NCsoft quarterly report shows overall drop in profits, but some good news
The NCsoft quarterly report is now available, and as usual it makes for compelling reading. Net sales are down, expenses up: overall, it's not been a good quarter for the company, but there are positive elements.
A look at the specific games tells an interesting story. Guild Wars shows a sharp drop in online sales, plunging by 46%, which may simply be due to anticipation of Guild Wars II.
Online sales of Lineage and Lineage II, the major earners outside Europe and the US, are slightly down, presumably due to age-related falloff, while online sales of Tabula Rasa and CoX are up, the former jumping by 7%. Though online sales earnings from Tabula Rasa are still the lowest of the named games, bringing in only 2,007 million Won as compared to the 5,743 and 5,096 of CoX and Guild Wars respectively, players will be glad to know they have shown an increase.
However, Tabula Rasa is once again omitted completely from the section on server metrics, as it was in the previous quarter. It's thus impossible to get any definitive data on how many people are subscribed or playing, which is just as frustrating for the game's supporters as it is for its critics.
The royalty figures for Tabula Rasa cannot go without comment, either. The quarter before last, they stood at 1.2 billion Won; in the last quarter, they had dropped to 49 million Won; this quarter, they have gone into the negative, with a loss of 513 million Won. This represents a drop of 1,147%, which stands out on the spreadsheet like a very sore thumb.
While this doesn't confirm any of the rumors relating to Tabula Rasa, it does put them in context. NCsoft will be keen to turn this title's fortunes around, and bring back lost subscribers.
There's one especially eye-catching statistic: City of Heroes players who may have noticed that their servers feel more busy now have data to back it up. For the first time since Issue 9 back in June 2007, contrary to what we might reasonably expect for a four-year-old title, the subscription numbers are rising.
What CoX players will find most exciting, however, is that this rise in subscriber numbers has occurred before the full impact of NCsoft's reinvestment in the City of Heroes IP has really been felt. We already know that the CoX team is recruiting eight more members, and a survey is doing the rounds that may (we cannot stress the word may enough here) give some indication of the game's future.
The report is summed up thus: For the quarter ended June 30, 2008, consolidated net sales recorded 81.2 billion Won, a decrease of 8% from the previous quarter and an increase of 7% compared to the previous year.
Operating profit was 80 billion won, a decrease of 60% compared to the previous quarter, and a decrease of 25% compared to the previous year. A decline in Guild Wars related sales, headquarters relocation costs, higher advertising costs and outsourced R&D costs drove operating profit down quarter over quarter.
This looks bleak on the surface, but it's worth bearing in mind that headquarters relocation isn't the kind of expense you have to incur on an ongoing basis, and the loss of Guild Wars sales may well be the result of a sequel around the corner. In addition, the release of Aion is not far away, and it remains to be seen how a major new title will affect NCsoft's fortunes, especially since Aion may have the Asian market appeal that some other titles have not.
