Month end update - November 2023

I made 32bn profits in November 2023 of which 101bn was distributed on to the Oz Tank Show (100bn to Oz Tank Show and 1bn to a Twitch show). Therefore, my wealth fell by 69bn isk to 1.101 trillion isk.

Distributions

These days, the aim is to distribute my profits to the Oz Tank Show.  Hence, my wealth will barely increase and any monthly surplus will all be given away at some point.

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

The show started in July and i have generated profits of 238bn in July - November and distributed 260bn.  There will be no show in December which will allow my profits to catch up.

Four Omega Accounts to pay for

Keeping 4 accounts on Omega cost me 7.0bn isk in November.  The cost has fallen given the deals i have taken part in over recent months.

Second month making 1bn per day profit

In October when i stripped out what i made in skill farming from the Omega-MCT deal which i discussed here i worked out that i made 1bn per day (33bn profits).

November has been no different.

This has taken me by surprise, i was constantly doing 2bn profits per day since September 2022.

Not sure what the problem is but sounds like i need to revisit what i am trying to sell.  I suspect i am focusing too much on items with no competition rather than items with 1 or 2 competitors.

The basic numbers

In November i had sales of 219bn isk vs October of 334bn.  That said, the underlying sales in October were 251bn (+83bn skill farming).  But, still a decline of 13%.  That was a poor show.

Item profits were 69bn isk which is a healthy margin of 32% (69/219).  So, again, the problem is not profitability.  The problem is sales.

Taxes and Courier fees came to 31bn isk.  Then add in the 7bn plex cost to Omega 4 accounts takes me to 32bn profits made in November.

And then off that comes the 101bn distributions.

What i am selling

Same as usual - Implants, Blueprints, ship equipment.

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 wont move the dials.  That said, it is surprising how many items i can buy for 120m and sell for 220m.  At that isk level, players re-equipping don't care about spending an additional 100m isk to save time.

There is a competitor for the Blueprints in a few of my trading locations now.  Updating their prices daily.  Will be a battle of attrition.  But i can't give up and therefore it is a costly battle of attrition.

Implants are doing the best now and i often sell a family of implants at a time (i.e. the alpha, beta, delta, epilson, gamma and omega implant).

Manufacturing

All but on hold for now - i don't really have enough time to devote to it.  I would love to find a system or process  that would allow me to have continuous manufacturing in place to make decent profits.

Planetary Interaction

Started this up again to remind me how it works.  Following the changes to volumes, i can keep my planets going for a long time before i need to pick anything up.

The ultimate aim is to do this in low or null sec.

Station Trading

All in Jita.  This is going ok though has slowed right down to 13bn sales.  Takes up very little time so i will stick with it for now.  But i need to ramp this up.

Alpha Accounts

They have all now stopped trading.  Other than Arnon and Alentene, all the other locations show little promise at this stage.  I will keep them on but they will be dormant for now.

Non-Trading activities

Putting Manufacturing on hold and stopping Planetary Interaction all makes sense but is a little sad for me.  I would love to find another isk making activity that would fit into my schedule.

Current Wealth

Current wealth is 1.10 trillion ISK made up from:

• Plex held as an investment 0bn ISK
• Items in hanger for sale 62bn ISK
• Items in hanger for use in business 11bn ISK
• Omega brought forward 21bn ISK
• Buy orders on the market 22bn ISK
• items for sale 1.2 trillion ISK

• less a 20% provision 240bn ISK*

• ISK in wallet 27bn 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.

Platinum Starter Pack Offer for 48 hours - great deal, 3 months Omega for free.

If like me you Plex your account and tend to take the three month Omega deal for 1200 Plex then this offer is a great deal.

The deal

Only one per account.

In the new Eden Store (accessed ingame) there is an offer for the Platinum Starter Pack.

It costs you 1501 Plex.

