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Sunday, 8 May 2016

April 2016 Economic Report - the economics of war.

The monthly Economic Report for April is out.

In summary:

 - The numbers reflecting war are up; the numbers reflecting other activities are down.  This is classic war stuff - non war related activities are in decline as people resources get diverted towards the war effort; and those regions where the battles are being fought are seeing a collapse in all economic activity.

 - Deklein and Pure Blind are seeing the full effect of war

 - There is a potential that Lonetrek is becoming a new trade hub? - or at least is a key staging post for the war.

 - one or two effects seen from the Citadel release.  Expect more in May.



Overall

What we have in April are the numbers of war with the homeland of one side under siege.

General activity was lower in April with Mining down 9%, Production down 4% and Bounty Prizes down a massive 22%.

That said, the activities of war were up: Destruction rose 2%; Insurance payments rose a massive 31%; Alliance Registration fees up a massive 41%; and Corporation Registration Fees up 12%.

In amongst all this, Trade was only up 1% - so not recovered from the 14% fall during March.

There was 1 less day in April so that should have reduced everything by 3% anyway - though i suspect Easter being in March distorts matters also (not sure which way though!).

In March trading fell some 15% in all major Trade Hubs and April saw no recovery with all Trade Hubs either flat or very slightly changed.

The amount of ISK sitting in players and corporation wallets fell from 972 trillion to 968 trillion - in part due to the spending exceeding income for only the third month on record and also due to 4 trillion leaving the game (players leaving).

The overall numbers to keep everything in perspective for March, all in Trillions: Mining fell 9% to 23.0; Destruction rose 2% to 35.3; Trade rose 1% to 849.8; Production fell 4% to 104.5.


Items of note from Regional Activity

Trade


Trillions
1 The Forge 597.7
2 Domain 99.4
3 Sinq Laison 34.8
4 Heimatar 19.1
5 Lonetrek 18.6
6 Metropolis 14.0
7 The Citadel 7.1
8 Essence 6.5
9 Providence 4.4
10 Tash-Murkon 4.1

No big ranking changes from February or March.  Business almost as normal really, Trade Hubs dominating.  That said, Lonetrek has pulled further away from Hek (Metropolis).  In March it had caught up and was broadly inline, now it is clearly ahead.  Indeed, Lonetrek has a real chance of overtaking Rens (Heimatar).

It would be odd if Lonetrek was made the fifth, or indeed fourth, Trade Hub given it is a region that is right next door to Jita (The Forge).

As a reminder to new players, the main 5 Trade Hubs in the order we know: The Forge (i.e. Jita); Domain (i.e. Amarr); Sinq Laison (i.e. Dodixie); Heimatar (i.e. Rens); Metropolis (i.e. Hek).

In the next 5: the expected Essence and Tash-Murkon are there, known secondary trade hubs.  But also Lonetrek and Citadel (both Regions that are one jump out of Jita) and Providence (null sec space that borders several highsec Regions: Domain / Tash-Murkon / Devoid / Derelik).

The dominance of The Forge (Jita) reigns supreme though - Jita shows no sign of losing its dominance.



Production



Trillions
1 The Forge 19.6
2 Lonetrek 14.0
3 The Citadel 11.8
4 Domain 7.3
5 Sinq Laison 5.3
6 Providence 3.6
7 Metropolis 2.8
8 Geminate 2.5
9 Malpais 2.1
10 Tash-Murkon 2.0

In terms of Production The Forge is top slot - makes sense, many people will produce near where they buy the raw materials and/or intend to sell.  I suspect Lonetrek and The Citadel benefit from being next to The Forge and so less jumps to transport raw materials from Jita or produced items to Jita.

Domain and Sinq Laison are the other two major Trade Hubs - hence would expect Production to be there.

Deklein has fallen from the top 10 all the way to position 15 with a value fall of 61% from 4.0 trillion to 1.6 trillion.


Mining


Trillions
1 The Forge 1.7
2 Lonetrek 1.4
3 Domain 1.3
4 Providence 1.3
5 Metropolis 1.1
6 Everyshore 0.9
7 Tash-Murkon 0.8
8 Sinq Laison 0.8
9 The Citadel 0.7
10 Malpais 0.7

Some interesting items of note in mining.

Deklein, which historically had been a Top 10 mining Region has dropped out down to position number 44!  In fact, mining in Dekein has fallen 88% from 1.0 trillion to 0.1 trillion!

