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Claire Voyant
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Posted - 2011.06.11 19:34:00 -
[1]
 Originally by: Tutskii
Theyre trying to scare people into SELLING their Plex.
Well, actually scare people into buying GTCs and selling PLEX. Pretty good plan too, because PLEX are probably about to take a dip so now is a good time to buy GTCs before the Incarna rush. I assure you though, CCP is not trying to scare any of us MD types into selling our PLEX.
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Claire Voyant
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Posted - 2011.06.11 23:49:00 -
[2]
Originally by: Tutskii
Originally by: Claire Voyant
Originally by: Tutskii
Theyre trying to scare people into SELLING their Plex.
Well, actually scare people into buying GTCs and selling PLEX. Pretty good plan too, because PLEX are probably about to take a dip so now is a good time to buy GTCs before the Incarna rush. I assure you though, CCP is not trying to scare any of us MD types into selling our PLEX.
I assure you that more than a few MD types sold their PLEX.
Some of them, before the price dropped too much.
I think its safe to assume that they are very happy they did, what with the massive price drop and all.
Wasn't the question what was CCP's intent in running the ad?
Isn't it clear that their motive was to sell more GTC's while their isk value was still high?
Causing players to dump existing stocks of PLEX and crash the price would seem to defeat the purpose. Anyway, players dumping PLEX were probably acting on their own initiative and didn't need any prompting from CCP.
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Claire Voyant
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Posted - 2011.06.11 23:54:00 -
[3]
Originally by: Tutskii
At this time, its probably as low as its going to get, for instance, so you might safely buy for the next time when it is at 390+
You are entitled to your opinion, but look at the timing of previous lows relative to expansions.
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Claire Voyant
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Posted - 2011.06.12 00:10:00 -
[4]
Originally by: Tutskii
Because Aurum is likely to make Plex shoot up, by building volatility into it, they make it less desirable to hoard it and may set up a price wall through entirely psychological means.
I expect that they will throttle the release of aurum store items to throttle the demand for PLEX and keep the price from shooting too high. How high is too high is a debatable question, but my guess is they will err on the side of caution and we will see almost no detectable aurum bump in the PLEX price at least detectable in the middle of the usual expansion crash.
The main issue effecting PLEX prices over the next month will be whether the influx of new and returning players for Incarna buying GTCs outweighs the increased demand for PLEX from aurum.
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Claire Voyant
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Posted - 2011.06.12 00:27:00 -
[5]
Originally by: Tutskii
All little me has to go on is the prices and how they have been impacted by the recent announcements, starting with the ccp blog on Aurum that launched plex to 420 million immediately after.
Have you noticed that the price of PLEX has now dropped below the level before the aurum dev blog? Maybe you should have listened to the older players who warned you not to speculate on PLEX in response to that blog. The GTC supply glut starts before the expansion and the aurum demand can't start until after the expansion so the timing is all wrong. Aurum can only temper the PLEX crash, not prevent it.
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Claire Voyant
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Posted - 2011.06.12 00:33:00 -
[6]
Originally by: Tutskii
I noticed you failed to provide the name of the expansion you are using for precedent, so I went ahead and looked up the price of Plex this time last year:
Under 300 million on average.
Now you are cooking.
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Claire Voyant
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Posted - 2011.06.14 13:06:00 -
[7]
Originally by: Companion Qube
I'm more than a little doubtful that in-game items are counted as a liability on CCP's balance sheet. I think the more important thing to consider is the monthly rate of plex generation, aka, how the $17.50/plex affects CCP's monthly revenue.
When EA sells a console game that has a "free" online multi-player component, they carry a portion of the sale on their books as a liability for 12 months. They are a public company and you can verify this by looking at their financial statements.
Of course CCP carries unused PLEX on their books as a liability. They also treat prepaid subsciptions, unused GTCs, and PLEX that have been redeemed for future gametime as a liability. The real question is, does it matter?
Here is one way to think about it. When PLEX was introducted it was seen as a way to increase GTC sales, which is good because GTCs net $17.50 per month versus $11 per month for 12-month subscriptions. It is also a way to combat RMT, which really means it is a way they can get some of the revenue stream that was going to RMTers.
A side benefit of PLEX was that it made it easier for players to stockpile gametime. When you buy GTCs on the timecode bazaar the time is credited to a specific account. There was not much motivation to buy extended periods of time because you would be tying up isk for little apparent benefit. The ability to trade PLEX now means players no longer see gametime as a sink but as an investment.