It gives you:

3x 30 day Omega

10x Skill Extractors

2x Multiple Pilot Training

650,000 skill points

a number of skins and suits

1x Expert 'boost' Cerebral Accelerator (this activates immediately on the character that bought the deal, +10 to all learning attributes, lasts for 10 days)

The numbers

Plex is currently selling for 5m, so the cost of the deal is 1501x5.032 = 7.553bn

costing up what i get:

• 3 months of Omega i can get for 1200 Plex in the New Eden Store = 1200 x 5.032 = 6.038bn
• I am ignoring the 2 months of Multiple Pilot Training because i don't normally Skill Farm
• 10 Skill Extractors can be sold for around 400m each = 10x400 = 4bn
• And for now lets ignore the Skill Points
• The Skins and Suits come to a few sundry millions

So, the Deal gives me 10.2bn worth of items.

Or, put it another way, if i sold the Extractors i would get 3 months of omega for (6.038-4.0) = 2bn isk and then on top of that 2 Multiple Pilot Training Certificates and 650,000 skill points.

If i then skill farmed and assumed i would make 37.5 skill points per minute per character then i would get 37.5 x 60 x 24 x 30 x 2 = 3,240,000 skill points.  That gives me 6 skill extractors to fill (at 500,000 skill points each).  Each Skill Extractor makes a profit of around lets say 400m = 2.4bn.

and that then covers the rest of the cost of the Omega.  In other words, i get 3 months Omega for Free.

And some fancy pants suits and skins.  And 650,000 Skill Points to advance my training character.  And what ever was left from the Multiple Pilot Training certificates that i could not put into an extractor.

Month end update - October 2023

I made 74bn profits in October 2023 of which 62bn was distributed on to the Oz Tank Show and the Eden Halloween give away.  Therefore, my wealth rose by 12bn isk to 1.170 trillion isk.

These days, the aim is to distribute my profits to the Oz Tank Show.  Hence, my wealth will barely increase and any monthly surplus will all be given away at some point.

Four Omega Accounts to pay for

Keeping 4 accounts on Omega cost me 8.2bn isk in October - i took part in one of the CCP deals which i detailed in this post - it was a great deal.  The 74bn isk profits comes after this 8.2bn isk cost.

I greatly suspect CCP will keep doing these Omega deals - and for me the 3 month deal is always the best.

74bn isk profits sounds great but there is a lot going on in there

Firstly, around three months ago i took part in a Omega-MCT deal which i discussed here.  Essentially, i paid 3bn isk for 3 months of multiple character skill training for all my Omega Accounts.  It was the deal of a life time.  i reckoned that would generate me 50bn profits at the time.  Infact, it generated me 41bn - looks like i did not trade in all my additional skill points.

Therefore, my normal profits were 33bn ( = 74-41) which is around 1bn per day.

Not too shabby but not the 2bn per day i was getting used to.

I find myself a little concerned, i should be doing much better in October and November feels slow also.

Also, good job in paying out 62bn isk to the Oz Tank and Eden Halloween Event

Again, there is a bit more to this.

I actually paid 67bn to the Oz Tank Show + 10bn to Golden CEO Zero Tax Market project + 5bn to Eden Trade Halloween Event.  That is 82bn paid.

However, in August and September i had accrued 10bn in each month to pay Golden CEO but he decided that he did not need his monthly 10bn until October.  Therefore, i wrote back the 20bn accrued which effectively meant my distributions in October were 82 - 20 = 62bn.

That makes the total distributions i have made to mostly the Oz Tank Show of 160bn isk in the last 4 months.

So, from July onwards i have made profits of 206bn isk and distributed 160bn of it.  I aim to distribute all the monthly profits i make,

As i write this, i have promised another 101bn isk in November in the November Oz Tank Show.

The basic numbers

In October i had sales of 334bn isk which breaks down as 83bn isk of skill farming sales + 251bn isk of normal sales.  I would have to go back to March 2022 to see 250bn of normal sales - that indicates why i am concerned.  October should not be this slow.

Item profits were 116bn isk which again breaks down as 45bn skill farming profits + 71bn isk normal profits.  That means that my normal item profits were 28% (71/250) which are at the upper end of the normal range.  So no problems on profitability.

Taxes and Courier fees came to 34bn isk.  Then add in the 8bn plex cost to Omega 4 accounts takes me to 74bn profits made in October.