Otherwise, no change of note.  Tash-Murkon is back in the top 10 having fallen out in March.

The Forge and Domain at the top given being major Trade Hubs - so people mining near where they intend to sell and Lonetrek being next to The Forge and itself a major production Region.

Providence is up there given it is nullsec space that is very connected to several High Sec Regions and has a more neutral policy to neutral players.



Destruction


Trillions
1 Lonetrek 3.0
2 Pure Blind 2.3
3 The Forge 2.3
4 The Citadel 1.9
5 Black Rise 1.6
6 Domain 1.4
7 Tribute 1.1
8 Deklein 1.1
9 Metropolis 1.1
10 Sinq Laison 1.1

In March we saw Vale of the Silent enter the top 10 given a large battle.

In April we now see Deklein enter the top 10 as the battle moves to a home region.  Also, Pure Blind, another home region, storms into the number 2 position with a massive rise of 165% from 865 billion destroyed in March to 2.3 trillion destroyed in April.  In a similar vein, Lonetrek is now the number 1 slot.

War regions aside, we see that Destruction follows Trade - for that, read ganking.

For The Forge, during April there was 686 trillion ISK of goods imported into the Region and 665 trillion ISK of goods exported.  Out of all that, a mere 2.2 trillion was destroyed.  A drop in the ocean really, only 0.2% of all traffic value.  Though annoying if you happen to be amongst the drop.


In fact, all the major Trade Hubs don't see more than 0.2% of their import+export traffic destroyed in March (or February).  Ganking is clearly there but just not the threat it is made out to be.




Deklein

The numbers of a war:
  • Notable that Dekelin saw 228 trillion of exports out of the region in April vs 55 trillion Exports in March.  (Imports were 151 trillion vs 67 trillion in the prior month).  Someone was moving stuff out as quick as you like!
  • Destruction value almost tripled from 410 billion to 1.1 trillion.
  • Mining collapsed 88% from 1.0 trillion ISK to 126 billion.
  • Trade fell 35% from 2.8 trillion to 1.8 trillion ISK.
That's war for you: people leaving; trading falling; mining falling; destruction rising.


Pure Blind

The numbers of a war - almost but more interesting:
  • Pure Blind saw 211 trillion of exports out of the region in April vs 87 trillion exports in March.  However, Imports were 232 trillion vs 86 trillion in the prior month).  So, in all a balance.  Looks like someone was leaving and someone else entering.  I guess that is called a takeover!
  • Destruction value almost tripled from 865 billion to 2.3 trillion.
  • Mining collapsed 81% from 231 billion ISK to only 44 billion.
  • But Trade rose a massive 200% from 1.0 trillion to 3.0 trillion ISK.

Not sure what to read into all that other than someone has moved in big time, destroyed what was there before and is now trading aggressively - perhaps using it as a staging post.



Items of note in the Sinks and Faucets

Buying Skill books rose 21% to 11.9 trillion - which is partly recovering from the fall in March.

We can see the effect of Citadel Blueprints: the spend on Blueprints shot up 566% to 24.8 trillion vs 3.7 trillion in March.

We can also see some of the effect of the new Brokers fees with fees rising 56% to 7.5 trillion (though given the change in Broker fees was introduced at the end of April there must be other explainations).

Net insurance payments (payments to players less premiums paid to NPCs) rose by a massive 31% to 4.5 trillion ISK (on top of a massive 21% to 3.4 trillion ISK in March).  This is despite a 22% fall in bounty payments and only a 2% rise in total Destruction.  So, similar to March we are seeing a much greater use in Insurance for this current war than we have seen in normal times.  I.e. players are taking their ships to war nicely insured rather than out ratting uninsured.

On the Sinks and Faucets data there is a Sink called "Other".  Not sure what it is but in February it had an ISK inflow of 13.7 billion and an ISK outflow of 47.4 billion vs March inflow of 15.3 billion and an outflow of 51.1 billion vs April inflow of 14.1 billion and an outflow of 85.7 billion.  That said, the monthly inflows seem stable at 14 billion though the monthly outflow has almost doubled from February to 85.7 billion.  I am still not sure what this is . . . . perhaps the sum of odds and ends.

Project Discovery fell 12% from 340 billion of ISK to 298 billion.


