NCsoft Reports Third Quarter Return To Profitability

Officials from South Korean-headquartered MMO publisher NCsoft have released financial details concerning the company’s third quarter, which saw NCsoft return to profitability following the disappointing loss posted during the prior quarter. However, despite this, the company noted that the reported profits for the period were less than those experienced during the same quarter in 2005. During the three month period, the company reported revenues of 85 billion Korean won ($90.8 million), a slight decline from the 87.8 billion won ($93.7 million) in revenue reported during the same period a year ago. Net profit for the quarter was 12.8 billion won ($14.6 million), which also slipped from the 20.4 billion won ($21.8 million) in profit from 2005. The company cited “brisk sales” of its MMORPG titles Lineage, Lineage II and City of Heroes/City of Villains, as well as a decrease in operating costs such as labor and marketing, as the chief reasons for NCsoft's turnaround in net profit from the previous quarter. The company also noted that sales of Lineage and Lineage II alone in North America and Europe amounted to 15.8 billion won ($16.9 million) and 6.1 billion won ($6.5 million) respectively. The series has also proved successful in Japan thanks to an increase in the number of users of Lineage II and the recent Chronicle 5 update. Sales of Lineage and Lineage II made up 36 percent and 35 percent of NCsoft's total software sales for the period respectively, followed by City of Heroes/City of Villains with 9 percent and Guild Wars with 14 percent. However, Korea by far proved to be the most lucrative region for NCsoft during the quarter, with the country playing host to 57 percent of the company's total sales. By comparison, North America resulted in 19 percent of NCsoft's software sales for the period, followed by Japan with 11 percent and Europe with 7 percent. Looking forward, officials from NCsoft noted that earnings for the year up to the third quarter exceeded initial projections. As a result, the company announced that it has elevated its 2006 earnings outlook to 339 billion won ($362 million) in revenue from the previous forecast of 330 billion won ($352.3 million). According to NCSoft's CFO Lee Jae-ho, “The revision reflects the ongoing success with our game titles and the positive effects we’ve seen from the company’s cost controls.” The company just recently released the third campaign in the Guild Wars franchise, Guild Wars Nightfall, sales of which will be reflected in the company's fourth quarter earnings. In addition, this week NCsoft is demonstrating its Korean MMORPG Aion during the region's major game expedition, G-star, as well as another project, titled ATrix.