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Wednesday, 4 December 2024

Month end update - November 2024

I made 75bn profits in November 2024 from which i utilised 28bn of my skill farm (more of that below).  I also logged back onto all my old characters to use them to enter Manufacturing - that brought back 128bn.  Therefore, my wealth rose by 203bn to 2.012 trillion isk.

If i just focus on the 75bn profits then this was a good month.


Distributions

These days, the aim is to distribute my profits to the Oz Tank Show or other ventures.

So far i have given 260bn isk to the Oz Tank Show + 40bn to The Oz Show + 5bn to the podcast Declarations of War to sponsor it.

The Oz Tank Show started in July 2023 and i have generated profits of 1.074 trillion in the July 2023 - November 2024 period and distributed 306bn.

So that leaves 768bn isk to distribute to some venture(s).

It is early days but the Oz Show is considering having some of its tycoons sponsor a new Corporation.  Lets see.


Six Omega Accounts to pay for / Skill Farming

In June i went for the MCT / Omega deal and have now pre-funded 6 accounts (so the 4 omega accounts and 2 alpha accounts) for 12 months.

This also took me into Skill Farming for the first time.

I spent 130bn isk on all that - and so how to account for this?  Basically, i could either say that was 130bn spent in one month or i could spread the cost of the 130bn over a timeframe (which is how i have always accounted for Omega bought that lasts for longer than a month).


Accounting for the MCT / Omega Deal

I went for the option of spreading the cost of the 130bn over a time period.

The 130bn bought me a 12 month Omega for 6 of my accounts and 12 months of MCT for 2 characters per Account.

As i skill farm i will generate revenues by selling Large Skill Injectors.

The way i have decided to account for this is to:

I will hold the 130bn on by Balance Sheet and as i sell the Skill Points into the market will will reduce the 130bn by the profits made.  This will mean i will not earn any profits from my Skill Farming until the 130bn asset is exhausted.

Hence, in August i made 17bn profits on my Skill Farms and so the 130bn asset reduced to 113bn and then in September i made 20bn profits from Skill Farms and so the asset was reduced further to 93.3bn and then in October i made 26bn profits from Skill Farms and then in November i made 28bn.  Therefore the asset on the Balance Sheet is 130-17-20-26-28 = 39bn.

I expect it will take 2 more months to reduce this asset to nil by which time the profits made on the Skill Farming will then be taken as pure profit.

So, thinking this through by the end of January i should have recouped the investment leaving 4 to 5 more months of pure profit from Skill Farming, and of course, the 12 months of Omega all paid for each of the 6 accounts.

This was a brilliant deal.


The basic numbers for November

In November i had sales of 401bn isk vs October of 352bn.  So a rise of 14%.

That is my third best month of sale and above the long running average 330bn isk though helped by Skill Farms.

This comes to average daily sales of 13.4bn isk.  In other words, each evening i expect to see across all my accounts an additional 13bn isk sitting on the characters to be reinvested back into the markets.

Item profits were 135bn isk which is a margin of 34% (135/401).  So above the 25% target.  There will be an upwards distortion from Skill Farming in here which one day i may attempt to reverse.  I had thought the prior month 48% had data issues but since November did not indicate any data reversing i have come to the conclusion that i am selling items for higher than normal margin and the Skill Farming is causing a positive mix effect.

Taxes and Courier fees came to 32bn isk.  That takes the Trading Profits to 103bn isk and so a trading margin of 25.6% (103/401).  Above the 16% target.

Then we have 28bn Skill Farming Asset amortised to take me to 75bn profits

And then add in the 128bn wealth (mix of isk and assets) from the old characters logged into which takes the increase in wealth for November to 203bn.


What is needed to get wealth to rise to 100bn in a month?

In some ways, i am there now.

Once i get to the situation where the 130bn Omega is paid off and the Skill farming goes to profit then i have generation over 100bn profits per month in the last 3 months (September - November).

But lets assume i only get the 25% item profit margin that i target . . . . therefore to get 100bn isk of an increase in wealth before distributions i would need to make daily sales of 18bn isk.

I am pretty sure i wont get there sustainably on the current strategy (pre skill farms) so i am putting my mind to how else to earning isk.  Skill Farming is one idea.  May need more.  Alternatively, i could just become more profitable which is what is happening now.


My Sales Strategy

I am putting more effort into designing spreadsheets using the Eve Excel Addin to both make my online time more efficient and find those items to sell in the Regions quicker.

This is allowing me to move faster each night.  Currently, i can now see which of my trades need updated and go straight to them rather than cycle through all trades.  I can also see which sales have been made so i can see if i can replace them.  I can also see what items i can buy from Jita Sell Orders to put up for sale in the trade hubs and make my target margin.

For me, the market was better in September, October and November.  Back to the good old days for me after a quiet July and August.

My strategy is to Buy from Sell Orders in Jita to sell in the trading hubs in other Regions.

I don't sell consumable items such as ammunition given they tend to be high volume and very competitive.  That includes ships.

I rarely sell items used as components in manufacturing because the end buyer tends to be cost conscious (and armed with spreadsheets) and able to manufacture the items themselves if market prices are too high.

I sell items that are in low supply and sell very slowly.  These items tend to have very low competition - sellers want to get cash quickly and so don't bother in these items.  If i put an item on the market and it sells in 15 days that is fine with me.

These items also tend to be price insensitive - players will buy the item almost whatever the price.  The Buyer is much more interested in getting the item to use now rather than setting off to Jita to get it cheaper.

I sell items that are typically bought to kit a ship as a player progresses or has to replace a destroyed ship / pod.

Each month i sell 20-30% of what i had to sell at the start of the month.

