Author Topic: Call to Action: Write to NCsoft  (Read 60317 times)

Hyperstrike

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Re: Call to Action: Write to NCsoft
« Reply #80 on: September 09, 2012, 05:17:37 AM »
Quote me wherever and whenever you like.  *jazzhands* is my husband Larry Dixon, I generally run everything I do that is official past him because he is the diplomat of the family.

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StarRanger4

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Re: Letter Writing Campaign: Important Advice
« Reply #81 on: September 09, 2012, 05:15:28 PM »
Just a bit of a counter point.  In Washington, DC handwritten notes are taken seriously because it is assumed that the person went out of their way to write and didn't just copy a form letter.  So I don't know if that is relevant or not with NCSoft, but thought I would share.  Either way, mailed is definitely treated as more meaningful then email.

Its the difference between a political animal and a business.  For a business, like this, typed is better.

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Re: Letter Writing Campaign: Important Advice
« Reply #82 on: September 09, 2012, 05:19:05 PM »
Its the difference between a political animal and a business.  For a business, like this, typed is better.

Indeed.

Though, not every business will have a preference for typed letters. Thank you notes  and others of that kind are typically supposed to be handwritten, after all.
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Victoria Victrix

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Re: Call to Action: Write to NCsoft
« Reply #83 on: September 09, 2012, 08:54:04 PM »
First off, this post is NOT meant to discourage you guys.  Just remember we have to deal in facts as well as hope.

Larry did some fact-checking and money-tracing (he's the brains of our operation, I just do the heavy-word-lifting).  This is what he found.

The essence of it all appears to be as simple as this: NCsoft is owned by Nexon Co. Ltd., and Nexon has a record of only being interested in what benefits Asian gamers, and last quarter, their push was heavy East and EU.

Paragon Studios employed 80 people.  Nexon employs 3,400.  City made $800k clear profit a month.  Nexon's quarterly was $242 million, and their latest 1 of 60 MMOs registered 3 million players in China last month.  Nexon has been at a steady $1.1 to $1.2 billion dollar company for 3 years.

As big as CoH has been to us, City wasn't even a blip seen from Tokyo and Seoul.  Someone 5,000 miles away (who likely never played any game the corporation owns---and even their largest shareholder only has a 21 percent share) said "reduce North American assets," and this happened.  And with a billion people in China as a market for Nexon's free-to-play/micropayment 2D MMOs versus a highly-technical American-based 3D MMO, they saw no reason to bother (or, really, even take notice).

THIS SHOULD NOT DISCOURAGE YOU, especially from writing letters.  But I would suggest to turn the request to NCSoft to "Please consider keeping the game and Paragon Studios--or at least partial staff--running until a new buyer can be found."  there are good economic reasons for this--even at half profit because of dropped subscribers over this, $400k a month is not to be sneezed at for something you are going to sell off anyway, not to mention something you were intending to dump flat.  It's like renting out the house you intend to sell, except that the renters know they are just going to be changing landlords, not getting booted.
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jacknomind

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Re: Call to Action: Write to NCsoft
« Reply #84 on: September 09, 2012, 09:35:58 PM »
Thanks, Ms. Lackey.  This is pretty much what we'd assumed -- that Paragon Studios wasn't being shut down because it was unprofitable, but because it wasn't profitable enough to justify their support.

To that end, while we've been keeping the "save the game" language, what we've actually been pushing for is general awareness.  We know we probably can't buy out all the assets, so the goal of this awareness-raising is to interest other publishers in acquiring the game.

I would have liked to have gone with a "sell us (the fans) the Intellectual Property" angle pretty much from the start (if we could have had a fundraiser going like, last Wednesday there would have been more support than if we do it this week), but I've been in the minority.  I hope this news helps push things in that direction.

eabrace

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Re: Call to Action: Write to NCsoft
« Reply #85 on: September 09, 2012, 09:49:52 PM »
I actually find that quite encouraging.  While any sale of the game might not really even register as a blip on their quarterly earnings, it would nonetheless be a last little bit of profit they could squeeze out of a title they've already written off.  They are also highly unlikely to view a change in ownership of CoH as competitive given their target market.
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Victoria Victrix

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Re: Call to Action: Write to NCsoft
« Reply #86 on: September 09, 2012, 10:58:12 PM »
Thanks, Ms. Lackey.  This is pretty much what we'd assumed -- that Paragon Studios wasn't being shut down because it was unprofitable, but because it wasn't profitable enough to justify their support.

To that end, while we've been keeping the "save the game" language, what we've actually been pushing for is general awareness.  We know we probably can't buy out all the assets, so the goal of this awareness-raising is to interest other publishers in acquiring the game.

I would have liked to have gone with a "sell us (the fans) the Intellectual Property" angle pretty much from the start (if we could have had a fundraiser going like, last Wednesday there would have been more support than if we do it this week), but I've been in the minority.  I hope this news helps push things in that direction.

