NCsoft Buys Unreal Engine 4 Licenses (But at What Cost?)

[TonyV]

With around 3-4ish million each year at 80 employees @ 45k (some will be much higher and some will be much lower), salary alone is nearly half their total sales. Overhead (rent, employee benefits [close to what salary costs in some cases!], sending rednames to cons, Hero Con/meetups, merchandise, etc) plus NCsoft's take right off the top - means they MAYBE broke even, and almost guaranteed were in the red.

I just don't buy that overhead was that expensive, nor was sending rednames to cons, especially since lately they haven't been doing that very often.  As for meet-ups, hero cons, etc., they sold tickets to those.  Not saying that it didn't cost them anything, but the Player Summit tickets were $40 a pop, which covered the meal, a t-shirt, and some swag.  Door prizes were contributed by sponsors.  They probably foot the bill for the cost of renting the room, but I would be very surprised if all of those expenses you cited other than employee benefits added up together exceeded more than $200,000 or so.

And as for breaking even, the idea with the secret project was that that was just a temporary status until the new games that resulted from that effort launched.  You almost always have to spend money to make money; if you can merely break even to make money, you're actually doing extremely well, way ahead of and in better shape than most companies.

[Aggelakis]

Alright, so less than 10 million a year then.

We've been told over and over on these fora that NCSoft could easily afford to piss away 10 million a year and that hence shutting down CoH wasn't the fool decision many of us maintain that it was.

So I'm unclear which is true: Could NCSoft afford to piss away 10 million a year, or was a 3-4 million a year loss just too much for them to bear?

They definitely can afford to piss away 10m a year. They already do so at a slightly smaller scale on their stupid baseball team which isn't winning any games.

[Blue Pulsar]

I just don't buy that overhead was that expensive, nor was sending rednames to cons, especially since lately they haven't been doing that very often.  As for meet-ups, hero cons, etc., they sold tickets to those.  Not saying that it didn't cost them anything, but the Player Summit tickets were $40 a pop, which covered the meal, a t-shirt, and some swag.  Door prizes were contributed by sponsors.  They probably foot the bill for the cost of renting the room, but I would be very surprised if all of those expenses you cited other than employee benefits added up together exceeded more than $200,000 or so.

Yeah, the salaries thing got to me too. I can't see the average worker at Paragon studios making over $800 per week. I mean, how many of them were janitors, mailmen, data entry guys, etc. Sure, the top of the dev team pyramid were probably making some pretty comfortable salary, but I doubt that NCSoft was spending out $45k per year on average per worker.

[Aggelakis]

Yeah, the salaries thing got to me too. I can't see the average worker at Paragon studios making over $800 per week. I mean, how many of them were janitors, mailmen, data entry guys, etc. Sure, the top of the dev team pyramid were probably making some pretty comfortable salary, but I doubt that NCSoft was spending out $45k per year on average per worker.

It's pretty easy to make that much in the game industry. In 2011, the national average was $81k. And Paragon was in CA, which has a higher base starting rate than pretty much any state in the nation. So I'm really lowballing that one at $45k.

[Twisted Toon]

Yeah, the salaries thing got to me too. I can't see the average worker at Paragon studios making over $800 per week. I mean, how many of them were janitors, mailmen, data entry guys, etc. Sure, the top of the dev team pyramid were probably making some pretty comfortable salary, but I doubt that NCSoft was spending out $45k per year on average per worker.

I pulled in over $1000/week in Security for about 4 months.
Of course, that included about 20 to 30 hours of OT each week.   

I don't really have anything to add to the discussion, though.  carry on.

[srmalloy]

They didn't close City (profitable) so much as shut down Paragon Studios (not profitable), which has the side-effect of closing City. Paragon was developing two next-gen games in addition to City - they had 80-something folks working for them. They were definitely losing money. City was profitable but Paragon Studios was not. NCsoft allowed Paragon to be unprofitable and then decided that Paragon being unprofitable wasn't good for NCsoft. It's like chopping off your foot because the toe you shotgunned hurts.

However, if their intent was to replace City of Heroes with an updated version based off the Unreal engine, killing the existing game while development starts on its replacement is the stupidest business move possible, ranking just above deciding to replace CoH with CoH2 and not taking the existing devs and telling them "We want you to suspend development on CoH and build a next-generation version of the game using this game engine" and, instead, firing them all and bringing in a new dev team.

