NCSoft financials Q3 2012 are out.
By
airhead,
Posted on: 2012-11-06 19:36 in CoH and CoV General Discussions
And this is where it get's interesting. We only get to see two things about the subsidiaries, their profit or loss, and their sales contribution to the NCSoft Corporate.
What I saw as interesting is the massive sale revenue increases not only for ArenaNet but NC Interactive and NC Europe. Since Blade & Soul isn't out in NA or Europe yet this tells me some reason NC Interactive and NC Europe gets some kind of cut of the sales for GW2 (perhaps box sales in those regions and ArenaNet gets direct purchase sales?). Maybe NC Interactive and NC Europe acts as ArenaNet's publisher for those regions, who knows.
Also ArenaNet's P/L is actually a loss now that the game is out? Say what? Does this represent paying off development cost "loans" from daddy? We'll never know because the subsidiaries are "black boxes" that we only see sales in and profit/loss out. No idea how the money is spent.
Sadly but somewhat expected, CoH is no longer broken out in the game sales graphs or charts but is now lumped with "other" (so is GW1 BTW). B&S is broken out of "other" for 2Q which wasn't the case at the time. It only came out a week or two before the end of the quarter which is why it went from 2,582 in 2Q to 32,662 in 3Q. The interesting number about sales is that GW2 was the game with the largest sales revenue in 3Q beating all their mainstays. It also looks like B&S ate into Aion, L1 and L2 sales.
Also NCSoft's Korean sales revenues were actually down quarter to quarter and it was the big bounce in NA and Europe, likely due to GW2, which saved their bacon. The question now is what happens to GW2 sale numbers in 4Q? Do they plummet because the majority who were looking to buy the game already have. Does the holiday season hide the dropoff until 1Q next year. How soon until the first paid expansion due out? GW1 had a fairly spikey set of sales numbers as they release expansions and once they were done with that their sales quickly dropped off.
Will B&S continue to cannibalize sales numbers of NCSoft's older games or will it grow on it's own the way Aion originally did in it's first few quarters? As it stands right now I can't see NCSoft hitting either their 1 or 1.2 Trillion KrW sales targets they listed in their late 2010 and 2011 investor reports respectively. They don't even have 500 billion in sales after three quarters. They may hit 700-750 if the holidays are kind or B&S is released outside of Korea by then (likely in the other Asian markets) and is wildly successful.
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Quote:
2 words. Cash. Shop. The box sales may dwindle on GW2 but depending on what they sell in their cash shop, that will more than make up for it.|
Originally Posted by Father Xmas
And this is where it get's interesting. We only get to see two things about the subsidiaries, their profit or loss, and their sales contribution to the NCSoft Corporate.
What I saw as interesting is the massive sale revenue increases not only for ArenaNet but NC Interactive and NC Europe. Since Blade & Soul isn't out in NA or Europe yet this tells me some reason NC Interactive and NC Europe gets some kind of cut of the sales for GW2 (perhaps box sales in those regions and ArenaNet gets direct purchase sales?). Maybe NC Interactive and NC Europe acts as ArenaNet's publisher for those regions, who knows. Also ArenaNet's P/L is actually a loss now that the game is out? Say what? Does this represent paying off development cost "loans" from daddy? We'll never know because the subsidiaries are "black boxes" that we only see sales in and profit/loss out. No idea how the money is spent. Sadly but somewhat expected, CoH is no longer broken out in the game sales graphs or charts but is now lumped with "other" (so is GW1 BTW). B&S is broken out of "other" for 2Q which wasn't the case at the time. It only came out a week or two before the end of the quarter which is why it went from 2,582 in 2Q to 32,662 in 3Q. The interesting number about sales is that GW2 was the game with the largest sales revenue in 3Q beating all their mainstays. It also looks like B&S ate into Aion, L1 and L2 sales. Also NCSoft's Korean sales revenues were actually down quarter to quarter and it was the big bounce in NA and Europe, likely due to GW2, which saved their bacon. The question now is what happens to GW2 sale numbers in 4Q? Do they plummet because the majority who were looking to buy the game already have. Does the holiday season hide the dropoff until 1Q next year. How soon until the first paid expansion due out? GW1 had a fairly spikey set of sales numbers as they release expansions and once they were done with that their sales quickly dropped off. Will B&S continue to cannibalize sales numbers of NCSoft's older games or will it grow on it's own the way Aion originally did in it's first few quarters? As it stands right now I can't see NCSoft hitting either their 1 or 1.2 Trillion KrW sales targets they listed in their late 2010 and 2011 investor reports respectively. They don't even have 500 billion in sales after three quarters. They may hit 700-750 if the holidays are kind or B&S is released outside of Korea by then (likely in the other Asian markets) and is wildly successful. |
GW1 had an in-game store, with the items being the same pretty much on the NC Soft store website, that were all pretty much a 1 time account unlock purchase. The only items you could purchase multiple times were character rename tokens and makeover kits to change your character appearance and/or gender. With GW2, I'm sure they have consumable items that players can purchase multiple times, which keeps revenue coming in. XP boosters and such.
