NCSoft – Page 22 – MMO Fallout

NCSoft Third Quarter Finances: Profit/Revenues Down

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.

Appeals Court Rules In Favor of Richard Garriot

Backstory: Richard Garriot partnered with NCsoft to create Tabula Rasa, a sci-fi shooter MMO that rather famously launched in late 2007 and shut down in early 2009 following a poor reception. Before Tabula Rasa shut down, however, NCsoft published a letter of resignation purportedly from Richard Garriot that he was leaving the company to pursue other careers. Garriot shot back, suing NCsoft with the claim that he was fired from the company, and then marked as voluntarily resigning in order to defraud him out of stock options that were available but expired upon his “resignation.”

Last year I reported that Richard Garriot had won $28 million in his lawsuit against NCsoft, although the final amount was $32 million, after lawyer fees and other costs added on. I also pointed out that NCsoft would undoubtedly appeal, and appeal they did. The 5th Circuit Court, however, saw Garriot’s side of the story (yet again) and shot NCsoft down, affirming the judgement.

“It would be unjust to allow NCsoft to sit back during trial, observe Garriott’s litigation strategy, and then demand a new trial on damages when it dislikes the verdict.”

NCsoft noted the lawsuit in their 2010 financial documents as a notable dent in their revenue.

Lineage 2 Heading Free To Play

NCsoft wants you to play Lineage II your way. Coming off the heels of City of Heroes taking the free to play route comes the announcement that NC is pairing up with Innova to bring free to play to Lineage II. The new model is being called “Play Your Way,” and is not being referred to as free to play, but rather a hybrid model, by NCsoft. So far the details are sparse, but user Pocket Medic of the Lineage II forums posted specifics from Innova’s other services:

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.

More on this to come. Lineage II is one of NCsoft’s best performing games, and I think the dip this past quarter may have been the first indication that the west would go free to play or follow in Lineage’s footsteps and simply shut down.

Has Aion Embraced Pay To Win?

Pay to win is a highly controversial label in the MMO business, and I should know. I haven’t even finished the second sentence for this article, yet there is already a mob forming inside of my house ready to beat me to death if I show even a hint of unwavering and militant opposition to the monetary scheme. Going back to our old rule book, it’s important to remember the rule of perception: The important factor is not your intent, it is the player’s reception. If players viewed Turbine’s survey wall as an underhanded, deliberate scam, that is how it will be remembered.

Aion has a special sale going on in the NCsoft store that has managed to ruffle more than a few feathers: The publisher is selling Felicitous Socketing in both Fabled and Eternal flavors, in single sets or bundles of three. The items is single-use and allows you to socket a manastone with 100% success rate. If this makes no sense to you, you’ve probably seen socketing in games like Diablo or Torchlight, except in Aion this system is designed to be unreliable. Failing a socket will cost you the manastone. Couple low success rates with higher level armor/manastones, and you have an expensive recipe for disaster. When researching this topic, I came across a notable amount of posters claiming losses rising up to and over ten million Kinah.

To top it off, the items are only available until October 12th, after which they will be removed from the store. So I’ll leave this one up to the viewers. Do you think this constitutes pay to win?

City of Heroes Officially Free

Dust the cobwebs off of that old City of Heroes account, kids, because everyone’s favorite super hero MMO from that time only us old people remember is officially free. For new players, head on over to this website to get started with a new account. For prior subscribers, all you have to do is log in and away you go. As I pointed out last week, if you are still running the old standalone launcher, you’re going to have to upgrade to NCsoft’s in-house client.

New to City of Heroes? Check out the new user guide. Otherwise, get in there and get fighting for good…or evil.

Nexon, Hanbitsoft, NCsoft Block Korean Probe Into Gambling

You’ve most likely heard of “jackpot items,” even if you aren’t entirely familiar with the term itself. These items cost real money and only offer the chance at a high level piece of equipment, usually a very slim chance at that. I’ve been rather critical of jackpot items in the past, I’ve referred to them as taking advantage of people with gambling problems, and criticized a certain company on using it in conjunction with abusing the name of charity to gain funds.

But the question remains as to whether or not such an item constitutes gambling. While you or I might say yes, the Games Rating Board of South Korea asked ten publishers to hand over information relating to their jackpot items. The companies reportedly revealed names, costs, and currencies involved, but refused to hand over details of payout percentages. When pressed, the GRB was met with statements that the data constituted confidential company information, and was not under the jurisdiction of the GRB.

The Games Rating Board is now accusing these companies of obstructing an investigation. It is unclear at this time what, if any, ramifications these companies could face.

Help I Can't Connect To City of Heroes!

The “Hellgate: Stuck At Waterloo Bridge” article went over very well, so I’m expanding the series. If you are like me, you woke up this morning and immediately checked your account on NCsoft’s website, and booted up that old City of Heroes client you hadn’t touched in about a year. Again, if you are like me you were met with a “cannot connect to server” error, in which case you missed the above warning at the verification page.

Earlier this year, NCsoft discontinued the separate client for City of Heroes. In order to play, you will need to have the NCsoft launcher and may or may not have to download the game over again. I had to download around three gigabytes of data. For those of you who would rather not jump on the horse before it’s born, so to speak, you can check your account info on NCsoft’s website. If your account has been activated, you will see your City of Heroes profile marked as a playable and free account.

Happy brawling.

Help I Can’t Connect To City of Heroes!

Happy brawling.

City Of Heroes: Past Subscribers Come Back Early

City of Heroes: Freedom, the MMO’s foray into free to play, begins sometime this coming week. To entice past players back into the game, NCsoft is reactivating old accounts ahead of time with premium membership, a tier for those who had previously subscribed to the game.

It’s important to note the warning in NCsoft’s announcement that the account reactivation is rolling and not instantaneous, so you may not get in for the first day or so. You also won’t have access to any of the VIP features, including premium power sets. posting on the forums, and a few other restrictions you can find in the side-by-side comparison sheet.

More to come on City of Heroes: Freedom, very soon.

NCsoft Q2 Release: Profits Up, Aion/Lineage 2 Down

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:

Korea: 64%
Japan: 10%
Royalties: 7%
N. America: 9%
Europe: 5%
Taiwan: 3%

Those figures in Q2 2011:

Korea: 71%
Japan: 10%
Royalties: 9%
N. America: 4%
Europe: 3%
Taiwan: 3%

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