And, quite frankly, I would be deathly afraid, were NCSoft to fund development of a follow-on to CoH using a new dev team, that the entire game would turn into a game full of "Go out and stop the Hellion muggings, and bring me twenty switchblades as proof (BTW, switchblades only drop from Nasty Hellions, not Brutal Hellions, Angry Hellions, Deranged Hellions, or any of the half-dozen other flavors of Hellion -- but you don't get told that)" open-world missions like virtually every other MMO on the market, just to turn it into a grind-centric Korean-style MMO so that they're comfortable with it.

[Aggelakis]

However, if their intent was to replace City of Heroes with an updated version based off the Unreal engine, killing the existing game while development starts on its replacement is the stupidest business move possible, ranking just above deciding to replace CoH with CoH2 and not taking the existing devs and telling them "We want you to suspend development on CoH and build a next-generation version of the game using this game engine" and, instead, firing them all and bringing in a new dev team.

And, quite frankly, I would be deathly afraid, were NCSoft to fund development of a follow-on to CoH using a new dev team, that the entire game would turn into a game full of "Go out and stop the Hellion muggings, and bring me twenty switchblades as proof (BTW, switchblades only drop from Nasty Hellions, not Brutal Hellions, Angry Hellions, Deranged Hellions, or any of the half-dozen other flavors of Hellion -- but you don't get told that)" open-world missions like virtually every other MMO on the market, just to turn it into a grind-centric Korean-style MMO so that they're comfortable with it.

I highly, HIGHLY doubt there will ever be another City-related offering from NCsoft ever.

[FatherXmas]

Yeah, the salaries thing got to me too. I can't see the average worker at Paragon studios making over $800 per week. I mean, how many of them were janitors, mailmen, data entry guys, etc. Sure, the top of the dev team pyramid were probably making some pretty comfortable salary, but I doubt that NCSoft was spending out $45k per year on average per worker.

I was making $1200 per week ($800 after taxes and max 401K) over a decade ago as a software developer and the company I worked for was hardly the best paying software company in the area and I certainly wasn't the highest paid there.  That's just designing and slinging code, no management responsibilities.

[Blue Pulsar]

I was making $1200 per week ($800 after taxes and max 401K) over a decade ago as a software developer and the company I worked for was hardly the best paying software company in the area and I certainly wasn't the highest paid there.  That's just designing and slinging code, no management responsibilities.

I pulled in over $1000/week in Security for about 4 months.
Of course, that included about 20 to 30 hours of OT each week.   

I don't really have anything to add to the discussion, though.  carry on.

It's pretty easy to make that much in the game industry. In 2011, the national average was $81k. And Paragon was in CA, which has a higher base starting rate than pretty much any state in the nation. So I'm really lowballing that one at $45k.

Like I said:

...I can't see the average worker at Paragon studios making over $800 per week. I mean, how many of them were janitors, mailmen, data entry guys, etc. Sure, the top of the dev team pyramid were probably making some pretty comfortable salary...

I understand that the actual designers, developers, make 60 to 90k. But I can't believe that all 80 employees of PS were top level, high paid devs. Especially considering NCSofts cheap arses. I admit to knowing nothing of the industry, but I know that in many medium sized companies, high paid experts often make up 15% or less of the work force. The rest are often rather underpaid. I could be wrong, but I think I'd like to see real numbers on how much money was actually going into Paragon Studios to keep it running. Even better, how much of that was actually dedicated to CoX. My guess is a good 1/4 of the work force was being used to upkeep and develop the game.

[Kosmos]

Yeah, the salaries thing got to me too. I can't see the average worker at Paragon studios making over $800 per week. I mean, how many of them were janitors, mailmen, data entry guys, etc. Sure, the top of the dev team pyramid were probably making some pretty comfortable salary, but I doubt that NCSoft was spending out $45k per year on average per worker.

The average janitor's salary in the Mountain View area is about $700 a week.

[Aggelakis]

The average janitor's salary in the Mountain View area is about $700 a week.

Yeah. The pay in/near Silicon Valley is ridiculous for pretty much any job. Some days I envy folks who live there. Then I realize they pay three times as much to live there, or commute for an hour or more to live somewhere cheaper (and then pay for gas!).

