Updated Digital Bro Financials

DAZ0273

@entrailbucket said:

@LavaManLee said:

@entrailbucket said:
Do they show their profits or just revenues?

We know that the current game requires a ton of manual effort to do mundane things like set up events. My theory about the new engine is that it's mostly designed not for new features, but to make it easier to automate that stuff.

And people are still spending some money, so I wonder if they'll be able to get more profitable at lower revenues once that happens.

Page 25 shows everything. Profits are actually worse than revenue as far as % down.

What is really bad for them is if you look at the EBITDA on line 16. Last year that was at -.04%. This year it was -16.9%. That is lower revenue with higher expenses, essentially. It seems simple but they are spending way more than they are earning at a rate that really isn't sustainable, especially over last year.

The higher expenses over the last year are almost certainly due to the rebuild, though. I'm sure they planned for that, since the rebuild is such a big effort. I guess we'll see how it changes once this thing is actually done.

They were confident enough about the future of the game to invest in this upgrade. Given the state of the existing code they couldn't just stand still, this investment should enable them to expand the game, offer more content and all the while using less manpower hours to do so freeing up time to make additional revenue making ideas. It is in theory, a sound plan. Whether any of the changes translate into people opening their wallets again, I guess we don't know.

In terms of the effect the loss of cover swaps has had - I read somewhere (maybe on Reddit?) that processing cover swaps accounted for something like 30% of Customer Services time and that really doesn't seem sustainable either given the rather small customer base it was serving being much less than 1% of the playerbase.

LavaManLee

@DAZ0273 said:

@entrailbucket said:

@LavaManLee said:

@entrailbucket said:
Do they show their profits or just revenues?

We know that the current game requires a ton of manual effort to do mundane things like set up events. My theory about the new engine is that it's mostly designed not for new features, but to make it easier to automate that stuff.

And people are still spending some money, so I wonder if they'll be able to get more profitable at lower revenues once that happens.

Page 25 shows everything. Profits are actually worse than revenue as far as % down.

What is really bad for them is if you look at the EBITDA on line 16. Last year that was at -.04%. This year it was -16.9%. That is lower revenue with higher expenses, essentially. It seems simple but they are spending way more than they are earning at a rate that really isn't sustainable, especially over last year.

The higher expenses over the last year are almost certainly due to the rebuild, though. I'm sure they planned for that, since the rebuild is such a big effort. I guess we'll see how it changes once this thing is actually done.

They were confident enough about the future of the game to invest in this upgrade. Given the state of the existing code they couldn't just stand still, this investment should enable them to expand the game, offer more content and all the while using less manpower hours to do so freeing up time to make additional revenue making ideas. It is in theory, a sound plan. Whether any of the changes translate into people opening their wallets again, I guess we don't know.

In terms of the effect the loss of cover swaps has had - I read somewhere (maybe on Reddit?) that processing cover swaps accounted for something like 30% of Customer Services time and that really doesn't seem sustainable either given the rather small customer base it was serving being much less than 1% of the playerbase.

We have zero information, though, into what that 30% of Customer Service time cost in $$$ vs what the buy clubs actually brought in for them. Perhaps it was more. Perhaps it was less. We just don't know. Saying that cover swaps accounted for 30% of CS time means nothing without the data around the monetary value of that 30% and how much the buy clubs were bringing to the table.

TheXMan

This new engine is going to do everything else...I am sure it could have done the swaps that CS was doing

KGB

What I still don't get is what buy clubs / whales were getting out of the old system that mattered so much to go on a spending strike.

Buy clubs net a ton of HP / CP obviously. But if free to play players were easily 550ing all the newest releases purely from resources + free swaps then whales / buy clubs players must have been able to do the same with even less effort. So why were they even spending all that money every month for the last couple of years since they didn't need to do it? The common refrain of 'well they are doing it to help out free to play players keep up' doesn't hold a lot of water to me.

If anything the new system makes 550ing the latest even more of an exclusive thing which is sort of the point of being a whale (getting 1st access).

KGB

dianetics

@KGB said:
What I still don't get is what buy clubs / whales were getting out of the old system that mattered so much to go on a spending strike.

Sway with CS. You can push for favorable CS interactions if they know you spend.
Also the ability to be perpetually ahead of everyone without losing resources was clearly nice.
Now cover swaps using resources will allow people to start to catch up some

DAZ0273

@LavaManLee said:

@DAZ0273 said:

@entrailbucket said:

@LavaManLee said:

@entrailbucket said:
Do they show their profits or just revenues?

We know that the current game requires a ton of manual effort to do mundane things like set up events. My theory about the new engine is that it's mostly designed not for new features, but to make it easier to automate that stuff.

And people are still spending some money, so I wonder if they'll be able to get more profitable at lower revenues once that happens.

Page 25 shows everything. Profits are actually worse than revenue as far as % down.

