$800k/month profit? I think you mean revenue?

[downix]

Dropping down to only 15 employees and keeping their salaries in the low six-figure range (decidedly luxurious for non-high-end management), it gets extremely profitable. Under the assumptions downix made about the other 65 employees.

Not assuming anything. I am pointing out how if profit was the concern, that is how to do it. As it is now, roughly 2/3 of the studio best estimates are working on the new game, with the remaining third on CoX. Under a profit concern, CoX has run with as few as 15 people and still gotten updates out the door, which tells us how low we can go cost-wise.

A 15 person maintenance studio also does not need anywhere near as much room to operate as an 80 person development studio.

[rathe101]

Another thing to consider, is quality of work. With those 15 people, working on CoH, we managed to get issue 10. Which was a major overhaul to the RWZ, as well as other pretty massive changes.

So, working at 'bare minimal' might not be a bad thing, especially when the quality of work, is pretty massive.

[downix]

Another thing to consider, is quality of work. With those 15 people, working on CoH, we managed to get issue 10. Which was a major overhaul to the RWZ, as well as other pretty massive changes.

So, working at 'bare minimal' might not be a bad thing, especially when the quality of work, is pretty massive.

Precisely.

I think the real problem for Paragon Studios is that NCSoft never authorized them to make City of Heroes 2. With popular titles, dropoff will happen. Look at Lineage and Guild Wars. The key to keeping a title fresh is a revamp. A CoH2 project, as described by Positron, would have given them precisely what was neeed. Use the studio to get the existing IP up to snuff during the more profitable end of the life cycle, but unlike GW and Lineage, the existing game can then migrate over, giving NCSoft a double-bonus: new sales increase *and* elimination of old-cycle support simultaneously. CoH2's idea to migrate over the existing playerbase and characters would have been the key.

But even in maintenance mode, CoH would remain profitable. It was the development without obvious tie-ins which would have caused any red ink.

[Chaos Ex Machina]

The free conversion fell way under the increases brought in by other games, and anecdotal evidence that a lot of veterans actually spend more, is actually consistent.

The conversion had a serious issue with veteran dependency... when I see a small increase immediately after the conversion followed by revenue lower than the previous year, it suggests a lot of veterans spent big and no dramatic increase of new customers happened.  Personally I made a habit of checking profiles because I was concerned at how rare the elusive new customer was, and regardless of attempts like the training arcs a lot of the ones I did find had plenty of trouble getting situated.

The restrictions of how a trial or later free person could chat or use channels or participate in supergroups were absolutely killer.  The /reply command was obscure, the players had a recruitment channel system that the people with new accounts had no way to use, replaced by official chat a few months prior to the closure, and the help channel was inexcusably glitched for a few years.  How often did you encounter a person who said the game was totally dead, or it was impossible getting recruitment, only to get a veteran response to use a channel or a populated server, as if you should be a new person and know how to prior to the signup?  The game actually listed servers in quietest first order!

Another thing was how operating the store required a user who understood what was there and how to search in the first place.  The interface was bad.  It had no way to block bought items.  The effort involved reduced impulse buying.  I would also put a lot of the veteran rewards in the store instead, along with a ton of the pre-conversion costume pieces.  There should be a way to buy incarnate access through a license and invention access should probably not be automatically free in any veteran level, especially since many veterans are uninterested in the incarnates.

[downix]

What a lot of you do not understand is how the free conversion fell way under the increases brought in by other games, and anecdotal evidence that a lot of veterans actually spend more, is actually consistent.

The conversion had a serious issue with veteran dependency... when I see a small increase immediately after the conversion followed by revenue lower than the previous year, it suggests a lot of veterans spent big and no dramatic increase of new customers happened.  Personally I made a habit of checking profiles because I was concerned at how rare the elusive new customer was, and regardless of attempts like the training arcs a lot of the ones I did find had plenty of trouble getting situated.

The restrictions of how a trial or later free person could chat or use channels or participate in supergroups were absolutely killer.  The /reply command was obscure, the players had a recruitment channel system that the people with new accounts had no way to use, replaced by official chat a few months prior to the closure, and the help channel was inexcusably glitched for a few years.  How often did you encounter a person who said the game was totally dead, or it was impossible getting recruitment, only to get a veteran response to use a channel or a populated server, as if you should be a new person and know how to prior to the signup?  The game actually listed servers in quietest first order!

