“You know, I never thought you could become tired of having sex with kids… And I was right.” - Derek Liu, creator of GaiaOnline

To celebrate the official relaunch of GaiaOnlineSucks.com — Mr.Liu and GaiaOnline watchdogs had us conveniently shut down for a while — we are having yet another interview with Derek Liu, creator of GaiaOnline. It has now been two years since our last interview: my english hasn’t improved and, most of all, Gaia BattleSystem is still not out.

GaiaOnlineSucks: Greetings Mr. Liu. We are honored to celebrate the relaunch of GaiaOnlineSucks.

Derek Liu: Yah, like I needed that.

GaiaOnlineSucks: What happened?

Derek Liu: I got caught some weeks ago on “Dateline: To catch a predator” by Chris Hansen.

GaiaOnlineSucks: Really? What for?

Derek Liu: … You don’t know me, do you?

GaiaOnlineSucks: Oh, of course. I heard Chris Hansen now gets pedophiles for his show exclusively from  Gaia Online. From what I heard, he recorded over six hundreds episodes by posting barely one thread.

Derek Liu: Yes… including my own.

GaiaOnlineSucks: Let’s look at the video right now.

GaiaOnlineSucks: Any comment?

Derek Liu: She told me she was over 18!

GaiaOnlineSucks: Did she play GaiaOnline?

Derek Liu: Yes.

GaiaOnlineSucks: Then how could you believe she was over 18?

Derek Liu: I don’t know. She could be a very retarded adult, you know?

GaiaOnlineSucks: Probably the only way any adult will ever play Gaia. 

Derek Liu: I disagree! Our moderators also play Gaia and are adults

GaiaOnlineSucks: Exactly what I was saying. Anyway, could you please tell us what happened on the show?

GaiaOnlineSucks: Alright. Basically, I had been chatting with that girl for a week or so. This is the longest I’ve ever chatted with a little girl before having sex with her. I usually just promise them Gaia gold and candies — mostly Gaia gold. I arrived and then Chris Helsen told me WHY DON’T YOU HAVE A SEAT OVER THERE. I told her I was a nerd unable to pick girls my age.

GaiaOnlineSucks: Unable to pick girls at all, apparently.

Derek Liu: Right. I told him women thought I was too short or that an asian is a nerd and shit.

GaiaOnlineSucks: But you ARE a nerd! You think it’s appropriate to bring strawberries and cream to makeout with a kid?

Derek Liu: No. I usually don’t bring anything.

GaiaOnlineSucks: This really sucks for you.

Derek Liu: Not really. I ended in jail. I never had so much fun.

GaiaOnlineSucks: So THIS is why updates on Gaia are slow!

Derek Liu: No, updates on Gaia are slow because I don’t give a shit.

GaiaOnlineSucks: Why did you say you had fun in jail? I mean, don’t you get raped by lots of… Nevermind, I just answered my own question.

Derek Liu: Yup, you certainly did.

GaiaOnlineSucks: Let’s get back to Gaia and its updates. What about the new layout?

Derek Liu: The only update we’ve ever done that was actually a downgrade. Now that I think of it, the only update we’ve ever done.

GaiaOnlineSucks: I see. What about the Battle System. Is it close to release?

Derek Liu: No.

GaiaOnlineSucks: But why do you say “Coming Soon”!

Derek Liu: So that people keep playing the game — and paying, most of all. Facebook harmed us, you know? People realize that if they are going to waste their time on a stupid board doing stupid crap, they could as well use their real name while doing it and screw their real lives.

GaiaOnlineSucks: Okay. What else changed on Gaia Online?

Derek Liu: I added more ads.

GaiaOnlineSucks: So in three years, the only thing that changed is you adding more ads?

Derek Liu: And I made more money, yes.

GaiaOnlineSucks: Okay. There has been a lot of controversy about Intellectually Property. You’ve taken items from DragonQuest, Final Fantasy, Naruto and many more popular games and animes. What do you have to answer to that?

Derek Liu:  You mean when I ask people to submit their drawings and then show MY ads next to them?

GaiaOnlineSucks: That kind of stuff, yes.

Derek Liu: They’re too young to sue anyway.

GaiaOnlineSucks: But not too young to sleep with you?

Derek Liu: They can only be too young if their age is a negative number. Then again, I’ll put myself on the waiting list.

GaiaOnlineSucks: What about Gaia cars which are not so new anymore. Do you really think anyone enjoy them?

