NCSoft Stockwatch

[FatherXmas]

I always shake my head when people argue the "NCSoft will do what logically makes business sense" angle.

They will, to them, to their logic.

Why is it illogical to only want to sell products that do well in your native markets and hopefully as well overseas?  Why support a niche product that does okay but not fantastic in a region outside of your core market?  Why sell it's IP when you've never sold off any IP of any product in an industry where few IPs are sold after cancellation?

Lets look at a different example.  You are one of the major automakers in the world.  You own a plant in a former iron curtain country that makes a car model that only has a loyal following, but not a major one, in that country.  Attempts to broaden it's market have failed.  It uses few if any parts that are common to your other model lines in Europe.  Now due to other market forces you are looking to streamline your operations throughout Europe.  Do you keep making that model?  Do you even keep the plant open?

It's not a perfect analogy, few are, but it's similar enough.  Asian based MMO companies have not done well cracking the NA MMO market by localizing their core products.  However western MMOs they own may do better than their adapted Asian MMOs in NA, still not fantastic, but have no appeal in their core Asian markets.  They are looking for another WoW style MMO that has worldwide appeal.  They don't care if it's developed in the east or the west, just that it could do well everywhere.

Do I think NCSoft hung onto CoH until GW2 was ready to be released, yes.  I think they were willing to put up with CoH anomaly until they had another western revenue stream, a much superior one, ready to take over.  The loss of $2.5-3 million a quarter in sales from closing our game isn't missed when the new kid on the block brings in 15x that much in a third of the time.  And while you are tapping that stream you have another studio getting ready with it's new product that you think/hope will be a big winner as well in the west.

Now in the west the F2P model is taking hold big time.  The only way to make money is by having a start up fee and/or attractive item store.  So NCSoft teams up with Nexon whose sole source of income is item stores.  However Nexon isn't stupid and isn't willing to share their secret sauce recipe with NCSoft without some kind of leverage and that leverage is 15% of NCSoft stock and becoming its largest single shareholder even above it's CEO/founder.  NCSoft also provides Nexon with their 3D development expertise and both of them are trying to make it big in the mobile/tablet market that neither have been able to significantly cash in on so both have been buying startups that have.

That's NCSoft's concern right now, evolving with the marketplace.  Global expansion is a nice secondary goal but they don't want to end up the Microsoft of Korea and relegated to statements like; "X is the NCSoft of the 2010s".

[Quinch]

Why? Decision making involves a lot of factors of which the general public is rarely aware. That is why certain outcomes may appear random, but they seldom are.

This premise, however, can be flawed on the assumption that even if full, accurate knowledge of those factors is available to the decision-makers, they utilize it to its fullest extent, or even consider it at all. This kind of "business knows best" philosophy is flawed because it generalizes the entire company - it ignores the possibility that regardless of how many people it employs, the person or persons on whose decisions the entire company pivots around made a wrong decision. Whether it's because of misinterpretation of data, or insistence on "trusting their gut", there is no position in a business hierarchy that confers on its holder immunity to mistakes.

So in short, yes, there may be factors we don't know of that recast all the evidence we have available in a different light, and NCsoft's insistence that CoH stays dead and buried somehow works in their favor. But it's often a good idea to use a razor {Occam's or Hanlan's, take your pick} and go with the possibility that involves the least number of unknowns - that NCsoft's management made a mistake.

It's not a perfect analogy, few are, but it's similar enough.

I... don't think so. CoH had been performing rather well in both North America and Europe, especially given its near-total lack of marketing support. The analogy is more reminiscent of the model having a loyal following, but not a major one, in a number of other countries, but neither the loyalty or relevance in the only country you feel should matter.

[HarvesterOfEyes]

They will, to them, to their logic.

When you say such a thing you do violence to the word. They may well have a different assessment of the facts that leads them to a different conclusion, but logic is a pretty solid concept.

I maintain that it's fairly normal in business to have to act in the absence of enough facts to make a logical decision. For that reason alone I'm not shocked when a company makes a poor or seemingly-irrational decision. Likewise I marvel at the faith people have that corporate decision-makers are something approaching omniscient.

If the evidence supports the idea that they acted foolishly then don't reflexively rule out the possibility. I remember people telling me "New Coke" was a great business decision at the time. "Look how much they make, they can't do that and make foolish decisions."

Um actually, yes they can.

