Tencent Acquisition

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WithLoveEarL wrote:

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__MaX__ wrote:

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WithLoveEarL wrote:

To GGG and PoE community {...}

I do understand your reaction but :

- Have you any idea how a company works ? ( financial needs and everything that allows a company to "stay alive" )
- Have you considered that GGG works with Tencent since 2016 for the chinese version ?
- Did you try to imagine how much money you would need to sustain a game that has (in best case scenario) 100k concurrent players ? (spoiler : a frak load)

I do understand that you can be scared when a company like Tencent gains almost all shares on a company like GGG (I am too). But I think you are kind of crazy to think that the community could invest in GGG to sustain its activity :)

I work in a Hedge Fund so yes, I have a slight idea of how business works.

I think you are confusing 'profitable' with 'even more profitable!'. Clearly GGG has been successful so far to have grown a 100+ people team. Simply take a look at the player base - there are peaks and valleys, but there is a clear positive trend, the game is attracting mainstream attention and that's why Tencent has decided the time is now to snatch it while the company would still make good use of their financial support (despite working together since 2016).

What I am saying is - it is sad that after so much work to stay independent, community-driven, for-the-players developer, GGG cracked under the pressure and sold out, plain and simple. There are many ways to continue monetising as discussed by Chris in Baeclast - I don't want to over-expand. TL;DR: not blaming, just shame you have left yourself at a huge corporation's mercy for further plans of this game's development.

And I believe that as any other market participant, GGG could have raised all the capital they needed. Have loads of small investors, not a single one is my point.

I dont think GGG was successful enough to hire 100+ guys tbh.

Back then it was a huge surprise and GGG basically doubled the numbers of their employees over night.
What happened? GGG made the decision to hire more guys? Double their team all the sudden? Possible, but unlikely.
Much more likely is: They got money from investors (Tencent) and worked on the xbox port as well as on the china realm. Why China? Why at this specific point in time?
Hardly a coincidence.

As a follow up, GGG released the china realm in August 2018.
About 9 months later GGG and Tencent are signing a deal. So both companies took their time and were watching the Chinese market closely. Numbers are fine (at least it seems so) and both companies are happy.


This started years ago, not yesterday.
Claiming GGG did achieve all of this by themselves (and our donations) is romantic nonsense.
We´ve been enjoying content produced with Chinese money quite a while now. The only difference is: No one bothered to tell us. So we could assume it was our doing, our donations - when it actually was the investors money. Now we know and ofc the sky is falling ^^
Because reasons

Isn't this just the moot-est conversation ever to grace the internets?

Cathartic, I guess, but certainly a waste of time.

Deal is done, boyo, get over it. Sometimes shitty stuff happens, and you just have to roll with it. I work in Oil & Gas and was with a company who had a hostile takeover and another that spent a year trying to sell. I worked with a huge company and for a year we spent all our resources selling our own properties to fund debt pay-down and other projects.

It's business as usual in the corporate world. Who can tell the minds of the principles of the old GGG? Perhaps they got sick of all the stupid whining from too many directions? Maybe they wanted some financial security in the present and into their old age? I expect Notch, to this day, still regrets selling Minecraft even though he became filthy, ridiculously, hunt-humans-for-sport rich overnight. But it was a great business decision on his part!

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Slaanesh69 wrote:

It's business as usual in the corporate world.

so you provided a free service to the public and asked your customers to maybe pay you if they liked what you did or out of pure symphathy cause you tried to make principle work in a capitalist environment and because otherwise you had to shut it down?

nope.

we went from supporters of a free to play game (a charity if you will) to customers of a multi billion it giant. that's a huge step and a big deal, especially for those who invested much to make that free to play principle work.
and failed.

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vio wrote:

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Slaanesh69 wrote:

It's business as usual in the corporate world.

so you provided a free service to the public and asked your customers to maybe pay you if they liked what you did or out of pure symphathy cause you tried to make principle work in a capitalist environment and because otherwise you had to shut it down?

nope.

we went from supporters of a free to play game (a charity if you will) to customers of a multi billion it giant. that's a huge step and a big deal, especially for those who invested much to make that free to play principle work.
and failed.

I don't disagree with the emotional content of your message.

