When the first quarter of financial data landed following City of Heroes / Villains conversion to a free-to-play model, it showed a positive-if-only-moderate bump from 2812 million Won (or US$2.41m) in Q3 2011 to 3435 million Won (or US$2.97m) in Q4 2011. Going F2P saw about a 20% jump in revenue. It certainly wasn’t in the realms of a several hundred percent increase claimed by other MMO companies who had also made that shift, but it was a positive step forward.
NCsoft has just released its Q1 2012 financial information and things aren’t that positive any more. To begin with, NCsoft saw declines of over 60% on both income and profit against the same time last year despite sales only being down about 9% over the same period, claiming a lot of increased variable expenses saw those profit figures drop. For CoH/V, it earned a total of 2890 million Won (US$2.56m) – a drop that wipes out almost all of the growth seen during the F2P launch of Q4 2011.
I’d suspect that this return to pre-F2P revenue levels came along increased development costs as well (or there were a number of development costs incurred that increased revenue from F2P was meant to cover for longer than 90 days, anyway) – multiple new powersets, revised and new zones, new trials etc have all been added after CoH/V went F2P. After years of “powersets are too time-intensive to release that frequently”, there’s been a relative flood of them, so either they are no longer as time intensive and / or Paragon Studios / NCsoft has made a big investment in them.
There are a number of reasons why CoH/V saw that dip in Q1 2012 – Star Wars: The Old Republic may have eaten into the paying player base, or perhaps what was offered in the Paragon Markets wasn’t enough to bring in the dollars for that quarter, or perhaps Paragon Studios didn’t get the F2P model right – but either way the F2P bounce appears to have been pretty limited for CoH/V.
I’m still curious to see what Paragon Studios vaguely-mentioned next MMO title is (and it is apparently still active), but the easiest title for a publisher to kill is one that hasn’t been formally announced. NCsoft has let ArenaNet’s revenues dwindle a long, long way from its glory days because they are expecting Guild Wars 2 to be a smashing success; in contrast, despite all the freedom Paragon Studios has received and the numerous CoH/V updates released, its revenue keeps going down. How much patience does NCsoft have with Paragon Studios moving forward and what are their expectations for the future?