NCSoft Stockwatch

[Twisted Toon]

What this is really pointing out is that RPG alignment systems are of limited applicability to the real world.  Can be fine in a game, because the rulebook can say *exactly* what they are supposed to mean.

It also points out one of the reasons I never really liked D&D.

[dwturducken]

I'm ex-Navy, but that doesn't really qualify me to patronize a defense contractor.

We have one, here, that has changed hands a few times. I think Tenneco was the last major corporation to own it, but it's locally owned, now. It's always been a good place to work, if you can get in the door.  :)

[Victoria Victrix]

Let me say I very recently got the $80 million figure from a third-party source I consider trustworthy, along with some other information that would probably send blood pressures soaring, but I need to get confirmation of that figure from the parties directly involved.

[Terwyn]

Let me say I very recently got the $80 million figure from a third-party source I consider trustworthy, along with some other information that would probably send blood pressures soaring, but I need to get confirmation of that figure from the parties directly involved.

I have also received that same information.

[Ammon]

Let me say I very recently got the $80 million figure from a third-party source I consider trustworthy, along with some other information that would probably send blood pressures soaring, but I need to get confirmation of that figure from the parties directly involved.

We also need to have confirmation of precisely what that $80 million was supposedly for.  Was that to buy out the entire game, studio and staff as well?  If so, that's pretty much in the ballpark I'd expected all along.  If that is $80 million for just the intellectual property rights, no code, data, etc, then its a ridiculous valuation... but still $20 million less than one single branding TV ad campaign in the US alone.  In other words, we still know we can stack the deck to make giving it away for goodwill and positive publicity cheaper than hanging on to it and repairing the PR damage.

[Colette]

"...along with some other information that would probably send blood pressures soaring...."

We anxiously await the expiration of NDAs.

[Codewalker]

We also need to have confirmation of precisely what that $80 million was supposedly for.  Was that to buy out the entire game, studio and staff as well?

Just the IP, but without ridiculous strings being attached. Presumably would have to include the code, at least I would hope.

I'm not sure if that includes the account database though. Fairly certain it doesn't include server hardware, and definitely doesn't include things like the office assets, desktop PCs, etc.

I don't know if we'll ever get the full details stated publicly, it depends if certain things that were trying to be forcibly enacted ended up happening or not.

[Segev]

Just the IP, but without ridiculous strings being attached. Presumably would have to include the code, at least I would hope.

I'm not sure if that includes the account database though. Fairly certain it doesn't include server hardware, and definitely doesn't include things like the office assets, desktop PCs, etc.

I don't know if we'll ever get the full details stated publicly, it depends if certain things that were trying to be forcibly enacted ended up happening or not.

It is utterly frustrating to not even know how to get in the know on things like that. It sounds fascinating.

[Codewalker]

It is utterly frustrating to not even know how to get in the know on things like that. It sounds fascinating.

I'm certain it's much more frustrating for people like VV who might be "in the know", but can't talk about it and correct inaccuracies, for fear of making things even worse for the people who are already being screwed.

[Segev]

Probably. I know the one small thing I knew that I was asked not to share was frustrating to not be able to share. But...knowing was better than not, to my mind.

I like understanding things. If I understood them well enough, I could make broad statements like "your anger is justified" or "your anger is unjustified; I can't say why, but believe me, there are no bad guys here." Or, if I couldn't, at least I would know what the situation was (and maybe, just maybe, at least be able to privately brainstorm solutions. Nothing upsets me more than insoluble problems).

[Victoria Victrix]

Just the IP, but without ridiculous strings being attached. Presumably would have to include the code, at least I would hope.

I'm not sure if that includes the account database though. Fairly certain it doesn't include server hardware, and definitely doesn't include things like the office assets, desktop PCs, etc.

I don't know if we'll ever get the full details stated publicly, it depends if certain things that were trying to be forcibly enacted ended up happening or not.

For reasons I have explained before (but will reiterate here) 80 million for the IP and code is utterly ridiculous.

Book rights are worth close to zero because the original CoH books did so very poorly.  You would be hard-put to find a publishing company willing to take the project on now; even if one did, it would be at the standard advance of about $5k-$10k per book that an unpublished author gets.  The books would probably have to be self-published which opens up another can of worms--editing, printing and distributing those books would be very costly.

Comic rights: see book rights.

Move rights: movie rights are already tied up in a previous option.  At the moment they are worth nothing.  When the current option lapses, they will be worth at maximum $25k a year.  Movies are seldom made about dead games. 

Other gaming rights: the game is dead, long live the game?  Given what we've been doing, the gaming rights for other sorts of games are probably also worth close to zero.

[Ammon]

For reasons I have explained before (but will reiterate here) 80 million for the IP and code is utterly ridiculous.

If it in fact does include the code (not yet confirmed?), VV, that makes quite a difference.  The code *is* the creative work and the license to publish it.  In book terms, its like granting not only the rights to use the characters and settings, but also granting all the works to date and full publishing rights, along with royalties etc.

