NCsoft's Q3 2015 report: Guild Wars 2, WildStar, all sales dip downward [Updated]

The bad news for the most recent NCsoft financial report is that once again, profits from WildStar were down slightly from the previous quarter -- but this round, even Guild Wars 2's profits were down a bit. In fact, sales dipped for all of NCsoft's big games, and profit for the company was down on the whole, quarter-over-quarter and year-over-year, so the takeway isn't that specific games are underperforming relative to the others but that NCsoft had a bad quarter overall. Decreased profits are attributed to a lack of in-game promotions with the company's highest-earning titles.

Of note is that the third quarter report stretches only to the end of September, thus predating both WildStar's shift in business model and Guild Wars 2's first expansion release. During the conference call, NCsoft said it has been focused on cost-efficiency and expects fourth quarter revenues to improve, referencing Guild Wars 2 specifically. Fans of the aforementioned games should keep their eyes peeled for next quarter's results.

Update: We've included transcripts of excerpts from the translated conference call below.

highlights

sales

Source: Earnings report; thanks to Carl for the tip!
Addendum: During its conference call, NCsoft told investors that it plans to market Heart of Thorns aggressively. In answer to questions about Guild Wars 2, a company rep explained (through his translator -- apologies for some of the parts that we couldn't make out or make sense of in our transcription here):

We are actually observing very visible performance from the active users. [...] We are very much targeting [...] high-level users. So before the launch, we had six weeks for the free-play users [...] to [...] enjoy the game and for them to [...] reach the cap, but we expected a lot of them would reach the cap level, but however only some of them would reach the cap level during the six-week free-play period. So some of those who reached the cap level are buying this expansion pack. [...] However, the new users who are also reaching the cap level, and of course when they are very much buying the expansion pack, but we are preparing for the promotions and the events. And also [...] there will be users who have not yet reached the cap level, but still we are going to target those users who reach the cap level and who will buy the expansion pack.

As for the marketing span in the fourth quarter, we anticipate that it will increase compared to the third quarter. Of course, as mentioned earlier: The Guild Wars 2 expansion pack, to [...] increase the sales we will be very aggressive on the marketing span for the Guild Wars 2 expansion pack.

The sales performance in the North American region would be very much contingent on the Guild Wars 2 and WildStar performance. We had a very big launch impact of WildStar, but that impact has been diluted this year. [Guild Wars 2's expansion] performance will be incorporated into the fourth quarter results, so the sales trend will be turning into a positive trend.

As for WildStar, at the end of September, we launched as free-to-play [...], so after that there has been very active user movement, very very active and conspicuous user movement in WildStar. And it's a bit down right now and it's a bit stabilized level, but it has been only one month since this launch, so it's a bit shorter period for us to have a very confident comment on that, [but] still we are expecting that that will go up, so we will be able to have a significant impact on the fourth quarter. [...] We expect sales to increase, definitely.

NCsoft also says that its San Mateo mobile studio has 60 employees of a planned 100. It is expected to "leverage" a new IP as well as NCsoft's existing IPs.

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135 Comments on "NCsoft's Q3 2015 report: Guild Wars 2, WildStar, all sales dip downward [Updated]"

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gav4985
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gav4985

People are getting fed up with pay to win game formats, bring back city of heroes!!!!!

Noyjitat
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Noyjitat

1  Poor advertising (let's be serious here, games like candy crush get more commercials)
2 Years of screwing over customers and communities by shutting down more mmos than any mmo company to date. 
3 overhyping game expansions and new titles while tying developers hands to a "release it NAO even though it's not ready to be released"

Yeah it's starting to catch up with them.

chosenxeno
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chosenxeno

duane99 chosenxeno Sazri This doesn't even make sense. She's already taken dude.

duane99
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duane99

chosenxeno Sazri  you seem to do a good job at it yourself

Zukkitude
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Zukkitude

Also 7 million copies of a game sold isn't uncommon...

Zukkitude
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Zukkitude

@SallyBowls1 - How is 7 million units sold close to a quarter of a billion? For your future reference that would be 250 million units = 1/4 of a billion.
Learn basic numbers before you try and correct people, the source I read may have been inaccurate but you are as far correct as possible!

chosenxeno
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chosenxeno

Sazri chosenxeno This does little to shift my point. Please don't litter my mailbox with drivel.

swordandkeyboardgaming
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swordandkeyboardgaming

gw2 devs just don't get it.  on top of that they just absorb all the ''its so wonderful crowd''' , everything is amazing and wonderful.

Sorry but hundred thousand (random number/ im sure its more) wvw player's that left after 1st 6 months will never return, and half that group came back to give it a second chance just to quit.  Instead of fixing the wvw grounds 1st they added the mist.

Not in HOT they added ridiculous full that is already empty.  Adding more pve to pvp area, and thining outt the population in those areas by making bigger areas.  Instead they should have stream lined the areas to make more fights and land more valuable to defend.

For me they just don't think things out when comes to wvw.  Love the devs, nice people sorry if my opinions hurt but some times truth hurts.
Game I once spend many many hours and my wvw rank is very high on 2 accounts. Just no reason for me to play wvw anymore sadly.

