City of Heroes / Villains: An End of the World Event

I was surprised to see a large spike in my site traffic today, especially to older posts about how many players CoH/V had. Then I looked further and saw that NCsoft announced its intentions to shut down CoH/V and Paragon Studios. This has taken a lot of people by surprise, given that it seemed that CoH/V was doing well since its conversion to F2P and lots of extra things being announced.

The Why – NCsoft’s Possible View

There are a few reasons for CoH/V shutting down.

NCsoft Operating Profit Q2 2012, taken straight out of their Q2 2012 Earnings Report. That's a steep slope down.

NCsoft’s overall operating profit: Oh, it’s in the red alright.

First off: NCsoft’s financial position. It’s Q2 2012 financial report came out in early August and it’s the first one I can remember seeing where NCsoft actually lost money in a quarter. It’s also part of a very clear trend of NCsoft’s group revenue declining – in Q2 2011 NCsoft’s operating profit was 43 497 M Won (approx. US$39m); a year later it is -7 641 M Won (approx. -US$6.6m). NCsoft is blaming it on a “one-off” labour cost, but even without that the negative trend in group revenue is very clear.

This decline in operating profit is despite NCsoft’s sales being down only 12% (from 166 815 M Won in Q2 2011 to 146 808 M Won in Q2 2012). For operating profit to have fallen so far without sales declining at the equivalent rate points to NCsoft having a lot of larger expenses it is now trying to cover (shown on page 6 of that Q2 2012 Earnings Report). It makes sense that NCsoft is looking around for costs to cut.

(NCsoft also saw Nexon become a significant minority shareholder in this time period – I don’t know the impact of that on NCsoft’s decision making, so I’ll just put that to one side.)

Which is where Paragon Studios comes into the crosshairs. CoH/V only provides NCsoft with 2% of its overall revenues, down from it’s best ever contribution when it was 18% of overall revenue (when City of Villains launched in Q4 2005). CoH/V’s conversion to F2P might have brought player numbers back, but it didn’t bring the revenue back. The Q2 2012 results continue this trend – this quarter’s revenue is 2 855 M Won (approx. US$2.47m), down about 3% from the previous quarter and 2% year on year despite CoH/V going F2P in Q4 2011.

City of Heroes / Villains Revenue, including Q2 2012 results - it's all downhill too.

This is CoH/V’s revenue results (converted from M Won to US$) across it’s entire life time. Outside of major content launches, every quarter is worse than the one before. (Click to enlarge)

Again, it’s another quarter of “CoH/V’s worst revenue performance ever”. Yes, CoH/V has paid for itself many times over. But it’s only apparent future is revenue down, down, down.

All the extra cost of turning CoH/V go F2P has failed to see a return on investment; it’s very possible that all the extra effort spent on turning CoH/V F2P and then producing content for players to buy has actually meant that CoH/V is now less profitable than it was before going F2P.

The door flew open, in he ran, The great, long, red-legged scissorman.

The door flew open, in he ran, The great, long, red-legged scissorman… looking for cost-cutting opportunities.

If NCsoft was looking for places to cut expenses, a title with no future revenue growth is a good place to start from their point of view. On top of this, Paragon Studios was allegedly working on a second title. They’ve been doing so since at least the start of 2010 and it involved a number of their more senior people. That’s a lot of effort (read: resourcing and expenses) for a title we know nothing about.

So whatever profit (if any) is made on CoH/V by Paragon Studios, it may well be that the studio itself is unprofitable when this second project is taken into account. Secret projects are the easiest to kill, regardless of the sunk cost – it’s hard for there to be fan / press outcry when the fans don’t even know what they’ve lost.

For those looking for a why, those are the obvious factors – NCsoft is under a degree of financial stress and Paragon Studios hasn’t been able to deliver increased revenues despite a lot of extra investment in CoH/V. So it becomes an easier decision to shut things down and reallocate NCsoft’s cash elsewhere.

But CoH/V is Profitable!

