NCSoft Stockwatch

[Mistress Urd]

I feel a little sorry for NCSOFT.  They are like some first time author who writes a critically acclaimed and wildly popular novel and then the pressure is on them to do it again, and again, and again.

Before CoH was ever released, way back when NCSOFT first came out with Lineage, that game blew up big time.  I don't know if it was the first successful MMO in Korea but it made the company.

Then the company decided to go to full 3D unlike the Diablo style of Lineage for Lineage II, which is actually a prequel.  The stock price shot up so much leading up to it's release it was the only time NCSOFT split their stock, three for one, as it was in the 250,000+ a share range.  Overall sales nearly doubled between 2003 and 2004 (yes, CoH came out in 2004 but was less than 13% of sales).

Then Guild Wars came out in 2005, did well.  Overall sales up 21%.

Then Auto Assault came out in 2006, didn't do well.  Overall sales up 10%.

Then Tabula Rasa came out in 2007, didn't do well.  At all.  Overall sales down 3%.  Oops. 

2008.  Late October 2008.  If you had a time machine and wanted to take over the company, that was the time to do it.  The stock price closed at a post split low on Oct 27th, 2008 of 24,400 a share.  That was below book value, the shareholder's value of a company's assets.  Stock quickly rallied after that partially due to reports on Aion's successful beta and buzz generated by it.  On Nov 24th, 2008 the stock closed at 41,900.  On the 25th Aion went live.  By the end of the year the stock was at 52,600.  On Aion's first anniversary it was at 151,500.

NCSOFT started big with Lineage.  Expanded overseas all over Asia.  Invested in several studios in the US.  Hit it big with Lineage II.  Then hit it really big with Aion.  They could do no wrong with their AAA properties.

Overall sales in 2008 was up only 5%, but mostly due to only a month of Aion sales. 

In 2009 sales was up 83%, profits up 623%.  It was Lineage II's success all over again.  The sky was the limit for the stock.  Aion brought in sales that were almost as large as Lineage and Lineage II combined in 2009 (89%).

And then ... nothing.  For nearly four years.  No new MMOs.  Lots of talk about B&S and GW2 but nothing to release.  It really didn't matter in 2009, they were riding high on Aion's first year.

But sales in 2010 were up only 2%, profits down 6%.  No new MMOs.

Sales in 2011 were down 7%, profits down 18%.  No new MMOs.  And that's when the stock price started to fall.  Oct 19th, 2011 the stock closed at it's all time high of 380,500.  Almost 3 years after it closed at it's post split low of 24,400.

In 2012 profits kept declining quarter after quarter.  And the stock's momentum went from everyone on the party train to outer space to fighting for lifeboats on the Titanic.

And when B&S didn't pull an Aion or Lineage II in terms of sales in the 3Q 2012 numbers.  Boom.  GW2 didn't matter as much because it's not being played down at the local PC cafe.  It's not on their weekly charts.  It doesn't matter to Korean investors.  What mattered to them was Aion and Lineage II sales taking a dive in 2012 while B&S didn't even pick up the slack to break even.

But still 2012 sales were up 24%, profits by 31%.

Maybe NCSOFT's best days are behind them.  They had three big successes in Korea and Asia.  But as long as their Asian business is still going strong.  And if Wildstar is successful or not, they have at least three or four more AAA MMO titles under development in the upcoming years.  As long as they remain profitable as they diversify into Mobile gaming; if GW2 can have the same kind of success in Asia as GW1 had; they aren't going anywhere any time soon.

I don't feel sorry for them. One of the hardest things when you get to the top is staying there. The people making the decisions have to keep making good ones. Mistakes happen, no doubt they will make their share of good ones and bad ones. If they make too many bad ones, the company will fail.

[Tanklet]

I refuse to feel sorry for a company that refuses to listen to their market, and yet somehow still expect them to be customers...

[Whyaylooh]

Wrong.  Aion, in it's depressed state, had nearly as much sales in 4Q 2012 than CoH had in it's last two years.  Also in Korea Aion is still the number 4 MMORPG in Korea with Lineage being 1 and B&S being 2 (ArcheAge is 3).

It'll be news when NCSOFT shuts down entirely any of their big three Korean grown titles.

Agreed, especially since that there are stragglers in their herd that are a.) more sickly, and b.) less likely to cheese off the home crowd.

My guts says, "Look for Guild Wars (the original) to be culled in August."  (Which means I should probably get something to eat here, and probably look into some medication, if my stomach is speaking to me so clearly, but that's neither here nor there.)  Earnings aren't much better than CoH's when it was cut, they're already a foot in the grave, anyway -- I believe they're down to a skeleton crew maintaining it, with everyone else moved over to GW2 -- and the home audience couldn't care less about it.  Right around late summer earnings reports is when they tend to announce or execute closures (see: Auto Assault, Exteel, and, yes, CoH), and if earnings are starting to slide again, it would make a relatively low-risk, "Yeah, things aren't looking good, but we're reorganizing to make things better!" move.