Another thing was how operating the store required a user who understood what was there and how to search in the first place.  The interface was bad.  It had no way to block bought items.  The effort involved reduced impulse buying.  I would also put a lot of the veteran rewards in the store instead, along with a ton of the pre-conversion costume pieces.  There should be a way to buy incarnate access through a license and invention access should probably not be automatically free in any veteran level, especially since many veterans are uninterested in the incarnates.

I have no arguments here. I too found the store interface fustrating and confusing.

[eabrace]

Another thing was how operating the store required a user who understood what was there and how to search in the first place.  The interface was bad.  It had no way to block bought items.  The effort involved reduced impulse buying.  I would also put a lot of the veteran rewards in the store instead, along with a ton of the pre-conversion costume pieces.  There should be a way to buy incarnate access through a license and invention access should probably not be automatically free in any veteran level, especially since many veterans are uninterested in the incarnates.

Yeah, the store had a lot of room for improvement.  I was frequently annoyed by trying to figure out what I had and had not already purchased.  And I agree that there should have been a way to purchase passes into every possible aspect of the game.

I often found myself wishing that the CoH store had been implemented more like the DDO store.  (No, DDO isn't perfect, but they've done a lot of things very well since going F2P and very quickly addressed issues when they were not working out the way they had hoped.)  Free players in DDO don't have access to classes like Monks, races like Drow, and some content like Three Barrel Cove by default.  They can unlock some perks through game play on each individual server (Drow can be unlocked by earning enough favor from the various houses), but then need to unlock that perk again if they start playing on a new server.  They also have the option of using points to buy game-wide unlocks for just about everything under the sun.  They can unlock races, classes, and adventure packs across all servers on their account with single purchases, allowing them to pick and choose which content they have access to.  The difference between CoH and DDO here, though, is that in DDO, the only thing VIP players have to unlock are Drow and Veteran character creation.  All classes are available to VIPs and all abilities of those classes are available.  The equivalent in CoH would be unlocking Kheldians and Soldiers of Arachnos and having access to all ATs and all power sets without having to pay extra for them.

The DDO store also gives access to hirelings, different types of potions, XP buffs, loot buffs, rez items, vanity pets, armor appearance kits, etc.  Those are easily equivalent to inspirations (super inspirations, team buff inspirations, dual inspirations); temp powers that buff XP, Inf, or Prestige; temp powers that might increase drop rates; temp self-rez powers; vanity pets (obviously); and costume sets.

And the search bar in the DDO store makes it really easy to find what you're looking for.

[Knightslayer]

Yep, DDO's store wins hands down, to me the abscence of a system that keeps track, always had my paranoid side whispering "They WANT you to mess up and buy things twice!".
In DDO you could also earn store points through completing adventures, of course the amounts were so tiny that they mostly served to give you a taste of the system (and encourage you to actually buy more :P).
Mind you, it was possible to buy everything - it just involved a lot of farming and rerolling alts.


Another trend I've seen lately in F2P games is the ability to sell store currency for in game currency - it's something Perfect World does (through special brokers) and GW2 has it as well, you can trade gems (store currency) for in game gold and vice versa through their auction house.
It pretty much promotes those with a lot of money, but with little spare time to buy store currency and sell it to people with the opposite problem - all the time in the world, but no finances, and the Devs each time make money that they otherwise wouldn't have made; the player looking to make in game money buys more store currency than he normally would've done - and the buyers of that currency never would've used your store anyway due to their finances, now they ARE doing it by proxy (if that made any sense).
Of course, for CoH that system might not work at all - since Inf is so easy to make. Maybe for CoH2 =P

[WanderingAries]

I spent way more with CoH Freedom than I did beforehand; not that I am complaining mind you. It used to be that being F2P meant you were shutting down, but if you look at alot of the MMOs out there - microtransactions are what are helping save them. I personally liked CoH Freedom as it gave me more flexibility and options than before. Things that would have irked me off under the traditional system for example would have been: Beast Mastery, Street Justice, Nature Affinity, and Titan Weapons...just not my cup of team. With Freedom the amount of powers and costumes that they were churning out gave me the ability to pass on the ones I did not like/want :)

I think this sums up the effect right away.