Then 62bn distributions takes me to my wealth rising 12bn isk in the month.

Skill Farming

Over 3 months i trained all the characters in my Omega accounts with the aim of harvesting the skills generated form the 2 non-jita characters in each account.

in total i harvested 41m skill points.  I paid an average of 462m isk per skill extractor and sold each large skill injector for 902m isk.

Because i was always going to omega my accounts then i don't count the cost of this omega when thinking about skill farming.

What i am selling

Same as usual - Implants, Blueprints, ship equipment.

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 wont move the dials.  That said, it is surprising how many items i can buy for 120m and sell for 220m.  At that isk level, players re-equipping don't care about spending an additional 100m isk to save time.

There is a competitor for the Blueprints in a few of my trading locations now.  Updating their prices daily.  Will be a battle of attrition.  But i can't give up and therefore it is a costly battle of attrition.

Implants are doing the best now and i often sell a family of implants at a time (i.e. the alpha, beta, delta, epilson, gamma and omega implant).

Lower than hoped sales over October

For the matter of the lower than hoped sales over October I suspect part of my problem is that i have done two things over recent months that have gone down the liquidity curve:

1) I have more focused on selling items where there is zero competition.  That tends to be the items that sell the least frequently, even by my standards.

2) I have not reviewed the market to look for new items to sell.  Therefore i have not refreshed by target sell list for too long.

Manufacturing

All but on hold for now - i don't really have enough time to devote to it.  I would love to find a system or process  that would allow me to have continuous manufacturing in place to make decent profits.

Planetary Interaction

Not gone any further and stopped the trial over the summer.

That may still work.  Profits in High-Sec are too low for me given the time required to make it all work.

Maybe low or null sec will work but that is a project for a another day.

Station Trading

All in Jita.  This is going ok though slowed down in October to 14bn.  Takes up very little time so i will stick with it for now.

Alpha Accounts

They have all now stopped trading.  Other than Arnon and Alentene, all the other locations show little promise at this stage.  I will keep them on but they will be dormant for now.

Non-Trading activities

Putting Manufacturing on hold and stopping Planetary Interaction all makes sense but is a little sad for me.  I would love to find another isk making activity that would fit into my schedule.

Current Wealth

Current wealth is 1.17 trillion ISK made up from:

• Plex held as an investment 0bn ISK
• Items in hanger for sale 41bn ISK
• Items in hanger for use in business 11bn ISK
• Omega brought forward 28bn ISK
• Buy orders on the market 40bn ISK
• items for sale 1.2 trillion ISK

• less a 20% provision 244bn ISK*

• ISK in wallet 77bn 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.

Pearl Abyss Q3 2023 results

Pearl Abyss has released its Q3 results (July - September 2023).  The webcast and link to their presentation is on their website.

Overall

Revenues were down 12.7% Q3 2023 vs Q3 2022 and up 8.3% vs Q2 2022.

A small operating profit was made though this is still down 82.5% vs Q3 2022, and at the bottom line the net profit was still down 29.6% vs Q3 2022.

Focus on the Revenues and Operating Profits - they tell the story.  The Net Profits has all sorts of things going on that don't really relate to gaming.

The big news was the delay to the launch of Crimson Harvest.  It had been expected to launch in mid 2024, that has been pushed back to 2025.  This has surprised many people - Pearl Abyss was talking about the 2024 launch as recently as August at Gamescom.  Also, this follows on from prior delays to the game launch - so worries setting in that there is a problem.

This has pushed back other games as their developers focus on Crimson Harvest.  So DokeV now pushed back to 2026.

In all 2024 revenue hopes will likely need to be almost halved from where anyone thought they would be been before this update.

The net effect of this is that Pearl Abyss profits remain reliant on Black Desert and Eve Online and so profits will be very small, at best.  Black Desert continues to be in decline, so Pearl Abyss could see losses.

The share price fell 8% which makes it flat over a week - so the shares gave back what they had made on some more optimistic hopes from one broker.  That said, sentiment has turned negative on the shares.

What did Management say about Eve?

As usual, not much.

No hard numbers other than revenues (see below).