[Victoria Victrix]

And if Wildstar is successful or not, they have at least three or four more AAA MMO titles under development in the upcoming years. 

Only if they actually pay to develop those titles in a timely manner.  I don't know what the situation in Korea is when it comes to staffing but so far in the US all we are hearing about is cuts.  If there are not good updates, frequently, there are other new, shiny, and FTP game out there that will not cost the internet cafes a single won to put on the roster. 

[Tubbius]

A single won?  You mean one won? 

[JWBullfrog]

A single won?  You mean one won? 

you know, I was in a Korean lottery once. I won one won.

[dwturducken]

In Comedy Sportz, that would get a flag on the play: groaner.

[JWBullfrog]

And that wasn't the worst part...
My friend from Spain was in that same lottery...
 
Juan won one won too.

[dwturducken]

I'm killing you with brain lasers, now...

 

[TimtheEnchanter]

Juan won one won too.

Wait... Juan won one won when?

[dwturducken]

Brain lasers everywhere!

[Illusionss]

Wrong.  Aion, in it's depressed state, had nearly as much sales in 4Q 2012 than CoH had in it's last two years.  Also in Korea Aion is still the number 4 MMORPG in Korea with Lineage being 1 and B&S being 2 (ArcheAge is 3).

It'll be news when NCSOFT shuts down entirely any of their big three Korean grown titles.

But that still does not matter. NCSoft will still close that game any time they feel like it, whether or not it makes sense or whether or not it is making money. That is how they roll.

Sooooooooooooo...... If I were an Aion player, I would be very nervous. If I were heavily invested in GW1, I'd be nervous about that too. This is a very trigger-happy company.

[Triplash]

And that wasn't the worst part...
My friend from Spain was in that same lottery...
 
Juan won one won too.

Cool! A friend of mine entered a raffle over there once. She got a ballet skirt from a dollar store.

She won one one-won tutu.

[Twisted Toon]

A single won?  You mean one won? 

you know, I was in a Korean lottery once. I won one won.

And that wasn't the worst part...
My friend from Spain was in that same lottery...
 
Juan won one won too.

Wait... Juan won one won when?

Cool! A friend of mine entered a raffle over there once. She got a ballet skirt from a dollar store.

She won one one-won tutu.

I'll be able to sleep well tonight...once I stop giggling...

[Tubbius]

Wow.    Look what I spawned with a single pun!

THAT was a hilarious read. 

[FatherXmas]

But that still does not matter. NCSoft will still close that game any time they feel like it, whether or not it makes sense or whether or not it is making money. That is how they roll.

Sooooooooooooo...... If I were an Aion player, I would be very nervous. If I were heavily invested in GW1, I'd be nervous about that too. This is a very trigger-happy company.

/facepalm

As much as we hated it they didn't close CoH out of malice.  They had their reasons, it's just we don't understand them.  And even if they told us we would still likely disagree with them.  Maybe it wasn't making enough.  Maybe Paragon was costing too much.  I'm not talking straight up profit or loss, I'm talking about some 2nd or 3rd order abstract metric that they teach MBAs or is a report in SAP.  Sell through per player, profit per employee.  Maybe the return on the game was less than what they could get investing the money in bonds.

My point was CoH was bringing in a paltry amount of sales compared to Aion even at it's current anemic levels, anemic compared to where it was even a year ago.  I doubt a game with still over 10x the sales CoH had when it's plug got pulled is in the crosshairs.  Yet.

Sure down the line, after a total collapse of it's player base as they moved on to newer NCSOFT pastures, Aion could get it's plug pulled.  And for those who stayed behind, those who showed the game some loyalty will be POed like we were.  Or they will accept these things happen and move on to join their fellows in the greener pastures.

[TonyV]

My point was CoH was bringing in a paltry amount of sales compared to Aion even at it's current anemic levels, anemic compared to where it was even a year ago.

You keep saying that, but I still have to point out that I honestly believe that your assessment is based on investor reports that NCsoft has produced in-house, and we don't know what the actual numbers are.  It is not unusual for companies to shift numbers around to convey some impression or another, and with less regulation in South Korea than the SEC mandates here in the United States, it would be even easier to do so.  I'm telling you, do not trust the numbers that NCsoft is putting out when it comes to sales and expenses.  I can't prove it.  I wish I could.  If this were a U.S. company, I'd have more avenues to chase down to try.  I think that someday we'll find out the truth, but it won't be until NCsoft is forced to turn over information that it really wants to keep locked up.  But based on what I've been told by people who would know, people I have a lot more trust in than anyone at NCsoft, City of Heroes was doing very well and the amount of money it was making could hardly be called "paltry".