I have a rule that the minimum profits have to be 100m isk.  It is no use me buying items for 5m to sell them for 15m.  The profitability may be great but that won't move the dials.  That said, it is surprising how many items i can buy for 120m from Jita Sell Orders and sell for 220m in the other trading hubs.  At that isk level, players re-equipping don't care about spending an additional 100m isk to save time.

And in the secondary trading hubs Amarr / Dodixie / Rens / Hek buyers will not travel even one jump to buy a cheaper item.

Therefore, i mostly sell Implants, Blueprints, ship equipment and some structure modules.  And more recently Large Skill Injectors.


What is selling well in November

Blueprints: did better in November; and continue to be a steady source of revenues; similar to what i have seen since August, i am seeing Buyers buy out whole groups of blueprints - i.e. buy out all faction ship blueprints in one go.  Given Blueprints i buy at base cost - so i source Blueprints from the source NPC stations and have then couriered to the Selling location - and therefore the item profit margin starts at 25% and perhaps ends a bit lower by the time the Blueprint is sold.

Implants: more varied these days and has been like this for a while.  They used to be a solid income earner but the competition is tougher now.  My experience with Implants is that they sell by the family - i.e. the alpha / beta / delta / epsilon / gamma / omega implant all sell to the same buyer at once.  So they can be good earners when they occur.  November was better but this feels like a slowing market for me.

Mining equipment: very low these days; competitors are all over this.

Ship Equipment: doing better over a right old range of items - afterburners, armour repairs, shield repairs, weapons are the main staples.


Manufacturing

I do this opportunistically and i don't keep track of it.  I don't (yet) do it systematically but i need to get a grip.  I am sure there are many items i sell in the Trade Hubs that i could manufacture in Jita and so get a better in price vs buying them from Jita Sell Orders.

But so far i manufacture items that sell for over 1bn isk.  My favourite items are where the Blueprint Original costs >10bn and there are no Copies in the Contract Market.  Sort of makes me feel i have the market to myself.

That said, the Oz Show had a great interview with Sir SmashAlot where he talked about his manufacturing activities to the tune of making over 1 trillion profits per month!  And the author of the blog I wanna be a Trillionaire, so frickin' bad... has moved into manufacturing and is making a good job of it.

That has made me think more about giving manufacturing a shot and so i logged back into old characters to bring them into the fold and so that i can start again on manufacturing.


Planetary Interaction

For now, i have stopped trying to make this work.


Research

For now, i have stopped trying to make this work.


Station Trading

All in Jita.  And i am not focusing on this for now, so only 9bn sales.

Real life puts this on the back burner.

My idea of station trading is not buying items when they look cheap.  For me, station trading is about sticking to the slow moving items and quite often i am the only person in Jita trying to sell an item.  Almost always Selling for over 1bn isk.

What i don't do is Investing.  I.e. i don't buy an item now i think is cheap and hold onto it to sell it a few months later when the price has risen.


Alpha Accounts

I upgraded 2 of these accounts to Omega as part of the MCT deal.  So training them all hard to get to the 5m skill points to start the skill farm.

That leaves 1 Alpha account with a character in Venal left.  I also added another character to that account and am training it up to 5m skill points.  The idea here is to get another set of Alpha Accounts ready for Skill Farming sometime in the future if needed.


Plex

At the start of September i bought 8000 Plex at around 5.3m each.  The main reason for doing this is to have a store of plex ready in case of any deals on the NEX store that comes along.

The holding of Plex has made a small profit of around 6bn but this is not the reason for holding the Plex - it is purely there as a ready source for any deals that come along.


Items in hanger for sale

There are a number of items that i sell that can only be sourced from Regions outside of The Forge (the home of Jita).

I used to have these items couriered directly to the trading location to sell but that has proved to be tedious over time.

Therefore, i now have the items couriered to Jita and stored.  When i a trade location needs one of these items to be sold i can then courier them from Jita - a much easier process to handle.

In effect this means i am couriering these items twice - once to Jita and once to the trade location.  Therefore, i add the additional courier cost to the Sale's price.

I also hold some BPOs + minerals + other items in inventory.

All that comes to around 151bn.

Furthermore, i am buying Skill Extractors all the time and i hold Large Skill Injectors for sale.  Currently, these come to 166bn.

And finally, the old characters i logged back into came with around 110bn of items in their hangers.

What it means is that items in Hangers used to be 20bn but is now 427bn (this also now includes Skill Extractors and Large Skill Injectors).


Buy Orders

Buy Orders have varied over time but are now back on the rise as i start placing Buy Orders for Skill Extractors around High Sec.

Once i get a grip, Buy Orders will also increase as i ramp up the Station Trading in Jita.

Currently Buy Orders sit at 76bn which is part Skill Extractor Buy Orders and Jita Buy Orders to station trade items.


ISK

For the last 12 months the average ISK in wallets has been over 100bn compared to around 50bn before this.

The reason for his is purely real life being busy and so not having the time to make sure everything is invested.


2 trillion wealth

Before i got to 1 trillion wealth, 2 trillion was the next aim.

But, it just got boring watching my wealth rise so i set myself the task of giving everything above 1 trillion away.

However, my wealth is now 2 trillion despite giving away 306bn and taking a provision of 324 bn.  If neither of these things had been done then my current wealth would be 2.6 trillion isk.


Current Wealth

Current wealth is 2.021 trillion ISK made up from:
  • Plex held as an investment 48bn ISK
  • Items in hanger for sale 428bn ISK
  • Items in hanger for use in business 11bn ISK
  • Omega brought forward 39bn ISK
  • Buy orders on the market 76bn ISK
  • items for sale 1.62 trillion ISK
  • less a 20% provision 324bn ISK*
  • ISK in wallet 124bn ISK

When i add up my wealth, I don't count assets I use in the course of my business such as ships, fittings etc nor do I add back any expenses such as skills purchased etc.  The wealth I disclose is made up of items that are ISK or are in the process of being converted to ISK or are used to generate isk that can be readily resold back onto the market.  Any ships or skills or fittings etc i buy are counted as expenses in that month.  The only exception to this rule is Blueprint Originals i use for manufacturing.  They are held at cost.