In the narrative they said:

"For EVE Online, we saw a slowdown in revenue in Q3 due to the base effect of the Viridian update we launched in Q2. However, we continue to see the strength of the EVE IP with new updates, and most importantly, the largest EVE Fanfest ever held to celebrate the 20th anniversary of service.

Notably, the event not only announced news about updates in the second half but also new titles in development, including EVE Vanguard and the EVE Galaxy Conquest. It was an opportunity to showcase EVE's new roadmap for the next decade, carrying on a successful legacy of 20 years in service."

"EVE will also be providing various contents to service. Most notably the new expansion pack EVE Havoc is planned to be released soon, which will support more diversified game play compared to the as-is with new story elements to add more fun to the game."

"We are also preparing for the soft launch of EVE Galaxy Quest, which we announced at Fanfest. EVE Galaxy Conquest is a casual mobile version of the EVE IP that combines exploration, diplomacy, and PvP combat. We're checking those metrics after the soft launch, with a global launch plan for sometime in 2024. Also EVE Vanguard, an FPS expansion pack designed to bring EVE from ship scale to human scale, is undergoing preparations to be made available to select users from December.

EVE Vanguard has been designed to create an organic relationship with EVE Online that goes beyond just playing an FPS game. It took the best parts of Dust 412, a different version of FPS of the EVE IP, and fixed the weak spots. And it has been designed to be both an expansion pack of EVE Online and have its own VM. We expect to see energy with EVE Online sales as well as increased sales of the EVE IP in the future."

Focusing on Eve online - the numbers

Literally, this is it:

In Q3 2023 Eve generated 16.0bn Won in revenues vs 20.2bn Won in Q2 2023 and 19.4bn Won in Q3 2022.

Focusing on Eve online - some analysis looking at the movement in Omega Accounts

Firstly, right off the bat, what we don't know is how the revenue is split between paid monthly subscriptions and other revenues such as paying for Plex, Injectors, etc.

But lets assume, for a moment, it is mostly subscription and the movement in revenues can be explained by pricing and volumes.

When thinking about is 16.0bn Won good or bad, we have to compare the prior year to get a fair comparison (i.e Q3 2022) because that irons out seasonal issues.

In Q3 2022 Eve generated 19.4bn Won.

We have to remember that in Q2 2022 CCP increased the subscription price by 30%.  Lets assume therefore that the Q3 2022 revenues had the full price rise in as does the Q3 2023.  Therefore, the difference between Q3 2023 and Q3 2022 will be currency and Omega Account numbers.

Quick check on currencies:

The average rates of Won vs USD, Euros and GBP moved +6%, -2% and -5% respectively between Q3 2022 to Q3 2023.  Lets therefore assume the overall currency effect was 0% - makes the maths easier.

Therefore, that implied that Omega Account numbers fell 17-18% between Q3 2022 and Q3 2023.  That is sort of what we estimated when we looked at the Q2 2023 numbers three months ago.

That is Omega Account numbers, not player numbers.  A player can drop Accounts or downgrade Accounts from Omega to Alpha but still remain a player in the game.

Comparing to pre-pandemic

We also know that gaming companies benefited from the covid lockdowns.  So it will be fair to compare Q3 2023 (where everyone is out of lockdown) to Q3 2019 which is the last Q3 before the pandemic.

In Q3 2019 Eve generated 14.6bn Won.

Since then the subscription price has risen 30%.

Quick check on currencies:

The average rates of USD, Euros and GBP moved -11%, -8% and -10% respectively between Q3 2019 to Q3 2023.  Lets call it -10%.

Therefore, in constant currency the revenues from Q3 2019 to Q3 2023 fell 2% (= (16.0/14.6) x (1-10%) -1)

However, between Q3 2019 and Q3 2023 there was a 30% increase in subscription prices and therefore that indicates that Omega Account numbers fell by 24% (= (16.0/14.6) x (1-10%) x (1/(1+30%)) -1)

The complete (translated) Transcript of the webcast is below:

Company Participants

Jin-young Heo, Chief Executive Officer

Seok Woo Cho, Chief Financial Officer

Unidentified Speaker

Other Participants

Jingu Kim

Presentation

Operator

(Foreign Language) Good morning and good evening. First of all, thank you, all, for joining this conference call. And, now, we will begin the conference call of the fiscal year 2023 third quarter earnings results by Pearl Abyss. This conference call will start with a presentation followed by a divisional Q&A session. (Operator Instructions)

Now, we shall commence the presentation on the fiscal year 2023 third quarter earnings results by Pearl Abyss.