Derek Liu: Yes. Most people playing Gaia Online will never be able to afford a car, yet alone obtain the license. Gaia cars is probably the only thing they’re going to ride, aside from me in bed.

GaiaOnlineSucks: We read recently what GaiaOnline was actually hurt by the economical problems. Is it the case? Have people finally noticed how shitty GaiaOnline was?

Derek Liu: You know, after people lost their houses, it’s hard to keep playing Gaia. They still got a house in Gaia, though. And a real house they can come at any time — mine.

GaiaOnlineSucks: Man, you don’t miss one joke on sex with kids, do you?

Derek Liu: You know, I never thought you could become tired of having sex with kids… And I was right

GaiaOnlineSucks: But… doesn’t that ever gets you into trouble?

Derek Liu: Yes. See above. I’ve passed on Dateline NBC and subsequently went to jail.

GaiaOnlineSucks: And yet you are STILL making jokes on pedophilia? 

Derek Liu: You’re right. Pedophilia is a very serious subject. Some childrens get abused and never recover for all their lives…

GaiaOnlineSucks: Wow, I didn’t know you could be so serious…

Derek Liu: Let me finish. These kids usually make even easier targets. 

GaiaOnlineSucks: Mr. Liu, you know what time it is?

Derek Liu: Time to release the Battle System?

GaiaOnlineSucks: We wish. This is the rapidfire questions period of the interview. Whatever the question I ask, you have to answer in ten words or less. 

Derek Liu: It’s ten more words than what I ask kids to say when talking about our “relationship”.

GaiaOnlineSucks: Mr. Liu, when did you realize you had absolutely no talent in programming?

Derek Liu: Too soon.

GaiaOnlineSucks: Too soon… hmm… Seriously, will we ever see the Gaia Online Battle System?

Derek Liu: No. Not of your living.

GaiaOnlineSucks: We noticed you almost tripled the amount of ads on Gaia. Is there a reason?

Derek Liu: Yes. To get three times more cash.

GaiaOnlineSucks: I thought so. Let’s talk about Gaia Movies which have grown in popularity recently. What do you think of it?

Derek Liu: What’s better than a 200×120 resolution to watch a two-hours long movie?

GaiaOnlineSucks: That was longer than 10 words…

Derek Liu: 13, actually. The age of the oldest guy I’ve ever slept with.

GaiaOnlineSucks: I didn’t know you knew how to count.

Derek Liu: Only up to 10. If your age is higher than that, it doesn’t interest me.

GaiaOnlineSucks: Anyway, do you think “Woah” is still in?

Derek Liu: Yes. We based our whole advertising campaign on that word.

GaiaOnlineSucks: That was exactly 10 words. Woah.

Derek Liu: See?

GaiaOnlineSucks: Our last interview was in 2006. During these 3 years, what else changed on GaiaOnline?

Derek Liu: I redid the website in AJAX.

GaiaOnlineSucks: You did?

Derek Liu: Alright, you got me. Someone with talent redid the website.

GaiaOnlineSucks: It still sucks, though.

Derek Liu: Yeah, the only reason we did that in fact was to display new ads without requiring the user to refresh his browser.

GaiaOnlineSucks: Clever. Mr.Liu, there are still hundreds of people banned unfairly weekly. What do you have to tell them?

Derek Liu: There’s always a way to get unbanned. It depends on what they’re ready to do.

GaiaOnlineSucks: Will you bring strawberries and cream this time?

Derek Liu: Yes. And hopefully, I’ll be the one bringing cameras this time hahaha!

GaiaOnlineSucks: Hopefully — for you, at least. Don’t you ever feel shame about what you’re doing, the harm you are doing?

Derek Liu: You know, it might make them unhappy, but it makes me happy: One unhappy+one happy = 0, so it evens out.

GaiaOnlineSucks: Mr. Liu, thank you for your time. I need to talk to a psychologist after hearing all this.

Derek Liu: You could talk to me, I’m a great listener.

GaiaOnlineSucks: Are you sure? I’m 22.

Derek Liu: Huh… talk to me when you’re 12.

GaiaOnlineSucks: Mr. Liu, I don’t get younger as time passes…

Derek Liu: *Sigh*A man can dream… A man can dream…

At this point, Mr. Liu was completely unresponsive, clearly daydreaming of a world where adults get younger and kids even younger… I decided to call off the interview.

Perhaps the most disgusting point about Gaia Online is how it specifically target children. In Canada (and USA), publicity aimed at children under 12 years old is illegal. But Gaia Online does not need to make publicity: much like a virus, it is made to auto-reproduces itself.

