Eve Online maker CCP Games, Iceland’s biggest game studio, has agreed to be acquired by Black Desert Online creator Pearl Abyss of South Korea for $425 million.

That’s a huge sum, but CCP has been around for 21 years, and its Eve Online massively multiplayer online role-playing game continues to enthrall hundreds of thousands of fans, who buy virtual goods in the game and periodically destroy them in spectacular space battles.

So who wouldn’t want to buy this company? It certainly proved alluring for Pearl Abyss. The Seoul-based company that operates the fantasy MMORPG Black Desert Online, which features massive castle sieges and has 9.5 million players. So now the studio are hoping to build a much bigger company with an even greater global presence in online games.

“We saw a lot of synergy between our plans and their plans and between our cultures and backgrounds and DNA. It might not be obvious of the synergy between an Iceland private company and a Korean public company, but through our games we found we had a lot in common,” said CCP Games CEO Hilmar Veigar Pétursson in an interview with GamesBeat. “We came to the conclusion this would be a good time to make the change.”

While it’s a great outcome for CCP Games, it’s also an admission of a defeat for VR games, which CCP championed until last year. CCP Games invested big in Eve: Valkyrie (a starfighter sim based in the Eve Online universe), but the payoff wasn’t there. The company scaled back, and it’s no surprise that an Asian online game company is doing the acquiring, Pétursson said.

“We have always looked to Korea and China, where services and online games are popular. The industry was born in Korea,” he said. “Another aspect is that Asia’s public markets value gaming companies quite high at multiples versus the West.”

Under the deal, CCP Games will continue to operate independently, with 250 employees at studios in Reykjavik, London, and Shanghai, while integrating the company’s extensive development and publishing experience into Pearl Abyss’ operations for all current and future projects. The deal is expected to close October 12.

Image Credit: CCP

Eve Online is a space-based, persistent world MMO game, which CCP’s Reykjavik studio developed and first launched in 2003. The game earned renown for its scale and complexity with regards to player interactions and an economy that some countries would envy.

In Eve’s single, shared game world, players can take on a number of professions and engage in economic competition, warfare, and political schemes with each other across several thousand explorable solar systems.

“We are thrilled to have CCP Games join our team as Black Desert Online continues to branch out globally,” said Pearl Abyss CEO Robin Jung, in a statement. “CCP is a seasoned publisher with over 15 years of digital distribution experience and know-how. They have done an incredible job of engaging and maintaining their playerbase, which we aim to learn from and integrate natively into Pearl Abyss’ general practices across all our games. I am confident CCP’s reputable IP and expertise in global publishing will help reaffirm our company’s dedication to developing and servicing the world’s best MMORPGs.”

Pearl Abyss’s fast growth

Image Credit: Pearl Abyss

Pearl Abyss first launched its Black Desert Online in South Korea in 2014. The game has received critical acclaim for its seamless world, large-scale castle sieges, and action-based combat system. Black Desert Online is now available in 150 countries and 12 languages. Since Pearl Abyss’ initial public offering in 2017, the company has worked to secure competitive global intellectual properties, such as Eve Online, through strategic investments and acquisitions.

Pearl Abyss saw record-high sales in the second half of 2018, following the launch of Black Desert Mobile in Korea. The company is looking forward to another strong year in 2019 with Eve Online and the upcoming global launch of Black Desert Mobile.

“As lead investor in CCP for over 13 years alongside General Catalyst and NEA, we’ve seen CCP go from being a few dozen people strong to employing hundreds all over the world, with an ever-increasing customer base and multiple titles,” said Birgir Már Ragnarsson, chairman of CCP, in a statement. “CEO Hilmar V. Pétursson and his dedicated team have built a company that Novator and its partners are proud to hand over to Pearl Abyss and we wish them the best of luck in their future ventures.”

CCP’s rich history

Image Credit: CCP

As a company, CCP Games is a lot better known than Pearl Abyss. It has been operating Eve Online for 15 years, and it was founded in 1997 by Reynir Harðarson, Þórólfur Beck Kristjónsson and Ívar Kristjánsson. Veigar Pétursson joined as CEO in 2004. In 2006, CCP Games acquired White Wolf Publishing, a maker of tabletop role-playing games. Then it began an expansion in North America.

The company started work on another major online game, World of Darkness, but it ran into troubles with Eve Online and scaled back the World of Darkness team. It created the Dust 514 shooter, which was part of the Eve universe. Eve Online tried to introduce microtransactions in 2011, but they didn’t go over well with players. CCP then cut a bunch of jobs. In 2014, it shut down a San Francisco office.

CCP Games raised $30 million from NEA and other investors in 2015. It used that war chest to dive headfirst into virtual reality. The company published four major games for all VR platforms and generated about $30 million in revenue, Pétursson said. The games like Eve: Valkyrie were hits and earned a lot of praise, but the VR headset market sales were a disappointment.

“It was a calculated risk, and you have to take some risks,” Pétursson said. “Overall, it came out very well for the market size. We generated $30 million in revenue. I would call that a good outcome. But I think the market is going to take some years to justify more investments at the scale we would like to do. So we decided not to do further development.”

In October 2017, CCP Games decided it would shut its Atlanta, Georgia VR game studio, and sell off its Newcastle studio, affecting about 100 employees. After that happened, Pétursson said the company made a big strategic change to focus on its core PC games and mobile games. It hired the Raine Group, an investment bank and advisory company, to hit the road and run the strategy by potential investors or buyers. During that process, Pétursson met the Black Desert Online team and hit it off.

Image Credit: Pearl Abyss

But negotiating a deal was a complicated thing. It wasn’t a desperate move, as CCP Games still has about $40 million in the bank. Pétursson said the company has open positions in its London studio, but it isn’t immediately going to expand its staff in a big way.

“But the best time to raise money is when you don’t need it,” Pétursson said. “That’s why we did this.”

The $425 million includes both cash and a bonus earnout if certain financial targets are met. That’s meant to retain the people in the acquired company. CCP still believes it has a lot of potential in Eve Online, which has gone free to play. The main focus is to rerelease it in China.

Veigar Pétursson said the company is working on an action-MMO using the Unreal game engine. He can’t describe it more beyond that yet.

“We wanted to focus on PC and mobile,” Pétursson said. “We have kept an eye on mobile for 10 years. The trends for mobile are moving to more hardcore games. It now makes sense to take a closer look. We look at this as the next natural step for us as a company.”

Deutsche Bank is acting as financial advisor to Pearl Abyss, and Kim & Chang is providing legal counsel. The Raine Group is acting as financial advisor to CCP Games, and White & Case LLP and LOGOS are providing legal counsel.