NCsoft Q1 results are mixed

Korean MMO maker's revenue drops, subscription-based profits rise.

NCsoft, the South Korean publisher and developer of massively multiplayer online games including Guild Wars, Lineage, and Lineage II, today announced its first-quarter earnings. While the firm's revenues and operating profits were down slightly compared to the preceding quarter, Q4 of 2004, the company's recurring profits, which are earned from subscription fees, were up 12 percent from the previous quarter, to $17.2 million.

NCsoft said revenue for Q1 2005, the quarter ending March 31, 2005, was $60.2 million, with an operating profit of $21.2 million. When all was said and done in the first three months of 2005, the company pocketed $12.6 million in net profit.

In Q4 2004, the firm tallied $62.3 million revenue, four percent higher than the revenue announced this morning.

But the real worry for NCsoft was the 33 percent drop in profits compared to its first quarter of 2004. The company attributes this loss to the high cost of MMO development and the ever-increasing pace of competition in the online game market.

This shrinkage, while disappointing, is not a death sentence for the company: 2004 was a watershed year for NCsoft. Its total revenues for 2004 were $246 million, up 48 percent from 2003.

"2005 will be a meaningful year for NCsoft because we will be launching products that have been in development for quite a while," said Tack Jin Kim, NCsoft's CEO. "Guild Wars launched simultaneously in North America and Europe on April 28, and the result is even better than we expected."

The company racked up 250,000 new Guild Wars accounts in its first week of release, and the Korean beta-test of the game, which is currently under way, saw 500,000 players logging in to play. Guild Wars will launch in South Korea during the second quarter of 2005.

Later this year, NCsoft will also be launching City of Villains, a new MMO sequel to the popular City of Heroes online title.

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