Gaia Online puts a lot of pressure on you to invite your friends. Like almost everything in life, Gaia Online sucks when you are alone, and I’ve always seen Gaia Online as a sort of MySpace for kids. Gaia Online claims it is targetted as 13+, but I would the reality is all otherwise. But wait, maybe we are too severe, after all, Gaia Online does ask for your birthdate when you sign-up! They won’t let you make an account unless you are over 13, something you can fix in 3, maybe four seconds. We don’t say Gaia Online should make a DNA text but it should at least be obvious that the game is aimed at 13+. You can’t find anything related to that on the front page and everything is in “fun, little manga characters”.

Gaia Online states the majority of its player are adults, but we say it’s bullshit. If you take a look a typical day in Gaia’s forums:

You can clearly see the level of maturity Gaia users show. That’s the kind of stuff PG13? It looks like a bunch of kids discovering sex. Don’t tell me anyone over 15 would seriously write any of that crap, even in a forum. 

It’s a fact that Gaia Online not only target the 9-12 market, but also takes very few measure to reduce vulgarity. Hey, after all, they put c**k instead of “cock” like it was less offensive. I mean, that’s a beginning! With threads titles like “Watch me put a knife in my vagina” (off picture)or “If I don’t log on tomorrow, I’m dead” (off picture again), it’s rather obvious Gaia Online is packed with kids.

What’s wrong with that? First, they take no precautions. It would be very easy to mute anyone using an offensive word and be very strict with vulgarity. Or even make a separate forum without any rule with VERY CLEAR WARNING that the content is 18+. We’re not for filters and parental controls and kids would probably just lie then again, but at least Gaia could try.

There’s more, thought. Everyone knows kids 9-14 are an age where they are most influential, as they are building their personalities and relexions. What kind of message is Gaia Online sending to them with their subtle ads hidden all around the forum? Buy the newest crappy item, buy the best item and you will have friends? It’s very clear Gaia Online uses everything it can to sell things. We all know kids are not yet able to make constant and clear decisions and we all know they are going to go to their parents and cry for items and gold. That’s what Gaia wants, that’s how Gaia makes his cash: abusing kids by making them believe the newest item will make them popular. Just like real life, right?

Except that you don’t owe a trendy clothline: you own pixels. And Gaia acts without pity with botters. If you’re a kid unlucky enough to have good parents who will refuse to hand their credit card for that crap (but you could always mail them your weekly allowance fortunatly!), you might want to find better ways to make gold, such as botting, or refreshing. Once caught, you can forget all your friends, items, gold, house, etc. You’re gone and gone forever. Hell, there’s worse: if you’re banned by mistake– which happens more often that one thinks — you have no real chance to get unbanned. Gaia is the judge, the jury and the executioneer. Again, what message do they send? That the world is cruel? Is that really at that age that kids must learn that?

Profanity, vulgarity, pressure, manipulation, lies, injustice, these are many of principles Gaia Online uses on kids in order to make cash. That is why we believe Gaia Online totally Sucks. 

JOIN OUR FORUMS!

Gaia Online claims it is 13+, but it’s so easy for a eight, nine years old to join that it’s almost a joke. We believe that Gaia Online says it is 13+ only to preserve a good image. This is, however, not true, as there are hordes of little kids that have nothing better to do than joining Gaia and getting raped by pedophiles.

You think I’m joking? Who the hell over 14, maybe 15 would join a stupid game where the average IQ is 75?

Oh, but don’t worry, Gaia takes strong precautions to make sure NO ONE under 13 can join. In fact, they :

–Ask kids under 13 not to join in the first place kids would look: hidden deep below pages of Terms of Services

–When registering, it asks for your birthday, and if it is too low, it tells you this

”You cannot registed at this time”

You then have to press ”back”, change the birthdate year a bit (assuming you didn’t put a fake in the first place) and click ‘’submit” again. 

That’s it! That’s how Gaia Online intends to stop kids from registering. Wait, wait Mr. Boosh, tell us how they could possibly do better?

If they really wanted to stop kids from registering at their forums (they do not, in case you haven’t figured yet), they would clearly state the game is 13+ in the first page, and also make a display in the registration process. I am not asking that Gaia does a verification for each person who joins but at least show clearly to every new subscriber that the game is not designed for persons below 13. Instead, they hide it somewhere in their Terms of Service that no one ever read.

Wait, what does it change?

