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.
Lineage II’s free to play launched almost as expected: the servers were steamrolled by the Persian Army sized group of newcomers, and naturally players experienced problems reliably logging in and staying logged in last night. In preparation for the transition, NCSoft opened a brand new server (Shilen) and today revealed yet another new server, Magmeld.
Announced on Twitter and on the main website, NCSoft is advertising the server to new players and new players only. In fact, much like Shilen before it, character transfers have been disabled to Magmeld. Similar to Shilen, NCSoft is adding rewards for server firsts.
NCSoft’s next quarterly report should be rather interesting.
What do Lineage II and Ragnarok Online have in common? Nothing. Last month, NCSoft announced that Lineage II will mark the next product in their line to make the great transition to free to play, and what a transition it promises to be. Dubbed “Play Your Way,” players can still opt to pay a subscription for bonus loot, experience, and more, or they can opt to play the entirety of the game absolutely free. There are no content locks, so you can experience all the game has to offer completely free of charge.
The home page for Lineage II now displays a release date of November 30th. Head over to the link for more information, but it appears our source from the previous article was spot on that this would follow in lockstep with Innova’s service in other regions:
Anyone can play for free. However, if you pay the monthly subscription, you get permanent 2x Exp, SP, Drops, Spoils.Item store includes items like Buff Milks, 30-day rent-a-Buffpet, 30 day rent-a-Mount, New Hair Accessories, etc.
NCSoft last week announced Lineage Eternal: Twilight Resistance. Although you won’t be fighting back hordes of sparkling vampires, the game promises massive battles, siege warfare, destructible environments, and more. The game is presented in the original Lineage isometric view, etc.
The trailer shows off some amazing concepts. Large scale battles, the destruction engine, boss creatures, cutscenes and more. The game looks like it will play similar to the isometric dungeon crawlers ala Diablo and Torchlight, with a few twists. The player character is shown using abilities by dragging the mouse and making patterns. A circle around the player unleashes a swirling blade slash that destroys everything around him. Enemies do not display health bars in the trailer. A grappling mechanic allows the player to both pull mobs within reach and scale normally blocked terrain.
You’ll have to watch the video to see all the glory for what it is.
NCSoft has released its financial documents for the third quarter, and the report starts with “Revenue and Operating Income came down due to soft promotions for in-game items sales versus Q2.” In fact, the publisher is reporting a 22% loss quarter over quarter and 32% year over year loss in operating profit, as well as a 12% loss in sales over last quarter, and a 33% loss in net income over the same quarter.
Income from Aion rose slightly over the last quarter, with Lineage coming down from its big jump. Lineage 2 lost less than it did last quarter, while income from Guild Wars continued its decline and City of Heroes increased slightly. Lineage’s loss of revenue is noted as being related to scaling back of cash shop items in the game’s Korean and Taiwan distributions. The quarter over quarter expense increase is due to NCsoft’s Japan donation.
Now to talk region distribution. North America’s share dropped 10% over last quarter, with Europe dropping 6% of its sales. Japan’s share increased 6% over last quarter, with Korea dropping 13% and royalties taking a dip as well.
Next quarter will see a dramatic rise in sales by City of Heroes, and hopefully Aion with the number of content updates. The announcement of Lineage Eternal should bring some interest to the other two games.
The first thing you’ll notice about NCsoft’s quarterly report for the second quarter of 2011 is a massive spike in sales from Lineage. NCsoft attributes this to strong item sales promotions. As of now, Lineage is the company’s best source of income, despite the game’s removal from its Western presence just a couple of months ago. Lineage’s item sales have propelled a 67% year over year increase in income, despite a 1% decline in overall sales over the same period. City of Heroes and Guild Wars continued a slow decline, although City of Heroes will undoubtedly hit an increase in sales once the game goes free to play later this year.
Lineage’s success, however, comes on the heels of both Lineage II and Aion dropping a hefty amount, attributed to “slow seasonality” in the report. I talked last year about NCsoft’s regional breakdown in sales, as a response to why some western gamers described feeling like NCsoft doesn’t pay the hemisphere as much attention. As of Q2 2010, the regional breakdown is as such:
It’s that time of the year already, the first quarter financial reports are starting to stream in. Last year wasn’t so great for NCsoft, considering they lost a $28 million lawsuit against Richard Garriot. Sales of Aion, Lineage, and City of Heroes went down, while Lineage 2, Guild Wars, and NCsoft’s other titles saw a brief increase.
Another point worth noting is the American presence in NCsoft’s portfolio: It’s dropping. Whereas North America made up 12% of NCsoft’s sales in Q4 2009 (23,733), this figure has plummeted to 5% in Q1 2011 (or a paltry 7,129). Similarly, NCsoft’s presence in Japan and Taiwan has been suffering, albeit not nearly as much, and Europe has also plummeted from 12% down to 4% since Q4 2009. Royalties have skyrocketed, around 50% higher than the same time in Q1 2010. This is attributed mostly to Aion’s performance in China.
