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NCsoft Responds to Anonymous Source on CoH Profitability

Posted Sat, Jan 05, 2013 by Martuk

It’s been a hotly debated topic since NCsoft announced that it would be shutting down Paragon Studios and sunsetting City of Heroes (CoH) back in August. But this week an anonymous source reached out to MMORPG to talk about the studio’s closure and claims that the game was profitable.

The source told MMORPG that the operating cost for Paragon Studios was around $4 million yearly and that the studio grossed $12 million. They also revealed that the studio had begun work on a second project that wasn’t City of Heroes 2, but rather a Minecraft meets Lost style of game. Additionally, the source also discussed NCsoft’s efforts to sell CoH and efforts to buy out the studio with a Kickstarter effort were even considered.

Lincoln Davis, NCsoft’s director of corporate communications, responded to MMORPG's inquiry with a rather poignant response first taking a jab at the news and then offering a rebuttal that recapped the Q2 2012 Earnings Report, how CoH wasn’t profitable enough for the needs of the studio, and NCsoft’s previous statements on efforts to sell the game.

"While we looked to sell the franchise multiple times, we were unsuccessful in finding a suitable partner that we thought would support City of Heroes’ fans in a manner they were accustomed to for years to come. Closing a studio and sun setting a beloved franchise is never an easy thing to do for the publisher, the developer or the fans. This was not an easy decision to make. The Heroes and Villains have taken to the skies of City of Heroes for the last time, but the game and community will remain in our memories”.

All the same, the closure is still an unfortunate story and a reminder that in the end our games are simply a business, and we are all at the mercy of our publisher overlords when it comes to how long they remain in operation.

Source: MMORPG

I'm going to toss my two cents in.

First, I very much appreciate the anonymous employee coming forward with this information. Most of it had been uncovered previously, but it's still encouraging to have it confirmed. But far more importantly, I'd like to thank NCsoft's Director of Corporate Communications, Lincoln Davis, for taking the time to step forward and provide open, straightforward reasons for CoH's closure that have been debunked for months.

Allow me to address them individually.

"The operating cost, annual revenue figures and other financial information shared by this anonymous source are simply wrong."

While I'm not privy to Paragon's operating costs, the revenue figures are corroborated by NCsoft's own quarterly revenue reports - so either the claim is not wrong, or NCsoft had been falsifying their own financials regarding the game - take your pick.

"The studio was unprofitable before the shutdown."

Interestingly enough, in each of its previous closures, NCsoft had openly cited lack of income and interest as the primary cause for the shutdown. CoH was written off with an uninformative "realignment of company focus and publishing support". There are two possibilities at play;

1} Was CoH as a game unprofitable? A glance at the revenue reports, as well as the game's own population numbers disproves that theory - income-wise, the game had the equivalent of sixty thousand subscribers, a solid population by any standard.

2} Was CoH as a game profitable, but the studio's side project ran it in the red? If that was the case, then the problem could have been solved by simply axing the said project and the associated costs, rather than eliminating the entire revenue stream.

"While we looked to sell the franchise multiple times, we were unsuccessful in finding a suitable partner that we thought would support City of Heroes’ fans in a manner they were accustomed to for years to come."

To begin with, what NCsoft neglected to mention was the fact that in the months leading up to the shutdown, Paragon Studios had been negotiating with NCsoft to buy the studio out. So if the game's own developers weren't considered to be fitting custodians, I would very much like to hear who would. A clear list of requirements for the prospective buyers would only help all parties involved, if what mr. Davis says about NCsoft's wish to find a suitable partner still holds.

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