GW2 reaches Lineage 1 level of success for a quarter. Grats Anet!

NCSoft reported their quarterly earnings. The biggest surprise? Lineage 1 and Guild Wars 2 are pretty close in overall sales.

Of course that’s not totally fair, seeing as how GW2 just came out, uses the B2P model, and had a ridiculously huge marketing budget, while Lineage 1 is ancient, a ‘forced-group’ PvP MMO, and likely no one reading this blog has ever really played it (spoiler alert: it was pretty good back in the day). I’m sure in the coming quarters GW2 will continue to kill it, while L1 will finally die, once and for all showing us that an MMO only has a certain life span, and that hardcore PvP MMOs can never work.

/sarcasm off – Pretty surprised by GW2’s performance, considering how front-loaded it is and the amount of money and resources that went into making/marketing it. It will also be interesting to see how steep the drop is next quarter. I can’t imagine NCSoft would be happy with GW1-level success considering the investment made.

About SynCaine

Former hardcore raider turned casual gamer.
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24 Responses to GW2 reaches Lineage 1 level of success for a quarter. Grats Anet!

  1. I was thinking along those lines too, though there is more to the dynamic than just that straight comparison. 55% of NCsoft’s business is in Korea where I do not think GW2 is available.

    The Q4 results will be the interesting one.

    Meanwhile, City of Heroes is lumped into a tiny little zone at the top of the column with everything else not worthy of note, so I guess that set out just how important (or not) CoH was.

  2. Ravious says:

    Yes, L1 has been holding the line here against WoW in the NA market for some time. Good on them.

    That being said there is something off either with the dates or something. GW2 sold 2 mil. copies, which should be about $120 mil. give or take. That’s not including any gem purchases or retail costs. Yet, they’ve only disclosed around $45 million in sales… so either they took out some chunk that ArenaNet “used” or they ended Q3 sales at some period.

    • SynCaine says:

      You’re making the mistake that NCSoft sees all $60 of the box price. From what I recall, after all is said and done, publishers are lucky if they get 50%. That’s a huge reason why collecting $15 a month is a lot more money than selling a $60 box once. Not only is it sustained income, there are far fewer middle men taking a cut.

      Also consider how many copies were sold as pre-orders before Q3 started.

      • Kobeathris says:

        Looking at their Q2 earnings, I don’t think they factored pre-orders in to Q2, so it’s likely all shown in Q3.

        • SynCaine says:

          I’m not an accountant, but if you collect the money (like Anet/NCSoft did) in Q2, how can you move those sales to Q3? Seems odd to me.

          I get pre-order $5 stuff not being counted, but GW2 was a full-price pre-order buy to get beta access and all that.

        • Kobeathris says:

          I honestly have no idea either. Could you cancel a pre-order? If that was the case, holding off on reporting it would make sense.

        • There are all sorts of rules about when you can show revenue versus when the money you collected shows up as a liability. Not as big of a factor with shrink wrapped software, but in enterprise software it is a pain, with projects chopped up into separate revenue related deliverables. Generally, it isn’t revenue until you’ve given the customer what you owe them.

      • carson63000 says:

        Box price maths is indeed a common mistake in these sorts of discussions. But I thought they did more direct-download sales with no middle-men than that, though.

      • Ravious says:

        They used the term “sales” instead of “profit” or “revenue”. Regardless, even using your numbers and taking in to account direct sales, $45 million still seems awfully light.

  3. bhagpuss says:

    Only thing I’d say is that on Yak’s Bend we have Overflow again and the server frequently comes up as Full. Halloween was extremely busy and it hasn’t quietened down much since. I would anticipate continuing high levels of activity with Lost Shores coming and it seems likely that if ArenaNet can keep pumping out hyped content people will keep logging in to see it.

    Of course, whether that makes them any money is another question entirely.

  4. Teer says:

    I’m not sure of the point of the post other than to drive blog views?

    L1 sales continue strong in Korea as do sales of Blade and Soul.
    North America and Europe are only 27% of NCSoft’s total sales. GW2 is not released in Asia.

    The combined US/Europe sales to NCSoft for GW2 total something on the order of 46,000 KRW in MN as of September 2012 to NCSoft.

    Release for GW2 was August 28th was it not?

    We have no idea how they account for sales in that period. Perhaps someone versed in how korean firms account for sales can enlighten us. Without that information we can’t really comment much.

    Further, we have no idea how sales revenue is divided between Arenanet and NCSoft.

    Are you proposing that GW2 sales were disappointing to Arenanet/NCSoft?

    • Well, Arenanet is owned 100% by NCsoft, so we know exactly how things are divided up, which is “not at all.”

      And it certainly seemed worth noting that Lineage 1, which is 14 years old at this point and has been shut down in North America, pulled in more revenue than GW2, even if GW2 only had an August 28 to September 30 sales run during Q32012. That is a game with some legs.

      • Ettesiun says:

        I do not read that Lineage 1 bring more moneys than GW2.
        L1 : 38 000 VS GW2 : 45 000

        The interesting part is that L1 bring 3x more money than L2, that AION in Q1 2012, just after going F2P, bring more money that GW2 in Q3.

        It would have been really interesting to see revenue by games AND regions; and not only by game OR region.

        For NC soft, Korea is more than half of its market !

      • Teer says:

        Well, Wilhelm…maybe….but some minor points to consider. We have no idea how many days the reporting period for GW2 includes (its almost certainly NOT 30 and may well be as little as 10 days) and we know that L1 was 90 days. (It really, really depends on a number of things).

