SRL Archive - RuneScape News and General

The financial statements for Jagex were released, and they don't look so great.




http://www.insidermedia.com/insider/central-and-east/126853-profits-plummet-online-games-giant-turns-focus-investment/

Full-year revenues and pre-tax profits have plummeted at the UK's largest independent developer and publisher of online games.

But Cambridge-based Jagex, the maker of RuneScape, said it was positive about the future and praised the performance of its flagship game, adding that the team finished the year "on a high".

According to the financial accounts for the year to 31 December 2013, Jagex reported operating profits of £944,833, a significant drop from £9.7m the year before.

Gross margin has decreased from 45 per cent to 31 per cent, re?ecting the bigger investment in talent during the year. Headcount increased from an average of 472 to 515 in 2013 financial year.

Pre-tax profits slipped from £9.8m to £968,123.

This was on the back of a decline in revenue - from £53.1m to £46.5m. Game income, which includes both subscription and microtransaction sales, fell from £52.3m to £46.1m, while advertising revenue declined from £735,118 to 332,496.

But other income, which includes revenue from advertising and the sale of merchandise, rose from £27,907 to £89,537.

A statement by company secretary R Hodgson said: "During the year the company focused on its two leading titles RuneScape and Transformers Universe and decided to pause the expansion of the Third-Party Publishing division to ensure the two main games were prioritised above other activities.

"Revenue decreased in comparison to 2012 but the management team is pleased with the current underlying game engagement and community sentiment going into 2014, which is stronger than the same period in the previous year.

"The landscape is continuing to be very competitive but the group is positive about the future, given the successful engagement with the RuneScape community and the upcoming launch of Transformers Universe in the coming ?nancial year. The company made the decision to invest further in Transformers Universe and extend the launch date into 2014."

they don't look so great indeed

How can a company with so many people operate with a profit of only ~$1.500k?

It would be interesting if they separated subscription profits and transaction profits. I suspect they're trying to get more money from less people.

From: Robert
How can a company with so many people operate with a profit of only ~$1.500k?

Profit is minus salaries.

From: masterBB
Profit is minus salaries.

Oh gotcha, but that's still not much considering how much their putting in and the size of the company

Operating profit gives little insight into their profitability as it's aimed to be as low as possible for tax purposes. You'd to know how they spent their money to make any worthwhile judgements (imo).

& did anyone notice that they paid almost nothing on that <1M that they reported? (looks like 2.4%)
dem charitable contributions ^_^

From: Jake
The financial statements for Jagex were released, and they don't look so great.

It looks worse than it is really. if you watch closely you will notice the following:

2012 revenue 53.1M and 9.7 M Profit

2013 revenue 46.5M and 1m profit.

they had a decrease of 13% in revenue, but a 90% decrease in profits.

Conclusion, they are having a small-medium decrease in revenue, but spending A LOT more money (thus less profit) . it may have lots of reasons… Development of the new transformers game? increasing the pay rol because of Old school? preparing for growth that did not happen?

i mean, with this data, there is not much you can analize really since you are lacking lots of important factors to be taken into account!

How the hell have their profits from microtransactions gone down? That's all the game is anymore.

From: KeepBotting
How the hell have their profits from microtransactions gone down? That's all the game is anymore.

"jagex's profits plummeting" could be a little misleading as a title, it's not about the current year(2k14), it's comparing 2k13 to 2k12.

So we're going back to the time around the eoc update, which came in at the end of 2k12, and that obviously had a large [negative] impact on 2k13's revenues.

this is good click bait but posts like this are really misleading.

jagex prioritized paying down liabilities, it's debt ratio improved by 11%.

operating profit is also preferred to be declared as low as it can be in order for pretax income to be low.

we also don't get to see a YtD retained earnings account so we don't even know how solvent jagex is.

you don't get the full picture just by pointing out some accounts decreased dramatically.

I couldn't really understand this, their profit dropped almost 10 times, but revenue only dropped 12%, so it means their cost of operation has increased drastically? there's only about 10% increase in headcount so where did the majority of money go? Extensive advertising/infrastructure improvement? Or like the above mentioned, they used the majority of the revenue to pay debts? (i didnt even know they are in debt…why were they in debt in the first place?)

