NCSoft obviously doesnt care about us

[JaguarX]

Figured that was the most likely scenario if you did own stock.  Buying from over here is a tad convoluted.

yeah.

[FatherXmas]

They're still a bunch of jerks. It's no one here's fault. You don't have to defend them. Those of you defending them, they're worth 3 billion dollars, they can shut down the game you loved for 8 years, fire 80 developers without notice, and look at em, they're STILL getting the cha-ching outta your wallet. They're on top of the world. They answer to no one. They don't need you to defend them. Just keep your wallet open!  :P

If I'm defending them it's from those who believe what they did was due to some sadistic malice and not what they saw as a sound business decision.  They thought it made sense and was their best course of action.  Doesn't matter if we think they're crazy.

And market cap, that $3 billion you say they're worth, doesn't really matter because it's based on stock price and stock price is influenced by so much more than actual "worth".  It's actual "worth" (shareholder equity) is only $930 million at the end of the first quarter.  EA was worth $5 billion ($5.3 billion market cap) and Activision-Blizzard was worth $13.7 billion ($16.3 billion market cap) in the same quarter.  My point being is that it's not the big company you make it out to be.  No means it's small but a number by itself with no reference to where that falls among others of it's ilk is meaningless.

[Mantic]

Not to derail into a debate over Walmart, but....

My anecdote is a bit more than talking to a few employees: my own hometown saw every possible competitor to the Wal Mart put out of business in the last two decades by a super-center. I have witnessed first-hand over a long period of time the consistent use of franchise power undercutting competitors, probably at a loss, until they were gone. Followed by reductions in stocking variety and increases in prices. The most asinine move was the installation of a mechanical service department to compete with local services, and then reducing it to a part-time, barely available department once they had achieved a local monopoly. Some local employees do complain about their treatment, but in a town that is now unable to field anything but fast-food franchises without being targeted by Wal Mart, it apparently remains their best option.

When Wal Mart has competition, their stores are great. But you don't want to deal with them when they have become the only option within fifty miles.

I am not aware that any unionizing effort is being tolerated here. It is a very conservative State and people are more leery of union corruption than rough working conditions. The situation of predatory Wal Marts is real, however, as many small towns can now attest.

I did not bring it up to start a tangent argument, as from my vantage it was an obvious example. Maybe I should have cited Disney...?

[srmalloy]

The game had sales of $10-12 million a year in it's last two years.  Lets say that after everything, including the cost of Paragon Studios, the game had a 25% profit.  That's $2-2.4 million a year on costs of $8- 9.6 million a year.

If NCSoft decided that $8-9.6 million being spent can make more than $2-2.4 million a year somewhere else you end up with a "realignment of focus".  If those funds being spent on CoH and Paragon could speed up the release of a new game by even a few months, those few extra months could easily bring in $2-2.4 million, probably many times more.  It's the same cold logic that goes into closing one manufacturing facility over another or discontinuing a product because some unique part is now too expensive.

The problem with your assessment is that NCSoft is getting that profit of $2-2.4M only because of that $8-9.6M in costs -- as soon as they shut down Paragon Studios and CoH, that $10-12M a year vanishes; it's not available to be dumped into some other property that would produce a higher return.

[srmalloy]

Unless you argue that the people managing NCSoft are incompetent to run a business, and would make bad business decisions out of ignorance or stupidity, there has to be some other reason why NCSoft shut down Paragon Studios, and CoH with it -- a reason that made sense to them. And when dealing with people from other cultures, aspects of that culture's mindset can influence decisions. And without data we can trust out of NCSoft, we may never know why they made that decision; we can only be sure that it was not made on the basis of proft-and-loss. Although I can see a low-probability situation where someone up the chain in NCSoft sees that 'Paragon Studios' has been running a loss for the last several years and decided on that basis to close the company, without knowing that Paragon Studios was two separate groups of developers, one of whom was responsible for the studio as a whole running at a loss -- and either no one paid any attention to this fact, or the person who made the decision was sufficiently highly-placed that their mistake was glossed over and the closure left to stand, rather than embarrassing them over it.

And I just ran across an interesting reference on how much culture can affect business practices that relates back to comments I made in the past suggesting that NCSoft's actions in closing Paragon Studios and announcing the shutdown of CoH (and their subsequent nonstatements about the closure) were all consistent with Korean cultural predilections. Malcolm Gladwell wrote a book, Outliers: The Story of Success; one chapter is titled "The Ethnic Theory of Plane Crashes". In an interview with Fortune magazine, Gladwell described a cultural impact that is specifically appropriate to the CoH shutdown:

F: "You share a fascinating story about culture and airline safety."

