MMORPG - COH profitability

[HarvesterOfEyes]

MMOs are essentially a service.  Now there are plenty of MMOs out there and they are fighting over the same set of customers, since the customer only has a fix amount of money and time to devote to playing MMOs. 

Now if a customer in one of your games becomes bored and want to try something else, the company would want them to play another of their games and not a competitor because of a chance of losing them for the long term.

So why would you empower a new company, a competitor, with your precious list of customer without compensation?  What if this new competitor starts producing additional MMOs that they can now market to your now shared customer list?

There were far more players who have joined and quit CoH over the last 8 years than those who were left at the end.  It wasn't a "small" list.  Some number of those players also play(ed) NCSoft's other titles as well, and may still be.  Would you be willing to give a competitor a direct line to them?  How much would you price that information?

...and if they were being that rational why would they need to rotate among lying, obfuscating and stonewalling?

[Lily Barclay]

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10.  Clayton does not tell managers or employers right away.  Instead, he urgently pleads with NCSoft to give him more time to negotiate.  They give him 90 days - on the contingency that he can no longer save the studio.  They will give the game 90 days, and he will have that time to prove himself to them.
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The only reason NCSoft gave them a 90 day notice was because they are required to by California law. It was at this point that it was all over. Didn't they have security usher them out? Makes sense if they were worried someone might take stuff and try to reform. Evil corporation is evil.

It does seem pretty obvious that the peons suggesting they could manage themselves better than the mothership and do better without them, coupled with the garriott precedent is probably what set this all off. It's also interesting to note that in years NCSoft sells a lot of boxes, they close a game. Must do something to make their numbers look better.

[corvus1970]

Exec #1 "Okay guys, we need to come up with excuses as to why we shut down CoH."
Exec #2 "What, we can't just say that Paragon was filled with a bunch of no-account rebels who thought that they could defy our omniscience and run the game themselves?"
Exec #1 "No, we can't say that Exec #2, because our new research shows that people would think we were being totally stupid and mean."
Exec #2 "Stupid and mean? WHAT?? Oh god, I need a smoke."
Exec #3 "Why do we have to say anything at all? I thought the foolish masses would be totally blinded by the new shiny!"
Exec #1 "Well, a chunk of them weren't."
Exec #3 "Inconceivable! This is, by far, the shiniest new shiny we've ever built and polished! It has boobs and everything!"
Exec #4 "Well, we could just say that the studio wasn't profitable or something. 'Cuz, you know, money!"
Exec #1 "Brilliant!"
Exec #3 "Genius!"
Exec #2 "I still need a smoke."

[FatherXmas]

...and if they were being that rational why would they need to rotate among lying, obfuscating and stonewalling?

They've never before have come out to say why so how are they changing their story?  If the suggestion, based on this first time reply from NCSoft, is that it was Paragon that they were dissatisfied with and that CoH was just the proverbial baby in Paragon's bath water, you could say that NCSoft has been politely holding their tongue until now.

[Servantes]

They've never before have come out to say why so how are they changing their story?  If the suggestion, based on this first time reply from NCSoft, is that it was Paragon that they were dissatisfied with and that CoH was just the proverbial baby in Paragon's bath water, you could say that NCSoft has been politely holding their tongue until now.

Now we need to keep pressing the issue , get them to talk about something they clearly are avoiding.

[Little Green Frog]

MMOs are essentially a service.  Now there are plenty of MMOs out there and they are fighting over the same set of customers, since the customer only has a fix amount of money and time to devote to playing MMOs. 

Now if a customer in one of your games becomes bored and want to try something else, the company would want them to play another of their games and not a competitor because of a chance of losing them for the long term.

So why would you empower a new company, a competitor, with your precious list of customer without compensation?  What if this new competitor starts producing additional MMOs that they can now market to your now shared customer list?

There were far more players who have joined and quit CoH over the last 8 years than those who were left at the end.  It wasn't a "small" list.  Some number of those players also play(ed) NCSoft's other titles as well, and may still be.  Would you be willing to give a competitor a direct line to them?  How much would you price that information?

I can see how a company may perceive the customer list as a strategic asset, but what can said competitor do with it apart from sending marketing emails about their games? Not much. Customers are not cattle and it is up to them whether they'll choose to play those games. I would assume publishers are aware of this.