Items of note in the Money Supply

The greatest inflow of ISK into the game as a % of the prior day's ISK was on 17 October 2014 when 4.9 trillion ISK came into the game (=0.66% of the prior day's ISK in the game).  And indeed 18 October 2014 was the third largest day with 4.1 trillion ISK coming into the game.  Not sure why this would be: Plex went over 800m though that itself would not cause ISK to flow into the game; may also relate to SOMER Blink reimbursing prior deposits (see paragraph below).

That said, in April we had a new top 10 day % inflow when on 1 April 2016 3.8 trillion ISK was generated = 0.39% of the prior day total ISK.

The greatest outflow of ISK from the game occured on 20 August 2014 when a massive 32.7 trillion ISK left the game (=4.3% of the prior day's ISK in the game).  Most likely to do with the banning of SOMER Blink from the game on that day.  To put this in perspective, the next largest outflow of ISK was on 8 January 2016 when 4.8 trillion left the game (=0.52% of the prior day's ISK in the game) - again, most likely due to a banning event: The Latest IWANTISK Ban Wave.  Seems at least to be a pattern to the major outflow days = banning days.

That said, in April we had two new top 10 % outflow days.  27 April was the second greatest % outflow (at 11.6 trillion) and 28 April was the third greatest % outflow (at 5.5 trillion).  I suspect we can map those two days directly onto the 24.8 trillion spend on Blueprints in April (vs the normal 3 - 4 trillion) as Citadel Blueprints were purchased.


Items of note in Imports and Exports

As we would expect the major 5 Trade Hubs and the Regions next to them see the greatest Imports and Exports.  No surprise there, all traffic heading for Jita / Amarr / Dodixie / Hek / Rens.

Looking for some notable items:

  • Deklein and Pure Blind, as noted above, saw large increases in Imports and Exports in April
  • Continuing the trend seen in March, Branch saw a big rise in both imports and Exports.  If i follow the rise in Imports and Exports from connecting Regions then the trail would suggest these imports and exports were coming and going from Venal (not Deklein or Tenal) which in turn looks like it came from Tribute (not Perrigen Falls).  From there it was imported and exported to Lonetrek (and so some onto The Forge).
  • Looking closer at Branch - mining collapsed by 88%; Destruction rose by 13% on top of the March rise of 33%; Trading collapsed by 29%; and Production collpased by 85%.  Branch is right next to Deklein, so likely caught up in the war!

The following look to be war related:
  • Black rise saw an abnormal rise in Imports and Exports - no doubt war related given the position of the region.
  • Essense rise saw an abnormal rise in Imports and Exports - again, war related given the position of the region.
  • Placid rise saw an abnormal rise in Imports and Exports - war related given the position of the region.
  • Tenal rise saw an abnormal rise in Imports - war related given the position of the region.
  • Venal rise saw an abnormal rise in Imports and Exports - war related given the position of the region.

Not sure about these two:
  • Curse rise saw an abnormal rise in Imports and Exports - not sure why that would be.
  • Derelik rise saw an abnormal rise in Imports and Exports, though trading fell 26% - not sure why that would be but i suspect related to Curse given those Regions are next to each other.

Citadels

Only seen two effects so far:

Firstly, the spend on Blueprints rose a massive 566% from 3.7 trillion ISK to 24.8 trillion ISK.

Secondly, the price of Plex fell.  I greatly suspect players and Corporations are selling surplus Plex to fund the cost of the new Citadels - and perhaps the cost of the war.

Wednesday, 27 April 2016

Someone has Blundered

. . . . . . namely me, again.

I was putting up a Sell Order for two Drake Blueprints and I fingers literally trip off my mouse onto the Enter key.



I was aiming to sell for somewhere nearer then 699m mark and ended up selling for 10k each.

A nice loss of 1.4bn.  That was annoying, to say the least.



Now, blundering is all part of the game.  I get that.  And these cheeky Buy Orders are set up to catch such blunders.  I get that also.  CCP is not there to protect idiots.  I get that.  Mistakes are made in Ship pvp, so why not on the market also?  I get that.

That said, there can surely be a mechanism where the Sell Order for any item defaults to the last price I posted a similar Sell Order?  I note this happens occasionally but not always.  Heck, there could even be an additional ISK fee to pay to activate such a mechanism.

It would save me a bundle.  Has been a while since I got a blunder in my favour.

Monday, 11 April 2016

CCP Financial Statements for 2015 - a review

Summary: Revenues remain in decline, record breaking year for profits, record breaking year for profitability, record breaking year for cashflow, balance sheet very strong.