Why is it illogical to only want to sell products that do well in your native markets and hopefully as well overseas?  Why support a niche product that does okay but not fantastic in a region outside of your core market?  Why sell it's IP when you've never sold off any IP of any product in an industry where few IPs are sold after cancellation?

Lets look at a different example.  You are one of the major automakers in the world.  You own a plant in a former iron curtain country that makes a car model that only has a loyal following, but not a major one, in that country.  Attempts to broaden it's market have failed.  It uses few if any parts that are common to your other model lines in Europe.  Now due to other market forces you are looking to streamline your operations throughout Europe.  Do you keep making that model?  Do you even keep the plant open?

Is it logical refuse to sell the plant and thus recoup none of the investment? Or to be more precise, to set your sale price so high you can be assured that no one will buy and you will lose 100% of your existing investment rather than losing 90% or 80% or some other number? In what business model is a bigger loss preferable to a smaller one?

Is this logical business behavior?

It's not a perfect analogy, few are, but it's similar enough.  Asian based MMO companies have not done well cracking the NA MMO market by localizing their core products.  However western MMOs they own may do better than their adapted Asian MMOs in NA, still not fantastic, but have no appeal in their core Asian markets.  They are looking for another WoW style MMO that has worldwide appeal.  They don't care if it's developed in the east or the west, just that it could do well everywhere.

Do I think NCSoft hung onto CoH until GW2 was ready to be released, yes.  I think they were willing to put up with CoH anomaly until they had another western revenue stream, a much superior one, ready to take over.  The loss of $2.5-3 million a quarter in sales from closing our game isn't missed when the new kid on the block brings in 15x that much in a third of the time.  And while you are tapping that stream you have another studio getting ready with it's new product that you think/hope will be a big winner as well in the west.

If shutting down Paragon Studios was in their longer-term plan why did they not phase out the developers sooner and save more money? If I have to go on just what we know then the dog didn't bark here.

Is there any other piece of evidence of which you are aware that supports the idea that this was a long-term decision or are you relying on the supposition that whatever they did it must have been rational?

Now in the west the F2P model is taking hold big time.  The only way to make money is by having a start up fee and/or attractive item store.  So NCSoft teams up with Nexon whose sole source of income is item stores.  However Nexon isn't stupid and isn't willing to share their secret sauce recipe with NCSoft without some kind of leverage and that leverage is 15% of NCSoft stock and becoming its largest single shareholder even above it's CEO/founder.  NCSoft also provides Nexon with their 3D development expertise and both of them are trying to make it big in the mobile/tablet market that neither have been able to significantly cash in on so both have been buying startups that have.

That's NCSoft's concern right now, evolving with the marketplace.  Global expansion is a nice secondary goal but they don't want to end up the Microsoft of Korea and relegated to statements like; "X is the NCSoft of the 2010s".

I can't speak to their corporate strategy because they consistently obfuscate about what that is. It is to be expected. I can speak to what they've done recently and suggest that we not assume that they are going to suddenly start behaving differently.

I see evidence of foolishness and impulse. These are normal in human behavior. NCSoft is not run by robots. [At least, not as far as we know.] I'm not ready to ignore some of the evidence on faith that NCSoft's corporate decision-makers are deeply-wise people.

[Colette]

Continued general decline in stock prices. They're below 150, though not comfortably yet. They show absolutely no signs at all of recovering to where they were before the CEO selloff/Unity rally. Indeed, their stock has been in general decline since October of last year. Looking at their five-month chart... if this trend continues as-is, the stock will be worth nothing at all by June.

However, NCSoft proved its ability to survive at 50-100 from 2003 to 2008. Will they retain that resilience?

Anyone have experience with companies that're sinking? What sort of behavior can we expect from NCSoft if their stock continues to decline so precipitously? What happens as their stock value continues to sink? Should we expect some sort of hostile takeover? Radical changes in corporate leadership? Any educated guesses?

"If shutting down Paragon Studios was in their longer-term plan why did they not phase out the developers sooner and save more money? I see evidence of foolishness and impulse."

I'm forced to concur, though frame it differently. Evidently, some grave structural problem exists within NCSoft, something that we as outsiders cannot see. They somehow foresaw the decline.

It is a fact of psychology that people will not risk so much to make new gains, but will gamble boldly, even desperately, to prevent or regain losses. Las Vegas is founded upon that quirk of human behavior. The abrupt cancellation of CoH feels like that, a kind of corporate spasm of pain rather than a planned action. Certainly, having cancelled several games before CoH, no one there anticipated the PR wound they inflicted upon themselves.