Assuming this is true, there’s a big difference between “profitable” and “profitable and worth the continued investment”. NCsoft wants big successes, not titles that have limited future potential for growth. If the money might be better off going to ArenaNet (you bet NCsoft wants Guild Wars 2 to an incredible success) or Carbine Studios (Wildstar is on its way) than staying with Paragon Studios, then it makes sense to divert the cash.

An army of wierd looking superheroes are flying in to save the day.

Last minute saves are a comic book staple. I’m pretty certain this isn’t going to be the case for CoH/V.

NCsoft Should Sell CoH/V Off!

I’m 99.5% sure they won’t. NCsoft doesn’t sell off its failing titles. Why would it want to create the competition for itself? Much better to try to convert current CoH/V players to titles like Guild Wars 2 than hand a competitor an existing title on the cheap that comes complete with a loyal fan base of something like 55k to 60k players.

So if NCsoft says CoH/V and Paragon Studios are shutting down, they are shutting down. CoH/V’s closing date is November 30. Don’t expect any cavalry to ride in and save it.

On A Long Enough Time Line, We’re All Dead

One of the things I’ve been criticised in the past for when tracking CoH/V’s revenue decline was that if I predicted its failure long enough, I’d eventually be correct. I don’t think I was constantly going “CoH/V will totally fail and it sucks and it’s the most awful game ever” because I didn’t believe that; what I had issues with was the approach it took to trying to evolve itself. (Plus I spent 5 years or so playing CoH/V – it definitely wasn’t the most awful game ever.)

I kept wondering what Paragon Studios had in the bag to draw players back, given the ever downward trend of revenue. Despite the popularity of CoH/V’s developers within the CoH/V community, they completely failed to grow the title’s audience despite delivering a lot of popular requests. The Going Rogue expansion came across to me as muddled and too limited, plus its attempt to be both the best newbie experience possible plus increase the difficulty for veterans at the same time seemed actively confused. The F2P experience for a completely new player was just plain unfriendly in my experience of it.

Statesman's signature faceplate is cracked and broken.

The death of Statesman was meant to kick off a new age for CoH/V. Hmmm.

And right now the in-game death of Statesman – CoH/V’s most well-known character and icon – seems horribly portentous. (Looks like I was completely wrong about Statesman being brought back later on.)

Other factors need to also be considered – CoH/V has a number of direct superhero MMO competitors, none of whom have done that well. The MMO industry itself is in a malaise, with  2012 being the year of the massive flop, the massive collapse and a lot of closures, big and small. I’ve got another article in development about that, but the MMO age that flourished from 2004 to December 31, 2011 is over.

UPDATE TO ADD: I’ve also got a belief that NCsoft’s future corporate strategy is more focused its Korean home soil than in the US and Europe, which is possibly why CoH/V no longer ‘fits’. Tabula Rasa still casts a long shadow; after all, what new EU / US-based projects has NCsoft announced in the last 2 years? Guild Wars 2 and Wildstar don’t count, given the length of time they’ve already spent in development.

Proof I Have A Heart

What could have been done differently? Right now I think the wound is too fresh to answer that. Maybe later.

CoH/V was the MMO that ruined every other MMO for me. If your game doesn’t have travel powers, I’m not interested. I remember getting up at 4am on Sunday mornings so that I could take part in the beta and that the very first time I logged in, having followed the game pre-release for 2 years, my first thoughts were, “Wow! This game is fantastic and matches my expectations – I haven’t been wasting my time!”. So, despite not playing CoH/V for a while now, it is sad to see such a fantastic title that broke so many new, fresh ideas – sidekicking, travel powers, scaling instances – and that I spent so much time with is now on its way out.

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69 thoughts on “City of Heroes / Villains: An End of the World Event

  1. I’ve been keeping an eye on this downward trend for some time, curious as to the long term fate of this game from an MMO business perspective. CoX unfortunately completely failed to grow its audience since GR dropped (the total number of players actually dropped in half). I’m thinking the long term investments that NCSoft was hoping for didn’t pan out. Looking at their quarterly reports, NC Interactive, the western parent of Paragon Studios (for reporting purposes), has been in the red for more than 5 straight quarters in a row.