But we are not talking books here, but software.  The code *is* the software and the product.  Sure, I personally still think the price is too high, but now probably only by double, rather than ten-times and so.  In other words, its a point to negotiate from.  Many negotiations begin with the seller asking double the value and the buyer offering half, and negotiating (haggling) from there to get to a deal.

All in all, an idea of price is a good thing, as it does allow for the starting of negotiation and offer.  We already had the means to drive down the asking price, but now we have a ballpark figure of where it is, and know that it is within the realms of possibility to achieve.  Even 80 million, assuming it does include all the code, is at least a starting point.  We know that one TV campaign in one country can cost more than that. 

Again, these comments are assuming that it does include the code itself - the software.  If this is purely the IP then you are right, 80 million is a ridiculously unrealistic amount, designed purely to declare they are unwilling to sell at all, and only putting a price on at all so they can tell their stockholders that they did not actually close the door to offers.  (They just made the door completely inaccessible, the wrong size, and otherwise completely unfeasible to use).

[Ammon]

Good post, Gangrel.  Yes, I think that's pretty much spot-on, as I'd estimated in my original post on the topic some time back:

Now, from what I've seen and understood of the financial state of Paragon Studios and CoH, as a company it would likely (my opinion and estimate only) be valued at around $100 million as a complete business to takeover.  Remember, that's isn't to make a profit for shareholders, that's it reasonable value, so to speak.  In my professional opinion, anything lower than a value of around $50 million would be a complete insult.

I can tell you that I know (but cannot divulge my sources) that none of the offers made to NCsoft for CoH were anywhere near even half of that.  Steam offered something like $3million plus some profit share.  Imagine how such an offer as that must come across to a people whjo are known to be concerned about saving face and not insulting people.  Wow.  I wouldn't even speak to such insulting people either.

The other offers were all ridiculously low too.

That's not Steam's fault.  To them, CoH is seen mostly as low-hanging fruit, able to be easily plucked.  A game that is 8 yrs old, with small profits, in an ever-increasingly competitive market, and with a declining customer base.  Oh, and during a recession.

Of course, values on things are always a tricky business, and effectively, a pure guess.

As a general rule, a service business is valued at around its annual turnover, because Service businesses have very low barriers to entry, and are effectively dependant on the staff who provide the service (who may leave in a takeover).  Meanwhile a tech business is generally valued at 2-5 times its annual turnover, dependant on the amount of patents and intellectual property, because those create far higher barriers to entry.  But all of these valuations are based on the idea that just because a business did X amount of business last year, it should do about the same this year, and could do better if better managed...

The selling price of a thing is really determined by the guesses of two different parties.  The value the seller estimates his thing has, and the value that a potential buyer estimates the thing has.  Usually the two negotiate to some kind of compromise, but only if there is room somewhere in the middle.  If the two different opinions of value are just too far apart, generally no negotiation happens.

You can understand why Steam would offer so little for the game, considering they'd been mailed and told it was basically dead in the water and ripe for a low-ball bid to steal.  I can conversely understand why NCsoft may be asking so much, though I do think they are being unrealistic in the current economy and market (the increasing number of choices in MMOs in the market do mean that each can expect less market share, etc, current economic predictions are bearish on MMOs, and there's a global recession).

Of course, my initial valuation estimate was made assuming that it would be a takeover of the entire business, premises, staff, etc.  However, since the staff and premises both add ongoing costs, especially with the heavy over-staffing at Paragon due to development, these things don't add as much value to the business as you may imagine.  They just save a company having to organise location and recruitment for themselves.  The servers are not necessarily a major cost either, so again, including or excluding a load of second-hand servers may not affect the value that much either.

I personally think that all of the offers made by outside companies, including Steam, were at least under half what they'd have needed to be to be taken as a serious point of negotiation.  Ten million *might* have been enough to start a serious discussion, but less than 5?  No.

[TonyV]

Let me say I very recently got the $80 million figure from a third-party source I consider trustworthy, along with some other information that would probably send blood pressures soaring, but I need to get confirmation of that figure from the parties directly involved.

I have also received that same information.

I also received that same information from a third-party source I consider trustworthy.  While this doesn't necessarily make it 100% correct (it could, in theory, all be the same source who is incorrect), it does mean that VV, Codewalker, and other people here aren't just making stuff up.  :)

[BryanSnowden]

Are we sure it's not 80 Million "Won"?
OR, even if that was the *ahem* "offer" *ahem* couldn't we try to counter-offer/suggest  with whatever 80 million "Won" is in "Dollars" & if they balk suggest we saw/or didn't see - the $ sign - or that it was lost in translation??

*Actually, I just checked - using the converter I googled up it was around $73,333* So that might be "a slap-in-the-face"  :roll:
But, maybe we could go with something along this line of reasoning. Sorry, but $80 million is way more absurd in my mind than $73,333 is = while they still might see that as absurd & we might all agree - it's more than they can make off of it sitting in their basement till they go out of business...
Because unless they seriously surpirse us with the an ideal *CoH 2* that let CoH characters transfer in with more or less equivalent "stuff"/stats=(for lack of a better word)/etc.  Then, the odds that we're gonna play it would be miniscule... at best.
Somehow, We need to get to the 'stock holders/share-holders (more or less the same)
AND the 'stakeholders' (which can be totally different folks) = something i didn't realize until fairly recently when I was digging thru some investment guides & whatnot...

