NCsoft’s 3Q 2017 financials: Lineage M drives record profits, Guild Wars 2 Path of Fire isn’t too shabby either

    
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NCsoft had an exceptionally good third financial quarter this year, reaching a record high in sales and operating profit for the company, and it’s almost entirely thanks to the mobile MMORPG Lineage M, which didn’t even bleed the rest of the Lineage franchise as you might have expected (Lineage and Lineage II held remarkably steady this quarter compared to last, as did Aion and Blade & Soul).

Good news for Guild Wars 2 as well; NCsoft notes that ArenaNet’s flagship brought in over $20B Won, “an increase of 49% [quarter-over-quarter], driven by the second expansion pack sales” that saw US and European sales figures in particular increase 13% QOQ “on the back of Guild Wars 2 performance.” $20B Korean Won is about $18M US. So Path of Fire at least performed well enough for NCsoft to gloat about it, twice, and it’s a big boost to GW2, especially considering Q2 2017 was the game’s worst ever – but it didn’t top Heart of Thorns’ huge showing two years ago.

Before you ask, no, we don’t know how well WildStar is doing; NCsoft doesn’t report it separately anymore. But it’s still flying. That’s enough.

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Siphaed
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Siphaed

Business -not gaming business, but business in general- sense says that Wildstar is a lead-loss (leader loss) for NCSoft. Namely for company namesake and consumer PR appeal. They took a very heavy hit when the shuttering of City of Heroes in the Western market. Nearly every other new MMO announcement article from their future portfolio included “not buying another NCSoft game after City of Heroes” commented on it. Whether a minority or not, that is publicly viewed as negative press.

So by keeping Wildstar open for a significant lifespan of an MMO, they can siphon off good PR relations for their other games. “Oh, NCSoft has changed and is no longer killing off unprofitable games such as Wildstar. Maybe I should check out [insert other NCSoft game here].” The profits of other games, significant as they are, will keep that one afloat doing what it is doing as a marketing campaign, so to speak.

P.S. Before bringing up Richard Garriot’s Tabula Rasa, know that there was a whole contractual legal spiel behind that catastrophe. In order to cut ties with Richard Garriot, they had no choice but to cancel the game because of his name being in the title (and I’m sure there were larger stipulations in his contract making the game, possibly owning certain aspects and payable royalties even if employment was severed with the company at a future time).

kalamari_
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kalamari_

things to remember:

PoF is 30 bucks, not 50 like HoT was.

PoF had a very short timespan between announcement and release (and also literally 0 hype building and advertisment, like anet did with HoT)

PoF launched at the end of the quartal. (many ppl waited for reviews. first looks and their next salary before purchasing PoF) so the next quartal should also have some significant box sales.

deekay_plus
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deekay_plus

we shall see in three months won’t we :)

Nick
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Nick

Wow – the mobile games made more money than all their MMOs combined. :(

That said I am going to check out the Lineage mobile game and see how it goes when it releases tomorrow. I would be playing Aion, but every since buying a top of the line computer it no longer runs. Maybe it was meant for older computers. Hopeing for an Aion 2 MMO that isn’t mobile.

Veldan
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Veldan

I’ve been hoping for an Aion 2 PC MMORPG for years. That said, I hope there won’t be one any time soon. I hope that there will be a day that lockboxes, P2W, obnoxious daily rewards that require you to log in 3 seperate times at least an hour apart and many more things will all be in the past and we can go back to actually having good games. When that day comes, I hope they make Aion 2. If they did it today, I wouldn’t even try it.

Nick
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Nick

I actually agree with all of this. The lockboxes are off-putting and I hate games that put me on a schedule like it’s work with consistent and scheduled log-in requirements.

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rafael12104

So my key take away? You bet your ass they are going to do more mobile. Mobile BnS II and another flavor on top of that. And don’t be surprised if you see an annoucment for mobile GW2 in the near future. No way?

Look at that first slide! Let that silince any doubt about where the money is in APAC. And what is good for the goose, is good for the gander. Seriously, don’t be surprised if you see a Guild Wars flavor of mobile announced soon.

A good quarter for NCsoft and that explains the re-tooling and the renewed effort call Linage TL. They can afford to bring that home, and as you can see for the game charts Lineage is in decline. They need a replacement.

Blade and Soul, had a good Q1 but has fallen off. It went F2P in Korea in Q1. It was still a sub game then, and in Japan. Mixed results. I think, to be honest, missed opportunities here in NA/EU. It is amazing how little they promote the game here until recently. Ask MOP staff. Their PR is crap, but suddenly, it is a little bit better this fall. Overall, they have a few things in the works to sustain BnS. We will see if plays out well. The good news might be that success of BnS mobile might actually help BnS standard.

Wildstar. Guys, I think that is a gimmie for us. They haven’t shuttered it, and I think they are willing to keep it limping along to keep use engaged in the West. It seems to me, they learned something from CoH and wary of the NCsoft brand here in NA.

Overall, things are looking good for us in the west. Exceptional for mobile fans.

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Morbid Eel

HMM ANet was hiring mobile devs awhile ago, maybe still are.

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Loyal Patron
Armsbend

Can anyone tell me why you would use lighter shades of the same French blue on a bar graph?. Are we expected to download it. Take it to a copy shop. Blow it up to 500% and then use a magnifying glass to find out where the lines are?

