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
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This should get a lot more attention.|
Originally Posted by Deacon_NA
I just listened to the Q2 earnings report conference call, as linked in the OP. Yes, the whole thing. These calls are painful enough, but to have to listen to everything in Korean and then again in English... torture.
Our little game was mentioned one time and only factually as they went over slide 5. There was more discussion about the baseball team NC owns in a Korean league. There was even a question about liquidating some of the properties (like Arenanet) but nothing about CoH/V or Paragon. There seemed to be a general apprehension about the future of online games and PC games as well, but I may be reading too much into that. None of the questions from any of the investment firms were about CoH/V, but a lot of time was spent talking about headcount. NCSoft made a clear point that headcount would NOT increase. No doubt this is a key management focus. Headcount always is, especially in light of reporting a loss. It seems to me that, with managing headcount being a priority the low hanging fruit was Paragon. I believe that even being slightly profitable wouldn't have helped Paragon. Headcount just needed to go down. |
Of any explanations you brought up the most reasonable.
A game is not supposed to be some kind of... place where people enjoy themselves!
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Funcom/EA was banking on raking in money ASAP on an undermarketed game exploring new frontiers in MMO gaming. Its going to take time to get its feet steady, so I'm not sure what the heck their strategic thinking was. Oh right, EA. Hopefully Guild Wars 2 will show that there's still a valid MMO market stateside.
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Originally Posted by Ukaserex
Time will tell. The info about FunCom was also interesting, as I'd just downloaded it - depressing character creation compared to CoH. Interesting to think MMOs could go the way of the dinosaur because they're not profitable enough.
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Blood Widow Ricki * Tide Shifter * T-34 * Opposite Reaction * Shaolin Midnight * ChernobylCheerleader
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Yeah, pretty much. We don't know NCSoft's reasoning, so it's impossible to say that any realistic amount of extra CoH subscribers (absentee fans of the game who in an alternate universe subscribed full-time instead of subscribing off-and-on) would have changed anything.|
Originally Posted by Brillig
Blaming "freeloaders" is a massive failure of reasoning.
If the "freeloaders" were what caused the game to go down, then the root cause would then be that Paragon went F2P without managing to monetize free players adequately. So NCSoft didn't kill CoH - it was suicide. |
Obviously, the game would have survived with an indeterminately large number of extra subscribers, but that's a pointless observation.
Internet acrimony is bad enough on its own. Pointing fingers now, on this forum? Silly doesn't even begin to cover it.
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Originally Posted by Iggy_Kamakaze
Nice build
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There's an interesting timeline to that. |
Originally Posted by Lothic
For all we know the switch to the F2P CoH:Freedom system might itself have been a compromise that avoided a shutdown of the game as early as last year. It could have been a "last chance" maneuver that was given some time to work but ultimately didn't save the game. *shrugs*
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In late 2009, CoX's revenue took a hit by almost half...early 2010 they firmly decided to work on the F2P intergration. After a year with F2P, CoX's revenue was still showing a downward direction and looks like it keeps setting record lows.
Majority of CoX's revenue is from NA so if you convert to USD you'll get a better approximation (not exact since a small portion of that is from EU) of the revenue trajectory.
And year after year, CoX's yearly revenue keeps decreasing. In 2010 it made about $13.5mil, 2011 was $10.9 and at the half year mark...2012 was looking to make about $10mil. (If it were to continue...likely would be less now with the freeze)
The year NCSoft bought CoX from Cryptic (2007) CoX made $25mil that year. Less than half what it's looking like this year.
Before Freedom, CoX (not counting the temporary spikes from some releases) was basically losing about $100k to $150k a quarter...after freedom it was losing about $80k USD.
Needed another quarter to get a better picture of that but so far F2P was slowing down the decline but it was still declining and not knowing how far they can go down since they never breakdown operating costs by game in their public reports so not sure how much longer they can continue that decline but maybe they're close and the outlook that even F2P couldn't reverse that decline (along with other factors like whatever their refocus target is) didn't help but maybe spur their decision along.
Whatever else their reasons are that concluded in this event, the poor long-term outlook of CoX's revenue didn't help.
I don't know what else after trying a year of F2P they could try to reverse that revenue trend. Seems like NCSoft gave them a couple years to try.
[speculation]
That other Paragon project they diverted personnel to may have been PS's attempt to avert having all their eggs in this one basket but didn't have enough time.
