Why NCsoft Doesn’t Sell Off Its Failures

Adam Martin picked up on my previous entry and expanded it in a fantastic way based on his time there – basically, NCsoft Korea has too much money to bother with small projects, so only big projects are worth considering. I am a complete outsider here – not worked for NCsoft Korea or any other MMO developer – but part of my experience is in business / market analysis and what Martin says feels right. Big companies don’t sweat the small stuff, even if it might be good for them.

Your Failures Do Not Define You

... particuarly if you sweep them under a big rug marked "Cancelled".

However, from that business analysis point of view I just thought I’d cover a criticism I’ve seen of NCsoft: why don’t they sell off their failures, make a bit of money back and perhaps even let the game survive? Even the most misshapen MMO apparently have enough fans to try to mount a ‘pass the hat around and we’ll all buy this game‘ attempt. In Ryzom’s case, it almost succeeded. And if the fans can’t afford it, there probably are corporate entities who could afford to pony up the cash to buy a failing MMO. Even the developers of a title might be interested – it is what saved EvE Online, after all. The publisher gets some money back, the game lives on, the players are happy – that’s what matters, right?

No, not really.

Despite being called ‘games’, MMOGs are multi-million dollar service entities. For a dedicated publisher of multiple MMOs, it makes no sense to sell off a failed title for a cents in the dollar when the chance always exists that the new owners will turn the game around and create major competition for you. Again, EvE Online  is the best example of this, going from a failed and almost cancelled title in 2003 to over 300 000 active subscriptions in 2009. Simon & Schuster Interactive probably don’t care (given they no longer exist) but Vivendi probably wouldn’t have minded to hang on to another successful MMO. Or to have killed it and see a portion of those 300k subscribed to something else.

NCsoft doesn’t sell off its failures because it doesn’t make sense to them to do so. Firstly, they can use any failures as a tax write-off and if they go down this path, the larger the cost the better (to a point, obviously). Secondly, they don’t want to be creating competition for their own titles further down the line. Finally, someone else turning your failure into their success is just embarrassing. I’m not going to pretend I’m an expert on the cultural impact of embarrassment in Korea, but I suspect that avoiding embarrassment is something NCsoft Korea would attempt to do.

Imagine NCsoft sold Tabula Rasa to an well-known existing MMO developer heading up a venture capitalist consortium. They aren’t going to pay full development costs for the title, only what it is worth now in the market. NCsoft gets cents back on the sale and still has to announce a huge loss (quietly in their P&L statements). The well-known developer gets to work with his studio, turns Tabula Rasa into a 500k+ player MMO, earning rave reviews and kudos. Could you imagine how NCsoft would feel about Brad McQuaid’s Tabula Rasa?

They Shoot Horses Don't They - Vanity Fair Image

For the record, shooting horses to put them down doesn't have to be seen as fair or right - it's only what is.

MMOGs are NCsoft’s business. If an NCsoft MMO fails (and Tabula Rasa did fail despite extended attempts to let it succeed), they cut it off clean. Players get offered free passes to other NCsoft titles to try to keep them generating revenue. New titles are offered on the horizon to keep players interested in NCsoft products. But if NCsoft can’t get a title to succeed, it doesn’t deserve to live. Giving a failed title the chance to live by selling it off has few upsides – a few extra million dollars back (doesn’t matter on a development debt of $100 million) – but plenty of downsides – increased competition and embarrassment for the company.

To put it as a restaurant analogy: sometimes it looks like you’ve got a good deal by only selling pieces of your restaurant offering to a buyer, but there’s always the chance you’ve just done a deal with Ray Kroc.

And as for the players: if the cancelled game only has 50k players at the end of its life, it doesn’t matter if none of them ever play an NCsoft title again (really, truly never play… not just forum posturing) when a new NCsoft title comes out and attracts 400k players.

For big companies, size matters.

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10 thoughts on “Why NCsoft Doesn’t Sell Off Its Failures

  1. I do not know how korean players minds work, but consider your last sentence.
    “And as for the players: if the cancelled game only has 50k players at the end of its life, it doesn’t matter if none of them ever play an NCsoft title again (really, truly never play… not just forum posturing) when a new NCsoft title comes out and attracts 400k players.”
    50k out of 400k are 12.5%, if you loose about 10% of your player base every time you shut down a pretty good game with some hard core followers, that is not considerd a good plan for the future.
    In korea you get millions of players, in europe and the U.S. most are counted in thousands, maybe because we pay a pretty hefty amount every month to play them.
    Several friends of mine, including me, tried Aion, preorderd it, and were out before the first month.
    It is WAY worse than Tabula Rasa ever was, longer waiting times, more lag, ugly as hell in comparison, do not start me on the music and the pvp area, where you are supposed to spend all your time is even worse. The first time some of us tried PvP the server went down, too many players in one spot.
    Knowing how “well” NCSoft manages to get rid of lag and under powerd servers all of us quit.
    Most of us are going to need several years before we could consider a NCSoft title again.
    That is the biggest difference I suppose, those of us old enough to know what Ultima is, learned to stick with guys like Richard Garriot or firms like Westwood, Blizzard and consorts.
    Keeping games like Diablo and Star Craft alive is one of the reasons most of us like Blizzard, despite the direction WoW went.
    And by the way keeping those titels alive was just costs for Blizzard, but paved the way for professional gaming, and Blizzard in Asia.
    NCSoft just hates everybody outside of Asia, and is not subtle about it.

  2. Personally, I don’t agree with NCsoft’s choices – if they’d spent all the money they spent of Tabula Rasa on 4 or 5 separate MMOs, they would probably have made more money overall. But NCsoft wants a huge hit, so they prefer to invest in one big project than several smaller ones.

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  4. sorry if I’m not constructive but:

    I MISS MY TABULA RASA T_T

    It was, at least for me, the PERFECT mmo.
    And shortly before it was shutdown, it was incredibly refined aswell! I hope Garriots wins in court.

    I want to believe!

  5. I miss TR. Tried Aion and left after 4 months cause game play was boring.
    I tried 5 other MMO’s after TR and I didnt enjoy them as much as TR.
    Played Star Trek Online open beta and game was ok but not as good as TR.
    NCsoft can afford to keep 2 servers, Europe and USA, for TR. I am sure they will have enough subs to pay for those 2 servers.
    The friends I made during my TR days still keep in touch with me and we still agree that TR was the best MMO we played.

  6. TR was the best game that ever came from NCsoft, and im still in shock they closed it, keeping a EU and USA server online with a small dev team would have easily payed for its self.

    Aion is shocking and once the hype wears off it will be another niche game like lineage is in the west.

    Ncsoft Korea never liked TR as they dont require games there unless they are pure linear grind fests.

    I hope someday soon it does make a return away from ncsoft.

    Its also a shame ArenaNet are tied in with them.

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