NCSoft Stockwatch

[Blue Pulsar]

QFT. This is what I have been thinking for a while.

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).

[Ironwolf]

I see this whole thing in a different light:

The Paragon Studio representative twitched nervously holding his hat in sweating palms and once again patted the case carrying his recommendations to expand City of Heroes further after Issue 24 by leveraging some of the new profits into a new advertising campaign. He looked again at the doors leading to the CEO's office and saw the 2 shrew faced accountants standing guard were staring at him. Quickly he looked down and away, he had heard these guys were the MMO killers and had left many gamers shreiking into the darkness of a silent server.

He took heart though that with all the blaster changes and other wonders planned with Issue 24 and the prospectus he himself had written that Korea would see the wisdom of growing the game and its influence. Another quick glance at the door showed him one of the accountants was still staring at him. He shuddered once more and glanced away if he wanted to kill a game he would imagine that accountant would be who he would use. Tight and pinched face, receding hair and a snarl that shows he never had energy punched a minion in his life.

Suddenly the door opens!

"Enter," says the pinchfaced accountant. "Mr. Kim will see you now."

The Paragon rep walks in on knees that seem a bit weak. He does however take heart when he sees that Mr. Kim is wearing a Positron tee shirt! Now his stride is more sure and he reaches out a hand greet Mr. Kim.

"It is a pleasure to see a Paragon rep here in my halls again," Mr. Kim speaks and seems not to see the offered hand.
"I have looked at your ideas and they seem in good order. However, a local custom dictates I consult our Chief Finance Officer prior to signing to go along with this venture, I am sure you understand."

The rep smiles and starts to speak and Mr. Kim holds out his hand in a silencing motion and summons a man more pinchfaced and heartless than the one at the door. In one hand he holds a shallow bowl and in the other a live chicken. He hands the chicken to Mr. Kim who abruptly rips the throat out of the bird and drains the blood into the bowl spattering the Positron shirt with blood.

The CFO looks into the blood for a moment and shakes his head slightly.

Mr. Kim turns around ripping off the Positron shirt and underneath is a black lace bra and garters embossed with Blade and Soul written in gold. "The omens do not bode well for Paragon Studios," he quips.

[Blue Pulsar]

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.

Unfortunately, your comparing an apple to a bag of mixed fruit. There were several reasons to turn off XP and at least one good reason not to. I turned off XP to I could get recipe drops at a specific level. Some did it in the beginning so they could be perma-bridges at level 46. Some did it for content. There are lots of reasons and they all depend on what your goal is.

However, most here would say that the final goal of a company is earning an income. And if a company does something that is to the contrary, well, you get the idea... I hope.

As the game of publicly traded big business is now played, short term gains are rewarded.  Growth is rewarded over stability or customer satisfaction.

So, can you give a solid explanation as to how eliminating a product that nets you 30-50% of your income in a market that you want to push into counts as any gain at all? And, please, keep the hypothetical to a minimum.

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.

Point taken.



-edited for spelling-

[FatherXmas]

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".

CO came out in 2009 (so did Aion BTW).  In 2008 CoH had over $22 million in sales.  In 2009 CoH had less than $18 million.  2009 was the start of a significant downturn in sales.  Maybe it was CO, maybe it was simply burnout, maybe it was I13 PvP changes coming home to roost or the influx of AE babies but something drove away 20% of sales that year with the dip starting with the 3Q numbers.  2Q 2009 the game had sales over $5 million and in 1Q 2010 it was hovering at around $3 million.  That's a 40% drop in 9 months.  Something happened then.

If you accept the premise that CoH only had sales in NA and Europe then in 2010 CoH was 19% of those regions total sales, 27% in 2011, 28% in 1Q 2012 and only 44% in 2Q 2012.  Percentages are great for hiding facts.  The only reason our game was 44% in 2Q was that our decline in sales were simply less than the decline in overall regional sales.  Europe utterly collapsed in 2Q, down 86.9% YoY.  NA down only 21.1% but CoH was only down 3.5%.  It's not that we grew but everything else fell more.  But we still fell.  The numbers do sort of showed our community's commitment toward our game versus say Lineage or Aion.

[tigerbaby]

An alternate theory:

If a business had made a 'deal with the devil' that went horribly awry, and were being drawn into ever-deeper entanglement of ethical and legal misconduct, with their continued cooperation and complete silence guaranteed under threat...

...deliberately pissing off a bunch of fiendishly loyal would-be heroes in a tiny subsector of the company's holdings on another continent on the pretext of a 'marketing realignment' -particularly if you'd noticed the demographics of this group favoured a range with a bit more experience and connections than average- would be an ideal last-ditch 'message in a bottle'...
<_<
>_>
It would make a good story arc in CoH, ne?  It would even 'flip' well for red-side.
::tigerbaby escorts cowering businessman NPC out of burning office building.  You know the map I mean...;P::

Like my tinfoil hat?  I made it to look like a fez...