Gaia takes great proud into saying its boards are kept mature and that children under 13 cannot join, but I have just shown it is total bullshit. There are, in fact, a lot of eight, ten, eleven years old kids crawling on the forums. And Gaia does not care about it. Why should it? These are the people that buy the most donations.

If I had a sixteen years old kid wanting some monthly collectibles, I’d tell him to get a job. If I had an eleven years old kid wanting this same donation, what could I tell him? This is not counting that the children are MUCH more influential.

As stated by Fred Kelson, there is no actual way to know how much cash Gaia Online makes because it tries to hide all of its financial data. In other words, because they are not a company, they can easily hide all their income to the large public and thus continue to say that they need donations for server upcosts.

Well, for the first time, Gaia Online has admitted they were making a lot of money.

From http://www.answers.com/topic/gaia-online : ”It should be noted that the items for November 2006 barely payed for server costs.”

Oh really? How nice! A few things should be noted:

1)As stated by Mr. Kelson, aside from server upcosts, Gaia has virtually no other costs. It does not offer technical support nor does it upgrade a lot (aside from monthly collectibles). 

2)This does not count advertising, the gold they sell, the ad placement they sell and the store which is responsible for over 60% of their income. 

3)This was a data from November 2006; we can safely assume these income have grown up a bit. 

You can also note that Fred Kelson’s estimation was indeed correct as both results, the one he estimated and the one given by answers.com, are very close to each other.

Where do I want to come? Well they said that monthly collectibles paid for server costs, thus meaning that all money from advertising, gold and real shop go into their pockets. Nice job, assholes!

Here is a quest you won’t find on gaia

You might wonder: I agree with what you said so far, but how can I hurt them? Maybe you actually like a part of Gaia Online and don’t want to quit. Well, you certainly don’t need to stop playing to hurt Gaia. Here is how. 

The best way to help us is to put our logos in your signature, in your journal, anywhere where people will see them. We need to teach more people the evil of Gaia.

The best way to hurt gaia online is to download an ad blocker. I personally recommend Firefox with adblock to prevent these ads from loading once and for all. You will reduce the income Derek Liu gets, and stop seeing these annoying ads.

Never send donations. These are pure rape. If you absoluly insist on getting donations, pay with a credit card. You will not pay extra and Gaia will pay 1,9%+0,25c per transaction. Odd to say but I prefer Matercard to be rich than Derek Liu.

Never buy gold in-game; this is pure rape. I highly suggest you buy gold from independant website; it will be 90% cheaper and available everywhere. Or better yet, bot it for yourself.

Don’t talk of Gaia to your friends. We know you love the game and would love to see your friends addicted like you are, but this is the main reason Gaia grew so big without advertising. If you want to see your friends, see them in real life. 

Refer this website to your friends that already play.

Sign our petition against Gaia.

Join another community. There are much better forums than Gaia out there, without the advertising and crap.

I don’t get how Gaia managed to make such shitty games. They’ve taken blackjack, a great game, and managed to make it shitty. There was no need to add “cheating” and other bullshit story, just plain old blackjack would have cut it. Then again, what better way to introduce children to gambling.

I didn’t think it was possible to make fishing that boring. Then again, their game prove me wrong. I’ve heard of a guy fishing 25,000 fishs in a single day. What a fucking loser really. How about catching real fishes, moron?

Their puzzle games might give you subtle hints as to what you are in:

Gay.

Then let’s take their so-called slots machine:

WOOT I WON! How stupid really, who would really play that crappy game? Real money virtual machines are already boring, but THIS? I mean, there’s only two possible outcomes:

1)You win

2)You don’t win.

And what do you win? Stupid pointless tickets. Great job, dumbass, you’ve won 50 tickets, 999,950 more and you’ll be able to afford an hat!

Wait, I almost forgot the towns! What’s that, exactly, a kind of Second Life but even more boring? There are two things to do in town:

1)Hit trees hoping cash will fall

2)Leave.

Sometimes, Gaia will add something as stupid as waterballoon fights and other pointless craps which have absolutly no point. Next, please! 

JOIN OUR FORUMS!

Fred Kelson, student in mathematics/economy and Vice-President of Chaos Programming (www.chaosprogramming.com), has agreed to help us against Gaia Online by providing us information on Gaia’s financial state. Since Gaia does never releases any financial data, we asked him to estimate their relative income for us to verify if Gaia Online was indeed making money. The result is presented under the form of an interview, although, it was more his job. Again, I do not take credit for anything said here.