Plus there are legal aspects. If you are to sell an MMO game, you share not only the IP and the code, but also customer information, including real names and credit card numbers of your users. There are plenty of laws governing sharing personal information and every country has their own. With a popular title that is played by people all over the world, transference of all that data could be a major pain, as you need to treat every single account individually and apply the laws of its owner's respective country. Which in many (all?) countries in EU require user consent, for example, so said user needs to be contacted before the buyer can put their customer information into their database.

I suspect that is one of the reasons why it is such a rare occurence in the world of MMOs for individual games be sold to another company. Buyouts of entire studios or publishers are more likely as that makes it much simpler to handle this situation from the legal standpoint. This may be the main reason behind NCsoft's reluctance to sell, too. They wouldn't want to be dragged to court for accusation of negligence in handling user information.

[dwturducken]

They've never before have come out to say why so how are they changing their story?  If the suggestion, based on this first time reply from NCSoft, is that it was Paragon that they were dissatisfied with and that CoH was just the proverbial baby in Paragon's bath water, you could say that NCSoft has been politely holding their tongue until now.

They may not have made any definitive statements until this article, but even their non-statements have had inconsistencies, when they're not being bluntly insulting.

[HarvesterOfEyes]

They've never before have come out to say why so how are they changing their story?  If the suggestion, based on this first time reply from NCSoft, is that it was Paragon that they were dissatisfied with and that CoH was just the proverbial baby in Paragon's bath water, you could say that NCSoft has been politely holding their tongue until now.

They have indeed changed the story from "change of focus" to "not meeting expectations". I'm sorry to personalize this but what I hear from you is a simple insistence to not accept that they've said what they've said and not said what they've not said.

Regardless, both of their statements obfuscations.

For three months they left us with just one bland obfuscation to chew on, hence stonewalling.

Now we have a second obfuscation from them and the only way for them both to be true is if the first was intended to mislead.

They are simply not acting like the rational calculators you seem to want to believe they are. Having had to deal with more than a few liars in my time, I am seeing a familiar pattern from NCSoft. Truthful, honest, reasonable people do not act nor talk like this.

[Starsman]

I would love to see an open statement by some one. I doubt the NDA prevents them from speaking about the game's profitability pre-cancelation, and for the game to not be profitable at cancelation time, based on the quarterly reports, it would have been unprofitable for nearly 2 years.

[Little Green Frog]

I would love to see an open statement by some one. I doubt the NDA prevents them from speaking about the game's profitability pre-cancelation, and for the game to not be profitable at cancelation time, based on the quarterly reports, it would have been unprofitable for nearly 2 years.

In their recent statement, NCsoft has stated that the studio was unprofitable, not the game.

[Seethe]

This is precisely one of my reasons for believing the anonymous source over NCsoft.  Here are my basic thoughts on the matter:

1) If the game was either not profitable or headed towards the territory of unprofitability, why would Paragon Studios management have tried to acquire the game?  This makes absolutely zero sense.  If the game was not profitable, then they wouldn't have even taken the game for free, let alone actually offered to pay good money to get it.

Think about the decision to close CoH less about the profitability of the game itself and more about the overall cost/revenue of NCSoft.  NCSoft, as a whole, is undergoing massive restructuring all across the board- because many inside and outside of the company came to the conclusion that costs were getting out of control.  NCSoft let go of hundreds of employees- not just little Paragon Studios.  They closed other studios, let go of a bunch of people in Austin, and purged people world wide.  The decision to shut down CoH wasn't an isolated one- it was part of a massive restructuring project.

CoH likely got caught in the crossfire because it was tied to a significant number of jobs outside of CoH.  When you called or e-mailed support for technical or customer problems, you went to NCSoft Austin- not Paragon studios.  Paragon Studios also relied IT professionals, accountants, managers/promoters, and other people who didn't work inside of the Paragon Studios/CoH umbrella.  And all of those 'costs' count for NCSoft and not necessarily CoH directly.