    I’m guessing in summer of 2011 after seeing the extreme failure of GR to attract new bodies NCSoft basically gave the game a year to turn around using a different business model. This simply didn’t happen. Mostly because the core gameplay and content of CoX is/was hopelessly dated. New players found the experience impenetrable and frustrating, old players found the F2P restrictions to be suffocating.

    I enjoyed my time in CoX, but always knew this was coming. The game just stubbornly refused to move on from its early roots in the pre-WoW era to ever enjoy being more than a small niche game. NCSoft is clearly uninterested in selling niche games. They want to maximize their ROI like any other publicly traded company. I get the feeling that they are likely to abandon their North American markets over the next year or so altogether. Americans simply don’t play their games and they have a very robust Asian playerbase with different expectations.

    There’s a lot of screaming go on about ‘how this makes no business sense’ and how players of CoX will never buy another NCSoft product. NCSoft doesn’t care about barely 50,000 players in the Americas when there are millions of players of their other games in their other markets. I never understood why people thought that this NCSoft title was any more likely to survive than any other when it has been shrinking dramatically for 2 years straight with no end in sight.

    • I agree with your assessment. CoH/V didn’t progress in a way that brought the players it once had back. This could be in part that after titles like DCUO and ChampO (flawed as they were) CoH/V did feel very ‘slow’ (at least in my opinion), plus other factors I’ve discussed.

      The CoH/V forum community is a very dedicated one, which is a tribute to what Cryptic / Paragon created. Given all the PR around what was coming up – and that Paragon Studios themselves appeared blindsided by the news of their closure – I’m sure they thought that Freedom was a big success and guaranteed a long future for the game. So this all comes as a shock.

      • Just as a quick little thought experiment I decided to run a few numbers. Assuming that CoX managed to pull in about $830,000/month during the second quarter, that would barely make their staffing and office rental/mortgage for a modest average staff salary (including any benefits, taxes, fees, and the like – employee costs are always more than just their pay) of $50,000 per head and an average office space rental for a company their size. $50,000 per head in costs x 80 people = $400,000 per month. Average office rent in Mountain View, CA is about $25 square foot. Using an average office size for an American business fo about 200 square feet per person (lots of loss to hallways and facilities) it works their rent out to nearly $330,000 per month. This does not include utilities or other overhead costs. This gives them about $100,000 left over to cover those costs per month. Profits start to look pretty thin as you continue to add on expenses. There are also charge-backs to corporate IT, billing support, and other transfer costs to consider. (Not to mention long term expenses for decent workstations, internet connectivity, and networking equipment.) All of this is assuming that they don’t have any major hosting equipment onsite (a data center) as well.

        Key in NCSoft’s investor relations package for Q2 was the noting of online games as a ‘High Margin Business’. With numbers like the above it’s starting to look like they could do better with their $10 million a year by just putting it in the bank or the stock market, or buying up some real estate. Taking all the above into consideration it is hardly surprising for a business interested in high margins to want to take an ax to a studio that is barely breaking even. CoX would have recovered its development costs years ago, true, but the last two years of 2.5 mil per quarter is survival, not profit. This is even after they cut staff after the release of Going Rogue.

        NCSoft is a publicly traded company that on principle has to maximize shareholder ROI. If I was an NCSoft majority shareholder, knowing the above, I’d have voted to close Paragon Studios as well. I think I could risk alienating 50,000 people or so, when my average game in the Asian markets gain or lose that many subscribers in less than a week’s time.

      • Heh, I made an oops in my calculations, as salary costs are calculated per year, and not per month. Even then, margins aren’t very healthly looking. -_-

      • Rechecking my numbers after no longer being distracted I realized my numbers are actually correct (I calced the annual salary costs and cut them per month properly). I also started thinking of other overhead costs, including insurance, taxes, and other details.

        I’m guessing that Paragon Studios, if it were operating in the black, has averaged <5% ROI for the last two straight years.

