This post is part of The Northstack Memo, a newsletter analysing the tech and startup scene in Iceland.
The CCP Sale
As most of you probably know, Eve Online creator CCP was sold to Pearl Abyss last week, for a $425m in total. Pearl Abyss, a seven year old South Korean gaming company, will keep CCP operating as a standalone studio (for the time being at least).
Several things to unpack here.
First off, it finally happened. There’s been sale rumours surrounding CCP for a very long time. The most recent rumours reached their peak with a hint in Bloomberg, where then VR-leader CCP (they’ve since shuttered VR development), was apparently looking at a $900m+ price tag. Whether or not those were actual talks or not, we’ll probably never know, but it’s fair to say that this lofty price tag was connected to the VR hype of the time.
Second, as the price suggests, unlike most recently acquired Icelandic companies, this acquisition is not an acquihire or tech play, but a business that’s being acquired. Other exits, like Greenqloud, Clara, Datamarket, and more, were all focused on product or people, but never business (that is, revenue). So this acquisition not only shows that we can build cool stuff and great teams in Iceland, but also that there are viable, international businesses that can come from here.
Third, all press regarding this, whether it’s from Pearl Abyss’ CEO Robin Jung or Hilmar Veigar of CCP, mentions that operations in Iceland will continue. It’s almost mentioned too much. Also, people speaking on behalf of the company mention that Pearl Abyss had looked at the government’s plan on removing the ceiling on R&D tax incentives in Iceland when considering the sale. This not-so-subtle hint-hint, nudge-nudge to the government hopefully drives the point home: Iceland needs to be competitive when it comes to tax incentives, because if not, companies leave.
Fourth: the price. $425 million is the highest price paid for an Icelandic technology company ever. The next in line would be the price Amgen paid for Decode in 2012 ($415m). And in typical Icelandic fashion, media immediately started calculating how much money each and every person involved would now be worth (spoiler alert: they’re all doing it wrong). Also, in typical Icelandic fashion, no one really mentioned that part of the price was tied to performance. A big part. A $200 million part. Which is completely understandable, as Pearl Abyss is buying into a cash-cow (Eve Online), probably hoping that the company’s connections in the far east will help Eve grow there, so earnings-related performance ties are completely normal.
The (second?) birth of a gaming sector?
Looking at the news from a higher vantage point, I would make the case that we’re experiencing a birth of a gaming sector.
I know, we’ve had gaming companies before – and when I mentioned this idea to people more experienced than me, I was reminded of a similar time not so long ago when companies like Gogogic were all the rage – but this year alone four gaming companies received their second (or later) round of funding, totaling around $13m, with most of the money coming from leading gaming investors.
Now, I’m not known to be a cheerleader, and don’t want to sound like one, but if at any time we had hope in creating an actual gaming sector, with more than one company consistently turning a profit, developing internationally acclaimed games, attracting talent and creating value for the ecosystem, I’d bet that now is that time.