[FatherXmas]

Unfortunately, your comparing an apple to a bag of mixed fruit. There were several reasons to turn off XP and at least one good reason not to. I turned off XP to I could get recipe drops at a specific level. Some did it in the beginning so they could be perma-bridges at level 46. Some did it for content. There are lots of reasons and they all depend on what your goal is.

However, most here would say that the final goal of a company is earning an income. And if a company does something that is to the contrary, well, you get the idea... I hope.

Sorry for not enumerating all the reasons one would turn off XP.

And what if sacrificing short term income to be in a better position for long term growth was their play?

So, can you give a solid explanation as to how eliminating a product that nets you 30-50% of your income in a market that you want to push into counts as any gain at all? And, please, keep the hypothetical to a minimum.

Because it simplifies your life.  It's simpler to localize one product across all markets than to support a niche product that only sells in one shrinking market.  That the only reason it currently nets 30-50% is because your other products have taken a significant downturn in sales (note that this is 2Q 2012 sales, two months before the announcement).  It doesn't hurt either if you know that any lost sales is easily offset by a new locally developed product.  Or that your latest game conversion will include play style changes this time around.

Point taken.

Yeah, takes me a while to get any traction, I'll give you that ...  when it comes to making a concise point.  :P

[Blue Pulsar]

Like my tinfoil hat?  I made it to look like a fez...

Very cute. I want one.

[Blue Pulsar]

And what if sacrificing short term income to be in a better position for long term growth was their play?

It's simpler to localize one product across all markets than to support a niche product that only sells in one shrinking market.

And my question, along with others here, is: How is closing down something you have little to do with (since PA was a stand-alone organization that generated money with little or no input from NCsoft) good?

It doesn't hurt either if you know that any lost sales is easily offset by a new locally developed product.

So, if you have a 100 dollar bill, a 50, and a 5 in your wallet, and are planning on getting a 10, are you going to put that 5 in a box in your basement never to be seen again simply because it's a small percentage of what you have? Because the loss of the 5 will be offset by the 10? How about put out their "new venture" AND they keep their old ones?

You can't tell me that having Paragon Studios open and running here was any real burden to them over there. That 10 mil profit is above and beyond taxes, bills, payroll, etc.

Streamlining makes sense when you are actually cutting expenses, not cutting profits. Even if those profits are pennies on the dollar.

I don't personally think that they closed CoX because of money laundering or spite. I think they just made a dumb decision. I believe that it was a hair brained idea from someone in the company that thought it would make their other games do better. So, There is no defense of their actions unless there is something that we don't know (which is extremely possible, if not probable.)

[ukaserex]

Here's the thing about stocks. Some go up, some go down and some stay the same.

NCSoft shut down CoH, even though it was making money.

Why? We may never know the specifics. It's probably the single largest reason why the closure has felt so negative to many CoH players.
My hunch is that it was a combination of factors.

First, CoH was easily considered a "western" game. In the "west", the economy was(and still is) in decline. Even though the game was a measly 15 bucks a month, when times are hard, something has to give. If memory serves, the dollar was and still is weaker that it used to be.
When a foreign company gets 100 US dollars converted to the Korean Won, the strength of the dollar is a significant detail to consider. That 2% of total revenue that NCSoft got was worth less than it was previously. (It was 2%, wasn't it?)

Secondly, although from my seat, keeping a functioning, profitable company going makes sense to me, that doesn't mean I have all the information to make the fiscally responsible decision. It's possible that NCSoft simply isn't concerned with niche marketing. And that's what a super-hero MMO is - a niche. Why? because as delightful as the costume creator and the rest of CoH was, it didn't have as broad an appeal as WoW and other games. Given the market for MMO players, CoH never did have a super-robust playerbase number wise. I suspect if the PvP changes in issue 13 were addressed in grand fashion, perhaps CoH could have kept a lot of players that left, and possibly attract more once they went F2P. Still, there were a host of expenses and costs that went into running CoH. Without all that information at my fingertips, I honestly can't say that NCSoft did the wrong thing, from a fiscal perspective.
What I can say is that if I had been the decision maker, even if the game were losing a small amount of money per year, if I were aware of how tremendous the impact CoH had on the lives of many of its players, I'd have kept the game going and used the losses to offset the income from the other games to lower my tax liability.
But, I'm in the US and have no idea if Korea even has a tax code, let alone what it is regarding losses. And there again, that's the rub. Many of us don't know the business climate in Korea, so most of us really can't know if NCSoft acted responsibly or not. My guess is that they aren't in the business of losing money. They probably closed the game down to make things simpler(cheaper) for them in some vague, nebulous way.