Although these figures look great for NCsoft as a whole, they don’t really spell well for the Western markets for the coming years. As sales continue to fall in North America and Europe, NCsoft continues to shut down games, with the most recent being Lineage (just in the west) this June. Perhaps the trend can turn around with NCsoft’s upcoming titles: Blade and Soul, Lineage III, and Guild Wars 2 are looking to draw in big crowds, with Guild Wars 2 likely being the first to launch.
I have a question for all of you who read this introductory paragraph. Have you ever rage-quit an MMO? I haven’t. I’ve quit more MMOs in the past than I can count, but they’ve never been out of a fit of rage. Single player games, yes, I’ve stopped playing because every time I played I wanted to smash my keyboard through the monitor, but for some reason I’ve never rage quit an MMO. Getting griefed by some loser in Meduli who is abusing bugs to pickpocket me and then jump onto buildings, just doesn’t get an emotional response from me.
I still remember the time I died in Runescape and lost almost everything I owned (I had invested all of my money into very high level gear for the time), and I stopped playing for about a week. Not out of anger, but I went back and started recuperating my losses, and eventually I got all of my gear back. I suppose my reaction is because, in MMOs, death is meaningful when you can lose everything on you, so for many of us it triggers a sympathetic response. In a single player game, you lose the time you spent from the last checkpoint, which simply triggers frustration at having to play through the same area or sit through the same cutscene over and over again until you progress.
1. What Did We Learn From the Sony Incident?
First of all, we learned that even people giving testimony to Congress aren’t to be trusted. The media took the story that Sony was running outdated software and ran with it like the Olympic torch. Turns out, Dr. Gene (the security expert) was merely parroting what he had heard in the media, without actually looking at Sony’s records. The servers were indeed running an up to date version of Apache. What Sony needs to do is come out and say “Yes, we had a firewall, yes we were running up to date versions of Apache” if they haven’t already.
The offer of identity protection was a good move, but will ultimately not be useful. No relevant credit card data was stolen, apart from the twelve thousand expired credit cards Sony had stockpiled on a database somewhere in the off-reaches of their systems. Sony’s stupid move in all of this was foremost trying to take the hackers head-on, but secondly placing regular data in plain text. If they hadn’t done that, we wouldn’t be hearing rumors of passwords being in plain text, or credit card data being unencrypted. It simply wouldn’t be as present.
2. So What’s The News With Lineage 2?
The announcement that Lineage was shutting down in the west was rather abrupt to those of us who don’t play, to be honest the game falls into the system of only appearing in the media when NCsoft releases their financial reports to tell us how great their games are doing in Korea. Make no word about it, Lineage is still going very strong in the east, and in 2010 actually outperformed Lineage 2 by a full 10% of NCsoft’s total income. The game made up 30% of NCsoft’s income in 2010 (20% Lineage 2, 44% Aion, 2% City of Heroes and Guild Wars respectively). Lineage, to my understanding, didn’t even have official support in the west for 64-bit operating systems until late 2010.
Lineage 2 is still active according to several active players I discussed the game with, but with biases the way they are, I have the feeling Lineage II will be next on the chopping block for the west, possibly coinciding with the release of Lineage III. I’m not one for calling death, but this is NCsoft we’re talking about, they don’t take under-performance lightly.
So, I say…Keep playing Lineage 2. The game will die one day, so why not spend the time until then having fun instead of worrying about when the time will come?
3. Star Wars Galaxies Server Mergers
This one made me chuckle. Looking back at my previous article, I had to laugh thinking about how frustrated I was that I couldn’t get any information regarding the Galaxies server transfers, due to the random DDOS attacks that preempted Sony’s database being hacked and taken offline for the better part of the month.
Now that that debate is over, we can get back to the important discussion, namely how many servers will shut down when Sony finishes the free transfer system. My bet is on at least half, so about six servers if Sony does do a server merger, which likely depends on how the population shifts during the free transfer phase.
4. NCsoft Bribing Asmodians
To assist in the creation and leveling of Asmodian characters, players on selected servers with an Asmodian, level 10 or higher, will receive a huge supply of Berdin’s Amulets. Berdin’s Amulets deliver a 50% additional EXP gain from hunting, gathering and crafting. The effect lasts one hour, with a one hour cooldown after activation.
In short: Not enough Asmodian players at max level participating in PvP on select servers, Elyos players taking too much control. This is one of the big problems 2-faction MMOs have, is that generally one side steamrolls the other, causing the losing side’s members to leave, meaning an even bigger steamrolling on the following round of action. In a game like Aion, being on the losing side of faction warfare can mean never having access to certain content simply because your side does not have control over territory.