Or even log in either because the HOT is for big guilds small ones are screwed  over majorly. Ive returned to single player games after years and years of being a mmo strictly guy.

Sazri
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Sazri

chosenxeno Wildstar's been f2p for a month, and HoT has been out for two weeks. You have a bad sense of time.

Maelzrael
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Maelzrael

Telos_ Gw2 is dope. :)

syberghost
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syberghost

Wayshuba 7BitBrian my wife, who is a senior accountant with a Fortune 500 and until recently was an auditor subcontracting on large accounts with one of the Big 4, concurs on this; they can't list revenue from pre-orders until the product ships. In fact she high-fived me for getting this right.

Wayshuba
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Wayshuba

7BitBrian They can't do that legally unless they didn't bill the pre-orders until the game launches. All revenue, by law, needs to be recognized when the company accumulated it. If NCSoft billed the pre-orders for HoT when they were placed - say one month ago - then they would be recognized in the numbers above. If not, then it would be fair to say they won't be seen until Q4 of next year.
Regardless, I don't see GW2 as being in any trouble. Without the expansion they are still producing $75m-$80m US in revenue annually which seems to be a rather healthy business for an MMO.

JazzyGaming
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JazzyGaming

woolydub the numbers for both gw2 expac and the ws f2p conversions wont be seen until the NEXT Q earnings because they both came after the end of this quarter. look for it next month before you get too worried about it

HidingCat
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HidingCat

SeanNeubert Anyone wants to educate me on the appeal of Lineage 1, and why it's so enduring?

Telos_
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Telos_

It's not just NCsoft, but all MMOs.  The genre has been on decline for over 3 years now.  Action-combat mmos tried to save the genre, but still failed horribly, such as (BnS, WS, GW2, TSW, EQN, etc).

HidingCat
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HidingCat

SoMuchMass DJjazzy Sorenthaz Hi! If you're interested:

https://en.wikipedia.org/wiki/Generally_Accepted_Accounting_Principles_(United_States)

In particular: https://en.wikipedia.org/wiki/Revenue_recognition

Radfist
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Radfist

DugFromTheEarth I agree regarding Wildstar. You unlock the ability to start your own guild / warplot really early into Wildstars rewards too, literally one month of sub and you'll never need to sub again.  Its good from a value for money perspective for players, but I don't see how that will be viable for long term income for Carbine. They need to beef up the subscription perks, include some NCoins and maybe give unique items every month to subscribers.
I suspect most of their revenue will come from appearance items, mounts and housing items though.

7BitBrian
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7BitBrian

pocketdimension Leviathon_lx DugFromTheEarth Actually, no they probably didn't. Most companies, especially game companies, will report all sales, even pre-order sales, when the game actually launches, and not before. This helps them post those "1 million sales on launch days!" posts as well as plan for, and hype up, a bigger quarters earnings to their shareholders.

pocketdimension
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pocketdimension

Leviathon_lx DugFromTheEarth because they magically didnt include the pre-orders , and collector's editions that have been on sale for months

RyanMahaffey
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RyanMahaffey

Cramit
You
Have
No
Brain

Wildstar right now is a towering achievement of them park mmos and guild wars 2 perfectly blends the content of themepark with the exploration of sandbox

RyanMahaffey
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RyanMahaffey

Mezla People have been saying that since Cataclysm

Sub mmos are coming to an  end, not themepark mmos, they are still by far the best type of mmo, people think they want a skyrim like full sandbox mmo but they don't otherwise so many "sandbox mmos" would be doing miles better.

Gangrel
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Gangrel

Damonvile It also counts for EU Aion, as Gameforge run it in that region and not NCsoft anymore (and haven't for several years)

Leviathon_lx
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Leviathon_lx

DugFromTheEarth "but judging by their data, its clearly not enough."
None of this data includes HoT's release as Q3 ended in September.

Lethality
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Lethality

Partial quarter of availability is pretty irrelevant to judge things on :)

Nyres
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Nyres

breetoplay SallyBowls1 I think its likely that WOW will be loosing way more than 100k in q4 and q12016.  The fact that they're ditching sub numbers now after years of not seeming to care when they had to report losses makes me wonder if their expecting a early Q3 launch for Legion or a very very late Q2 one. The flight patch is the likely reason for the stabilization of subs for Q3 2015.

chosenxeno
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chosenxeno

WildStar has been free for like a Week. HOT is like a week old. I wouldn't even bother with this report. You obviously aren't going to be able to see the impact from changes made that late in the quarter. Way to needlessly spread panic!

rottenrotny
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rottenrotny

But action combat is so good! How can this be?!

ArbsX
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ArbsX

Samizdat Cramit So you want Universe of Starcraft ;).

TadSaine
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TadSaine

it will be interesting to see if Aion and Lineage II moving to steam will help at all.  i've returned to Aion because it is on Steam and am so far enjoying it.  servers seem full, which is great news for the game.  

