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NCsoft annual profits up 3% to $150m

NCsoft annual profits up 3% to $150m

Fri 14 Feb 2014 8:54am GMT / 3:54am EST / 12:54am PST
PublishingDevelopment

Savings on labour and marketing push up bottom line as Lineage continues to grow

NCsoft

NCsoft is a leading developer and publisher of online games.

A gaming powerhouse with a global reach,...

ncsoft.net

NCsoft's yearly financials are in, showing a three per cent growth in net profit, year-on-year, to a total of ₩159 billion ($150m). Revenue remained essentially flat at ₩757 billion ($714 million), with savings on marketing and staff costs pushing the publisher's profit up slightly.

Ncsoft's flagship MMO Guild Wars 2 showed a decline in sales and revenue, making ₩34 billion ($32 million) in Q4, 2013. That's down from ₩119 billion ($112 million) in the prior year's quarter, when the game launched - a clear reflection of its subscription-free model. However, with the title still to launch in Asian territories, traditionally NCsoft's strongest market, those numbers are expected to climb again soon.

Territory-wise, the lack of releases also manifested in lower sales and revenues. In North America, quarterly revenue fell from ₩71 billion ($67 million) to ₩25 billion ($24 million) year-on-year, while European revenue fell from ₩51 billion ($48 million) to ₩11 billion ($10 million).

Surprisingly, the company's most improved product in terms of revenue was also its oldest: Lineage, first released in 1998, earned ₩75 billion ($71 million) in revenue for the quarter, up from ₩65 billion ($61 million) in the prior year quarter. Across the entire year, its performance was more impressive still, climbing from ₩205 billion ($194 million) to ₩288 billion ($272 million).

The business as a whole had a weaker fourth quarter than in 2012, with revenue falling 26 per cent year-on-year to ₩210 billion ($198 million), and net profit tumbling 55 per cent to ₩46 billion ($43 million). However, it should be noted that this is largely the result of Guild Wars 2's winter 2012 release skewing the comparison.

This report was updated to clarify details on the comparative quarterly figures involved, specifically relating to the launch period of Guild Wars 2.

10 Comments

Renaud Charpentier Lead Designer, The Creative Assembly

66 144 2.2
Well, GW2 was a massive let down to me and all the core MMO players around me, so that's not a surprise. We had a lot of faith, the art was superb, the tech was great... then we all played it for a month and left... Same as most MMO published after WoW. TESO and WildStar are the next challengers but the crown seems nailed to the king's head.

Posted:8 months ago

#1

Klaus Preisinger Freelance Writing

1,137 1,178 1.0
We are talking about a game here that is being sold once at retail and then has an online store. For such a game it has quite a nice tail of revenue. Of course, nothing which impresses the likes of $4 Million per day f2p games, but no reason to consider the 350 people ArenaNet employs to be out of work next month. 3.5 Million Units sold was the last announcement in mid 2013 in terms of units sold, if you want to guesstimate RPU.

Q3-2012: $43 Million
Q4-2012: $112 Million
Q1-2013: $34 Million
Q2-2013: $27 Million
Q3-2013: $23 Million
Q4-2013: $31 Million

You could say either the RPU has to grow more with better cash shop offers, or the stagnating number of active users has to grow. Which is where ArenaNet China release comes in.

Edit: sry, numbers are off a bit because conversion tool from Won to Dollars does not consider last year's fluctuations concerning currency exchange. You get the idea though, try to fix it later.

Edited 1 times. Last edit by Klaus Preisinger on 14th February 2014 10:12am

Posted:8 months ago

#2
GW2 is not the same as GW...there was a sense of exploration in GW

Posted:8 months ago

#3

JT QA, Rockstar Lincoln

26 17 0.7
Was really disappointed with GW2, the art was fantastic, but the game didn't hold me after 1 month.

Posted:8 months ago

#4
in GW2, there is alot of items to store, and one is incentivised to buy additional storage, so playing it out of the package without further investment can be a small hill to climb sometimes

Posted:8 months ago

#5

Tim Ogul Illustrator

335 462 1.4
We are talking about a game here that is being sold once at retail and then has an online store. For such a game it has quite a nice tail of revenue.
Exactly. How much revenue did Assassin's Creed 3 make in Q4 2013? How much did Halo 4 make in Q4 2013? GW2's still doing exactly what it intended to do.
in GW2, there is alot of items to store, and one is incentivised to buy additional storage, so playing it out of the package without further investment can be a small hill to climb sometimes
Yeah, but the cost to invest in storage is significantly less than the monthly fee for a subscription MMO. I've bought several things like character slot and bank space upgrades, but I didn't have to just to enjoy the game, and even so I'm ahead on price relative to if I'd been playing a game with even a $5 sub fee for that period, and the upgrades I bought will stay for the life of the game, as opposed to a sub game in which my January sub fee would mean nothing at all once February rolls around.

Posted:8 months ago

#6

Klaus Preisinger Freelance Writing

1,137 1,178 1.0
The game certainly has a few flaws by design which the shop conveniently seeks to fix while suckering you into paying more money than the box price. Even a subscription is no guarantee these days that an MMO won't try such things.

