Star Vault has released their fourth quarter releases for 2012, and the news isn’t all bad. Net sales lowered to 463,307 Krona ($72 thousand, approximately) from 501,252 Krona ($78 thousand) in the third quarter. Net profits continued deeper into the red at -895,699 ($140 thousand, approximately) from 706,844 in the third quarter ($110 thousand).
The fourth quarter saw the release of both Mortal Online’s free to play as well as the the launch of a donation system. Overall, according to the report, the model has compensated for the loss of license sales and Star Vault has seen positive development in all areas.
The number of subscriptions in the fourth quarter was approximately the same as in the third, with a slight increase following free to play. Sale of licenses will no longer be reported due to the new business model, as they have been discontinued.
In Henrik Nystrom’s notes, he discusses that the expansion Awakening went well, but did not increase sales as expected. Nystrom references 2012 as a transitional year, noting donations as important to continued development. The company is still working to be listed on Steam, and while the new cash flow has been positive, it has had no effect on the fourth quarter. Star Vault expects to break even in 2013.
Good news, Jagex fans. While we don’t know for sure if Jagex has actually filed its annual reports, it appears the company has at least responded to Companies House. Last week, I posted that Jagex’s status was changed to “Active – Proposal to strike off.” If a company is more than 90 days late on filing its proper documents (in this case annual income), Companies House is required to propose striking them off unless the company either submits a response or files the actual documents. Failure to do either would result in fines and, eventually, the company being dissolved and liquidated by the UK government. As I said last time, the odds of Companies House shutting down Jagex were just about nil.
It is rather likely that Jagex has indeed filed their income statements. Companies House updated Jagex’s status to simply “Active,” and the due date for their next annual income has been changed to September 2013. The income statement will not be available for public viewing until a later date.
City of Heroes is undoubtedly the most surprising shut down of the year, not to mention the show of support for the game by its community during its last days.
You didn’t think that the drama surrounding City of Heroes was over just because the servers had shut down, did you? Well think again. MMORPG.com has posted an article today detailing exchanges between NCSoft and a former Paragon Studios employee over the fate of City of Heroes, and as usual the two pieces of information directly clash with one another. According to the source from Paragon Studios, City of Heroes had been profitable even before the transition to free to play, bringing in twelve million annually compared to four million in operating costs. NCSoft apparently wanted $80 million to sell City of Heroes to another developer, however they valued the game at $3 million for tax purposes. Ultimately, however, the game was shut down as while the game was profitable, the profits were not “what they needed to be,” and Paragon wound up the weak link in NCSoft’s restructuring.
MMORPG.com asked for a comment from NCSoft, and received the following note from Lincoln Davis, Director of Corporate Communications:
“It is disappointing that such inaccurate information was provided to MMORPG by an anonymous source and is being reported on as news. The operating cost, annual revenue figures and other financial information shared by this anonymous source are simply wrong. The studio was unprofitable before the shutdown. Both NCSOFT and Paragon Studios were incredibly proud of the transition of City of Heroes to a Free to Play business model, but unfortunately it wasn’t enough to support the studio’s needs. We made the difficult decision to close Paragon Studios and sunset City of Heroes because the franchise no longer aligned with the long term profitability goals for the company.
“While we looked to sell the franchise multiple times, we were unsuccessful in finding a suitable partner that we thought would support City of Heroes’ fans in a manner they were accustomed to for years to come. Closing a studio and sun setting a beloved franchise is never an easy thing to do for the publisher, the developer or the fans. This was not an easy decision to make. The Heroes and Villains have taken to the skies of City of Heroes for the last time, but the game and community will remain in our memories. We truly thank our fans for their years of support and we hope they understand the difficult position we were in when making the final decision.”
I’d like to look at one particular node: Paragon Studios. Now, the anonymous source claims that Paragon Studios had another game in the works, a Lost meets Minecraft game, which means that Paragon was eating far more money than simply keeping City of Heroes optional. Lincoln Davis doesn’t say that City of Heroes was unprofitable, and one can only imagine that such a game wouldn’t consume three million dollars a quarter in upkeep alone. Rather, Lincoln Davis specifically states that “the studio” was not profitable, referring to Paragon Studios itself. It is entirely possible that while City of Heroes was profitable, the second project that Paragon Studios was consuming the rest of its revenue and then some, leaving the studio as a whole as a burden on NCSoft’s finances.
I should point out that the source was anonymous by request, meaning MMORPG.com presumably knows who they are talking to and that person is a credible source in the company. It is also important to note that this is the first time someone from NCSoft has commented directly that Paragon Studios was not making a profit, a comment that should have been made several months ago when Paragon Studios was first shut down. Despite the comment by Lincoln Davis, the latest entry into the City of Heroes saga once again leaves us with more questions than answers.