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rafael12104

Ok, good. I thought I was going color blind.

miol
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miol

A less distorted chart for a better comparison:

3Q17 chart.jpg
miol
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miol

And how much “mobile” outshines the rest now:

3Q17 chart mobile.jpg
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rafael12104

Sheeeez… Welp, I think we all know which way is up.

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Sally Bowls

If you read the comments hereabouts, I think you will find vast herds unclear on the direction of up. :-)

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rafael12104

Awesome. Thanks. Was this in the full deck?

miol
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miol

Nah, did the same last quarter and only added the new numbers this time.

Like others, I just couldn’t take their “philosophy” on charts anymore! ;P

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rafael12104

Well done, and thank you!

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Sally Bowls

Seems like a very good quarter for NCSoft

Its sales doubled and operating profit quadrupled on-year thanks to its mobile game Lineage M, which was released in late June. Its cumulative sales through September reached W1.23 trillion, making this the first year the 20-year-old company’s sales have exceeded W1 trillion. NCsoft is the third game developer in Korea to achieve the milestone, following Nexon and Netmarble Games.

I think the GW2 news was fine but my initial impression was more good than great, but it is complicated by PoF being in the end of the quarter.

For HoT, the revenue level of GW2 was about 20BKW per quarter and the launch quarter saw a bump of about 17BKW. In an earnings call, NCSoft said between 2/3 and 3/4 of that was from cash/shop gems which says that HoT sales of the expansion itself from June through Dec of ’16 were about 5BKW or US$4.5M. The total bump for PoF was 6.6BKW. If the cash shop sales % remained the same, that put the expansion itself selling a couple of million dollars. Note that PoF launched late in the quarter and NCSoft does expect a bump to continue. Although we will probably never know how much of that will be from people buying PoF after launch vs cash shop sales.

GW2 is doing fine; no reason it could not outlive me. However, if I were an ambitious manager at ANet, I would worry about the intangibles.
I think with this quarter we can see that NCSoft has turned the corner and is now a mobile developer more than PC/console.
NCSoft wants to sell globally and GW2 is not very global.
NCSoft wants mobile tie-ins to their PC (now PC/console) MMOs and while NCSoft has discussed work being done on GW2 mobile, it was not discussed this quarter. IMO, this is not a good sign; it may have been rebooted/cancelled.
NCSoft says for Western Hemisphere and Japan, console is larger than PC and that new non-mobile games which support the PC will also support consoles. I have not heard GW2 console rumors since ’13.

Q2’17 being the worst quarter ever is not really news as Q1’17, Q4’16, Q3’16, and Q2’16 were also the worst quarter ever for GW2.

GW2 can and hopefully will continue to motor on, but it seems like it will be fighting a headwind as it may not be a great fit in NCSoft’s stategies-du-jour.

FYI: from the Earnings call:

The second part of my strategy is that, as we have continued to develop — as we continue to develop the MMO games that we have on the mobile platform, what we have seen is that different from the existing games that we developed on our PC-based MMO, of course, Lineage M would be a quite exception to this second strategy. But for the games that we develop on our ongoing basis, from the current time going forward, we actually are targeting a global market when we look at the target user base for these games. So when we develop look of the game, the feel of the game, the game style of the game, we are looking at a global audience as the target audience for the development. And also looking to service these games on a global basis. So I think that is a different approach that we have had from the past. And also, we have talked about our PC-based games and talked somewhat during the presentation about the revenues and the projections going forward. But rather than calling them PC-based games, we now internally call them PC/console-based game. So what this indicates is that when we develop these games, that would be the non-mobile games — the non-mobile online games. These are games that we will be developing to support both the platforms that would be PC and also console. In terms of the overall situation, because as you are aware, in the Western Hemisphere and also in the Japanese market, there are — the console-based platform is the bigger market. So we do want to be able to tap into that market with the future games that we do release. So that is a second strategic direction.

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Utakata

“But it’s still flying.”

…and under the radar apparently. o.O

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Bruno Brito

I’m going to assume the game is not expensive to keep afloat. Or just under the radar, yeah.

Call me crazily optimistic, but i still think WS can get a following. I just don’t know how, and clearly, not the devs either.

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Utakata

It’s a way underrated MMO that has likely one of the best housing mechanics going. It’s unfortunate WildStar left a bad taste in a lot of mouths that folks can’t get over when it was first released. Not that I blame them…but I think it’s time some of those folks give it a second pass IMO.

Meanwhile, it appears to sit sustainable – perhaps even slightly profitable I dare say – on the North side of the big plug being pulled on it. The bad news is, so did City of Heroes. :(

finyar
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finyar

For comparison: Heart of Thorns made 37,331 billion KRW during its launch quarter, PoF only 20,145 (the full, rather short pre order phase included).

TRU?H
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TRU?H

Keep in mind PoF launched at the end of it’s quarter as well, with only a few days worth of sales in this quarter. So we will likely see more PoF sales numbers in the next quarterly report.

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Morbid Eel

Given the price difference that looks like they sold similar number of copies.

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Schmidt.Capela

A nearly 50% increase, compared with the worst quarter for the game ever, in a B2P game where box sales supposedly play a large role, happening in the quarter where a new expansion was released. To be sincere I’m not sure this is something worth gloating about, though we need to wait until next quarter to see just how much an effect the expansion has on non-box-sales revenues.

The big news, though, is how incredibly well mobile games are doing; with mobile being the main driver for the company growth, it’s now bringing NCSoft over 4x more money than all their MMOs added together. Great news for NCSoft, though I’m not sure it’s good news for fans of their MMOs.