LOTRO and Daybreak Game Company
Over the past eleven years The Lord of the Rings Online has faced many business-related issues that has prompted its player base to speculate over the games future. These include the MMOs transition from a subscription to a free to play service, Turbine’s acquisition by Warner Bros. Interactive Entertainment and then there were the issues with the license expiration in 2017. However, all these problems were resolved in one way or another and the game endures. That is not to say that Turbine or Standing Stone Games (SSG) are business geniuses. Absolutely not. They’ve made plenty of mistakes over the years and continue to regularly shoot themselves in the foot with their community relations. LOTRO survives because of its core playerbase who have made this virtual Middle-earth their home and they support the game come hell or high water. A lot of this core group are fully aware of SSGs shortcomings, but they are wedded to this game and hence they sustain it. It’s a curious yet fascinating symbiotic relationship.
Two days ago, Massively Overpowered reported on an interesting situation that has potential to impact upon LOTRO (and DDO) as it is to do with SSGs current “publisher” Daybreak Game Company (DGC). On April 6th, the U.S. Department of the Treasury commenced the freezing of assets of several Russian businesses because of alleged “destabilizing activities” such as interference in the 2016 U.S. election. This includes Viktor Vekselberg, who owns the Renova Group conglomerate along with its subsidiary, Columbus Nova. Columbus Nova, is the parent company of DGC. Renova has until June 5th to “wind down operations, contracts, or other agreements” according to The U.S. Office of Foreign Assets Control. Approximately $1.5 and $2 billion assets from Vekselberg have been frozen because of these sanctions. It now remains to be seen whether this process extends to Columbus Nova’s assets and DGC. At present, DGC is trying to distance itself from Columbus Nova. Tweets and press releases are being deleted and Wikipedia entries are being “edited”. Yesterday, DGC’s Chief Publishing Officer and former Senior Vice President, Laura Naviaux, announced she’s left the company.
Naturally, those who play EverQuest II and PlanetSide 2 are “concerned” as to whether this situation will impact upon these games as they are owned by DGC. Which then brings us back to the LOTRO community. It has naturally got wind of the situation and players are asking SSG for clarification on the games official forums. Naturally, SSG are being tight lipped about the matter using marketing speak to brush concerns aside. Putting the potential gravity of the situation aside for the moment, most businesses are smart enough to keep details of their internal machinations behind close door, so it’s highly unlikely the current community manager Jerry “Cordovan” Snook, is going to go public and spill the beans as to what’s going on. Some players are adamant that DGC is simply SSGs publisher and even if there is a problem, it’s just a case of finding a new one. Certainly, on paper DGC is SSGs publisher and further details about the business relationship between the two is not clear. However, history doesn’t always favour the “wait and see” approach and there is nothing wrong with some intelligent and measured speculative analysis of the situation.
The potential for this matter to affect LOTRO depends on two key factors. First off, is DGC directly linked to Columbus Nova and therefore at risk of having its business assets frozen? This is ultimately one for the lawyers to decide but it is curious that DGC’s Chief Publishing Officer has chosen now as a time to make a career move. It could be coincidence. If further senior staff resign, then perhaps that may be a clearer indication that the company is at risk. There is also plenty of company information in the public domain these days that allows even the layman to remain informed. If we see any movement of corporate assets to outside of the US, then again it may be a clear indication that DGC is subject to The U.S. Office of Foreign Assets Control.
The second point to consider is the exact nature of SSGs relationship with DGC. Many games journalists and gaming community commentators have suspected right from the outset, that DGC was more than just a publisher for SSG and that they bankrolled their entire extraction from Turbine/Warner Bros. in late 2016. In a recent interview with with Jean "Druidsfire" Prior for MMO central, LOTRO Executive Producer Rob Ciccolini AKA Severlin stated that Jake Emert is his direct boss. Emert is CEO Daybreak Game Company Austin Texas Studio. Such a statement certainly puts DGCs status with SSG in a different light. When you consider the whole matter of how staff from Turbine set up their own company, then bought the rights for DDO and LOTRO, as well as the infrastructure and then settled all associated legalities, it must have taken a substantial amount of capital. I am not aware of SSG having raised that money themselves, which therefore means there must have been a major investor involved. It is not unreasonable to suggest that DGC was and remains that investor.
If both of these points are correct and that DGC underwrites SSG and is in imminent danger of having its assets frozen, then there is scope for problems in the weeks to come. And it is at this point that there is less data available to speculate upon. What exactly would be the consequences of removing DGC from SSGs business plan. How easy would it be to find a replacement investor? Would there be a one who was interested and readily available? Would there be a disruption of service to both LOTRO or DDO or would it be worse than that? Or are there caveats in the fedral asset freezing regulations to prevent collateral damage such as this hypothetical scenario? At present there is insufficient information for any of us to know definitively what is going on. However, if we reflect upon information that has emerged from former Codemasters employees about the business practices surrounding LOTRO, we can be assured that both the grass roots staff and the playerbase are always the last to know what is really going on. I’m sure in the meantime, LOTRO players will continue with their activities as usual and quite right to. It is however a worrying situation and it would be foolish to ignore the matter out of hand.