* I take a 20% provision against the items I am selling.  Eve calculates wealth by adding up the value of the sell orders hence it is possible to increase your wealth by buying an item for 100m ISK and putting a sell order for 120m ISK (in this case your wealth would increase by 20m ISK).  For me, I want my wealth to be calculated at cost.  I know that the value of my sell orders will likely fall over time as I update my orders downwards as competition reduces their prices before my items are sold.  Hence the 20% provision is my best guess as to what the maximum reduction I would need to make to my sell orders as a whole before they are sold.  In an ideal world I would value my sell orders at the value which I bought the items for.

Tuesday, 12 November 2024

Pearl Abyss Q3 Earnings Call

Pearl Abyss, who are the owners of CCP, had their Q3 results today. 

Full transcript of the call is at the bottom of this post.

And, if you speak Korean, the call recording can be found https://irsvc.teletogether.com/pearlabyss/pearlabyss2024Q3_eng.php


Firstly, right of the blocks - this looks like a fantastic Quarter for Eve Online.  Revenues up 28% vs Q3 2023.

But a poor quarter for the rest of Pearl Abyss.  Certainly worse than what the market expected.



Pearl Abyss


For Pearl Abyss, revenues in Q3 2024 were down 6% to 79.5bn Won and the business slipped into greater losses of 9.2bn Won.  And after the usual odd items that meant a 7.8bn Won loss at the bottom line.

Put it this way, over the last 12 months Pearl Abyss has made an Operating Loss of 20bn Won from its core games business but has made income of 11bn Won from "Financial Income" + 25bn Won from "Other Income" offset by a 5bn Won loss from "Income from Equity Method".  Hence, over the last 12 months the Profit before Tax is 12bn Won thanks to non core items.


Revenues:

Black Desert continues to slowdown across all Platforms.  It is 10 years old.  Hard to see how this trend does not continue.

Black Desert was launched in China on 24 October, slow ramp up to date.

Eve Online is doing well but only represents 27% of revenues - so does not really make up for the declining Black Desert.


In the Cost base:

Labour costs were up 7% on Q3 2023 and come to almost half the cost base.  Driven by a 4% rise in the number of employees.

Commissions were up 19% and come to 19% of the cost base.

Advertising was down 11% (but is ramping up for Crimson Harvest) and comes to 10% of the cost base.  I suspect this will start to rise more into the launch of Crimson Desert into 2025.

The rest of the cost base was up 9% and comes to 21% of the cost base.


. . . . but, the revenues from the existing games (Black Desert and Eve Online) do not cover the running costs + new game development costs of Pearl Abyss.

. . . . . . this business will not make a profit until Crimson Desert is launched sometime in 2025.



Eve Online



Focusing on the year-on-year numbers, Eve Online rose from 16.0b Won in Q3 2023 to 20.5bn Won in Q3 2024 = a 28% rise.  This comes on the back of a 7% rise for Q2 2024 vs Q2 2023 and a 6% rise for Q1 2024 vs Q1 2023.

There will be some foreign currency movements in there but i don't think that will be much - this just looks like a cracking Q3 for Eve Online on the back of the Equinox expansion.

Whilst in the August Call, the management were pointing at keeping Eve Online revenues at the 20bn market, the market mostly did not really believe them - so this is a positive results for the market also (offset by the poor rest of the business).

Q4 is normally the big quarter (October - December) so we should expect something closer to 24bn Won revenues for Q4 which means that 2024 could be 84bn Won.  This is in line with what the market thought it could be after the August update.

Within the Q&A on the call, not much more on Eve came out (second time i have seen an analyst ask a question on Eve at the call).  A little more chatter on their blockchain but not much.


Eve related comments from management:

"We plan to launch diverse content for EVE as well, and following the Equinox Expansion Pack, which was launched in Q2, we will launch the new Expansion Pack, Revenant, today. For EVE Vanguard, we plan to continuously refine the gameplay until the release while showcasing new content. We are smoothly implementing preparations for our new titles to secure new growth engines."

"First, in the case of EVE IP-based player-led sandbox game EVE Frontier, we revealed that we are developing it as a blockchain-based survival game in September, along with the official game name and game playing experience. We will continue testing Q4 as well as for EVE Frontier, and we'll refine the game until we perfect it."

"In the case of EVE Galaxy Conquest, we officially launched it on October 29th, and since strategy games are showing strength nowadays, we will focus on service so that we can achieve great results."

"Next, I will explain more about EVE Frontier. CCP Games, during the past couple of years, in order to secure new growth engines, have been developing EVE IP-based new titles. EVE Frontier, among these titles, is a blockchain-based sandbox game that has an economic system.

So after its reveal previously, we have been actually implementing many playtests and have been refining the game's completeness. We will engage in many tests until its official launch, and we will share the details of our development process as we go along. Regarding the issuance of tokens for this blockchain project, we are currently reviewing the different regulations for different countries. So through CCP Games, we will give you more information."


Crimson Desert

This has been delayed five times since it was first announced back in 2019.  It really needs to come through to get Pearl Abyss back to profits.

It is being show cased next week at G-Star in South Korea.

Marketing is ramping up for Crimson Desert with Gamescom in August, TwtichCon in September and Paris Games Week last month.



