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Published August 5, 2012

Barely a week after a much-heralded refocusing on spaceship content for EVE and a blog from the CEO of CCP, Hilmar Petursson, which hinted that he has finally ‘gotten it’, CCP slashed 20% of their staff in what may be the darkest day in the company’s history. Closing operations on the World of Darkness MMO, the firings also impacted a number of well-known EVE devs. CCP flags are flying at half-mast. In my previous column, released just before the layoffs, I glossed over the controversy of the FiS Refocus, hoping to accept Hilmar’s mea culpa and return to writing about internet spaceships. Yet now more than 120 people are out of work, their lives thrown into disarray, so we must return to the bleak realm of CCP’s errors and find out why the company - once held up in the industry as an example of the one MMO which always grows - fell from grace so spectacularly.

The immediate cause of the layoffs is obvious enough: stagnating subscriptions in EVE and a too-aggressive burn rate for DUST and WoD development. During the height of the Monoclegate controversy, EVE players examined CCP’s 2010 financial report. On October 28th, 2011 the company was due to repay or recapitalize a $12 million dollar loan which it had been using to develop WoD and DUST 514. It is likely that CCP’s cash on hand dwindled past the point where they could repay the loan outright, requiring recapitalization and negotiation with their creditors.

Incarna and the NeX Store appear to be dead for now. Reports indicate that much of staff tasked to these projects as environment or fashion designers have been axed, as have the remote (ie, non-Reykjavik) community team and an unspecified number of Atlanta-based EVE content developers. Those remaining in Reykjavik have begun a mad scramble of releasing spaceship content, including four tier 3 battlecruisers and a long-overdue fix to hybrid weaponry.

Meanwhile, Hilmar has been confronting the company’s fall from grace in the media, with pieces in Gamasutra and Eurogamer. It is easy to be unsympathetic towards a CEO immediately after layoffs, particularly when I consider some of those Hilmar fired to be friends. Yet the context of CCP in the Icelandic business community created a situation where avoiding hubris would be nearly impossible for anyone in Hilmar’s position - and hidden in that context are the answers as to why EVE began to go wrong.

It begins with the bubble. If you are one of the last three EVE players who have not yet read Michael Lewis’ seminal article ‘Wall Street on the Tundra’ I suggest you do so. It’s a crash course in Icelandic culture from an American perspective that roughly matches my experiences in Reykjavik, as well a depiction of the milieu of irrational exuberance which Hilmar and the other CCP executives were swimming in when they decided to buy a floundering company in the United States that made tabletop roleplaying games for the goth/industrial demographic - ten years after that subculture had grown up and moved on to other things.

“That was the biggest American financial lesson the Icelanders took to heart: the importance of buying as many assets as possible with borrowed money, as asset prices only rose... They bought stakes in businesses they knew nothing about and told the people running them what to do—just like real American investment bankers! Nor were the Icelanders particularly choosy about what they bought...” -Lewis, ibid

For EVE players with no experience with Vampire, check out Troika’s excellent Vampire: Bloodlines on Steam (using the fan-patch to fix it, of course; Troika makes CCP look good at code). It captured the essence of the World of Darkness in a way no other title has. Now try to imagine CCP developing such a game.

I say this as an avid fan of the old World of Darkness; “The Mittani” was originally a Malkavian WoD character. Yet the heyday of World of Darkness was when I was a clove-smoking twentysomething with shoulder-length hair and an obsession with kinky vinyl-clad goth chicks - i.e.,  the late 1990s, more than a decade ago. CCP bought White Wolf in 2006, and the reaction from RPG fans was similar to that of businessmen worldwide upon being bought out by overly aggressive Icelandic bankers: ‘Huh?’

“Icelanders—or at any rate Icelandic men—had their own explanations for why, when they leapt into global finance, they broke world records: the natural superiority of Icelanders... Iceland’s president, Olafur Ragnar Grimsson, gave speeches abroad in which he explained why Icelanders were banking prodigies. “Our heritage and training, our culture and home market, have provided a valuable advantage,” he said, then went on to list nine of these advantages, ending with how unthreatening to others Icelanders are. There were many, many expressions of this same sentiment, most of them in Icelandic.” - Lewis, ibid

After acquiring White Wolf, CCP attempted to develop both a World of Darkness MMO and a MMO-FPS hybrid (DUST 514), while simultaneously maintaining EVE. “[W]e thought we could achieve three impossible things at the same time," says Hilmar. Considering it rationally, there is very little overlap in development experience between an atmospheric, political roleplaying game about the undead and a spaceship PvP MMO - and neither project has any overlap with a Battlefield 2142-style first person shooter. CCP branching out from EVE into either DUST or World of Darkness would be fraught with peril; doing both was raw, blind madness.