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Father Xmas will know better, but if I remember right GW1 made most of their dinero on box sales and expansions. Cash shops are pretty much just gravy.|
Originally Posted by monkeyslap
2 words. Cash. Shop. The box sales may dwindle on GW2 but depending on what they sell in their cash shop, that will more than make up for it.
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I thought B&S and GW2 would give NCSoft a very nice 3Q. Whoopsie.
Blood Widow Ricki * Tide Shifter * T-34 * Opposite Reaction * Shaolin Midnight * ChernobylCheerleader
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I thought Blade and Soul would have had more of an impact than it did... as Father Xmas has stated, it seemed to have cannibalise their Lineage series and Aion earnings. But yeah, considering it had a whole quarter, Blade and Soul doesnt look like to have done all that well overall.|
Originally Posted by SpyralPegacyon
Father Xmas will know better, but if I remember right GW1 made most of their dinero on box sales and expansions. Cash shops are pretty much just gravy.
I thought B&S and GW2 would give NCSoft a very nice 3Q. Whoopsie. |
However, Guild Wars 2, considering it has only officially released in the EU and US, *has* done well. And those figures are just for one month (The game was released on 28th August, Q3 ended end of september).
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True, but GW2's riding on those box sales. They had to go gangbusters in that first month. An eventual Asian release will definitely help, though.|
Originally Posted by Gangrel_EU
However, Guild Wars 2, considering it has only officially released in the EU and US, *has* done well. And those figures are just for one month (The game was released on 28th August, Q3 ended end of september).
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The really big takeaway: Even with B&S release in Asia and two million plus sales of GW2 in America, they still lost money. That's an 'uh oh'.
Blood Widow Ricki * Tide Shifter * T-34 * Opposite Reaction * Shaolin Midnight * ChernobylCheerleader
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The bigger picture, I believe, is that MMOs, in general, are no longer a license to print money -- there's weakness in the overall market.|
Originally Posted by SpyralPegacyon
The really big takeaway: Even with B&S release in Asia and two million plus sales of GW2 in America, they still lost money. That's an 'uh oh'.
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That ...
And it's an OMG saturated marketplace where, as someone else said, it looks like new titles are cannibalizing the revenues from older titles (maybe a tie-in with why The Sekrit got nuked from orbit?).
IMO i think the reason they made so much more in Q3 was release of GW2 and laying off about 80+ poeple
i dont think ncsoft will see the full effect of dropping coh until Q4 or even next year
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Actually, due to a lot of costs associated with laying off those 80 people (by law they were all employed until 8 days ago so there was no savings PLUS severance pays) they saved nothing out of CoH's closure. They won’t see any "positive" impact from CoH's cancelation until next quarter and that assumes they paid off every closure expense they had to during the previous month. I think there still will be some severance packages being offered in this next quarter, for the few staff members that will remain until shutdown.|
Originally Posted by Necrotech_Master
IMO i think the reason they made so much more in Q3 was release of GW2 and laying off about 80+ poeple
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The closure of this game would have the opposite effect. They lost more money, not less. Should the game be operating normally and players spent money in subscriptions and points things would have been better for them. The release of the new Bio power set and the new super pack was definitively going to have a small burst in profits for the quarter too; instead they were running CoH for the quarter at zero profit and still paying the non-working employees.
