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NCsoft profits up on Guild Wars 2 success

322 per cent YoY rise for Korean publisher

NCsoft's latest financials are out, and show a 49 per cent fall in net income on last quarter, but a 322 per cent rise year on year. Sales follow the same pattern, down 51 per cent on the last quarter, but up 31 per cent on last year.

Q1 sales were ₩184.9 million or $166.3m (£108.2m), while net income for the same period stood at ₩52.3m or $47.1m (£30.6m).

Korea remained NCsoft's biggest market with 64 per cent of sales, up from 43 per cent last quarter. North America's share fell from 25 per cent to 13 per cent, while Europe fell from 18 per cent to 8 per cent. The company's biggest seller for Q1 2013 was Lineage 1, but Guild Wars 2 still maintained a 21 per cent share.

NCsoft's managing director, Nah Seong Chan, also hinted during the earnings call that the company was planning to address falling Guild Wars 2 sales with a new expansion pack.

"In terms of box sales and microtransactions are still very strong, and of course we are preparing an expansion pack but in terms of when we will actually launch it, it's something we are still monitoring... We are looking to the performance of the game and then we will decide what will be the best time to do the launch."

Unfortunately developer ArenaNet doesn't appear to have got the memo, with director Colin Johanson saying as recently as March that none were currently planned.

"Expansions are definitely something that we'll potentially look at in the future, but we don't have a timetable on it. We're open to it, but I think our major focus as a studio is making the living world concept as strong as possibly can for the players that we've got."

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Latest comments (9)

Brian Lewis Operations Manager, PlayNext8 years ago
I am not sure that you are reading the numbers right. When I look at the numbers, I see that GW2 is DOWN drastically, but that Lineage 1 is up. So, if there is any game that should be credited for the increase, it is Lineage 1.

In fact the sales for GW2 are crashing so fast that it might be questionable whether this is a sustainable products. Putting out an expansion might invogorate the product, but it would also mean that it would need an update monthly, in order to survive. The bottom line seems to be that the B2P business model is not paying off like it once used too.. and that there is no sustained sales to support the product over time.

Edited 2 times. Last edit by Brian Lewis on 13th May 2013 3:48pm

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Jade Law Senior concept artist, Reloaded Productions8 years ago
@Brian have you even played GW2?
They already have monthly mini updates and are very good at providing new content. A new traditional expansion would only benefit from a marketing perspective. The game itself receives as much new content as an expansion would give it but is released in iterations instead of one big one every year.
Given that it has a reasonably sized playerbase and a thriving economy that feeds into the cash shop I would say B2P is why GW2 has been so successful compared to the myriad of F2P crap all competing for the same players. Being B2P has set it apart in quality and they seem comitted to providing customers with a quality ongoing games experience.
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Brian Lewis Operations Manager, PlayNext8 years ago
The issue here isnt the game, the content updates, or even the playerbase. The issue is the revenue.

This game has two revenue streams. The primary revenue comes from box (or expansion) sales. That is drying up, and doing so quickly. The sale of gems (cash shop) is not showing itself to be a suitable replacement.

NCSoft is a business. They are going to look at the revenue (both current and future), and then look at the cost of operations/development. ArenaNet has a very large staff (and still growing). At some point NCSoft will want to either see an increase in revenue, or a decrease in cost. Their first such attempt will be an expansion. The second attempt will be to adjust the cash shop. However, if the revenue for these are not sustainable, expect to see them start cutting cost (staff).

Just take a look at the revenue for Lineage 1, or even AION. They at least show the potential for sustained growth... which is what NCSoft is looking for in a product.

Edited 2 times. Last edit by Brian Lewis on 13th May 2013 4:14pm

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Show all comments (9)
Steven Wemyss Senior QA Engineer, Avalanche Studios8 years ago
I'd tend to say it seems to be symptomatic of the game not living up to expectations more than anything, anecdotally speaking I know very few people that stuck with GW2 because it was a flawed concept which ended up being very disappointing. The PvP was ok but not great, the dungeons were poor and ironically the lack of the trinity (one of the main features of this) just made them into random aggro spamfests. Tried to get back into it but given my old guild imploded with the lack of people and the Social functionality being completely non-existent in this game it made it incredibly difficult, no Looking for group, not even a simple looking for guild interface...

