Letter From the Chairman

Squadron 42: The Road to Release, Financials and New Partners

Hello everyone,

2018 brought some pretty big things in the universe of Star Citizen; our first planet, Hurston, our first major landing zone, Lorville, four new moons, 32 new flyable ships, Face Over IP, much improved performance thanks to Object Container Streaming, Network Bind Culling and a complete overhaul of the game code to run on multiple CPU cores simultaneously. We had our largest CitizenCon to date in Austin, Texas and just recently wrapped up a really fun Anniversary Event. How cool was it to make the journey to Lorville, visit the Intergalactic Aerospace Expo West and get an up close and personal sneak preview of some ships that are coming to the ‘verse, or fly dozens of already flyable ships? It has been exciting reading the posts from people discovering the project for the first time and seeing so many people having a blast playing Star Citizen.

As we look forward to the holidays, I wanted to give you all a couple of updates. The first item of news is the Squadron 42 public roadmap is going live today. As with our Persistent Universe roadmap, this is linked to our company’s internal JIRA tracking system, so you can see at a glance the work remaining to complete the game. It was a lot of work to make sure every remaining task was broken down in detail and estimated to the best of our ability, and the same caveats will apply to the Squadron 42 roadmap as they do to the PU one, but our plan is to be feature and content complete by the end of 2019, with the first 6 months of 2020 for Alpha (balance, optimization and polish) and then Beta.

When we started the campaign for Star Citizen and Squadron 42, I said that the crowdfunding would go towards development of the game, and that the amount would define the scope and ambition of what we were working on. That is a commitment I am proud to say we have been upholding; its why we have over 500 staff around the world working on the games and have spent very little on marketing.

You can see this investment into development in the UK financials that we publish every year on Companies House. In a further effort at transparency we have decided to publish our historical financials from 2012 through 2017 on our new corporate website to allow all of you to see not just how much money we raise via the public counter, but also how the money has been spent globally.

All of our marketing is community focused and viral; events we host for all of you, in-fiction lore, commercials that help flesh out the world, and PR outreach. The fact that we have raised over $211M via word of mouth and viral marketing is staggering and a testament to how amazing a community all of you are. Everyone at Cloud Imperium is humbled to have your trust and support on this journey together.

As a result, we are building two of the most ambitious games ever embarked on in gaming, with budgets that are unmatched by all but the very biggest projects.

Having a great game is only half the battle. As we look towards the release of Squadron 42, we have been acutely aware that having a AAA game that matches the biggest single player games out there only goes so far if no one knows about it. The games we will be competing with for attention have tens and, in some cases, hundreds of millions of dollars of advertising behind them.

Other companies in a similar situation have normally tackled this problem by partnering with a Publisher for the marketing and sales of their game. As you all know I am not in favor of putting my destiny in the hands of a third party. On the other hand, I don’t feel it would be right to go back to all of you to raise funds to market the game to other people; most of you already have a copy earmarked for you and I still strongly feel that the money brought in from our crowdfunding should continue to go to the development of Star Citizen and Squadron 42.

Because of this, we started to investigate ways to raise money to fund the upcoming marketing and release needs of Squadron 42. We turned away some approaches from Private Equity and Venture Capital because we were concerned about them fully understanding what makes our company tick and pushing us towards short term decisions.

During this process we were introduced to Clive Calder and his son Keith, who have both been interested in the confluence of entertainment with the ability to directly connect with an audience online. Clive founded the most successful independent music company, Zomba, which was home to some of the biggest music acts in the world. Keith is an independent film producer whose company Snoot Entertainment’s most recent films are the critically acclaimed Blindspotting and the Academy Award-nominated Anomalisa. During our first meeting, we got on like a house on fire, with Clive telling me about how he wished that when he built Zomba you could have connected to the fans of an artist bypassing the myriad of media gatekeepers in the way Star Citizen does, and which wasn’t possible 15 years ago. Keith and I swapped war stories about the film industry and talked about how refreshing it is to be able to utilize crowdfunding to create a project that normally would fly against what is currently considered mainstream.

During the course of these discussions it became clear to me that if Clive and Keith joined us as investors in our company, we’d have true partners that respected what we had built, but also fully understood the ins and outs and the patience required with a business based on creating entertainment. Taking in like-minded partners helps us solve the need of funding the marketing and release of Squadron 42, but also stay attuned to what makes us special.

So, it’s with this that I would like to announce that we have closed a minority investment into Cloud Imperium US & UK, from Clive’s family office and Keith’s Snoot Entertainment for $46M for approximately 10% of the shares in the Cloud Imperium US and UK companies, which is a testament to the value, future potential and longevity of the company.

As part of this process we’ve taken on two outside board members. The first is Dan Offner, an experienced lawyer and entrepreneur with over twenty years of experience in Interactive Entertainment, who is Clive and Keith’s board nominee and second is Eli Klein, a long term friend who has been acting as an advisor to the company over the past couple of years.

The control of the company and the board still firmly stays with myself as Chairman, CEO and majority shareholder.

We wouldn’t have taken anyone on board if we didn’t feel that they were fully aligned with our vision, philosophy and could add valuable insight in navigating the business challenges ahead.

This investment helps secure our independence. We may not have the resources that an Activision or EA have to launch one of their tentpole games, but we now control our own destiny in marketing Squadron 42, especially as we have a secret weapon: all of you! Between the power of the best community in gaming to help get the message out and these additional funds we will be well positioned to enable Squadron 42 to enjoy the success that it deserves.

Beyond this, this investment gives Cloud Imperium the ability to take the long view when needed and allows us to grow as a company. I couldn’t be happier.

So I would like to welcome Clive, Keith, Dan and Eli to the Cloud Imperium family, and I look forward to great success with them and all of you.

See you in the ‘Verse!

-Chris

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