From: riwu
I couldn't really understand this, their profit dropped almost 10 times, but revenue only dropped 12%, so it means their cost of operation has increased drastically? there's only about 10% increase in headcount so where did the majority of money go? Extensive advertising/infrastructure improvement? Or like the above mentioned, they used the majority of the revenue to pay debts? (i didnt even know they are in debt…why were they in debt in the first place?)

Just because they pay their debt doesn't mean they are "in debt".

In (every?) business there will always be creditors and debtors. Most things that businesses buy from each other is not performed with cash. They normally get invoices for the services, etc. These are called debts, liabilities, etc depending on who taught you accounting and how much you remember. Some debts are big, like a mortgage on a building, or new equipment. Those can be paid off over longer periods of time. So if they all of a sudden decide to pay down their debts, or incur more debts through upgrades etc, then their revenue will go down.

None of the financial data provided gives me any reason to worry. Several good posts above mention the biggest problems with the small amount of data. Jagex made nearly the same amount of revenue, but much less profit. If they invested the revenue in something worthwhile, then it really doesn't matter (to me) if they make $1 profit or $1M profit, as long as they stay out of the red. Serious investors might care some because dropping profit might be an indicator of bad things, but it's impossible to say with only the information provided.

(I took a couple accounting classes in Uni so probably most of my terminology is awful)

From: 3Garrett3
Just because they pay their debt doesn't mean they are "in debt".

In (every?) business there will always be creditors and debtors. Most things that businesses buy from each other is not performed with cash. They normally get invoices for the services, etc. These are called debts, liabilities, etc depending on who taught you accounting and how much you remember. Some debts are big, like a mortgage on a building, or new equipment. Those can be paid off over longer periods of time. So if they all of a sudden decide to pay down their debts, or incur more debts through upgrades etc, then their revenue will go down.

None of the financial data provided gives me any reason to worry. Several good posts above mention the biggest problems with the small amount of data. Jagex made nearly the same amount of revenue, but much less profit. If they invested the revenue in something worthwhile, then it really doesn't matter (to me) if they make $1 profit or $1M profit, as long as they stay out of the red. Serious investors might care some because dropping profit might be an indicator of bad things, but it's impossible to say with only the information provided.

(I took a couple accounting classes in Uni so probably most of my terminology is awful)

You know I've never worked on a gaming company before… does anyone know what actually goes into their COS? Also I assume those financials are audited/consistent with IFRS? Anyone know? B/c if it's another method of accounting those balances mean nothing to an average Joe

as garret said, nowadays having debt is part of the bussiness. Almost EVERY single succesfull company has debt, so there is nothing to worry about that, its part of the new way of making bussiness!

From: Ashaman88
You know I've never worked on a gaming company before… does anyone know what actually goes into their COS? Also I assume those financials are audited/consistent with IFRS? Anyone know? B/c if it's another method of accounting those balances mean nothing to an average Joe

I've never heard of a special method that they would do accounting, but if there is I would love if someone could shed some light on it. I assume they just have a LOT of labour and expenses associated with servers/other hardware upkeep. But I'm pretty ignorant into how the whole development process goes.

From: undorak7
as garret said, nowadays having debt is part of the bussiness. Almost EVERY single succesfull company has debt, so there is nothing to worry about that, its part of the new way of making bussiness!

Keep in mind that most of these companies don't carry or even use 'cash' to pay for anything. Big purchases will normally be covered with loans, and those loans are paid down as "debt". Any company carrying cash is wasting it, because they would be better off investing it. As long as you have enough assets to stay solvent and liquid then you're good to go. (in an overly simplified explanation).

After further searching, I found their a fully detailed Balance Sheet, Income Statement and Other, Audited by Deloitte for the past 2-3 years.
Long Screenshot http://i.imgur.com/iMH0p5e.png
Taken from this site https://www.duedil.com/company/03982706/jagex-limited/financials
Its a pay-wall site, Firebug removes all the log in stuff.

