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Korean Developer NCSoft Posts Loss in Q2 2012
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George Johnson
Aug 31, 2012, 7:13:11 PM8/31/12
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Korean Developer NCSoft Posts Loss in Q2 2012
http://www.gamingbus.com/2012/08/09/korean-developer-ncsoft-posts-loss-in-q2-2012/
By Mohamed Al Saadoon
- August 9, 2012
Posted in: News, PC Gaming
NCSoft, developer of popular MMORPG series Lineage and City of Heroes, has
posted their financial results for Q2 2012. They show an operating profit
loss of ?7.641 billion KRW (approx. $6.78 million USD) and a net income loss
?7.263 billion (approx. $6.44 million) compared to profit and income of
?43.47 billion (approx. $38.56 million) and ?41.359 billion (approx. $36.69
million), respectively.
The company attributed the loss to larger labour costs "one-time severance
pay"; increased marketing costs due to the launch of Blade & Soul in Korea;
acquisition of Ntreev Soft, the makers of PANGYA and Trickster Online; and
slower sales of items in AION.
In terms of sales, Lineage continues to be the largest contributer to sales
with 45% of all game sales. Korea continues to be the dominant market for
NCSoft with 70% of sales revenue originating there. Japan and America come
to a distant second and third place, respectively.
Analysis: NCSoft doesn't really go into too much detail on what "one -time
severance pay" is. It basically means the final pay for people they're
laying off; ever since they've been bought by Nexon, they've been shedding
employees. In the long run, they'll have fewer labour costs in the future,
but for now, it's kind of dragging the profits down.
Guild Wars 2 is looming on the horizon, though, and that game would most
likely help to balance the budget as it's a huge release. Guild Wars 2 has
no subscription fee, so most of the profit will be upfront with purchases of
the retail copy, but it does include the option to buy Gems in-game. Gems
are the micro-transaction element of GW2, and as I can attest, the urge to
spend "just a couple of bucks; it won't do any harm; there's no subscription
fee" is overwhelming.
It remains to be seen, however, if the company can diversify away from the
Lineage series as it's far too dependent on that game as well as the Korean
market. A funny note: NCSoft makes more money on royalties than they do in
North America. Actually, revenue from Taiwan dwarfs that of Europe by over
four times.
========
City of Heroes was the next least profitable game to "Others" and "Guild
Wars 1".
Since "Guild Wars 2" is being launched I figured they cut their losses for
the new launch.
NCSOFT 2Q 2012 Earnings Release
http://www.scribd.com/doc/102444902/NCSoft-Q2-2012-Financial-Results
COH/V = City of Heroes/Villains
Sales by Games (excluding royalty)
2Q.11 (2nd Quarter, 2011) 2787 (2%)
1Q.12 ( 1st Quarter, 2011) 2890 (2%)
2Q.12 (2nd Quarter, 2012) 2855 (2%)
Operating Profit (all income sources) 2Q 2012 (-7,641)
http://www.gamingbus.com/2012/08/09/korean-developer-ncsoft-posts-loss-in-q2-2012/
By Mohamed Al Saadoon
- August 9, 2012
Posted in: News, PC Gaming
NCSoft, developer of popular MMORPG series Lineage and City of Heroes, has
posted their financial results for Q2 2012. They show an operating profit
loss of ?7.641 billion KRW (approx. $6.78 million USD) and a net income loss
?7.263 billion (approx. $6.44 million) compared to profit and income of
?43.47 billion (approx. $38.56 million) and ?41.359 billion (approx. $36.69
million), respectively.
The company attributed the loss to larger labour costs "one-time severance
pay"; increased marketing costs due to the launch of Blade & Soul in Korea;
acquisition of Ntreev Soft, the makers of PANGYA and Trickster Online; and
slower sales of items in AION.
In terms of sales, Lineage continues to be the largest contributer to sales
with 45% of all game sales. Korea continues to be the dominant market for
NCSoft with 70% of sales revenue originating there. Japan and America come
to a distant second and third place, respectively.
Analysis: NCSoft doesn't really go into too much detail on what "one -time
severance pay" is. It basically means the final pay for people they're
laying off; ever since they've been bought by Nexon, they've been shedding
employees. In the long run, they'll have fewer labour costs in the future,
but for now, it's kind of dragging the profits down.
Guild Wars 2 is looming on the horizon, though, and that game would most
likely help to balance the budget as it's a huge release. Guild Wars 2 has
no subscription fee, so most of the profit will be upfront with purchases of
the retail copy, but it does include the option to buy Gems in-game. Gems
are the micro-transaction element of GW2, and as I can attest, the urge to
spend "just a couple of bucks; it won't do any harm; there's no subscription
fee" is overwhelming.
It remains to be seen, however, if the company can diversify away from the
Lineage series as it's far too dependent on that game as well as the Korean
market. A funny note: NCSoft makes more money on royalties than they do in
North America. Actually, revenue from Taiwan dwarfs that of Europe by over
four times.
========
City of Heroes was the next least profitable game to "Others" and "Guild
Wars 1".
Since "Guild Wars 2" is being launched I figured they cut their losses for
the new launch.
NCSOFT 2Q 2012 Earnings Release
http://www.scribd.com/doc/102444902/NCSoft-Q2-2012-Financial-Results
COH/V = City of Heroes/Villains
Sales by Games (excluding royalty)
2Q.11 (2nd Quarter, 2011) 2787 (2%)
1Q.12 ( 1st Quarter, 2011) 2890 (2%)
2Q.12 (2nd Quarter, 2012) 2855 (2%)
Operating Profit (all income sources) 2Q 2012 (-7,641)
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