DEs parent company is for sale apparantly. What could the future hold?

[Magus_Tahir]

2 minutes ago, JackHargreav said:

Probably nothing will change. Tho seeing the latest game industry #*!% ups really makes you think.

Any company can just do a 180 any time and ruin everything.

Bethesda *cough*

 

[JackHargreav]

Just now, Magus_Tahir said:

Bethesda *cough*

 

Yup. Exactly the company I had in mind. And the creators of the Culling are also kinda nuts. Both of these companies just go against logic in every way possible.

[FireSegment]

5 minutes ago, (XB1)ShonFr0st said:

What makes you think that being owned by microsoft would lead to exclusivity? I think that decision is in DE's hand, and anyways, Microsoft has been pretty open towards cross play and cross save.

aside from the fact the ps4 and switch is the direct competitor for xbox in years? idk, may be the fact that DE keep the right to creative control, but not the entire distribution control.  I believe DE can't just decide to release a new version of warframe on a new console without the approval of their parent company, i guess you know where this is going.

In other word, if MS bought DE right now, there is a chance we won't even have a PS5 version of waframe, or that the support for platform other than MS approve one would dwindle over time, or the game might start to have features that exclusives for window or xbox later down the line ... 

[nslay]

I would rather DE own itself (at least a majority) and only have a partner in China for access to that market.

And no, I wouldn't trust Microsoft either. This is not the same company that it once was. Whatever it did with the remaster of AoE is nothing short of a fluke. Let me remind you that these guys bought Nokia, ruined them, and then screwed a lot of their employees. They also ruined Windows with frankenstein Windows 10 and all the forced telemetry built-in (nice name for spyware), they ruined Office with the newer UI, they were late to smart phones, they abandoned Windows Mobile 10, they botched the launch of XBox One (I mean, c'mon... don't you remember this? Is this really who you would want to own DE?)... they do nothing but suck at anything to do with normal users these days. Now they're more into cloud as I understand it... not the sorta company I want owning DE.

Them buying DE could be good. I am more pessimistic... this is the new stupid Microsoft we're talking about.

[FireSegment]

5 minutes ago, (XB1)TyeGoo said:

Your statement is downright wrong, they will not make it exclusive to Xbox or pc. A lot of game devs have been bought and they're allowed to release on all platforms except there's a special deal where the devs get more money.

Or is Minecraft now exclusively for Xbox?

Also considering the player count it would be not beneficial to make it exclusive, hence, current exclusives are released to pc.

Sony does the same by the way by making Detroit become human available for pc.

which is why i said not a lot of activities going on right now on the platform war in my first post, they seem peacefully enough now but no party would forfeit the war.

my point is that DE would not actually have as much control as somebody think they have with MS owning the company, there are still a somewhat direct conflict of interest among those companies that could blow up in the player faces down the line

[(NSW)Joewoof]

I remember when Activision Blizzard first merged, and I remember how Blizzard told everyone to not worry, because they're retaining creative control.
A decade later, Blizzard is absolutely not what it once was. Sure, it's not the same situation with DE, but I think it's naive to believe that nothing will change and it will be business as usual. A different owner always exerts some influence, and that influence may grow over time. The more "corporate" a gaming company becomes, the less agile it is, and being less agile is absolutely what DE cannot afford, considering their entire success is based on them taking constant risks and releasing content before they're ready.

Of course, it's been a long time - almost 8 years, in fact. Maybe it's time for change, and maybe that change is for the better.

[Luciole77]

13 hours ago, DrivaMain said:

DE retains Creative Control during the initial agreement. So even by changing investors they can still can’t interfere with development. I would rather they break off from Leyou to be independent to be honest, they are making lots of profits while sending Leyou’s cut. Imagine it with all of the profit for themselves,

Not sure about this. Chineses are buying the entire world and what we see is products/games much worse than ever....

 

See what activision did with blizzard....they destroyed blizzard!