SURELY, stakeholders could be persuaded that 80 million Dollars US is pie-in-the-sky & NOT a realistic price = and therefor this "we;ve exhausted all options is a crock of "stuff"
I also noticed that the S.Korean Government has like 9% of the NCsoft Stock (I think), maybe there's some possibility of leveraging that = what government is going to think sitting on IPs forever = while essentially killing-off most/any of the innate value they may  possess (or might have have once possessed).
I mean, that's nothing short of destroying an asset, No?  It sure is IMO & I think that this a view that we could persuade others to agree with, and possibly more importantly "side with" - in any sort of (future?) "persuasive bargaining" that could lead to a deal that is a "win-win" for all involved, OR for those with "leverage to influence" said deal.

[Ammon]

Because unless they seriously surpirse us with the an ideal *CoH 2* that let CoH characters transfer in with more or less equivalent "stuff"/stats=(for lack of a better word)/etc.  Then, the odds that we're gonna play it would be miniscule... at best.

Sadly most business decisions are short-term, within the magical 5 year plan at best, but assets are thought of as longer, and therefore somewhat fuzzily planned for, if at all.  Often assets are hoarded as 'something we know we'll find a use for'.

I've been saying for a while that where we have power is that for NCsoft this is just business.  Its not personal.  And their business decisions are honestly no worse than the decisions made in corporations you use and are not railing against, from your bank to your telecom supplier, and from your utility suppliers to your local branch of Starbucks.  In other words, they are all just as shortsighted and idiotic in their own ways.

We can beat them every time because for us this is not just business.  Its not just about money.  Its about principles and value beyond dollars, which lets us apply planning and tactics that are wider than the bottom line profit.

But slapping them in the face makes it personal to them too.  At which point, we lose their predictability, and our advantage.

I can appreciate that many of you do not think $80 million is realistic.  Just like I don't think £5 or more for a burger is realistic, or £3 for a cup of coffee.  I went to a Planet Hollywood once, back when they were still fairly new, and that had to be the most unrealistic pricing I'd ever seen in my life ... and the place was packed.  All I could think of was that scene in Pulp Fiction where Vincent (John Travolta's character) can't get his head around the idea of a $5 milkshake that Mia (Uma Thurman) has ordered.

None of that changes that Planet Hollywood was packed full, just like the fictional restaurant in Pulp Fiction, and just like all those overpriced coffee shops are.  It may be a price we personally find ridiculous, but its obviously working for their target market.

I don't think $80 million is really ridiculous or incredible if it includes all of the code (not least because that might include the code as is for i24 that was almost ready, so you are buying software with the big new update almost ready to launch).  I think it is a high asking price, but an asking price is just that.  It is only the opening move for negotiating the price down.

Now sure, if that is $80 million for just the IP and no code at all, then yes, it is ridiculous.  So perhaps we need to confirm whether or not that does include the code before we comment further.

Either way, until recently many were speculating that NCsoft were refusing to entertain offers at any price, so having an $80 million figure is still a massive improvement on thinking that to them sitting on the IP was priceless.

[NecrotechMaster]

if the rumors are true and ncsoft does value coh at $80 million, then i too think that is prolly a gross overestimate of what it prolly is

i think coh could possibly top out at maybe $20-40 million (and even then that is prolly high estimate)

i hope that ncsoft will reconsider selling before we have to start fanning the fires

[P51mus]

Just a note, as far as I know, stock price is often determined not just by how well a company is doing now, but their potential to do well in the future (This basically makes it a weird kind of betting, but that's a bit of a tangent).  NCSoft's stockprice quite likely has some amount of inflation because of investors expecting them to actually expand into a market that's not Korea and do well at some point.

Our PR efforts remind investors of exactly how horrible NCSoft has been at expanding into other markets, and how little effort they put into understanding other markets so they can succeed in them.

[The Fifth Horseman]

and how little effort they put into understanding other markets

That makes an assumption they put any effort into it. Does not seem to be the case. NCSoft is THE company with most MMO shutdowns under its' belt to date.

[TonyV]

I don't think $80 million is really ridiculous or incredible if it includes all of the code (not least because that might include the code as is for i24 that was almost ready, so you are buying software with the big new update almost ready to launch).  I think it is a high asking price, but an asking price is just that.  It is only the opening move for negotiating the price down.

$80 million is extremely ridiculous, especially considering that the game is 8-1/2 years old.  Just to put this in perspective, this is more than the budget of all but the biggest blockbuster movies that come out.  Making a top-tier AAA brand new game would only run at most around $100 million; typically it actually costs much less.  Don't be fooled, $80 million is a slap in the face, NCsoft's way of telling everyone who asks that they're not going to sell the game, and the fact that they later said that they had "exhausted all possibilities" in keeping the game alive is an insult to its players.

I can't prove this, though I hope that at some point others will come out publicly regarding this, but I've gotten from multiple reliable sources that several attempts at negotiating reasonable terms for sale--counteroffers to NCsoft's opening move--were attempted and rebuffed.