The transcript of the call (translated to English)

Pearl Abyss Q3 2024 Earnings Call

Operator:
(Foreign Language) Good morning and good evening. Thank you all for joining the conference call for the Earnings Results of Pearl Abyss. This conference will start with a presentation, followed by a Q&A session. (Operator Instructions) Now, we will begin the presentation on Pearl Abyss third quarter earnings results of the fiscal year 2024.

Kim Yoon
(Foreign Language) Greetings, I am Kim Yoon from Pearl Abyss, IR team. First of all, I express my deepest gratitude to the analysts and investors in and out of Korea for taking part in the 2024 Q3 Pearl Abyss earnings presentation despite your busy schedules. (Foreign Language) Before elaborating on today's business results, I would like to ask for your understanding regarding the following. The financial and business results contained in today's earnings release have been prepared for the convenience of investors and is subject to change depending on the final closing of our books.

In addition, the accuracy and completeness of the financial and business results in the earnings results material are not guaranteed, and the company is not obliged to give updates of the accounts given after this date, so please take these factors into consideration. (Foreign Language) I would like to tell you a few things before the presentation. Please note that the financial statements and sales results of the presentation will be changed according to the final decision results for the convenience of investors. We have here with us at the earnings presentation today, Pearl Abyss, CEO; Heo Jin-young; CBO, Kim Gyeong Man; and CFO, Cho Seok-Woo.

We will first hear the business performance presentation highlights from CFO, Cho Seok-Woo, and then engage in a Q&A session.

Seok Woo Cho, Chief Financial Officer:
(Foreign Language) (Foreign Language) Greetings, I am Pearl Abyss CFO, Cho Seok-Woo. Thank you once again for taking part in our company's earnings conference call despite your busy schedules. (Foreign Language) (Foreign Language).

I would like to elaborate on Q3 major business activities and performance. Black Desert and EVE, consistently showcase live service and we carried out marketing for Crimson Desert and EVE Valley. We carried out marketing for Crimson Desert and implemented tests for new service of Black Desert China, EVE Frontier, and EVE Galaxy Conquest. Black Desert showcased the Land of Morning Light Soul which showed the charm and beauty of Korean tradition and completed a vast fantasy world encompassing both Eastern and Western elements.

In particular, in Black Desert, which has the background of Western medieval fantasy, we implemented terrain and locations which had the charm unique only to Korea and provided new experiences to global users. In addition, in line with the Land of Morning Light update, we launched a new class Dosa, which captured the colors of Korea and enhanced immersion in the game. In case of Mobile, we launched the Dosa class and Azunak Arena, a combination of PvP and PvE, and worked hard to provide more to provide more fun to the game. In addition, we hosted the Heidel Ball, and along with colorful events, we communicated major second half updates.
For EVE Online, we held the Alliance Tournament, which is held each year, and implemented additional update of the EQUINOX Expansion Pack, and provided more things to enjoy to our users. In addition, EVE Vanguard, through the Solstice update, held the largest record ever live event, communicated major improvements, and enabled diverse gameplay experiences. Apart from this, we were thorough in preparing for new services to expand revenues. First of all, Crimson Desert participated in Gamescom in August, and along with four boss character hands-on demos, showcased our footage.

In addition, in September, we provided a 50-minute gameplay video and revealed the story, action, and fun elements that you get to experience through the Crimson Desert vast open-world. After the Chinese license for Black Desert China was issued in June, after a technical test in August, official service started on October 24th. There were various many playtests for EVE Frontier, which is blockchain-based, following the previous quarter, and we perfected EVE Galaxy Conquest, the mobile strategy game, based on our soft launching feedback, and it was officially launched on October 29. (Foreign Language).

Next, I would like to walk you through our Q3 performance. Q3 operating revenue posted KRW79.5 billion, a 2.8% decline Q-o-Q Operating losses posted KRW9.2 billion, and net loss recorded KRW7.8 billion, recording a loss. (Foreign Language). I will cover in more detail regarding operating revenue. First, I will cover major IP operating revenue. Operating revenue from Black Desert IP this quarter posted KRW54 billion, and decreased 10% Q-o-Q EVE IP operating revenue posted KRW20.5 billion, a 5.2% decrease Q-o-Q For regional operating revenue contribution, 20% was from Korea, 24% was from Asia, 56% was from North America and Europe. And for platform operating revenue contribution 76% was for PC, 21% for mobile, and 3% for console. (Foreign Language) Next, I will cover operating expenses.

Q3 operating expenses went up 1.2% Q-o-Q and posted KRW88.7 billion. In the case of labor costs, it posted KRW43.5 billion, a 4.9% decrease Q-o-Q For your reference, Q3 and total number of employees stand at 1,347. The number of employees in development are 771 and take up 57% of the total headcount. Commissions posted KRW17 billion, a 7.5% decrease Q-o-Q In the case of advertising, it posted KRW8.9 billion, a 22.1% increase Q-o-Q due to Crimson Desert marketing, including our participation in Gamescom.

(Foreign Language) Lastly, I will cover Q4 major highlights. (Foreign Language) ( ) Q4 Black Desert will showcase content and events which are full of more interesting adventures. In particular, in celebration of our 10-year anniversary of Black Desert, we plan to hold a Black Desert Festa. At the event, we will introduce new content, which we will showcase in 2025, and also hold diverse events, including art events and concerts to strengthen communication with users.
Black Desert console launched the Dosa Quest, which was first introduced via PC and mobile. In addition, to foster a better quality game environment for users, we are accelerating development of versions for next-generation devices. In the case of mobile, we launched the Kurenai class in October, and we will host the Kaopei-On Banquet in December to communicate our future roadmap. Black Desert China, after two rounds of tests, started official service official service on the 24th of last month.