Doesn't really matter how good your shop and Gem economy is if people aren't playing the game

Edited 1 times. Last edit by Steven Wemyss on 13th May 2013 4:17pm

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Jade Law Senior concept artist, Reloaded Productions8 years ago
i was replying directly about this content comment
"Putting out an expansion might invogorate the product, but it would also mean that it would need an update monthly, in order to survive."

My point is they already update monthly.
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Benjamin Holschuh Production Assistant, 2K Games8 years ago
As a player of Guild Wars 2 myself I've found that it is rare for anything in the gem store (real money store) to compel me to purchase it. The boosts that are sold (XP bonus etc) seem like a good idea, but I've received enough of those from just playing the game. The cosmetic changes (new outfits) are cool, but most of them are considered "Town Clothes" meaning you are meant to wear them in non-combat areas. If hit while wearing town clothes you are immediately reverted back to your regular armor. If I as a player am out in the open world 95% of the time, it doesn't make sense for me to purchase a cosmetic enhancement that will only be seen 5% of the time I'm playing the game. Another NCsoft game, AION specifically, allowed these kind of silly cosmetic skins to be worn anywhere, and if I remember correctly from my time with AION those skins were a pretty substantial part of the in game economy.

At the end of the day I feel like some of these inherent limitations of the items players are able to purchase, as well as the fact that new items are not added with much frequency (in my opinion), could be contributing to this decline. I haven't seen any numbers myself, but if micro transactions are the lifeblood of this game after the initial purchase, then maybe focusing more attention on the types and amount of content available there would help.
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Tim Ogul Illustrator 8 years ago
Are there publicly available numbers for the GW2 cash shop? I mean, Brian is saying that the boxed purchase is their primary revenue stream, but I've spent about as much in the gem store as on the boxed purchase, and I'm extremely frugal compared to other people I've encountered in the game. I wouldn't be at all surprised to find that their gem store revenues matched or exceeded their box revenue.
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Klaus Preisinger Freelance Writing 8 years ago
Here is what we know:

GW2 was mentioned in three quarterly reports now.
It stands at $175 Million earned, adding all quarterly reports so far.
ArenaNet made a "we hit three million users" announcement, but not four.
This puts GW2 somewhere between $42 and $59 earned per user.
Consider vat, retail, wholeseller and distributors (e.g. NCSOFT uses Flashpoint Inc. for German distribution) and you get a god idea how well microtransactions work.

If you open the report on page 10, you will see "sales by subsidiaries". What is ArenaNet going to sell directly other than their microtransactions and some accounts? Another indicator to see how the game is doing.

Also notice that the game was first sold in February 2012 (Preorder including some beta access) but income from GW2 did not appear on the financial reports before q3/12.

ArenaNet has 300 people working for them and is actively seeking more on their homepage.

Looking purely at the numbers, then whatever they are doing seems to be working out for them.

But don't get me started on my player's opinion on the cash shop. It might be far from horse armor, but sometimes it is not far from horse manure.
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Tim Ogul Illustrator 8 years ago
I think GW2 has one of the better cash shops out there. Is a lot of it junk? Yes. I would never buy town clothes in their current form. But there's also some good stuff in there that almost all long-term players would tend to dip into, like bank slots and character slots. There are definitely ways they could improve it though. For one thing they absolutely need a free "town clothes closet". You pay for the clothes, you shouldn't have to pay to store them. For another, you should be able to wear town clothes in combat, ideally allowing you to selectively replace armor pieces with town clothes at will. I also think the prices for chest keys is way too high for what you get. I have a huge stack of unused chests sitting around.
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