        Our firm 100% owns a corporation that owns a building. We don’t report that in our earnings statement except as a line item. That is we don’t break out the buildings “sales” except as a net. Now we are a US “S” class corporation and we carefully comply with US law. I’ve no idea how NCSoft and Arenanet’s corporate relationship is structured and I suspect you don’t either. I don’t know Korean reporting requirements. If I were really interested, I’d track down Arenanet’s reports. I’d also wait for more than 10-30 days.

        So “not at all” may well be the right answer, but it also may be “We haven’t a clue”. I suspect that NCSoft wishes to finish the year with a “bang” and probably structured the P/L to make sure that the year closes “big”.

        So summary…we don’t know the reporting period for GW2 sales, We don’t know how the reporting is structured, we don’t know how many days are included, we don’t know what NCSoft is trying to accomplish with this earnings statement.

        Again, let me ask you the question, did you think GW2 sales were disappointing to Arenanet/NCSoft?

        • Xyloxan says:

          So, if we cannot say anything based on the NCSoft report why they even bother reporting those numbers?

        • Indeed, nothing but minor points. You can nitpick anything into question if your goal is obfuscation.

          And I did not opine on whether or not the sales were disappointing because, as I said in my first comment, I really want to see how it plays out in the next quarter as well. That will be the interested report.

          I am mostly just amazed at how well Lineage is doing 14 years down the road.

  5. Teer says:

    Xyloxan, is the question serious? I’ll presume that it is.

    You can say lots…you can’t extract information that is not there, however. As an example, its very fair to say that L1 is doing well. (No surprise there, its been doing well for years.) You can also make all kinds of statements about NCSoft’s overall third quarter performance.

    SynCaine said “Pretty surprised by GW2’s performance, considering how front-loaded it is and the amount of money and resources that went into making/marketing it.”

    I’ve pointed out that such a statement may not be an accurate statement. My basis for saying that is that reporting on earning statements is often not accurate IN THE SHORT HAUL. That GW2 sales may be reported for as many as 30 days but are likely a good deal fewer than that. (The reasons are complex…but include such things as third party reporting, direct sales, reporting requirements, and a choice made by a corporation in how they report.) In the long haul and in the US you can get a good idea how things are going from earnings reports.

    I also pointed out that the the way in which Arenanet is owned by NCSoft matters.

    Wilheim assures me that NCSoft must pass through all of Arenanets sales because they are a 100% subsidiary. That’s not true in the US, as I’ve illustrated, but he may well know better than I do.

    As to why NCSoft reports numbers, its the law in Korea.

    Here is a very basic but quite good primer on reading earning reports. Note how much is subjective and note further that companies have agenda’s when they publish reports. Those corporate agenda’s rarely involve SynCaine as best I can tell. His desire to increase blog readership probably plays a role in some of the things he says. (That’s a guess!)

    Bottom line, lets at least see what the 4th quarter report shows us before we bury Arenanet, declare GW2 a failure, and move all of our gaming to Darkfall and Eve, ok?

    • SynCaine says:

      I’d start packing. And while packing for EVE/DF, do a quick search on my feelings about blog hits and posting to maximize them. Should not be hard to find.

      But honestly, if you think GW2 sales over 30 days vs 20 days vs 10 days is a big deal, you’re not paying attention. Front-loaded not only meant $60 and done, but pre-orders+day1 and done. Sure, GW2 box sales will trickle in after, but considering the after80 reactions to the game, do you really think it’s going to go EVE (forget WoW)-levels and keep a strong sales pace?

      So yes, based on the numbers in this report, and the fact that NCSoft did not pre-empt them with “This is only a fraction of GW2 sales” (like happens so often even when that’s not really true), I’d say they are disappointed, at least considering the statements being made pre-release. The talk was not “GW2 should be a mild success, hopefully”, it was “GW2 is the next thing, period”. Barely outperforming L1 during your release quarter is not exactly a smash success, no matter what color you paint the numbers.

      • Teer says:

        I’m sure that if I blogged I, too, would post to attract attention. You are a bit of a one trick pony in terms of coverage, but you write well and its usually fun to read.

        Honestly, I think that GW2 sold well on the order of 2 million sales. Are my thoughts correct? I don’t know, we’ll see as time passes. Is that a disappointment to NCSoft or Arenanet?

        I have no idea how future sales will go, nor do I have any clue as to what the profit will be in the long haul. Neither do you, but its ok to pretend.

        As to the rest of your comments about the numbers….its drivel. We’ll need to wait to see what comes out over the next quarter to start to understand how its doing. We’ll also need to see where Arenanet takes the game in the long haul.

        • SynCaine says:

          Feel free to come back next quarter when my drivel is confirmed then.

          I really should start a special section of the blog for such admissions, given their frequency.

    • Xyloxan says:

      @Teer: It was a semi-serious question (but not trolling), as I’ve been reading earning statements for more than 30 years. And I know the tricks that companies (worldwide) use to cover up shit. Nevertheless, you CAN read between the lines and interpret the numbers. Especially when you know more about the company than it’s written in the quarterly report.

      But, I have a different opinion about SynCaine’s writing as “a one trick pony in terms of coverage.” That is, it is his blog not a gaming news site. So yes, by definition, this is his very subjective take on the topics that he wants to comment on. When he stops expressing his (often “hardcore” but always entertaining) opinion and starts writing polite, too well-balanced reports I will stop reading his blog.

  6. Teer says:

    Eve levels???? With a straight face??

  7. Anonymous says:

    how about anet’s quarterly report?

    how’s the lack of government funding keeping tasos from retiring at 55?

    ahahahaha dont cry syncaine flambouras!

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