JIM BOOSH, administrator at GaiaOnline Sucks.

Fred Kelson, Vice-president of Chaos Programming

Jim Boosh : Hello Fred. We are here to discuss of Gaia Online financial report.

Fred Kelson: Correct. The first thing I’d like to say is that by remaining privately-held, Gaia Online manages to do two things:

1) They are capable of keeping all profits for themselves while still enjoying the benefits of no taxes.

2) They do not need to emit financial reports, meaning they can hide all their profits from the general public.

Jim Boosh: You mean there are publicly-held companies?

Fred Kelson: Correct. In fact, most companies (of that size) are publicy-held, meaning they do redistribute a (good) part of their profits to public holder. Stock holders, for example, or bond holders.

Jim Boosh: Why would a company do that?

Fred Kelson: Privately held companies are usually going for profits. This is normally utilized by small businesses that cannot afford to go onto the Stock Market, or for big companies that prefer to generate a lot of profits. Publicly held companies are here for one reason: to make a big annual income. 

Jim Boosh: Why so and why do they need to go public?

Fred Kelson: They do it because while they may make less profit, they can keep growing. The main problem of a company is and will always be to get cash for new project. By emitting bonds and stocks, they can keep the interest they have to pay low, while still having enough funds to continue growing. That means that Gaia Online does not intend to grow but to continue to make profits.

Jim Boosh: Are you saying that Gaia does not really care about their growth?

Fred Kelson: Precisely. Gaia has a very large community; and by becoming a public company, they could not only have much more free cash flow, but be able to hire many, many more employees and help serve their many customers much better. 

Jim Boosh: Interesting. Gaia Online states that it can barely pay for its hosting bills. What do you think of that?

Fred Kelson: That is total bullshit. They can not only pay their server hosting multiple times, but also have a large portion of profits.

For this analysis we are going to take pessimistic hypothesis. In the evaluation of discounted cash flows, especially when using Gordon-Shapiro techniques, there is always three types of scenarios: pessimistic, neutral, and optimistic. When a company compares a new project, it will always look at all the possible outcomes; however, I do not have the time nor the interest to make all three. You have to understand that whatever I am saying is pessimistic, meaning that things cost more in my planning that they should and that Gaia gets less than they should.

Jim Boosh: In other words, you take consider the worse possible scenarios.

Fred Kelson: Exactly. There are two types of Cash Flows (Cash Flow is the money that enters and leaves a certain portfolio). For now we are going to consider the negative Cash Flow.

Jim Boosh: Alright.

Fred Kelson: There is no technical support. There is no customer support. There seem to be very limited upgrades in Gaia Online if you consider that they only have to put two new items per month. There are no material costs. Gaia does not need to have offices, it does not need to buy materials to make its products (except for the store, but they are considered in our evaluation). They do not have music, bosses, levels or anything that would require man power. Their forums are on freely hosted PhP site. Their games were designed ages ago and are not considered in our analysis (they are not even complex to make). Also, most content is user-generated.

We are in the situation of a perfect project where costs and work have been reduced to a minimum. I must remember you that we are still taking pessimistic hypothesise. 

Now, let’s calculate their only real costs: the servers. On big-boards.com, Gaia Online claims that ‘’It has 80+ web servers, 11 database servers (4 dedicated to forums), 3 session database servers, 1 memory cache server’’. From the interviews, Derek Liu claims that these servers are

‘’ 1 x Celeron 1.3 w/512k RAM, single HD

4 x P4 2.6Ghz w/2GB RAM, single HD

1 x Dual Xeon 2.6 w/4GG RAM, 4 80GB HD running as 2 sets of RAID 0 arrays

1 x Dual Opteron 240 w/4GG RAM, 4 x 15,000RPM 16GB HD as 2 sets of RAID 0 arrays from Raid Array controller, 1 80GB HD for OS’’

These are quite old news, but we can safely assume that Gaia uses similar type of servers now, although they use more. This is a server similar (and even stronger since these are dual cores servers) than what Derek Liu states :

http://www1.ca.dell.com/content/products/features.aspx/pedge_6800?c=ca&cs=CABSDT1&l=en&s=bsd

The most expensive of these cost 7,316$. We are going to assume Derek Liu got no discount for the number of servers he bought (although a 15-20% discount would be reasonable for someone who buys 80+ servers!). This would make 95 servers at 7,316$ each. Let’s assume each server is 7500$ (a bit more) and that he has 100 servers. This makes it a 750,000$ investment.

Jim Boosh: Really? Wouldn’t the servers cost more?

