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December 19, 2020 10:55:35 am
Initially expected to become one of the best-selling games of all time, Cyberpunk’s viability as a franchise starter and moneymaker for years to come is at risk (Image source: Bloomberg)
Despite its setting in 2077, this year’s biggest video game launch is proving to be a very fitting disaster for 2020. The futuristic role-playing game Cyberpunk 2077 has seen a growing backlash in the days since its long-awaited debut. month, due to performance issues on anything other than the newest hardware.
Shares of Polish developer CD Projekt SA had risen more than 1,800% in the five years from the studio’s previous main title to the pre-launch peak this month, only to later lose about 40% of their value in fifteen days, erasing almost $ 5 billion. in market value.
It was initially expected to become one of the best-selling games of all time, but Cyberpunk’s viability as a franchise starter and moneymaker for years to come is at risk. Plagued by bugs that critics and gamers say make the game nearly unplayable on older-generation consoles, its latest misfortune was Friday’s exceptional moves by Sony Corp and Microsoft Corp.
On Friday, the Japanese firm decided to remove Cyberpunk from its PlayStation Store, prompting a further drop in CD Projekt shares, while the Xbox owner offered “full refunds” to anyone who bought Cyberpunk digitally from the Microsoft Store.
“Cyberpunk 2077 is the Christmas present that continues to deliver negative surprises to both console gamers and investors,” wrote Matti Littunen, an analyst at Sanford C Bernstein, in a note on Friday. After slashing unit sales estimates on previous-generation consoles by 75% earlier this week, Littunen said “the extent of Sony’s frustration” still caught him off guard.
Last Christmas
While the company apologized this week for technical issues and promised to remedy the situation with major patches in the coming months, the timing of Sony’s lockdown means the game will likely miss the lucrative holiday season and faces an unknown number of refunds.
Co-CEO Adam Kicinski said in an email that the studio is in contact with Sony and is working to restore Cyberpunk to the PlayStation store. CD Projekt still intends to release initial sales data next week, but the “situation is very dynamic,” spokeswoman Karolina Gnas said in an email.
The extent of the share price decline “shows that the hype was too great and it was very difficult to match expectations,” said Andras Szalkai, fund manager at Raiffeisen Kapitalanlage GmbH in Vienna. “Regional and local money will remain invested in the study, but that is not enough to support the previous valuation.”
Sony’s setback is a “public relations disaster” and “very negative” as PlayStation 4 is the best-selling console of the generation with more than 113 million units sold, according to Adrian Kowollik, an analyst at AlphaValue, who on Friday cut your recommendation. on CD Projekt to reduce. Console sales accounted for about 41% of Cyberpunk’s 8 million pre-orders, Kowollik said.
Fixing the core
Perhaps even worse than the short-term problems, expectations for a multiplayer component that was seen to extend the life of the game and possibly provide some recurring revenue are now on hold indefinitely.
“The road, originally, would likely see the launch of multiplayer in 2021 and a massive online open world in 2022,” Neil Campling, an analyst at Mirabaud, wrote via email, drawing parallels to Take-Two Interactive Software Inc’s Grand Theft Auto. V. “Forget those goals; first you have to fix the kernel. “
The stock’s recent slide has reduced its combined 12-month price-to-earnings ratio to around 16 from more than 26 earlier this month, according to data compiled by Bloomberg. However, that may also be partially the result of earnings expectations that have yet to fully adjust to recent events. Before Sony’s decision, nine analysts surveyed by Bloomberg this week cut their first-year sales estimates by 14% to 25.6 million copies.
Still, the tough start doesn’t necessarily mean all is lost. While CD Projekt faces an uphill climb to restore player confidence, it has overcome a similar challenge in the past.
“Next year will show if the game can still be a success after debugging,” said Raiffeisen’s Szalkai, noting that the studio’s previous hit, The Witcher, was also “buggy” at first.
