ACCOUNTING NERD SYSTEMS: ENGAGED.
Silver players generate more income for Cryptic as compared to gold players on a monthly basis consistently.
Numbers:
On a standalone basis and after intercompany eliminations, Cryptic accounted for revenue during the second
semester of approximately €7.2 million and on a full year basis of approximately €15.9 million as of Fiscal Year
2010/2011 – as compared to approximately €4.5 million and €4.5 million on the second half and a full basis for
Fiscal Year 2009/ 2010, respectively. The net results of Cryptic was a loss of approximately -€3.3 million for the
second semester and on a full year basis of approximately -€5.3 million as of Fiscal Year 2010/2011, as
compared to a profit of approximately +€0.2 million and a loss of -€12.6 million on a semester 2 and a full basis
for Fiscal Year 2009/ 2010, respectively.
Seeing as they're operating at a loss, and the 3 year profit period is ending soon.
"As of March 31, 2011, the Company accounted Cryptic as a “discontinued operation” in the Statement of Income
starting on April 1, 2009 and as “assets / liabilities held for sale” in the Balance Sheet as of March 31, 2011."Here is the link to where the OP received the info:
www.atari.com/dyncontent/atari/uploads/PR_ATAR_FY10-11_20110517_0.pdfThis is public knowledge for the Atari shareholder's benefit.
The OP cleverly (or just overlooked) the actual figures after the paragraph he referenced, relating to Cryptic.
Revenue AnalysisFor the second semester of Fiscal Year 2010/2011, actual consolidated Revenues amounted to €35.8 million,
down 16.2% from the previous year. Foreign exchange impact was a positive €2.0 million. This reduction in
sales was in line with expectations as Atari’s focus continues to be on fewer but more profitable releases and
has exited from the majority of its lower margin third party distribution business.
Net Income AnalysisActual Current Operating Income for the second half of Fiscal Year 2010/2011 was €7.1 million, exceeding the
guidance (“Current Operating Income to be slightly negative to break even in the second half of this Fiscal Year
2010/2011, excluding non-recurring items”) released earlier in the year. This was an improvement of €6.2 million
over the Current Operating Income of €0.9 million in the second half of the prior year. This improvement
compared to the same period last year can mainly be explained by:
- Higher margin revenue due to better performing releases and the reduction of lower margin third party
distribution business in its product mix;
(IE: There stuff isn't sucking as much as usual (that was a stab at humor), and they aren't outsourcing their operations)- Sharp reduction of general & administrative expenses from cost savings initiatives;
(They are not paying as much admin fees, this can be due to reduction in staff, cutting costs, or removing redundancies as examples, they don't go into details, so I don't know)- Lower marketing and administrative expenses in line with the reduced sales volume and continued cost
savings initiatives over prior year; offset by:
- Higher share based non-cash incentive expense and amortization related to the release of Test Drive
Unlimited 2 recorded in the current semester.4
(They are paying their peepz with assets like shares, options, end of year incentives, etc, the idea is that the company pays them later as a pose to now, oh and it relates to another game's performance, anyone who read this part would of realized champs isn't the only thing on Cryptic's list).Actual Net Income for the second half of Fiscal Year 2010/2011 was €3.0 million, a slight decrease of €0.7
million over the Net Income of €3.7 million in the second half of the prior year. Despite
improving Operating
Income, this slight decrease was
primarily due to:
- A loss at Cryptic Studios in the current semester of approximately -€3.3 million as compared to a breakeven position in the prior period. These results are included in profit and loss of discontinued operations;
and
- Higher cost of debt as the amount drawn on the Credit facility amounted to approximately €42.3 million
as of March 31, 2011
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Basically, there was more going on than just the release of champs F2P. Cryptic doesn't JUST maintain CO you know...
The information is sound, the interpretation of said information by the OP is just down right naive though.
In closing, here are my thoughts on F2P
F2P is a great system because:
- it attracts both the customer that wants to spend 10 dollars and 200 dollars, and grants the users easy access to pay for more stuff. Think of the first time you used the C store, and your 2nd time, I bet it was a lot harder to make a purchase at first, but afterward, whether you were satisfied with what you got or not, you found it a lot easier to buy some more CP.
- it brings in more people to expand the population of the game, no one wants to continue their sub when the game looks like it is dead (in truth, many will still play, but others might not, ergo they are keeping the latter portion happy and willing to buy CP and/or continue their subscription.
- it is a great marketing campaign, allowing players to access the character builder (arguably, CO's best asset) and make a character even with slightly less options than a paying customer is a great way to get them into the game. By opening the world to them, they can experience almost the entirety of the game without spending a dollar / euro / whatever.