Crunch harder, daddy

Market cap = Stock evaluation, which is what I explained. It is not profit or revenue. It's what they could sell their stocks for right now. Like I said, I don't think we will get anywhere since you obviously didn't read what I wrote anyway lol.

Have a good one.

@oursin_360: Do you seriously not understand corporate financing? Market cap, or the total price of all stock for a company can be used as collateral to secure bridge loans, or the company can do a new round of stock issue to generate cash from new investment. They remain in a strong position (again, as of August 2020) to continue funding the development of Cyberpunk for for far longer than they are planning to now. And given that 2077 remains one of the surest bets for monstrous sales in the industry, it will not put the company at risk to push out the release date to early 2021 to ensure bug fixing happens without crunch. This is a choice, one that puts the desires of investors over the welfare of workers.

And that assumes they are even having cash flow problems. The clear trend in the industry this year has pointed to increased sales and profits due to people being stuck inside. I see no reason why CD Project Red would be any different, especially given the market's bullish position on their stock.

@oursin_360: I will say, the head of a company is hardly the most trustworthy source of information when it comes to promised bonuses.

For example, different company -- Gearbox promised employees that they would receive large bonuses based on the sales of Borderlands 3. Historically, Gearbox has lower salaries but higher royalties from the game sales for the devs. Borderlands 3 went on to sell 5 million copies in 5 days, but the employees received much smaller bonuses than promised by Pitchford. The inflated expenses of switching from UE3 to UE4 mid-development, plus a clause from Take Two saying the game had to recoup the expenses of development before Gearbox received royalties, were cited as the reason, but legitimate or not -- just because a company says they'll give a bonus of a certain amount, does not mean they'll actually follow through.

@theoracleofgame: I mean randy pitchford is kinda of a renowned PIS though so I'm not just going to put everyone in the same box. I mean, he could be lying i guess but I doubt it.

@navster15: I'm not the most versed in it no, but aren't bridge loans only applicable before a company turns public? If they want to issue new stock then I'm guessing it would have to be approved by the current investors, and the CEO can't just do that right? I will admit I don't know much about reissuing. I highly doubt they'd do that anyway just to avoid a few weeks of overtime, that could completely dilute the stock right?

@oursin_360: A company can take out loans provided they have the collateral to do so. What that money ends up funding is basically irrelevant as long as their credit is good. A “bridge” loan is just a way of saying the money is used to cover expenses temporarily and will be repaid in short order. And yes, issuing more stock would dilute shares, which comes out to shareholders putting there own interests ahead of workers, the very essence of unsustainable capitalism.

But that’s getting in the weeds when it’s unclear that they even need new money to keep going. Which, if we’re going by CDPR’s own reporting of their 2020 revenue, is up 70% year on year (https://www.cdprojekt.com/en/investors/result-center/). So maybe before spouting off about how I’m making assumptions, maybe back your statements up with facts.

@navster15: I apologize for triggering you in some way with the word "assumption" but assumption to me means, i have no clue what their current costs are, what their current profit margins are, or any other issues they may be having since, so I can't assume they are just screwing over their workers. Here is what I said

@oursin_360 said:

I'm honestly not sure why you got so triggered by this, and again I apologize for that, but I don't just assume this is some corporate greed when they are going to be compensated fairly. The only fact I can post is the company's word though, so if they don't not do that then you have a point. But I'm not going to assume they are lying about it.

Anyway, revenue, stock price does not account for costs, profit margins. We have no clue what is actually going on right now, and anything else is an "assumption". I'm not calling you wrong or even trying to argue anything honestly, just saying it is an assumption that I didn't want to make based on the information I had (and have now).

I think there was some miscommunication here, so I will end this convo here as I think we've wasted enough time already.

@oursin_360: Yes we actually know their entire financial situation. They are a publicly traded company and the full quarterly report is actually in the link I provided above. All indications, including profit margins after cost is taken into account, shows a very strong financial position and a capacity to carry on development for the foreseeable future. This data is disclosed by the company, who are legally obligated to honestly report their financial position. I think we can take them at their word that they are doing just fine financing Cyberpunk’s development.

@navster15: I'm sorry to butt in on your debate but looking at this financial data I don't see where you are coming from. Their operating income is listed at 33 millions euros, with a cash flow of 25 million euros. They have short term liabilities totaling 70 million euros, and total liabilities well in excess of 100 million euros. Now I'm no investment banker, but a short term liability normally refers to a cost due within the next financial year. With a cash flow of 25 million, and a negative cash flow for FY2019, I don't see how they could take additional loans without putting the future of the business in significant jeopardy. Even now, with liabilities totaling significantly more than their last five years of income combined, they are banking the business on Cyberpunk's success. Their liabilities currently total over a third of their assets, meaning should Cyberpunk be a failure they would likely have to dramatically scale back their costs. And even if it is a major hit, with additional loans to pay it would be unlikely they would be able to maintain their current staffing levels. So I really don't see how you can argue that they have any choice but to do this. And note that a significant amount of those loans could be coming due in the next quarter, meaning they could literally not have the cash on hand to continue without putting this game out.

There's certainly a subtle irony in being forced to work overtime on a game called Cyberpunk. A genre who's themes and motifs often focus on a dystopian corporate future. Can't wait to start my corpo run in CD Projekt RED's corporate headquarters.