I am sure they would have been at zero loss, or less than 100k in losses, should CoH not been killed. Given I think CoH was still (I think) bringing in about a million in profits per quarter, NCSoft would have seen no losses at all and instead seen some tiny profits.
Mind you, I am not saying CoH was the only thing taking them down to a negative. The launch of GW2 likely involved an insane marketing budget, but that’s something that would have happened regardless, and given the game’s main source of profit are sales it’s also something that cant be killed or even lowered without huge backlash in sales.
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| i dont think ncsoft will see the full effect of dropping coh until Q4 or even next year |
Another thing “worries*” me is that this quarter included the huge burst of profit from launching GW2. Sales of games ALWAYS drop after the first month, so those sales will not be as good for next quarter. What will keep things afloat then?
I may be wrong, some other stuff may bring them some money. A Christmas miracle may bump GW2 sales for the one quarter. Or perhaps they will entirely kill marketing budget for GW2 (that may be stupid since the game can only make money as long as it sells new copies.)
*To be honest, it does not worry me. They deserve all negative that comes to them.
Few more thoughts:
If I'm not wrong, NCSoft released Blade & Soul in addition to Guild Wars 2 during Q3... This should have meant huge profits for the company... the company should have not faced any losses... even considering the costs of closing down City of Heroes. Without CoH closing costs their profits likely were razor thin... that's not good, not in the month that should have been their biggest month in a long time...
It sounds to me NCSoft is in BIG trouble if they are not able to release Blade & Sould AND Wildstar in the west within the next quarter.
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Heh? NCSoft didn't lose money this quarter, they had some of their biggest profits ever seen. 47,200 million KrW profit in 3Q versus a 7,800 million loss in 2Q. Actually they had about the same profit in 3Q that they had in the previous 4 quarters combined. And since sales only increased by 35,400 million means NCSoft were able to cut costs by around 20,000 million since last quarter.|
Originally Posted by SpyralPegacyon
True, but GW2's riding on those box sales. They had to go gangbusters in that first month. An eventual Asian release will definitely help, though.
The really big takeaway: Even with B&S release in Asia and two million plus sales of GW2 in America, they still lost money. That's an 'uh oh'. |
The major item I noticed about Blade & Soul is that unlike Aion, it wasn't "new" income on top of their existing titles, instead it looked as if people switched away from Aion/L1/L2 to try B&S so sales growth there was flat. Only GW2 added to their sales revenue.
I also think B&S is only out in Korea right now and not the rest of Asia, but Korean still has 4x the sales than Taiwan and Japan regions combined so I don't think the additional growth would be that much more.
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Quote:
That would make a lot more sense, I never seen that report before so I can't understand it and was confused where the loss was reflected. |
Originally Posted by Father Xmas
Heh? NCSoft didn't lose money this quarter, they had some of their biggest profits ever seen. 47,200 million KrW profit in 3Q versus a 7,800 million loss in 2Q. Actually they had about the same profit in 3Q that they had in the previous 4 quarters combined. And since sales only increased by 35,400 million means NCSoft were able to cut costs by around 20,000 million since last quarter.
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This is the breakdown of profit per title translated to USD:
$41,990,356 Guild Wars2
$35,088,296 Lineage
$29,918,392 Blade&Soul
$24,677,040 Aion
$12,182,800 Lineage II
$09,360,604 Others
Still odd that GW is making only 20% more than Lineage 1, but I guess that's some good profits there.
Also I believe B&S was only released in Korea and not the rest of Asia yet. The opposite is true I believe with GW2, only in the west but not in Asia at all.
Father Xmas - Level 50 Ice/Ice Tanker - Victory
$725 and $1350 parts lists --- My guide to computer components
Tempus unum hominem manet
Quote:
In 2Q the sales breakdown for NCSoft's big 3/4 were;|
Originally Posted by Starsman
That would make a lot more sense, I never seen that report before so I can't understand it and was confused where the loss was reflected.
