NCSoft Q2 '08 Financials

[schild]

Note: 1USD = 1,033 Korean Won (KRW)

 

NCsoft Announces 2008 Second Quarter Consolidated Sales of US$78.6 Million

Compared to the previous corresponding year, sales rose 7%

Pre-tax profit reached US$10.2 million

 

Seoul, South Korea, Aug. 13, 2008 – NCsoft® Corporation today reported second quarter 2008 sales of KRW 81.2 billion (US$78.6 million), operating profit of KRW 8 billion (US$7.7 million), pre-tax profit of KRW 10 billion (US$9.7 million), and net income of KRW 6.1 billion (US$5.9 million). Compared to the previous year, sales rose 7% while the operating profit, pre-tax profit and the net income dropped 25%, 31%, 42%, respectively.

NCsoft announced that the increase in sales was due primarily to the shutting down of private Lineage® servers and the successful update of Lineage II Gracia™ Part 1. The drop in operating profit was due to continued investment, including personnel, in development studios across the NCsoft organization.

By region, the percentage breakdown of sales for the second quarter shows 58% in Korea (KRW 46.6 billion/US$44.5 million), and 42% from overseas entities and royalty income: 13% in North America (KRW 10.8 billion/US$10.4 million), 6% in Europe (KRW 5.3 billion/US$5.1 million), 13% in Japan (KRW 10.7 billion/US$10.3 million), 4% in Taiwan (KRW 2.9 billion/US$2.8 million) and royalty income of 6% (KRW 4.7 billion/US$4.5 million).

By game title, sales in the quarter for Lineage recorded KRW 28.1 billion (US$27.2 million), Lineage II KRW 34.7 billion (US$33.6 million), City of Heroes®/City of Villains® KRW 5.7 billion (US$5.5 million), Guild Wars KRW 5.1 billion (US$4.9 million) and Richard Garriott’s Tabula Rasa® KRW 2 billion (US$1.9 million).

NCsoft’s CFO Jaeho Lee said, “In order to maintain our ongoing development cycles and a diverse game portfolio, multiple games are in development currently across all NCsoft studios. We anticipate publishing these new titles within the next two to three years, during which we believe we’ll maintain NCsoft’s status as a leader in the global on-line game market.”

NCsoft will officially launch its next AAA MMORPG, Aion®, in Korea by the end of this year after open testing. Additionally open testing services for Lite MMOs such as Love Beat™, Punch Monster™, and Dragonica™ will begin. In addition, NCsoft saw positive response from the gaming industry during July’s NC Media Day, after unveiling its three new titles currently under development: Oriental Martial Arts MMORPG Blade and Soul™, Shooter Action RPG MetalBlack™, and Extreme Vehicle Combat Steel Dog™.

[2008 Q2 Consolidated Earnings are under the quote.]

NCsoft, the interlocking NC logo, Lineage, Gracia, Guild Wars, City of Heroes, City of Villains, Aion, Tabula Rasa, Point Blank, Punch Monster, Dragonica, Love Beat, Blade and Soul, MetalBlack, Steel Dog, PlayNC, PlayNC.com and all associated logos and designs are trademarks or registered trademarks of NCsoft Corporation. All other trademarks are the property of their respective owners.

Code: (2008 Q2 Consolidated Earnings Summary (Unit KRW Mil)

                        Q2,08      Q1,08      Q2,07       QoQ      YoY
Sales                  81,201     88,143     75,882       -8%       7%
Operating Income        7,969     19,732     10,603      -60%     -25%
Pre-Tax Profit         10,019     11,160     14,571      -10%     -31%
Net Income              6,121      8,074     10,562      -24%     -42%

Edit by Trippy: I hate long titles, or more specifically the forum hates them I hate the red warning box that appears

[tmp]

In addition, NCsoft saw positive response from the gaming industry during July’s NC Media Day, after unveiling its three new titles currently under development: Oriental Martial Arts MMORPG Blade and Soul™, Shooter Action RPG MetalBlack™, and Extreme Vehicle Combat Steel Dog™.

Didn't see the other two (beside Blade and Soul) mentioned yet, so for the reference this is what the gaming industry responds positively to nowadays:

http://www.gametrailers.com/player/usermovies/248682.html ( Extreme Vehicle Combat Steel Dog™ )
http://www.gametrailers.com/player/usermovies/248670.html ( Shooter Action RPG MetalBlack™ )

[schild]

Steel Dog will be crap.