Unidentified Speaker

(Foreign Language) Hello. This is Peter Yu[ph] from the Pearl Abyss IR team. First of all, I would like to thank the analysts and investors from Korea and abroad for taking time to take part in the earnings call for fiscal year 2023 Q3 by Pearl Abyss despite your busy schedules.

(Foreign Language) Allow me to provide a few important notices. Today's earnings results have been prepared for the convenience of the investors and may be subject to change depending on the final closing results. Please note that the accuracy or completeness of the financial and operating results set forth in the earnings release is not guaranteed, and we do not undertake any obligation to update the materials, which speak to the date which they were made.

(Foreign Language) With us today, we have CEO, Jin-young Heo; CBO, Gyeong Man Kim; and CFO, Seok Woo Cho. Mr.Seok Woo Cho, our CFO, will first provide a detailed explanation of our results and then proceed with Q&A.

Seok Woo Cho

(Foreign Language) Hello. I'm Seok Woo Cho, CFO of Pearl Abyss. Thank you once again for taking time out of your busy schedules to participate in our company's earnings call.

(Foreign Language) In Q3, we continued to deliver live services for our Black Desert and EVE IPs. The EVE expansion pack and new clips of the Crimson Desert were released, showing ongoing preparations for the future.

First, I'd like to highlight some of our main business activities and highlights for Q3. Black Desert continued to deliver strong financial results, with user metrics improving significantly across all regions globally, mainly driven by the continued popularity and hype created by the Black Desert Festa in July and the update of the Land of the Morning Light. In fact, average monthly active users grew 36% Q-o-Q in Q3, the highest in the last two years.

In Q3, we continued to make efforts to build on the popularity of Black Desert with the Ulu kita Hunting Grounds update, seasonal servers, and a variety of user-friendly patches. The Black Desert console has been performing well, with the highest user metrics in the recent two years following the release of the of the Land of the Morning Light, and the inclusion in the monthly games by PS Plus has resulted in huge popularity, boosting our user metrics.

Black Desert Mobile is carrying out continuous updates to be enjoyed, including updates of the Land of the Morning Light and new classes. In addition, Black Desert also participated in TwitchCon in Paris, where they organized an event for players to experience and enjoy the Land of the Morning content firsthand, and Black Desert Mobile hosted the Global Hideout Ball to announce updates for the second half and strengthened the user community.

For EVE Online, we saw a slowdown in revenue in Q3 due to the base effect of the Viridian update we launched in Q2. However, we continue to see the strength of the EVE IP with new updates, and most importantly, the largest EVE Fanfest ever held to celebrate the 20th anniversary of service.

Notably, the event not only announced news about updates in the second half but also new titles in development, including EVE Vanguard and the EVE Galaxy Conquest. It was an opportunity to showcase EVE's new roadmap for the next decade, carrying on a successful legacy of 20 years in service.

(Foreign Language) For Crimson Desert, we showcased a wide variety of content improvements within the game at Gamescom last August. In addition to the previously released trailer, we also released a clip on some parts that the users can experience with gameplay. After the release of the video, the official trailer reached more than 2 million views in one day, in particular, with many Korean game companies currently strongly focusing on establishing presence in the console market, the market is maturing and we are seeing a lot of interest coming from the partner companies.

(Foreign Language) Next, I will move on to explain our Q3 earnings results. Operating revenue for the quarter was KRW84.9 billion, up 8.3% Q-o-Q. Operating profit and net profit recorded KRW2.1 billion and KRW15 billion each, respectively, to turn positive.

