Here's my take on the divestiture. It costs about $10 million to $20 million a year to develop a AAA online game. Cryptic's developing two new ones currently, Neverwinter (a co-op online RPG) and an unannounced MMORPG. That means they're spending $20 million to $40 million on new development.
During that time they lost $7.5 million. That tells me that STO and CO combined are making 8 figure profits. Push one of these new games back 2 years, and they're golden.
Atari doesn't want to be in the AAA business; they want to return to their core competency of either casual online games or "develop, ship, abandon" box games. Somebody else who likes the big online model will snap Cryptic up while they're a bargain.
STO isn't going anywhere; Dan Stahl confirmed today that several new developers start in June.
Yes, if anything the Cryptic revenue stream allowed ATARI to pay down it's other debts; and I'm sure the ATARI board of directors feels that by this move:
1) They essentially rid themselves of the debt incurred (25 - 30 million dollar U.S. EACH for CO and STO by most estimates)
2) They get an influx of fresh capital from the sale of Cyptic to help Atari pay down more of it's own existiing debt and fund their new development direction (eg Facebook games that nickel and dime you and small PC and X-Box releases).
The fact that Cryptic is shown as such a huge 'loss' IS due to the fact that Atari has put the 50+ million U.S. dollar MMO Development costs back squarely on Cryptic Studios, while noting, that in the past two years, the Cryptic revenue stream was approx. 25 million Euros from its online games (STO and CO).
It's definitely creative accounting, as for the past two years, it was reported that Atari was able to pay off a lot of it's other existing debt due to the revenue from Cryptic games (STO and CO.)
And this move a big gamble, because if Atari can't find a buyer, it will have to re-assume all that debt (Atari still owns Cryptic fully and all Cryptic's incurred debt; but since Atari has listed Cryptic as a 'discontinued operation' - it can legally (under French law); cook its books to not show that Cryptic debt all the way back to 2009.) I don't know how long Atari has to sell Cryptic Studios before it wouuld have to re-absorb them; but if it doesn't sell Cryptic, BOTH companies will most likely go down the tubes.
By all reports, Cryptic WAS generating the majority of revenue for Atari over the last btwo years; but Atari just sees this as a chance to drop more debt; and get some more free and clear operations capital to fund their business shift to smaller online java based games and small PC and X-Box titles.
IMO - I know the Cryptic Community Rep WishStone has posted "it's not as dire as it sounds."; but (IMO) in this economy, anything with that level of debt and no expectation of 'profit' for 3 - 5 years (which is how most MMO development debt is usually amortized); I think it's just another stupid move by Atari's board of directors; and if they don't pull off a sale - Atari and Cryptic are toast. (and IMO - IF they already had a buyer; they would have held off on this announcement until a deal was finalized, and in such a case, Atari's own books would have looked even better. - so theyu ARE 'shopping' Cryptic.)
So, yeah, I'm worried, not because I have an LTS (but I bought it back when it was first offered in open beta so even if the worst happens and STO shuts down in 3 months or so, I'll have generally broke even anyway); but because I LIKE STO (and CO); the Foundry,although I am debating if I should biother working on the conclusion to the one mission
"A Relic's Return" I already have up - I'm about 3/4's done with the conclusion atm; until we know more about Cryptic's actual future. I'd hate to spend another 12 or so hours free time fpr something that will disappear soon
; and the direction the game is going (the new Duty officer system and the ramp up to 9 FE series a year.)
I'm honestly trying NOT to be pessemistic; but I've seen this in the MMO industry before; and the really said this is, none of this is due to any real fault on the Cryptic STO Dev team, but is squarely on the shounders of the Atari BoDs; and the fact Atari will go down with Cryptic if the move fails, is no consolation. It's not even the Atari of old; it's INFOGAMES trading on the name of the original Atari brand name.
I also don't see any existing MMO developer jumping in.
SOE - Just cancelled an MMO titled and pruned 250 employees and closed 3 off site Dev studios. They also have just launched DCUO; and that would be a competitor of sorts in the same company. Also, they still hold SWG, and while it's fate after SW:ToR release is uncertain, it's dev cost is ''paid off'. But I don't see SOE wanting to assume more debt; or having a lot of cash available if it did; especially with the recent hacking incident.
EA/BioWare/Mythic - They have 150-300 million sunk in
SW:ToR; and it's just spliting the potential audience. No way. (FYI and IMO - if SWToR doesn't go gangbusters out of the gate and maintain, you might see EA try and sell it back solely to Lucas Arts in a year or so. That's EA.)
Turbine - Doubful. They already share revenue with Atari for D&D Online; I don't think again, they'd want the debt; and if they did acquire Cryptic, I doubt Cryptic would be allowed to continue with it's 'open communicaton' development style.
CCP - EVE Online is it for them.
NCSoft - In effect Cryptic had already sold 'City of Heroes' to them; and as much as Jack wants to continue Cryptic, I doubt he'd want to colaberate with NCSoft again. CO is still a direct competitor to CoH too; and probably paid off development wise. I don't see NCSoft having any fuirther interest in the western MMO market beyond what they have now.
Vivendi/Blizzard - No. No need. These guys don't want another Dev studio. What they have works well for them already.
Funcom - They are the most likely; but they're still involved trying to make
Age of Conan work; and again, I don't think they have the capital or want the extra debt.
Oh, and for all those who say - "Who cares, Cryptic did a piss poor job on STO and CBS will just license the IP again to a better developer, and we'll get a REAL Star Trek Online."
Unlikely.
It's possible (but doubtful) that CBS could buy Cryptic and at least continue STO; but I doubt CBS wants it's own MMO studio; and it already makes pure profit from licensing the Star Trek IP in various areas, with little overhead. If Cryptic and STO go under; after the Perpetual Studios development debacle and now this, I think CBS will either not be able to find another MMO developer who wants the license; or will just consider Star Trek unable to be effectively licensed in the MMO market.
It's the same logic as people who thought
Enterprise sucked; and after it was cancelled; we'd see a "Better 6th series 'done right.' (tm)" <-- Yeah, we saw how well that logic worked.
So, after two failed attempts, I think CBS will take it's Star Trek MMO ball, and shelve it indefinitely.
Again, I really do hope Atari finds a buyer and that buyer is able/willing to let Cryptic continue as it has been with STO. I'll really hate to see the STO game fold.