Metal Black might not be. Depends on just how Diablo it is.

[tmp]

Getting a vague old school arcade/amiga games vibe from them. The Steel Dog thing slowly grows on me actually after watching the trailer again, but then i liked Supercars and Interstate, and it seems to combine these in a form of (hopefully short) online fights.... might turn out a good casual game. Kind of like Audition is time stealer for me because each round is just few minutes, so makes it so easy to just keep on playing.

[UnSub]

For the first time in a while, CoH/V player numbers went up.

And, OMG does TR have to hurt in terms of its performance. How much does it hurt? I can't even see TR player numbers in the IR documents, that's how much it hurts.

[photek]

For Christs sake, when will they learn ? NcSoft needs to realize that there is a major difference between the western and eastern markets. You cannot have 10-12 crap-to-decent games, shit, not even games, MMO's, and expect to make a profit on it in the US/EU. Average MMO players in the west play, just speculating, top 2-3 MMO's a year. Top. And those MMO's need to be fucking good for people to even bother, and it doesn't help being only good, it needs "internet promotion" and media coverage, and not shit like MMORPG.com, I'm talking about the right sites and forums. If they canceled all their games and sat down for a while, put all their best people and teams together, cause they really have some good guys there, and focused on making one, maybe two, very good games, five years from now, you could add several zeros to those numbers.

I don't know why they have so many studios and games, its not like its a lack of games in the markets they are targeting either. If it was something really innovative and actually good each time I'd get it, but this is just stupid, you learn this first week at any business school. Quality > quantity.

[UnSub]

I don't know why they have so many studios and games, its not like its a lack of games in the markets they are targeting either. If it was something really innovative and actually good each time I'd get it, but this is just stupid, you learn this first week at any business school. Quality > quantity.

Quantity > quality is a very good business model if you get the pricing right. See: Wal-Mart.

And arguablly TR was NCsoft's best people working on a title. Or, if not 'best' people, then people who should be expected to perform.

Regardless, these kind of results add weight to NCsoft looking to slash the dev numbers at Austin.

[Trippy]

And arguablly TR was NCsoft's best people working on a title. Or, if not 'best' people, then people who should be expected to perform.

The people who were working on TR were acquired by NCsoft as part of Destination Games (the Garriotts' game company). It's not like NCsoft "hand-picked" people to work on the game (like they presumably did with Lum and his unannounced and hopefully not cancelled game). They just got whoever came along with DG.

[Lantyssa]

And arguablly TR was NCsoft's best people working on a title. Or, if not 'best' people, then people who should be expected to perform.

It doesn't matter who you have working on a game if the team is lead by a complete hack and nutcase.

[Reg]

Is it popularly accepted yet that the successes of UO and EQ were both purely accidental and not because they were developed by gaming gods?

[UnSub]

And arguablly TR was NCsoft's best people working on a title. Or, if not 'best' people, then people who should be expected to perform.

It doesn't matter who you have working on a game if the team is lead by a complete hack and nutcase.

If they'd succeed, they've have been known as "gifted auter" and "visionary eccentric". 

[UnSub]

And arguablly TR was NCsoft's best people working on a title. Or, if not 'best' people, then people who should be expected to perform.

The people who were working on TR were acquired by NCsoft as part of Destination Games (the Garriotts' game company). It's not like NCsoft "hand-picked" people to work on the game (like they presumably did with Lum and his unannounced and hopefully not cancelled game). They just got whoever came along with DG.

Ahh, true. It's been long enough I'd forgotten that the Garriotts were acquired and didn't get selected to do the original game on behalf of NCsoft.

However, TR being developed by a so-called all-star MMO development team was correct. At least initially. Until it was found a team of all-stars tend not to play well together.

[stark]

I must be dense, what is the depressing part?

[Stormwaltz]

Didn't see the other two (beside Blade and Soul) mentioned yet, so for the reference this is what the gaming industry responds positively to nowadays:

http://www.gametrailers.com/player/usermovies/248682.html ( Extreme Vehicle Combat Steel Dog™ )
http://www.gametrailers.com/player/usermovies/248670.html ( Shooter Action RPG MetalBlack™ )

I can grok the "Mercenaries + Diablo" vibe of MetalBlack. I think it could do well.

