Why not worry about what is going on in your! world rather than playing the guessing game.
    JtaDmwW.png
  • sekritagentsekritagent Member Posts: 510 Arc User
    edited November 2014
    Well, the aggressive monetization makes a lot more sense. However the worst part is that the desperate strategy here appears to be backfiring. The best way to get more out of the player base is to give more not take away more or put up more walls.
    Delta Rising is the best expansion ever and the players love it! No, seriously! ...Why are you laughing so hard? :(
  • virusdancervirusdancer Member Posts: 18,687 Arc User
    edited November 2014
    I know it's all the fad for folks just to read a headline or read some comment based on what was said, but I hope that folks show they're smarter than that and actually read through the information provided before jumping on the fearmongering bandwagon while passing off false information...
  • daqheghdaqhegh Member Posts: 1,489 Arc User
    edited November 2014
    No surprises there. Except that they didn't pad it for public consumption.
    My Old Blog about things that could and should have been added when I wrote it. Not sure what I want to do with it now. I'll just keep it available now that most of it is outdated.
  • sekritagentsekritagent Member Posts: 510 Arc User
    edited November 2014
    I know it's all the fad for folks just to read a headline or read some comment based on what was said, but I hope that folks show they're smarter than that and actually read through the information provided before jumping on the fearmongering bandwagon while passing off false information...

    Please enlighten us about what we're missing. It seems pretty straightforward. I read the release and interestingly I saw no mention of Star Trek Online's best expansion ever.
    Delta Rising is the best expansion ever and the players love it! No, seriously! ...Why are you laughing so hard? :(
  • stf65stf65 Member Posts: 0 Arc User
    edited November 2014
    Please enlighten us about what we're missing. It seems pretty straightforward. I read the release and interestingly I saw no mention of Star Trek Online's best expansion ever.
    for starters the chinese player base is down 20% from last year: currently 623k players per game compared to 778k same quarter last year.

    the whole pdf's online for anyone to see. they don't break it down by game but they've had a ton of expenses with all the expansion into console games. they're total revenues are up almost 20% compared to same quarter last year, but a ton of expenses too.
  • stoleviathan99stoleviathan99 Member Posts: 7,747 Arc User
    edited November 2014
    http://www.prnewswire.com/news-releases/perfect-world-announces-third-quarter-2014-unaudited-financial-results-300001342.html

    From the Report:



    The gaming site 'Massively' also reported:


    It makes one wonder just how successful STO and NeverWinter (the two main U.S. 'Holdings' have actually been of late, So, as the Chinese managers of perfect World continue to direct PWE to take their U.S. games further in the direction of the 'Asian Grinder' paradigm; their concurrent player numbers drop and their profit decreases...

    What will Perfect World management take away from this turn of events in their U.S. subsidiaries run by PWE? Will PWE/Cryptic renew the STO IP rights with CBS when the current licensing term ends?

    A couple of notes.

    - They seem to blame it on players not spending enough time in game early in the call. I think I've sorted this out. Time spent is probably being treated as a marketshare metric (ie. they're evaluating based on time spent because it shows percentage of free marketshare under the theory that few people will be logged into two MMOs at once), which is somewhat funny because this flies in the face of the time vs. money game balance theories I'd heard before. (Ie. people spend in order to spend less time in game, generally, either at an absolute level or to have more freedom in how they spend time.) I'm not critiquing it but, man, that's a discussion I'd love to have over drinks with a senior game developer.

    - They announced spinning off R&D in the same call. They've called Cryptic R&D before. They seem to acknowledge them as R&D here. They don't announce which R&D subsidiaries they spun off. I think Cryptic is likely one of them. If so, that means Cryptic may have gone from 100% PWE owned (and financed) to being 51% PWE owned (and financed). That is huge if so. As it was described as a talent appeasing move, it would likely mean that Emmert, Zinc, D'Angelo, and maybe Geko and Stahl and others own stakes in Cryptic now. This would have all kinds of design (and financing) implications.
  • virusdancervirusdancer Member Posts: 18,687 Arc User
    edited November 2014
    Please enlighten us about what we're missing. It seems pretty straightforward. I read the release and interestingly I saw no mention of Star Trek Online's best expansion ever.

    If you actually read it...as in you went down and read all the explanations on where the reduced profits came from - then nobody would have to explain it to you, now would they? :rolleyes:

    Revenue was up ~4.9%.
    Operating expenses were up by ~26.3%.

