Q3 2019 Earnings Reports

While I don’t exactly have time to dig into these in detail, I stopped for a moment to check out the latest Activision/Blizzard and Starbreeze Q3 reports. It’s almost scary how much more sense they make with a basic understanding of accounting.

I mean, just looking at the consolidated balance sheet for AB, I get it. I know what those things and at least vaguely understand what they mean. Hopefully, that means I’ll have something more meaningful to say when they year-end report rolls around in a few months.

That knowledge sure doesn’t make Starbreeze look any better. I noticed an announcement buried in there that their partner for Payday: Crime Wars, a mobile title, has shut down most of the mobile publishing wing. This is probably one of the reasons why Payday 2 development began again recently. While the resumed Payday 2 income is certainly going to help, but probably not enough to offset the 80ish million SEK (roughly 8.4M USD) their VR parks are costing them. I realize most of the cost is an impairment, but still, they’re posing an overall operating loss of 20M SEK (~2.1M USD). They have 113.2M SEK (~11.7M USD) of cash(ish), so we don’t exactly have to worry about them sinking tomorrow. At this rate they have roughly a year to year and a half of operation. I’m sure the new paid DLC for Payday 2 will help extend that further.

Either way, y’all know the drill. None of this should be considered financial or investment advice. Likewise, I don’t own any stake in either of these companies. Partially because I have yet to find a way to buy shares internationally.

Y’all take care.

Starbreeze – Getting a bit drafty in the vault

Well, I don’t know what to say really. I saw a headline regarding Starbreeze and figured I’d wander by to read the financial report myself. It’s… not good news.

The company currently lacks sufficient secured funds to guarantee continued operations for the next 12 months and is expected to have a liquidity shortfall before mid-year 2019 if no additional funds are provided.

I did manage to find the actual quote toward the end of the report. While it does not necessarily mean the end, this is what the end looks like. In terms that make more sense to the average person, such as myself, they may run out of cash to cover operating expenses by mid-year.

Naturally, they have every intention of preventing this, but their options seem to be limited. If there were ever a valid reason to actually rush a product out the door, I would say this would be it. Unfortunately, poor project management is how they ended up in this position, and if Payday 3 bombed they would pretty much be out of options. It is, in my opinion, the only good card they have left to play.

starbreezeq119chart

Now, just so we’re clear, these numbers are in Swedish Krona, and it’s currently about 10 Krona to 1 USD. Good news is that means it converts pretty easy by moving the decimal place one to the left. That is, losses before tax are 167m Krona or 16.7m USD.

It’s a sad story, but this is what happens when a smaller studio not backed by a giant like EA puts out a game comparable in quality and history to Anthem.

They have an annual meeting about a month from now. Since that’s the halfway point between now and mid-year, I’m guessing it will be pretty clear at that point what the future holds. I’m sure there are ways to keep things moving though I cannot easily tell if the confidence in their report is real or simply a brave face.

[UPDATE: After I wrote this, they kicked off an “event” on Steam with a free weekend, a 50% discount on the base game, and an 80% discount on the Ultimate Edition. If you have ever wanted to try it out, now is not only the time but potentially the last time. If anyone should actually be interested let me know and we can do some missions together.]

Sidenote, though, I love their actual report’s design and layout. Much better than your traditional “text document” kind of look.

Nevertheless, I have decided that I’m not likely to see Payday 3. At least, not one made by Starbreeze. I’m sure someone will see the value in picking up the rights in what currently seems to be an inevitable fire sale. If by some miracle they actually manage to pull through this, I might consider picking up some shares. If I can find a broker that deals with the Swedish exchange that is. My current one does not.

Y’all take care and, I dunno, don’t do what Bioware and Starbreeze did. It didn’t work.

Starbreeze – An Update from Eurogamer

Honestly there hasn’t been a whole lot of movement that I’m aware of regarding the developer/publisher Starbreeze. Eurogamer has published a really good article though. It’s quite long, but goes into great detail concerning the history of Starbreeze and Overkill, their very strange merger, and the ups and downs of their projects and money.

One of the surprising takeaways is that in the merger Starbreeze paid Overkill with stock, instead of money, but it had such little value that they essentially handed majority control to Overkill.

On the whole, it sounds like Mr. Andersson was a very strong personality, with some very strong ideas and vision. He invested the company heavily in a wide variety of projects, many of which never panned out. In a way it’s not that different from what I see Valve and Star Citizen doing. Both of them have seemingly obscene amounts of money and seem to just generally throw it at the wall to see what sticks.

In reality, I think the comparison to Star Citizen is the most accurate. The Walking Dead had a long and expensive development time with engine switches, feature changes, scope changes, and a lack of direction, all of which we’ve had hints of behind the scenes with Star Citizen as well.

Both games are/were selling a dream, a big one. In the case of The Walking Dead, though, the money ran out. They had to push a product because there wasn’t anything left to develop it with. A problem Star Citizen doesn’t have yet, it seems.

Of course, Starbreeze also spent a ton of money on various VR related projects as well. Not a bad move, per se, but the market just isn’t there yet. I mean, sure, I’d love to have an HTC Vive myself. I’m not sure about Payday 2 in VR, but I’d try it, but Elite would be wonderful to experience in VR, and there are several other cute little titles that would be fun toys as well.

That’s where I feel the market is at right now though. It’s a toy that would be fun to tinker with for a while, but at $500 it’s still a bit steep and hard to justify. On top of that, I’m not even certain my PC has the power to push decently quality VR. I’ve tested some VR videos using a phone and a cheap plastic headset and it didn’t really sit well with me. I don’t know if it was a framerate problem or what, but it’s given me some pause on buying hardware I might not be able to even use.

It also appears to the be case that one of the individuals detained when authorities raided the Starbreeze office was Bo Andersson himself, but he was apparently released with no charges. I expect we’ll hear from him again at some point, once the chaos and noise die down somewhat. He apparently has some manner of pet project he wants to make, so that’ll be a thing.

With Starbreeze officially in reconstruction I’ve given some thought to buying some stock. Provided they don’t eventually fold, I doubt it’ll get much cheaper than it is now, and if they manage to somehow survive long enough to put out something like Payday 3, they may stand a chance of actually making some money. Maybe.