While I am completely in sympathy with you, the reality is that even at fire-sale prices you are looking at a $6-$10 MILLION dollar price tag.  I don't think we can raise that much quickly enough before the code would "disappear."  (A smart venture capitalist with access to a strong server farm however would look at that and go "recoup my entire outlay in a YEAR?  Sign me up!")
« Last Edit: September 10, 2012, 04:37:38 AM by Victoria Victrix »
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jacknomind

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Re: Call to Action: Write to NCsoft
« Reply #87 on: September 09, 2012, 11:10:24 PM »
I think we could raise two million over a six-month period.  It would definitely be a challenge, though.  My hope would be that we could get NCSoft to agree to that price (prior to raising the money, since "this is our target" is easier for people to dig deep on than "maybe this will be enough") for the IP and an agreement not to "lose" the code, based on our PR campaign and not seeing us as competition.  From there ("fans raised 2 mil for this game!") we would attract a VC or publisher who would acquire the remaining assets.  We would license them (for free) the IP, but retain ownership.

But yes, I'm also interested in simply getting a publisher on board now to do *all* the heavy lifting.  I'm aiming towards Turbine/Warner Brothers Interactive at the moment, but I'll keep looking for more.

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Re: Call to Action: Write to NCsoft
« Reply #88 on: September 09, 2012, 11:21:08 PM »
While I am completely in sympathy with you, the reality is that even at fire-sale prices you are looking at a $6-$10 MILLION dollar price tag.  I don't think we can raise that much quickly enough for the code to "disappear."  (A smart venture capitalist with access to a strong server farm however would look at that and go "recoup my entire outlay in a YEAR?  Sign me up!")

Indeed. Looking at the metrics, Paragon seems to be among the more profitable software companies out there. Especially considering the fact that it's only an 80 person firm.
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Olantern

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Re: Call to Action: Write to NCsoft
« Reply #89 on: September 09, 2012, 11:35:21 PM »
First, thank you to everyone who's written in.  Special thanks to Ms. Lackey for offering her rights of publicity and to Mr. Dixon for doing the research on NCSoft/Nexon.

I think we could raise two million over a six-month period.  It would definitely be a challenge, though.  My hope would be that we could get NCSoft to agree to that price (prior to raising the money, since "this is our target" is easier for people to dig deep on than "maybe this will be enough") for the IP and an agreement not to "lose" the code, based on our PR campaign and not seeing us as competition.  From there ("fans raised 2 mil for this game!") we would attract a VC or publisher who would acquire the remaining assets.  We would license them (for free) the IP, but retain ownership.

But yes, I'm also interested in simply getting a publisher on board now to do *all* the heavy lifting.  I'm aiming towards Turbine/Warner Brothers Interactive at the moment, but I'll keep looking for more.

I'm not sure NCSoft would have interest in selling us partial rights.  If that's an option we're going to pursue, we need to determine just what rights to request.  Perhaps a limited-term license to run the game (possibly using some of the emulators people have been working on?), with an option for purchase once the term is up?  I don't know the gaming industry, or Korean IP business models, well enough to give clear suggestions here, but someone needs to think of some.

As I've stated elsewhere, if we get into a fan purchase situation, there needs to be some entity to hold the rights.  I think someone with some experience in setting up businesses had better get on this sooner rather than later.

The easiest (of several very difficult options) thing to do still seems to be to have an existing publisher who can plunk down the $6-10 million for an immediate purchase of all rights.  As Ms. Lackey pointed out, from a typical investor's point of view, the CoH IP has a fantastic rate of return.  It's finding someone who realizes that and has the cash (or financing) to make the purchase that's the sticking point.  Time to call in those connections, everyone!

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Re: Call to Action: Write to NCsoft
« Reply #90 on: September 10, 2012, 04:55:11 AM »
City made $800k clear profit a month.

Are you sure you mean profit here and not revenue?  I've done my own math, and I arrive at Paragon just barely breaking even, and possibly drifting into the red sometime 2012/2013.

Then again I only have educated guesswork about the financials, so if you have more information than I do about subscriber numbers, I would welcome the information.

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Re: Call to Action: Write to NCsoft
« Reply #91 on: September 10, 2012, 04:58:10 AM »
Are you sure you mean profit here and not revenue?  I've done my own math, and I arrive at Paragon just barely breaking even, and possibly drifting into the red sometime 2012/2013.

Then again I only have educated guesswork about the financials, so if you have more information than I do about subscriber numbers, I would welcome the information.