After the White Wolf acquisition CCP began to accentuate its hubris with an increasingly Orwellian stream of slogans. CCP is known for the daring potential of EVE and the travails of trying to bring that potential into actuality; eyebrows were raised when CCP proclaimed themselves to be icons of ‘Excellence’. While expansions dropped features midstream, CCP proclaimed their ability to ‘Deliver’. While trumpeting their ‘Innovation’, the company put out Tyrannis, a bland, derivative attempt to copy Facebook and Farmville. When I was summoned to Reykjavik for the Emergency Summit in July, I was alarmed to hear Hilmar actually use these phrases in regular speech - he seemed to believe his own Newspeak.

After the mortgage finance implosion wiped out both the Icelandic banking industry and the national currency - toppling the government in the process- Hilmar was one of the few business magnates left in the country with a revenue stream of hard currency, and CCP was awarded by the (next) Icelandic government for this post-apocalyptic success. One could jest that post-crisis Iceland has four export products - fish, aluminium, Bjork, and internet spaceships - and be alarmingly accurate.

And it was just after the crash that the management of EVE, infected with misplaced confidence from being among the last businessmen in Iceland left standing, began to truly lose touch with their customers - pushing out the Tyrannis and Incarna duds, going on a hiring spree, simultaneously developing two new games, and resolutely ignoring the continual cries for spaceship-focused EVE content.

People tend to explain success - especially accidental success - in terms of personal achievement. If you found yourself abruptly enriched while your peers crashed and burned, odds are good that you would rationalize your situation as a reflection of your superior worldview or methodology. Perhaps you would proclaim your ‘Excellence’, your ability to ‘Deliver’, or extol your ‘Innovation’, rather than writing off your fortunate circumstances as a stroke of good luck - particularly if your country, media and even your President had been aggressively lauding your ‘inherent superiority’ for years. As customers we may think dark thoughts about the hubris of CCP’s upper management, but the ugly truth is that many would fall prey to the same manias if they had been in Hilmar’s shoes.

As a leader, it’s hard to get the straight truth from someone who feeds their family with a salary you control. While Hilmar himself had extolled the CSM as a method for the players to ‘call bullshit’ on CCP, the CSM mostly deals with the mid-level employees who actually design EVE, rather than off-meds corporate executives entranced by visions of global dominance. Besides, avoiding irrational business decisions is something that executives must do within their own company, rather than relying on their customers to perform this critical function. To ward against the dangers of hubris, CCP would have had to take aggressive steps to avoid buzzwordism, and enable their employees to speak truth to power - and then listen to them.

If Roman generals were followed during triumphs by a slave who whispered to them of their inevitable mortality, perhaps what Hilmar needed was the humblest CCP QA intern to follow him and remind him that he was not Lady Gaga.

I write this not as an apologia for CCP’s missteps, but to try to put an explanatory frame around what seems, in a vacuum, to be an utterly unbelievable series of business decisions - a spaceship MMO not adding new spaceships for 2+ years, $70 monocles, and a disastrous flirtation with microtransactions, high fashion and overheating video cards. If there had been a culture of openness within the upper echelons of the company and less kool-aid drunk by ccp executives, the obvious dictum of ‘don’t abandon your core product’ might not have been disobeyed.

But it was.

 

Commentary

 

I'm proud of this column; it's something of a tour de force. Unfortunately, many of the problems illustrated here haven't changed; instead of tilting at the Incarna windmill, CCP is now pursuing Dust 514 and using the same 'it's so crazy, it must be genius' excuse that has gotten them into trouble so many times before.

The Mittani
Goonswarm Federation CEO, Space Tyrant. Likes yoga, Alaskan Malamutes, bacon, and delegation.

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