G: "Korean Air had more plane crashes than almost any other airline in the world for a period at the end of the 1990s. When we think of airline crashes, we think, 'Oh, they must have had old planes. They must have had badly trained pilots.' No. What they were struggling with was a cultural legacy, that Korean culture is hierarchical. You are obliged to be deferential toward your elders and superiors in a way that would be unimaginable in the U.S.

"But Boeing and Airbus design modern, complex airplanes to be flown by two equals. That works beautifully in low-power-distance cultures [like the U.S., where hierarchies aren't as relevant]. But in cultures that have high power distance, it's very difficult.

"I use the case study of a very famous plane crash in Guam of Korean Air. They're flying along, and they run into a little bit of trouble, the weather's bad. The pilot makes an error, and the co-pilot doesn't correct him. But once Korean Air figured out that their problem was cultural, they fixed it."

The Associated Press says that Gladwell "examines the role of culture in the crashes of Avianca 052 and Korean Air Flight 801 in 1997. In addition to weather and pilot fatigue, he blames those crashes on crew members whose cultural legacy made them too deferential to communicate clearly that the plane was about to crash."

Finding this reinforces my belief that NCSoft carried out its shutdown of Paragon Studios the way it did because, within the cultural mindset of deference to authority, they believed that terminating everyone out of the blue was sparing them the shame of coming in to work with their failure hanging over their head, and that we, as 'subordinates' of Paragon Studios and NCSoft, would deferentially accept the shutdown no matter how much we disagreed with the decision. And it raises my suspicion that Paragon Studios was shut down because it failed to demonstrate the proper deference for its position in the corporate power structure by attempting to buy itself out. All of which is just more fuel on the "NCSoft can't be bothered to understand that there are other cultures than their own" fire. We may never know for sure, but the more I find out about Korean business practices, the more NCSoft's actions look like ethnocentric blindness on their part.

[thunderforce]

It's actual "worth" (shareholder equity) is only $930 million at the end of the first quarter.

I am enlightened. Clearly quite unable to borrow $8 million to make $12 million, then, as a princely 1% of their worth.

[Blondeshell]

The Associated Press says that Gladwell "examines the role of culture in the crashes of Avianca 052 and Korean Air Flight 801 in 1997. In addition to weather and pilot fatigue, he blames those crashes on crew members whose cultural legacy made them too deferential to communicate clearly that the plane was about to crash."

Not to derail this thread completely, but this same question has now come up in reference to the recent Asiana Airlines crash in San Francisco.

http://www.nbcnews.com/business/korean-culture-may-offer-clues-asiana-crash-6C10578732?ocid=msnhp&pos=1

[FatherXmas]

This seems a bit confused because it doesn't quite know if it's about capital investment or ongoing income; the second sentence reads as if about capital.

Either way, no, you don't. If a business needs capital to run a profitable subsidiary, or if the capital tied up in that profitable subsidiary stops it running something still more profitable, borrow it at a lower interest rate and pocket the difference - NCSoft's market capitalisation is well over 3 billion USD even after the stock issues, it cannot possibly have trouble borrowing a few million.

If it's actually about ongoing income I'm afraid that makes less sense. If you get day to day returns on that $8 million - as you do with MMO subs - it's just a net profit, it doesn't in any way stop you doing something similar elsewhere. If you pay 5 quid to get the train to work and get paid by the day, you in no sense have to make a choice between Monday's train fare and Friday's, unless you actually didn't start the week with 10 quid; each train fare pays for itself.

And (in either event) the profitable subsidiary has value. If for some mysterious reason you can't afford to run an income-generating asset, what do you do with it?

Yea you're right, I'm thinking more in terms of companies with large capital investments with lots of overhead costs.  MMO is more like a service industry.

[FatherXmas]

I am enlightened. Clearly quite unable to borrow $8 million to make $12 million, then, as a princely 1% of their worth.

Companies try to avoid borrowing money if the can.  Plus since their Q2 of 2012 earnings was negative, during a global economic downturn, the terms would for borrowing was likely not be favorable.

[thunderforce]

Companies try to avoid borrowing money if the can.

True but misleading. Sure, if you've got the capital anyway, use it; if you haven't, you won't hesitate to borrow it in order to make a return better than the interest rate. A non-huge company that doesn't borrow is simply going to be outgrown by one that does and succeeds.

Plus since their Q2 of 2012 earnings was negative, during a global economic downturn, the terms would for borrowing was likely not be favorable.

Depends. I can think of an obvious choice of asset to secure the hypothetical capital loan for CoX on.

[Codewalker]

The "better investment of capital" argument is bunk. We went thorough this after the announcement. NCSoft financial reports clearly show a huge excess of cash. They have more that enough to finance whatever project they want. 8m a year in expenses is a drop in the bucket compared to their cash reserves, even over 5+ years.