[Victoria Victrix]

Could you answer the question I pose in this thread. Please.

Since i only write about psychics and am not one myself, the answer obviously is no, I cannot. 

Paragon's profit and loss figures were not available separately from NCSoft's. 

My husband teased out that stuff himself before he got occupied by a cover project with a 3 week deadline and I am not about to jiggle his elbow at this point.  I am not sure where my husband got what he quoted to me, but I have generally found his search-fu to be pretty astonishingly reliable.

[Segev]

I have friends like that. People who can, in moments, find something I've failed to locate with hours of attempted searching online. There's a real skill and talent to it.

[Vulpy]

I have friends like that. People who can, in moments, find something I've failed to locate with hours of attempted searching online. There's a real skill and talent to it.

Don't forget: Mr. Jazzhands also has connections we don't.

[void hunter]

OK, there are holes here...

According to reports and posts there were 80+ people associated with Paragon (how many were specific to CoX I'm not sure).

There are many sources saying the game was GROSSING $800k a month = $9.6m a year. Let's really break this down, and do it from a realistic business sense.

Facility = The facility would probably need at least a 20k sq/ft facility. With prices the way they are right now, and the location, I'm betting the price was a bit higher, in the $40 per sq/ft range annually.

Employees = There are salaries / wages for all employed AND cost of any benefits.

Operational costs = You're going to have utilities, which are going to be more than what most people think, and we are talking about potentially a 24 hour facility.

Licensure and fees = There are licensure issues with any software used that may require annual fees / costs. There are also legal and accounting fees associated with running a business.

Upkeep = Any maintenance and replacement of hardware needed

Business Supplies = consumable supplies and equipment

TAXES = These include half of the social security for all employees, and state and federal taxes needing to be paid for the company (income tax, franchise tax, etc). Then you have to consider whether or not NCSoft was being taxed on the income from the Korean side as well.

Advertising = while all players consistently blame the company for not advertising enough, they had to have at least SOME costs.

Let's add some of this up....



Facility Lease = $800,000 per year or so based on the guesses above. (remember this could be double)

Employees = 80+ people @ $60k per year (some were making more than this, and some were making less, but we'll call this an average and we don't know if there were other people off site dipping into this pool for support roles. For instance were there NCSoft employees overseeing this project that their salaries were tied into it as well?) = $4.8 million + another 20% for benefits = $5,760,000

Operational Costs = $100k - 200k (guessing, but it may actually be MUCH higher you have to figure the costs of the data and energy a company like this would consume)

Licensure and fees = $50k (remember this guess includes accounting and legal fees)

Upkeep = ??? (I don't think anyone will have this figure but let's say $25k)

Business Supplies = ??? (this one either but let's say $50k)

Taxes = (figure about 8.5 % for the company contribution of employee social security, then you have their income taxes, property taxes, and any applicable franchise tax which I'm thinking would be extremely low at 30 % of net, but that's a good number to start with and we don't know if Korea is double dipping) = $1,092,600

Advertising = ??? (but it would surprise me if it was LESS than $50k per year)

Insurance = (including things like liability and unemployment) $25k (guess)

Ok, so if my numbers are ANYWHERE in the ballpark, the company is grossing around $9.6 million, but netting around $1.5 million. Now you have to consider this DOESN'T take any state taxes or Korean government dipping into account. It could also be completely neglecting areas of expense, because I don't own a comparable company, so I can't be sure I didn't leave anything out.

Now to a company like NCSoft (or a potential investor), the liability for running this may well exceed the profit. You also have to consider that by closing this down, they get to write off not only their lost profits, but they get to write off their losses in the devaluation of any equipment and this could very well lead to a larger amount than what anyone has or is willing to offer.

If Paragon has made an offer, which I'm sure they have, they may not even have access to all of these details either, and it may be a hard sell to get NCSoft to take less than what they can get through showing a loss for the company's closure. This isn't supposed to be negative, but realistic. Let's keep the discussion on the numbers if this is what the thread is about.

