Why was COH killed by NCSoft?

OK, I'm trying to make sense of the charts and numbers in these posts.

Was City of Heroes making $10M-$12M/year in revenues or profits?

Revenues being all the money taken in, but doesn't account for costs the company has to pay - salaries, benefits, payroll taxes, office space, utilities etc.

Profits being the money left over after the costs are paid or Revenues-Costs.

The MBA definitions may be more complicated but lets use these Econ 101 definitions.

For an 80 employee company, revenues of $10M/year aren't really all that great. Ballpark each employee at $100,000 /year cost in salary, benefits, cubicle space, etc and you get a cost of $8M. Add in the cost of the servers, then the game was actually generating little profit.

Or does the $10M /year number represents NCSoft's cut after Paragon Studios pays all the costs? If that's the case, then we're back to a number representing more the profit of CoX to NCSoft.

Don't know if you're the one that's behind Vicarious Existence blog Pebble but I find this chart interesting.



The interesting part for me is the sudden drop in revenues between Q2 and Q4 of 2009. It looks as if we're on the same slight downward slope in revenues before and after that period, just offset by around $2 million per quarter. What happened from July to October 2009 that caused revenues to shift from roughly $5 million per quarter before to only $3 after?

CO and Aion were released in that time frame.

As for issues, the only issues that came out Q2 through Q4 that year were I14: Mission Architect, I15: Anniversary and I16: Power Spectrum.

It's possible that it took that long to see the fallout of PvP changes and/or players who were upset over the many "tweaks" done to MA to fix the numerous exploits but we are talking 40-60% loss in revenue. I'm sure if the PvP community was that large those I13 changes would have been rolled back to some extent and I would like to think that 1/2 the players in the game at the time would NOT get upset enough that the quick path to XP and IOs that didn't exist 6 months before was "fixed", so they choose to quit.

I'm leaning more toward leaving to try CO for whatever reason and even if they didn't like CO, just didn't come back here.

Well, this got much more serious than I intended. Honestly, the original post was done after 3 very large tumblers of Capt&Coke, so I'm surprised I remember posting at all, spelled mostly everything correctly, didn't swear every other word and didn't pass out before hitting the "Submit Post" button.

Personally, I think falling numbers are certainly part of the issue, but in the end NCSoft just wants to abandon NA. It's a battleground that they are losing in, while they are doing well in Asia. Yes, GW2 is marketed here, and B&S is supposedly going to make the move. But I have the feeling B&S won't make it here, and GW2 will go the way of CoH's support in EU in short order. NCSoft just don't market NA like they should if they really cared about establishing/keeping a presence here.

Where am I getting this from? Mostly, just stepping back and looking at the big picture. Why haven't they given any real explanation to "why"? Why are they allowing themselves to get dragged through the mud, when they certainly they saw this coming? Because they just don't give a crap about the NA market anymore.

Or maybe they are just assmonkeys.

I think the story goes beyond CoX,
-A general decline in sales that matches with the period of the Recession

-strangely enough their lead MMO is Lineage, and it was the real winner of last quarter, and over long term seems to have done a better job of holding steady

-I say stange above, b/c Lineage II has been in second place for a while and has been doing less well than the original for a while, and seems to be in a slight decline

-Aion, looking at last quarter and previous quarters, this looks like where their real problem is, while it still has stronger sales than CoX by a huge margin, based on how they have been doing, its just a matter of time

those three games account for something like 85% of their sales, with CoX, GW, and Misc. for the rest.

-Compared to to their other games, CoX seems to have stable sales, with only a very small decline, and with spikes, averaging at $10 million in sales/yr, last Q it only had something like 1.2% decrease in sales( both Lineage II and Aion had a greater decrease both in % and $).

If you look at their different regions, its pretty obvious the vast majority of their sales is in Asia, but whats more interesting here, it looks like last Q sales litterly died in Europe, prior to that it was doing about the same as North America.

-In terms of costs, last Q spiked in two areas. One area looked like it was the costs related to launching Guild Wars 2. The more troubling part was the 25% increase in labor costs last quarter.

While I am sure there other factors related in their decision tree, it really looked like they were in position based on last Q's performance where they had to prove to their investors that they were doing something, and to be blunt it wasn't going to be the big three( although Aion looks like it really does need some corrective action before things get to bad there)
so it was going to be either CoX or GW

Here CoX has two major disadvantages, its never been strong in asia for whatever reasons
, and didn't have a new version about to be launched( GW 2), and I imagine there is some hope that GW 2 will have some legs in Asia.

Honestly the part I am not understanding is their reluctance to sale, CoX might not be WoW, but in terms of North American MMO's its not a bad property, and there are a lot of other MMO's out there still going with weaker sales and subs.

All very interesting stuff.

A special thanks to Father XMas, without whose wonderful guides, I might not have been able to upgrade as easily and affordably as I did.

I can understand why NCSoft wanted to drop CoX. As the above numbers show it was not a fiscal giant for them in any way the past few years.

My big question is why didn't they at least LOOK for a buyer? Hell, for the right price one of the other big firms (DC or the upcoming Marvel MMO) might have bought it just to shut it down. Or some other buyer might have purchased it, along with the outstanding subs, and just kept the lights on.

The game was set to generate 10 million dollars in revenue. Even if they kept a few Devs to handle problems and release the occasional Issue the server upkeep couldn't be THAT much. Even if everything was condensed down to Freedom and Virtue (the two most populous servers) there STILL would have been enough players around to support the project.

To just DROP a game and piss off 100k players who most likely will never touch your product line again seems a bit short-sighted to me.

I can understand why they did it...but it could have been handled MUCH better.

Well it's possible that since they didn't think it was worth keeping around, why would any right thinking company want to own it? You have to think something has value before you think someone else would be interested in buying it.

Of course then you have to factor in the player database. Companies tend to jealously guard their customer lists. Why would they want a competitor to have those names?

OMG! I just heard, I was away for a couple weeks. I feel like I've just lost one of my children. I've been playing this game since the beginning. I am embarassed to say that my eyes are actually welling up over this and I feel like I'm about to sob. COH has such a close knit community and gave me so many hours of fun and happiness. *sob, sob, sob* :................

Believe me EarthFury...you are not the only one to actually shed tears....and not just us gals

The Don't Dwell on the How or Why just hurts me (See Below). It seems to me that the game is a reasonable IP. It is paying its bills. Going Rogue had a lot of extra's but for me I would have liked to see a lot more new powersets in a true expansion, but that had they built an actual expansion I would easily have paid my $40-$50 for the expansion pack. That was a missed opportunity for revenue jumps. WoW puts out expansions every so often and they see revenue jump in that model.

I think our community would've been happy with regular expansions. If the CoX franchise has any potential future revenues you would probably want to bank on some sort of expansion if not right away, in the foreseeable future.

In a lot of ways, I'd pay some moderate extra amount $20.00 to $40.00 for issue 24 and the ability to keep my accounts operating and my toons alive. In a lot of ways if they had setup that you pay $20.00 per Issue. I would've payed that.



"To our Community,

Thank you. Thank you for your years of support. You've been with us every step of the way, sharing in our challenges, encouraging us to make City of Heroes better, more than everyone else thought it could be. We couldn't have come this far without you. I implore you all, focus on the good things of CoH and Paragon Studios. Don't dwell on the "how" or the "why", but rather join us in celebrating the legacy of an amazing partnership between the players and the development team.

Thank you, and I'll see you in the skies, one last time.

Andy Belford

Community Manager"

Does anyone actually have evidence that CoX is profitable? Or is this just some baseless speculation