In addition to giving exp incentives for leveling up, Aion is allowing Asmodians on certain servers access to instances otherwise inaccessible due to the aforementioned fortress control. Players who do control fortresses will also be awarded greater than players on the Elyos side, as an extra incentive for participating, and succeeding, in turning the tide. You can read it all here.
5. Runescape Has The Best RP: Virtual Mafia Complete With Dirty Cops
Back in a time before research (2009), Jagex introduced virtual game pieces for Runescape, items in-game that allowed for community driven events, including stopwatches, tickers, and more importantly, dice. The introduction of dice, of course, lead to a Runescape version of craps. And inevitably, the online community being what the online community is, groups sprang up using this to scam from players. At the same time, legitimate gambling rings formed to allow for a safer environment to play.
Where there is gambling, however, there is a mafia behind the scenes shooting your friend Joey because he had sex with the don’s daughter. This may be my extra-strength medication talking, but I am fascinated by the idea of a mafia running a questionably legitimate (according to the game rules, not calling the outfit a scam), run by teenagers. If you head over to this thread, there is allegedly a clan on Runescape that uses a single world for dice games, and has a player mod either in the clan or on its payroll to mute the accounts of competing clans on their world.
If that isn’t brilliant, my name is Farmer Joe. Isn’t this the Valhalla of role playing? Here you have a virtual form of gambling, secretly run by the mafia, using corrupt police to virtually cut out the tongues of the competition. The only way this could be more extreme is if Jagex allows money to be transported in large quantities via suitcase, a Runescape version of crack cocaine for the dicing mafia to deal, and the reintroduction of player-vs-player worlds so the mafia could literally murder their competition. Or if the aforementioned teenage mafia don actually murdered his competition, although I can’t say I condone such conduct. This is the first thing that popped to mind when thinking MMO mafia:
What’s next? Runescape hookers? Already existent, just check a free to play world near a bank. In case you’re thinking about it, don’t. I already have the Runescape mafia on my payroll. You’d be surprised what those Runescapers will agree to if you package those chocolate coins with the foil wrapping and tell them it’s “rl geepee.”
That’s all for this week. Tune in next time, when I’ll be showcasing a thing. Better yet, I’ll be showcasing a thing in a place.
[Update: 5/18] I’ve been seeing a lot of searches pointing to this page by players who want to know if their accounts will work on the Korean version when the North American servers shut down. Simple answer is no, your account will not work on the Korean version.]
Writing this article, I’m reminded of a few random comments placed on the last NCsoft article I wrote (about how NCsoft’s subscription games were performing better than their non-subscription games). Lineage entered the scene back in 1998, a year after Ultima Online, and with it brought the little game studio known as NCsoft to an eagerly awaiting pile of money, spawning a sequel as well as shuttling NCsoft into one of the major players nowadays in the MMO industry. Ironically, the designer of Lineage (Jake Song) had previously worked on NEXUS, for Nexon.
Lineage is still going strong in Korea, some unknown number under one million according to Wikipedia, but over here in the west the game just isn’t doing well. Not well enough to maintain profitability anyway. Today, NCsoft announced that the western service for Lineage will be shut off this June 29th. While there are no updates planned, the article does mention ruleset changes and in-game events planned.
Information on compensation is already available. Unused time will be refunded, and any player with an active subscription during 2011 will receive:
Lineage II activation code and two months game time, as well as some free items.
Aion activation code plus collector’s upgrade, and two months free game time, as well as free items.
Guild Wars activation code.
City of Heroes activation code and two booster packs.
It’s always sad to see a game go, especially knowing that it is still available (just not in your region). For what it’s worth, Lineage’s western counterpart lived a full life, and died a ripe old age of thirteen years (that’s 91 in MMO years)
[UPDATE] Since this article has recently started receiving a high amount of traffic, I want to point out that the information below was true as of this article’s publication (September 10, 2010) and that more up to date data can be found in the Lineage 2 category.
Lineage II is one of NCsoft’s biggest hits, scoring #3 worldwide in NCsoft’s sales lists for Q1 2010, and having the benefit of being so good that addicted kidults are willing to sue over it. Granted, most of Lineage II’s sales and subscribers come from Korea while over in North America and Europe, not so much.
So it is with great…I would imagine joy that NCsoft announced that the North American and European Lineage II servers will be shut down and accounts will be merged into two servers (one NA, one EU). As part of the merging process, any character under level 20 that has been inactive for a year will be deleted. In addition, players will only be able to keep seven characters from all servers combined, and those with the lowest experience will be deleted, so it is advised that players move items from low level to high level accounts, and figure out which they want to keep and which they would like to delete.
The merger hits October 5th (reflected in the MMO Fallout calendar, so you don’t forget). This move consolidates five US servers into one, and three EU servers into one. There is currently no information on how clans, alliances, Olympiads, castles, etc will play out.
MMO Fallout 