[/speculation]
EDIT: I mentioned this in other threads but NCSoft's operating profit/income dipped into the red once before in 2006. Granted not as deep as last quarter's but they had expected the releases of GW2 in north america and Blade&Soul in korea territories in this quarter to compensate just as that time in 2006 where the quarter after the dip, their income shot back up.
And GW2 so far is only released in the western territories, no news yet of releasing in asia so not sure about abandoning the NA region in their refocus. Don't really know how they're refocusing yet.
EDIT2: GW2 and B&S does show promise but it's still early and B&S is showing signs of slowing already so have to wait and see.
Thank-you guys for discussing in this thread, the first actual info. besides all the stressed, emotional responses I have seen. I enjoyed and will miss this game.
I had 2 accounts when we got the news last week, and even bought the Nature Affinity set with the sparkly power heal.
Since it seems more and more reasonable a decision they made, I have to say, In my mind the only villain behind the closing of Paragon studios and City of Heroes is... the dude who was the first in game doorsitter. The guy in Hollows who told us to "Go, Hunt. Kill skulls." I blame him.
I would like to see someone buy it, even if it was "archived" with all the current sets, mishes, etc, and no changes, but playable for us reminiscent fogies.
-BurnSucka.
"Melt 'em like butters!"
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So where did you get the numbers that represent the expense side of those calculations? They aren't in any of the NCSoft reports, they don't break their expenses down on a per game basis just revenue. So how did you calculate how much they are losing?|
Originally Posted by Pebblebrook
Before Freedom, CoX (not counting the temporary spikes from some releases) was basically losing about $100k to $150k a quarter...after freedom it was losing about $80k USD.
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Therefore I shall call BS on you.
Now I could understand the suggestion that the game had a low profit margin and they believe they could get a higher rate of return by putting that money into something else. I see that Wildstar was shown again at PAX (by the developer, not NCSoft proper) and generated the requisite hype so maybe it's closer to release than I thought and they won't kill it in the crib, at least not until it makes some money to offset some of the development costs.
Father Xmas - Level 50 Ice/Ice Tanker - Victory
$725 and $1350 parts lists --- My guide to computer components
Tempus unum hominem manet
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I thought it was obvious since i even mention they (NCSoft) never broke down operating costs by game but sorry, that was talking about loss in "revenue"|
Originally Posted by Father Xmas
So where did you get the numbers that represent the expense side of those calculations? They aren't in any of the NCSoft reports, they don't break their expenses down on a per game basis just revenue. So how did you calculate how much they are losing?
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And profit comes from revenue. They can still be profitable, but with shrinking revenue, unless they keep shaving off costs, there's nowhere profit can go but lower eventually.
And yes cost is a moving target so really can't even guess what their profit margins are so i don't. There was only one mention of how much CoH was costing NCSoft and that was $18mil per year...but that was 8 years ago. I'm sure it's very different now.
Sorry, the word "losing" by itself made it sound like you were stating an actual quarterly loss, a bottom line number, not a negative change of revenue when comparing quarters.
Father Xmas - Level 50 Ice/Ice Tanker - Victory
$725 and $1350 parts lists --- My guide to computer components
Tempus unum hominem manet
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Here, no, but in the past I did write that one of the problems that CoH has is that it's highly mission based nature made it so the game appeared empty, that zone exploration was dead and hazard zones were nearly useless, and that with a lack of street events to go on there wasn't that dynamic nature that a lot of people get in most MMOs.
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Originally Posted by Father Xmas
+1
I'm surprised nobody has yet to blame mission bonuses and mission reduced debt yet. After all before they implemented that street sweeping was a viable leveling strategy and kept the streets and skies full of heroes instead of ghost towns with heroes seen only when they were going door to door and that is rare today with all the methods of zone and mission travel now available. Honestly if you were a new player in an MMO and you see visually maybe five others in your zone you are going to start questioning the population and therefore the popularity. |
TPN trial guide video / MoM trial guide video / DD trial guide video / BAF trial guide video
/ Lambda trial guide video / Keyes trial guide video / Magisterium trial guide video / Underground trial guide
This thread embodies the CoX community in it's most distilled form.
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You can't blame the players. We who left all have reasons not to play, and they're perfectly valid reasons, because it's our decision to make. That doesn't mean we don't like the game, or that we can't be sad that it's gone, it just means that circumstances (or for some, changes in the game) made it harder for us to justify playing or paying.|
Originally Posted by Ukaserex
It boggles my mind how many sad people there are because they weren't playing before - but now they want to play.
