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NCsoft's Intriguing Casual Purchase

Richard Aihoshi Posted:
Columns The Free Zone 0

In a newsworthy and potentially quite significant move that surprises absolutely no one who has been watching the Korean online game market and industry, NCsoft has taken a step toward becoming a player in the casual sector by acquiring Ntreev Soft.  According to various reports during the past week or so, it looks like the price was nearly $US 100 million for just over three-quarters of the company.  Whether this will prove to be a bargain or an over-expenditure is difficult to predict.

In either case, it does seem a reasonable amount to risk since there's still plenty more left in NCsoft's war chest. This is the result of its success in the serious MMORPG segment with such releases as the landmark Lineage, Lineage 2 and Aion. In the casual sphere, however, the company has yet to rise above the status of a marginal player despite no lack of effort.  It has made several attempts over the past eight to 10 years; some examples that come to mind are Exteel, Punch Monster, Atrix and Toy Strikers.  I suspect none of these names qualifies as top of mind for you.  And worse still, they're not that much better known to gamers in Korea.

On the other hand, Ntreev is very heavily weighted toward casual.  It has a couple of properties that have gained pretty wide international distribution.  One is Pangya, a visually cute fantasy golf simulation that goes by Albatross18 in some areas.  Available domestically since 2004, it is also played in North America (since 2005), Southeast Asia (2005), Japan (2005), China (2006), the Philippines (2006), Taiwan (2006) and Europe (2007).  The other is Trickster Online.  In service since 2004, it's a lighthearted 2D anime MMORPG with some unusual features such as a battle card system and drilling for treasure.

Although seldom heard of here, Alicia seems to be another important title.  I don't know a lot about it myself, mainly two things.  One is that it's described as a horse-themed casual MMO.  The other is that unconfirmed rumors place its gross revenue for its first year of operation, which ended recently, as high as $20 to $25 million.  This is quite a tidy figure under any circumstances, but even more so if, as has been indicated, it's from Korea alone.

And yes, just to be absolutely clear, all three of these games are free to play. NCsoft, as you may recall from mentions in previous columns, has only started to dabble with this business model in the past year or two. This may help explain its poor performance in the less than hardcore sector so far.  It seems reasonable to think that Ntreev has a better handle on how to meet casual gamers' expectations.  This applies not only to gameplay and design, but also to preferred method of payment. As a result, the two companies could be an excellent fit. I'm very interested to see how much of this very obvious potential will actually be realized.

I also wonder if this acquisition will help NCsoft to do a better and faster job transitioning its entire portfolio to F2P. In particular, will it have any effect on the eagerly awaited Guild Wars 2. Both here and in Korea where the first game didn't perform nearly as well as it did in the west.  As I saw for myself in November at the GSTAR show, there's definitely a higher level of anticipation there this time.  This bodes well, but is hardly a guarantee of success.

In addition, I question whether it's now more likely that Guild Wars 2 will eventually go F2P entirely (as opposed to a retail purchase and no subscription).  I'm well aware that some will think me a heretic for even mentioning such a possibility.  That said: it's clear that NCsoft, after holding out as the main Korean bastion of P2P for some years, is clearly shifting away from its former stance. Within this apparently strong corporate direction, how long will one title be held back as an exception, quite possibly the only one?

For what it's worth, my guess is that it will go F2P within a couple of years.  The prospect of retail box sales is very attractive. Even after factoring out the stores' share and other channel costs, selling a million-plus units will still bring in a lot of money in a short time.  But even for triple-A releases, the curve drops of quite quickly,  this despite discounts and price cuts that can begin quite quickly in order keep up the volume from declining even more sharply.

So, once a game stops flying off the shelves, why not switch try giving the client away and having faith that the new players this attracts will enjoy it enough to reach into their pockets voluntarily, thereby bringing about a second round of profitability?  Check back in early 2014 to see if my crystal ball was clear or cloudy on this matter.


Richard Aihoshi

Richard Aihoshi / Richard Aihoshi has been writing about the MMOG industry since the mid-1990s, always with a global perspective. He has observed the emergence and growth of the free to play business model from its early days in both hemispheres.