We will launch popular contents like Great Ocean and Land of Morning Light quickly within this year. We plan to launch diverse content for EVE as well, and following the Equinox Expansion Pack, which was launched in Q2, we will launch the new Expansion Pack, Revenant, today. For EVE Vanguard, we plan to continuously refine the gameplay until the release while showcasing new content. We are smoothly implementing preparations for our new titles to secure new growth engines.

First, in the case of EVE IP-based player-led sandbox game EVE Frontier, we revealed that we are developing it as a blockchain-based survival game in September, along with the official game name and game playing experience. We will continue testing Q4 as well as for EVE Frontier, and we'll refine the game until we perfect it. In the case of EVE Galaxy Conquest, we officially launched it on October 29th, and since strategy games are showing strength nowadays, we will focus on service so that we can achieve great results. For Crimson Desert, we plan to participate in diverse game events in Q4 as well and actively promote the game.

First of all, at this week's G-STAR, we plan to show an approximately 30-minute demo build so that users can directly play the game. We are preparing a demo event that will sufficiently satisfy the heightened expectations of many people, and we kindly ask for your continued interest. Starting from last week's Gamescom, we are engaging in active marketing, including at TwitchCon and at Paris Game Week. We met countless media influencers and users, and after getting feedback for Crimson Desert and sharing opinions, we are working very hard to promote the game to more people, so our offices around the globe are very busy working to do this. We will participate in diverse game events, including G-STAR, for the remainder of 2024, and along with hands-on demos, we will communicate more information. Everyone at Pearl Abyss, from our CEO to all our employees, are doing our utmost to always show an improved company. We will kindly look forward to your continued interest and support. Thank you for listening. (Foreign Language) With this, we will conclude the 2024 Q3 Pearl Abyss business results presentation and start the Q&A session.

Questions And Answers

Operator:
Question And Answer

Operator:
(Foreign Language) Now the Q&A session will begin. (Operator Instructions) (Operator Instructions). (Foreign Language).

The first question will be presented by Jingu Kim from Kiwoom Securities. Please go ahead with your question.

Jingu Kim:
(Foreign Language). Thank you very much for giving me the opportunity. I have three questions. My first question is regarding more details related to Crimson Desert marketing. Are you going to participate in TGA this year? And can you also tell us about what is your timeline for the launching of the game? Will it be within this year? If you can give more details, it will be greatly appreciated. My second question is about Black Desert China. So can you give us some updates on user traffic or your revenue trends? It would be also greatly appreciated. And third question is about any updates regarding --

Unidentified Speaker, :
(Foreign Language). Thank you very much for your question regarding Crimson Desert marketing. For Crimson Desert, we have been strengthening our narrative and refining our game for perfection and have been smoothly engaging in the final processes.
(Foreign Language). In addition, as we are nearing the completion of development, we are actually meeting many users by participating in many gameshows in and out of Korea, strengthening our relationships with the media and influencers and intensifying our marketing. (Foreign Language). (Foreign Language) Also, at this weeks G-STAR, which is planned, we will provide around a 30-minute demo build so that users will be able to directly play the game.
(Foreign Language) As we are nearing the completion of the game development, we are seeing more visibility about the timeline. (Foreign Language) That is why, as we had shared with you in the previous quarters earnings conference call, we are going to participate in global game events at the end of the year and communicate more details to you. (Foreign Language) We are going to do our best until it is finally completed and perfected, and also work hard on our marketing so that we can have great performance. (Foreign Language) I would like to update you on our results and our current status for Black Desert China.
(Foreign Language) For Black Desert China, we started official service on October 24th. (Foreign Language) We have had about 20 classes since the launch, and we have been offering diverse and various contents and are receiving great acclaim from our users. (Foreign Language) Regarding the performance, since it took us a very long time to service in China, our goal is to not have a very high performance like a completely new title game. (Foreign Language) However, we are working very hard with our publisher so that this game can safely take root in the Chinese market, so that we can service this game for a very long time with a certain amount of capacity. (Foreign Language) Based on our operation know-how in the global stage, we are going to work hard on our service on our service and do our best so that in China, it can also consistently contribute to our performance.

Heo Jin-young
(Foreign Language). I will answer your third question regarding Dokkaebi (DokeV). (Foreign Language).
For Dokkaebi(DokeV), we have been consistently accumulating our assets and have been developing this along with Crimson Desert. (Foreign Language). In particular, because we are nearing the completion of Crimson Desert, we believe that the development of Dokkaebi (DokeV) will become more accelerated. (Foreign Language).

Although we have been focusing our marketing on Crimson Desert until now, we will also share with you the development status of Dokkaebi (DokeV) at the appropriate moment. (Foreign Language). And as I had mentioned previously, with Dokkaebi (DokeV), we have been accumulating many assets and with our Black Space engine, we have had more efficiency in our development. So we are going to do our best to complete development quickly after Crimson Desert.

Unidentified Speaker, :
(Foreign Language). The answers were from our CEO, Heo Jin-young; and CBO, Kim Gyeong Man. We will take the next question.

Operator:
(Foreign Language).
The next question will be presented by Jaemin Ahn from NH Investment & Securities. Please go ahead with your question.

Jaemin Ahn:
(Foreign Language). ( ) Thank you for the opportunity.
I have several questions to ask you. I know that you have been preparing for Crimson Desert for a long time. And I know that there have been many games using different graphics that are like early arrange five or 50, or other types of these Unreal game development engines that have great forte in graphics. So, can you tell us about what is the advantage or competitive edge of Crimson Desert? And my second question is related to your marketing budget for next year.
Can you give us more color? And my third question is a little bit of a trivial question, but I've seen that your additional costs have been increasing for this quarter. Can you tell us about the reason why? Thank you.