    R&D expenses were up by ~8.1%.
    Marketing expenses were up by ~35%.
    Admin expenses were up by ~26.4%.

    Yeah, there was the Goodwill Impairment of ~5m for the US subsidiaries, but that was less than half the increase in Marketing expenses that took place.

    ACUs in China were ~94.3% what they were for the previous quarter and ~80.1% of what they were for the same quarter last year. They've been showing growth in the mobile gaming sector, but that has an increased cost on revenues because of distribution channels for those mobile games.

    All the information is right there in the link provided by the OP...without the OP's twist on it.
  • sekritagentsekritagent Member Posts: 510 Arc User
    edited November 2014
    If you actually read it...as in you went down and read all the explanations on where the reduced profits came from - then nobody would have to explain it to you, now would they? :rolleyes:

    Ah, so no meaningful insights to share, just ad hominem attacks that I can now disregard. Thanks for the clarification. :)
    Delta Rising is the best expansion ever and the players love it! No, seriously! ...Why are you laughing so hard? :(
  • stf65stf65 Member Posts: 0 Arc User
    edited November 2014
    - They announced spinning off R&D in the same call. They've called Cryptic R&D before. They seem to acknowledge them as R&D here. They don't announce which R&D subsidiaries they spun off. I think Cryptic is likely one of them. If so, that means Cryptic may have gone from 100% PWE owned (and financed) to being 51% PWE owned (and financed). That is huge if so. As it was described as a talent appeasing move, it would likely mean that Emmert, Zinc, D'Angelo, and maybe Geko and Stahl and others own stakes in Cryptic now. This would have all kinds of design (and financing) implications.
    pw's r&d's been restructured into 5 different divisions now. it has nothing to do with your wild speculation of cryptic's ownership changing in any way.
  • virusdancervirusdancer Member Posts: 18,687 Arc User
    edited November 2014
    Ah, so no meaningful insights to share, just ad hominem attacks that I can now disregard. Thanks for the clarification. :)

    Guessing you didn't see the edited version...
    If you actually read it...as in you went down and read all the explanations on where the reduced profits came from - then nobody would have to explain it to you, now would they? :rolleyes:

    Revenue was up ~4.9%.
    Operating expenses were up by ~26.3%.

    R&D expenses were up by ~8.1%.
    Marketing expenses were up by ~35%.
    Admin expenses were up by ~26.4%.

    Yeah, there was the Goodwill Impairment of ~5m for the US subsidiaries, but that was less than half the increase in Marketing expenses that took place.

    ACUs in China were ~94.3% what they were for the previous quarter and ~80.1% of what they were for the same quarter last year. They've been showing growth in the mobile gaming sector, but that has an increased cost on revenues because of distribution channels for those mobile games.

    All the information is right there in the link provided by the OP...without the OP's twist on it.

    ...but yeah, in the end - it still comes down to you're not having read anything.
  • seaofsorrowsseaofsorrows Member Posts: 7,593 Arc User
    edited November 2014
    I don't know what any of it means.. but I know that in the face of the constant nerfs I have totally quit spending.

    Like many players, I have decided to withhold my financial support until Cryptic starts actually listening to players.

    The requests are simple, the issues valid. Everyone I know that plays this game has stopped financial support completely.

    They either fix it, or shut it down. Ball is in their court.
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  • wildweasalwildweasal Member Posts: 1,052 Arc User
    edited November 2014
    I Couldn't Resist ...............dooooooooooooooooooooooooooooooommmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmm!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
    3ondby_zpsikszslyx.jpg
  • bobtheskull99bobtheskull99 Member Posts: 706 Arc User
    edited November 2014
    considering this report is for last quarter (ending sept 30) im not sure what the OP point is?

    also, the above
  • jorantomalakjorantomalak Member Posts: 7,129 Arc User
    edited November 2014
    wildweasal wrote: »
    I Couldn't Resist ...............dooooooooooooooooooooooooooooooommmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmm!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    you beat me to it

    but .....DOOM the game is dead the universe is dead and all things everywhere is DOOOOMED!!!!
    I'm Alex MAKEPEACE, not Alex Roundhouse Everyone, Knocking Their Heads Off and Stuffing Their Headless Corpses Into a Black Hole!

    ... Calling it now. Someone's going to ban me for making peace.

  • iconiansiconians Member Posts: 6,986 Arc User
    edited November 2014
    Those cherries won't pick themselves.
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  • antoniosalieriantoniosalieri Member Posts: 0 Arc User
    edited November 2014
    PWE is the US sub of PW.