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I haven't played much since 2008. When my daughter (now 4) was born my gaming time plummeted and after my son was born it went down even further to the point where I'm not playing any games for weeks at a time, and when I do it's only short sessions.
I can't justify paying a subscription to a game I don't play. I was happy about Freedom, but the F2P conversion was such that it left me with crippled or unplayable characters (without paying extra or investing lots of time to change them) which left a lot of the excitement out. I still played a little, checked out the new low level content, but it just wasn't "it".
I still care for CoH. It was a big part of my life from 2005 to 2008, and a small but existing part afterwards. I'm pretty sure it's still a game I'd play if I had tons of time to game. I'm still sad about it going away because it was the game I spent most time on in my life.
One last thing: it doesn't boggle the mind. On the contrary, it's natural. When a friend you haven't been in touch with in years dies, isn't the first thing you think "I wish I kept in touch"? We are mourning City of Heroes. Doesn't belittle our feelings.
Hey guys,
Slight OT here, but I just want to apologise to anyone who was offended in any way by my earlier comments and laying of blame. Seems I'm more upset by this whole thing than I realised, and was hitting out at people that totally didn't deserve it.
So, I'm sorry. I apologise unreservedly for my prior comments and freely admit I was being a jerk.
@FloatingFatMan
Do not go gentle into that good night.
Rage, rage against the dying of the light.
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There is something a lot more than just simply losing a game about this. I guess this game, and the way its so chat friendly, gets under your skin big time. It just has something about it.|
Originally Posted by FloatingFatMan
Hey guys,
Slight OT here, but I just want to apologise to anyone who was offended in any way by my earlier comments and laying of blame. Seems I'm more upset by this whole thing than I realised, and was hitting out at people that totally didn't deserve it. So, I'm sorry. I apologise unreservedly for my prior comments and freely admit I was being a jerk. |
I gave up the gnme a couple of years ago ..(you may remember me from our clashes on these boards) I came back, reinvigorated by the incarnate system and the way the devs seemed to be really redoubling their efforts to make this game the best they could.
I left again owing to unforseen circumstances and I rejoined a month ago. Both times it had a coming home feel about it. ( I don't want to sound to washy here...) So, I too am devastated by this unforseen, pretty callous decision, not least because it leaves 80 good people out in thre cold, without the decency of at least warning them their jobs were on the line.
Every time I relog onto these boards I get an irrational hope that someones posted they had a change of heart or that the games been bought out or something. And I get this weird disappointment when i snap back to the real world a few seconds later.
f memory serves, you weren't happy when NC bought out Cryptic and (I hope I'm remembering correctly) you cited your distrust of corporations.
How right you were.
Don't get into a flap. It's only my opinion and I'm thick
Arc 56763 Lord Anarchys heaven
2 mission arc. Bring friends cause Lord Anarchy means business...
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Yep. I've been through the process before, several times in fact. First time it happened things were going great, until one day, on December 24th, we were all given our marching orders without warning.|
Originally Posted by lionsbane_EU
f memory serves, you weren't happy when NC bought out Cryptic and (I hope I'm remembering correctly) you cited your distrust of corporations.
How right you were. |
The current situation.... bares watching.
@FloatingFatMan
Do not go gentle into that good night.
Rage, rage against the dying of the light.
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No hard feelings here, FFM, and likewise I retract anything I said in the heat of the moment.|
Originally Posted by FloatingFatMan
Hey guys,
Slight OT here, but I just want to apologise to anyone who was offended in any way by my earlier comments and laying of blame. Seems I'm more upset by this whole thing than I realised, and was hitting out at people that totally didn't deserve it. So, I'm sorry. I apologise unreservedly for my prior comments and freely admit I was being a jerk. |
I think this has hit a lot of us harder than we might have expected it to - certainly the news made me realise how much this game really means to me, leaving me with a lot of regret over the time (and money) I didn't spend on it. I can only imagine how awful it is for those of you for whom CoH has always been the one MMO.
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Originally Posted by Rubberlad
Long story short:
2) City of Heroes had the lowest performing game sales (even Aion was doing much better...). http://global.ncsoft.com/global/ir/quarterly.aspx Sorry folks. |
If you look closely it was actually GW1 that made the least amount of sales but for some reason they are continuing it and not CoH. I think they should close GW1 since they have 2 now and consolidate servers for CoH to save money. Not close the game. Maybe go back to subscriptions if that helps. I know my dad and i never quit paying our subscriptions even after F2P. We liked having all the content at our disposal.
