Possible trade off to offload krono

Discussion in 'The Veterans' Lounge' started by Eniner, Oct 1, 2018.

  1. fortuneteller Augur

    I seriously doubt you are correct about not being profit, until consumed, its profit as soon as people buy it.

    Now lets follow a krono, just for fun. You buy a krono, give it to person A, who, then give it to person C together with another kronos, person C gives 1 krono to person D and another to person E, person E consumes his, is that profit for your kronos or ?

    Or Person F buys 20 kronos, plays around and then commit illegal activities, which got his account banned, what happens with the 20 kronos, do person F gets Money back for them or are they lost, DBG still sold them and have the Money, this me guess,so is it profit I guess DBG shall still say to IRS, we sold those kronos, including these 20, for which we banned the person behind for doing some illegal things.

    I seriously doubt that buying a krono is much different than buying a can of Cola, if I buy a cola at a shop, the shop has their profit for it until I return it, and that option we do not have buying a krono.

    And when you buy an xp potion in markedsplace, thats also profit as soon you buy it, not when you drink it.
  2. Sancus Augur

    In accounting, Revenue isn't recorded until a good/service is actually provided/used. Kronos are likely recorded as a Liability until they're consumed.

    The best analogy I can think of is with gift cards. When a company sells you a gift card, they get your cash, but it isn't revenue for them. Gift cards are recorded as liabilities until you actually use your gift cards, at which point they become revenue. For gift cards, there are a variety of standards used to record revenue from gift cards that are never redeemed. I think a common one is to record it as Revenue after a certain period of time (e.g. 2 years) has elapsed. Another is to assume a certain percentage of gift cards will go un-redeemed based on past trends. This is a good article on that subject.

    I don't know exactly how Daybreak accounts for kronos that will never be redeemed, but it's fairly safe to say that they can't simply count the initial sale as revenue.
  3. Dreadmore Augur


    Ah... so it's a business thing, and a more precise definition of "revenue" than what I know.
    Thanks for clarifying!

    Also, you caught my post before I fixed my typo... obviously I don't understand how it works, not that I do.
  4. AlaskaJay Lorekeeper


    Another interesting question would be what happens to the Krono if a farmer who is committing RMT get's their account banned (or anyone for any reason who had Krono). If they don't see the $ until they are consumed then what happens in that case? The Gift Card scenario would not be an adequate analogy. That would be like having 1000$ of Walmart gift cards and then being banned from every Walmart world wide with no option to redeem.
  5. NameAlreadyInUse Augur

    When they show up as revenue is almost irrelevant. As a company, they can use the cash any time they want, and deferring the revenue (by maintaining outstanding Krono as a liability) is likely a huge tax benefit. And when the game/company shuts down, all of those kronos are simply written off. Essentially zero-liability, free money. That and guaranteed loyalty are the reasons companies love them (and other "gift card"-like products) so much.

    The entire premise of this thread is that there are tons of existing Kronos in-game. Kronos that have already been purchased. Money already spent. Allowing the use of those Kronos to purchase expansions would absolutely have a negative impact on expansion revenue. As you say, it may not affect expansion sales numbers, but that's only hiding the true income loss.

    Smokezz, if you can explain to DBG how they would make more $ by allowing the use of Kronos to buy things they already charge cash for, then I'm sure they will be interested. Keeping in mind that this very thread is based on the assumption that already-purchased Kronos exist in abundance, why would players purchase more Kronos in order to buy an expansion? How can DBG make more money for their effort? Answer that, and I'm certain DBG would do it.
    Aurmoon likes this.
  6. Aurmoon Augur

    Dreadmore — this response isn’t for you. I understand the purpose of your questions.

    Smokezz — generating “revenue” and “cash” are two totally different concepts. In this case, more revenue is NOT necessarily a good thing. Think of it this way:

    A buying a Krono is like making a deposit. The buyer pays $17.99 to Daybreak in exchange for an IOU (1 Krono). The IOU (Krono) stipulates that Daybreak must provide 30 days of game time when the holder of the IOU (Krono) requests it. Daybreak essentially gets the cash up front, but doesn’t need to provide the service until the holder of the IOU claims it. From Daybreak’s perspective, the BEST case scenario is that the holder of the IOU never claims it and therefore Daybreak never needs to provide 30 days of game time. Daybreak already has the money, so they lose nothing if the IOU (Krono) holder quits and the IOU (Krono) goes unclaimed. Same holds true if a single person goes around collecting up all the IOUs (Kronos) that people have purchased. Daybreak has the money, so if one person wants to hoard IOUs and not claim them, that’s great from Daybreak’s perspective.