[FatherXmas]

So TonyV, you believe that NCSOFT had been intentionally lying in they investor reports for years leading up to the closure of CoH as part of some grand plan to lay the groundwork for a justifiable reason to close the game?  So at what point did this start or is all their numbers for the last 8 years are falsified?  That sounds a lot like premeditation which does imply then some degree of malice.
 
Are you suggesting that CoH, at any time, was even remotely as large of an income source as any of NCSOFT's big 3 worldwide?  Are you suggesting that CoH style had the player population hadn't declined from it's heyday when NCSOFT still reported those numbers?  Or don't you believe that Aion's worst quarter brought in almost as much income, from just Korea in 4th quarter 2012, than CoH did in it's 4th quarter of 2005, the quarter that CoV was released?

This all does sound a bit conspiracy theorist to me.  Sure we don't like the reason they gave.  It's only natural to dismiss facts if they don't agree with our "gut".  But how did closing our game, if it was doing as well as you are suggesting, help them?  What was NCSOFT looking to gain from the closure?  What balanced the negative publicity they were likely aware that the closure of a 8 year old game that had none of the usual public precursors that it was in trouble (server merges, staff layoffs) would generate?  No company would intentionally upset their customer base unless there was an upside to it, so what was it?  What was their motive if they've been planning this for years, cooking the books just to back their claim (not that they ever said that CoH was losing money)?

[Lightslinger]

I personally think CoH was still doing well, just not as "well" as NCsoft would've liked. NCsoft saw an 8 year old game that had definitely peaked, the $$$ from CoH was only downhill from when they made the decision to shut down.

I believe it would've been a very long and slow downhill, but CoH had most likely peaked. NCsoft saw this as justification to get out. Also, NCsoft was probably looking at the ROI, return on investment factor. Because of CoH's age it had a lower ROI. So even though CoH was making money, it was making less than an investment in another property would.

Basically, NCsoft puts $1 into CoH, they get $2. They put $1 into GW2, they get $5. Translate that to millions and its a big difference.

NCsoft closing CoH doesn't make them stupid or malicious, its the way it was conducted that was wrong. If NCsoft didn't want CoH they should have:

-Ramped down development and slashed Paragon Studios to a smaller team.
-If that didn't work for them, go to "maintenance mode".
-Sell CoH to highest bidder.

The business side of shutting down CoH kind of makes sense, the Customer Service side however...yikes.

[JaguarX]

You keep saying that, but I still have to point out that I honestly believe that your assessment is based on investor reports that NCsoft has produced in-house, and we don't know what the actual numbers are.  It is not unusual for companies to shift numbers around to convey some impression or another, and with less regulation in South Korea than the SEC mandates here in the United States, it would be even easier to do so.  I'm telling you, do not trust the numbers that NCsoft is putting out when it comes to sales and expenses.  I can't prove it.  I wish I could.  If this were a U.S. company, I'd have more avenues to chase down to try.  I think that someday we'll find out the truth, but it won't be until NCsoft is forced to turn over information that it really wants to keep locked up.  But based on what I've been told by people who would know, people I have a lot more trust in than anyone at NCsoft, City of Heroes was doing very well and the amount of money it was making could hardly be called "paltry".

Sooooo. Without true financial reports and numbers can we say it was for one reason or another in a definate manner? I.e it was for malice; it was for lack of profits; it was irregardless of profit; it was making a killing; it wasn't making anything and etc. But one thing that father xmas is proper about is that Ncsoft had a reason. Although they havent elaborated on it, it may have been a stupid reason good reason personal reason business reason some ate a burger and got rot gut reason but all reasons nonetheless. Yet it doesn't seem as the reason will be clear anytime soon unless a public audit of finance dating far back shows the reason. We have a company the only one that know the true numbers that may have pencil whipped some numbers but I always thought they pencil whip to make it look more profitable not less but hey.

The f2p model seemed to make it easier to make up numbers. With pure subs more people logged on more money. I remember when just about all servers were decently populated. In the end it seemed that there were less people on than in the past but with server transfers being handed out like candy, people who play and don't pay a dime, villain zones being all but empty due to AT prof. and ease of switching its possible that everyone migrated to virtue and freedom. Maybe money made decreased over the years maybe not. Maybe there are 34 alt. dimensions. What is a butt load of money to one us chump change not worrying about to another. That is why I wished companies express their expectations and thresholds a bit better. WoW if profits decreased to say 18 million a year
and many would say that is super excellent money, some companies may look at it as a loss and shut it down for nit performing anymore. How long must it not perform? Depends on company expectations. Some may wait 4 years others after a few months but the threshold is ever rarely stated. I guess they assume mmo players/workers have the ability to read the company financial analyst minds.