(Foreign Language) Now, allow me to provide some more color on the operating revenue. First, the operating revenue by core IP. For the quarter for our Black Desert IP, we generated KRW68.4 billion in operating revenue of 21.1% Q-o-Q. Operating revenue for the EVE IP stood at KRW16 billion, down 20.8% Q-o-Q. By region, operating revenue breakdown was 27% in Korea, 20% in Asia, and 53% in North America and Europe. And by platform, 81% of our revenue came revenue came from PCs, 13% from mobile, and 6% from consoles.

Next, I will talk about the operating expenses. In Q3, operating expenses decreased by 10.5% Q-o-Q to KRW82.8 billion. Labor costs decreased 18% Q-o-Q to KRW40.7 billion. This decrease was due to the exclusion of the one-off incentive of approximately KRW8 billion from the previous quarter. As of the end of Q3, our headcount stands at 1,293, out of which 744 are in development positions, accounting for 58% of the total.

Commissions decreased 21% Q-o-Q to KRW14.4 billion. Advertising expenses increased 26% Q-o-Q to KRW10.1 billion due to various offline events, such as Black Desert Festa, Gamescom, and the EVE Fanfest.

(Foreign Language) Lastly, I will cover the key highlights for Q4. Black Desert will continue to deliver a wide variety of new contents in Q4. We recently launched the War of the Roses Pre-Seasons, a new type of large-scale PvP content, and plan to add new contents in December. The War of the Roses is a new type of PvP with new combat rules, aiming to give players a new sense of fun rather than a set of patterns of repetitions.

In addition, we plan to improve the accessibility and usability of the game by reflecting recent user feedback to provide better services. The Black Desert console has recently updated three of its most popular Mythical Dream Horses in the online space. We're also planning to release the new class of Awakening Megu as part of our efforts to keep the user retention, which we have seen improvements in Q3.

We will also follow up on various updates on the PC platform to ensure that we continue to build on the good progress we've achieved. On the mobile side, we want to keep things interesting by releasing a wide variety of new contents.

In addition to content updates, we plan to increase our reach to global users through events such as Cafeon and the Adventurer's Oasis. EVE will also be providing various contents to service. Most notably the new expansion pack EVE Havoc is planned to be released soon, which will support more diversified game play compared to the as-is with new story elements to add more fun to the game.

We are also preparing for the soft launch of EVE Galaxy Quest, which we announced at Fanfest. EVE Galaxy Conquest is a casual mobile version of the EVE IP that combines exploration, diplomacy, and PvP combat. We're checking those metrics after the soft launch, with a global launch plan for sometime in 2024. Also EVE Vanguard, an FPS expansion pack designed to bring EVE from ship scale to human scale, is undergoing preparations to be made available to select users from December.

EVE Vanguard has been designed to create an organic relationship with EVE Online that goes beyond just playing an FPS game. It took the best parts of Dust 412, a different version of FPS of the EVE IP, and fixed the weak spots. And it has been designed to be both an expansion pack of EVE Online and have its own VM. We expect to see energy with EVE Online sales as well as increased sales of the EVE IP in the future.

The highly anticipated Crimson Desert is gradually expanding its reach. Following Gamescom, we will be at G-STAR next week to discuss with various partners at our B2B booth to make preparations for a successful service. Being very mindful of the concerns expressed by many, we are prioritizing quality in our development, but we are also making the necessary preparations to not have the timeline extended too much.

(Foreign Language) This year marks the 9th and 20th anniversaries for Black Desert and EVE, respectively, and we are preparing them for the next 20 or 30 years of long-term service. We will continue to strengthen the live service of both games and make thorough preparations for new titles based on the IPs to achieve good results.

In addition, we will also make the utmost effort to develop new IPs, such as Crimson Desert, to build IPs that can last for more than 20 years. We ask for your continuous interest and support moving forward. Thank you.

Unidentified Speaker

(Foreign Language) This concludes our Q3 2023 earnings presentation. We will now proceed with the Q&A.

Questions And Answers

Operator

(Question And Answer)

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

(Foreign Language) The first question will be provided by Jingu Kim from Kiwoom Securities. Please go ahead with your question.