    The accounting treatment is quite different. Because Daybreak has received a deposit in exchange for an IOU, they can’t actually recognize it as revenue. It is treated as a liability, because they essentially “owe” the IOU holder 30 days of game time that remains unclaimed. Daybreak keeps the actual cash, but no revenue is generated. So while their revenue generation numbers are quite poor, they don’t care because they are still generating cash to pay their costs and their shareholders.

    So what happens when someone cashes in the IOU? Doing so REDUCES the liabilities on Daybreak’s balance sheet by $17.99, and Daybreak recognizes $17.99 of revenue. This revenue is “cashless” in that the cash has already been collected back when the IOU (Krono) was issued. So if a Krono hoarder went ahead and consumed 1000 Krono, it wouldn’t result in a single extra penny to Daybreak.

    Note: The actual mechanics are even more complicated than this because I suspect that Daybreak can only recognize the revenue as the service is being delivered rather than when the Krono is consumed. Either way, this explanation still holds.
    NameAlreadyInUse likes this.
  7. Smokezz Augur

    Pretty sure simple math explains it. Just like the cost of a Krono used for a month of time is more than it costs to sub with cash. Why haven't they done it? More likely a technical thing, and having the resources to put into making it a reality.
  8. NameAlreadyInUse Augur

    Simple math does explain it. We just need to better understand the word problem :)

    Points so far:
    • Nobody buys kronos from DBG with the intent to use them as a subscription.
    • No reason given, as yet, for why anybody would buy kronos from DBG with the intent to use them to purchase an expansion.
    • People buy Kronos from DBG to buy in-game wealth. This generates $ for DBG.
    • People with in-game wealth may buy & use Kronos in-game for subs. This generates zero $ for DBG.
    So far, I think the two missing answers we need to provide to DBG in order to justify selling expansions for Kronos are:
    1) How many players would buy Kronos from DBG in order to buy an expansion from DBG?
    2) How could you ensure that those sales would offset the losses from players who use existing Kronos to buy expansions, which negatively affects expansion revenue?
  9. Smokezz Augur

    No, but the people that get them in game use them for subs... Like myself. Do you think they're just swapped around forever and never clicked? LOL. You're pointless to talk to. You have your mind made up.
  10. Rickate Augur

    Krono revenue is earned when the sale is made, there is no cost to Daybreak to redeem a Krono, the server maintenance costs would be exactly the same if 1000 accounts redeemed a Krono today. Gift card revenue is usually earned when it's redeemed because you then have to provide the customer with tangible goods, it's of little fiscal benefit to Amazon to sell a $50 Gift Card for $50. The fiscal benefit is when the gift recipient redeems the card or the card expires.

    If Daybreak has outstanding Krono on the books as a liability, EverQuest is an IRS audit away from being sunset. It's the equivalent of running a company and setting an official price for smiles at $17.99 and then claiming because there are 1000 outstanding vouchers for smiles your company has $17,990.00 in liabilities and as a result turns a smaller profit and owes less in taxes.
    IblisTheMage and So Happy like this.
  11. So Happy Augur

    There are numerous sites where you can buy krono for less then what DB sells them for. Why would anyone buy krono from DB to purchase an expansion in the first place? What they should do is find a way to number and track krono to identify accounts used by the sites for transfers and storage and take them back.
  12. code-zero Augur

    The bottom line is that no one at Daybreak is sitting around fretting about too many Krono being in circulation. They just aren't and thinking that you are going to come up with a solution that in reality earns them no additional revenue is just plain silly.
  13. Khat_Nip Augur

    Blockchain.
  14. Yinla Augur

    You have got me curious now.

    Should EQ ever decide to shut down, would whoever had Khronos get the cash back? if this is already seen as a liability for accounting purposes, the items would no longer be able to be used for what they were created for (subscriptions) so Daybreak would be liable to those who own them?
  15. NameAlreadyInUse Augur

    Technically, but not realistically, if they are really considered the same as gift certificates. Then Krono holders might be able to get in line behind all of the other creditors when the company goes bankrupt. But by law, gift certificate holders are usually behind many other types of creditors and there wouldn't be any money left over. For the most part, they are written off and would be free money for DBG.

    BUT!!!! As I re-read the FAQ for kronos, they make a very big point to define them as in-game items, non-refundable, non-expiring, and tied to the specific game they are used or traded in. I think the reality is, unless somebody contested it in court, I think these would be considered no different than an illusion you buy from the marketplace: when the game shuts down, they go away.