The "Speed Racer + GTA 1" vibe of Steel Dog seems a much harder sell.

I hope they're developing these with small, tight (cheap) teams, though, because neither one will be a Guild Wars or Lineage scale success.

[Draegan]

MetalBlack reminds me of:

[Evildrider]

Didn't see the other two (beside Blade and Soul) mentioned yet, so for the reference this is what the gaming industry responds positively to nowadays:

http://www.gametrailers.com/player/usermovies/248682.html ( Extreme Vehicle Combat Steel Dog™ )
http://www.gametrailers.com/player/usermovies/248670.html ( Shooter Action RPG MetalBlack™ )

I can grok the "Mercenaries + Diablo" vibe of MetalBlack. I think it could do well.

The "Speed Racer + GTA 1" vibe of Steel Dog seems a much harder sell.

I hope they're developing these with small, tight (cheap) teams, though, because neither one will be a Guild Wars or Lineage scale success.

You know if someone could make a good Car Wars/Autoduel game, I would play the hell out of it.  I had hopes for Auto Assault, but we all know how that went.

[Baldrake]

Here is the depressing part.

Damn, I was looking forward to seeing what Lum came up with.

[DraconianOne]

Point Blank, Punch Monster, Love Beat, Blade and Soul, Metal Black, Steel Dog

I think I may have just worked out how they name their games.  Using the power of this page, I predict that their next titles will be:

Bathroom Broadcast
Prison Whistle
Coincedence Mimic
Rabbit Team
and let's not forget what is destined to be a game that will topple WoW's crown as king of MMORPGs, Richard Garriot's "Castle Inhabitant".

[schild]

Prison Whistle sounds awesome, manbitch.

[Bokonon]

Is it just me, or did MetalBlack look like it was using a souped up Dungeon Runners engine? It seemed more fluid in motion, but it looked similar somehow.

I think NCSoft could do worse than to take the DR concept to it's absurd conclusion (Diablo-esque genre-satire games for free or for profit).

[schild]

There's nothing absurd about that. I'd love to take that engine and make a diablo clone. Srsly. I wish someone would make a hack and slash Maker game, like RPG maker.

[sam, an eggplant]

Here is the depressing part.

Damn, I was looking forward to seeing what Lum came up with.

Was just about to post that. Yeah, it's a real bummer. I can't begin to imagine how disappointing and soul-crushingly frustrating it must be to spend years of your life working on a project just to have it canceled before even being announced. Best wishes to Lum and the rest of the guys working on whatever he was working on.

[Soln]

Edit: changing threads...

[schild]

Guys, guys, other thread.

[UnSub]

Link.

The royalty figures for Tabula Rasa cannot go without comment, either. The quarter before last, they stood at 1.2 billion Won; in the last quarter, they had dropped to 49 million Won; this quarter, they have gone into the negative, with a loss of 513 million Won. This represents a drop of 1,147%, which stands out on the spreadsheet like a very sore thumb.

Negative royalties? How does that work?

[Trippy]

Link.

The royalty figures for Tabula Rasa cannot go without comment, either. The quarter before last, they stood at 1.2 billion Won; in the last quarter, they had dropped to 49 million Won; this quarter, they have gone into the negative, with a loss of 513 million Won. This represents a drop of 1,147%, which stands out on the spreadsheet like a very sore thumb.

Negative royalties? How does that work?

They don't list any countries with that so it's hard to say but my guess is that they paid somebody (like an Asian operator) to do some work on it (e.g. for localization) and they put that cost in that line item for some reason.

Another possiblity is that that was their cost to manufacturer and distribute time card/game cards and other infrastructure needed by an operator in Asia (again assuming they are trying to sell the game over there). E.g. as part of the typical operator agreement for Asian MMORPGs they agree to buy time cards from the publisher for X amount and the publisher provides them with said cards, but it's up to the publisher to make the cards and get them over there to the operator. The money the operator pays to the publisher for the cards is part of the royalty agreement so in this case it would make sense to put the "cost" for the cards in this line item.

[eldaec]

Link.

