Financial documents – MMO Fallout

The folks at Arenanet and Team Bloodlust must be breaking open the champagne today, as NCSoft’s financial statements for the third quarter of 2012 reveal that Guild Wars 2 and Blade & Soul aren’t just bringing home the bacon, they are weaving it and frying it to perfection. Guild Wars 2 launched strong in the United States and Europe, while Blade & Soul ripped up the carpeting in Korea. Both games contributed to a massive 50% year over year gain in profits for NCSoft, pulling the developer up from its operating loss from last quarter that saw heavy corporate restructuring and the cancellation of City of Heroes. Both titles should receive a bump in revenue, as Guild Wars 2’s sales do not include Asia, and Blade & Soul has not launched in the West.

On the other hand, every rose has its thorn. As you have likely noticed, both Guild Wars and City of Heroes are no longer listed. Aion continued its free fall in sales while Lineage II continues its considerably slower downturn. The bump that Lineage received in the second quarter is clearly over and done with, as sales fell to below the fourth quarter sales trough in 2011.

NCSoft has posted their fourth quarter finances. Sales were hit with a 6% loss since the last quarter, with operating profit reportedly taking a 51% hit and net income down 42% since last quarter. NCSoft attributes the decline in sales and profits due to scaled back in-game item sales.

Year over year sales from 2011 compared to 2010 saw a similar drop in revenue by 7%, operating income by 24%, and income by 21%, due to what NCSoft refers to as a weakened user base, and an expansion in research and development. Labor costs increased 9%, marketing increased 25%, and variable expenses grew 7%.

You can see from the chart above that Lineage has continued its dip in sales, which NCSoft attributes to a lack of item sales in-game. Lineage II’s sales opened up somewhat, attributed in the release to “roust sales in Japan.” Aion saw a dip in sales of about 8%, as did Guild Wars (22%), and City of Heroes has shown a 22% increase in sales over Q3.

In terms of regional breakdown, Korea’s stake in NCSoft dived from 69% in Q3 to 60% in Q4. North America rose from 4% to 5% while Europe dipped from 3% to 2%. Japan almost doubled its share, from 12% to 21%, while Taiwan lowered its share from 3% down to 2%. Royalties increased to 10% from 8%.

City of Heroes and Lineage II went free to play recently, with Aion moving free to play in Europe.

(Source: NCSoft Finances)