So rather than caprice or malice, I see them flailing about uselessly while on fire. Not quite in their death-throes yet, though.

[Little Green Frog]

This premise, however, can be flawed on the assumption that even if full, accurate knowledge of those factors is available to the decision-makers, they utilize it to its fullest extent, or even consider it at all. This kind of "business knows best" philosophy is flawed because it generalizes the entire company - it ignores the possibility that regardless of how many people it employs, the person or persons on whose decisions the entire company pivots around made a wrong decision. Whether it's because of misinterpretation of data, or insistence on "trusting their gut", there is no position in a business hierarchy that confers on its holder immunity to mistakes.

The premise is not flawed, because it does not assume anything else than that certain factors existed. Not that they were objectively beneficial to company's market standing. Also not that they were objectively harmful. Only that they most likely existed. It has nothing to do with "business knows best", but it also doesn't explicitly say "lol their dumb", because we really don't have enough data to support either claim. And as long as we don't obtain more data, certain NCsoft actions may look more or less random. FatherXmas makes a few good points about company's actions that prove NCsoft may not be very considerate, but it is operating like a similar institution would in their position.

But it's often a good idea to use a razor {Occam's or Hanlan's, take your pick}

Occam's razor is a very useful tool in making assumptions for example where there is insuffient amount of data available, while Hanlon's razor is a humorous remark, not unlike Murphy's law. It's not a great idea to use either of those to draw serious conclusions about the surrounding world. Well, not exclusively at least.

[Nafaustu]

<snip>
So rather than caprice or malice, I see them flailing about uselessly while on fire. Not quite in their death-throes yet, though.

I'm a terrible person.   I laughed.

[FatherXmas]

This premise, however, can be flawed on the assumption that even if full, accurate knowledge of those factors is available to the decision-makers, they utilize it to its fullest extent, or even consider it at all. This kind of "business knows best" philosophy is flawed because it generalizes the entire company - it ignores the possibility that regardless of how many people it employs, the person or persons on whose decisions the entire company pivots around made a wrong decision. Whether it's because of misinterpretation of data, or insistence on "trusting their gut", there is no position in a business hierarchy that confers on its holder immunity to mistakes.

So in short, yes, there may be factors we don't know of that recast all the evidence we have available in a different light, and NCsoft's insistence that CoH stays dead and buried somehow works in their favor. But it's often a good idea to use a razor {Occam's or Hanlan's, take your pick} and go with the possibility that involves the least number of unknowns - that NCsoft's management made a mistake.

I... don't think so. CoH had been performing rather well in both North America and Europe, especially given its near-total lack of marketing support. The analogy is more reminiscent of the model having a loyal following, but not a major one, in a number of other countries, but neither the loyalty or relevance in the only country you feel should matter.

$12 million a year isn't rather well, not when NCSoft's other MMOs are doing 8-18x that each.  If you limit it to NA and Europe, well those markets have been shrinking, considerably, to almost the point of irrelevancy until GW2 came out.
2011 NA sales declined 43% and Europe 47% over 2010.  For the 1st half of 2012, NA sales declined 9.5% from the 1st half of 2011 while Europe declined a whopping 61.9%.  With GW2's release NA sales for 3Q is more than all of 2011 by nearly 8% and Europe's by 16%.  One month of GW2's sales (yes I know it's not scalable or sustainable) was more than the last 12 reported quarters, three years, of CoH sales. 

Size of a market matters.  A TV show's overwhelming popularity in the 50th largest ad market means very little if it's ratings are bad in the the top 20, it's going to get canceled.  Being the big fish in an ever shrinking pond means very little in the long run.  Lets say CoH wasn't canceled.  GW2 comes out and now we're a very tiny fish in a big pond.  This still doesn't bode well in the long term.  Companies routinely eliminate under performing products, projects, employees, however they may go about defining "under performing", periodically.  Not to mention what happens when you have a major reorganization, shift in global strategy or the dreaded "realignment of company focus". 

Tiny sales and tiny profits were not enough of a reason to survive this shift.  It doesn't mean that the company is insane, illogical, or malicious, just they were willing to sacrifice our game for what they saw as better long term strategy for the company.  It may be as simple as "a game must do well in Asian markets especially Korea or if not, have similar sized sales numbers outside of Asia".  CoH in 2012 was neither.