Q - Jingu Kim

(Foreign Language) Thank you for the opportunity to ask questions. I have two questions in total, and the previous conference call I think there was a commitment that the development for the Crimson Desert will be completed in the second half of this year. I'm curious whether this commitment can be upheld. So if you can provide a more detailed timeline on the release, that would be much appreciated.

And the second question is regarding the marketing strategy for Crimson Desert. In addition to the plans that you have already explained, for example, moving forward, do you have further plans to release additional trailers or video clips for long-term in-game or even different types of -- because cinematic video clips, because it is targeting and appealing, tried to be a AAA game. So if you have any further release plans for such trailers, it would be much appreciated if you could share.

A - Jin-young Heo

(Foreign Language) So I will take that question. So in terms of Crimson Desert development, we're making much efforts to complete the final touches to the game, as we see the top quality and completeness of the game quality is much important. As we are targeting it to be AAA game on console or platform, we are working on to provide a story line to have much relevance and because, as we said, final touches and the level of quality and completeness is very important. So we are making the utmost effort to relive the quality we targeted.

However, in order to provide the quality we have committed to, we do expect that it might take a little longer than we have expected. However, we are trying to not have a significant delay on the timeline. So, as much as we can, we will speed up the development so that we can release it to the users as soon as possible.

So, currently, we are also ongoing in terms of the final discussions and agreements with partner companies in terms of finalizing the contract. So, please understand that we will not be able to share a detailed timeline on the game release as of now. But, as I mentioned before, we will try to stay quite up to speed so that we are not too late to the market, and we will try to speed up the development process to meet the users as soon as possible.

(Foreign Language) In terms of marketing, for the past year, we have been taking various paths in terms of marketing. So we've been meeting with a lot of our partners to show demos and also gather feedback based on such comments, and we have continuously updating our game quality as a result.

(Foreign Language) Since Gamescom in August, I think there was also the rise of a lot of needs that they wanted more detailed gameplay trailers or clips to be available. So we also have high expectations ourselves to achieve good results. So additional trailers or clips for the playthrough, if we are meeting the expectation that we think that will satisfy the players, we will try to release them as soon as possible.

(Foreign Language) During the upcoming G-STAR next week, we will be setting up a B2B booth so that we can demo our game to the partner companies to gather feedback, and we will use that as our cycle to improve the quality of the game even further. As we are in the final stages of the development, we will also be mindful of how we can strengthen our marketing activities as well.

A - Unidentified Speaker

(Foreign Language) That was the answer by our CEO, Jin-Young Heo. (Foreign Language) We'll now take the next question.

Operator

(Foreign Language) Currently, there are no participants with questions. (Operator Instructions)

A - Unidentified Speaker

(Foreign Language) Currently, I don't think there are any more participants with questions.

So with that, then we will conclude our Q3 2023 earnings call. Thank you very much for joining us today.

Becoming a trillionaire - Fanfest 2023 Talk by Eden Trade

At this year's Fanfest, Eden Trade gave a talk on how he became a trillionaire in Eve, titled "becoming a tycoon".

Well worth listening to, good slides, very open and takes 45 minutes.

The Journey started in 2019 and today Eden Trade is making 60bn isk profits per month and is aiming for 100bn per month.  He has 60 trade characters, so thats 20 accounts that be spends 40-50bn isk per month for Omega.

There are always three parts to this type of talk i enjoy

1) the strategy and the evolution of the business model from the start to today

2) the excitement of the journey as milestones are reached, the ups & downs and then the 1 trillion is hit.

3) future plans

The Strategy and Business Model

The strategy of Eden Trade is to create new market hubs in High Sec outside of the main trading hubs and to sell items that have decent daily volume.

He buys from Sell Orders in Jita, has the items couriered to his Trade locations and puts them up for sale for around a 25% market up.

He faces next to no competition and so has great sales and profit margins.

He is very open, he shows us where is trade locations are and what he typically sells (ammo is the second biggest item!, Rigs the highest, weapons in number three followed by mining equipment).

He goes through how his strategy and business model has evolved over time and a more recent inclusion of a data person will likely result in a further evolution of the business model to move away from items that don't sell.