But, again, this IS business as usual. Small, independent companies get bought up by major corporations and conglomerates all the time - and for a myriad of reasons: financial security, management fatigue, management wanting to start over in another direction, straight-up failure, market changes, etc.

When I was marketing the smaller company I worked for a decade ago, ultimately it was a financial institution with a huge network of varied companies that bought it, and took it from public to a private part of its portfolio. A company I helped grow no longer exists as its own individual identity anymore.

The myopic issue at hand is looking at your investment in GGG to date as a failure. They created and ran what I feel is the best independent ARPG of all time. The best ARPG period, at least of modernity. Did you have fun while it lasted? Sure you did, that is why you invested.

GGGs change is not a personal betrayal of the previous supporters. Whatever their reason, and they are entitled to THEIR reasons, they decided financial support from a major company was their future.

Edit - This isn't Bre-X, that manufactured some of the original "fake news" in their gold potential, and got people to invest. We all reaped the rewards of our investment with a game that lasted a lot longer than most.

So now you don't support if that is your wish. I won't be giving them any more money, that is for sure - they have plenty now. I will be most interested in exactly how monetization for this game looks moving forward.

The thing is, the emotional content and context of the message feels pretty important to me.

This was not a one night girl for me, it was a long standing relationship, with romantic walks, dinners, candles and all. And yeah, I never OWNED the girl, so she can do what she feels is best.

Rationally, I understand what happened and why.
Still, feeling pretty miserable, despite the understanding.

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鬼殺し wrote:

2) If I'm even vaguely right with how much I think GGG made with this sale of their company, it'd take an unrealistic amount of subscriptions and support to justify that over this sudden but inevitable betrayal change in company structure.

Money does certainly change a lot of hearts and minds... I'm actually curious what you think they made; granted, I can't seem to find a CONSISTENT figure on the size of the stake, other than it being a "majority;" I'd heard an 80-percent figure floating around.

My rough estimate is that either way, the trade probably valued the company at somewhere in the low 9 figures; while they don't really have much for assets beyond the IP for the game, I've been pretty confident in my estimate that their annual revenue is at least in the $5-10 million (USD) and possibly higher... And for some reason tech (especially video game) companies seem to fetch a strangely high valuation for the same health indicators as other companies.

So, I guess I wouldn't be surprised if they found what price Chris Wilson was able to compromise his word and dreams for: instantly making someone at least a decamillionaire would be hard for most people to resist.

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鬼殺し wrote:

The xsolla issue was a factor for sure. For whatever reason it never got in the way of my paypaling support but I know it cost GGG some cash. Again, probably nowhere near what they made with this devil's bargain.

Yes, GGG's blunder with Xsolla probably did make their spot a bit tighter. I have no clue how long the contract is, but I'm pretty sure that they regretted it.

This is also what leads me to predict that GGG probably still got a poor deal in selling out to Tencent; as far as I can tell, they have NOT retained very good business dealing expertise, and instead rely upon what business knowledge Chris et. al. have picked up on the job. While this is plenty good enough for running a small (~100 employees is still small) business, when one starts to deal with "big business dealings," this experience is woefully insufficient.

Just as it seems that GGG signed an ill-advised deal with xsolla, I wouldn't be surprised if Tencent's acquisition was downright predatory. One CANNOT claim anything other than that Tencent very obviously would have far, FAR more expertise with business dealings than GGG ever possibly could. (in terms of revenue, assets, etc, Tencent is on a scale where you can readily measure compared to all of New Zealand)

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鬼殺し wrote:

What I'm missing from all this is a sense that the devs are being honest with us. They have no obligation to be, but until a few days ago being somewhat honest was an expected part of their image to the playerbase. As I said elsewhere, this is all very cagey and secretive, and it's a shock for long-time patrons of GGG and PoE.

All the classic tells of lying are actually pretty present; the rushed announcement, (on an odd day, for one; the middle of a weekend, and a holiday weekend for the USA, at that) along with the wording. The big red flag is their contradictions: "majority stake" vs. "independent company," for one; the two terms are mutually-exclusive. (as they no longer have majority ownership, there is no way they can possibly be considered "independent")

Like... Almost every single item in the FAQ was written in a highly suspicious, if not contradictory, manner.