@raven10: Net cash is operating expenses minus short term liabilities (among other things, including the financing of long term liabilities) and is baked into the profit cake of financial reporting. They are making their 1st half profit while still taking into account short term liability. The listed short term liability simply is projection of what their costs are going to be in the next 12 months. Given current profitable trends, they have plenty of cash flow to cover it (and the market seems to agree, seeing as they are hitting record market cap), and their strong market position would make long term liability financing a breeze for even a six month delay.

And I’m not sure how them losing money in 2019 matters much now. My entire contention is that they are in strong financial position in 2020, and they are still doing mandatory crunch. I see nothing in the financial statement that contradicts this.

This is a more than a little condescending to anyone but single men, isn't it? You realize you're making all of the same points Jordan Peterson makes that he claims explain the gender pay gap, except your conclusion is to change the rules and stifle ambition for everyone because of "those darn hard young working males."

We need more diverse and inclusive video games, but we need to get there through rewarding companies that seek out and provide more opportunities that prove what should be obvious; that women and those with untraditional gender roles are fully as capable as men, *not* lowering standards because they aren't.

@north6: First off, I don't agree that workers demanding to work sane hours is in any way "lowering standards". There's a difference between working hard and being a doormat for mandatory overtime, unless you are for a labor market with a race to the bottom on employee standards. In which case, enjoy your capitalist dystopia I guess.

And all I'm doing is acknowledging that women are to this day taking on more than their fair share of child rearing: https://www.theguardian.com/lifeandstyle/2019/aug/04/men-women-parental-leave-impact-career

But ok, let's make it so women can choose between a career in games or have children, not both, and let's conveniently ignore that some of the highest rated games coming out of Sony are about fatherhood. Even partnered women without children shoulder greater housework burden: https://www.nytimes.com/2020/02/12/us/the-household-work-men-and-women-do-and-why.html

Alright, let's only fight for single, childless women, or the few women who are partnered and have partners that split housework fairly or takes on more of that load. How many are left? And more importantly, how many are left that want to feed themselves to the woodchipper of crunched game development (plus having to deal with rampant sexism). Given the current state of the industry, I don't see many taking up the offer. Plugging our ears and not listening to the statistics isn't going to improve anything, and the neo-liberal worldview of who meets your insane standards isn't going to help either.

And not for nothing, I am a project manger by my career, and I have never seen good work done at hour 60. It's always full of mistakes and cut corners that only leads to rework. It's spinning wheels for no one's benefit. Better to staff up or reschedule, every time.

Interesting discussion. I'm not knowledgeable enough about the industry to say whether the crunch is necessary in the short-term for these companies to stay afloat. But I am curious about the extent to which having so much content translates to more sales. For me personally, I would rather games be shorter in general so that I can get the complete experience without so much time investment. I liked what I played of the Witcher 3, but that game is enormous and I will never finish it. I feel like you could cut half of that content and it would still be worth the $50. Or do gamers care that much about the overall length and $/hour ratio that sales would suffer tremendously? I am assuming that 2077 also has a huge amount of content, and it doesn't seem unreasonable to make the scope a bit smaller and put out some of the content later as DLC. It must be frustrating for devs if they put so many hours into content that only a small portion of the players ever see.

I do hope to see more unionizing in the industry. With more collective bargaining we will see whether the companies can actually afford to compromise or not.

@navster15: Sorry I am a month late in seeing that response. I will reiterate that I am not an expert on these things, but my understanding was that cash flow in regards to investments referred to either new investments taken or payments to previous investments that were paid within the reporting period. Meanwhile short term liabilities list those liabilities yet to be paid but that will be due in the following fiscal year. So their positive cash flow indicates they had 25000 Euros of income greater than their liabilities paid in H1 2020(in addition to long term investments and other costs). Their cash flow from activities though only totaled 64000. A large portion of that uptick came from additional sales of The Witcher series generated from the series' premiere on Netflix. You'll note that it was an increase of over 6x the result of the previous year, something you wouldn't normally see without any new product releases. So it is not beyond belief to expect H2 results without Cyberpunk to not exceed 70000 Euros. Now it is possible that the liabilities come due in H1 2021, which would allow for additional delays without taking on additional debt, but with 25000 in cash gained, and no indication of previous short term investments coming due, a result of around 40000 Euros in activity cash flow would leave them with 65000 Euros in cash on hand and potentially 70000 Euros in payments. Now obviously they could take on additional debt in order to pay down the current debt, but I would suggest that it is not great financial advice to take on additional debt when your corporation has not released a new product in half a decade, especially in a period of economic instability where the reliability of obtaining large amounts of long term debt is uncertain.

Of note, I mentioned their previous results to point out that they did not have a record of positive cash flow, indicating that is might be difficult for them to take on additional debt as they had already spent some time taking on more debt to pay off previous debt, and were several years behind on their scheduled releases. If I were a banker in a very tough economy, I might not want to take a chance on a company whose chief product had been delayed a half dozen times, or at least I wouldn't provide them with very good rates.

@raven10: Look, I’m tired of discussing this, so I’m not going to get into the dollars and cents discussion yet again. I’ll just say that maybe consider that CD Projekt Red has been incredibly profitable in the years since The Witcher III’s release, and responsible corporate stewardship would have meant that they would have money in the bank to weather any cash flow issues. If they are in the position of going into debt financing to keep going after many quarters of surplus, perhaps by squandering the surplus on executive bonuses and salaries (the head of the company is a billionaire), then I simply don’t have sympathy for CDPR’s board. They are expecting their workers to go well above and beyond while executives remain fabulously wealthy. If you’re going to continue to break down cash flows like this to justify what’s going on, I think we just have fundamentally incompatible world views and so I’d rather not continue this conversation.