        NCSoft 'online games are a high margin business' wouldn't stand for that for very long unless they were confident that the studio could recover the costs either via CoX's revenue stream or through their 'secret project', which was likely still 2-3 years more away from release and had nothing to publicly exhibit by the time the studio was closed.

        Paragon's best work over the last two years never managed to crack the 100,000 account subscriber base. I'm guessing that NCSoft didn't have much faith that their project would be successful. Paragon Studios is simply too small a development house to meaningfully produce a AAA MMO according to the standards that NCSoft wants for a subscriber base.

        In short, they can do better at the bank, or by reinvesting it back into any of their other products (which have ROIs of greater than 20%) or for paying off any debts that are maturing. Killing off CoX is a business decision, pure and simple. Even the most cursory of analysis shows that unless they are geniuses at controlling overhead costs they're effectively barely keeping the lights on from a business perspective. At best, they probably added $500,000 a year to NCSoft's bottom line. This is for a company with a 6 billion dollar market cap (Blizzard Activision by comparsion has a 14 billion dollar market cap).

        Drop in the bucket doesn't even begin to describe it.

      • I think that’s a big issue from NCsoft’s perspective. Obviously we’re dealing with some hypothetical numbers, but the one we do know is revenue and that’s not moving in the right direction.

        After all, I’m not sure what resources are on CoH/V’s other unnannounced title. That could be contributing a lot to the costs that have seen NCsoft make the shutdown announcement.

  2. I was waiting for your post on COH after hearing about it sunsetting (long time lurker here). I’m part of the group hoping that they get bought up instead of totally killed off. Your assessment is definitely a bummer, but it makes a lot of sense. But still.. hoping here.. maybe they’ll have mercy and release the code.

    • I doubt it, and those who have tried to reverse engineer things (TonyV / the Titan Network) report having little success.

      Of course, the code may also accidentally leak to interested parties. NCsoft will work to shut down unauthorised servers though.

      • The Titan Network has never reported any kind of success – positive or negative – about reverse engineering. We’ve only ever said “efforts are underway”. So I’m not exactly sure where you’re getting this information other than your backside. I’d appreciate it if you didn’t drag our name in the dirt to get page views.

      • First off, name dropping TonyV / the Titan Network isn’t going increase my page views.

        Secondly, looking at comments like TonyV’s here (http://www.cohtitan.com/forum/index.php?topic=4888.0) say that reverse engineering CoH/V would be “very, very hard” and that the aim isn’t to create private servers due to legal issues. And by “reverse engineer”, I am talking about private servers, because if NCsoft does shut CoH/V down, that’s the only way the title would keep going. The Titan Network has been very good at reverse engineering some things to create their player tools, but that’s a very different thing to setting up a full title on private servers.

        Then there is also TonyV’s comment (http://boards.cityofheroes.com/showpost.php?p=4368349&postcount=145) that “Reverse engineering the server in three months is going to be extremely difficult. If we haven’t been able to do it in the years we’ve been pouring into it–not that we haven’t made any progress–but we’re still a long way away, then I find the prospect of being able to do it to the point of actually having something the client can run against unlikely at best.”

        Thirdly, perhaps things have changed in the last two-odd weeks since I made that post. Perhaps the Titan Network has had great success in that time and have full private servers just ready to go, but haven’t announced it.

        Finally, it wasn’t an insult to the people working on the project. I’m not saying you’ve failed already, just that little success in that area has been indicated thus far (although threads from TonyV saying, “Don’t delete your characters” may point in a different direction – we’ll see).

  3. City of Heroes was a fantastic game, with an unbelievable feature set for an MMO developed 10 years ago. Your comment that you liked the game, but haven’t played in a long time, I’ve seen that comment a lot around the blogosphere. Kind of says it all, doesn’t it? People have good memories of the game, but just aren’t playing anymore.

    The real shame is CoH has no spiritual successor. The MMO market has proven it just isn’t interested in a superhero themed game.

    • I do see a lot of the “I loved CoH/V when I played it 4 years ago”-style comments. CoH/V has a lot of goodwill, but that goodwill hasn’t translated into a growing player base.