[TonyV]

Why is it illogical to only want to sell products that do well in your native markets and hopefully as well overseas?

Because most successful major multinational corporations have figured out that you adjust for foreign markets, not try to shoehorn your principles on them (or at the very least, in addition to trying to shoehorn your principles on them).  It's why McDonald's sells burgers made of lamb in India (and a lot of other stuff in other places).  It's why Coca-Cola sells that nasty-ass stuff they sell in Italy but not here (in the U.S.).  Or for that matter, have you ever heard of Qoo?  Actually, aren't you German?  If so, you may very well have since it was sold there for a few years, but about 99.99% of the people in the United States haven't.  It's a niche brand of non-carbonated fruit drinks sold by Coca-Cola primarily in Asian markets.  Why does a multi-billion dollar multinational behemoth like Coca-Cola sell Qoo?

Why support a niche product that does okay but not fantastic in a region outside of your core market?

Because that's what the people there want.  I'm not saying that you can't try to push your own stuff there, but if you want to be a multinational company like NCsoft says it wants to, you have to have a keen sense of what sells and where.

I'm not disputing that the thought process you're engaging in is probably the exact thought process that NCsoft is going through.  I'm just saying that for a company to "take it to the next level," so to speak, it has to factor in local markets; to not do so poses a serious risk of disinterest and, depending on the circumstances, backlash against the company that tries to come in and impose their culture on others.

What's kind of weird about this specific circumstance is that NCsoft actually used to have a good strategy in this arena.  After all, it did fund City of Heroes and it did buy out Cryptic's interest in the IP way back when.  That's why I think that sometime within the last few years, there has been some kind of fundamental management shift within the company.  Not at the CEO level, but slightly lower.  I honestly believe that someone who either is grossly incompetent or who doesn't have the best interest of NCsoft at heart has Taek-Jin Kim's ear right now--like a corporate Wormtongue.

Why sell it's IP when you've never sold off any IP of any product in an industry where few IPs are sold after cancellation?

Because smart people make mistakes just like stupid people do.  The difference between smart people and stupid people, though, is that smart people learn from their mistakes and try to make right by them when possible, whereas stupid people double down on their mistakes, adamantly refusing to change course, hoping the problem magically goes away.

That is the position that NCsoft is in currently.  At one time, they were a smart company with a diverse game portfolio and profit-making enterprises in multiple international markets.  Now, they're an insular Asian publisher that churns out games that only appeal predominantly to an Asian market, who has basically put all of their eggs into one basket: the success of Blade and Soul in China, which will either make or break them as a company.  Killing off City of Heroes is obviously backfiring on them and has done quite a bit of harm in a market that would have been an AWESOME hedge against something like, for example, the Chinese economy tanking, which at this point would kill NCsoft.

So what would a smart person do?  Try to make right by it.  I honestly think it's too late for them to rescue City of Heroes themselves, to try to go back to the way things were.  However, if they want to get at least some measure of goodwill here, they're going to have to let it go and work to shed their image as a game-killer.  Will it solve all of their problems?  No, but at least it's a start, and to do otherwise would basically be conceding the North American and European markets to other companies, admitting that NCsoft will likely not be a major multinational corporation anytime in the near future.

[FatherXmas]

Um actually, yes they can.Is it logical refuse to sell the plant and thus recoup none of the investment? Or to be more precise, to set your sale price so high you can be assured that no one will buy and you will lose 100% of your existing investment rather than losing 90% or 80% or some other number? In what business model is a bigger loss preferable to a smaller one?

If that was the case then why are their so many abandoned factories or retail properties?  Sellers need buyers but sellers aren't simply going to take any offer, not when there are alternatives such tax right offs, that puts a bottom limit on what would be an acceptable price.  Of course it also assumes that the investment in an asset isn't already paid off, multiple times over or fully depreciated.  In that case they don't NEED to sell it.

If shutting down Paragon Studios was in their longer-term plan why did they not phase out the developers sooner and save more money? If I have to go on just what we know then the dog didn't bark here.

The phrase "realignment in focus" implies an overall company shift in priorities.  If it didn't happen or if the "realignment" had different goals then you might not want to phase out anyone.

Is there any other piece of evidence of which you are aware that supports the idea that this was a long-term decision or are you relying on the supposition that whatever they did it must have been rational?
I can't speak to their corporate strategy because they consistently obfuscate about what that is. It is to be expected. I can speak to what they've done recently and suggest that we not assume that they are going to suddenly start behaving differently.

