CCP Games ceases VR development, closes two studios – no negative impact on EVE Online
Icelandic business website mbl.is has just reported that EVE Online developer CCP Games is planning to close two of its offices and cease all VR game development. The move affects over 100 staff worldwide, with the Atlanta office in the United States being closed and the Newcastle studio being sold off. The Newcastle office was the development house responsible for the VR dogfighter EVE: Valkyrie, which released as a bundled launch title for the Oculus Rift and has since been released on PlayStation VR and as a non-VR PC title.
The move will see CCP pull out of the VR market for the time being, focusing instead on PC and mobile development. The studio secured a $30 million US investment specifically for VR games back in 2015, and CEO Hilmar Pétursson revealed back in March of this year that the company had only recently broken even on that investment. Despite having some success with Valkyrie, Gunjack, and its recently released VR sports title Sparc, CCP acknowledged the limited opportunities and growth it sees in VR as a platform over the next several years.
Though around 30 staff in the Iceland office are being laid off, EVE Online’s Community Manager told players today that the game has not been affected by those layoffs:
“With regard to EVE, it’s kind of bittersweet that this puts us in a more solid position going forward, as a lot more focus is back on EVE Online, its services and all the technology and support around it.
“The EVE Online development team was not impacted at all by these changes, and remains the same size, working toward the same goals and features that have already been announced.
“We still have very big plans for EVE Online, and everything we’ve announced, plus more, is still going ahead, so there shouldn’t be any concerns from our pilots in that respect.”
First of all. I am firmly in the corner of “VR is not ready for prime time yet” for that matter. AR isn’t either. So now you know where I stand.
This was one of the most hotly anticipated launch titles for the first string of VR headsets. It has barely managed to break even. There has been a small handful of titles worth looking at and most of those can’t even register as a blip on any sales charts.
Sales for all of the major VR headsets are not where investors want them to be and now we are seeing more and more articles like this one…
This VR cycle is dead
completely baseless speculation:
So if Plan A was to jump big into VR, take some VC money to do VR, slap some lipstick on the pig and sell it on the street corner.
https://www.bloomberg.com/news/articles/2016-12-09/eve-online-owners-said-to-weigh-game-maker-sale-after-approaches
If the owners could have dumped CCP for anywhere near a billion and turned it down then IMO their greed exceeded their wisdom.
Then is plan B to get rid of all the wasted money on development, make EVE a non-growth cash-cow and sell that to someone???
https://www.bloomberg.com/news/features/2017-05-17/why-did-a-chinese-peroxide-company-pay-1-billion-for-a-talking-cat
I mean you have some VC that can’t be happy at the moment after spending $30 and having it fail and two of the VCs are/were on the CCP Board of Directors. VCs invest for huge returns and tend to quickly lose interest in non-growth businesses. When do the VCs decide it is time to cash out?
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Kind of surprised this happened later in the month of EVE Vegas. If you have a public event, your second largest of the year, in early October with Valkyrie tournaments and VR discussions and presentations about futures and integration with EVE. Later in the month, it is very dead. What happened? It seems quite sudden. Did a mid-October board meeting about Q3 get dramatic? IDK. It could be mundane business as usual but I wonder if there is an interesting story there.
I think this was a simple case of them getting 30m in investment to become the market leader in VR gaming and that investment not returning enough, so now they’re calling it quits. The timing is very suspect following all the business as usual talk at EVE Vegas, and we know Hilmar left EVE Vegas right after giving his welcome speech on the first day so he was likely heading to an investor/board meeting of some kind where the decision was made.
The closure of the Atlanta office is unexpected as CCP got a film tax credit worth several million per year just for having that office, it’s possible that subsidy was no longer workable for CCP and the office no longer made financial sense. Whatever the direct cause is, CCP’s statements indicate that the company considers itself to have been one of the biggest players in VR game development, and being the biggest fish in a small pond evidently isn’t good enough financially.
They just barely broke even on that $30 million US investment, and if they can’t make a decent return on such a small investment (and 30m is small in the games industry), then perhaps the VR games market isn’t big enough for games of that budget scale. It certainly seems that the best strategy going into VR would be an almost indie approach of low-cost rapid development, the way Valkyrie originally started.
I may not be right, but this does not pass the smell test for me. CCP is a small company; shareholder retained earnings through 14 were negative, layoffs in 11 and 14, etc. I.e., they don’t have large financial resources. 30M is not a lot of money.
CPP was all in – they were the only VR company to support 4+ different hardware platforms. Unless the Icelandic machismo was even stronger than I expect, then a rational company that cared about short-term profitability would not dump all their meager resources into a market that companies like Facebook/Oculus and Microsoft say are going to be developing over the next decade. An apparently-failed strategy of selling CCP as a VR innovator seems reasonable. A strategy of a small player like CCP thinking it could get short-term profits from a nascent VR market is dubious. Would even CCP do that?