What is really bad for them is if you look at the EBITDA on line 16. Last year that was at -.04%. This year it was -16.9%. That is lower revenue with higher expenses, essentially. It seems simple but they are spending way more than they are earning at a rate that really isn't sustainable, especially over last year.

The higher expenses over the last year are almost certainly due to the rebuild, though. I'm sure they planned for that, since the rebuild is such a big effort. I guess we'll see how it changes once this thing is actually done.

They were confident enough about the future of the game to invest in this upgrade. Given the state of the existing code they couldn't just stand still, this investment should enable them to expand the game, offer more content and all the while using less manpower hours to do so freeing up time to make additional revenue making ideas. It is in theory, a sound plan. Whether any of the changes translate into people opening their wallets again, I guess we don't know.

In terms of the effect the loss of cover swaps has had - I read somewhere (maybe on Reddit?) that processing cover swaps accounted for something like 30% of Customer Services time and that really doesn't seem sustainable either given the rather small customer base it was serving being much less than 1% of the playerbase.

We have zero information, though, into what that 30% of Customer Service time cost in $$$ vs what the buy clubs actually brought in for them. Perhaps it was more. Perhaps it was less. We just don't know. Saying that cover swaps accounted for 30% of CS time means nothing without the data around the monetary value of that 30% and how much the buy clubs were bringing to the table.

Unless it formed some sort of required public disclosure we will never find out anything about such financial costs but we have to assume it was significant enough savings for them to not have even considered rescinding the (unpopular with some) change to the policy.

KGB

@dianetics said:

@KGB said:
What I still don't get is what buy clubs / whales were getting out of the old system that mattered so much to go on a spending strike.

Sway with CS. You can push for favorable CS interactions if they know you spend.
Also the ability to be perpetually ahead of everyone without losing resources was clearly nice.
Now cover swaps using resources will allow people to start to catch up some

Sway with CS makes sense.

But the other 2 things you mentioned do not. As I said, free to play players were routinely riding the 550 train with free swaps. So if free players were doing it so were whales/spenders. In which case why were they buying even MORE resources that they didn't need or couldn't use? Also swaps using resources does not let people catch up some, it makes the rich even richer because free to play players will run out of resources (HP) far faster than whales when doing swaps. In other words the new policy would accentuate whale/spending advantages, not lessen them.

KGB

entrailbucket

@KGB said:

@dianetics said:

@KGB said:
What I still don't get is what buy clubs / whales were getting out of the old system that mattered so much to go on a spending strike.

Sway with CS. You can push for favorable CS interactions if they know you spend.
Also the ability to be perpetually ahead of everyone without losing resources was clearly nice.
Now cover swaps using resources will allow people to start to catch up some

Sway with CS makes sense.

But the other 2 things you mentioned do not. As I said, free to play players were routinely riding the 550 train with free swaps. So if free players were doing it so were whales/spenders. In which case why were they buying even MORE resources that they didn't need or couldn't use? Also swaps using resources does not let people catch up some, it makes the rich even richer because free to play players will run out of resources (HP) far faster than whales when doing swaps. In other words the new policy would accentuate whale/spending advantages, not lessen them.

KGB

This has never made sense to me, and nobody has explained it adequately. These players were not dropping $100 at a time as a favor to the devs, they were doing it for some sort of competitive advantage.

The issue is that you only need something like 3 or 4 characters to win everything forever. Once you've got those guys you are done. I think this "boycott" would've happened on its own regardless of the change, because there is no longer any need to spend once you've got the few characters that actually matter.

TheXMan

I don't know if this is the reason but whales were able to do swaps and get a new 550 to use each month that included several weeks while there were boosted. F2P players could hoard and do this for awhile but the resources ran out. Using the new HP swap method is too expensive for 5s and I think you also lose that first month boost.

entrailbucket

@TheXMan said:
I don't know if this is the reason but whales were able to do swaps and get a new 550 to use each month that included several weeks while there were boosted. F2P players could hoard and do this for awhile but the resources ran out. Using the new HP swap method is too expensive for 5s and I think you also lose that first month boost.

I never saw this happening in PvP before, but I think it's even more unlikely in the current metagame. Even if swaps were free, I don't see these players running, say, a "new character boost" Juggerduck at 672 over their unboosted 550 Sam teams, or 550 m'baku or whatever.

Maybe it made more sense a few years ago, but I think the spending would've naturally dried up by now anyway because of what the metagame looks like.

TheXMan

I saw it quite a bit with characters like Jubilee, Kaine Parker, May Parker, Phyla-Vell, Hotpool. If swaps were still around, I think I would see folks trying out 672 Toni Ho but I don't see her at all in pvp.

DAZ0273

@entrailbucket said:

@KGB said:

@dianetics said:

@KGB said:
What I still don't get is what buy clubs / whales were getting out of the old system that mattered so much to go on a spending strike.

Sway with CS. You can push for favorable CS interactions if they know you spend.
Also the ability to be perpetually ahead of everyone without losing resources was clearly nice.
Now cover swaps using resources will allow people to start to catch up some

Sway with CS makes sense.