The CCP 2015 Financial Statements were filed at the Directorate of Internal Revenue on 30 March 2016.  I have a obtained copy (they are available to the Public) and discuss them below.

I have filled in the main numbers on my CCP Financials (as published) page to allow a quick comparison of the Profit & Losses, Balance Sheets and Cash Flows of prior years going back to 2008 (i.e. 8 years of numbers).

I have also created new page "CCP hf. Consolidated Financial Statements for 2015"
 that recreates the 2015 accounts as near as practicable to their original form to allow others to take the information and analyse it themselves.


Discussions on implications for Player numbers (i estimate 396,000 + Trial Players) and Plex all below.



A bit of background

Iceland, much like the UK and other countries, requires all companies (both public and private) to file their Accounts at a central authority within a certain time such that they be kept on record and can be viewed by the public.  There are good reasons for this which are beyond this post - but are mainly to do with the fact that a company is a separate legal entity from its shareholders and management.  For the UK, anyone can go online to Companies House, or private websites, and download a copy of any UK company for £1 (free at the moment) - in fact, you could download the accounts of the UK subsidiary of CCP of you wanted.  In Iceland, to get a copy of the accounts you need to fill out a form in Icelandic and, for the required payment, they email you the accounts.

The 2015 CCP hf. Accounts can be found on the website of Directorate of Internal Revenue, click on the "+" sign beside the phrase "
Gögn úr ársreikningaskrá".





And if you brush up on your Icelandic you can find the right form to fill in and the accounts will be emailed to you for a fee.  Note, you need to navigate the Icelandic version of this site (google translated if required), the English version seems to bypass all the company data pages.


As far as i can tell, there are no half-year accounts though i am not sure what the accounts filed on 22.09.2015 (number 415679) were.  I am tempted to check.



And so onto the 2015 Accounts

For the record, I maintained last year that Eve Online is a very profitable, cash generative and low growth game which is standing the test of time (up their with very few other games).  The 2015 accounts show that Eve Online is indeed a very profitable and cash generative game.  The growth matter though remains to be proven for now.


In 2015 we are largely seeing a cleaned up business and so can get a good idea of what CCP (mainly Eve Online) looks like in real life.  There are only a few one-offs which flattered the numbers: sale of World of Darkness added $5.1m of profits and $5.7m of cash; and an equity raise added $30m of cash.


For 2015 the Revenues (Eve + Eve China + Others) were $65.7m vs $68.6m in 2014.  More below, but i estimate that Eve Online (not including China) were $53.7m vs $63.7m in 2014, a fall of 16%, and brings the Eve Online revenues down from its peak of $71.7m in 2013 back to the 2009 level of $51.8m.


That said, this year CCP made a post tax profit of $20.7m vs a loss of $65.6m in 2014 (i estimate that the underlying profits in 2015 were $15.4m once the World of Darkness profit on sale is excluded and the 2014 underlying profits were $11m once i excluded all the one-off write-offs, so still saw good profit growth).  In fact, i have data going back to 2008 and CCP has never made profits of over $12m - so 2015 is a big record year.


Further good news is that CCP generated free cash flow of $14.9m vs $0.2m in 2014, swapped the expensive $20m Convertible Loan into cheaper bank debt and raised $30m to recapitalise the company.  CCP now has net cash of $33.8m vs net debt of $16.0m in 2014.  CCP has never had a stronger net cash position.


Perhaps where CCP has fallen down is how it uses that cash on other projects - and 2013 and 2014 was all about cleaning up that mess (including raising new equity in 2015) - and therefore its lack of revenue growth.  Eve Online revenues are back to below 2010 levels.


In summary, CCP has been cleaned up and has plenty of cash to invest in new projects (fingers crossed!).


A key debate will be if CCP can put Eve Online back onto a growth path, what is CCP going to be spending its cash on and how will Valkyrie do.



Revenues


Full year revenues fell 4.2% from $68.6m to $65.7m.  That is on top of the decline in 2014 of 10.6% from $76.7m to $68.6m.


Eve splits out its Revenues in a number of ways and the trick is to determine the Eve Online part - somewhat easier this year given CCP only had one game in operation:








Very broadly, i believe there are four parts to the 2015 Revenues: Eve Online; Eve China; Other Games and Others.


Given that Eve Online was the only game this year then that would indicate that the Eve Online Revenues were the $53.3m vs $63.7m in 2014.