Heo Jin-young
(Foreign Language) Thank you for your questions. I would like to give you a little more color about what is a strong point of Crimson Desert and give you more information about our marketing budget.

We participated in Gamescom, TwitchCon, and Paris Game Week, and we had the hands-on demos for the users, media, and influencers. (Foreign Language) Many people exclaimed at the Crimson Desert games' details, the degree of immersiveness, and high quality, and did not hesitate to give out top-notch claims for its great performance. (Foreign Language) In particular, we saw acclaims for surprisingly high-quality visuals and that people were very impressed by our unique gameplay, which was actually based on our engine. And we could also find out that many were very positive about the game, saying that it is very fresh and it is a game unlike any other game they have seen before.

(Foreign Language) Crimson Desert has a very has a very high degree of freedom that goes beyond the open world games that have existed until now and is trying very hard to show a level of game experience that is one notch higher than before. (Foreign Language) We are going to do more of these hands-on demos so that we can heighten expectations for Crimson Desert and will work hard to perfect the game until its official launching. (Foreign Language) I would like to answer your second question related to Crimson Desert marketing expenses. (Foreign Language) For Crimson Desert, we have engaged in our focused marketing in Q3 as well.

So our advertising for Q3 went up 22% Q-o-Q (Foreign Language) For Crimson Desert, we plan to intensify our marketing efforts in Q4 as well as 2025, so we believe that expenses will go up. (Foreign Language) However, we are preparing for efficient marketing through our diverse partners and channels, so we are not actually expecting a great deal of marketing expense increase. (Foreign Language) I would like to explain about the third issue that you asked about, which was heightened additional costs. In Q-o-Q, we had about KRW3 billion of increase in our additional expenses, which were mostly one-off costs.

(Foreign Language) So we had, actually in Q3, we had the tax audit for our regional taxes and our corporate taxes. So we had those KRW2.5 billion expenses going toward these tax audits and other preparations. (Foreign Language) (Foreign Language). And we had about KRW500 million of increase because of the very hot summer we had this year.

So that is why we had a higher electricity bill because we had to pay more for electricity for air conditioning.

Unidentified Speaker, :
(Foreign Language). We had answers from our CEO, Heo Jin-young; and our CFO, Cho Seok-Woo. We will take the next question.

Operator:
(Foreign Language). The next question will be presented by Seung-ho Choi from Sangsang Insecurities. Please go ahead with your question.

Analyst:
(Foreign Language).
Thank you very much for your opportunity. I am Choi Sung-ho from Sangsang Insecurities, and I have two questions. I am sure that we will get to see it soon, but I am curious about the demo build for Crimson Desert. Will it be similar to what was shown in Gamescom? And are you going to also show or reveal new demos as well? And I also have some questions about EVE Frontier. Can you explain more about what the game is about, when it will be launched, and what we can expect? Thank you very much.

Heo Jin-young
(Foreign Language). Thank you very much for your questions. I will answer your first question regarding the G-Star build and demos for Crimson Desert and other plans.

(Foreign Language). At G-Star, compared to Gamescom, when we had some limited time and many users, we are going to showcase one more new bot in our demo build. So we -- you will get to experience it at G-Star. (Foreign Language). However, for more details, you will actually have to get a look at it at the day at G-Star, because it will be only revealed on site. So we ask for your kind understanding. (Foreign Language) For Crimson Desert, we plan to continue to show you more footage and hands-on demos in 2025 as well. So in the phase of our marketing, we are going to do our best to show you diverse aspects of the game.

And regarding our demo versions, we believe that it will probably go along with our marketing plans, but we will communicate more details with you going forward. (Foreign Language) Next, I will explain more about EVE Frontier. CCP Games, during the past couple of years, in order to secure new growth engines, have been developing EVE IP-based new titles. (Foreign Language) EVE Frontier, among these titles, is a blockchain-based sandbox game that has an economic system.

So after its reveal previously, we have been actually implementing many playtests and have been refining the game's completeness. (Foreign Language) We will engage in many tests until its official launch, and we will share the details of our development process as we go along. (Foreign Language) Regarding the issuance of tokens for this blockchain project, we are currently reviewing the different regulations for different countries. So through CCP Games, we will give you more information.

(Foreign Language) Our CEO, Heo Jin-young, answered the question. We will receive the next question.

Operator:
(Foreign Language) The next question will be presented will be presented by Donghwan Oh from Samsung Securities. Please go ahead with your question.

Analyst:
(Foreign Language) Thank you very much for the opportunity. I have two questions. They are all related to Crimson Desert. I know that we have heightened expectations for Crimson Desert, and can you tell us about any revenue goals you have for the first year after it's launched? And can you also tell us about how many titles you plan to sell, or how many titles do you think will cover your development and marketing costs? My second question is about console games like Crimson Desert, which tend to have more concentration of sales and revenues in the first and second quarters after it has been launched.
So from a financial perspective, can you tell us about how you plan to grow revenues the year after it has been launched? Thank you very much.

Heo Jin-young
(Foreign Language) Thank you very much for your questions. I will answer your question related to Crimson Desert expectations and goals. (Foreign Language) Crimson Desert has a very high degree of freedom that goes beyond the existing open world games, and it's showing a very high game playing experience that is one level higher than the existing games.

Also, because we have very immersive stories and graphics, and a high degree of perfection, we believe that we can have the performance that befits this type of high quality open world game. (Foreign Language) Actually, I cannot give you more give you more detailed figures on our expectations for revenues, but I can just tell you that I know that probably the market has some expectations for this, but internally, we believe that we will do our best to perfect the game so that the results are higher than what is expected. (Foreign Language). Your next question was about the fact that since Crimson Desert is a single-play game, you were wondering about the sustainability or continuity of the revenues and performance of this game. (Foreign Language). Well, actually, this is our first attempt at this type of single-play game, but we have very high expectations for this special game. And although we are currently developing Crimson Desert as a single-play game, we are actively considering to have this in a multi-play mode or DLC so that many users can play together. (Foreign Language).