-Moon Fyire
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I didn't read the whole thread, but I want you to know that I have a great deal of respect for you right now.
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Originally Posted by FloatingFatMan
So, I'm sorry. I apologise unreservedly for my prior comments and freely admit I was being a jerk.
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Newton: I observed Mercury's perihelion moving 43 arc-seconds per century more than it should. Is this WAI? --Einstein |
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GW1 has no subscriptions and very few microtransactions, but with the very successful release of GW2, it will ensure that people will want to play the first one and even buy the expansions.
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Originally Posted by Neuro Toxin
If you look closely it was actually GW1 that made the least amount of sales but for some reason they are continuing it and not CoH. I think they should close GW1 since they have 2 now and consolidate servers for CoH to save money. Not close the game. Maybe go back to subscriptions if that helps. I know my dad and i never quit paying our subscriptions even after F2P. We liked having all the content at our disposal.
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Not to mention as well that GW1 links forward through to GW2 (Hall of Monuments), so cutting that off would end up with one feature not being able to work *full stop*|
Originally Posted by That_Ninja
GW1 has no subscriptions and very few microtransactions, but with the very successful release of GW2, it will ensure that people will want to play the first one and even buy the expansions.
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I havent yet unlocked the HoM in GW1 (yeah, i know i suck), but i plan to...
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The HoM is actually a clever system to get new GW2 players to buy GW1 all the way up to Eye of the North.
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Originally Posted by Gangrel_EU
Not to mention as well that GW1 links forward through to GW2 (Hall of Monuments), so cutting that off would end up with one feature not being able to work *full stop*
I havent yet unlocked the HoM in GW1 (yeah, i know i suck), but i plan to... |
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Looks like a reasonably-sized jump for NCSoft starting at the opening of trading on Monday, and it also looks to have been sustained today.
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Originally Posted by mercykilling
However....last night as I was idly strolling/flying/jumping around zones and reminiscing....I heard several people talking about how NCSoft stocks were plummeting even as they watched and updated.
D'you think that the "lack of profit" of City of was a cause for its demise? Well, we as gamers and customers just showed a corporation just how mistaken it was...if indeed the stocks fell as several people were claiming. |
On Justice:
Heroes:
Dr Ion - lvl41 Elec/Dev/Force
Ebon Vector - lvl31 MA/SR
S H C - lvl26 fire/fire self-PL machine. (tanker)
Logica Scura - lvl21 3D
Villains:
Nehemiah Strong - lvl25 Claws/Regen
Eclectic Lughebu - lvl20 Necro/Dark
(and assorted under-20 alts)
But NCSoft is still mum about shutting down Paragon Studios. It probably jumped due to the sales of GW2.
Father Xmas - Level 50 Ice/Ice Tanker - Victory
$725 and $1350 parts lists --- My guide to computer components
Tempus unum hominem manet
I don't think this is about City of Heroes at all, I think it's much worse than that.
I'm looking through this report and I see the red but there's a couple interesting things here.
1. There are no notes in the headings about City of Heroes at all. There's an apology about Aion not selling that great and there's stuff about Lineage 1 doing well.
2. On the financial highlights page (of the PDF) there's this comment "Profits dropped reflecting one-off labor cost." (later this is expanded to "Labor cost temporarily surged 27% QoQ due to one-off severance pay.") 27% is one hell of a surge in labor cost.
Aion sales are much higher than GW1/City of Heroes but, to be honest, NCsoft has never really been very successful in North America vs Korea. Likewise, City of Heroes never made it out of beta in Korea. (I think Guild Wars was marginally successful there though.) Aion's been somewhat of a flop here (I played it until level 20, then the story went away and it became a PvP grindfest and I bailed.) I am amazed at how well Lineage 1/2 are doing though, utterly amazed.
If you look though, North America, in total, only accounts for 4% of sales in Q2 and in Q4 11. (We hit 5% in Q1 12, go USA!).
3. If the reason to shut down Paragon Studios & City of Heroes really was financial, wouldn't have they just said that? Wouldn't City of Heroes had been listed with the financial highlights on page 1? City of Heroes is not mentioned anywhere except in the chart legends. City of Heroes is beneath notice. The stated shutdown reason does not mention financials, sales or any of that. It talks of realignment plans.
Here is what I think is going on.
I think NCsoft is going to pull out of North America entirely. (And perhaps Europe as well.)
Crazy? Maybe (probably), but bear with me.
