The second quarter revenue reports for NCSoft have come in a few weeks early, and the results are pretty much positive across the board. I know this is the part where I'd normally add "unless you play Wildstar," but I'm not going to do that this month. Given the figures presented in this quarter's report, I'm going to guess there aren't a whole lot of people left that such a message would actually apply to. So instead, I'll say that it's positive across the board unless you work on Wildstar.
First let's talk positives, and NCSoft has that in spades. While operating profit and pre-tax income have increased 50-60% over the previous quarter, the number is pretty much in line with expectations, jumping back to normal sales from the post-holiday lull that is the first quarter. As I said in the previous article, you really have to compare the same quarters in order to get an idea on long term growth. The good news here is that NCSoft is growing, with 2% higher sales, 3% higher profits, and 9% higher net income annually.
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Globally, NCSoft has enjoyed increased revenue virtually everywhere. Not to be unexpected, Korea once again takes the lion's share of sales as well as the brunt of the market growth, making up 66% of NCSoft's total revenue stream or approximately $125 million of the $187 million USD in sales accrued during the second quarter. The US/EU combined led up the second biggest market at over 12% with Japan and Taiwan making up more than 5% each. The rest is factored into royalty payments.
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On the individual games front, NCSoft's oldest and highest performing title Lineage saw yet another bump in sales making $73.6 million in revenue that has been attributed to the game's stable community and strong in-game item promotions. Lineage 2 also saw a notable growth, nearly a 40% increase in sales over the previous quarter from $10 million to $14 million USD. The rest of the titles, Aion, Guild Wars 2, and Blade & Soul only saw a marginal increase of about five percent.
Revenue from royalties decreased 20% over last quarter, a figure that NCSoft has pinned on the performance of Blade & Soul in China. It's important to note that the 5% increase in sales might seem to conflict with NCSoft's statement that B&S is seeing "strong performance" and growth. Since the game's overseas revenues are being lumped into the 'royalties' section, we have no idea exactly how much Blade & Soul is bringing in globally, and NCSoft isn't exactly one to give extra financial details.
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And for the moment you've been waiting to see: Variable expenses. The recent push into mobile sales has led to an increase in variable expenses, due to the fees associated both with launching a mobile game as well as processing payments. The new mobile games launched by NCSoft over the last quarter has also led to increased costs attributed to marketing. Labor costs dropped due to last quarter's one-off incentive payments.
This year will see gamers diving into the first Guild Wars 2 expansion, Heart of Thorns, as well as the possible release of Lineage Eternal's beta. NCSoft has a few mobile games coming over the next year, including card battle games based off of Lineage and Aion, as well as a Lineage 2 handheld title.
We're also looking forward to Wildstar's transition into free to play because the game doesn't seem like it will last more than another couple of quarters as it is. Wildstar sales have been plummeting, landing this month at $1.79 million for the quarter, a 25% drop (from $2.36 mil last quarter and $5 mil before that) and yes that figure does include subscriptions. The game is now performing worse than Tabula Rasa did before NCSoft axed the entire studio, and the forums so far are eerily silent on the news.