If the game was subscription based, we would be looking at 600.000 subscribers necessary to pull in these numbers. Which for a game having sold 3.5 million units is not a realistic rate of retention as far as I know. Please correct me though.

At the same time, if I took the numbers in this Q4 report and combined them with statistics about monetization rates suggested by EEDAR, then 600.000 players in GW2 means the average person monetizing is around 16 per month, with whales pulling in an average of 590. Which frankly sounds a bit high, which in turn means the active player numbers are probably higher in the region of one million, or a far larger percentage of players actually monetize compared to EEDAR models. Either way, ArenaNet seems to be doing something right, even if you do hate their cash shop.

Posted:8 months ago

#7

Tim Ogul Illustrator

335 462 1.4
If the game was subscription based, we would be looking at 600.000 subscribers necessary to pull in these numbers. Which for a game having sold 3.5 million units is not a realistic rate of retention as far as I know. Please correct me though.
And it wouldn't have sold 3.5 million units had it launched with a subscription. If it had, they probably wouldn't have had more than 750,000 in total sales, and the bulk of those would have been gone by Christmas. They did as well as they did because the people who bought into it knew that they wouldn't be asked for $15 more the following month just to keep playing the same product they already owned.

As for total players, that's never been clear, and probably hard to gauge even internally, since people don't "unsubscribe" when they leave, they just stop logging in for a while. In my personal experience, there seem to be less people around, but that may just mean they've migrated to other servers or other activities, and there're still plenty of people around most of the time. They claimed to have their highest concurrency rates ever last summer (although it could have grown since), which would at least imply that the game had a higher total population during that period than they did at launch, so a growing total population rather than a falling one, but then there's n o guarantee that these players are regulars.

One thing to note though that probably played a role in their Q4 values was a December promotion in which if you spent a total of $50 in the gem store you'd get a special prize. This likely goosed the Q4 results, and would also probably lower the Q1 2014 sales a bit, since some players will likely have gems left over from this promotion (you had to turn cash into gems, you didn't have to actually pick up items with those gems).

Posted:8 months ago

#8
I believe the original GW model and quests were excellent.
I don't believe In a Pay monthly subscription. Why would anyone want to?
(as a player, I really liked the GW pay it all upfront model, no tricks, no hidden surprises)

And as such, GW 2 should either go free to play or remove the cash shop for sucking you in for worthless junkets of grind. IAPs, even in its modest form are a bane if online gaming. (I understand the practicalities of having to run GW as a business, but it just.. Doesnt feel like the same game)

It should really be a totally optional option that does not limit ones enjoyment one bit. At least for the GW franchise. That's what arena net got totally right with GW1 and it's expansions. GW2 goes a bit too far. Just

Edited 1 times. Last edit by Dr. Chee Ming Wong on 15th February 2014 5:35pm

Posted:8 months ago

#9

Tim Ogul Illustrator

335 462 1.4
And as such, GW 2 should either go free to play or remove the cash shop for sucking you in for worthless junkets of grind. IAPs, even in its modest form are a bane if online gaming. (I understand the practicalities of having to run GW as a business, but it just.. Doesnt feel like the same game)
The cash shop allows them to keep improving the game though. If they dropped the cash shop then they might be able to leave the game running as is, but they would have no money coming in to justify making new content. I have no problem with the cash shop they have, there are far worse ones out there. Very little in the GW2 cash shop is actually necessary for playing. Early on in the game, I bought three extra character slots, and two extra bank spaces, and that's about it. I spent more on GW2 over the first three months than I have on most subscription MMOs, but then I spent almost nothing on the game for the next nine months or so. And I wouldn't really even have to have spent that except through my own personal choices, since five characters is plenty to enjoy the game with (and more than most games offer for free), and the main bank space is reasonably large (especially given the huge space for collectible items on the side). In GW2, if you make all five characters you get for free (even just as level 2 characters) and give them all 20 slot bags, then that gives you a total of 530 inventory slots to put things in, plus 445 slots for collectibles, all of which stacks to 250 units per stack, plus you can form a personal guild and build it up to a vault holding 250 more slots, and that's all without spending a single penny more. On top of that, even gem store purchases can be made using ingame gold, so you can buy additional space that way.

Compared to, say, Marvel Heroes, which only offers a single 40 slot bag that has to be shared between ALL characters, whether you own one or thirty, and then a single 48 slot bank space that also has to be shared, AND that most items only stack to 10, or maybe 50 or 100 if they're being "generous," and I think GW2 offers a very good deal. 1225 inventory slots verses 88, yeah, I'll take that.

Sure, you can buy up all the black lion chests and special costumes and fancy mining tools if you like, but they offer almost no gameplay advantages and are easily avoidable. If someone else wants to buy them and help to fund the development of the game so that you can play a new zone or boss fight, so much the better. And again, every one of those items can be bought using ingame currency if you really want to never spend another penny on the game. There are exploitative business models out there, but GW2's is pretty much a textbook example of how to NOT exploit your players with an ongoing business model.

Posted:8 months ago

#10

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