For a while now, I’ve been struggling with my response to the Sony Online Entertainment acquisition by Columbus Nova. Hope, fear, worry, curiosity; I have run a wide gamut of emotion! I’m very passionate about my gaming. I already wrote a short blurb about my feeling hopeful; although what I didn’t really go into with much detail is the why. It goes beyond Terry Michaels’ impassioned defense of Daybreak. You see, one of my other passions is the stock market. I love digging into stocks and investments. I can’t help but respond to any change in the company of games I play with fear – but that is simply a fear of change. I react the same way every time a class revamp is announced. Or a balancing pass.
I am in no way attempting to compare the impact of a company acquisition and round of layoffs to a class revamp. It is simply that an acquisition in and of itself is not a harbinger of doom. Neither are layoffs. The gaming industry is very unstable, studios over hire, layoff, hire, layoff; it’s an endlessly repeating cycle. Don’t believe me? Dave Georgeson says just that, with more detail, in a guest post on mmorpg.com. Dave Carey says the same thing, in a post regarding the layoffs and Columbus Nova.
Then I came across a post on the Landmark forums by a poster named Nibbon. Have you ever settled down to do something, only to find someone else has done it more brilliantly than you ever could? That’s Nibbon. I am sharing the post in its entirety for two reasons. I want to give Nibbon a shout out, because I really enjoyed his post a great deal. And also because he really did put what I’ve been struggling to formulate into words with a greater eloquence than I could have managed. So with his permission to repost, I give you…
Nibbon’s Response to Terry Michaels’ Quick Update:
I think some people here have some very distorted views over this situation. Understandably so, this is an emotional blow to those who have been putting a lot of effort into this game, and those, like me, who are long time fans of the EQ IP. I think it comes down to just not being familiar with, or being incredibly misinformed about, what happens during an acquisition. I’ve been in the industry and know quite a bit, so I want to help shed light on some things.
From Columbus Nova’s website:
And additionally from their technology partners website:
I’ll start here. This is not a venture capital firm, solely. They seem to do some venture capital work, which is mostly seed money (Think, giving uber $10M to assint in hiring). They are a an “investment firm” with a few different arms. In this case, it would broadly be defined as their private equity arm (one that would handle platform acquisitions, potentially such as a divestiture). Note: a divestiture is when a corporation spins out one or more of its divisions to be acquired as a separate entity. Private equity firms typically make these acquisitions and look for operating efficiency. This is what PEGs (private equity groups) excel at, finding operating efficiency. For a game developer, this is normally found at eliminating jobs at the management level.
A commenter from Kotaku stated:
It sucks that people had to lose their jobs, good people, and not all those who lost their jobs are necessarily as described. However, what was described, is probably the majority of the cases. Development will inevitably slow while the company reorganizes, but this will likely end up, in the long run, creating a more efficient company that will have a similar development speed of what we’ve seen, but with less spend to do so (less decision makers).
A quote from a former PS2 producer who was let go:
Keep in mind, when you are let go from a company – your severance does not buy your silence, you keep silent because it would hurt your chances of getting a new job if you badmouth your old one. That is absolutely true. But there is absolutely no incentive to go out of your way and praise the company that just let you go. I really do think his word should be taken at face value.
SOE, or Sony as a whole, is not doing well. It is likely that SOE specifically was doing worse than we know. It is hard for Sony to manage their many divisions. It is important to know that this situation could have been far worse. If Sony had not found a partner to take over their online gaming division, the whole thing could have been shut down instead. As The PS2 producer said, if CN should be seen as a white knight, this likely saved more jobs than were eliminated. And I think that is the key takeaway. It is more likely that EQN/Landmark would have been cancelled under Sony’s control then under a new partner. The new partner doesn’t want to see these projects fail, it is largely what they paid for. I want to reitreate one quote: “We pride ourselves in playing the long game, prioritizing long-term relationships over those with odds for a quick exit.” Sure it is PR, but this is their strategy. CN is more likely to reinvest in Daybreak, than Sony was to continue to invest in SOE.
A couple more points … If you support this game and want it to succeed, continue to do so. Whether you take the above as true or not, the best chance this game and this studio have of surviving is through customer support. Claiming the sky is falling does not help. Also the silence regarding layoffs up until this point is standard, the last thing you want to do is have a larger PR blunder by saying X amount of people are being let go and be wrong. You also don’t want to announce layoffs with the acquisition. They did it quickly to rip off the bandaid, but they also waited so the two issues wouldn’t be entirely connected – people at the studio knew this was coming, but it was best not to say anything until it was all said and done.
As a bit of an aside, I’ll end with some industry facts: Thomson Reuters reports that there was $3.5 trillion worth of global M&A (mergers and acquisitions [this would cover divestitures, such as this one]) activity in 2014, which is up 47% from the year before. Thomson Reuters also puts the global PE total at $561.9 billion. That’s the highest figure since 2007, and a 43% bump over 2013. According to the U.S. Bureau of Labor Statistics, unemployment fell from 6.7% to 5.6% over this period. I just waned to present this information to state plainly, M&A is not correlated with job loss, probably the opposite.
End Nibbon’s Response.
There’s really not much I can add to this, other than to emphasize what I think is the most important thing for those of us who love Daybreak’s games: if you want these games to continue, and to succeed, then continue to support it and them. Walking away out of fear of their demise will only bring about and hasten that demise. All I can think about when I see people threatening to cancel their subscriptions over this is the toilet paper shortage once caused by Johnny Carson. He joked on air that there was a shortage … and it turned into an actual shortage as people ran out in alarm and tried to hoard it all.
I would really love to know people’s thoughts on this, so let’s get a lively discussion going in the comments below!