EG7 enters agreement to acquire Daybreak

Discussion in 'The Veterans' Lounge' started by Skuz, Dec 1, 2020.

  1. Jbur New Member

    I've always found it amusing that people make guesses about the value and revenue of EQ that puts it in the same league as a mom and pop hardware store in a small town.
    minimind and Tarvas like this.
  2. Svann2 The Magnificent

    I think they have to. Buy a company you buy their obligations.
  3. Nennius Curmudgeon

    I had $300 million divided by 10. Boy was I off. :)
    Svann2 likes this.
  4. Svann2 The Magnificent

    MassivelyOP has an interesting quote from a press release:
    “Daybreak possesses globally recognized third party IPs combined with valuable original IPs. Third party IPs include DC, Lord of the Rings and Dungeons & Dragons. Original IPs include EverQuest, H1Z1 and PlanetSide.
  5. KrakenReality Augur

    Smart post.

    Certainly, not me and I think Benito has the reasoning behind a larger bid price.

    Based off the numbers from the press release, I'm pretty shocked. Aging IPs with seemingly nothing on the horizon. DCUO would be enticing. Plus, any other real estate assets in San Diego and Austin. I would have thought 150m range. The number at 300m is 10x the EBITDA, which seems to be a reach. Normally, these investors are looking at how do I make 10x their money.
  6. Borm FV New Member

    I’m trying to figure out user base from that info. $77.6m give me about $6m a month factoring in the once a year expansion. To do that I simply assumed that the income from the expansion is equal to one month revenue. So divide 77.6 by 13 and you get close to $6mil. If that is from $15 per month fee, then the total DBG user base is about 400,000. Since EQ has proven to be the game that retains users the longest, that is a pretty stable number for the next 5 years; lack of new blood means that will dwindle down eventually, but you can budget on $6 mil a month income.

    If you break it down to 70% labor and 30% hardware and bandwidth, you get a payroll of $4.2 mil per month. With another assumption of $200k total cost per person (bennies, taxes, salary, etc) that allows for 21 full time. It’s prolly higher as lower level techs can do system maintenance and will cost less, but management will get more, so - maybe it’s a wash.

    I run a staff of 31 software developers for one of the worlds largest companies and have a ratty good idea what that level of staff can do. If it was 21 all on EQ we’d be back in the good old days of multi releases per year and paid GM. I think EQ probably gets about 5 full time equivalents for the year, and that explains why we get the quality we get.

    Bottom line - we can happily expect long term milking of the franchise with ever dwindling new content. I suspect CoV will be a real dud of an expansion by content and challenge. We should get used to this. We will probably see “good” expansions every two years and a money-grab expansion in between. Their lack of creativity in monetizing other aspects of the game also limits them.

    I guess this information just confirms what we already knew.
    Leerah likes this.
  7. Captain Video Augur

    I think we should have a New Owner Celebration Event: Double XP for a month, 25% discount store-wide in the Marketplace, and a lifetime subscription sale!
    Bardy McFly likes this.
  8. KrakenReality Augur

    I found these numbers pretty interesting, keep in mind they're in Swedish Krona (million) and not in USD (million). Look at the Depreciation and Amortization line item, -436. Now, there's a good accountant showing a loss on a paper, lol. Also, take a look at the generous tax return +46. Whoever is running their books is earning their keep.

    Jan-Sep 2020 Unaudited[4] (SEKm) Daybreak Adjusted
    Net revenue 589
    Own work capitalized 21
    Other revenue 55
    Total revenue 666

    Operating expenses
    Cost of goods sols -79
    Other external expenses -84
    Personnel expenses -229
    Other expenses -18
    EBITDA 255

    Depreciation and amortization -436
    EBIT -181

    Financial net 3
    Profit before tax -178

    Taxes 46
    Net profit -132

    EBITDA margin 43%
    EBIT margin -31%
  9. Nennius Curmudgeon

    Let's be honest here. How many folks would be happy with a working /pizza?
    Bardy McFly likes this.
  10. Svann2 The Magnificent

    from investopedia:
    The enterprise value (EV) to the earnings before interest, taxes, depreciation, and amortization (EBITDA) ratio varies by industry. However, the EV/EBITDA for the S&P 500 has typically averaged from 11 to 14 over the last few years. EBITDA measures a firm's overall financial performance, while EV determines the firm's total value.

    So for a normal company its not bad not great. Lower EV/EBITDA than most of the S&P.
  11. The real Sandaormo Augur

    Some raids yes are easy but I do not see this as a "show up, raid mob falls over" expansion like ToV.
    At least not yet, definitely some clunkers in there that are buggy enough to worry about.

    I kinda always wondered how big the Lottery would have to be to buy EQ and get it staffed properly.
    Now we know its in the 300 to 350 million range. That extra 50 million is for a new house and a Playstation 5 off ebay.
  12. Bardy McFly Elder

    Sneaky wording. Just because someone has a registered account doesn't mean they've logged in within the past 15 years. I think what they were hinting at is being able to target those non-paying players and get them to reinvest some money on microtransactions or re-subbing.
    Caell likes this.
  13. Bardy McFly Elder

    Part of the value would be based off current revenue and pre-acquired userbase. Other value would be based on potential to convert inactive users back to paying users of some sort. Also, the IP has significant value, given Everquest was one of the first MMOs and has been a known name for 20+ years.

    Let's hope someone can finally put that IP to good modern use.
  14. Benito EQ Player since 2001.

    With the kind of tech sector and bubble we have in the USA (Facebook, Netflix), it should be more on the order of $1 billion by now (hyped up number).
  15. Svann2 The Magnificent

    I honestly think EQ is the major contributor to income though.
  16. KrakenReality Augur

    They literally put it in the publication that DBG possesses those 3rd party IPs. DBG is the owner of that studio.
  17. gugabuba New Member

    That's monthly revenue of 4.2m, not annual and I assume 200k per FTE is annual costs. If monthly cost per FTE is 20k, they'd have a team of 210 by your reckoning.
  18. Svann2 The Magnificent

    So if DBG owns lotro, when can we expect it to be added to all access?
  19. KrakenReality Augur

    I know you’re being a bit cheeky, but that statement was from a publicly traded company saying they possessed the IP. If, they falsely claim to possess IP in that statement there can be penalties. If, they only owned the publishing rights it would be explicitly stated that was the case.

    Answering, your question it won’t get added to the All-Access. It’s just not a move an investment firm would make. The SOE All-Access was introduced in 2011, and that’s just a different business model.
    Corwyhn Lionheart likes this.
  20. Svann2 The Magnificent

    Was not at all implying that there was any doubt that DBG owns lotro.

    Otoh, I suspect that they kept that a secret for the specific purpose of preventing people from asking that it be added to all access. So I had to do it.

    Anyway, whats all access if you dont have access to all?
    Caell and KrakenReality like this.

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