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.