    And back to the thread at hand: would you think DBG should let you buy expansions with illusion clickies? :D
  16. IblisTheMage Augur

    Learning so much and so little at the same time :).
    NameAlreadyInUse likes this.
  17. Eniner Augur

    The way i was told krono's work is like this. At one point they recieved the sale money from kronos instantly. During the last krono swepe they changed it up where all krono purchased money is placed in a escrow type account until it is consumed to avoid charge backs. That way if it is charged back as a non legit sale on someones card they then have the money in that escrow account to pay for that so its at no loss to the company. I could be wrong but i remember right thats how it was explained to me.

    With that being said i dont see the hoarders doing the company any good if it is indeed played out this way. People would still buy kronos from the site but at same time they would consume those kronos instantly for a higher payday then paying out right for it.

    Same logic can be applied with Sub money. Its cheaper to out right sub with a debit card then it is to buy a krono. This is because kronos offer more then just sub time they are a currency in game making them cost a little more for extra value to buyer. So with that to me charging say 3 krono or 2 krono for a basic xpac is them profiting on krono sales maximizing profits as they received more in kronos sales then they would have xpac sales. As pointed above its basic math. Say 3 kronos for a xpac thats 53.97 for basic xpac. Over the orig asking price of 40. And its being consumed instantly and paying for that instantly moving escrow money to actual bank account.

    But unless a employee can chime in and state how krono's are dealt with in terms how collection works on them when consumed or before i dont know if its true but i do remember it being explained.
  18. Smokezz Augur


    Even if an employee chimed in... certain people would argue that said employee was wrong. :)
  19. NameAlreadyInUse Augur

    Any source?

    I think it is reasonable that DBG (like most retailers) may hold a percentage of all of their credit card sales in an "escrow" type of account for a finite period of time (maybe 30, 60, 90 days after a sale?) for the purpose of risk management. But I don't think there is any legislation that would force them to not use the cash they generate from Krono sales until the Krono is consumed in-game.
  20. Warpeace Augur

    https://help.daybreakgames.com/hc/en-us/articles/231116448-Krono

    Krono

    July 24, 2018 17:55


    Overview

    Krono are in-game assets which can be redeemed to receive 30 days of All Access membership time. They are sold in the marketplace for real money only, or they may be purchased from other players via the broker or private trade for in-game currency. Players may not, however, sell Krono to each other for real world money.*
    Krono are only granted after the order is reviewed. It can take up to 48 hours before you receive your order fulfillment. Thank you for your patience while this process is completed.
    Restrictions and Limits

    • Accounts must be 48 hours old to purchase.
    • Account limit of 9,999 Krono.
    • You may purchase 25 Krono in a 24 hour period.
    • Non Refundable.
    • Krono cannot be purchased with Station Cash
    • Krono can take up to 48 hours to appear on your account as your order is verified.
    • Once a Krono has been applied to an account, it cannot be transferred.
    Costs and Usage

    All Krono are initially purchased from Daybreak Game Company LLC using real world money. You are able to buy them from other players using in-game currency, mail them, sell them to other players for in-game currency, trade them to other players for other in-game items, and consume them.
    If you consume a Krono, it is removed from your inventory and 30 days of All Access membership time is added to the account associated with the character that consumed it. The price for one Krono is $17.99 USD.
    Purchasing and Applying Krono

    Krono can be purchased through our in-game /marketplace using real money. Once purchased, it will appear in a special Krono slot in your main inventory window (i).
    Since Krono are account based, you can access them from any character on your account, regardless of which server you're on. Any Krono in your character's mail will be automatically displayed in your account's total Krono - even if you haven't retrieved it from the parcel merchant, yet. In the event you receive a Krono through the in-game Parcel system, and consume it before visiting the merchant, the next time you go to the Parcel merchant the Krono will still be on the merchant's list, but will be deleted when you try to remove it, since it's already been consumed. The one you see in the mail is basically a receipt. You'll also receive a message as a reminder when you retrieve any Krono from a parcel merchant.
    To fund your account for 30 days using Krono, simply click the "Consume Krono" button to the right of the Krono slot. You must have a valid Zip Code registered to your account to be able to consume a Krono. Your account's Zip Code can be updated from our website: hover over login and click “Account Management”. Once logged in, go to Payment Sources and make sure your zip code is added and correct. If it’s not, click “Edit” and you’ll be able to adjust the zip code from there.
    When a Krono is consumed the number of days of All Access membership left on your account will be displayed below the "Consume Krono" button. Note that Krono may only be consumed in EverQuest or EverQuest 2 but provide All Access membership.
    * Selling Krono for real world currency is a violation of our Terms of Service (commonly called TOS)

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