Impact of European Commission Crackdown on Virtual Currency in EVE Online?

[March_rabbit]

@Hatch_Nasty

I will say, as far as I can tell, at least CCP doesn’t employ any of the really predatory practices, like selling an item in the game shop for 750 fauxbucks when you only sell fauxbucks on the cash shop in bundles of 500 or 1000.

I remember CCP doing exactly this. Happened years ago so my memory is fuzzy about it. Was something like selling pack of 480 PLEX while subscription requires 500. There was a thread about it on forums.
Maybe things got changed since then.

[Elinore_en_Divalone]

PLEX is not a direct income for CCP. It is a kind of token for claiming service time (Omega) or cosmetics. The fact you can exchange it for ISK is irrelevant as CCP can only legally “book” it as an income when someone uses it in NES to redeem the token.

I’ve not made that up lol

Pay with plex in NES for extra CCP Dev time

CCP treats plex as deferred income on their balance sheets. Plex represents a contract between the players and the company for 30 days of game time. While we buy and sell it for in-game currency, it only becomes real world revenue to them when someone redeems it for game time. Say, if there is $7 million total plex rolling around (this is a number I seem to recall) but only $1 million of it is redeemed in a year, CCP can only claim $1 million in revenue, and the rest is treated as a liabilit…

So “buying” PLEX with cash is a kind of loan to CCP
And by exchanging it for ISK you cede your right to hold CCP accountable to whomever receives that PLEX from you.

And you don’t get ISK from CCP, you get it from other players lol

[Akkar_Kardashev]

How is plex not a direct income? You literally buy it for cash on the website. It couldn’t be more direct without walking to Reykjavik with a backpack full of money. Before you even do anything with it, CCP are already paid.

[Hatch_Nasty]

@Akkar_Kardashev

How is plex not a direct income? You literally buy it for cash on the website.

It is income, but it’s deferred revenue because PLEX is a token that represents game time [a liability]. The difference between what you pay for game time [revenue] and what it costs CCP to provide you that game time [expense] is CCP’s profitability. For accounting purposes, you want to realize the value of a token when it’s traded in, not when it’s purchased. Beyond having an accurate P&L, you don’t want to realize outsized profits when the PLEX is purchased, pay higher taxes on that income, and then later (when the PLEX is redeemed) have an expense with no offsetting income on your books. Because some people buy PLEX and hold it for months or years, you could very well have PLEX purchased in one quarter but redeemed in another quarter, or even in a different fiscal year. If CCP realized PLEX when it was purchased (rather than when it was consumed), that would play holy hell with the company’s books.

I expect CCP treats multi-month subscriptions the same way. If you purchase a 12-month subscription in January, they don’t realize all the income in January. They move that revenue into a deferred account, and realize a portion as income every month throughout the subscription term (thus offsetting the operational expenses for that month). This is a very common practice with subscription services.