I have no idea what "Other revenues" of $7.1m are and this did a lot to bail out the overall revenue decline.  It is made up of "Revenue from sale of goods" of $1.1m and "Other Revenue" of $6.0m.  I am reasonably sure this does not relate to the sale of World of Darkness given i suspect the "Profit on Sale" of that business is included in "General and Administration".  That said, i can't for now think what this $6.0m revenues would be - if it proves to be a one-off then we should exclude this $6m revenues and associated profits from our view of the underlying business of CCP.


Within the geographic distribution of Revenues "Other regions" is defined as the Southern Hemisphere hence i believe Eve China is mostly Asia / Royalties & Licenses.  So anywhere between $4.9m and $5.3m.


To make life easier i have assumed that Asia is China and that Asia is included in the "Royalties and Licenses" line, the remaining $0.4m of Royalties & Licenses i classed as "Other Games".  Hence, stripping out "Other revenues" of $7.1m and remaining Royalties of $0.4m leads me to conclude that Eve Online was indeed the $53.3m of revenues in 2015.


No hiding from it, this was a tough year for Eve Online revenues in 2015, worse than in 2014.


In 2015, Eve Online Revenue therefore fell 16%, and that is on top of a fall of 11% in 2014.  Eve Online Revenues peaked at $71.7m in 2013 and now are $53.3m.


I suspect the only growth came from China - all other regions were in decline, a similar story to 2014.



Subscriber / Player numbers


The accounts themselves do not state the number of subscribers or player in Eve Online.


But that is not going to stop us having a shot:


Remember t
hat Players = Paying Subscribers + Plexed Accounts + Free Trial Players.


Also, remember that Plex is only counted as Revenues when it is used - and i am assuming that Plex is only used for game time when it is activated (dangerous assumption, i know).


In 2012 we were told that Plex sales make up 20-25% of revenues and 1 months subscription was $15 vs a Plex of $20.


We were also told in 2012 that there are about 30,000 - 40,000 Trail Players at any one time.


Subscriber numbers (including China) were last disclosed as at 31 December 2012 at 490,000 (351,502 2011, 360,000 2010).  That included China which in February 2013 had 85,959 subscribers and about 84,000 in December 2012.  So lets assume as at 31 December 2012 Eve Online (not including China) had about 406,000 subscribers.


Eve Online Revenues in 2012 were $64.1m vs $53.7m at the end of 2015.  That is a fall of 16%.  If we dangerously assumed that the proportion of Plexed accounts stayed constant then that would indicate that Subscriber numbers have fallen 16% to 340,000 and that they still represented 75% of revenues leaving the Plexed accounts to represent 25% (=$53.7 x 25% = $13.4m).  At $20 a shot per month that would indicate 56,000 Plex accounts and so total players at the end of 2015 of 396,000.  And then add in however many Trial Players there are were.


Alternatively, we could merely observe that in 2009 Eve Online Revenues were $51.8m and in 2010 Eve Online Revenues were $57.4m.  We know that the Subscribers in 2010 were 360,000 (China was not around back then) so that indicates that the above 340,000 subscriber number is in the right area.


As an aside, in the 2013 prospectus to raise the bond money CCP included a chart on "The development of monthly subscribers to EVE (excluding Eve China), as shown below.  I can only assume this is the average monthly subscriber numbers in each year given it does not really reconcile to anything else.




There is one more clue.  In the accounts for Deferred Revenues we have the following:



Now, Deferred Revenues are cash that has been received during the year but relates to sales for future periods.  In other words, subscriptions paid in advance.

The subscriptions paid in advance as at 31 December 2015 were $3.7m vs $4.0m in 2014.  If we assumed that there was no mix change (i.e. the average payment in advance per player was the same in 2015 as 2014) then we can say that the subscriber base fell 7.5%.


If someone could tell me the average payment in advance per subscriber then we could get another estimate of the subscriber base.  




Gross Profits


This is revenues less the direct costs of running the game (servers, employees who run the game such as security, customer support etc).


Gross profits were $61.4m which is 93.5% of Revenues and a healthy level.  Eve Online should cost next to nothing to actually run (there are more costs in coding updates, marketing, publishing etc elsewhere).  Infact, 93.5% is the highest proportion of revenues that Gross Profits have ever been.




Staff Numbers

The number of staff at CCP at the end of 2015 was 330 vs 338 at the end of 2014.  At the end of 2013 it was 508.  2014 was the year of the big layoffs - hence 2014 still carries the cost of those staff.  A far cry from the 603 staff employed in December 2010.