Well it wasn’t CCP’s money, it was external investment they got specifically to develop VR games, so evidently someone thought they could make short-term profits from VR games and took that risk. Also CCP may not be Facebook or Blizzard but it’s by no means a small company, despite the layoffs over the years it was floating at nearly 400 employees this year in several different countries around the world.
I think the real issue here is that around $30 million was reportedly spent just on Valkyrie, but that given the size of the VR market it was unrealistic to expect a decent return at that cost. They also kept developing the game at great cost after release even when sales and game activity were dropping, and at some point it no longer makes financial sense to do that. Games have a finite life span.
In retrospect, it may have been smarter to spread that investment over a much wider variety of projects, with in-house games like Valkyrie and maybe even acquiring independent studios working on VR projects. You should be able to get a lot more for 30 million than one dogfighting sim.
My experience/bias/beliefs would have me disagree with
Venture Capitalists who invest are looking for a story that supports being a ten-bagger (1000% return) if it hits. E.g., $30M are looking for a best case $300M upside. So I just don’t see whether they are making or losing a few million a year would be a big issue to VCs; my guess is losing the hope for a mega hit was the fatal change in attitude. But I am not arguing with the wisdom of shutting down the VR games; I just don’t see what has much changed recently with what a reasonable businessperson would have expected when this began.
Re ” external investment ” – I assume that the VCs got equity, diluting the value for the existing shareholders. Giving the new VCs a seat on the board of directors probably did not make for a smooth meeting.
CCP is certainly quite large relative to my meager assets. But not only is it tiny relative to ATVI/EA/Ten Cent, but it seems quite tiny to be pissing away $30M on very high risk, very long term investments. I doubt that CCP could afford to finance another AAA MMO and VR seems to be riskier with longer time frame.
@ Brendan: So essentially Eve Valkyrie may be swept under the rug and closed for good? One thing that has always bothered me about folks who post negatively on VR is that they haven’t tried it and spread misinformation on it. It is definitely a deeper experience for me than siting in front of a monitor. Sad news for the developers. These height maps and levels are not that big of a scale really in UR4. And that shanghai studio is terrible after what they did with Dust514, please correct me if I am wrong. No offense anyone.
The latest word is that Valkyrie is continuing development through to the winter update that has been announced and the Newcastle studio is already starting to transition into new ownership. Either long-term server & community support for Valkyrie (but probably not development) was written into the terms of the sale, or more likely Valkyrie will cease support after the winter update.
Ty
CCP had cancellations and layoffs in 2011 and 2014 and 2017; I sense a pattern.
https://www.engadget.com/2011/10/19/ccp-layoffs-affect-20-of-worldwide-staff-company-focusing-on-e/
https://www.recode.net/2014/6/5/11627664/ccp-games-lays-off-another-49-people
Never got to try valkyrie in VR, but I did try it on the non-vr version, and it was complete and utter crap. No tears will be shed here.
I’ve tried both, and I will say that it’s very much a VR experience. Playing it on a monitor loses a lot of the charm and immersion that makes it a good VR game, I think they knew that and it’s why they didn’t want to release a non-VR version initially.
Fair enough, since I never got to try the VR version.
I play VR Eve Valkyrie and the VR version is so much better. Essentially a game I loved will probably close down. Yet another Hilster error.
Well, lets be honest – this ain’t the first time CCP has blown say $20-$30 million on something and then canned it. Seems top be SOP for them the last few years. ;)
We’ve already seen devs patch vr out of games and make them traditional first person games. Its possible the VR meme is running out of steam with no huge interest in the mainstream consumer. Wouldn’t be the first time. Remember when all the early adopters were telling us how “3D gaming on 3DTV’s is the future?” and the same thing happened. Big names wont develop for just a fraction of their audience so it drowns in shovelware and dies.
VR has lots of applications but in its current states core audience or AAA gaming is never going to happen in significant numbers that the big names need to care about.
Remember VR gaming is not all of VR.
https://www.theverge.com/2017/10/11/16459636/mark-zuckerberg-oculus-rift-connect
IMO, FB did not spend $3B for VR just for gaming. If we get “a billion” VR devices, then there may be hope for someone making software to use them for gaming.
https://www.forbes.com/sites/charliefink/2017/10/09/a-few-good-apps-wont-save-apple-ar-the-future-will
So my WAG is xR starting to really get traction in ’20-21 and perhaps we could have an MMO by middle of next decade.