One part that also gets to me; they list Tencent as "one of the largest companies in the world;" depending on their definition, it can vary. If we go by market capitalization, Tencent is the world's 7th-most-valued company, making it possibly the 6th to hit the $500 billion (USD) mark, and the only non-American company to do so. (#1-5 are familiar faces: Apple, Amazon, Microsoft, Alphabet/Google, and Facebook, in that order) Granted, that's going off of rough price-quote figures I just pulled at the time of writing; the last time anyone actually compiled a set list was back in March 2017, where Tencent was still rapidly expanding, but down in rank #11; it was STILL the most-valuable company outside of the United States. (Source is in PDF file downloadable from this page)

But, if we go by other measures, like revenue? That's incoming cash flow BEFORE expenditures, taxes, etc; a solid measure of just how much "business" a company is doing. On that list, Tencent holdings... Ranks #478 on the "Forbes Global 500;" (Link) their $22.9 billion revenue for 2017 was dwarfed by a lot of other companies, such as Apple's $229.2 billion, which still only qualifies THEM for 4th place. (1st place, of course, is Wal-Mart, at just over half a trillion dollars)

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鬼殺し wrote:

I'm sure the truth will come out eventually, but for now, we're left in this limbo of just so much speculation and unease. Which would be a problem were we investors, and not just saps who've thrown so much money at GGG over the years. The fact that it's not a problem to them to keep us in the dark like this is in itself unsettling, isn't it?

It does make it 100% undeniable what I'd suspected for a couple of years now. Contrary to the belief of their fans, GGG hasn't actually been among the most transparent of game developers: their announcements/manifestos were pretty sterilized, and largely a form of theater, ESPECIALLY when it came to technical subjects.

In those, they relied on knowing that most of their userbase, like most gamers, would be technically ignorant enough that they could get away with anything that sounded remotely plausible, and trust that those people would form a loud enough voice to drown out anyone that knew better. (as one of the maybe 1-5% of PoE's playerbase that's a programmer, I can attest to this)

Another prime example was during the 3.0 beta, where there was a LOT of contention between GGG and their own community over their decisions. As with every prior decision, GGG has taken the stance of "we're infallible" and when the community actually presented them with resounding logic to demonstrate that GGG was in the wrong, the company responded with pulling the "well, WE are the company with the money" defense, making it clear even then what they thought of their community.

(BTW, I'd edited in some new info about Tencent into my PRIOR post; it includes some links, too)

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鬼殺し wrote:

But he did get the majority.

Well, he and the other two founders; Johnathan and Erik tend to be listed of equal stature, even if after Chris' name. I'd imagine that all three had comparable stakes. There's not TOO much precedent, but the last "multi-split" independent studio to get bought out that I can think of was Id Software, and everyone on the top tier had an equal share; even Tim Willits, in spite of not being a founder, had a 20% stake in the 90s alongside the four founders.

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鬼殺し wrote:

And yes, your estimate of how much GGG makes a year is probably not too far off. I think it suffices to say he is absolutely a very rich man now. And I hope absolutely none of us begrudge him that, in and of itself.

I just wish he'd cashed out entirely and started over.

Inserted from further on

At any rate, Tencent found Chris' price. That price included, I would guess, the 'promise' of creative control retention, a financially secure workplace for his people (this has always been a high priority), a proper buyout for the private investors both in NZ and the US (including the beloved magic nerd Brian Weissman) and basically ongoing, well-supported PoE presence in China.

Yes, this is the part I ding him for. In the question of selling out, you go all or nothing; anything in-between is a devil's bargain at best. If you want to ACTUALLY ensure what Chris wanted, then you don't budge. If you want to sell out, do it 100%, and wash your hands of it. They could've taken a page from one of your fellow Diamond Supporters, Notch. When he sold Mojang to Microsoft, he made out better than anyone has ever done from starting from zero: his 40% stake instantly made him a billionaire. But, he did it RIGHT; he didn't stay entangled with the business of Minecraft; he wiped his hands off and went on to other things.

