NCSoft has released their financial results for the first quarter of 2015, and the results are a mixed bag of the good and predictably bad. Blade & Soul has seen continued growth, the company is in an overall better position, and second half releases are set to bring in an infusion of cash. There is nothing to worry about.
Provided you don’t play Wildstar.
With fourth quarter holiday sales coming to an end, it isn’t all that surprising that NCSoft posted a drop across the board for the first quarter. Sales were down 20%, operating profit and pre-tax income down nearly 50%, and net income down 43%. So why isn’t this necessarily a bad thing?
As I said, a drop in the first quarter is a given. With the volatile nature of quarterly sales, you get a lot more useful information by looking at long term trends and year over year performance, where they are now compared to the same period last year. That is where NCSoft is growing. Compared to the first quarter of 2014, sales are up 6%, profit is up 1%, pre-tax income up 9%, and net income down only 3%.
And even the lower sides can be explained by higher costs of conducting business. Labor costs are up, as is marketing and payment processing, the latter of which managed to climb 50% over last year. On the other hand, box production has dropped to a near negligible amount ($180k).
On the game side, the expansion of Blade & Soul and the continued performance of Lineage have gone a long way to compensating for the lack of growth in NCSoft’s other titles. Fueled primarily by a strong performance in Taiwan, Blade & Soul grew 30% over last year while Lineage had one of its strongest first quarter performances ever, a 50% increase over last year.
Both Guild Wars 2 and Aion are down approximately 25% over this time last year. However I have my doubts that NCSoft is particularly worried about either title. Guild Wars 2 has the upcoming Heart of Thorns expansion to boost sales while Aion is gearing up for its next expansion, Upheava.
And now Wildstar. I had hoped that we would hear something about Wildstar’s business model by now, and the silence from NCSoft and Carbine Studios don’t give me a whole lot of confidence. The writing is on the wall, either Wildstar is going to change models or it’s going to fail and shut down (or both). It’s as simple as that and no amount of anecdotal evidence of growth by the community is going to change the facts.
And they’re going to have to do it fast. As of Q1 2015, Wildstar is officially performing worse than City of Heroes did when NCSoft shut the title down and slashed the entire staff of Paragon Studios. $2.36 million for the first quarter, counting subscriptions, box sales, and CREDD.
It doesn’t take a financial genius or soothsayer to know that Wildstar needs to adapt, or no one will be playing it come Christmas.