Edited May 29, 2020 by Luciole77

[Vernoc]

old news

[(XBOX)Cram Duahcim]

27 minutes ago, Luciole77 said:

Not sure about this. Chineses are buying the entire world and what we see is products/games much worse than ever....

 

See what activision did with blizzard....they destroyed blizzard!

This is exactly what I'm talking about. Its worst case senario but the hope is DE can still do it's own thing. Studio sales can lead to directional changes for the game or studio if stakeholders pressure them to. 

I honestly hope DE decides to go Independent. I feel if DE is put into a corner in regards to its Creative direction  or direction as a studio as a whole, they would do so, they really care about Warframe and how far its come and I'd see then protect warframe and do the best thing for it, DE is definately a different studio. 

As for Microsoft buying DE, I'm not sure that they would. It wouldn't make sense,and even if they did I dont think they would retract exclusivity from Switch and PS4. It would be a great way to piss off alot of the players or AKA there customers. I dont see them purchasing DE at all honestly.

[OniDax]

6 hours ago, Kidkilla said:

Revenue/Earnings does not = profits. Does anyone have any info on DE's last earnings call or end of year financials?

Leyou Technologies Holdings Ltd - 2019 Annual Report

Edited May 29, 2020 by TheGildedOni

[hendrix923]

Its the game mechanics that affect players the most.  And we’ve all seen multi layered RNG increase over the last few years and player satisfaction decrease.  I would guess Tencent or a subsidiary buys out Leyou so the business side stays in China (HK). But not much should change immediately and we’ll never know who pushed for what. We can only hope things improve in the next update and vote with ur wallet. 

[Leyers_of_facade]

7 hours ago, Kidkilla said:

Revenue/Earnings does not = profits. Does anyone have any info on DE's last earnings call or end of year financials?

While the exact numbers isn't something we can find, there are quite a few things about DE and Leyou that we can find from their financial reports

 

In 2018, DE accounts for the vast majority of Leyou's revenue (194 million out of 227.7 million of Leyou's revenue is from warframe)

-> Considering WF accounts for ~85% of their revenue, it would be sensible to guess that in terms of "cost of goods sold", warframe would likely be accounting a similar percentage (I am not saying its also 85%, but its unlikely for it to be 40% or 100% as that will indicate very alarming results about the other "products" Leyou provides, either scenario would mean these other products cost nearly nothing or cost way too much) 

 

The total cost of goods sold of Leyou is 86 million, so I would be putting my guess of warframe's at roughly 86*0.85 ~ 73M. We would be at ~120M in terms of gross profit (pre tax as well as before accounting for other costs such as administrative / operating costs) for warframe (out of 141M for all of Leyou) However, we can see that after everything is accounted for, Leyou's profit for the year in 2018 was only 20M (compare that to the 141M in gross profit), how these numbers are calculated is shown in the picture below as well as inside their reports. Roughly speaking, 85% of their gross profit was spent on other expenses as well as paying taxes, in this case, if we were to apply a similar calculation to warframe, I would put my guess of warframe's profit at roughly 18M.

 

Now, in 2019, things got a little problematic for Leyou (which is why they are being bought up), Warframe's revenue decreased by 12.2% according to their report, so revenue wise, it is roughly 172M in 2019 for warframe (Leyou's total revenue in 2019 is 214 million, so warframe accounts for ~80% this time). Cost of sales went up compared to the previous years and gross profit decreased by 20M. This wasn't the worst part, administrative expenses and marketing expenses went up significantly, we saw a lot more advertisement and such about warframe (which is probably what happened to those expenses). We all know how liches and railjack went (hint: it didn't go too well), so after all calculations, Leyou was at a 6 million loss in 2019 (compared to 20M profit in 2018). Using a similar estimation method from above, I would be putting my guess on warframe's earning at perhaps -5.5M in 2019, ie, a 5.5M loss.

 

There are definitely many "problems" with the way I am making my estimation, but its probably a decent ballpark of what you are looking at for warframe's profit the past 2 years.