Fred Kelson: 7,500$ is already too much. Hell, if I was realistic, I’d say that his 80 servers cost 2,000$ each. The server linked above could probably run a World of Warcraft server alone without lag. And I must remind you that this is a forum and some flash animation, not a full-scaled, MMO developed game. I am only taking the worst scenarios; I highly doubt Gaia’s server costed 750,000$. 400,000$ would be reasonable.

Jim Boosh: What about the server management?

Fred Kelson: If by that you mean making sure the servers are always connected and restart the servers that bug, then it’s mostly 500$ per month tops (300$ in electricity and 200$ in maintenance). Hell, the most expensive maintenance is probably to clean the top of the servers. Don’t believe rumors of servers costing millions.

Today, you can get a pretty solid dedicated server for 299$/month, at least one similar to one like Gaia Online has. That is, in my opinion, the same cost if you choose to lend a 12,000$ car (such as Honda Civic). However, the 299$/month counts all the money spent into engineers, handling, insurance, profit margin, marketing, meaning that if you purchase the servers and handle them yourself, they will indeed be much, much cheaper. On the 299$/month, maybe 125, 150 dollars go to pay the servers. Finally, you must remember that like cars, servers have no value after 10-15 years simply because technology will have evolved so much. This would be like running a MacIntosh today, it’s completely outdated. 

Also, but by buying the servers, Derek Liu saves a good bunch of taxes.

Jim Boosh: Interesting. Continue!

Fred Kelson: Let’s go back to our 750,000$ investment and let’s assume it is true (I have just shown it was way overpriced but let’s assume it was not. Also, one count argue all the servers were not bought at the same time but rather over time, leading to even more taxe saves). Assuming MACRS 5 years depreciation (any good company will use this, especially on this short-handled project), Derek Liu will be able to save a lot of taxes. First, since he gets commercial taxes, he only get 30% tax rate and can also deduce all servers cost from his tax report. Second, he does not have to pay the whole 750,000$ and can use MACRS depreciation over five years, leading to tax credits of around 40,000$ per year. To conclude, this makes HUGE taxes saves.

Now, let’s go on positive cash flows. To proceed, we need to establish a few hypotheses. Here is every single of them with a description of whether or not it is acceptable.

H1: We are going to assume everything said by Gaia Online is true to their last word. That seems reasonable because they already say very little about how much they make, so why would they lie?

H2: We are going to assume that Gaia Online is a medium-risked company and use a company internal rate of return of 10%. This is a bit too much since risk-free rate is around 4%, but for the sake of argument, let’s stick with this one

H3: We are going to assume every item is purchased at the end of the month to simplify the maths. This is wrong but it decreases the positive cash flows and thus doesn’t go against our calculations

H4: We are going to assume Gaia online lives forever. There is no reasons why it should close and this is a good approximation if Gaia remains at least 10 years. This seems reasonable because nothing indicate they are going to crash

H5: We are going to assume servers have no residual values and are simply thrashed at the end of their life. This seems a bit underrated but again goes again decreases positive cash flows (since we ignore what happens with them).

So let’s begin with the main source of income: advertising. There is an average of 50,000 players logged at any time of the day and night. Because of the large quantity, the IP redundancy is ignored, meaning each page loaded loads a different page.

We are going to assume a 0.10 CPM (cost per 1000 impressions), a VERY low price. If I could advertise on such a popular website at this price, I wouldn’t hesitate one second. I calculated this after evaluating the position and number of advertisements. 

From the 50,000 players, we are going to assume 20,000 (only) are in forums talking, others being playing games. We are going to ignore publicity placed on PMs. 

We are going to say each of those 20,000 players loads one ad per 5 minutes. This seems pretty low because I highly doubt anyone would spend 5 minutes looking at a thread doing nothing. Finally, we are going to say 70% of these players have nothing to prevent ads loading (that’s the real percentage in the population). This is a bit low since most are children and have no idea how to block ads, but oh well.

So this makes : 20,000 x 0.75 x 0.10/1000 x12 (number of ads a regular player load per hour) x24 (one day) x 30 (a month, all months have 30 days)

=12,960$ per month through advertising.