And since we are targeting other games that use our Black Space engine so that the other launching games have a very fast lifestyle, we believe that we will be able to get the great results that we expect.

Unidentified Speaker, :
(Foreign Language). The answer was given by our CEO, Heo Jin-young. (Foreign Language).
It seems that there are no other questions in the queue, so with this, we will conclude 2024 Q3 Pearl Abyss business results conference call. Thank you for your participation. The Event has Ended

Sunday, 3 November 2024

Month end update - October 2024

I made 129bn profits in October 2024, from which i utilised 27bn of my skill farm (more of that below) and distributed 5bn to sponsor an Eve show (more on that another time).  Therefore, my wealth rose by 97bn to 1.818 trillion isk.

Another good month, on some measures my best ever in part because of the skill farming.  On other measures my second best if i exclude my skill farming given it is still paying for itself.  Either way, a good month.


Distributions

These days, the aim is to distribute my profits to the Oz Tank Show or other ventures.

So far i have given 260bn isk to the Oz Tank Show and 40bn to The Oz Show.

The Oz Tank Show started in July 2023 and i have generated profits of 999bn in the July 2023 - October 2024 period and distributed 306bn.

So that leaves 694bn isk to distribute to some venture(s).

So far, sponsoring an Eve Show for 5bn is about as far as i have got . . . . . 


Six Omega Accounts to pay for / Skill Farming

In June i went for the MCT / Omega deal and have now pre-funded 6 accounts (so the 4 omega accounts and 2 alpha accounts) for 12 months.

This also took me into Skill Farming for the first time.

I spent 130bn isk on all that - and so how to account for this?


Accounting for the MCT / Omega Deal

The question therefore is how to account for the 130bn isk spent on the MCT deal.

The 130bn bought me a 12 month Omega for 6 of my accounts and 12 months of MCT for 2 characters per Account.

As i skill farm i will generate revenues.

The way i have decided to account for this is to:

I will hold the 130bn on by Balance Sheet and as i sell the Skill Points into the market will will reduce the 130bn by the profits made.  This will mean i will not earn any profits from my Skill Farming until the 130bn asset is exhausted.

Hence, in August i made 17bn profits on my Skill Farms and so the 130bn asset reduced to 113bn and then in September i made 20bn profits from Skill Farms and so the asset was reduced further to 93.3bn and then in October i made 26bn profits from Skill Farms and so the asset is now 66bn.

I expect it will take 4 more months to reduce this asset to nil by which time the profits made on the Skill Farming will then be taken as pure profit.

So, thinking this through by the end of February i should have recouped the investment leaving 4 more months of pure profit from Skill Farming, and of course, the 12 months of Omega all paid for each of the 6 accounts.

This was a brilliant deal.


The basic numbers for October

In October i had sales of 352bn isk vs September of 369bn.  So a fall of 5%.

So now back above the long running average 330bn isk again though helped by Skill Farms.

This comes to average daily sales of 11.4bn isk.  In other words, each evening i expect to see across all my accounts an additional 11bn isk sitting on the characters to be reinvested back into the markets.

Item profits were 168bn isk which is a margin of 48% (168/352).  So back above the 25% target.  There will be an upwards distortion from Skill Farming in here which one day i may attempt to reverse.  That said, this 48% does look high and suggests some data issues - may be or may be not, if there are problems these will be reversed in November.  Lets see.

Taxes and Courier fees came to 40bn isk.  That takes the Trading Profits to 129bn isk and so a trading margin of 26.6% (129/352).  Again, way above the 16% target.

Then we have 26bn Skill Farming Asset amortised to take me to 102bn profits from which i distributed 5bn isk to sponsor a show and therefore giving a 97bn isk increase in wealth for October.


What is needed to get wealth to rise to 100bn in a month?

In some ways, i am there now.

This still remains my target and i am hoping the Skill Farming will really help in 4 months time.  Technically, i achieved this in September and October.  Lets see how November goes.

Lets assume i only get the 25% item profit margin that i target . . . . 

To get 100bn isk of an increase in wealth before distributions i would need to make daily sales of 18bn isk.

I am pretty sure i wont get there sustainably on the current strategy (pre skill farms) so i am putting my mind to how else to earning isk.  Skill Farming is one idea.  May need more.


My Sales Strategy

I am putting more effort into designing spreadsheets using the Eve Excel Addin to both make my online time more efficient and find those items to sell in the Regions quicker.

For me, the market was better in September and October, back to levels i saw earlier in the year.

My strategy is to Buy from Sell Orders in Jita to sell in the trading hubs in other Regions.

I don't sell consumable items such as ammunition given they tend to be high volume and very competitive.  That includes ships.

I rarely sell items used as components in manufacturing because the end buyer tends to be cost conscious (and armed with spreadsheets) and able to manufacture the items themselves if market prices are too high.

I sell items that are in low supply and sell very slowly.  These items tend to have very low competition - sellers want to get cash quickly and so don't bother in these items.  If i put an item on the market and it sells in 15 days that is fine with me.

These items also tend to be price insensitive - players will buy the item almost whatever the price.  The Buyer is much more interested in getting the item to use now rather than setting off to Jita to get it cheaper.

I sell items that are typically bought to kit a ship as a player progresses or has to replace a destroyed ship / pod.

Each month i sell 20-30% of what i had to sell at the start of the month.