 

 

Sources: 

http://leyoutech.com.hk/wp-content/uploads/2019/09/ltn20190417075.pdf (2018 report)

http://leyoutech.com.hk/wp-content/uploads/2020/04/2019-Annual-Report.pdf (2019 report)

Edited May 29, 2020 by Leyers_of_facade

[Jarriaga]

17 hours ago, DrivaMain said:

DE retains Creative Control during the initial agreement. So even by changing investors they can still can’t interfere with development. I would rather they break off from Leyou to be independent to be honest, they are making lots of profits while sending Leyou’s cut. Imagine it with all of the profit for themselves,

What does "keeping creative control" entail? Does that mean it can only be produced/managed by DE? If so, they can just easily fire anyone that is not a yes-man and replace them with yes-man under the parent company. Therefore, DE is technically keeping "creative control" even though the parent is the one with actual control because the original staff is no longer there. This process first begins by replacing those in the HR office with yes-man under the parent. 

We don't know the terms of the deal. We don't know the loopholes, and it's in the parent company's best interest for the contract to have a form of loophole they can abuse to take control or increase pressure and expectations, thus affecting development decisions in a slow but insidious indirect way.

Unless the contract explicitly says "WF is kept under the creative control of Steve Sinclair" and they are not adding external pressure/metrics so he can keep his job (Thus bending the knee as to not get fired and replaced) then I don't buy for a second that DE will retain creative control.

4 hours ago, (NSW)Joewoof said:

I remember when Activision Blizzard first merged, and I remember how Blizzard told everyone to not worry, because they're retaining creative control.

Blizzard is a testament to this. The biggest one there is. It's no coincidence that J. Allen Brack took over just a few months after the merger, and all questionable decisions from Diablo III's initial gameplay loop resolving around the auction house to loopboxes becoming mainstream through Overwatch to Diablo Immortal have all happened under his watch, and I'm sure their investors are more than pleased because the number of people who care is significantly smaller than those buying the micro-transactions.

Edited May 29, 2020 by Jarriaga

[SneakyErvin]

6 minutes ago, Jarriaga said:

That's what some people don't understand: What does "keeping creative control" entail? Does that mean it can only be produced/managed by DE? If so, they can just easily fire anyone that is not a yes-man and replace them with yes-man under the parent company. Therefore, DE is technically keeping "creative control" even though the parent is the one with actual control because the original staff is no longer there.

Blizzard is a testament to this. The biggest one there is. It's no coincidence that J. Allen Brack took over just a few months after the merger, and all questionable decisions from Diablo III's initial gameplay loop resolving around the auction house to Diablo Immortal have all happened under his watch. 

We don't know the terms of the deal. We don't know the loopholes, and it's in the parent company's best interest for the contract to have a form of loophole they can abuse to take control or increase pressure and expectations, thus affecting development decisions in a slow but insidious way.

Unless the contract explicitly says "WF is kept under the creative control of Steve Sinclair" and they are not adding external pressure/metrics so he can keep his job (Thus not bending the knee as to not get fired and replaced) then I don't buy for a second that DE will retain creative control.

They cant fire people as they want and hire new ones. DE is still a canadian company and abides to canadian employee laws and regulations. So there would need to be actual infraction made by anyone that gets fired and there would need to be proof of it. If they were to go with a smoke screen of firing people cos they need to let people go due to monetary reasons, then they'd also need to re-hire those same people again when the hiring process starts again. Pretty basic laws in most western countries.

Reason it was possible with Blizzard to swap people as they wanted is because it was an American company with total crap employment laws.

And if a contract would say that X person holds creative control, then that stays even if that person is fired, unless he breaks some part of the contract, which again would need proof that holds in a court.

What can happen is the parent company putting pressure on them to implement certain specific things in order to guarantee funding. But that would still come down to if the company needs the lifeline funding or if they can go on without it. The pressure may simply be put in place to increase revenue for the parent company, but if the developer doesnt need the funding they can say screw it and do their own thing since it has worked well enough before.

Those that stress up over a possible Tencent involvement should just look at Path of Exile. Nothing has changed there.