    They are responsible for games like Swordsman PW Blacklight torchlight RaiderZ ect.

    When PW talks about there US operations they lump it all together there really is nothing in there numbers that is 100% a cryptic number.

    As far as Cryptic... really folks PW doesn't much care about STO... it makes money, cause they don't spend to much on it at this point. Its just a nice to have. There real money comes from the D&D licence and that is all they care about.

    The person that pointed out China sub numbers on NW... 778k to 623k is in fact a very good number. Every new game always has a new game spike. A 80% retention rate from a launch 1 year in is in fact VERY good.

    I have no doubt STO is going to hurt the next few months cause the asian Grind model is not going to go over as well as they hope. Still STO could scrap out turning a 10% profit and PW would be fine with that... they only care about protecting that D&D licence.
    [SIGPIC][/SIGPIC]
    Dignity and an empty sack is worth the sack.
  • sirsitsalotsirsitsalot Member Posts: 1,673 Arc User
    edited November 2014
    What will Perfect World management take away from this turn of events in their U.S. subsidiaries run by PWE? Will PWE/Cryptic renew the STO IP rights with CBS when the current licensing term ends?

    I'll tell you exactly what they will take away from it: That Cryptic isn't doing it right. They won't consider, for one nanosecond that their directives are flawed.

    I predict a corporate restructure in the near future that will put PWE in more direct control of this game and Cryptic's developers in even less control than they are in now. Of course, the result will be worse than before.

    They are moving this game further and further from its original concept, and fewer and fewer players are opting to go along for the ride.

    I said in a different thread yesterday that I am beginning to hate Cryptic as a company. The hatred is misplaced. Cryptic is an asset of PWE. PWE dictates and Cryptic does. Cryptic reps can say all they want that PWE is hands-off. I call BS on that. I don't know of any corporation throwing $50,000,000 at a struggling company without assuming some sort of direct control over its forward-going direction. Cryptic has said that PWE offers "suggestions." Yeah right. A suggestion from the people who sign your paycheck has a different name: "Directive."

    What this game has become in terms of monetization is exactly what many players overwhelmingly said they did not want and Cryptic overwhelmingly said it would not be, back before the switch to Free-to-play.

    I was a supporter of the conversion to Free-to-play. Admittedly I was unemployed at the time and had no disposable income, so being able to play the game and not HAVE to pay a dime unless there was something I wanted to spend money on was pretty bloody appealing to me. If I had it to do over again, knowing what I know, I would have told Cryptic to take that C-store and sh<static crackle pop beep beep static> sideways!

    Now I have a game that has gotten so far away from itself that I don't even want to play it.

    The sad thing is that I still hold out hope that some upstart junior executive sitting at the long-TRIBBLE table in PWE's board room, who has actually watched and happens to love Star Trek, speaks up and says, "We've tried everything except attempt to make this game as close to what we see in the Star Trek shows and movies as technology will let us, so why not at least try?" and the others actually won't have an argument to the logic.

    And for the record, I am talking about the observable elements of the Star Trek shows and films, as in what the character do and do not do, not the cerebral elements that individually defines Star Trek for the fans. Each Star trek show has taken a set of elements and wrapped them around the writing and put it out there for the fans to consume. The show is in and of itself just a collection of stories written to conform to a set of guidelines (rather loosely, I might add), presented to the viewing audience as is. Anything transcendental about it takes shape within the hearts and minds of the viewers, making it something more to them than just the sum of its parts. But the product itself is exactly that: just the sum of its parts.

    So why the hell can't this company do the same thing? Take those same defining elements that Star Trek stories are supposed to conform to in order to maintain the "brand" and put it out there for the player community to consume, and let the transcendental aspect occur in their hearts and minds just like it does for the shows. The difference being that while the shows are just watched, content for this game would be EXPERIENCED.

    That is my vision for how I think STO should be produced.

    But who the hell am I? I don't spend any money on this game, and I don't even play it as it is right now. So I guess nothing I have to say means a thing to the powers that be.