This is the breakdown of profit per title translated to USD: $41,990,356 Guild Wars2 $35,088,296 Lineage $29,918,392 Blade&Soul $24,677,040 Aion $12,182,800 Lineage II $09,360,604 Others Still odd that GW is making only 20% more than Lineage 1, but I guess that's some good profits there. |
58,449 Lineage
16,912 Lineage II
36,367 Aion
2,528 Blade & Soul (I think it came out a week or so before the end of 2Q)
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114,256 Total
In 3Q it was;
38,306 Lineage
13,300 Lineage II
26,940 Aion
32,662 Blade & Soul
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111,208 Total
This is where my cannibalize sales comment is based.
There is a 2ndary sales revenue by game that excludes the subsidiaries. I assume the difference between the two shows reflect game sales from regions under control by the various subsidiaries.
2Q (first number parent, second number from subsidiaries)
55,135 - 3,314 Lineage
6,987 - 9,925 Lineage II
28,380 - 7,987 Aion
2,528 - 0 Blade & Soul
------------------------
93,030 - 21,226 Parent/Subsidiaries Total
3Q
35,617 - 2,689 Lineage
4,797 - 8,503 Lineage II
19,736 - 7,204 Aion
32,662 - 0 Blade & Soul
------------------------
92,812 - 18,396 Parent/Subsidiaries Total
By region, Korea sales shrank 3.3% (3,384), Taiwan by 29.8% (931) and Japan by 11.6% (1,954). Again if you assume that the sales figures excluding the subsidiaries are primarily from Korea, it looks as if B&S drank all the other game's milkshakes.
And just to add the parent company has always been profitable, even last 2Q. It was the subsidiaries that was losing money hand over fist with NC Interactive (NA) being the bulk of it.
Oh, and the original Lineage opened a cash shop back in 4Q 2009 which significantly boosted the game's overall revenue, like consistently over 50%, nearly doubling it YoY in some of those first four quarters. I guess players still felt invested in such an old game (looking at you NCSoft). Still new and shiny (and curvy and bouncy) will pull players from their favorites, at least for a short time.
Father Xmas - Level 50 Ice/Ice Tanker - Victory
$725 and $1350 parts lists --- My guide to computer components
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Quote:
I believe you're looking at sales per title, not profit.|
Originally Posted by Starsman
That would make a lot more sense, I never seen that report before so I can't understand it and was confused where the loss was reflected.
This is the breakdown of profit per title translated to USD: $41,990,356 Guild Wars2 $35,088,296 Lineage $29,918,392 Blade&Soul $24,677,040 Aion $12,182,800 Lineage II $09,360,604 Others Still odd that GW is making only 20% more than Lineage 1, but I guess that's some good profits there. |
*edit*
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Originally Posted by Father Xmas
Also I believe B&S was only released in Korea and not the rest of Asia yet. The opposite is true I believe with GW2, only in the west but not in Asia at all.
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Something interesting about that from their equity method page is that NC Interactive, in which Paragon Studios is under, has been negative every quarter consecutively since after 4Q 2009...shortly after the big revenue drop.|
Originally Posted by Father Xmas
And just to add the parent company has always been profitable, even last 2Q. It was the subsidiaries that was losing money hand over fist with NC Interactive (NA) being the bulk of it.
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Code:
Equity Method Gain/Loss (NC Interactive)
KrW(mn) USD
2009-4Q 2,414 2,059,510
2010-1Q -2,060 -1,792,431
2010-2Q -2,713 -2,323,385
2010-3Q -4,937 -4,158,111
2010-4Q -3,982 -3,508,190
2011-1Q -5,874 -5,237,092
2011-2Q -5,235 -4,823,010
2011-3Q -7,844 -7,246,103
2011-4Q -5,821 -5,071,127
2012-1Q -6,409 -5,657,489
2012-2Q -7,798 -6,744,892
2012-3Q -462 -406,217
2004 -412 (3 qtr)
2005 2,170
2006 -7,525
2007 7,510
2008 4,883
2009 -3,599
2010 -13,692
2011 -24,774
2012 -14,669 (3 qtr)
Commenting that Lineage decline is on its own but new in-game item promos happened near the end of the quarter so they're expecting that number to increase in 4Q...along with the rest of GW2's sales that wasn't recognized in 3Q.