It's likely that CoH's profit didn't exceed the savings of their total cost cutting measures.  And, think about this logically, now, in 2013.  Just because it was a good investment in 2009 (or whenever Cryptic sold CoH to NCSoft) doesn't mean that it's a good investment in 2013.  We're looking at a 9 year old game versus a 5 year old game.  The growth of revenues in a 9 year old game is unlikely- even if it still is profitable.  And, in looking at NCSoft's accounting records, CoH is such a small part of it's revenue that it's inconsequential to their long term viability.

NCSoft had good, logical, reasons for closing the curtains on CoH.  However, they didn't have good, logical reasons for not selling it to someone else to make a quick buck that could support it.  And, they especially didn't have good, logical reasons for the way they treated their customers in the last 90 days.

[Little Green Frog]

NCSoft had good, logical, reasons for closing the curtains on CoH.  However, they didn't have good, logical reasons for not selling it to someone else to make a quick buck that could support it.  And, they especially didn't have good, logical reasons for the way they treated their customers in the last 90 days.

I believe they actually may have had a good reason not to sell the game. See my post above.

[dwturducken]

In their recent statement, NCsoft has stated that the studio was unprofitable, not the game.

This is why we're accusing them of obfuscating. The game was bringing in a tidy sum. What accounting voodoo are they using, if any? Several people have made reasonable estimates of what the annual costs should be for a studio of their size, and the numbers work. At the end of the day, they don't have to tell us anything. The fact that they feel they need to means something. The question is, what?

[Little Green Frog]

This is why we're accusing them of obfuscating. The game was bringing in a tidy sum. What accounting voodoo are they using, if any? Several people have made reasonable estimates of what the annual costs should be for a studio of their size, and the numbers work.

Remember that Paragon Studios was not interested in merely supporting City of Heroes. They wanted to grow and make new games. This requires money. The more data we get, the more it looks like there was a conflict of interest between the studio and the publisher. NCsoft has brought Paragon Studios under its wings after Cryptic has left for greener pastures with the expectation, that PS will keep the title afloat as long as it makes money. Paragoners, on the other hand, wanted a real studio and planned new titles. They danced with each other for three years until NCsoft decided it's better for them if they get rid of Paragon, CoH be damned.

At the end of the day, they don't have to tell us anything. The fact that they feel they need to means something. The question is, what?

Damage control, I presume. I think they honestly believed an old and niche game like CoH would go away quietly. They didn't anticipate #SaveCoH, VV making statements for korean press and gaming websites teeming with variety of theories and accussations. They are starting to admit, there may be a PR crisis on the horizon.

[Peregrine Falcon]

While it's certainly possible that the studio wasn't profitable, and that other costs from customer service might have contributed to that, the fact is that if NCSoft had wanted to trim things down and keep Paragon Studios profitable they could have.

They chose not to. I'm not going to speculate as to why, but for whatever reason they chose not to.

They could have cancelled the other projects, layed off the developers not working directly on CoH, or absorbed them into other projects like Blade & Soul or Guild Wars 2. They could have cut Paragon's employees down to about 20 or so people and kept City of Heroes running, perhaps even at reduced content output, but still up and running and profitable.

A decent PR spokesman could have even spun it as a good thing. "We've cancelled other projects that were a drain on Paragon Studio's resources so that they can focus on continuing to improve and expand City of Heroes. City of Heroes continues to be a popular and profitable game and given the economic realities that exist today we didn't want to jeopardize its continued growth and expansion by dividing the developer's time among multiple and potentially less viable projects."

Doing that would have gotten them a bit of free publicity, which generally leads to an influx of new players and thus an increase in income if only temporarily, and it would have kept CoH running and profitable.

But they chose to simply shut the whole thing down instead of enacting these, or other, cost-cutting measures. When you add in the multiple claims that they refused to sell and/or they asked for a ridiculously high price (which amounts to the same thing as refusing to sell) this leads me to believe that they shut City of Heroes down for reasons that weren't entirely related to money.