GW2's numbers seem a bit poor - of course, i am no expert.  that said, i do think NCSoft games tend to lose a sense of cohesion as time goes on.  for example, GW2 confused a lot of players with their post-launch 'living story initiative'.  it didn't seem to work out as planned, nor did they suggest pre-launch that was the planned direction for the game.  i'm not sure they've ever truly recovered from the confusion created by the living story.  Aion also seems to have made a few odd choices along the way, and as a returning player, i'm not yet seeing how all the new additions fit in with the old.  i am still really enjoying myself in Aion, but both Aion and GW2 seem to suffer from an odd blend of competing ideas which muddles the focus.  not sure that makes sense, it is cold season, and my brain isn't working at full speed today.   :)

SallyBowls1
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SallyBowls1

Zukkitude 7 Million???? Over a quarter of a billion of HoT sales???  More revenue this month than in the previous three years??? I am skeptical.

SallyBowls1
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SallyBowls1

hardy83 I see the opposite. The HOT development expense has been ongoing for years and a lot of that has presumably already been recognized.  OTOH, marketing costs of a game tend to be at least as much as the development costs and all of that is just starting.

Estranged
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Estranged

RvR in GW2 has so little importance and no effect on PvE play, it just blah.

Estranged
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Estranged

My intuition says it is a damn big deal to divide a user base.

DugFromTheEarth
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DugFromTheEarth

There are still quite a few big walls keeping me from coming back and buying the expansion.

Namely, the huge gap in storyline that would require me to spend quite a bit of money (since im not floating in gold) to gain access to any of the living story that I missed.

I think NCsoft is going to have a hard time getting other similar players, who have played the original game for the first year or so and then quit, to come back and try HoT. Im sure there are some that have, but judging by their data, its clearly not enough.

Estranged
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Estranged

Sub tokens, is my speculation.

Estranged
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Estranged

Whoa.

Estranged
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Estranged

Before I read the comments:
These results are expected, due to the Xpac for GW2 and FTP for WS coming. I didn't feel the box promo would help a great deal, as awesome as it was...
My worry would be the disaster at relaunch for WS. I gave up and haven't returned. Sure it is fine now, but that is a perfect example of losing momentum. Hype is everything. Haven't seen a game that unplayable since WoW launched Vanilla. Pushed me away until BC.
Just SMH when games like Destiny and SWTOR are good to go at Xpac launch in the same launch window.
WS needs some good luck. I'll return soon, because of my free promo sub time.
Damn, I dont want all of this fabulous work to be wasted.

FistyFisterson
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FistyFisterson

I'm very happy Wildstar went F2P.  It's just a great MMO I can play casually a couple times a week and once a month grab something on sale on the market. All these companies are more apt to get my money when I don't feel like I'm already tied down.  I really hope their player trend stabilizes at a good number.

Feydakin
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Feydakin

Yeah let's not call the sky falling quite yet... I can pretty much guarantee that sales will be up considerably for GW2 and Woldstar once they get into the F2P conversion and Heart of Thorns. I think they know that though. ;)

Wild_Phil
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Wild_Phil

hardy83 Not really...the data is all there in the graphs.  Overall sales are down year over year by 10% with their oldest game (Lineage) being 50% of their total sales.

Wild_Phil
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Wild_Phil

dragonwhimsy Wild_Phil SoMuchMass Sure, but NCSoft's operating profit was down nearly 40% year over year.  Even with that expansion being pushed back a quarter, it was unexpected for profits to be so down year over year.

hardy83
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hardy83

That quarter was probably down because a large amount of resources was being used for both the GW2 expansions and the Wildstart port to F2P. I doubt either of those (especially the HoT) was cheap.

I imagine since both have been done and GW2 now moving into a living story season (which I would assume most is already done), will be a much better quarter for those games.

Zukkitude
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Zukkitude

I certainly know I've spent money on NCSoft products this forth quarter, along with the 7 million other players who purchased heart of thorns.

dragonwhimsy
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dragonwhimsy

Wild_Phil SoMuchMass They thought HoT's was launching 3rd quarter  and not 4th quarter so it means nothing at all.

Samizdat
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Samizdat

Hope Wildstar's earnings turn around with F2P. I've been having a lot of fun with it since the conversion.

breetoplay
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breetoplay

shadowblender This is addressed in the second paragraph of the post you're commenting on.

breetoplay
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breetoplay

SallyBowls1 I agree, the losses were minimal and very much expected. I think they're right in thinking Q4 will be huge, and investors apparently agree.
I also expected WoW to lose way more than 100k. Losing 100k is definitely more stability than WoW deserves lately.
TY for the tip on Funcom btw. Definitely a good week in spite of some lukewarm news.

Wild_Phil
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Wild_Phil

SoMuchMass That's crazy how far off the results were from the prediction...57 billion predicted, 25 billion actual!  That's catastrophically bad as a percentage.

NCSoft is either going through a very rocky fiscal time or that firm above needs to stop going to the orangutan exhibit at their local zoo or wherever they are getting their forecasters.

Sigbjorn
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Sigbjorn

I am fairly casual player and have no problem completing events in the new zones. I can get a lot done in an hour or two. II have no problem finding the action on the new maps and running a long with the events.

Leilonii
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Leilonii

Madda That's because there are none.

/hides

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