I don't know where Larry got his numbers, but I am confident they are solid, given that Melissa "War Witch" Bianco told me on the day of the shutdown that "We were doing WELL!"
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Lilabird

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Re: Call to Action: Write to NCsoft
« Reply #92 on: September 10, 2012, 05:13:28 AM »
This an audio link to Ncsoft and Nexon 2q 2012 Earnings conference call ( English translate) .. Most informative is the Q&A .

http://222.122.46.97/ct/ncsoft/20120808/ncsoft.html
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eabrace

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Re: Call to Action: Write to NCsoft
« Reply #93 on: September 10, 2012, 05:28:54 AM »
Had some issues getting it to open in Firefox (possible due to NoScript being a little aggressive despite telling it to allow all.)

Direct link to the audio in case you want to just copy paste into Windows Media Player:  mms://222.122.46.97/ct/ncsoft/20120808/ncsoft20120808.wma

If you just want to download it and listen to it (I saved it off to keep a copy handy), change the "mms" to "http"

Edit:  Also, the transcript:  http://ir.nexon.co.jp/cms/pdf/kessan_0796632885889107.pdf

Edit2:  It doesn't seem that the transcript and the audio are the same conversation.  I thought they were, but apparently not so much.
« Last Edit: September 10, 2012, 05:48:14 AM by eabrace »
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Re: Call to Action: Write to NCsoft
« Reply #94 on: September 10, 2012, 05:57:01 AM »

Edit:  Also, the transcript:  http://ir.nexon.co.jp/cms/pdf/kessan_0796632885889107.pdf

^^^^^That one is Nexon's.
The audio is NcSoft,
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eabrace

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Re: Call to Action: Write to NCsoft
« Reply #95 on: September 10, 2012, 05:58:43 AM »
Yeah, I realized that as I was listening to the audio and tried seeing if I could follow along in the transcript.  Clearly not.  :)
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srmalloy

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Re: Call to Action: Write to NCsoft
« Reply #96 on: September 10, 2012, 06:39:47 AM »
Larry did some fact-checking and money-tracing (he's the brains of our operation, I just do the heavy-word-lifting).  This is what he found.

The essence of it all appears to be as simple as this: NCsoft is owned by Nexon Co. Ltd., and Nexon has a record of only being interested in what benefits Asian gamers, and last quarter, their push was heavy East and EU.

Paragon Studios employed 80 people.  Nexon employs 3,400.  City made $800k clear profit a month.  Nexon's quarterly was $242 million, and their latest 1 of 60 MMOs registered 3 million players in China last month.  Nexon has been at a steady $1.1 to $1.2 billion dollar company for 3 years.

Then I put it to you, and the rest of the City of Heroes player community, that we are writing to the wrong person. An article on All Things about the new CEO of Nexon America, Min Kim,states:

Quote
Min Kim said he sees a big opportunity lying ahead in the traditional games space, where people play games for years at a time and for long stretches every month. As a younger gaming demographic grows up, and moves on from other experiences, such as Disney’s Club Penguin, “we’ll be in the sweet spot,” he said.

Mr. Kim, if you see such a big opportunity, then why is Nexon and NCSoft shutting down a game that proves exactly what you claim -- taking an existing community of people, some of whom have played City of Heroes for more than eight years, and throwing, not merely them, but the people who worked to develop the game that has earned that loyalty, under the bus? The City of Heroes community would seem to me to be the proof that, with the right game, you can create a dedicated group of players who will support a game for years. You have the opportunity to reverse a decision that puts the lie to your claim of what you see as the future of Nexon America; step up and prove that your words are more than just another sound bite, tailored to give the appearance of dedication while containing no substance.

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Re: Call to Action: Write to NCsoft
« Reply #97 on: September 10, 2012, 06:48:41 AM »
Then I put it to you, and the rest of the City of Heroes player community, that we are writing to the wrong person. An article on All Things about the new CEO of Nexon America, Min Kim,states:

Mr. Kim, if you see such a big opportunity, then why is Nexon and NCSoft shutting down a game that proves exactly what you claim -- taking an existing community of people, some of whom have played City of Heroes for more than eight years, and throwing, not merely them, but the people who worked to develop the game that has earned that loyalty, under the bus? The City of Heroes community would seem to me to be the proof that, with the right game, you can create a dedicated group of players who will support a game for years. You have the opportunity to reverse a decision that puts the lie to your claim of what you see as the future of Nexon America; step up and prove that your words are more than just another sound bite, tailored to give the appearance of dedication while containing no substance.

This is a very valid point, my friend.  Much like using their code of ethics to our advantage.

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Re: Call to Action: Write to NCsoft
« Reply #98 on: September 10, 2012, 06:58:04 AM »
Some points. Because the data simply does not agree with the claim of "$800K profit per month." Not at all.