    Whatever.
    I have no snarky remarks to make, at this time...
  • stf65stf65 Member Posts: 0 Arc User
    edited November 2014
    considering this report is for last quarter (ending sept 30) im not sure what the OP point is?

    also, the above
    don't use common sense around here. it won't work on this bunch. the fact that we won't know the financial impact of dr for 3 more months doesn't fit into the hater's doom mind set.
  • stf65stf65 Member Posts: 0 Arc User
    edited November 2014
    The person that pointed out China sub numbers on NW... 778k to 623k is in fact a very good number. Every new game always has a new game spike. A 80% retention rate from a launch 1 year in is in fact VERY good.
    those weren't the numbers for nwns. those were the average number of pc players per game in mainland china. nwns isn't even availabe on pc in china yet. it's only available on xbox.
  • antoniosalieriantoniosalieri Member Posts: 0 Arc User
    edited November 2014
    Also seeing as some people have some crazy idea that CBS could or would want to even pull IPs....

    Star Trek online was at first (way back in like 2000) going to be a Sony online game... they dropped the licence when they got a better offer from lucas. Hence we got Star Wars Galaxys.

    The IP was later given to to perpetual via Via Com. Which was stated at the time it was a pretty sweet IP deal it gave them the rights to use almost everything trek. Of course that company fell apart.

    So after YEARS of development issues and companies backing out... and watching other IPs cash in CBS/Via com however where talking about was making no MMO game money with there IP. So they looked for a quick fix.... so there comes Cryptic. They promise a working launched game with in two years.

    To be honest I doubt CBS would want to go through a the pain in the backside of trying to find another developer to put out any sort of full on AA style Trek MMO. Heck they have even had issues with Web based Game developers not getting the job done on other projects. I would think they are pretty sick of Developers that can't deliever. Like it or not STO under Cryptic has been profitable for over 4 years... at this point there still profitable like it or not. They may not be making CBS billions but they surely are still making them millions. There not pulling anything for a little dip in pure profit. lol
    [SIGPIC][/SIGPIC]
    Dignity and an empty sack is worth the sack.
  • antoniosalieriantoniosalieri Member Posts: 0 Arc User
    edited November 2014
    stf65 wrote: »
    those weren't the numbers for nwns. those were the average number of pc players per game in mainland china. nwns isn't even availabe on pc in china yet. it's only available on xbox.

    Fair fair... pay no attention to what I posted then I misread that somehow really badly. :)

    I guess those are numbers for PW/PW2/Jade Dynastay and the small handful of other titles it has running now there then. Still seems like a 20% drop isn't all that bad. Considering that the market there is much more competitive then it was even a few years back.

    I know as STO lovers we all sort of want the Chinese port of NW to fail a bit... but really this is the entire reason PW picked Cryptic up to begin with. Being able to launch the first actual D&D licence in China is going to be huge for them I would wager.
    [SIGPIC][/SIGPIC]
    Dignity and an empty sack is worth the sack.
  • iconiansiconians Member Posts: 6,986 Arc User
    edited November 2014
    To be honest I doubt CBS would want to go through a the pain in the backside of trying to find another developer to put out any sort of full on AA style Trek MMO. Heck they have even had issues with Web based Game developers not getting the job done on other projects. I would think they are pretty sick of Developers that can't deliever. Like it or not STO under Cryptic has been profitable for over 4 years... at this point there still profitable like it or not. They may not be making CBS billions but they surely are still making them millions. There not pulling anything for a little dip in pure profit. lol

    Not to mention that MMOs are really expensive to fund. These aren't the days when there was only a handful of competition.

    The MMO market is pretty cutthroat and even getting a game up off the ground is not as easy as waving a magic wand and throwing a few burlap sacks full of cash at a development studio.

    There's also the really uncomfortable truth that Star Trek may have brand recognition, but Star Trek as an IP is way past its prime. The timing of the 2009 Star Trek movie with the release of STO was not a coincidence, it was one last hurrah for a Star Trek MMO to launch.

    I mean let's get realistic here. STO focuses on a franchise in its prime during the mid-late 90's. This isn't exactly a fresh and trendy IP.

    The odds of CBS just whimsically throwing several million dollars towards another Star Trek MMO because of a small dip in profits in STO is pretty slim.

    Worst case scenario STO gets put into maintenance mode. The odds of another Star Trek MMO are not in our favor. As much as we may be displeased with Cryptic's performance, it's easier to fix what we currently have than wish death upon it in the hopes of a fantastical Star Trek MMO that only exists in our imaginations.
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  • antoniosalieriantoniosalieri Member Posts: 0 Arc User
    edited November 2014
    iconians wrote: »
    Worst case scenario STO gets put into maintenance mode. The odds of another Star Trek MMO are not in our favor. As much as we may be displeased with Cryptic's performance, it's easier to fix what we currently have than wish death upon it in the hopes of a fantastical Star Trek MMO that only exists in our imaginations.