[SenorClipClop]

24 minutes ago, Jarriaga said:

Blizzard is a testament to this. The biggest one there is. It's no coincidence that J. Allen Brack took over just a few months after the merger, and all questionable decisions from Diablo III's initial gameplay loop resolving around the auction house....

That's a merging of game-making companies, though. LeYou is a holdings company who, one would assume, only really has monetary interests in Warframe, not creative ones.

5 minutes ago, SneakyErvin said:

What can happen is the parent company putting pressure on them to implement certain specific things in order to guarantee funding.

This is something a holdings company would be more likely to do than anything in the creative spectrum of game-making. A holdings company probably wouldn't demand "Infested need ranged weapons" because that doesn't matter to them. But they might say something like "introduce more ways to attract players to the game or to buy into it", like maybe Twitch drops.

Edited May 29, 2020 by SenorClipClop

[SneakyErvin]

1 minute ago, SenorClipClop said:

That's a merging of game-making companies, though. LeYou is a holdings company who, one would assume, only really has monetary interests in Warframe, not creative ones.

This is something a holdings company would be more likely to do than anything in the creative spectrum of game-making. A holdings company probably would demand "Infested need ranged weapons" because that doesn't matter to them. But they might say something like "introduce more ways to attract players to the game or to buy into it", like maybe Twitch drops.

Yep, being owned by an investor is not much different from actively seeking investors. Even if DE was 100% indie, they'd still need to track down investors that can come with the exact same opinion in order for DE to get their investment funding. DE pitches an idea, whoever recieves it will either have input on it or not regarding what they wanna see changed in the idea or the product as a whole. I mean, if I was an investor and DE came to me with an idea I'd probably say "that looks great!" since I'm not a game dev and DE have been around for years in the business, but I'd probably also propose "if you want investments from me I'd like you to guarantee me that you will introduce a frame based on Thor the god of thunder in your game the coming year".  It would still just be a guidline idea and the end result would be fully the creation of DE.

Also a good point regarding the merger regarding Actiblizzion. I also dont think it was so much that people at Blizzard got fired when new people took over old positions, as it was about the previous people in those positions getting moved internally to other positions.

[Jarriaga]

23 minutes ago, SneakyErvin said:

They cant fire people as they want and hire new ones. DE is still a canadian company and abides to canadian employee laws and regulations. So there would need to be actual infraction made by anyone that gets fired and there would need to be proof of it. If they were to go with a smoke screen of firing people cos they need to let people go due to monetary reasons, then they'd also need to re-hire those same people again when the hiring process starts again. Pretty basic laws in most western countries.

Reason it was possible with Blizzard to swap people as they wanted is because it was an American company with total crap employment laws.

And if a contract would say that X person holds creative control, then that stays even if that person is fired, unless he breaks some part of the contract, which again would need proof that holds in a court.

I am not versed in Canadian work laws, so I can't comment there. But I do expect for the lawyers of the buying company to design a loophole they can exploit should their priorities or intent change. I would then expect for DE's layers to catch this, but I don't know if they'd get a say this time since the deal would not be between DE and their current owner, but rather their current owner and the potential buyer. I don't know if the past contract would be inherited as it is or that since DE is being transferred as an asset that is already owned then there's nothing they can negotiate.

23 minutes ago, SneakyErvin said:

What can happen is the parent company putting pressure on them to implement certain specific things in order to guarantee funding. But that would still come down to if the company needs the lifeline funding or if they can go on without it. The pressure may simply be put in place to increase revenue for the parent company, but if the developer doesnt need the funding they can say screw it and do their own thing since it has worked well enough before.

Yes, at the end of the day indirect pressure via metrics is still a concern.

23 minutes ago, SneakyErvin said:

Those that stress up over a possible Tencent involvement should just look at Path of Exile. Nothing has changed there.

20% original stock onwership and positions in the board of directors retained for GGG vs. 3% at DE and I don't see Michael or James or Steve in the board, so it's not exactly apples to apples there.