The growing inventory of PLEX was sen as a cash-flow bonanza for CCP. They could focus on promoting the GTC sale side without worrying too much on the PLEX demand side which would tend to take care of itself. One memorable promotion was the guy that had his account banned for RMT when he should have bought GTCs. People sometimes see the PLEX for Fanfest or PLEX for Good promotions as demand side, but from an CCP accounting perspective they are really ways to increase fanfast sales or allow CCP to make charitable contributions (and get some publicity) without having it come off the bottom line.
The aurum store is really the first time CCP has tried to directly promote the demand for PLEX and you could argue that this is something of a change in direction but it has been coming down the road for a long time. Part of it is that this is just the way the world of on-line gaming is moving. Microtransactions will be an important component of Dust and most likely World of Darkness. There is less resistance to microtransactions if they are in the game from the beginning instead of being introduced later. CCP could just be testing out the concept and/or smoothing the way for combining the Dust and Eve currencies and economies.
[wall of text continues below]
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Claire Voyant
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Posted - 2011.06.14 13:34:00 -
[8]
Yet there is no avoiding the fact that aurum sales (or conversions? see below) are primarily aimed at taking PLEX off the books. Trading a liability for a virtual good is pure profit from CCPs perspective. It effects cash flow down the line as higher demand for PLEX will eventually boost GTC sales, but it may also be a sign that someone has been looking at CCPs balance sheet and saying we need to do something.
There are different kinds of liabilities. Taxes you owe the governmant are one extreme. Prepaid game time subscriptions are another. PLEX are somewhere in the middle. CCP will probably never have to pay out of pocket to redeem those PLEX but they also don't have a limited life-time like a 12-month subscription. At first, PLEX were probably lumped in with all other forms of pre-paid game time, but as the inventory grew they probably needed to separate it out on the balance sheet or at least on a separate table.
Think of their prepaid game-time liability as a proportion of their monthly revenue. If everyone paid with 12-month subscriptions and the subscription cycles were evenly distributed the liability would be six times the monlthy revenue. (Well maybe 5.5 because you can book the revenue at the beginning of the subscription month, but you get the point.) A mix of 1, 3, 6, and 12 month subscriptions probably resulted in a liability of 2-3 times the monthly revenue. You can make your own estimates of the unsold PLEX inventory and the impact it has on ratio of liabilities to revenue, but I think there is no doubting the fact that this is something that has been noticed at the highest levels at CCP.
Whether they are thinking about going public or getting more investors and need to fix up their balance sheet or they are simply following through on a long-term strategy is pure speculation. But there can be no doubt that the PLEX you hold in your grubby little hands is counted each month and reported to the CCP bigwigs. And if the bigwigs say that those liabilities need to be "managed" expect more pretty things to be offered at the aurum store.
P.S. An interesting question is are aurum (aurums, auri?) a liability also. They are presumably no longer convertible into game time and if players have no reason to keep more than one PLEX worth of aurum in their wallets you could argue that they are not financially significant to CCP. But if aurum became a full fledged second currency with the introduction of Dust the inventory of aurum could conceivably approach or surpass the equivalent inventory of PLEX. Think of aurum as pre-paid microtranactions and maybe you can see a case for treating them as a liability also.
[tl;dr Of course PLEX are liabilities. The real issue is whether the aurum store is an attempt to addres the growing PLEX liability or is it just part of CCPs long-term strategy.]
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Claire Voyant
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Posted - 2011.06.14 14:22:00 -
[9]
Edited by: Claire Voyant on 14/06/2011 14:24:40
Originally by: Adunh Slavy
I think perhaps we have two discussions going on in this thread as well separated by a razor thin way of thinking and perhaps leading a few of us to bump into one another. One discussion related to accounting, and another related to finance.
Possibly. Note that I was quoting to CQ's reference to CCPs balance sheet, not any of the discussion that followed.
Edit: Maybe some confusion can be avoided by the use of the term "balance sheet liability" where appropriate, as in "There can be no question that PLEX is a balance sheet liability for CCP."
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Claire Voyant
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Posted - 2011.06.14 23:32:00 -
[10]
Check your calendar. Is it before June 21? Then shut-up, Mkay?
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Claire Voyant
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Posted - 2011.06.15 16:45:00 -
[11]
Supply? Demand? Pointless blabber?
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