Now, for the monthly collectibles. A bit harder to estimate, a correct formula is:

6,750,000 (current players) x 0.10 (still playing) x 0.01 (one person out of 100 will buy a monthly collectible, very low estimate, I can hardly see a company selling 1 items for every 100 customers, but oh well!) x 2,20$ (cost of the donation after the handling fees of from donations

=14,850$

Gold selling: 

6,750,000 (current players) x 0.10 (still playing) x 0,001 (one person out of 1000 will buy gold which is kind of stupid, but we are going to assume less people buy gold) x 9,56$ (We assume average order is 10$ minus a 0.44$ fee, which makes a 20,000g order, low again. This was a bit harder to get and is a very rough approximation. I suspect average gold order is most likely at 20-25$, who would take this much time for only 20,000gold?)

= 6,453$

Again, there is more than 600,000 players playing, but we are taking pessimistic hypothesises.

Store (counting the ads):

This is a bit harder to estimate, but I am going to go roughly

6,750,000×0.10×0.001×5$ (average profit for an item sold, meaning a plain t-shirt would cost 10$ to make and ship) and their “ad system’’ giving a plain 5$ profit, transit fees excluded)

=3,375$

Which makes a total monthly profit of : 37,638. This is where it gets fun. We are going to estimate the NPV (Net present value) of Gaia Online as it is:

Note that we chose 0.10 ANNUAL RM rate (company rate of return); this gives monthly interests of:

(1+0.1)=(1+ i(12)/12)^12 è i(12)= 0.7974%

Using the perpetuity formula:

NPV = -750,000$ + 37638/0.007974 = + 3,970,007.17$

Or, if we compute the IRR (internal rate of return) 

0= -750,000$ + 37638s_12[1,04^(1/12)-1 ]/(i)

Where 4% is our risk free interest (meaning money is reinvested at 4%, which is odd because it’s easy to reach 6-7%, but again pessimistic hypotheses), s_12 the accumulated value of a 12 months annuity, 1,04^(1/12)-1 = 0,327373978% the monthly-calculated interest corresponding to a 4% annual rate of return and ‘’i’’ our IRR. 

We get i=61,3170299%

Meaning that a person putting 1,000$ into Gaia Online would get 1,613$ at the end of the year. This is simply crazy and is from far one of the strongest IRR I’ve seen.

Jim Boosh: Are you saying Gaia Online pays a lot?

Fred Kelson: A lot isn’t even the good word! I used the worst hypothesis ever made, such as 10% of players active (this would make it the less active forum ever made), and only 1% of people buying monthly collectible (this would make it the worst company ever) and I STILL comes to a NPV of +4 millions! Also, I calculated super expensive servers, meaning that the reality is probably close to 1.5x this, possibly even double!

Jim Boosh: According to you, how much does Derek Liu has?

Fred Kelson: Easily over 10 millions dollars.

Jim Boosh: What do you think of: http://mashable.com/2006/06/19/gaia-online-gets-893m-for-anime-community/

Fred Kelson: If it’s true, then this would be the biggest joke ever. 

Jim Boosh: Do you think advertising could pay server upcost alone?

Fred Kelson: We can see advertising brings about as much as donations (although I suspect more people than 6,750 buy collectibles), but I believe that 10.000$ is already enough to pay for servers. If you use Gordon Shapiro again:

NPV: -750 000 + 15,000$/0.007974= +500,000$

We still get a very positive NPV. That’s easily enough to pay for all future needs Gaia might have in server maintenance. So yes, advertising does pay for servers.

Jim Boosh: Why does Gaia shows so little advertising?

Fred Kelson: What do you mean so little advertising; they have it at the entrance of every forum and in each PM form. They could hardly put more without having customers pissed at it and moving to a new forum. Plus, it’s a commonly known fact that the more ads you put on a page, the less CPM each one pays. Advertisers love to be alone putting their messages on a page. Otherwise, the user will simply ignore it. Plus, the ad is very strategically placed. 0.10$ CPM seems very low considering these are banners and not text links and considering their targeted audience. Hell, for each 1000 persons that see an ad, you pay ten cents. If advertising was really like this, chances are that people wouldn’t even bother putting ads. On Chaos Programming, I used to get 1-2$ CPM, and it is much, muchhh smaller, with text ads, and with a single ad at the top.

Jim Boosh: Very interesting. So would you say Gaia Online lies?

Fred Kelson: They do not lie since they do not say anything, but even with pessimistic hypothesises, we can easily see they do gain hundreds of thousands every year out of little kids wasting their parent’s money.

Jim Boosh: Thank you, mister Kelson.

Fred Kelson: My pleasure.

Fred Kelson is working towards his CFA while still studying for his MBA. He is also studying to get a master in economy and works as CFO for Chaos Programming.

