Eve Online developer’s financials take a major dive into the red

The cancellation of the World of Darkness has reversed CCP’s financial fortune — and then some.

In its latest financial presentation, the Icelandic developer reported a loss of over $21 million for the 2013 fiscal year, a stark contrast to its $4.6 million in profit in fiscal 2012. The main cause of the sudden dive is a drastically increased research and development expense year-over-year — from $16.5 million to $56.5 million. Some of this $40 million spike must be from development costs of its properties: the space sim Eve: Valkyrie (still in development), the massively multiplayer online game Eve Online, and the shooter Dust 514. But according to Gamesindustry.biz, analysts think most of it consists of lost value from World of Darkness, a vampire-themed massively multiplayer online game that CCP canceled yesterday.

All this happened despite revenue rising from $56.3 million in fiscal 2012 to $76.7 million in fiscal 2013.

The following statement from the full financial report provides evidence for this theory:

“During the year the company assessed its capitalized development assets and determined that a portion of those assets would likely not have future economic benefits. IAS 38 requires that such assets should be derecognized and removed from the balance sheet. The expenses related to the derecognized assets are presented as part of research and development expenses in the statement of comprehensive income.”