I see evidence of foolishness and impulse. These are normal in human behavior. NCSoft is not run by robots. [At least, not as far as we know.] I'm not ready to ignore some of the evidence on faith that NCSoft's corporate decision-makers are deeply-wise people.

Corporations don't do irrational things.  The decisions seem rational at the time by those making them.  They may end up being short sighted, they may be based on incomplete or even false assumptions about where the market is going.  You could have an entire class on HP's missteps over the last two years.  AMD eliminated their low power CPU group just six months before demand exploded world wide.  I company I was at took a big loss back in 2000 when they hedge the exchange rate for the Euro the wrong way and we took a bath, twice, on our European sales.

[Little Green Frog]

Because that's what the people there want.

But what if the company does not want that? What if it does not feel like it has to do anything? There's a lot of affection in your words, but just because you feel strongly about the subject, it doesn't necessarily make your point of view to be in line with surrounding reality. I wish NCsoft saw things your way. Unfortunately they don't.

[TonyV]

But what if the company does not want that?

Well, that's entirely a possibility.  It's possible (and at this point, I think rather likely) that NCsoft would rather micromanage everything out of Seoul than to establish themselves as a viable multinational company, at least in non-Asian countries.  I don't think that's always been true, and has been a relatively recent (within the past few years) shift in strategy.  And you know, I don't really even have a problem with that.  I'm not interested in making them get into markets they don't want to be in.

However, to not sell the IP so that the people who you strung along still have their jobs and the customers who were loyal to you for almost a decade is unconscionable to me.  Is it legal?  Yes, I never disputed that.  But as I've said on multiple occasions, because so many people have spent so much money on this product, I believe that NCsoft has an ethical obligation to do what they reasonably can to see that the game continues.  That means that they need to sell the IP for whatever it would cost to transfer it, and I don't even mind an amount that results in a bit of profit to line their pockets.  I believe that NCsoft has not made a genuine effort to do so.  And when a company acts in a manner I think is unethical, I think it's incumbent upon its customers to make life uncomfortable for them, to do their best to ensure that the company pays a public relations price for their actions.

[Nafaustu]

Company's don't want a lot of things.   Like to pay taxes and child labor laws.

[Codewalker]

Corporations don't do irrational things.  ...  You could have an entire class on HP's missteps over the last two years.

Sure they do.  HP and Oracle used to be strategic partners, until an ousted HP president got a senior (co-president) position at Oracle. Thus began a blood feud that has done nothing but harm customers of both companies, to the point where many now actively avoid the two whenever possible.

Since then there have been several disgruntled execs from both companies hired by the other, but Hurd was the one that started the ball rolling. The court documents from their various lawsuits since read almost like divorce papers.

[HarvesterOfEyes]

If that was the case then why are their so many abandoned factories or retail properties?  Sellers need buyers but sellers aren't simply going to take any offer, not when there are alternatives such tax right offs, that puts a bottom limit on what would be an acceptable price.  Of course it also assumes that the investment in an asset isn't already paid off, multiple times over or fully depreciated.  In that case they don't NEED to sell it.

If there's a loss they can write off we'll see that in a corporate report.

If it's fully-depreciated there isn't, but then it's a much larger opportunity cost to sit on the property while it's market value decays.

There's a lot more than needs to be known before shutting down something profitable they were investing in up to the last moment looks like a rational decision.

The phrase "realignment in focus" implies an overall company shift in priorities.  If it didn't happen or if the "realignment" had different goals then you might not want to phase out anyone.

Help me understand your view. Here you seem to be saying that there was a sudden shift in their long-term strategy and that's why they didn't do a phase-out at PS to save money.

Do I think NCSoft hung onto CoH until GW2 was ready to be released, yes.  I think they were willing to put up with CoH anomaly until they had another western revenue stream, a much superior one, ready to take over.

...but here you seem to be saying that getting rid of CoH was a strategy going back at least a year or two. So I'm confused about what you think the explanation is.

Corporations don't do irrational things.

Hogwash. Utter, unmitigated nonsense.  So patently false a thesis that academicians actually study and attempt to explain the negation of it.
http://blogs.sas.com/content/cokins/2011/01/18/why-are-there-irrational-business-decisions/
http://www.sba.oakland.edu/Faculty/york/Readings434/Readings/On%20the%20folly.pdf
http://chronicle.com/page/Good-Research-on-Bad-Business/462/
https://www.repository.utl.pt/handle/10400.5/2257

Never mind New Coke.