I have a rule that the minimum profits have to be 100m isk.  It is no use me buying items for 5m to sell them for 15m.  The profitability may be great but that won't move the dials.  That said, it is surprising how many items i can buy for 120m from Jita Sell Orders and sell for 220m in the other trading hubs.  At that isk level, players re-equipping don't care about spending an additional 100m isk to save time.

And in the secondary trading hubs Amarr / Dodixie / Rens / Hek buyers will not travel even one jump to buy a cheaper item.

Therefore, i mostly sell Implants, Blueprints, ship equipment and some structure modules.  And more recently Large Skill Injectors.


What is selling well in October

Blueprints: continue to be a steady source of revenues; similar to what i have seen since August, i am seeing Buyers buy out whole groups of blueprints.  Given Blueprints i buy at base cost - so i source Blueprints from the source NPC stations and have then couriered to the Selling location - and therefore the item profit margin starts at 25% and perhaps ends a bit lower by the time the Blueprint is sold.

Implants: varied and has been like this for a while.  I am seeing more competition coming in.  My experience with Implants is that they sell by the family - i.e. the alpha / beta / delta / epsilon / gamma / omega implant all sell to the same buyer at once.  So they can be good earners when they occur.  But, i would say that my implant sales are getting lower over time.

Mining equipment: very low these days; competitors are all over this.

Ship Equipment: doing better over a right old range of items - afterburners, armour repairs, shield repairs, weapons are the main staples.

I sold one or two towers this month.


Manufacturing

I do this opportunistically and i don't keep track of it.  I don't (yet) do it systematically but i need to get a grip.  I am sure there are many items i sell in the Trade Hubs that i could manufacture in Jita and so get a better in price vs buying them from Jita Sell Orders.

But so far i manufacture items that sell for over 1bn isk.  My favourite items are where the Blueprint Original costs >10bn and there are no Copies in the Contract Market.  Sort of makes me feel i have the market to myself.


Planetary Interaction

For now, i have stopped trying to make this work.


Research

For now, i have stopped trying to make this work.


Station Trading

All in Jita.  And i am not focusing on this for now, so only 9bn sales.

Real life puts this on the back burner.

My idea of station trading is not buying items when they look cheap.  For me, station trading is about sticking to the slow moving items and quite often i am the only person in Jita trying to sell an item.  Almost always Selling for over 1bn isk.

What i don't do is Investing.  I.e. i don't buy an item now i think is cheap and hold onto it to sell it a few months later when the price has risen.


Alpha Accounts

I upgraded 2 of these accounts to Omega as part of the MCT deal.  So training them all hard to get to the 5m skill points to start the skill farm.

That leaves 1 Alpha account with a character in Venal left.  I also added another character to that account and am training it up to 5m skill points.  The idea here is to get another set of Alpha Accounts ready for Skill Farming sometime in the future if needed.


Plex

At the start of September i bought 8000 Plex at around 5.3m each.  The main reason for doing this is to have a store of plex ready in case of any deals on the NEX store that comes along.

The holding of Plex has made a small profit of around 3bn but this is not the reason for holding the Plex - it is purely there as a ready source for any deals that come along.


Items in hanger for sale

There are a number of items that i sell that can only be sourced from Regions outside of The Forge (the home of Jita).

I used to have these items couriered directly to the trading location to sell but that has proved to be tedious over time.

Therefore, i now have the items couriered to Jita and stored.  When i a trade location needs one of these items to be sold i can then courier them from Jita - a much easier process to handle.

In effect this means i am couriering these items twice - once to Jita and once to the trade location.  Therefore, i add the additional courier cost to the Sale's price.

What it means is that items in Hangers used to be 20bn but is now 182bn (this also now includes Skill Extractors and Large Skill Injectors).


Buy Orders

Buy Orders have varied over time but are now back on the rise as i start placing Buy Orders for Skill Extractors.

Once i get a grip, Buy Orders will also increase as i ramp up the Station Trading in Jita.


ISK

For the last 6 months the average ISK in wallets has been over 100bn compared to around 50bn before this.

The reason for his is purely real life being busy and so not having the time to make sure everything is invested.


2 trillion wealth

Not there yet and it is not an aim - i want to give my isk away.

But, worth noting that my wealth is 1.818 trillion and i have given away 306bn - so i would be at 2 trillion by now.

Also, worth noting that my wealth being 1.818 trillion and if i added back the provision of 327bn that i take away then by wealth would be 2.1 trillion.


Current Wealth

Current wealth is 1.818 trillion ISK made up from:
  • Plex held as an investment 46bn ISK
  • Items in hanger for sale 183bn ISK
  • Items in hanger for use in business 11bn ISK
  • Omega brought forward 66bn ISK
  • Buy orders on the market 80bn ISK
  • items for sale 1.63 trillion ISK
  • less a 20% provision 327bn ISK*
  • ISK in wallet 125bn ISK

When i add up my wealth, I don't count assets I use in the course of my business such as ships, fittings etc nor do I add back any expenses such as skills purchased etc.  The wealth I disclose is made up of items that are ISK or are in the process of being converted to ISK or are used to generate isk that can be readily resold back onto the market.  Any ships or skills or fittings etc i buy are counted as expenses in that month.  The only exception to this rule is Blueprint Originals i use for manufacturing.  They are held at cost.

* I take a 20% provision against the items I am selling.  Eve calculates wealth by adding up the value of the sell orders hence it is possible to increase your wealth by buying an item for 100m ISK and putting a sell order for 120m ISK (in this case your wealth would increase by 20m ISK).  For me, I want my wealth to be calculated at cost.  I know that the value of my sell orders will likely fall over time as I update my orders downwards as competition reduces their prices before my items are sold.  Hence the 20% provision is my best guess as to what the maximum reduction I would need to make to my sell orders as a whole before they are sold.  In an ideal world I would value my sell orders at the value which I bought the items for.