Analysts see ‘potential for earnings growth’ in NCsoft’s trio of upcoming titles

    
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If you walked away confused by NCsoft’s most recent quarterly financial report, Mirae Asset Daewoo Co. might be able to sort it out for you.

The Seoul-based analyst firm suggests that the Lineage series, which appeared strong at first glance, actually turned in weaker than expected revenue, in spite of the fact that Lineage M was the top-grossing game on Android and iOS. “The biggest surprise was marketing spend, which jumped 10% QoQ and 69% YoY, despite the absence of any new major titles,” the firm notes. “We believe this suggests the company spent as much on promoting Lineage M’s massive updates as it typically does on promoting new titles.”

That said, the firm still calls the company a buy: “We see little reason for concern in terms of profit and valuation in 1H18 and see potential for earnings growth and a re-rating in 2H18, driven by new releases.” What new releases would those be? Blade & Soul II (first half of the year) and Aion Tempest and Lineage II M (last half of the year).

“NCsoft has three big titles coming out this year. This is more than in previous cycles, as the company typically releases one new game every three years. We believe new title effects will be backloaded in 2H18. […] This year’s new titles are starkly different from the company’s most recent release, Lineage M, in terms of target audience, worldview, and graphics, and, in our view, are more inclusive of overseas markets.”

Also worth noting: The firm anticipates another dropoff for Guild Wars 2 late in the year, presumably once the shine’s worn off Path of Fire.

Source: Mirae Asset Daewoo. Thanks, Sally!

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Robert Mann

Let’s see. A bunch of mobile, nothing else. I don’t care what the analysts see, they are getting jack diddly out of me!

styopa
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styopa

B&S 2 is already coming out?
Cripes.

EDIT: Looked it up, it’s really Blade and Soul M. /utterlyuninterested.

Well, at least if Trion is moving wholly into mobile games, my risk of falling stupidly into playing one of their titles drops to zero – so that’s a GOOD thing. Thank you Trion!

Pepperzine
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Pepperzine

While I agree about avoiding trion, I can’t tell if you’re mistaking the two companies or segwaying from one to the other.

Veldan
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Veldan

The funny thing is that it’s actually not Blade & Soul M, because that name is taken for a seperate Blade & Soul mobile game also currently in development.

Veldan
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Veldan

Looks like they’re making as many mobile games as they can…

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rafael12104

Hmm. Well, ok. But a couple of things linger.

One, I think it is shortsighted to imply that marketing spend on Linage M was too high because it was tied to updates. Marketing spend to broaden appeal and perhaps become a bigger player in a segment, in this case mobile, is warranted and the numbers prove that.

Something else. There is another Blade and Soul title to be released as well. I don’t recall all of the details off hand, but it is clear that this is a licensed offering and not developed by NCsoft. So, how will that pan out, I wonder? Licensing royalties will kick in, but will it compete and maybe cannibalizes BnS M’s numbers? The situation seems strange to me as I would have thought NCsoft would want to be in control of any BnS mobile flavors at the outset.

Last, IMO, GW2 projections, at this point, are nothing to worry about. The variation is almost seasonal. The important thing is the long term outlook, and as such, the motivation to come up with even better content to keep the gravy train moving.