One, you cannot apply US accounting standards to NCsoft. NCsoft is a South Korean company, which is not US listed, and goes by South Korean accounting standards. They are different.
Two, no matter how much people try to paint Nexon as some sort of evildoer swooping in to axe City, they are nobodies. Their total stake in NCsoft is approximately 14.75% of all shares. Yes, the lion's share of 'major shareholders,' but also not much more than treasuries (9.4%.) See: http://global.ncsoft.com/global/ir/structure.aspx
Three, NCsoft uses the diversified holdings method. What you hear about "NCsoft" in their earnings report is essentially independent of the performance of their holdings - some of which they own less than 50% of. The accounting of individual subsidiaries is not generally disclosed. Take with a grain of salt assertions from subsidiaries that they are/were "doing great." It's the same everywhere else - I've been there.
Four, NCsoft did in fact, break out game sales for City in the 2Q12 sheets - sales of $2,890M KRW for 1Q12 and $2,855M KRW for 2Q12 totaling $5,745M KRW. Sounds impressive, doesn't it? It's not - that's $5.1M total sales over 6 months against Lineage's $90M. And that's revenue not profit. (2Q12 Consolidated Fact, Pp. 5) In fact, the only game with lower sales than City was Guild Wars (excluding GW2.)
Sheet's here: http://global.ncsoft.com/global/ir/quarterly.aspx - Earnings Report Download.

When you apply basic math to this equation, well, claims of "$800K/mo profit" do not pass a sniff test. Or basic arithmetic. A reasonable revenue estimate (that is, income before costs) for City based on sales would be roughly $950K/month in USD.

According to http://data.bls.gov/pdq/querytool.jsp?survey=cm - that is, the Bureau of Labor Statistics - the per hour cost per employee can be averaged at $47.13. You'll want to plug in "Total Compensation", "Professional and Related Occupations", and "Private Industry" then scroll to 2012 Q1. Please note that this does not include costs like electricity, leases, office supplies or office equipment.
According to Wikipedia, Paragon Studios had 46 employees as of August 31, 2012 or thereabouts. So we'll roll with 46. That means that it cost Paragon Studios $2,167.98 per hour worked, $86,719.20 per week, and about $347,000 per month. Just to have bodies in the office (or remote.)
Mountain View offers some wonderful views and an .. interesting culture, I think I'd call it. It also offers very expensive real estate - even the "cheap" stuff is north of $14/square foot. Each employee requires as a rule of thumb, 200 square feet. We'll say only 40 people actually worked in the office - that's 8,000 square feet. Another $112,000 per month to put a roof over their heads.
Again, we consult BLS - this time at http://www.bls.gov/ro9/cpilosa_energy.htm - to find a cost of $0.193 per kWH for electricity in the region. A reasonable estimate would be approximately 50 computers each consuming around 250kWH per month (also accounting for printers and copiers.) That's another $2,412.50 before you turn on the lights, the coffee makers, the vending machines...

So if you've been following along, then yes, you should have costs of over $460,000 against revenues of $950,000 per month.

This does not include costs for some benefits, office supplies, food, coffee, server operations, customer service costs (provided by NCsoft), legal services, outside consulting services, contractors, equipment replacement or repairs, cleaning services, or any other incidental costs of which there are many. These are also not disclosed by NCsoft as they are contained within the Paragon Studios subsidiary and then lumped into the "combined operations" with absolutely everything and everyone else.

And that's using only data we can confirm or reasonably estimate.

The unfortunate truth is that this is not the picture of financial health, especially for a game development studio which needs time and far more importantly, money to do major overhauls and updates. Issues may be given away, but they are not free to develop, and they add to those costs and sit on balance sheets you and I simply don't see. (Nor do developers usually, strangely enough.) If we say Paragon spends approximately $1M to develop, test, and release issues and DLC in addition to normal operating costs per quarter, it actually works out like this:

$2.85M (Revenue at $950K * 3) - $1.38M (Base Operating Costs at $460K *3) - $1M (Development) = $470,000 left

Yeah. That would mean ending two quarters with total profits that likely wouldn't even keep the lights on for one month. To develop a CoH2 would easily cost several million dollars - probably over $10M these days. And again, that's not accounting for a number of other undisclosed costs or estimating anything we don't have data for. There simply isn't enough money to support continued development - a 4 month development cycle costing just $600K takes 6 months to pay back.

Data is what the data is. Nexon isn't leeching profits or axing spitefully, NCsoft isn't part of some grand conspiracy. There simply aren't the finances to continue, and it doesn't make financial sense from the data available to drop $10M on a maybe when your last few "guaranteed hits" cratered.

Victoria Victrix

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Re: Call to Action: Write to NCsoft
« Reply #99 on: September 10, 2012, 08:02:32 AM »
AreEss, where are you getting the $1M EXTRA for development?  Paragon wasn't hiring extra employees, development was the JOB of the employees there.  They weren't adding extra computers, the computers THERE were for development.  I fail to see where this extra $1M in cost is coming from.
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