[PSI-on]

Really? Sounds like they aren't preforming up to expectations, so how come they don't get sunsetted. <_< You know, I saw the same reports they showed saying CoX was only like 2% of their profit, that same report said GW 1 was less than that and yet they get a squeal AND to run "forever" in maintainice mode (which, btw, I think proves them even more foul and I'm surprised there weren't a lot of news reports pointing it out like their were reports about the closure). I don't believe this had anything to do with money, making or losing, at all, honestly. However I'm a little concerned that they are buying up unreal engine liseneses. Correct me if I'm wrong, but doesn't the TPP use one of those, or is it thankfully not one they've bought (like a 3 or 5 or something, serious question from someone who knows little about programming.)

They definitely can afford to piss away 10m a year. They already do so at a slightly smaller scale on their stupid baseball team which isn't winning any games.

[LaughingAlex]

Some thoughts, unreal engine iterations are generally near-unusuable when they are first released even for better funded PC gamers.  Considering most gamers in general across the world don't have access to the very best technologies, NCSoft may be making a grave mistake doing this.  They like to cater to there home audience but I am doubtful most of their audience even has the money to make a top of the line computer.  They'll flop in sales easily.  They did do well with Unreal engine 2 locally with lineage 2 but thats the only game I can think of.

[therain93]

Some thoughts, unreal engine iterations are generally near-unusuable when they are first released even for better funded PC gamers.  Considering most gamers in general across the world don't have access to the very best technologies, NCSoft may be making a grave mistake doing this.  They like to cater to there home audience but I am doubtful most of their audience even has the money to make a top of the line computer.  They'll flop in sales easily.  They did do well with Unreal engine 2 locally with lineage 2 but thats the only game I can think of.

It's not like they're porting the code over for release on Monday morning -- getting an early version simply gives them more lead time, much like how Microsoft offered development versions of it's new major OS releases to other vendors so that they could work on testing/updating their own offerings.  Players will catch up to the advanced software.

[FatherXmas]

Some thoughts, unreal engine iterations are generally near-unusuable when they are first released even for better funded PC gamers.  Considering most gamers in general across the world don't have access to the very best technologies, NCSoft may be making a grave mistake doing this.  They like to cater to there home audience but I am doubtful most of their audience even has the money to make a top of the line computer.  They'll flop in sales easily.  They did do well with Unreal engine 2 locally with lineage 2 but thats the only game I can think of.

Except it'll take 3-5 years to produce any MMO.  I assume if you are a UE3 developer that it's very familiar just with additional developer features and the rendering engine can do more things with lower overhead.  And at the core UE is very crossplatform and therefore scalable.  I don't believe that UE4 would in and of itself prevent running on lower end systems.  That's up to the devs to not go apeshit with all the engine's capabilities all the time.  UE4 competing with the Crysis 3 engine and surprisingly that does work on lower end systems while still looking pretty nice.

[downix]

Some thoughts, unreal engine iterations are generally near-unusuable when they are first released even for better funded PC gamers.  Considering most gamers in general across the world don't have access to the very best technologies, NCSoft may be making a grave mistake doing this.  They like to cater to there home audience but I am doubtful most of their audience even has the money to make a top of the line computer.  They'll flop in sales easily.  They did do well with Unreal engine 2 locally with lineage 2 but thats the only game I can think of.

Blade and Soul is another of their games using the Unreal Engine.

[downix]

Really? Sounds like they aren't preforming up to expectations, so how come they don't get sunsetted. <_< You know, I saw the same reports they showed saying CoX was only like 2% of their profit, that same report said GW 1 was less than that and yet they get a squeal AND to run "forever" in maintainice mode (which, btw, I think proves them even more foul and I'm surprised there weren't a lot of news reports pointing it out like their were reports about the closure). I don't believe this had anything to do with money, making or losing, at all, honestly. However I'm a little concerned that they are buying up unreal engine liseneses. Correct me if I'm wrong, but doesn't the TPP use one of those, or is it thankfully not one they've bought (like a 3 or 5 or something, serious question from someone who knows little about programming.)

NCSoft is but one company licensing Unreal from Epic. They don't own it. It does not matter which one NCSoft licensed, it effects the other licensees, like TPP, not one bit.

[PSI-on]

Ok, that's great. So I misunderstood. They are just buying permission to make a game with it, not buying ownership of it? Cool, good to know.

NCSoft is but one company licensing Unreal from Epic. They don't own it. It does not matter which one NCSoft licensed, it effects the other licensees, like TPP, not one bit.

[Atlantea]

Just FYI, this sparked a memory, and I checked my games folder and sure enough, DCUO uses Unreal version 3.

Don't know how relevant this is to the discussion, but I thought I'd toss that out there.