Why? The Answer is in NCsoft's August 8th Earnings Report
By
Adelie,
Posted on: 2012-09-01 05:17 in CoH and CoV General Discussions
If thats the case..a purchase of the game, rights to distribute and the cryptic engine may be possible?
I am looking at the spreadsheets and report. Where are you seeing CoH-specific operating expenses?
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You have to look at the company's overall operating profit and net income (PDF page 4) and compare that to the Sales Breakdown - Sales by Games (PDF page 5).|
Originally Posted by Chazzmatazz
I am looking at the spreadsheets and report. Where are you seeing CoH-specific operating expenses?
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The company's overall operating profits and net incomes are in the red, so it makes sense to dump the IP with the lowest performing game sales. And when investors see NCsoft is operating in the red, they need to move fast to get back in the black... CoH would've been viewed as dead weight bringing down their bottom line (in which case it had to be cut loose).
But CoH wasn't the lowest sales performer, Guild Wars (I) was.
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It would have helped if NC had actually pushed CoH instead of forever jumping onto the next big thing.|
Originally Posted by Rubberlad
You have to look at the company's overall operating profit and net income (PDF page 4) and compare that to the Sales Breakdown - Sales by Games (PDF page 5).
The company's overall operating profits and net incomes being in the red, it makes sense to dump the IP with the lowest performing game sales. Regardless of how CoH's in-game market was doing, if NCsoft wasn't seeing solid game sales which would add MORE buyers to the market, then the game could be viewed as dead weight bringing down their bottom line (in which case it had to be cut loose). |
Ah whatever, I just hope they sell it to someone who cares.
[url=http://vox-doom.deviantart.com]Take A Gander At This.[/url]
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Guild Wars (I) is also:|
Originally Posted by Chazzmatazz
But CoH wasn't the lowest sales performer, Guild Wars (I) was.
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1) A standalone game with a one-time fee (no monthly subscription, no 3rd party "real-time market" operating costs)
2) Arguably NCsoft's best-selling game in years past with a very loyal player base (like ours)
3) The cornerstone of inspiration for Guild Wars 2 (which has JUST LAUNCHED)
Guaranteed, if GW2's sales slump in 2 quarters time, we may well see GW1 fold as well. If the company goes back in the black next quarter however, they'll keep GW1 for sure (and I'm very sure that NCsoft dropping CoH will lift their bottom line by quite a lot). Again, if NCsoft hadn't gone in the red this quarter, I think we'd still have CoH. Unfortunately for us, they had to do emergency surgery on their bottom line to get it off life support -- which required euthanizing CoH/Paragon Studios.
It's also possible that Funcom's earnings report last week scared NCsoft as well. That report says in no uncertain terms that Funcom thought MMO games are not the way of the future and that they're getting out of the business after the losses incurred with The Secret World. With that kind of fear circling around the gaming industry right now (which is very desperate to reinvent itself as something appealing to casual tablet/smartphone gamers) then again it makes sense to dump Paragon Studios which was working on an unannounced MMO game. Bottom line: NCsoft couldn't afford to take the risk on another MMO game that was still a year or two under development (especially when they were operating in the red). Especially if marketplace analysts are worried that the genre as a whole is dying.
Now if you still can't see the madness in all these numbers, then put yourself in NCsoft's shoes (which requires trying to appease your investors who are upset that the operating profits/net income have gone in the negative): If you *HAD* shut down an IP to save your bottom line and recoup a profit again, and you *HAD* to choose between Guild Wars 1 and City of Heroes, which IP would *you* get rid of in order to save face with your investors?
A lot of people are going "they shut down a successful game!" etc etc, but money speaks the truth. This news has been all over my facebook, and it's amazing now many people are commenting "I don't play anymore, but this still hurts".
Well, yeah, the fact that you don't play any more is why this is happening.
...I forgot what experience means.
One more thing: also notice that the Earnings Report is calling Aion's game sales numbers "weak" by comparison (top of PDF page 5) -- a comment which speaks volumes considering that Aion's sales were *much higher* than City of Heroes and Guild Wars (1) combined.
If that statement doesn't convince anyone that NCsoft viewed CoH as an underperforming liability that was dragging down their bottom line into the negative, then I don't know what will.
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Originally Posted by SpaceNut
A lot of people are going "they shut down a successful game!" etc etc, but money speaks the truth. This news has been all over my facebook, and it's amazing now many people are commenting "I don't play anymore, but this still hurts".
Well, yeah, the fact that you don't play any more is why this is happening. |
Quoted for truth!
Yes, from a business standpoint, it makes sense. I give them that 100%.
But to give absolutely ZERO notice to the team (and players) of your longest running title (near as I can tell), that clearly still has plenty of people playing it and willing to pay, is a dick move.
Want to save face? Give a public statement! Give an ultimatum. Give your loyal Studio and players a chance to save their game.
@Winter. Because I'm Winter. Period.
I am a blaster first, and an alt-oholic second.
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A bit, but porbably not enough - the dev team will cost more to fund than the servers.
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Originally Posted by Shadow Wail
If they cut servers would that help costs?
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@Golden Girl
City of Heroes comics and artwork
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Originally Posted by Rubberlad
In a word, it wasn't Cryptic Studios withholding license renewal that doomed CoH... It wasn't NCsoft hating on American gamers... At the end of the day, NCsoft was in the red and they cut the lowest-performing IP in their stable of games (and also the one with a significant mount of unjustifiable expense) just to rescue their bottom line... Can't say I blame them from an investment perspective. Unfortunately for all of us that turned out to be City of Heroes.
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Unfortunately this is what I feared as well. Server populations seemed to be dropping. Freedom added a lot of life, but SW:TOR hit us hard. Numbers recovered a bit in the spring but never seemed to come back fully.
