Jagex Acquisition. What Does it Mean For You?

posted by on 21st July 2016, at 10:15pm

Chinese iron ore mining company Shandong Hongda has successfully acquired Jagex Games Studios. The big question on everyone’s mind is what does this mean for RuneScape over the next few years. I will go over some details and then predict the changes that will be coming to the game here. I want to note before I go any further for RuneScape fans that I will be stating my opinions and have no intentions to fear monger. I am going into this acquisition with an open mind.

To start the deal to was around $300 million. This seems to be a fairly heavy investment for Shandong Hongda especially factoring in the low margins that Jagex has been putting up over the past few years. Right away, this could mean a few things. I want to point them out and explain my reasoning. First, the game has been growing as far as the technical and content side exponentially over the past few years. This requires money in order to do and that may explain the low profit for Jagex as of late. I can expect that now that some of the largest portions of the game have now been released (Evolution of Combat, NXT client, Chronicle, etc.) That the focus would have switched to something else monumental. Now that new investors are in charge I can expect a new form of increasing profit to start driving the game. Reducing cost. This could mean layoffs, pay reductions, fewer content updates, a different content release schedule or reducing technical debt like the Java client.

That sounds kind of scary. But the fact is that besides an update schedule being changed, I would highly doubt that the community would really feel the effects from this. Jagex had intentions to remove the Java client, I feel that the timeline for this will be moved upwards to reduce technical debt which can greatly reduce cost for development of the game. This is where the bulk of the savings will probably come from.

The fact that many of these large updates have been released and the other games such as Chronicle and Idle Adventures are near a point of maintenance and a smaller deal to work on updates will also reduce cost. I can see why Shandong Hongda jumped at the opportunity to acquire the company before the release and at the early release of Chronicle. The Idle adventures will be a cash cow without question. Mobile games for Jagex was a fantastic idea and the company is about to reap the rewards from this. Chronicle I could see being pushed to mobile devices to increase its relevance in comparison to Hearthstone from Blizzard.

So with that being said, is this deal going to be the reason Jagex goes under? No. In fact I think the profits will dramatically increase which could lead to some really cool things for RuneScape. Does this new company however put the game on shaky ground? That question I would say is too early to have a possible answer for. My educated guess would be a yes.

More focus on pay to play and pay to win models is likely. Why? The idle adventures will surely prove this to be a worth-while investment and I am sure it’s because the new side games offer this that Jagex looked like such a good buy. I can expect to see increased micro transactions across the board. It’s also possible that the grand fathered memberships will be increased either slightly or completely removed so there is a flat rate. This may make some players mad, but I do not think it will hurt the game as much as people think.

Will there be more RuneFest events in the future? I don’t know for sure. The cost may have a good return to run as they have been very well received. I would argue that yes there will be more of these in the future or at least one more following the current scheduled RuneFest.
It was said that the acquisition will have minimal impact on the game. I know that is not true and anyone that has seen acquisitions before should feel the same way so here is my prediction for the new direction RuneScape will be taken in.

Jagex will open itself to the eastern markets bringing in new player bases. This will be the most crucial time for the game and the company. If they fail, the company may be sold off again to cut losses. This is a hard market to get into by western companies as proven by Microsoft with the Xbox franchise again and again. A Lot of the cuts to other areas of the company will be used to put effort into entering this new player base. Chronicle will play a big role in getting into the new market. I think that if this game makes it’s way to android anytime soon, it should be just fine.
If Shandong Hongda is able to push Jagex through the first two shaky years and sticks to their guns, I am sure the revenue from all three main games will start to improve to numbers far better than 2015. I can see big updates coming around for the game in the distant future, but as for the next couple years, there will be a strong focus on getting the game up and functional for the east.

I have very mixed feelings about all of this but I am hopeful that this acquisition is a good thing for Jagex. I want to stress again that change will come and that change is not necessarily bad. Players need to give Jagex a chance with future updates as there may be a bigger picture to them. With that being said, Happy Gaming.

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