But, this raises a new question of just what Chris wanted, and what was the right choice; hence the "all OR nothing" rather than "all in." Notch knew that he wanted to do something different; he was, in fact, TIRED of Minecraft, and moved on to programming projects that were as far away from it as possible. (including him more or less intentionally making picks for things that could never be commercially successful)

Chris? I honestly don't think Chris has anything in him "great" beyond Path of Exile. I never took him as the sort of "continuous visionary" who'd build one great thing after another if given the opportunity. As you put it yourself, a lot of PoE's success was owed to factors outside of GGG's control that no one could've reliably predicted, such as Diablo 3, in essence, being a flop and creating a vacuum eager for an alternative. PoE basically was lucky to be in the exact right place at the right time.

Going off of that, Chris doesn't really have a new "dream" to go into, hence why he didn't want to wash his hands of the company. Path of Exile really is/was all he had, but he made the wrong choice on that; he's thinking that he could have his cake and eat it too.

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鬼殺し wrote:

Being beholden to Tencent is not going to be awesome for too long. We're in a honeymoon period right now. GGG has new stability and opportunities. For sure. But the proof will be in the pudding: how will support pack sales go for 3.4? GGG cleverly announced 3.3 packs well before the Tencent takeover, and look at us all sporting our shiny new icons. That was the last sale they're getting out of me and I reckon quite a few other stalwarts. I DO think the loss will be minor at first. Most players pay for what they like, and PoE will be PoE for a while yet.

But there will be changes. Only an idiot shouldn't be expecting those. Development will, going forward, have the Chinese version in mind. I don't think they're going to bother developing anything they know will be censored in China, for example. I don't think we would have Lunaris 2 had PoE been made by today's GGG. Or, for that matter, Summon Skeletons.

I may be wrong though. The beauty is if I'm not, we'll never know because you can't fully well say 'oh look what GGG didn't make due to anticipating Chinese censorship!'...that's like knowing what was censored from a book when you've only ever known a censored version. ;)

Oh yeah, they contradicted themselves right in the release; they would only have been honest if they qualified their statement about priority in EVERY instance. This deal means that the Chinese version gets a unique effect on its priority that was not there before; hence, there has ALREADY been changes in the office decision-making.

As far as the sales go, it will indeed be interesting to see: I mean, there's a wide range of unhappy emotions that would drive an end, ranging from those who feel betrayed to those who simply, logically, conclude that if they have all those millions from Tencent they "obviously" don't need us little guys. (Funny how they've basically demoted you like that. :V) I know I've already decided that any further supporter packs will see no business from me as well there.

And I can tell that when it comes to Chinese censorship, you are, in fact, at least a bit knowledgable; for anyone else reading, Skeletons are kind of a taboo thing in China, and hence any of Tencent's developers kinda avoid introducing anything with them in them. (League of Legends scrapped a skeletal champion design just for that reason)

Also, as an aside: Tencent/China is also explicitly why, for several years, even outside of China, Graves couldn't have his cigar.

Though, that does bring a counter to the "beauty" as you put it; while the typical game player won't notice it, those of us with a critical eye will be able to notice the patterns. For one, a prediction: from now on, GGG will focus less and less on skeleton/gore-related MTX.

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鬼殺し wrote:

Don't forget though: Chris was already well-off before this. He was a majority shareholder in a successful game studio that has not *once* stopped growing its returns.

Well... Sorta. As far as I can tell, he hadn't cashed out anything from it for himself, which meant that he had ALL his eggs in the basket. And if there was some turbulence being seen for the company, that could cause worry; since if the company went belly-up, he'd have been left with nothing. He'd have had to wake up and go back to his old job as a security programmer.

And of course, that sort of outcome has always been far, far more likely than probably 99% of the players of the game realize; game studios going from success to collapse in short order happens all the time. And the business side of the game has likely not always been smooth sailing... Especially with, as I've noticed, the game's increasingly-aggressive and ambitious development cycle. Even though it was a flop, Bestiary was VASTLY more involved in development than, say, Ambush. (Remember when challenge leagues didn't even have to have anything remotely resembling a progression through the endgame?)

