Tabula Rasa goes AWOL from Q1 NCSoft financial reports

When the financial reports for the Q1 performance of NCSoft hit the Massively offices, fingers were quickly pressed to pages with one intent -- finding out what was going on with Richard Garriott's Tabula Rasa. Already this year, we've heard dour reports on the status of the game, which were then rebuked by NCSoft, but those reports still planted seeds of doubt. Our hope was that the financial numbers could shed some light on what was happening with the game and perhaps reveal the game's direction. Was the game going uphill, or was it careening toward Auto Assault's junkyard?

But finding financial information about Tabula Rasa was like trying to track down Deep Throat. In the whole of the Q1 financial reports, TR appears twice. Even when most of NCSoft's major properties are listed and statistics are given, TR does not get mentioned.

But where Tabula Rasa does briefly appear, things do not look good at all.

The first direct mention of Tabula Rasa comes on page three of the 18 page Q1 earnings report, under "Online Game Sales Mix by Game". In Q4 of 2007, TR's launch brought in about 5 billion Won. When compared to NCSoft's other games during that quarter, it comes closest to City of Heroes/City of Villains, which pulled in 5.4 billion Won. This quarter paints a different picture as TR brought in only 1 billion Won while CoH/CoV brought in another 5.4 billion. Quarter over quarter (QoQ), TR experienced a 63% drop in this category.

The only other mention of TR in the report comes on page 15, in the "Royalties Breakdown" category. Last quarter, TR had 1.2 billion Won in royalties coming into NCSoft. Now, this quarter, TR only has 49 million Won attributed it -- a QoQ loss of 104%.

NCSoft was contacted regarding how royalties are calculated in the financial report, however they declined to comment, stating that royalty calculations were not something that they would discuss externally.

The oddest part of the report is the server metrics section, which completely skips Tabula Rasa. Lineage, Lineage II, CoH/CoV, and Guild Wars are all represented in this section, which shows the number of users, highest concurrent connection rate, and users with monthly access. (In the case of Guild Wars, it only shows number of accounts activated to date.) TR is also skipped in the earnings press release, even though it seems to be experiencing an abnormal drop.

The only location that could give any information about TR's current subscriber base was MMOGchart.com, which estimated TR to have 75,000 active subscribers, a significant drop from their estimated 150,000 subscribers at time of launch -- almost half of the subscriber base. Coincidentally, Ultima Online, Garriott's other online game, also has an estimated 75,000 active subscribers.

When asked to comment on the significant drop, NCSoft attributed it to the seasonality of the game. Due to TR having both a double influx of new players wishing to try the game at launch in addition to the holiday season, it's pretty easy to have a drop occur into the next quarter. NCSoft expressed that TR has done the same, market wise, when compared to other titles during that time.

When asked where up-to-date server metrics could be obtained, NCSoft declined to comment, citing that the TR server metrics was information they did not wish to release at this time. Regarding the MMOGchart numbers, NCSoft stated that they don't know how MMOGchart calculated their numbers as they have not released any user statistics.

NCSoft does, however, use statistics pulled from MMOGchart inside their investor relations packet, on page 16. Statistics from MMOGchart are used to show how much of a dominant hold NCSoft has on the market and why NCSoft is a good investment choice. While NCSoft does not entirely approve of MMOGchart's numbers for TR these numbers are apparently good enough to show why people should invest in the company.

This quarter's conference call, located on NCSoft's investor relations site, helped explain some of the numbers, but eventually only lead to more questions. During the overview of the report, Tabula Rasa is completely skipped by the chief financial officer Lee Jae-ho, even when numbers for it are listed directly in the report. TR's fate is only brought up when one of the shareholders directly asked about the status of the project during the question and answer session.

Lee Jae-ho confirmed at that point that Tabula Rasa's performance was not satisfactory.

"We are not making any profit, I shall admit, from this Tabula Rasa operation," Jae-ho said during the call.

Later on during the conference call, Jae-ho did propose an estimated break even point for Tabula Rasa. He said that if TR could make a profit of between 10 and 15 billion Won, then the project would reach a break even point. All of this, however, is dependent on the development team staying at the current size. One would assume, then, if the development team's size was cut, the break even point may come sooner.

Assuming that TR repeats last year's Q4 launch in revenue, TR needs to make another 4 billion Won over the second and third quarter to make the low end of Jae-ho's figure. With the current trend, it seems like a hard reach.

Even with all of these dour statistics, there are still some reasons for TR players to celebrate. NCSoft has confirmed to us that they will be introducing new plans on both the development and marketing sides of TR, so expect to see some more advertising for the game coming later this summer. Also, the development team has been working hard on introducing new updates and simultaneously listening to the community for new game mechanics.

"There is a lot going on with the TR team. They are working on more updates. We are planning a Japan launch later in the year," said David Swofford, head of the NCSoft North American public relations department, to Crispy Gamer.

Also, the community of Tabula Rasa is extremely strong. With events being held weekly by players in the community and many active clans in the game, it seems pretty easy for new players to join up and get active with the social aspects of TR.

TR is certainly a game with much potential that can easily improve to the point where it can make the break even goal set for it. But, with the current statistics, it's going to be a long and hard road to get there.