From: 3Garrett3
snip

From: Ashaman88
Ysnip

This is extremely interesting, thanks for posting I always wondered but never came up with anything during my search.
I wonder what microtransactions will be at in a year

Just an update, their long-awaited game of "Transformers: Universe" which they invested millions in, is now totally scrapped.
So again, another indication that their management of funds into these "new" games are honestly not worth it. (FunOrb, 8Realms, AceOfSpades, etc)

http://www.eurogamer.net/articles/2014-12-16-hasbro-and-jagexs-transformers-universe-to-close-down-next-month
http://tformers.com/jagex-to-shut-down-transformers-universe-on-january-31st/25415/news.html

From: Jake
Just an update, their long-awaited game of "Transformers: Universe" which they invested millions in, is now totally scrapped.
So again, another indication that their management of funds into these "new" games are honestly not worth it. (FunOrb, 8Realms, AceOfSpades, etc)

http://www.eurogamer.net/articles/2014-12-16-hasbro-and-jagexs-transformers-universe-to-close-down-next-month
http://tformers.com/jagex-to-shut-down-transformers-universe-on-january-31st/25415/news.html

Hasbro, on the other hand, "intends to pursue alternative digital gaming opportunities" for its robots-in-disguise franchise.

What does this mean? jagex working with botters? Or did i get this wrong?

Edit: Looked up and its whole different thing :duh:. But anyways maybe after this painfull mistake hopefully jagex will rething stuff it is doing with runescape and maybe will make it more enjoyable. Maybe they will value it more than did before and will really think of getting it better fixing unusefull skills, economy, combat system instead of farming people money more further and ruining game to the point they need to shut runescape too. If jagex learn from their mistakes thats good news, but its hard to believe that because in the past experience jagex never did good decisions before….But.. maybe this time since its a huge loss i think they will reconsider their strategy with runescape, well atleast there is a chance of jagex doing that unlike before. Atleast they will have their focus gone from transformers so will focus on something else, hopefully runescape. Good news in general:biggrin:.

From: Jake
"Transformers: Universe" which they invested millions in, is now totally scrapped.

I think this just goes to show what kind of "development" company we're dealing with, if you can even call them that. To-date, every single project Jagex has launched has been an utter failure, every single one. The lifeblood is, and always has been Runescape, and they didn't create it, they're just standing on what the Gowers built.

Not only that, but they have been successful in dropping their RS player base as low as 10% of previous highs, to now about 25-30%. They have alienated the biggest part of their once-loyal community, (one of the most loyal I have ever seen) while simultaneously helping usher in a new generation of AFK gamers. When I first started playing in my early 20's, RS was brand new. A couple years on and it had grown exceptionally well, but it was the kind of game you didn't dare talk about playing outside of very specific circles or you opened yourself to massive trolling and flaming. Now they have increased their price point to a place where, looking from the outside, would appear to be a few steps below WoW, LoL, and the other huge games, but it's just not the case. If it weren't for bonds there is no way in hell I would pay the membership fees for RS, it's just not worth it.

They have failed at every outside venture they have attempted, and they have damn near destroyed their one shining beacon of hope. If I was an investor for Jagex, I would be very afraid of what the future holds for such a poorly run company. I truly hope that now that MMG is gone, we can get some semblance of an epic game again, but I'm not holding my breath. MMG drove this game into the dirt, and I'm honestly not sure if it can recover. It may be a valid game for quite a few more years, but I doubt it will ever be the giant it once was.

The day Jagex begins to work with botters, is probably the day we might see a second jacmob get hired to their staff :p

From: cosmasjdz
What does this mean? jagex working with botters? Or did i get this wrong?

From: Jake
Just an update, their long-awaited game of "Transformers: Universe" which they invested millions in, is now totally scrapped.
So again, another indication that their management of funds into these "new" games are honestly not worth it. (FunOrb, 8Realms, AceOfSpades, etc)

http://www.eurogamer.net/articles/2014-12-16-hasbro-and-jagexs-transformers-universe-to-close-down-next-month
http://tformers.com/jagex-to-shut-down-transformers-universe-on-january-31st/25415/news.html

I had a chance to play Transformers… it was awful and the staff didn't listen to ANY of my criticism. Myself and a friend who have been playing MOBAs for a few years now and FPS games competitively back in the day gave some tips and ideas about the game but they rushed us out when we were complaining about the lack of role security in the game. You could dive in and out of being a transformer while shooting which negated damage because you were in your transforming stage. There was no momentum, the maps were awfully buggy. I didn't know who was who at some points because the skins messed up the roles. There was no strategic placement… the map literally had no choke points etc.

It was awful and the fact they didn't listen made it worse. Told em I wrote botscripts for their failure of an MMO and I hope that Mod Harriet got my mod edit:love. (She unbanned me because I flirted with her).