But the other 2 things you mentioned do not. As I said, free to play players were routinely riding the 550 train with free swaps. So if free players were doing it so were whales/spenders. In which case why were they buying even MORE resources that they didn't need or couldn't use? Also swaps using resources does not let people catch up some, it makes the rich even richer because free to play players will run out of resources (HP) far faster than whales when doing swaps. In other words the new policy would accentuate whale/spending advantages, not lessen them.

KGB

This has never made sense to me, and nobody has explained it adequately. These players were not dropping $100 at a time as a favor to the devs, they were doing it for some sort of competitive advantage.

The issue is that you only need something like 3 or 4 characters to win everything forever. Once you've got those guys you are done. I think this "boycott" would've happened on its own regardless of the change, because there is no longer any need to spend once you've got the few characters that actually matter.

I dunno how this will all work out but it seems the Devs did call the players bluff with this one. We saw in the past the threats to stop spending and the Devs backing down but not this time, this has effectively broken that chain. If the players thought this boycott would work, they seem to be surprised and given the level of investment the Devs are making it seems they are perfectly capable of and believe they can do without that specific revenue stream. I guess we wait and see in 6 months or so time.

entrailbucket

@TheXMan said:
I saw it quite a bit with characters like Jubilee, Kaine Parker, May Parker, Phyla-Vell, Hotpool. If swaps were still around, I think I would see folks trying out 672 Toni Ho but I don't see her at all in pvp.

Definitely not this week, with Sam boosted!

TheXMan

Seems like 672 Sam plus 672 Toni might be a decent pairing

dianetics

@KGB said:
But the other 2 things you mentioned do not. As I said, free to play players were routinely riding the 550 train with free swaps. So if free players were doing it so were whales/spenders. In which case why were they buying even MORE resources that they didn't need or couldn't use? Also swaps using resources does not let people catch up some, it makes the rich even richer because free to play players will run out of resources (HP) far faster than whales when doing swaps. In other words the new policy would accentuate whale/spending advantages, not lessen them.

If the buy club players were privy to CS interaction it makes a lot more sense.
I never knew about cover swaps until I was champing 5s already.

If you have a small group of players that spend and boost each others resources and those players also push down fresher rosters it makes more sense.

Free swaps were NEVER acknowledged until the change was made. Secret menu **** that only the ingroup knew about. Animal style burgers on the secret menu of the local burger shop stuff.

People having to expend resources does let other people catch up because it puts negative pressure on the older rosters to keep their position.

Previously they would only have to spend 1 resource, and now its 2. LL/CP and also HP for every swap. It won't look like much right away, but it works like a sink because you can't earn enough HP every month to swap 100 covers for your new fresh character.

Phumade

the key point is that you can't swap for the newest char. it wasn't about getting the LL to 550, rather the opportunity to play the new char at 550 and the new char boost.

Toni release is a great example. people would have stayed on the 550 train to ensure they had the opp to 550 toni via swaps from surplus LL

Now its a straight buy to 550 or wait until she rotates into LL

BriMan2222

@TheXMan said:
Seems like 672 Sam plus 672 Toni might be a decent pairing

Minor nit-pick, but the new character boost isn't quite as big as the Boost List character boost. I think the new character boost maxed out at lvl 650 or somewhere around there.

entrailbucket

@TheXMan said:
Seems like 672 Sam plus 672 Toni might be a decent pairing

It's not. I don't have them quite that high, but I have them pretty high level, and I have some other 672s this week, and absolutely nothing else is even worth trying.

entrailbucket

@Phumade said:
the key point is that you can't swap for the newest char. it wasn't about getting the LL to 550, rather the opportunity to play the new char at 550 and the new char boost.

Toni release is a great example. people would have stayed on the 550 train to ensure they had the opp to 550 toni via swaps from surplus LL

Now its a straight buy to 550 or wait until she rotates into LL

I just don't think any of the new characters are ever (or will ever) be worth doing this with, and I think they'd have all figured this out eventually anyway.

Phumade

@entrailbucket said:

@TheXMan said:
Seems like 672 Sam plus 672 Toni might be a decent pairing

It's not. I don't have them quite that high, but I have them pretty high level, and I have some other 672s this week, and absolutely nothing else is even worth trying.

Consider this though.
If you had maxed out on the day of the debut. The pick two would have been 550 4jugs 672 Sam vs 550 magik (or 550 Agatha) and 672 toni.

Consensus has been Sam and Toni are the best 2 5* in the last 6 releases. In the old coverswap (Where you could access the newest) people would have been compelled to keep gorgon, WS, hobgoblin at 550 to do an efficient swap.)

Now the best they can do is whale into the intro store (where you might already have strange or riri at 550 and no opportunity to swap surplus to toni)

Thats the revenue stream that was lost. The people who were on the 550 train who no longer see it as the efficient way to max out the meta chars.