As recently reported, NCsoft's financial results highlight the strategy implemented by the Korean giant. Indeed, while total revenue increased by 9% to reach $283.9 million, the overall balance suspiciously shows a $19.3 million loss. While these results were significantly below analysts' expectations, who had expected the company to report at least an operating profit, it’s also the first time in 12 years that NCSoft reported financial losses in a quarterly statement.
The studio has just announced the cancellation of six projects, some of which never even had the chance to be revealed to the public. PuzzUp Amitoi, which was already closed in July, and Battle Crush, which will shut down at the end of the month, are just the tip of the iceberg. Project Movie, whose development has been suspended, and Project E, which was meant to supplement the Throne and Liberty universe and an unannounced project, join the growing list of projects abandoned by the studio over the years.
This wave of cancellations comes with a workforce reduction: By next year, NCSoft plans to cut its workforce to 3,000 over the 4,000 current employees. In an internal message, the company's two co-CEOs expressed the seriousness with which they are taking the current situation, presenting this decision as a “necessary optimization measure”, arguing that the reduction in payroll will lead to substantial savings in the upcoming quarters.
NCSoft 2025 projects
While the company reduces its workforce and abandons projects, it also announced the launch of five new games. Starting with Aion 2, which makes a 180-degree turn from its PvP orientation to a PvE-focused approach. The game now promises to emphasize "fun and collective progression rather than competition," a shift that might disorient longtime fans.
Project LLL, another flagship project, offers a third-person Sci-Fi MMO Shooter. Tactan: Knights of the Gods was already tested last summer in Korea, and it focuses on the real-time strategy MMO genre. NCsoft is also expanding its influence as a publisher with Breakers: Unlock the World, developed by VIC Game, a company in which the group recently invested. A fifth project, still unknown, will complete this schedule by leveraging an existing franchise.
The mobile segment now represents 63% of the company’s revenue, mainly thanks to the success of Lineage M's Reboot World server. PC games, once the company's cornerstone, now account for only 20% of revenue and show a 6% decline. The other 17 % includes royalties received by NCSoft, notably those paid by Amazon Games for the exploitation of Throne and Liberty, which will be very interesting to analyze when we get to see their fourth-quarter results.
By the way, the studio remains close-to-the-chest about Throne and Liberty’s financial performance (even about its Korean version), citing confidentiality clauses. A slightly different version than the South Korean media's one, who estimated that the launch in the country a year ago was apparently so poor that NCSoft refused to publicly disclose the game's revenue.
Finally, it’s probably worth mentioning that despite this abovementioned context, the company ironically increased its marketing expenses by 180%... As if to display contemptuous confidence in the future after all these layoff and shutdown announcements.
A forward-looking strategy
NCsoft's diversification strategy operates on multiple fronts. As we know, since recently, the studio seeks to strengthen its presence on PC, its historical territory, while developing its mobile activity and venturing into the console market, as illustrated by Throne and Liberty. Geographically, the company targets both the Korean and international markets, relying on its new Purple platform and the restructuring of its Western offices. Partnerships with third-party publishers like Amazon Games complete this multi-market approach.
However, the simultaneous reduction in workforce and abandonment of ongoing projects raise legitimate questions about the studio's ability to maintain consistent quality across so many different fronts. NCsoft's recent history shows that the studio sometimes struggles to complete its projects, a trend that could intensify with reduced human resources.
The restructuring
NCSoft has announced the creation of four subsidiaries to organize the development of its projects and focus on artificial intelligence. Among these four new entities, we find three game development studios and one company specializing in AI technology. The three studios currently have temporary names: Studio X, Studio Y, and Studio Z.
Studio X will be responsible for continuing the work on the MMORPG Throne and Liberty. Its goal is to increase creativity, improve development processes, and accelerate decision-making. The aim is to strengthen the global service of Throne and Liberty and make the game a leading franchise in the MMORPG market. Studio Y will handle the development of the shooter game LLL. On the other hand, Studio Z is in charge of developing the MMORTS Tactan: Knights of the God.
Will these staff sacrifices at least translate into profits?
While NCsoft promises that its restructuring will be completed by the end of 2024, the studio's track record of abandoned projects calls for caution. The ambitious announcements for 2025 will have to face the reality of a company in full transformation, which often struggles to deliver on its promises. Players and industry observers will likely wait to see concrete results before maybe trusting the studio's new directions.
NCsoft's current trajectory mirrors a concerning pattern in the company's history. While the company frames its latest restructuring as a necessary step, its track record of abandoned projects casts a shadow over these new commitments. The announcement of five new games, the cancellation of six existing projects, and a 25% workforce reduction raises a crucial question: Is this truly a path to renewal, or merely a postponement of deeper structural issues?
However, it would be unfair to single out NCsoft in this regard.
The gaming industry as a whole has increasingly normalized this practice of project cancellations and dramatic restructuring, with major studios regularly announcing ambitious plans while simultaneously scaling back existing commitments. The coming year will test NCsoft's ability to deliver on its promises and serve as a case study for the industry.
Related:
Throne and Liberty Review