Overall, they're expecting next quarter sales to be better.
I didn't bother to listen to the call, I would rather read a transcript.
But still, regardless what they said, if you sum their big four games and compare those numbers it really does look as if B&S affected all three of their other titles. They are all down significantly QoQ and those percentage drops aren't reflected in the regional sales numbers.
And no matter if they're expecting next quarter sales to be better, it still won't come close to their 2012 estimates they published last September of 1.2 Trillion. Talk about rose color glasses.
I take that back. Actually looking at that slide again they had a somewhat humorous foot note for the chart "Revenues for 2012 are not company's official guidance but example of substantial growth". Why stop at 1.2 Trillion then if you are noting the number is purely made up? Looking back at the previous IR reports all those optimistic estimated revenue numbers are noted the same way, "not official guidance, just illustrating substantial growth". WTH? I think we can estimate what x% growth looks like in a flipping bar chart.
Edit: Looking at their last IR from Aug 2012, they were guesstimating 800 Billion for 2012, no silly footnote. Still that would need 4Q to be 50% larger than 3Q to achieve that and all that's left there is expansion into other regions and the holiday season.
Father Xmas - Level 50 Ice/Ice Tanker - Victory
$725 and $1350 parts lists --- My guide to computer components
Tempus unum hominem manet
These numbers mean that NCSoft will surely kill off City of Heroes... it doesn't have long to live!
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Not sure...i was just relaying what they said in the call about the migrating players when asked during the Q&A. Though they didn't have a lot of specifics in the call but said they'll go into it on a followup later.
I do recommend listening to the call, though. Occassionally, something is said (usually during the q&a) that gives more detail that you can't see in the report.
Not sure about that revenue trend bar they show, maybe they explain it in the calls for it. I'll check them later when there's more time, they're a bit lengthy.
EDIT: Oops, this QR was directed at Father Xmas.
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Just to point out one thing about guild Wars 2 before people complain about "how little it made".|
Originally Posted by Starsman
That would make a lot more sense, I never seen that report before so I can't understand it and was confused where the loss was reflected.
This is the breakdown of profit per title translated to USD: $41,990,356 Guild Wars2 $35,088,296 Lineage $29,918,392 Blade&Soul $24,677,040 Aion $12,182,800 Lineage II $09,360,604 Others Still odd that GW is making only 20% more than Lineage 1, but I guess that's some good profits there. |
It was only released for one *month* of Q3. So saying that Guild Wars 2 should have made more money... for being on release for *one* month, and it bringing in this much money, especially considering that it was not released in the Asian market is fairly respectable.
However, you can lay into Blade and Soul, because the figure for Q3 is for all 3 months, and to be honest, I would have expected it to make more money...
Their shareholders aren't impressed.
Please buff Ice Control.
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Clearly|
Originally Posted by DarkCurrent
Their shareholders aren't impressed.
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I find this absolutely delicious.
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But they were doing so well
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Originally Posted by Zombie Man
These numbers mean that NCSoft will surely kill off City of Heroes... it doesn't have long to live!
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Wow... I was already filled with schadenfreude today... this added to it nicely.
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Originally Posted by Xieveral
Clearly
I find this absolutely delicious. |
Be well, people of CoH.
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Although I can see why you would also choose to use that, I would also like to point out that the vast majority of Asian shares have also declined in the past 24 hours. Of course this could be just pure coincidence but there has apparently been a link with Obama winning the US elections and a general decline in world stock markets....
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Originally Posted by Xieveral
Clearly
I find this absolutely delicious. |
Go and check the figures out here.
I have noticed nothing really special, until I got to the back end where the subsideries are listed.
NC Interactive went from a $7million loss in Q2 to just $400,000 loss (roughly) in Q3.
Make of that what you will...
Paging Father Xmas.