In total, CCP paid $23.8m in salaries (or $29.5m once we add in all the salary related expensions like pension contributions etc) vs $33.1m in 2014 (or $42.5m).



Operating Costs


In total, operating costs came to $40.9m with declines in R&D, publishing, Marketing and General & Admin given no more Dust514 and World of Darkness, and the associated cut backs in staff.


However, CCP states that General & Admin costs were $11.2m vs $19.8m in 2014.  That feels like too big a decline on its own.  Indeed, I suspect that the profit in the sale of World of Darkness in October 2015 of $5.2m is included in here and the actual General & Admin costs are in fact higher at $16.3m.  It would be very unlikely if General & Admin was as low as $11.2m, a level not seen since 2008.


Hence, it is likely that the underlying operating costs were $46.1m which still compares favourably to the $95.8m in 2014 and is right back at the 2010 level of $46.6m.


If i assume this to be the case then operating profits (profits before interest and tax = revenues - cost of sales - operation costs) were $15.4m 
- a new record for CCP - and an operating margin (operating profits as a % of revenues) was 23.4% - another record for CCP.


Worth remembering that this 23.4% operating margin is the Eve Online margin less costs of developing Valkyrie.  That makes the 23.4% quite respectable.  Activision Blizzard generates operating margins of 28.3%.  Hence, for 2015 at least, CCP is within range of the leaders on profitability.


As an aside, i suspect CCP wrote off most of the carrying value of World of Darkness in 2014, so the $5.2m profit on sale ($5.7m proceeds less $0.5m costs) is perhaps quite flattering.



Finance Costs


The $20 convertible bond, requiring interest payments of 7%, was repaid in April and replaced by a new $24m bank loan with interest of LIBOR +4.7%.  So a good saving there: interest costs will go from $1.4m pa to $1.1m.  When comparing to the 2014 Finance Costs, don't forget that there was an accelerated $3m charge to reflect the early redemption of the Convertible Bond.



Tax


The company still has loads of losses to offset against tax, so CCP is not yet paying any corporation tax of note.  I am not sure when CCP will start paying corporation tax (at 20% of pre tax profits).



Profits


After some small currency movements that all gives post tax profits of $20.7m (that includes the one-off profit on sale of World of Darkness of $5.2m).  CCP has not has not seen post tax profits over $10m, let alone $20m, since i have records going back to 2008.  Even if i was to exclude the profit on sale of World of Darkness it would still be a new CCP record.




Cashflows


CCP itself generated cash of $14.9m (free cash flow of $20.6m less the $5.7m sales proceeds of World of Darkness) - again a record based on the data i have going back to 2008.


One-off cash inflows were: World of Darkness was sold in October, it looks like the sale price was $5.7m; $30m new equity was raised in November.


Hence, the $14.9m cash generated by the business + $5.7m sales proceeds + $30m equity - financing costs, put the company into a strong net cash position of $33.8m vs net debt of $16.0m at the end of 2014.  That is the strongest CCP has ever been in.  If anything, CCP may have raised too much equity in November unless they have some grand spending plans for 2016 onwards.



Balance Sheet


Other than what has been said above:


Development costs carried on the Balance Sheet - i.e. costs (mainly salaries) spent in developing Valkyrie and Eve Online releases - were $14.6m vs $13.6m in 2014.  Peaked at $88.0m in 2012, we saw a huge right offs in 2013 and 2014 of $21.5m and $29.4m respectively.  Of last years $13.6m, some $9.3m was expended through the P&L and replaced by $10.1m of new development.  In other words, unlike prior years, the Development cost on the Balance Sheet is being quickly and prudently expended.



Plex


As ever, to get an idea of how much Plex is sitting in hangers we look at the Deferred Income line in the balance sheet.


As a reminder, Plex sales only appear in Revenues once the Plex is used up.  Until then, it sits in Deferred Income.  Also potentially sitting in Deferred Income is any Aurum bought from the Store - but I assume that the purchase of Aurum is used immediately.  See my reasoning in this post i wrote back in September 2014 for linking Deferred Income to Plex price movements.



Looking at the "In-game purchases not yet consumed" line indicates that the US$ value of Plex sitting in hangers has risen from $3.0m to $3.3m.  If we assume each Plex costs $15 then that indicates the number of Plex sitting in hangers has risen from 197.7k to 219.8k (using the same methodology in December 2012 there was 71k Plex sitting in hangers and in 2013 there was 140.5k Plex sitting in hangers).