[Tannim222]

The only true data point anyone outside of Paragon Studios or NCSoft has is the NCSoft release of their quarterly figures for investors report. Anything outside of that including what it cost to pay, insure, cover facility fees and so on is pure conjecture. There's no point in going with this guess work.

All indications of how Paragon Studio was handling its operations point to a healthy studio. According to VV, even War Witch told her they were doing well. This is all we have to go with on this. Until the PS staff NDAs and severance packages expire, we won't know just how well or not the studio was doing. Even then we may never know. I think it's time to just let it all go.

[void hunter]

The only true data point anyone outside of Paragon Studios or NCSoft has is the NCSoft release of their quarterly figures for investors report. Anything outside of that including what it cost to pay, insure, cover facility fees and so on is pure conjecture. There's no point in going with this guess work.

All indications of how Paragon Studio was handling its operations point to a healthy studio. According to VV, even War Witch told her they were doing well. This is all we have to go with on this. Until the PS staff NDAs and severance packages expire, we won't know just how well or not the studio was doing. Even then we may never know. I think it's time to just let it all go.

While this may very well be true (even the time to let it go part), many people keep posting from the assumption that this was a VERY profitable venture. For example, VV is continuing to say War Witch said things were going WELL. I'm willing to bet War Witch didn't know all of the costs associated with running the whole venture, and I know for a fact that none of us do. My post was to bring the financial statements more into the realm of reality. If it's going to be discussed (and honestly the only time people say let's not discuss it is when someone says it's probably not doing as well as assumed), then it should be fully discussed in a way that helps us to understand why this might have happened and what obstacles are presently in the way of any transition.

[DrakeGrimm]

While this may very well be true (even the time to let it go part), many people keep posting from the assumption that this was a VERY profitable venture. For example, VV is continuing to say War Witch said things were going WELL. I'm willing to bet War Witch didn't know all of the costs associated with running the whole venture, and I know for a fact that none of us do. My post was to bring the financial statements more into the realm of reality. If it's going to be discussed (and honestly the only time people say let's not discuss it is when someone says it's probably not doing as well as assumed), then it should be fully discussed in a way that helps us to understand why this might have happened and what obstacles are presently in the way of any transition.

And I think you're passing judgment on people based on pure conjecture. That stops now, methinks. Thank you.

[void hunter]

How is me saying the numbers aren't realistic equate to me passing judgment? People are still using numbers as a justification for their viewpoints. What if their numbers aren't realistic? What's the harm in making things clearer in this particular view? On a sidenote, how is it that you seem to think you have the right to dictate how anyone else views or says things?

[dwturducken]

Actually, conjecture could become very important should Plan Z become necessary, or whatever letter we gave to trying to find a way to for a company to buy the IP, if I'm even remembering that happening at all. (Seriously, the threads list has reached 17 pages and is showing no signs of slowing; I doubt I'd find it now if I tried.) In that case, though, I believe it's called a "business plan." Therefore, perhaps conjectural discussions would probably best be had over there.  ;D

[void hunter]

Actually, conjecture could become very important should Plan Z become necessary, or whatever letter we gave to trying to find a way to for a company to buy the IP, if I'm even remembering that happening at all. (Seriously, the threads list has reached 17 pages and is showing no signs of slowing; I doubt I'd find it now if I tried.) In that case, though, I believe it's called a "business plan." Therefore, perhaps conjectural discussions would probably best be had over there.  ;D

Agreed, and it's a bit ironic that pretty much EVERY post in most of these threads is based on conjecture. Apparently it's only allowed if my conjecture agrees with other people's conjecture.  ;)

[Scott Jackson]

I respect the input of those who are willing to show their work, and put their math and sources on the table.  We will need a business plan and even deeper attention to detail, in the event Plan Z or some Titan-operated CoH recovery effort is required.

All financial analysis of this sort requires conjecture; accurate conjecture is the goal.

[Victoria Victrix]

Well I can tell you one thing you have conjectured is way out of whack.

Unless you are counting the periodic emails that NCSoft put out to present and former CoH sunscribers as advertising, NCSoft spent $0 on advertising for CoH.

Yes.  That's right.  They had no budget for conventional advertising for CoH.  Confirmed by Brian Clayton. 

One reason why Paragon had taken to creative venues like the Coffee Talks and the other virtual presences.