Edited May 29, 2020 by Jarriaga

[SenorClipClop]

23 minutes ago, Jarriaga said:

-snip-

What exactly is it that you think holdings companies do?

[SneakyErvin]

23 minutes ago, Jarriaga said:

I am not versed in Canadian work laws, so I can't comment there. But I do expect for the lawyers of the buying company to design a loophole they can exploit should their priorities or intent change. I would then expect for DE's layers to catch this, but I don't know if they'd get a say this time since the deal would not be between DE and their current owner, but rather their current owner and the potential buyer. I don't know if the past contract would be inherited as it is or that since DE is being transferred as an asset that is already owned then there's nothing they can negotiate.

Yes, at the end of the day indirect pressure via metrics is still a concern.

20% original stock onwership and positions in the board of directors retained for GGG vs. 3% at DE and I don't see Michael or James or Steve in the board, so it's not exactly apples to apples there.

Doesnt matter who the deal is between, they still need to abide to the laws of all countries involved. So DE would be protected by their national laws even if things make it through due to Leyou's lawyers not double checking everything. The deal also includes approval from all the nations involved through different instances. Just look at Disney buying most of Fox, it took a year to get it finalized and approved and in that case it was two companies within the same country. Even if china can be shady in china, it doesnt fly in the rest of the world. They get stomped on over and over because people no longer put up with it.

And indeed, it is a concern, my point is just that it doesnt matter where the funding comes from, the risks are as high if they were indie aswell. Not until DE comes to the point of being 100% self sufficient will it be clear of the risks of outside pressure.

Right now when the two are compared GGG is 80% owned by a chinese corporation that goes far beyond an investor company while DE is 97% owned by a Hong Kong based investor company. At the moment the two cannot be compared. We can only see if something happens in the future and what the share spread will be.

[Easytos]

6 hours ago, JackHargreav said:

Yup. Exactly the company I had in mind. And the creators of the Culling are also kinda nuts. Both of these companies just go against logic in every way possible.

The Culling devs/publishers have gone absolutely mad. An "insert coin to play" model, like how did they think that would work lol.

[Jarriaga]

21 minutes ago, SenorClipClop said:

What exactly is it that you think holdings companies do?

What any other company does: Maximize profit. They have no other purpose, function, goal, intention, or aspiration beyond making as much money as possible.

Edited May 29, 2020 by Jarriaga

[SenorClipClop]

Just now, Jarriaga said:

What any other company does: Maximize profit.

But are you aware of how they go about doing this? The specific things they do? How much control they have or use?

Are you just imagining things powerful entities could possibly do and then spitballing the effects it would have on this game?

[Jarriaga]

6 minutes ago, SenorClipClop said:

But are you aware of how they go about doing this? The specific things they do? How much control they have or use?

Are you just imagining things powerful entities could possibly do and then spitballing the effects it would have on this game?

I'm going by Blizzard as an example after they were absorbed into Activision (It was a merge in name and formalities only).

Irrespective of the specifics, the how, their operations, the goal is the same: Maximize profit.

The moment they see their profits would be bigger by mutating the company or its assets, they will try to. Succeeding is a different topic, but they will at least try. They will measure what they will lose by doing so against what they market researchers and spreadsheets will tell them they'll get. As reductionist and overly-simplistic as this reads, that's the reality at the end of the day.

Edited May 29, 2020 by Jarriaga

[SneakyErvin]

8 minutes ago, Jarriaga said:

I'm going by Blizzard as an example after they were absorbed into Activision (It was a merge in name and formalities only).

Irrespective of the specifics, the how, their operations, the goal is the same: Maximize profit.

The moment they see their profits would be bigger by mutating the company or its assets, they will try to. Succeeding is a different topic, but they will at least try. They will measure what they will lose by doing so against what they market researchers and spreadsheets will tell them they'll get. As reductionist and overly-simplistic as this reads, that's the reality at the end of the day.

That has nothing to do with holding companies.

[Jarriaga]

14 minutes ago, SneakyErvin said:

That has nothing to do with holding companies.

I don't disagree. It's just that agendas change.