Thinking over it, I wouldn't be surprised (especially with how they'd mentioned even THINKING about 4.0 when they spoke about an "ExileCon" a few days before the announcement; THAT had certainly raised my eyebrows) that if GGG had started sinking perhaps TOO MUCH there; when you see massive growth, most people WILL start to come to expect it, making them unprepared for when (it's not really an "if") things get turbulent; if they don't, they were just lucky.

I'm reminded of ANOTHER situation with another developer, but because it had different monetization, also had a different outcome: that'd be with EVE Online (made by Crowd Control Productions aka CCP) and its Incarna expansion back in mid-2011. Likewise in there, because of a partial shift in monetization (attempting to introduce MTX) the playerbase felt betrayed. However, because EVE Online is a subscription-based MMO, when the players declared to stop feeding money, the company felt it immediately.

Like any modern company, their initial response to criticism was to thumb their nose at their own customers. Then it was when their accountants informed them that over 25% of their accounts had canceled renewal... And that with the company having gotten overly ambitious with stretching their resources, (they were a one-game company that had started development on THREE MORE GAMES; a companion game to EVE, and two entirely unrelated new MMOs for different IPs!) the company was in immediate danger of going bankrupt.

The response after that, then, was that CCP basically had to do a 180° and kiss their players' behinds to beg them to come back. They made promises, and within a few months, released ANOTHER expansion, that brought no new content, but instead implemented a huge laundry list of what had been ongoing player demands, including scaling back some of the changes of Incarna. It worked, and the company avoided insolvency.

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鬼殺し wrote:

I looked at mtx transaction numbers not that long ago, working under the assumption that the transaction number count started at 1 and kept going from there. My first mtx purchase, the first diamond pack, was something like transaction 100. The increase in that number was consistent over time: a few thousand for a purchase not long after that, a hundred thousand nearing open beta, and so on. It's well over 5 million now.

edit:I previously said 30 million but the xsolla switch fucked with the numbers. My last non-xsolla purchase was 13th October, 2017. Order number: 5,976,997.

And we must assume each transaction is at least $5USD. At least. And most would be more.

That would actually suggest my figures were on the low side, since my estimate is that the arithmetic mean would be closer to $20-30, which suggests that (pre-fees) the company had taken in a bit over $100 million over its history.

And of course, I'm not sure where Steam numbers figure into there; all my packs, for instance, were purchased through Steam. For one, I actually can't even find any order number from GGG for those purchases, only Steam's own transaction IDs.

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鬼殺し wrote:

So yeah, I genuinely don't think this Tencent deal was solely about Chris lining his pockets. It HAD to come with some sort of assurances that the company he personally invested in and has worked so hard to build would continue to grow. But damn, I bet the huge buff to his personal wealth didn't hurt...

And sadly, while he (obviously) didn't realize it when he signed away the company, he'll find out that those assurances aren't quite what he wanted, just like the xsolla deal.

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quicksixteen wrote:

The real why is bestiary. Bestiary was their vision of where the game should go, and when they found out that the players hated it, they threw the towel and cashed out. Not like they get their vision anymore anyhow, so it’s time for a fat paycheck.

That's BS. All GGG had to do was say Bestiary is a flop so we are extending the current league to work out all the kinks. We will be holding brainstorming sessions on Reddit to figure out the best way to make the league enjoyable for everyone.

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aldorus wrote:

The thing is, the emotional content and context of the message feels pretty important to me.

This was not a one night girl for me, it was a long standing relationship, with romantic walks, dinners, candles and all. And yeah, I never OWNED the girl, so she can do what she feels is best.

Rationally, I understand what happened and why.
Still, feeling pretty miserable, despite the understanding.

D3 is a girl too, you know.

She's not really into nerds though. :)

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鬼殺し wrote:

1) they'd technically be going against their word introducing something like a subscription

Quick disclaimer before I write my comment in here: I'm not cherry picking your comment because I disagree with anything you're saying, rather there wasn't a better quote to use.


So the thing about this all is though, a lot of people want to believe Chris Wilson and/or GGG will continue to do the right thing by the players, do what's best for the game, and continue to make positive changes where the game is involved.

We all have to stop thinking like this. There's going to come a point where GGG/Chris wants to do one thing, and tencent wants something else. Tencent owns the legal rights now - when that happens they're going to win.