Just sayin

That's a huge profit loss in just a year, poor buggers haha

I blame EOC for those losses. They lost hella players, as well as botters willing to pay for their membership.

From: Triblouge
I blame EOC for those losses. They lost hella players, as well as botters willing to pay for their membership.

Eoc is fine, they fact that they forced players to use it when there was really nothing wrong with the current implementation was the problem. Now that you can use legacy mode it has helped soften the blow….

Jesus, those are some scary loses. someone is getting fired and someone is pulling their hair over these numbers

Looking at the in depth accounts I find that they've done pretty well this year. Let me point out why.

After tax profits may have been substantially lower than the year before, however if you look at their loans, debtors, stock, assets etc they have all improved even shareholders were given more money this year. What does this tell me? Although the recorded profits are very low what has happened is Jagex have decided to pay off some of their debt whilst at the same time invest in some stock and assets. Jagex is being run in a fit and proper way and the shareholders are receiving more money than they usually do. Hats off to Jagex, eventually those debtors will come knocking so you may as well pay them off while you're on top rather than wait until the company really is going into the shit. So in short they have used a lot of the profits that year to pay off some debt and invest in stock and assets while giving the shareholders a payday.

its because of eoc all the old players have quit.

From: Sajon
its because of eoc all the old players have quit.

Perhaps.. But as others have stated they spent a lot of money during 2013.. Unless jagex comes out and explains exactly what they spent their money on we can all only speculate. (Perhaps it was server security enhancement? all the goofy/retarded 'community' videos where they would hire payed actors/editors/directors to make?, producing and then cancelling projects and sometimes even starting again from scratch to cancel again?).. No 1 knows.

Hopefully the game just dies and every one gets cured of their addiction and quits video games forever.

From: samerdl
Perhaps.. But as others have stated they spent a lot of money during 2013.. Unless jagex comes out and explains exactly what they spent their money on we can all only speculate. (Perhaps it was server security enhancement? all the goofy/retarded 'community' videos where they would hire payed actors/editors/directors to make?, producing and then cancelling projects and sometimes even starting again from scratch to cancel again?).. No 1 knows.

Hopefully the game just dies and every one gets cured of their addiction and quits video games forever.

Weren't they working on a transformers game?

From: Tristana
Weren't they working on a transformers game?

Well this should explain a lot (taken from the wikipedia page):

Transformers Universe was a third person multiplayer online battle arena game developed by British game develop Jagex Games Studio in partnership with American toy company Hasbro. The game was officially unveiled at Botcon 2011,[1] the game went in to closed beta in March 2014[2] and entered open beta on July 4, 2014.[3] The game shut down on January 31, 2015.[4]

I am pretty sure Jagex bought the transformers universe IP or at least owned the majority of shares in it - but it wasn't their own naturally born/built/enhanced projec.
When you look think about it.. Jagex haven't released a single A/Double A game - stand alone game since Runescape 2.. Fun-orb wasn't their own IP either and i think they eventually sold it off…

Imagine for a moment here a big mega gaming company not producing a video game for 11+ years.. The duke nukem forever game pretty much had the same life cycle.. and i dont think Runescape 3 counts as a 'new game' its the same game as Runescape 2 - just worse.

So secondly imagine a big company investing 50 million dollars in a game and then just not releasing it or releasing it then cancelling it due to (????????) god knows what the heck goes through jagex's managements brain cells and sub-conscious mind.. (The first crysis game cost about 50 million dollars to produce and publish in 2007, that was a mega budget back then, imagine if they spent 45 millions on creating but took the other 5 million that should of went into advertising and starting doing all this sort of retarded videos instead and giving themselves bonuses/fruit baskets for no reason? the game would of obviously flopped.. I Know lots of money was pumped into advertising for crysis.. So yeah just an example).

Jagex lol

From: Triblouge
I blame EOC for those losses. They lost hella players, as well as botters willing to pay for their membership.

EOC was their ploy to become more relevant with most MMO games and their styles. It sorta worked for newer generation but the nostalgic feel (OSRS) was what older players went for. I'm sure a company as Jagex would research before doing anything

From: xtrapsp
I had a chance to play Transformers… it was awful and the staff didn't listen to ANY of my criticism. Myself and a friend who have been playing MOBAs for a few years now and FPS games competitively back in the day gave some tips and ideas about the game but they rushed us out when we were complaining about the lack of role security in the game. You could dive in and out of being a transformer while shooting which negated damage because you were in your transforming stage. There was no momentum, the maps were awfully buggy. I didn't know who was who at some points because the skins messed up the roles. There was no strategic placement… the map literally had no choke points etc.

