NCsoft profits drop 43 percent
Korean MMOG publisher reports drastic dip in operating income and profits.
Seoul-based online game developer and publisher NCsoft has posted a 43 percent drop in net profits for 2006. Pretax profit was 50 billion won (approx. $53.3 million), 41 percent down from the previous year, while operating profit was at 43.3 billion won ($46.1 million), down 44 percent.
The company put the drop down to "increased investment in development to expand the company's game portfolio," along with a "one-time write-off" related to the postapocalyptic massively multiplayer online game Auto Assault. Auto Assault was launched with great fanfare in the US in April 2006, as a unique take on the MMOG concept--gamers play in a futuristic armed-to-the-teeth car against mutants, scavengers, and other nasties. For more information, check out GameSpot's full review.
Although profits were down, the company's sales have been "constant" year on year, which it puts down to existing games such as Lineage and Lineage II performing strongly. Consolidated sales for the fourth quarter were 90.2 billion won (approx. $96.1 million).
Overseas sales made up 46 percent of the total, breaking down to 20 percent from North America, 12 percent from Europe, and 9 percent from Japan. NCsoft believes that the launch of Guild Wars Nightfall and an increase in the number of players of Lineage II boosted sales in the US and Europe.
NCsoft CEO Jaeho Lee said, "In preparation for growth of the global online game market, NCsoft has set up a development system with the ability to launch more than one major MMO game and several casual game titles every year. To accomplish this goal and establish a strong product pipeline, we plan on 18 percent year to year increase in the development budget this year as well. After several years of spending on development costs, we believe the fruits of those labours will finally begin paying off soon."
For the financial year 2007, the company predicted sales of between 358 and 367 billion won ($384-393 million), and operating profit of between 42 and 49 billion won ($45-52 million). MMOGs Exteel and Dungeon Runners will be released in the first half of 2007, and it is anticipated that Tabula Rasa and "a new major update" to the Guild Wars franchise will follow in the second half of the year.