EA to buy Mythic?

[schild]

Rumor: Electronic Arts Buying Mythic Entertainment
EA is apparently buying Mythic Entertainment for somewhere in the $30-50M range. Mythic is the developer and publisher of the MMORPG Dark Age of Camelot and is currently developing an MMORPG based on Warhammer. Dark Age of Camelot has been on the decline, like many US MMORPGs, because of the blockbuster success of World of Warcraft.

I wonder how much of its 2003 $32M investment TA Associates gets back?

If true I think it is a good move for EA. They need to get much deeper into the MMORPG business, especially if the PS3 is going to possibly be delayed into 2007.

via Billsdue

I don't know who the guy is, but it seems likely when you put all of the pieces together. But I don't know where the value of $30-50M is coming from. Maybe $15-30M, but $50M? Christ. If that's true Señor Jacobs should take the money and get the fuck out of the Warhammer business. NOW NOW NOW. SELL SELL SELL.

[WayAbvPar]

Interesting timing when coupled with Mr. Jennings' departure. Coincidence, or could he not stomach the thought of working for the Evil Empire?

[HaemishM]

I'm going to call bullshit until I see some convincing evidence. What would Mythic have to gain from it, other than some nice change for the stock owners? They are profitable. They just scored a major license. They made back their investors money a few times over on DAoC and got a decent bit of funding last year. Unless Warhammer is more expensive than they figured, I don't see where Mythic has to gain from this.

Of course, it's right up EA's alley, since they can't produce shit themselves, especially MMOG's. I don't see EA ever producing another MMOG, they'll just buy someone else to do it for them like they did with UO.

And $30-50 million? I can see that easily.

[Wolf]

They gain a solid publisher? Hell, they gain THE publisher. Which would mean a lot of retail presence for Warhammer, through EA's channels. Mythic publish themselves ATM, right? Or at least that was the case a few months back. If they want to make big bucks with Warhammer, they'll need a solid publisher. Or at least that's how I see it. And I'm a noob, so move along :)

[Merusk]

I don't see where Mythic has to gain from this.

Money.  Unless MJ is majority shareholder, you know as well as I do it's out of his hands.  MMOs aren't the new sexy anymore, and WoW > all.  Time for the initial backers to cash-in take their earnings to whatever else interests them and let someone else deal with it.

And $30-50 million? I can see that easily.

Ditto, that's practically pocket change for EA, isn't it?  Just slap a '2006' on last year's baseball game and voila, you bought an MMO company.

[HaemishM]

I don't see where Mythic has to gain from this.

Money.  Unless MJ is majority shareholder, you know as well as I do it's out of his hands.  MMOs aren't the new sexy anymore, and WoW > all.  Time for the initial backers to cash-in take their earnings to whatever else interests them and let someone else deal with it.

Like I said, as a business that wants to grow, I don't see what Mythic has to gain. If the stakeholders just want to get their gravy back and get out, it makes perfect, pathetic sense.

Mythic doesn't need a bigger publisher. I can't imagine any publisher worth its salt not wanting to put a Mythic game on the shelf based on past history, without the kind of anal intrusion EA is famous for.

[schild]

WoW ate everyone's lunch. DAoC just doesn't have legs.

Warhammer won't be a hit. World of Warhammercraft already exists.

Imperator is dead. And isn't coming back.

Where's the value?

Maybe they'll fold the teams into a UO2 team. /sadf

[sinij]

This will explain few things. Well another company to run into the ground for EA.

[Trippy]

I don't know who the guy is, but it seems likely when you put all of the pieces together. But I don't know where the value of $30-50M is coming from. Maybe $15-30M, but $50M? Christ. If that's true Señor Jacobs should take the money and get the fuck out of the Warhammer business. NOW NOW NOW. SELL SELL SELL.

If we assume that DAoC still has around 150K subscribers that would be about $25 million a year in revenue (assuming about $14 month average subscription fee; some small fraction of people on extended plans). So a $50 million buyout price would only be 2x revenue which I would consider on the low end for a profitable video game/MMO company (assuming they are profitable).

[Wolf]

Mythic doesn't need a bigger publisher. I can't imagine any publisher worth its salt not wanting to put a Mythic game on the shelf based on past history, without the kind of anal intrusion EA is famous for.

It's not a matter of bigger or smaller publisher. It's a matter of ANY publisher. Publishers are the guys that get you to smaller markets like Eastern Europe for example. Markets that would get you a 1000 sold copies here and another 500 there. But they all add up to a decent number, that you won't be able to sell if you don't have a publisher. And the thing is that Warhammer is somewhat of a famous IP that would sell better than a no name one like DaoC to random people.

[HaemishM]

WoW ate everyone's lunch. DAoC just doesn't have legs.

Warhammer won't be a hit. World of Warhammercraft already exists.

Imperator is dead. And isn't coming back.

Where's the value?

As I've said before, you don't have to be the biggest dick on the block in order to put out an MMOG or have a valuable MMOG company. You just have to be profitable. Mythic has a better track record than any MMOG released by EA since UO. That's enough value for EA.

For Mythic? Unless there'd be a Korean deal involved, I still don't see why being bought by a publisher is good for the company. It may well be good for Mark Jacobs or the stockholders, but I see it being a death knell for the company.