The decisions seem rational at the time by those making them.  They may end up being short sighted, they may be based on incomplete or even false assumptions about where the market is going.  You could have an entire class on HP's missteps over the last two years.  AMD eliminated their low power CPU group just six months before demand exploded world wide.  I company I was at took a big loss back in 2000 when they hedge the exchange rate for the Euro the wrong way and we took a bath, twice, on our European sales.

The point of the market is not that companies or corporations are flawless decision-makers. The fact that the market will punish you for making the wrong decisions is supposed to induce prudent behavior. The more detached the decision-makers become from the consequences of their stupidity, the more likely they are to display it.

Time again for the poster. Here's the biggest problem with corporate decision-making:



...and another I dedicate especially to NCSoft's CEO:



EDIT: spelling.

[FatherXmas]

Because most successful major multinational corporations have figured out that you adjust for foreign markets, not try to shoehorn your principles on them (or at the very least, in addition to trying to shoehorn your principles on them).  It's why McDonald's sells burgers made of lamb in India (and a lot of other stuff in other places).  It's why Coca-Cola sells that nasty-ass stuff they sell in Italy but not here (in the U.S.).  Or for that matter, have you ever heard of Qoo?  Actually, aren't you German?  If so, you may very well have since it was sold there for a few years, but about 99.99% of the people in the United States haven't.  It's a niche brand of non-carbonated fruit drinks sold by Coca-Cola primarily in Asian markets.  Why does a multi-billion dollar multinational behemoth like Coca-Cola sell Qoo?

It took those companies decades to expand into those markets.  It takes time and patience to learn what sells there as well as how to do business there.  There has to be a willingness to listen to the locals.  It's easy to waltz in and buy an existing product and then try to control it as if was like any other product in your company.  Many expansions into new markets that way ultimately fail.  NCSoft did exactly that.  They came over here and invested in or bought up products under development and while they were somewhat successful over the short term, they tried to micromanage to improve both sales and new project success.

NCSoft invested in NetDevil, ArenaNet and Cryptic, buying ArenaNet outright but on terms that allowed ArenaNet to manage themselves reasonably independently from Seoul. 

NetDevil created Auto Assault and it wasn't that successful, lasted 16 months.  NetDevil tried to buy back the IP in 2007 and NCSoft wasn't interested in selling.  So right there it shouldn't have been a surprise that they would sit on CoH's IP since they weren't even willing to sell the IP of a failed MMO back to it's independent studio.

Both Cryptic and ArenaNet had relatively successful titles but neither were raking in Lineage numbers forget about WoW numbers.  And when Cryptic looked to be ignoring the game NCSoft stepped in to form Paragon and own the IP outright.

So NCSoft buys Destination Games run by the legendary Richard Garriott, the reported creator of the acronym MMORPG as well as the popular Ultima series and the successful Origin Systems.  Who wouldn't want to get in on the ground floor of his new venture.  But now all indications that there were simply too many cooks for Tabula Rasa and it too failed but after a huge investment on NCSoft's part.  What did NCSoft learn from that debacle?  To exert even more control.  They let the locals run the project into the ground.

So they went ahead and bought Carbine Studios, with a developer pedigree that includes several original staff from WoW.  Until this reorg, they reported directly to NCSoft corporate.  I would imagine that Wildstar has the most closely monitored development of any of their previously western titles.

Now during all this ArenaNet was able to develop their new MMO and it appears to be a big hit in the west while Paragon couldn't get a concept passed the approval process in three tries and was left supporting a game with declining sales.

Because that's what the people there want.  I'm not saying that you can't try to push your own stuff there, but if you want to be a multinational company like NCsoft says it wants to, you have to have a keen sense of what sells and where.

I'm not disputing that the thought process you're engaging in is probably the exact thought process that NCsoft is going through.  I'm just saying that for a company to "take it to the next level," so to speak, it has to factor in local markets; to not do so poses a serious risk of disinterest and, depending on the circumstances, backlash against the company that tries to come in and impose their culture on others.