I really am confused why the whole game was shut down, and not a server merge with a skeleton crew to maintain it. It does feel like "corporate panic" is to blame on that front. I don't have the numbers in front of me of course but it really does feel ham-handed and that they could have planned this better.
Even if the game was underperforming, I find it hard to believe that killing it off was the only solution. I'd like to think that they considered a lot of different options first before they came to this drastic step.
******* it! I was going to upgrade back to VIP once I24 came out.
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Lots of people are saying that. Forgive me, but... if you truly wanted to support the game, you'd have already been a paying subscriber.|
Originally Posted by that_darn_lurker
******* it! I was going to upgrade back to VIP once I24 came out.
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Not pointing any fingers, but those who "were going to come back" have contributed greatly to this outcome.
@FloatingFatMan
Do not go gentle into that good night.
Rage, rage against the dying of the light.
Another option would be to keep the game running but not adding new stuff to it. That would safe tons of money, but also lesser sales.
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Unlikely, the servers are hosted by themselves and they are technically piggybacking on a data center that has to pay the bills with or without them. Thats likely why we did not see any shutdown of the game when the employees got fired.|
Originally Posted by Shadow Wail
If they cut servers would that help costs?
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Manpower is very very expensive, though.
I ponder, is any game looking to launch soon? Because replacing the servers by November instead of expanding the data center may be a driving factor.
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Originally Posted by Starsman
I ponder, is any game looking to launch soon? Because replacing the servers by November instead of expanding the data center may be a driving factor.
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Guild Wars 2 just had a very successful launch. They are in fact in need of more servers. This might be a "resource reallocation" issue.
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Oh sh.
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Originally Posted by FloatingFatMan
Lots of people are saying that. Forgive me, but... if you truly wanted to support the game, you'd have already been a paying subscriber.
Not pointing any fingers, but those who "were going to come back" have contributed greatly to this outcome. |
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I don't think it's the only reason, but it may be an influencing factor.
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Originally Posted by gameboy1234
Guild Wars 2 just had a very successful launch. They are in fact in need of more servers. This might be a "resource reallocation" issue.
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That's just holding off the cancellation- MMOs that don't update are as good as dead.|
Originally Posted by Gunbunny
Another option would be to keep the game running but not adding new stuff to it. That would safe tons of money, but also lesser sales.
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I'm not gonna blame NCSoft for this, as much as we all love this game, it's never been a top contender in the market, and it's pretty damn old compared to everything it's had to compete with, and doesn't have an established IP or other big draw to keep a steady supply of new players in. And as ahead of its time as CoH was when it released, it's really showing its age now in a lot of ways- UI, world design, missions... you all know what I mean.
That and honestly, I hadn't been playing even after a 3-month subscription, because I honestly feel like I've done everything, besides also having less time and attention span for MMOs nowadays.
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Alright, I'm not a tech admin, but the servers won't actually be available to do non-CoH related work until 12/1/12. Would finding brand new servers in the next 3 months really be that much harder/costlier than shutting down this game and reallocating the hardware? The whole shutdown decision reeks of flop-sweat and panic...|
Originally Posted by gameboy1234
Guild Wars 2 just had a very successful launch. They are in fact in need of more servers. This might be a "resource reallocation" issue.
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...which is largely my beef with how the game's end is being handled. I can accept that it's just not profitable to keep developing for the game (manpower being very expensive, as was pointed out earlier), but I find it hard to believe that just running the servers is a losing proposition. And with a nearly-completed issue sitting on beta, replete with a brand new powerset for sale on the market, it just seems like they're leaving money on the table.
I get that the game's ending, but the abrupt, fire-the-team-with-no-warning way it was handled suggests something more than a cost-benefit analysis was behind the shutdown. The "NC Soft's way in the red" and "Cryptic's holding on to the engine" rumors/explanations provide explanations why - and given most corporation's reluctance to explain anything they don't have to, I fear they're the best we'll ever get.
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I most certainly am hoping. (I know you've seen it, but to everyone else, please click link in signature below...)
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Originally Posted by DarkBlaster_NA
If thats the case..a purchase of the game, rights to distribute and the cryptic engine may be possible?
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We've been saving Paragon City for eight and a half years. It's time to do it one more time.
(If you love this game as much as I do, please read that post.)
Most companies lease thier data center space. Power and cooling cost have risen to the point were in most cases you would be better off leasing floor space off to a company dedicated to data center infrastructure. They would be able to handle physical security better as well.
If NC needed more servers they would have bought more servers and leased more space. I doubt this had to do with making room on some data center floor in cali. Also the servers still going may have to with the lease held where the COH servers are hosted.
If you are payed up to November may as well keep it going.
Long story short:
1) Q2 2012 was the first time ever that NCsoft was operating with a significantly NEGATIVE profit margin (ouch!).
2) City of Heroes had the lowest performing game sales (even Aion was doing much better...).
In a word, it wasn't Cryptic Studios withholding license renewal that doomed CoH... It wasn't NCsoft hating on American gamers... At the end of the day, NCsoft was in the red and they cut the lowest-performing IP in their stable of games (and also the one with a significant mount of unjustifiable expense) just to rescue their bottom line... Can't say I blame them from an investment perspective. Unfortunately for all of us that turned out to be City of Heroes.
See for yourself by getting the 2Q 2012, August 8th unaudited earnings report here:
http://global.ncsoft.com/global/ir/quarterly.aspx
I'm sure if NCsoft had maintained a profit this quarter, we wouldn't be in the predicament we are now. But they didn't and the price of doing business in a very competitive industry right now had to be paid...
Sorry folks.