Was City of Heroes itself profitable? How much was this second project by Paragon Studios costing them to develop? Why didn’t Paragon just shut down the project since it was apparently breaking the bank? What was going on with this second game Paragon Studios was making? If the cost that NCSoft was asking for City of Heroes was not $80 million, as Lincoln Davis claims the figures were “simply wrong,” then how much were they asking for? If Paragon Studios was unprofitable due to these other projects, what kind of money were they losing every quarter? Who decided that shutting the game down now would be better than putting it into maintenance mode and simply ceasing development (like Microsoft recently did with Age of Empires Online)?
We will probably never get a complete answer on exactly what was going on at NCSoft and Paragon Studios that lead up to the shut down, but the statement by Lincoln Davis paints a pretty clear picture that the performance of Paragon as a studio and its other projects, regardless of how City of Heroes itself had been running, played a major part in the studio being shut down. There is an answer somewhere, and it is likely much more complicated than any of us will be able to figure out.
City of Heroes is undoubtedly the most surprising shut down of the year, not to mention the show of support for the game by its community during its last days.
You didn’t think that the drama surrounding City of Heroes was over just because the servers had shut down, did you? Well think again. MMORPG.com has posted an article today detailing exchanges between NCSoft and a former Paragon Studios employee over the fate of City of Heroes, and as usual the two pieces of information directly clash with one another. According to the source from Paragon Studios, City of Heroes had been profitable even before the transition to free to play, bringing in twelve million annually compared to four million in operating costs. NCSoft apparently wanted $80 million to sell City of Heroes to another developer, however they valued the game at $3 million for tax purposes. Ultimately, however, the game was shut down as while the game was profitable, the profits were not “what they needed to be,” and Paragon wound up the weak link in NCSoft’s restructuring.
MMORPG.com asked for a comment from NCSoft, and received the following note from Lincoln Davis, Director of Corporate Communications:
“It is disappointing that such inaccurate information was provided to MMORPG by an anonymous source and is being reported on as news. The operating cost, annual revenue figures and other financial information shared by this anonymous source are simply wrong. The studio was unprofitable before the shutdown. Both NCSOFT and Paragon Studios were incredibly proud of the transition of City of Heroes to a Free to Play business model, but unfortunately it wasn’t enough to support the studio’s needs. We made the difficult decision to close Paragon Studios and sunset City of Heroes because the franchise no longer aligned with the long term profitability goals for the company.
“While we looked to sell the franchise multiple times, we were unsuccessful in finding a suitable partner that we thought would support City of Heroes’ fans in a manner they were accustomed to for years to come. Closing a studio and sun setting a beloved franchise is never an easy thing to do for the publisher, the developer or the fans. This was not an easy decision to make. The Heroes and Villains have taken to the skies of City of Heroes for the last time, but the game and community will remain in our memories. We truly thank our fans for their years of support and we hope they understand the difficult position we were in when making the final decision.”
I’d like to look at one particular node: Paragon Studios. Now, the anonymous source claims that Paragon Studios had another game in the works, a Lost meets Minecraft game, which means that Paragon was eating far more money than simply keeping City of Heroes optional. Lincoln Davis doesn’t say that City of Heroes was unprofitable, and one can only imagine that such a game wouldn’t consume three million dollars a quarter in upkeep alone. Rather, Lincoln Davis specifically states that “the studio” was not profitable, referring to Paragon Studios itself. It is entirely possible that while City of Heroes was profitable, the second project that Paragon Studios was consuming the rest of its revenue and then some, leaving the studio as a whole as a burden on NCSoft’s finances.
I should point out that the source was anonymous by request, meaning MMORPG.com presumably knows who they are talking to and that person is a credible source in the company. It is also important to note that this is the first time someone from NCSoft has commented directly that Paragon Studios was not making a profit, a comment that should have been made several months ago when Paragon Studios was first shut down. Despite the comment by Lincoln Davis, the latest entry into the City of Heroes saga once again leaves us with more questions than answers.
Was City of Heroes itself profitable? How much was this second project by Paragon Studios costing them to develop? Why didn’t Paragon just shut down the project since it was apparently breaking the bank? What was going on with this second game Paragon Studios was making? If the cost that NCSoft was asking for City of Heroes was not $80 million, as Lincoln Davis claims the figures were “simply wrong,” then how much were they asking for? If Paragon Studios was unprofitable due to these other projects, what kind of money were they losing every quarter? Who decided that shutting the game down now would be better than putting it into maintenance mode and simply ceasing development (like Microsoft recently did with Age of Empires Online)?
We will probably never get a complete answer on exactly what was going on at NCSoft and Paragon Studios that lead up to the shut down, but the statement by Lincoln Davis paints a pretty clear picture that the performance of Paragon as a studio and its other projects, regardless of how City of Heroes itself had been running, played a major part in the studio being shut down. There is an answer somewhere, and it is likely much more complicated than any of us will be able to figure out.
MMO Fallout 