It was awful and the fact they didn't listen made it worse. Told em I wrote botscripts for their failure of an MMO and I hope that Mod Harriet got my mod edit:love. (She unbanned me because I flirted with her).

Just sayin

LOL the things you stumble across on the Internet. FYI you should probably understand that Jagex pay for their staff to have to unban accounts, e dating doesn't do it for me. You should probably get some soap and wash that dirty mouth out.

From: HarrietTheSpy
LOL the things you stumble across on the Internet. FYI you should probably understand that Jagex pay for their staff to have to unban accounts, e dating doesn't do it for me. You should probably get some soap and wash that dirty mouth out.

I'd laugh so much if this is Mod Harriet.

It really is. Well ex-mod Harriet. Thought this keyboard warrior needed addressing.

From: HarrietTheSpy
It really is. Well ex-mod Harriet. Thought this keyboard warrior needed addressing.

Well, welcome to villavu. The oldest botting community still around, hope you stay around ;)

I'm curious to how you found his post; few minutes of indexing on search engines and no result matches his post or this thread.
Then again, this could just be a troll since there's no proof of you being who you claim to be.

From: HarrietTheSpy
LOL the things you stumble across on the Internet. FYI you should probably understand that Jagex pay for their staff to have to unban accounts, e dating doesn't do it for me. You should probably get some soap and wash that dirty mouth out.

From: Jake
I'm curious to how you found his post; few minutes of indexing on search engines and no result matches his post or this thread.
Then again, this could just be a troll since there's no proof of you being who you claim to be.

This is normally the case.

From: Flight
This is normally the case.

But… but…. a grill doe

Most people I know quit because of things like the squeal of fortune etc. microtransactions.

From: UrbanSmoke
Most people I know quit because of things like the squeal of fortune etc. microtransactions.

I know, could you imagine if Jagex had gone on from 07scape and just focused on releasing good content instead of trying to turn RS into the strange microtransaction machine it is now.

From: Davi
I know, could you imagine if Jagex had gone on from 07scape and just focused on releasing good content instead of trying to turn RS into the strange microtransaction machine it is now.

It would be dead and shut down by now tbh.

Even if one person buys the max keys possible in a week during one of the promos (I believe it's $500 worth), that's like 50 people buying a month of membership. Without that kind of money, I think Jagex would have real issues as it's userbase has substantially been reduced with the exodus because of people who just didn't want to make the switch to eoc (not to mention the prodigiously horrid business call to remove wilderness/free trade that didn't really help the userbase at all, in fact it probably persuaded a large portion of the users to move on to better made games such as WoW in the mmorpg space and DoTA/LoL[more recent than those changes iirc but this is what I've gone to 'after' RS] in the moba space). Without microtransactions Jagex's income would probably be slashed by a significant fraction, especially with all the people raging over cosmetics and op treasure hunter promos like the shark thing or metoerite events serving as an example of the many people who actually use treasure hunter quite a bit.

From: J_R
It would be dead and shut down by now tbh.

Even if one person buys the max keys possible in a week during one of the promos (I believe it's $500 worth), that's like 50 people buying a month of membership. Without that kind of money, I think Jagex would have real issues as it's userbase has substantially been reduced with the exodus because of people who just didn't want to make the switch to eoc (not to mention the prodigiously horrid business call to remove wilderness/free trade that didn't really help the userbase at all, in fact it probably persuaded a large portion of the users to move on to better made games such as WoW in the mmorpg space and DoTA/LoL[more recent than those changes iirc but this is what I've gone to 'after' RS] in the moba space). Without microtransactions Jagex's income would probably be slashed by a significant fraction, especially with all the people raging over cosmetics and op treasure hunter promos like the shark thing or metoerite events serving as an example of the many people who actually use treasure hunter quite a bit.

I'm talking about an alternate universe where they kept wildy and free trade and just focused on producing new areas, quests and content within the framework they had already created. Then maybe add cosmetic micro-transactions on top of membership fees. That's the dream.