[Margalis]

Good for the stockholders is unfortunately matters far more than anything else.

EA did show some interest in the MMORPG market with E&B and Motor City Online. (Was that EA?)

The problem that Mythic has is that the people that play DOAC now are people that have been playing for a while. They are retaining a fair number of customers. But can they attract those same numbers to a new game? My guess is probably not.

The people playing DOAC now were playing before WoW came out, and had incentive to keep playing it. They won't have any incentive to join a new game, other than the overall relative quality itself.

[HaemishM]

Good for the stockholders is unfortunately matters far more than anything else.

EA did show some interest in the MMORPG market with E&B and Motor City Online. (Was that EA?)

You should be able to judge if those two were EA or not by the distinctive strecthing of their corpses' cornholes. (Yes, they were EA).

The problem that Mythic has is that the people that play DOAC now are people that have been playing for a while. They are retaining a fair number of customers. But can they attract those same numbers to a new game? My guess is probably not.

The people playing DOAC now were playing before WoW came out, and had incentive to keep playing it. They won't have any incentive to join a new game, other than the overall relative quality itself.

I actually believe (perhaps foolishly) that Warhammer Online, unless it sucks absolute monkey balls in beta, will attract a decent sized following. I don't think it'll be another DAoC numberswise, but shit, EA would take a half-DAoC any day over trying to sustain the reanimated corpse of UO or Sims Online failed Franken-MOG.

[tazelbain]

My theory is EA wants to make a WoW-killer.  They don't have talent and experiance to do it.  So they are going to buy it.  Only 2 options I see at this point is Turbine and Mythic.  Clear, Mythic would be a much better choice.  Getting DAoC and WAR in the process is just cream.

[Sky]

The only way EA can kill WoW is to buy Blizzard.

[HaemishM]

The only way EA can kill WoW is to buy Blizzard.

That's the most surefire way to do it.

[tazelbain]

The only way EA can kill WoW is to buy Blizzard.

I agree, but at this point that would cost billions to do.

[HaemishM]

But it's EA billions, so I'm ok with those getting pissed away.

[Johny Cee]

Hmmm.... 

Interesting rumor,  but sounds real out there.

1. Operations. $30-50 million sounds low.  Primetime NA numbers for DAOC are around 20k online,  which with the rule of thumb for subs equals about 100k.

100,000 x $15/month x 12 months = $18 million in revenue from subscriptions a year

I'll go with DR for expansion rev:  $20 per x 100,000 subs = $2,000,000 revenue from expansions a year

So,  from NA operations about $20 million.  That's fairly conservative.  Add in whatever licensing revenue from Europe & Korea.  Guesstimate about $4-5 million.

Say $25 million,  with just the overhead of running servers, CS,  some work on game.  I'd imagine it'd be fairly low.  That leaves alot of money from operations that can be paid out as dividends or reinvested into new projects.  I'd think that the cost of development had been paid off by the bumper years of DAoC.

The remaining development on Romans in Space as well as WAR development must have a price tag in the several millions range.

Any other juicy assets I'm missing?

I'd think that $50 mill would be a low bid for the company as a whole.

But I haven't done any valuations in a couple years now,  and the ones I did were mostly heavy on assets and rentals.

/shrug....   Cash Flows for the next three years adjusted for inflation might be a decent indicator of the value of ongoing operations....  Unfortunately,  no real clue about cash flows.

2. Having a distributor:  I'm foggy now,  but I thought that Mythic dropped their distributor because they were moving to downloads as a means of getting their products out.  With no new games being released for a while,  they don't really need one.

Their game plan is based mostly around established customers,  and I don't think they need the shelf space.

3.  The consumers:  Yah, DAoC is heavy on retention.  There are some new players, but not many.  What I've noticed from following the boards and playing is that the subscription base is very nomadic.

They'll take off for new games,  play till tired of it,  and come back to DAoC for a few months.  It's pretty easy to see with the number of sigs listing other games in them,  yet maintaining a DAoC account or coming back for new patches/server types.

The fact that DAoC is probably the only moderately playable and fun pvp MMO around is their biggest draw.... Yes, the system has major flaws.  It's just better then your alternatives.

4.  In the face of WoW,  as others have stated,  there's a tendency to underrate the MMO's in a successful niche.  EVE, CoH/CoV (still?  Haven't been following), DAoC.  I think there's alot of profit here,  even if they aren't putting up WoW's subscription numbers.

5.  What is the gain to Mythic's owners of being bought out?  Especially at this price?

I'd think they'd be better off cutting back on development and milking DAoC for all it's worth, then selling the remains,  from a profit standpoint.

If you want further development,  Mythic has proved to be successful at attracting outside investment.  I'm not sure EA would provide any more money,  and I'm sure there would be a huge burden in bureaucracy/crazy large corp politics.

6. Speculation.  Is this Mythic management playing footsie with EA to get some kind of advantage for distribution when WAR gets released?  Set up a threat for negotiations with GW or Mythic's outside investors?

[ahoythematey]

The only way EA can kill WoW is to buy Blizzard.

That's the most surefire way to do it.

Funniest damn thing I've read in a while.  Kudos, Haemish.

[Sky]

Oi! Why is Haemmy getting credit for my joke? Bah.

[HaemishM]

I improved on it?

[Sky]

I guess I don't get it.