What's kind of weird about this specific circumstance is that NCsoft actually used to have a good strategy in this arena.  After all, it did fund City of Heroes and it did buy out Cryptic's interest in the IP way back when.  That's why I think that sometime within the last few years, there has been some kind of fundamental management shift within the company.  Not at the CEO level, but slightly lower.  I honestly believe that someone who either is grossly incompetent or who doesn't have the best interest of NCsoft at heart has Taek-Jin Kim's ear right now--like a corporate Wormtongue.

It's a possibility that there was a white knight for CoH at NCSoft but no longer or at least as influential.  And you don't need a Wormtongue like villain, just a persuasive presentation referencing well funded industry studies trying to predict the future of the industry.  "Always in motion is the future."

Because smart people make mistakes just like stupid people do.  The difference between smart people and stupid people, though, is that smart people learn from their mistakes and try to make right by them when possible, whereas stupid people double down on their mistakes, adamantly refusing to change course, hoping the problem magically goes away.

That is the position that NCsoft is in currently.  At one time, they were a smart company with a diverse game portfolio and profit-making enterprises in multiple international markets.  Now, they're an insular Asian publisher that churns out games that only appeal predominantly to an Asian market, who has basically put all of their eggs into one basket: the success of Blade and Soul in China, which will either make or break them as a company.  Killing off City of Heroes is obviously backfiring on them and has done quite a bit of harm in a market that would have been an AWESOME hedge against something like, for example, the Chinese economy tanking, which at this point would kill NCsoft.

So what would a smart person do?  Try to make right by it.  I honestly think it's too late for them to rescue City of Heroes themselves, to try to go back to the way things were.  However, if they want to get at least some measure of goodwill here, they're going to have to let it go and work to shed their image as a game-killer.  Will it solve all of their problems?  No, but at least it's a start, and to do otherwise would basically be conceding the North American and European markets to other companies, admitting that NCsoft will likely not be a major multinational corporation anytime in the near future.

Again, you are assigning a level of impact that canceling our game had that's wildly disproportionate to it's following.  When they canceled our game we were 2% of their sales and virtually unheard of in their native and nearby regional markets which accounts for 95% of their sales.  Their original MMOs are already doing poorly here and in Europe, there isn't a lot of down left for them.  I doubt the "boycott all NCSoft products" will affect GW2's sales numbers in any statistically significant way.  The success of B&S will be based on play style, is it just another PvP grindfest or something more accessible to casual players, and the degree of sex and violence that makes it by regional censors.  Europe may object to the violence and gun play while we prudes would object to the beef and cheese cake in "a video game".

Most gamers simply won't care about what happened to us.  What will matter most is if the games get good or great reviews and their friends go out and get it.  Trying to tell someone not to buy something on grounds that have nothing to do with that something isn't all that successful. Chick-fil-A or Papa John's hasn't been driven out of business or have even been significantly affected by their bad press simply because people care more if the food tastes good than what the profits are spent on.  Businesses close, favorite dishes vanish off of menus, books/dvds/games cease publication, it's the way things are.  Trying to warn people that it can happen will just get you of funny look and a "but of course they can".

I'm not suggesting that people should stop warning others, just that don't be surprised if it's not as effective as you think it might be.

[corvus1970]

Corporations don't do irrational things. 

This is patently false. One of the hallmarks of today's corporate climate is short-term profits tend to trump long-term thinking, and they tend to act as if resources are infinite. This thinking is not just irrational, its deranged. And its just one example of irrational corporate group-think.

[FatherXmas]

If there's a loss they can write off we'll see that in a corporate report.

If it's fully-depreciated there isn't, but then it's a much larger opportunity cost to sit on the property while it's market value decays.

There's a lot more than needs to be known before shutting down something profitable they were investing in up to the last moment looks like a rational decision.

Companies rarely line item D&A in their quarterly or annual reports.  However glancing at their 3Q report D&A is up 47% over last year.  We'll see what 4Q brings in February.
 

Help me understand your view. Here you seem to be saying that there was a sudden shift in their long-term strategy and that's why they didn't do a phase-out at PS to save money.

\
There were likely more than one restructuring plan under consideration.  Not all of them may have had the demise of Paragon as a feature.  However once a plan was picked it was swiftly implemented to get most of the costs associated to the changes applied before the start of fiscal 2013.

...but here you seem to be saying that getting rid of CoH was a strategy going back at least a year or two. So I'm confused about what you think the explanation is.