The only reasons that make sense are misguided corporate pride (a la Japanese series that prefer to go out on a high note rather than fade into mediocrity on a shrinking budget), disagreement and complete lack of confidence in Paragon management (or signs of outright defiance if it turns out the "secret project" wasn't approved by the right people), or possibly a tax write off.

Seeming unwillingness to even discuss terms of a sale points strongly to non-financial motives.

[Pinnacle Blue]

Seeming unwillingness to even discuss terms of a sale points strongly to non-financial motives.

Yes, this, exactly.  If they had had a clear financial motive, then I could forgive them.  But if they had had a clear financial motive then they would've sold the IP already.

[srmalloy]

Not to derail this thread completely, but this same question has now come up in reference to the recent Asiana Airlines crash in San Francisco.

http://www.nbcnews.com/business/korean-culture-may-offer-clues-asiana-crash-6C10578732?ocid=msnhp&pos=1

The Slashdot article about the crash was what brought it to my attention. Interestingly, several of the comments to the article raised the point that Korea Air, as a short-term solution to the problem, hired a large number of Western pilots for their aircrews, which suggests that the issues of power distance in Korean culture were too heavily ingrained to correct quickly.

[FatherXmas]

Yes, this, exactly.  If they had had a clear financial motive, then I could forgive them.  But if they had had a clear financial motive then they would've sold the IP already.

And this goes back to my point that game companies rarely give up their IPs.  NetDevil wanted to buy back the rights to Auto Assault when the plug was pulled and NCSOFT said no then.  A game that never had enough of a following to facilitate an acceptable payback of development costs, a "failure" from a bean counter perspective, you would think NCSOFT would be more than interested in getting back more of their investment yet said no.

And here we were.  We made them money.  We could be called successful.  Now if they didn't want to sell to the developer a failed MMO.  Why would they want to sell a successful, although small, MMO?  Your contention is money wasn't the issue.  They were willing to do without $10-12 million of sales a year which is what the shutdown would cost.  You all suggest that diverting the costs that it took to run Paragon and the game to other projects doesn't make sense.

So lets play "what if".  What if it was decided at corporate that they only want support MMOs that can also do well in Asia, their primary market.  That could be a "realignment of focus".  Or that CoH was now had too small of a following or believed that DCUO and CO would divide the potential players of that genre so there was no hope of future growth.  Or maybe people are right, the game had a "white knight" at NCSoft and he fell out of favor and couldn't shield us anymore.

In the end it really doesn't matter as to the why, they closed the studio which killed the game and they locked up the IP that they bought and paid for.  It's not personal, it's business.

[JaguarX]

So lets play "what if".  What if it was decided at corporate that they only want support MMOs that can also do well in Asia, their primary market.  That could be a "realignment of focus".  Or that CoH was now had too small of a following or believed that DCUO and CO would divide the potential players of that genre so there was no hope of future growth.  Or maybe people are right, the game had a "white knight" at NCSoft and he fell out of favor and couldn't shield us anymore.

In the end it really doesn't matter as to the why, they closed the studio which killed the game and they locked up the IP that they bought and paid for.  It's not personal, it's business.

basically.

[CoyoteSeven]

If I'm defending them it's from those who believe what they did was due to some sadistic malice and not what they saw as a sound business decision.  They thought it made sense and was their best course of action.  Doesn't matter if we think they're crazy.

Coca-Cola thought ditching old Coke for New Coke was a sound business decision. Just sayin'.

[Golden Girl]

It's not personal, it's business.

To them, maybe.

[Captain Electric]

To them, maybe.

You stole my post. :P

[CoyoteSeven]

"It's business, Superman. There are always trade-offs."

[Rust]

While I may have sworn off any NCSoft backed title due to what happened with City, I'm not burning with hatred for them.

By all reports, NCSoft's accountants said they needed to nix a MMO from their line up with Guild Wars 2 coming out. They opted to nix City of Heroes. Why? Because in the Asian Market - where NCSoft is primarily focused - City of Heroes was an abysmal failure and not even a blip on the MMO landscape radar.

I can't really blame NCSoft's decision that City was the one to go, when you stand back and look at it objectively. Heck, being honest about it, City of Heroes was a pretty niche game even here in North America. It did well, but I've heard more  about it since the shut down then three years prior to.

"It's not personal to them" is entirely accurate. I think the big sting with CoH's closure was it came on the heels of a major content update. So not only did we never get to see the promised changes, but those who played the beta version got a sample of what was to come. It's like being offered a juicy steak and a little bite...and then watching it being thrown in the trash can.

But in regards to it not being personal for them - it wasn't. It's not like NCSoft's directors were sitting around a smoke filled board room deciding which game to axe and cackling evilly when they saw how happy the City of Heroes player base was.

In some ways - I thank NCSoft. They could have held off until after Issue 24 went live. That would have stung even more. "Here's a brand new content patch! By the way, the game's shutting down. Baaaaaaaaaaai!"