[Xieveral]

Mr. Kim turns around ripping off the Positron shirt and underneath is a black lace bra and garters embossed with Blade and Soul written in gold. "The omens do not bode well for Paragon Studios," he quips.

I've seen enough global mistells to know where this is going...  :o

[And with that post... I have attained level 100 boss status.  :gonk: ]

[Little Green Frog]

What I can say is that if I had been the decision maker, even if the game were losing a small amount of money per year, if I were aware of how tremendous the impact CoH had on the lives of many of its players, I'd have kept the game going and used the losses to offset the income from the other games to lower my tax liability.

I subscribe to the philosophy that corporations are psychopaths. Expecting them to be considerate is usually a setup for disappointment.

[malonkey1]

I've seen enough global mistells to know where this is going...  :o

[And with that post... I have attained level 100 boss status.  :gonk: ]

Rocky Horror Picture Show?

[Xieveral]

Rocky Horror Picture Show?

...Why yes

https://images.weserv.nl/?url=i48.tinypic.com%2Fvg4yaa.png

[houtex]

He's a wild and an untamed thing... a bee with a deadly sting....

/Man, I need to go to another showing of that, so fun...

[Atlantea]

...Why yes

Excuse me while I go edit my mental images.

With a fork...

[srmalloy]

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.

The problem with the "...brings in 15x that much in a third of the time..." bit is that it's all one-time sales; if you have a subscription game at $15/month, then a F2P game that makes customers buy the client for $60 -- of which, if you're lucky, you'll get $30 -- will only beat the subscription game's income if the average 'lifespan' for a player is less than two months. For continued income, you have to rely on an in-game store filled with what amounts to bells and whistles that have no real effect on gameplay (otherwise you get slapped with the "pay to win" label and interest in the game starts to tank).

City of Heroes had an inherent advantage with its in-game store in that cosmetic rewards -- the costume sets you bought -- were an integral part of the game; making costumes that were distinctive and unique was as much a part of the game as the actual play. You can't do that with a "you are what you wear" MMO; the range of variability in appearance is inherently much more limited when everyone with the "Breastplate of Arglebargle IV" looks the same wearing it, no matter how different the individual modifications that may have been applied to the basic armor piece may have been. When I was researching play techniques for SWTOR, I ran across several articles that went over what things a Premium player should bother buying from the Cartel Market, and what things didn't do you any good in-game and were therefore a waste of Cartel Coins. Buying a costume set from the CoH market didn't give you any benefits in combat, but it expanded your ability to create a hero (or villain), which made it desirable for its own sake.

I think NCSoft severely jumped the gun with its closure of City of Heroes; they made the assumption that, because they had the New Shiny­­™ in GW2, they could get rid of the nasty little game that had the temerity to keep turning a profit despite not being a Korean-style grindfest and made them look stupid for bringing one flop grindfest after another to the Western market while ignoring the evidence of what worked. I expect that the tinplate on GW2 is going to wear off and reveal the pot metal underneath, just as Boobs&Sluts Blade&Soul will. The Western market may not be a significant part of NCSoft's revenues, but if they don't figure out that the entire world is not Korea, and cannot be expected to want the same things Koreans want, they're going to keep flopping as they try to become a worldwide MMO provider.

[Illusionss]

Corporations don't do irrational things.

Ok, I had to snicker when I saw that one. I'll see that and raise you ENRON. And Freddie Mac. And Sallie Mae. And a bunch of airlines. And deep-sea drilling corporations doing the most astoundingly stupid things, because the safety protocols would cost them the only god they hold dear: money. And the list is night endless.

Corporations are not infallible, sorry. They are often comprised of downright stupid people, too close to the forest to see the trees of common sense. NCSoftheaded is no different. The corporation seems schizophrenic to me.

[Triplash]

Excuse me while I go edit my mental images.

With a fork...

You might need something a little stronger than a fork for that one... :o

https://i813.photobucket.com/albums/zz55/KansasCrawford/Funny%20Pics/ZombieResearchSociety-favoriteweapon.jpg

[corvus1970]

I subscribe to the philosophy that corporations are psychopaths. Expecting them to be considerate is usually a setup for disappointment.

I have never agreed more strongly with anything you have said here than this. There aren't enough "INDEED" images in existence.

[Kaiser Tarantula]

Looking at NCsoft's stock graph today, I see they made a whopping 5,000 won rise... just to get back above 150,000 won/share.

Normally, such a rise would have me mildly annoyed, but the fact that they need those kinds of numbers just to stay above 150k is something I find amusing.

Doing a little math, I took the mean average of their last seven days' stock prices.  I came up with an average of 149,571 won.