NOTE (1): In this project I spoke of the IRR only in a comparative manner. What I meant to say is that if someone spent 750,000$ today and got the popularity of Gaia Online, he would get an IRR of 61%. Note that most IRR are at around 15-20% maximum. However, it must be noted that no one knew how Gaia would grow before it started and that these are very hard to estimate, therefore our calculations are used in a retrospective manner. This means that Gaia is indeed making a lot of money but that it was very hard to foresee three years ago.

NOTE (2) I’ve tried to calculate the value of Gaia Online Stocks assuming it was emitting Stocks. Since it does not grow anymore, it would need to distribute every profit in dividends. If they were going on Stocks, they would do a lot of tweaking to increase Gaia Online rentability even furthermore (like World of Warcraft did). However, my calculations ended there, with a g= 0% and the obvious difficultly of estimating the number of stocks emitted. Also, where would the new funds go? Gaia could indeed improve its services a lot and also grow a lot, purely throught advertising, but Derek Liu does not seem to be interested in it. This would, however, be a good project to invest money in. I know I would buy Gaia Online Stocks if they did emitted stocks. However, being privately owned, they prefer to keep all profits for themselves, at the risk of not being able to grow. The money wins over the stuomers

NOTE (3) It should be noted that I’ve used pessimistic hypotheses all over this analysis. In reality, as I suggested, the cash flows are probably 1.5x or even 2 times what I said, giving an even higher IRR.

JOIN OUR FORUMS! 

WHO AM I?

My name is Jim Boosh and I am an ex-employee at Chaos Programming (www.chaosprogramming.com). I was hired by them around 1 yearago, a bit before christmas, to work on their main product, GoldenGaia. I spent countless hours looking at Gaia boards, searching for all information I could use for this project. GoldenGaia is a bot that allows you to gain free gold, without doing anything. 

I was hired by Frank himself. We both met in the metro since we were going to the same university, him in mathematics/economy, me in communications. I was hired as consultant and helped towards the designing of the bot. I left around two weeks ago, in good terms. Over the weeks spent on Gaia Online, I developed a truly powerful anger at Gaia Online and especially Derek Liu, its father (and mother), a manipulator and liar that would do anything for cash. 

WHY DO YOU DO THIS?

I do this because I grew tired of all the bullshit I would see on Gaia, and how easily administrators would go away with anything they do. I also do this because of their cheap tactics to get all the money they can out of little childrens. But the main reason I do this is because of what I saw while working at Chaos Programming. It was mostly this period of my life that led me to what I do right now. Chaos Programming used to receive 300-400 e-mails per day and trust me, some weren’t really funny. A while ago, Chaos Programming announced it was developing an account unbanner, and I can swear our mailbox got flooded by little kids with caps lock that were litterally crying to get their accounts back. One time, I spoke on phone with a little kid that somehow found our number, and inbetween the tears, all I could hear is hope. Hope to get his account back. He then handled me his mother and I understood Gaia had pushed it too far.

Their ban process is a joke. They do not listen to customers at all and just let everything go, hoping for the best. They openly lie in their Terms of Services and generally represent one of the nuisance internet has.

HOW DO YOU PAY HOSTING? CAN I HELP?

I pay hosting from my own pockets, as well as every update. Chaos Programming offered to pay bills, but I decided to go alone. If you want to help, feel free to submit me any text and/or picture you might have on the subject, but please note that I do not accept money. If you really want to donate, please put the money in some place and pay yourself a good supper, a good book or a movie night, something that will count, and not a stupid virtual item.

LOL YOU KNOW YOU WON’T SHUT GAIA DOWN!!!!!

Probably not, unfortunatly, but that does not mean we cannot denounce what it is doing. If that website gets enough attention, they will be forced to listen to our recommendations. Most of them are really only good sense and this would make a better game for everyone. You can read the forums too for more details. 

I got banned, what can I do?

Not much. If you have a lot of cash, write to them at their P.O. box offering money for your account. If you bought donations, you can try the small claims court too, but that would cost even more.

I HATE GAIA AS MUCH AS YOU!!! I WANT TO HELP!

You can always submit stuff or participate in our forums (once they are up), but the best to help is to sign the petition (okay I’m kidding on that one), put our logos in your gaia signature, profile, journal, anywhere.

How often do you update this website?

Whenever I can. I usually work on this website daily, but add articles weekly. So bookmark and check often!

Who works on this website?

I do most of the work, but some articles are from Frank Lau and I take corrections (because my english is terrible) from many users.