[johnrobey]

Exec #1 "Okay guys, we need to come up with excuses as to why we shut down CoH."
Exec #2 "What, we can't just say that Paragon was filled with a bunch of no-account rebels who thought that they could defy our omniscience and run the game themselves?"
Exec #1 "No, we can't say that Exec #2, because our new research shows that people would think we were being totally stupid and mean."
Exec #2 "Stupid and mean? WHAT?? Oh god, I need a smoke."
Exec #3 "Why do we have to say anything at all? I thought the foolish masses would be totally blinded by the new shiny!"
Exec #1 "Well, a chunk of them weren't."
Exec #3 "Inconceivable! This is, by far, the shiniest new shiny we've ever built and polished! It has boobs and everything!"
Exec #4 "Well, we could just say that the studio wasn't profitable or something. 'Cuz, you know, money!"
Exec #1 "Brilliant!"
Exec #3 "Genius!"
Exec #2 "I still need a smoke."

ROFLMAO, Corvus!   I'm howling at Exec #3's lines!!!  8)

[johnrobey]

Perhaps I may be reading too much into it, but NCsoft representative's reply does have a damage control vibe to it. I mean it's whopping two paragraphs! Not even the game closure prompted them to articulate anything more than a couple of smoothed over sentences. And now they effectively argue their point.

I agree and as others noted the NCSoft side compares apples to oranges:  PS had CoH + 2 projects in development (high cost) vs. CoH itself running profitably.  But hey, at least NCsoft said something -  and I hope they can be kept talking.

Would love move on from the shut down and get to simply "There are thousands of players desperately wanting CoH back, why not sell?"

But I'm sure a question like that would be ignored, too hard to put a good spin on it.

I'd love an answer from NCSoft and/or anonymous sources to this question, Lightslinger.

[TimtheEnchanter]

There were far more players who have joined and quit CoH over the last 8 years than those who were left at the end.  It wasn't a "small" list.  Some number of those players also play(ed) NCSoft's other titles as well, and may still be.  Would you be willing to give a competitor a direct line to them?  How much would you price that information?

Given how much trading of personal information goes on between companies, I doubt there's any online consumer who isn't in the spam database of every single corporation in existence.

Plus there are legal aspects. If you are to sell an MMO game, you share not only the IP and the code, but also customer information, including real names and credit card numbers of your users. There are plenty of laws governing sharing personal information and every country has their own. With a popular title that is played by people all over the world, transference of all that data could be a major pain, as you need to treat every single account individually and apply the laws of its owner's respective country. Which in many (all?) countries in EU require user consent, for example, so said user needs to be contacted before the buyer can put their customer information into their database.

This really isn't that complicated. When my domain registrar got bought out, they set up a system by which we could either choose to transfer our data to the new owner, or quit. Everyone got an email, it took us to the site, we logged in, clicked a few buttons, and voila. The data got transferred. It would take very little time for NCsoft and a buyer to set up a system like this. You just log into your NC account, click on the details for CoH, and see an option to move your player info. Not an overnight job, but quick and cheap enough that to use it as a reason not to sell would be laughable.

[Perfidus]

To be fair Tim, those migrations aren't always seamless. See Perfect World/Cryptic. Recently PW forced all Cryptic accounts to transfer to PW ones. And it was a huge debacle with lots of people having lots of problems, resulting in lots of customer service hours spent sorting it out.

[Little Green Frog]

This really isn't that complicated. When my domain registrar got bought out, they set up a system by which we could either choose to transfer our data to the new owner, or quit. Everyone got an email, it took us to the site, we logged in, clicked a few buttons, and voila. The data got transferred. It would take very little time for NCsoft and a buyer to set up a system like this. You just log into your NC account, click on the details for CoH, and see an option to move your player info. Not an overnight job, but quick and cheap enough that to use it as a reason not to sell would be laughable.

Your domain registrar did not transfer user data to anyone. Instead it was bought out and that makes a lot of difference. In effect your old registrar was still the owner of all its customer data and until dissolution, which didn't happen immediately after the buyout, it retained your consent. And that is why, as you say, it wasn't a very complicated process.

But with City of Heroes it would be a much different situation, unless someone bought NCsoft, who is the party to whom you gave your consent to. Potential buyer would need to transfer that data from NCsoft. Without having prior consent. NCsoft would need to work closely with the buyer and handle requesting users to sign up for account transfer themselves. There would also have to be a system put in place that would transfer all necessary data to the buyer upon user confirmation. It is certainly doable, but it would also require plenty of time and effort on both sides.