by: Tony "RadarX" Jones
There is nothing some people enjoy more than a juicy rumor. A tidbit about your coworker stealing office supplies or perhaps the identity of who is swiping lunches from the breakroom refrigerator. In the gaming industry we see rumors all the time and while it's our job to report them, it's ultimately more important to get to the bottom of what's going on. While they usually involve exactly what game Blizzard is really working on, or what project will be very likely canceled, at times it involves the financial health of an entire company.
The Korea Times blindsided the Tabula Rasa community today with apocalyptic reports from last weeks conference call. Alluding to statements CFO Lee Jae-Ho made, the author claimed the game was a "financial disaster" and "downsizing in Austin is inevitable. Both very bold claims taken from a series of transcripts that were available as early as last week. Is NCsoft in that much trouble and will Tabula Rasa suffer as a result?
NCsoft Offices are Not
Breaking down the year end financial results of a multi-million dollar corporation is a little outside the scope of what you would call "entertaining" or "capable of keeping you awake." I did read them and to summarize the more important pieces, Guildwars and City of Heroes/Villans sales dropping along with Tabula Rasa selling fewer units than anticipated (which in fairness it was only out a few months before the end of the year) means NCsoft had a rough year. While the industry as a whole saw record sales (think Activision/Blizzard) NCsoft actually saw a 3% decline.
Now before you huddle in a corner and clutch your copy of Halo 3, it's important to realize how NCsoft currently impacts the MMO game market. First of all, Lineage and Lineage II made up 37% and 39% of last years sales respectively. That means 78% of their market share is in Lineage so if Tabula Rasa only made up 6% of last years sales this seems hardly the reason for the massive decrease in stock value as the Korea Times might lead you to believe. What they also fail to mention is the KOSPI (South Korean stock market index) has plunged almost 16% since late December affecting their entire market.
Another interesting claim made is there has been little return from their estimated 100 million dollar development budget. With industry estimates of MMO game projects costing between thirty and sixty million, it seems hard to believe NCsoft let a project go 60% over budget doesn't it? Ah, but it gets better. Guess what reputable newspaper the 100 million dollar budget rumor came from? That's right, the good old Korea Times. Enough with the numbers though, I think we've had just about enough excitement for one day.
The other incredulous statement we saw was the layoffs at the Austin studio. Like much of the entertainment industry hirings and layoffs are just part of project timetables and so common it's hard to do more than feel bad for those who are affected. With Tabula Rasa's development cycle ending, it's reasonable they could be a little overstaffed especially in a field such as artist. When even giants like Electronic Arts are regularly dropping staff from their studios it stands to reason this may be normal and we aren't even sure how many people work at NCsoft North America.
As you can see this article leaves out quite a bit of pertinent information that not only lessens the blow of this financial news, but changes it's outcome entirely. Our purpose here is not to say Tabula Rasa is crushing the MMO game market and NCsoft is making money hand over fist. What we do hope you see however is that at times media can put a pretty heavy spin on things for the purpose of causing controversy. Tabula Rasa is launching in Japan later this year, guaranteeing the overall project is moving forward so why is there so much doom and gloom?
What do you think? Is Tabula Rasa preforming as expected and is the South Korea Times article really credible? Email me and let us know what you think or stop by our forums where we already have a lively discussion going.