That indicates quite a slow down in the growth of Plex being bought by players as an investment though still indicates that there is net buying pressure on Plex from those players.



Thursday, 7 April 2016

March Economic Report - a review

The monthly Economic Report for March is out.

In summary: Activity is up, Trading is down


Overall

General activity was higher in March as seen by 11% higher Bounty Prizes, 7% higher Mining and 6% higher Production but Trading activity was down by 14%.  Worth noting that there are 2 more days in March vs February, so we would expect to see everything be about 7% bigger.

Trading fell in all major Trade Hubs by about 15% (except the Hek which fell 8% - more on Hek later).  We can see this also in the 15% fall in Transaction Tax to 8.3 trillion ISK and 19% fall in Brokers Fees to 4.8 trillion.  I suspect that is entirely down to Skill Point trading which burst onto the scene in February and lessened during March.

The amount of ISK sitting in players and corporation wallets rose from 949 trillion to 972 trillion - which was a 33.6 trillion inflow offset by 10.3 trillion leaving the game (players leaving).  There is a decent chance we get to over a quadrillion by the end of March.

The overall numbers to keep everything in perspective for March, all in Trillions: Mining rose 7% to 25.2; Destruction rose 5% to 34.7; Trade fell 14% to 843.0; Production rose 6% to 108.5.


Items of note from Regional Activity

Trade


Trillions
1 The Forge 595.8
2 Domain 97.8
3 Sinq Laison 35.6
4 Heimatar 19.1
5 Lonetrek 14.8
6 Metropolis 14.4
7 Essence 6.3
8 The Citadel 4.8
9 Providence 4.7
10 Tash-Murkon 4.0

No big ranking changes from February.  Business as normal really, Trade Hubs dominating, just at lower levels of ISK.

Perhaps worth noting that Lonetrek (a region next to The Forge) moved higher than Metropolis (Hek) - worth watching that.  I am starting to suspect that Hek may be losing its position as a major Trade Hub.

As a reminder to new players, the main 5 Trade Hubs in the order we know: The Forge (i.e. Jita); Domain (i.e. Amarr); Sinq Laison (i.e. Dodixie); Heimatar (i.e. Rens); Metropolis (i.e. Hek).

In the next 5: the expected Essence and Tash-Murkon are there, known secondary trade hubs.  But also Lonetrek and Citadel (both Regions that are one jump out of Jita) and Providence (null sec space that borders several highsec Regions: Domain / Tash-Murkon / Devoid / Derelik).

The dominance of The Forge reigns supreme though - Jita shows no sign of losing its dominance.  It would be interesting to see how many players have never left the station in the last 3 months!



Production



Trillions
1 The Forge 19.2
2 Lonetrek 13.0
3 The Citadel 12.3
4 Domain 7.2
5 Sinq Laison 4.6
6 Deklein 4.0
7 Providence 3.3
8 Geminate 2.3
9 Vale of the Silent 2.2
10 Metropolis 2.2


In terms of Production The Forge is top slot - makes sense, many people will produce near where they buy the raw materials and/or intend to sell.  I suspect Lonetrek and The Citadel benefit from being next to The Forge and so less jumps to transport raw materials from Jita or produced items to Jita.

Noteworthy that Deklein (home of the CFC) saw a rise in Production from 3.2 trillion in February to 4.0 trillion in March, became the largest non-high sec producer.  I guess gearing up for war or replacing lost assets.

Metropolis (Hek) in danger of falling out of the top 10 - another warning sign for Hek.


Mining


Trillions
1 The Forge 1.7
2 Lonetrek 1.3
3 Domain 1.2
4 Providence 1.1
5 Deklein 1.0
6 Metropolis 1.0
7 Malpais 0.9
8 Cobalt Edge 0.9
9 Everyshore 0.9
10 Oasa 0.8


Nothing of note in the mining - Oasa and Cobalt Edge are new top 10s, displacing Tash-Murkon and The Kalevala Expanse.

The Forge and Domain at the top given being major Trade Hubs - so people mining near where they intend to sell and Lonetrek being next to The Forge and itself a major production Region.

I guess Providence is up there given it is nullsec space that is very connected to several High Sec Regions.