Zuckerberg has said on a few occassions that he sees VR as a communications tool more than as the gaming platform it was sold as (in the Kickstarter). If companies like HTC and Oculus focus on the commercial and industrial markets (where the real money is anyway) over the next few years to mature the technology, I feel like that’s fairly accurate projection for mainstream adoption. I feel it will remain something of a niche tech still for some years to come even after “mainstream acceptance”, but not an uncommon part of a gaming enthusiast’s home set up. I can foresee it being something like reel to reel audio tape decks circa the late 1950s to the late 1960s were for home entertainment aficionados of the era: not common in all households, but hardly a rarity either.
It’s actually been very interesting to see how little Oculus seems to be interested in the commercial markets compared to HTC. I haven’t been able to find a single Commercial thing for the Oculus and all the arcades/etc all seems to be towards the Vive instead.
I guess I can rationalize that after the fact. FaceBook does not overly need a few million in arcade revenue. They want better ways to sell ads to their two billion users.
Well it’s not just arcades, it’s literally everything commercial. That’s school money, business money, doctor money, etc. But I suppose when I think about it, it is in line with their seemingly race to the bottom strategy.
Funny how niche low budget VR spacesim flopped and everyone jumps into VR is dead bandwagon
I love these threads here, I really do.
You got the people who unless VR requires no headset, no wires, has perfect graphics, and takes up no room while giving them the freedom to do whatever they want and if they price is anything over $50 then it’s just a fad.
Then you got the Morbo crowd who the second there’s any signs of anything that could be determined as failure they trot out their 3D TV memes and and just a fad nonsense despite all the actual companies producing VR hardware pretty much all saying things are going great and they are ahead of their predictions.
Not to nitpick, but $30 million isn’t low-budget. It might be considered low or mid-level funding for AAA games in general today, but for the VR market it was far too big a budget for one game.
I don’t get the one game comments. CCP spent a lot on non-Valkyrie content. They were unique in supporting console, PC (Rift & HTC) and mobile VR headsets. Atlanta and Shanghai did “additional virtual reality content.” The publisher had Project Nemesis, Disc Arena, Ship Spinner, and The Workshop playable prototypes. Plus games Gunjack, Gunjack 2: End of Shift, Project Nova, Sparc
It seems to me CCP “invested” in far more than Valkyrie and IMO more than they could afford.
The “one game” comment is referring to Valkyrie, which CCP admitted cost them $30 million to develop: “Petursson is quick to defend Valkyrie’s pricing, pointing out that the game cost around $30 million to make and that the studio is only now making back that investment.” ( https://www.rollingstone.com/glixel/news/eve-valkyrie-a-year-later-and-whats-next-for-vr-w473997 ).
You’re also double-counting some games here as Project Nemesis became Gunjack and Disc Arena became Sparc, and Project Nova isn’t a VR title. Additionally, CCP couldn’t invest less than 30m in VR anyway because they got that 30m from an external investor specifically for VR. I agree in principle that they evidently invested more in VR than they should have, but specifically I think they invested too much in Valkyrie if it really cost them 30m to make, as the market was never big enough to make that gamble worthwhile.
Yeaaaaah… I said this would happen when they got the investment money for VR, and was shouted down here for it by VR fanboys. It’s perfectly obvious that VR is a fad to anyone who doesn’t willfully blind themselves.
“Let’s look like an idiot wearing VR goggles, get motion sickness, and play a game that we’d never give the time of day if it wasn’t VR. Yay!” You can’t sell $400+ peripherals to play tech demos. It doesn’t work.
I’m not saying the tech will never be there to make it work, I’m just saying it’s not happening within the next 10 years.
VR will continue to be a fad as long as it requires goofy helmets with wires attached. Even 3D TV didn’t pan out and all that required were glasses.
I played around with Samsung Gear VR and as cool as it was it still felt like a gimmick and not something that would keep me coming back especially with so many other things competing for my attention.
VR isn’t a fad. It was just never going to be ultra-mainstream. I bought my Vive knowing that. I was also a huge fan of 3D gaming. The only people I am scared for are the console VR fans. VR( just like 3D) will live on for PC with or without Big Devs. Just like 3D did. That’s what makes the platform great. You should be uplifting the platform instead of trying to garner a “I told you so” that to be honest, doesn’t exist. The majority of VR users know that the “big boys” won’t be the ones to keep VR relevant and that the pricing made it niche from the get go.
P.S. A Samsung gear is what I have always called “Virtual Vision”. If it’s not Room Scale it’s not VR to me. In fact, you brought something to life that I said on Upload VR a year ago(or PC gamer don’t remember lol). I Said that mobile VR could hurt real VR like Oculus and Vive. Looks like I’m getting an actual “I told you so” but not one that I’m happy about:(
Mobile VR should not be called VR.