No, just suggesting what could have been a factor during previous discussions as to why they should keep CoH around for another quarter/year.  NC Interactive, which handles all sales in the NA region as well as being Paragon Studio's boss in the corporate org chart, was gushing money, at least according to the quarterly subsidiary profit/loss statements.  Not removing a significant part of that subsidiary's sales before another source is available seems obvious.

Hogwash. Utter, unmitigated nonsense.  So patently false a thesis that academicians actually study and attempt to explain the negation of it.
http://blogs.sas.com/content/cokins/2011/01/18/why-are-there-irrational-business-decisions/
http://www.sba.oakland.edu/Faculty/york/Readings434/Readings/On%20the%20folly.pdf
http://chronicle.com/page/Good-Research-on-Bad-Business/462/
https://www.repository.utl.pt/handle/10400.5/2257

Never mind New Coke.

Didn't mean to imply that all decisions of companies are not irrational, just that they are usually avoided.  Those articles highlight gut decisions; unintended consequences of reward systems (I'm gonna to write me a new minivan this afternoon - Wally, Dilbert); erring on the side of caution when you suspect you don't have enough information.  I grant you the sunk cost fallacy as irrational.  I think NCSoft did that one with Destination Games.

The point of the market is not that companies or corporations are flawless decision-makers. The fact that the market will punish you for making the wrong decisions is supposed to induce prudent behavior. The more detached the decision-makers become from the consequences of their stupidity, the more likely they are to display it.

Time again for the poster. Here's the biggest problem with corporate decision-making:



...and another I dedicate especially to NCSoft's CEO:

Those are two of my favorite Demotivator posters.  Yes, often meetings and committees are simply done to prevent blame from being assigned in the future.  Just like how compromise is having a solution that nobody likes.

However that said lets look at the Instagram debacle.  For the market to punish them, there can't be a similar competing service where their disgruntled customers can flock to as an alternative.  It doesn't need to be a 100% just like Instagram but good enough to keep those that switch to switch back in a month.

As for CoH, if we were the only MMO in this genre I can see a larger impact.  But CO and DCUO have already depleted out ranks before the closure were announced and they do provide an alternative to playing nothing.  Yes they don't have the same collection of features that made CoH popular to us but nothing else will again.  It's easy to knockoff a Maplestory style grind fest, however capturing lightning in a jar is a rare event and to us, CoH was that right mix.

[Valjean]

A bit of a tangent, but from what I've heard, while CO did hurt COH, DCUO didn't have much of an impact on COH due to its widly different playstyle.

But in the end, superhero MMO's generally end up feeding from the same pool. Unlike fantasy MMO's, the size of the playerbase never expanded past COH's original numbers.

[Thunder Glove]

The reason I can't see the logic behind NCSoft's decision to close CoH is simple:

CoH may have been only 2% of their overall revenue but it was 30-50% of their revenue in the Western market.

They've also said that they want to expand more into the Western market.

So you'll excuse me if I can't understand the logic behind beginning their expansion into the Western market by shutting down their most popular and most profitable product in that market (in the process also shutting down two other in-development projects also targeted specifically at that market).

Frankly, "they closed it to hide money-laundering" makes more logical sense than "They closed their most popular Western MMO in order to increase their influence in the West".

[FatherXmas]

This is patently false. One of the hallmarks of today's corporate climate is short-term profits tend to trump long-term thinking, and they tend to act as if resources are infinite. This thinking is not just irrational, its deranged. And its just one example of irrational corporate group-think.

Working toward short-term profits over long-term planning isn't irrational to you if that's what you are being rewarded on.  Was it irrational to turn off XP in CoH?  To those where leveling quickly was the most important thing about the game, it sure was but to others who wanted to play their characters through all the content it's not.

As the game of publicly traded big business is now played, short term gains are rewarded.  Growth is rewarded over stability or customer satisfaction.  They have learned that while we for instance hate bad service and lousy food, we really aren't willing to pay the cost for better, at least regularly.  While Five-Guys and Chipotle Grill have very clean establishments and better quality food than McD and Taco Bell, the price is too high for regular patronage for many.  You don't get caring, competent and polite employees at minimum wage.  We aren't willing to pay for locally made products.  When was the last time you bought clothing with "Made in the USA" on them?  It's okay, they're cheap.  And because they're cheap we expect them to have a short life expectancy.  But it's CHEAP. 

A case can be made that we are all irrational if you step back far enough to see the whole picture but within our little world we don't make irrational choices, our choices seem perfectly rational to us, it only seems irrational to an outside observer.