Destruction


Trillions
1 The Citadel 2.5
2 The Forge 2.2
3 Lonetrek 2.2
4 Domain 1.4
5 Tribute 1.3
6 Black Rise 1.3
7 Vale of the Silent 1.2
8 Querious 1.2
9 Metropolis 1.1
10 Providence 1.1

Vale of the Silent is new in Destruction top 10.  No surprises there given the battle reported upon.

Otherwise, at the top of the table we see that Destruction follows Trade - for that, read ganking.

For The Forge, during March there was 786 trillion ISK of goods imported into the Region and 671 trillion ISK of goods exported.  Out of all that, a mere 2.5 trillion was destroyed.  A drop in the ocean really, only 0.2% of all traffic value.  Though annoying if you happen to be amongst the drop.

In fact, all the major Trade Hubs don't see more than 0.2% of their import+export traffic destroyed in March (or February).  Ganking is clearly there but just not the threat it is made out to be.


Vale of the Silent

The numbers of a war:
  • Notable that Vale of the Silent saw 242 trillion of exports out of the region vs 94 trillion exports in February.  Someone was moving stuff out as quick as you like!
  • Destruction value doubled from 674 billion to 1.2 trillion.
  • Mining halved from 637 billion ISK to 307 billion.
  • Trade fell 23% to 2.2 trillion ISK.
I guess that is what a war looks like.  People leaving, trading falling, mining falling, destruction rising.


Items of note in the Sinks and Faucets

Buying Skill books fell from 13.6 trillion to 9.8 trillion, a massive fall of 28%.  In part i suspect that is a related fall off in Skill Trading from February.

Net insurance payments (payments to players less premiums paid to NPCs) rose by a massive 21% to 3.4 trillion ISK.  We would expect rising net payments given the 11% rise in Bounty Payments but this also smells of additional destruction.  However, the Destruction values only rose by 5% - which indicates that a lot more of the ships destroyed were insured in March.

The NPC Commodity market generated a net ISK inflow into the economy of 17.7 trillion in February and 19.9 trillion in March.  Strip this out (which is essentially buying from one NPC and shipping to sell to another NPC) and we would have had a much lower ISK inflow to the Eve economy in both February and March!  In fact, if CCP wanted to reduce the ISK coming into the game to almost nothing then getting rid of this faucet would be a good start.

On the Sinks and Faucets data there is a Sink called "Other".  Not sure what it is but in February it had an ISK inflow of 13.7 trillion and an ISK outflow of 47.4 trillion vs March inflow of 15.3 trillion and an outflow of 51.1 trillion . . . . i am guessing it is the sum of odds and ends.

Project Discovery generated 340 billion of ISK in March.


Items of note in the Money Supply

The greatest inflow of ISK into the game as a % of the prior day's ISK was on 17 October 2014 when 4.9 trillion ISK came into the game (=0.66% of the prior day's ISK in the game).  And indeed 18 October 2014 was the third largest day with 4.1 trillion ISK coming into the game.  Not sure why this would be: Plex went over 800m though that itself would not cause ISK to flow into the game; may also relate to SOMER Blink reimbursing prior deposits (see paragraph below).

The greatest outflow of ISK from the game occured on 20 August 2014 when a massive 32.7 trillion ISK left the game (=4.3% of the prior day's ISK in the game).  Most likely to do with the banning of SOMER Blink from the game on that day.  To put this in perspective, the next largest outflow of ISK was on 8 January 2016 when 4.8 trillion left the game (=0.52% of the prior day's ISK in the game) - again, most likely due to a banning event: The Latest IWANTISK Ban Wave.  Seems at least to be a pattern to the major outflow days = banning days.


Items of note in Imports and Exports

As we would expect the major 5 Trade Hubs and the Regions next to them see the greatest Imports and Exports.  No surprise there, all traffic heading for Jita / Amarr / Dodixie / Hek / Rens.

Looking for some notable items:

  • As noted above, Vale of the Silent saw a sharp rise in exports in March
  • Branch saw a big rise in both imports and Exports.  If i follow the rise in Imports and Exports from connecting Regions then the trail would suggest these imports and exports were coming and going from Venal (not Deklein or Tenal) which in turn looks like it came from Tribute (not Perrigen Falls).  From there it was either imported and exported to Vale of the Silent of Lonetrek (and so onto The Forge).
  • Looking closer at Branch - mining rose by 26%; Destruction rose by 33%; Trading rose by 15%; and Production rose by 21%.  Looks like someone is setting up in Branch (which is right next to Deklein).