And good slides on the lessons he has learned, how he chose the locations.

In summary, he is filling a gap in the market where demand clearly exists.  Like me, he exists because people will value their time highly and so will not make the journey to Jita to buy items if these items are available closer to them at a higher price.

The journey to becoming a trillionaire

Eden Trade takes us through 2019 to today, showing the ups and downs.  How he initially had investors that have since all been repaid.

Always exciting to listen to the point where a business model is bedded down enough to gather momentum on its own.

Eden Trade information

Eden Trade has his own youtube channel and discord server.

He is also an investor on the Oz Tank show (a show where Eve players pitch ideas, whether content of investment ideas, to trillionaires who then decide how much to contribute.

Month end update - August / September 2023

Busy times, i was away for half of September.

Profits after everything including Plex

In August my profits were 39bn isk and in September my profits were also 39bn isk, after paying 8.2bn in each month to upgrade to Omega for another 30 days for four accounts.

August was a typical slow summer month where as September i was only around for half of it.

That said, October is proving to be a slow month which is surprising me.

Distributions made

From those profits i distributed a total of 55bn isk to the Oz Tank Show, making my total distributions made or due to the Oz Tank Show to 98bn isk.

At the start of October, i distributed or promised a further 77bn isk.

My aim is to distribute all the profits i make.

So, to put this in context in July onwards i have made profits of 132bn isk and distributed 98bn isk.  Then add in the 77bn distributed in October.

Total Wealth

Therefore, at the end of September my total wealth was 1.16 trillion isk.

What i am selling

Same as usual - Implants, Blueprints, ship equipment.

There is a competitor for the Blueprints in a few of my trading locations now.  Updating their prices daily.  Will be a battle of attrition.

Current Wealth

Current wealth is 1.16 trillion ISK made up from:

• Plex held as an investment 0bn ISK
• Items in hanger for sale 26bn ISK
• Items in hanger for use in business 11bn ISK
• Omega brought forward 8bn ISK
• Buy orders on the market 51bn ISK
• items for sale 1.2 trillion ISK

• less a 20% provision 238bn ISK*

• ISK in wallet 128bn ISK from which 20bn of Oz Tank distributions need to be taken off

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.

Plex / Omega deal - 3 months is great value

For the first time in a long time the 1 month Omega cost has been discounted from 500 Plex to 350 and the 3 month Omega cost also discounted from 1200 to 1050 (it had sat on a long term discount from 1500 to 1200 previously).

This deal closes on 17 October and is available on the New Eden Store.

The cost of the other Omega times had not changed from their long term discounts.

As ever, the question is what is the best deal and the answer to that really depends on how you use your ISK in the game.

The thought process for an ingame business to decide which is the best deal

For me, i operate an ingame business and so the answer is not as clear as it may first appear to be.

For example, if i chose to buy 3 month Omega for all my 4 Omega accounts i would be spending 21bn isk vs the more usual 23bn, if no discount at all is given, 29bn.  But the calculation does not stop at comparing the 21bn cost to the other costs i would have paid.

I need to ask myself what 21bn invested into my business would have done.  Maybe the answer is just to take the 1 month deal for now, who knows.

Fortunately, i can work this out by asking myself the question of what my business would need to return each month if i decided to invest in the one month Omega each month instead of taking the 3 or 6 or 12 or 24 month deals:

The key column in the table above is the last column.  This tells my what my monthly return on my business must be to do better than taking the Omega deal.  (the working process is at the bottom of this post).

The clear winner is the 3 month deal where my business would need to do better than 51% returns each month - that is unlikely to happen.

The calculation process

What i do is compare two assumptions.  Lets use an example of the 3 month Omega deal:

If i go for it then i would spend 5.1bn isk per account vs the normal cost of 7.4bn isk, so a saving of 2.2bn isk for what is a 30% discount.

However, i must also compare this to taking that 5.1bn isk, buying a one month Omega and investing the rest in the business.  Then taking buy the next month Omega the following month from the profits and so on until the end of month 3.  For this to be a better use of the isk i need to work out what the monthly return needs to be - in this case for the 3 month Omega it is 51% each month.