The royalty figures for Tabula Rasa cannot go without comment, either. The quarter before last, they stood at 1.2 billion Won; in the last quarter, they had dropped to 49 million Won; this quarter, they have gone into the negative, with a loss of 513 million Won. This represents a drop of 1,147%, which stands out on the spreadsheet like a very sore thumb.

Negative royalties? How does that work?

My guess would be they are wrapping much more up into the term 'royalties' then what you or I think of them as.

Maybe they are including royalty costs on system components/IP as well as royalties gained from game operation.

Could be there are sale or return time cards/gameboxes that they posted as profit previously, but are taking back.

Could even be that they booked profit from subs deals with asian games cafes etc, but then the deals got dropped (they shouldn't have booked that profit if the deals could still be dropped, but entire industries convince themselves that this sort of accounting is ok all the time).

[Tisirin]

I am not sure how applicable it is in this case, but I do recall that NCsoft products in territories outside Korea sometimes were set up to pay royalties back to the main office.   So, taking Lineage II as an example, that game would make a certain amount of money in the U.S. / Europe, with a fixed amount paid to headquarters (in Korea) from the NC North America division.  While this is purely speculation, I would guess that negative royalties in this case COULD mean that TR did not make enough income overall to cover its royalty payments back to the home office.  If that is the case, then it would be a matter of internal financial arrangements.

These kind of arrangement vary from product to product, so I can't say for sure that this is the case for TR.

[schild]

NCsoft Auctions Ability to send Human DNA

Into Space

 

Highest bidder to have digitized DNA stored on International Space Station; Proceeds to benefit Planet Make-Over

 

AUSTIN, Texas, Aug. 14, 2008—NCsoft® announced today that it will auction an opportunity for one person to send their digitized DNA into space on a special Operation Immortality sale on the popular Internet auction site, eBay. The news comes just days after the company announced that an Immortality Drive, a time capsule with the digitized DNA of select video gamers and space aficionados, and a collection of humankind’s greatest achievements, will be carried to the International Space Station (ISS) by famed game designer Richard Garriott on October 12.

 

The auction can be accessed at the Operation Immortality auction site located at http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=250282465825. There are two items up for bidding in the auction. The first is a DNA swab kit, which allows users to swab the inside of their cheek and send the sample to a certified testing lab, which will provide a digitized version of the purchaser’s DNA to be placed on the special Immortality Drive. Garriott will leave the drive on the ISS prior to his return to Earth.

 

Players can be immortalized in Garriott’s latest game, Tabula Rasa® with the second item in the auction package, a character in Tabula Rasa to be named after the winner. Anyone who isn’t already playing the game can access a free trial at http://www.rgtr.com/trial.

 

The auction is currently open and will close on August 20.

The proceeds from the auction will benefit Planet Make-Over’s non-profit Arts Endowment via the Nobelity Project. Planet Make-Over is company based in Austin, Texas with a mission to reverse the effects of global warming. The funds will provide financial support and guidance to performing artists who evangelize Planet Make-Over’s efforts to reverse global warming. On August 12, NCsoft announced that recording artists Eric Johnson, Patrice Pike, and musical director Stephen Bruton in association with Planet Make-Over will be participating in NCsoft’s Operation Immortality and sending their DNA into space via the Immortality Drive.

For information about Operation Immortality, including full terms and conditions, go to http://www.OperationImmortality.com. For information on Richard Garriott's Tabula Rasa go to http://www.rgtr.com.

i lolled hard

[schild]

Image from the auction. Is that a 4GB standard microdrive? As in, moving parts? Really? REALLY? Or is it compact flash and he had one lying around?

[sam, an eggplant]

That looks like a myspace picture taken at an oblique angle to hide his unsightly thighs.

[tmp]

66 views, current high bid: US $86.00  

[cevik]

That looks like a myspace picture taken at an oblique angle to hide his unsightly thighs.

No, he's attached to the ceiling.  He feels it helps his creativity if he never touches a floor.

[Yegolev]

That's just his R4 card.

[UnSub]

66 views, current high bid: US $86.00  

I don't think I'm alone in not wanting Lord General British to have my DNA. The natural end result of such a thing would be finding out he's had me cloned millions of times into some kind of servant army who keep his castle clean.