    I agree with you completely.

    If we look at what happened with star wars galaxies as an example.

    The IP holder Lucas wanted to move on and not resign a deal with Sony. So he had to move fast. As he was not willing to have no Star Wars MMO on the market... he wanted Bio to launch as Galaxies was ending. So they spent a LOT of money making TOR.

    TOR cost around 200 million to make.

    Does anyone think CBS is going to convince EA or another developer to bank roll even 1/4 of that type of budget to do another Trek MMO ? They won't invest 50 mil of there own money I'm quite sure.

    I mean think about it in comparison... Into Darkness had a 185 million dollar budget. There is no way CBS talks another large game house like an EA into spending the amounts of $ it would take to make a viable high end AAA MMO with the trek licence.
    [SIGPIC][/SIGPIC]
    Dignity and an empty sack is worth the sack.
  • kavasekavase Member Posts: 771 Arc User
    edited November 2014
    iconians wrote: »
    Worst case scenario STO gets put into maintenance mode. The odds of another Star Trek MMO are not in our favor. As much as we may be displeased with Cryptic's performance, it's easier to fix what we currently have than wish death upon it in the hopes of a fantastical Star Trek MMO that only exists in our imaginations.

    Agreed. I say there is a good chance of Star Trek games that will come down the line, but none of which would be MMOs.
    Retired. I'm now in search for that perfect space anomaly.
  • iconiansiconians Member Posts: 6,986 Arc User
    edited November 2014
    Star Wars is a very good comparison to make. Star Wars (for better or for worse) is a little more culturally relevant at the moment. Namely due to the fact that despite things such as the prequels, Lucasfilm was able to keep milking the Star Wars cash cow through things like the Clone Wars cartoon.

    CBS Studios mostly licensed the Trek IP to alternate media such as comic books and novels. Reading material. Decipher was still licensed the Star Trek RPG for a time. A lot of what they invested money into was nowhere near as expensive as full-scale small screen or big screen productions.

    Sure, we had Star Trek fan films, but they were just that, fan films.

    This is relevant because even though Lucasfilm has more money than they knew what to do with, they were willing to kill SWG to double-down on the success of TOR.

    Star Trek may have hit its prime in the mid-late '90's but CBS Studios was only comfortable with continually milking it through books. Financially speaking, it was only through the timing of the 2009 Star Trek movie that they found it possible to make that kind of gamble on STO.

    Particularly in the wake of Perpetual's failings and possibly illegal actions.
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  • ddesjardinsddesjardins Member Posts: 3,051 Media Corps
    edited November 2014
    A couple of notes.

    - They seem to blame it on players not spending enough time in game early in the call. I think I've sorted this out. Time spent is probably being treated as a marketshare metric (ie. they're evaluating based on time spent because it shows percentage of free marketshare under the theory that few people will be logged into two MMOs at once), which is somewhat funny because this flies in the face of the time vs. money game balance theories I'd heard before. (Ie. people spend in order to spend less time in game, generally, either at an absolute level or to have more freedom in how they spend time.) I'm not critiquing it but, man, that's a discussion I'd love to have over drinks with a senior game developer.

    - They announced spinning off R&D in the same call. They've called Cryptic R&D before. They seem to acknowledge them as R&D here. They don't announce which R&D subsidiaries they spun off. I think Cryptic is likely one of them. If so, that means Cryptic may have gone from 100% PWE owned (and financed) to being 51% PWE owned (and financed). That is huge if so. As it was described as a talent appeasing move, it would likely mean that Emmert, Zinc, D'Angelo, and maybe Geko and Stahl and others own stakes in Cryptic now. This would have all kinds of design (and financing) implications.

    Interesting observation.

  • stf65stf65 Member Posts: 0 Arc User
    edited November 2014
    i remember reading something on the forum about another star trek mmo coming out set in fluid space dealing with species 8472.

    found the link here http://massively.joystiq.com/2014/06/16/ngames-teases-new-star-trek-mmo/
  • ddesjardinsddesjardins Member Posts: 3,051 Media Corps
    edited November 2014
    Having now read through the actual release, they're not doing so bad. The company is profitable, revenues after all considerations is in line with the 5% YOY growth.

    The US performance though speaks volumes.

    I would not want to be in the call to corporate over the performance of Delta Rising. I suspect it's only partially an issue, but I suspect many of the ham-fisted changes and the lack of QA is a direct response to having an impact in overall financial performance now.

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