1. In the PDF for August 2012, North America accounts for 4% of sales. (pg.5) (Europe, when it's above 0% seems to be at 2%). North America and Europe are completely insignificant in terms of revenue. (Taiwan doesn't seem to be doing well either but perhaps it's a new addition.)
2. Under Overseas Subsidiaries there is "NC Interactive" which I'm assuming includes Paragon Studios since it is not listed separately. It seems this costs 7,798 MWN per quarter. (pg.10) If we do the math and take the sales number and get 4% from that, we get 5,872 MWN. So North America does not pay for itself (and did not in previous quarters shown either.)
3. Strangely, ArenaNet IS broken off onto it's own line item on pg. 10. This was recent too because it does not have a historical value in any of the 2011 columns.
4. Guild Wars 2 appears to have been published by ArenaNet (at least the digital version). NCsoft (NA)'s store does not have it. NCsoft's launcher does not list it. On Guild Wars 2's website, NCsoft is only mentioned in legal fine print. Keeping in mind how ArenaNet is now listed on pg. 10, I think ArenaNet is going to be spun off as the sole NCsoft owned company in North America and that NC Interactive (NA) will close. (It would probably be stupid for NCsoft to sell it off entirely but I think it will probably just run as an autonomous unit and NCsoft HQ will just collect money.)
There's the North American versions of Lineage 1, Lineage 2 and Aion. Unless I'm mistaken, none of these are doing terribly well. Especially considering that North America sales, in it's entirety, counts for only 4% for Q2. They may very well be next on the block.
One flaw in this concept is (probably one of many), why didn't NCsoft just spin off Paragon Studios like it appears they are going to do to ArenaNet? My guess is that Guild Wars may still be popular enough in Korea to warrant continued development and operation whereas City of Heroes never launched in Korea and this is a non-entity.
If I'm right and this IS the realignment plan, it's somewhat stupid. For one, NCsoft should *sell off* City of Heroes, Paragon Studios (and the backlog of shuttered games) and make some money on the way out.
Of course, what does this mean for WildStar? I don't know. They may be screwed or maybe I'm wrong and it'll be fine. Perhaps the pull out of NA is conditional and will only complete if WildStar doesn't hit it out of the park. Still, it looks like NCsoft's got one foot out the door.
@Skolia
So many toons, so little time.
http://cit.cohtitan.com/profile/17258
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Idiotic comment.|
Originally Posted by FloatingFatMan
Says another freeloader.
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A free-loader is someone who is taking something away from those who pay. In the game you get what you pay for. And the only real 'free-loader' are those who joined after Freedom and never paid anything.
The rest of us normal people who took breaks but paid for what we played.
If a MMO cannot survive a percentage of it's player base taking breaks on a regular basis, or such things are not factored into the whole scheme of things then said MMO doesn't deserve to survive.
The fact that it had managed to do so for the better part of eight years - with people taking breaks - rather implies that your insinuation is baseless.
((Edited to remove my own inflammatory responses... FFM sorry...))
Edit to add:
Oh and for the record while I have supported the game less than some due to the unreasonableness of the real world at the times when I was playing (pretty much the first 3 years EU and then 6-8 months on 4-6 off thereafter) While I've been on I've been paying at least two subs and very often three. Looking at the billing pages on my three accounts it works out to be around 10 years total subbage... So in fact even as a *ahem* free-loader I've been paying over and above the odds to support the game.
Well, yeah, the fact that you don't play any more is why this is happening.
It boggles my mind how many sad people there are because they weren't playing before - but now they want to play.
To the OP: thanks for the link. I'd been wondering where a lot of other posters were getting their information from.
That being said, Accounting was way back in 1987. I had to keep reminding myself the data was not in US dollars.
The thing that I found interesting was that there were actual game sales of CoH. I know most VIPs got in on that 12+2 deal, or the 6+1. So, I'm thinking, just at a glance, that they really didn't give the hybrid model enough time. I'd have to spend some serious time over the numbers to make any real effort to assess the data, time which I don't have right now.
Also - another idea one of you gave to me - the idea of them actually selling the game to another company - it never occurred to me that they might do that. Maybe I shouldn't give all my inf away after all.
Time will tell. The info about FunCom was also interesting, as I'd just downloaded it - depressing character creation compared to CoH. Interesting to think MMOs could go the way of the dinosaur because they're not profitable enough.
"Most people that have no idea what they are doing have no idea that they don't know what they are doing." - John Cleese
@Ukase