      The state of the other superhero MMOs (ChampO, DCUO) doesn’t seem to be great either (can’t say for Super Hero Squad but that’s a whole different market) while Gazillion’s Marvel Heroes is an entirely different creature.

      ChampO is the closest thing CoH/V has to a successor, but it suffers very badly from second systems effect.

  4. Pingback: That “Cryptic’s Licensing of Its Engine Is Shutting Down CoH/V…” Rumour « Vicarious Existence

  5. From what you say I can see the business side of why NCSoft won’t keep COH/V around. But I don’t get why won’t NCsoft sell? 50K is not a whole lot of people and really won’t be that much of a big deal to them in terms of competition, especially since they are looking more toward the Korean market. I know business and ethics don’t seem to mesh nowadays but they really come off as a horrible company, they are really hurting their reputation by doing this. Even players from other MMO’s are a bit disgusted. NCSoft is not really making customers feel secure to spend money on their products!! Also, to do this so suddenly to a game that has been around by MMO standards a good long time, has earned respect and also is on many Top 10 MMO’s To Play lists just seems unethical.
    I mean really, what’s it to them? I think they gain more by being the good guys and just move on with their GW2. I mean you can’t really tell us this was a tough decision and allude to the fact that they feel bad for all the work of Paragon Studios and devoted fans and than go and throw it all in the trash can. COH has about 55k people, NCSoft has really angered some who won’t go to NCSoft, plus others will just not be interested in NCSoft games, so really, how many does that leave that may be future NCSoft customers?

    Rumors are that Paragon Studios bought the rights to City of Heroes 2. Any hope with that?

    • NCsoft has had the opportunity to sell off:

      – Auto Assault
      – Dungeon Runners
      – Exteel
      – Tabula Rasa

      and in every case has elected to shut the games down instead. Dungeon Runners had spent time and resources to convert to F2P right before it was closed iirc.

      NCsoft’s mentality has been that if a title isn’t working out financially, they’ll kill it off. Selling it to a competitor only creates more competition for them in the future if someone else manages to turn it around. There’s also the issue that NCsoft’s focus has really shifted away from the US / EU markets and this is just another step in cutting that relationship.

      For NC Interactive and the people who know the Paragon Studios’ team, I’m sure this was a hard decision, but this kind of instruction probably came down from above them.

      As for Paragon Studios buying the rights to CoH/V 2, I’d wonder where they got the money from. AFAIK, NCsoft would have controlled 100% of their purse strings since they owned the studio outright, which wasn’t the case when NCsoft paid money back to Cryptic when they shared CoH/V. Matt Miller (Positron) has said on Twitter that Paragon Studios is finished and that he’ll announce where the PS staff have found new jobs as they get them (@MMODesigner, iirc).

      • NCSoft bought the website address for a couple sites related to COH2 back in 2008/2009. There’s been nothing since. It was posited at the time that they bought them to keep the sites off the market to prevent confusion. There was never any (known) development.

      • Later information from some dev sources indicates that CoH 2.0 was killed as a project in 2009 or so. So yes, it was never something that went far.

  6. I think that a lot of the failure to create new player base is around the fact that the game has very little media presence in the gaming world. I am one of those people who enjoyed the game 4 years ago, etc. I recently (2 months ago) came back to the game and got hooked again by all the recent changes. I spent over a hundred dollars buying the new power sets, costume pieces, and some other convenience powers, but it did seem like the servers were pretty barren.

    I wondered why they didn’t try to condense the servers, or develop a new graphics engine and then market the game to the public again via the standard media channels as basically a new game. I haven’t really heard anything about CoH/V in a long time, but it really does have a lot to offer now, to old or new players.

    It stinks that the game is going down, and that the only real failure is on the marketing/management, and not in the game content itself. There is so much new content for old players, and the side kicking makes things really easy for new players to get into fast paced action very quickly. New players and people like me are the target they were trying to bring back, and the only reason I didn’t come back sooner is because I just didn’t know about all of these new things.

    The fact that NC Soft is afraid to sell off their titles shows their own weakness at managing their titles properly, and that someone could take their blunder and turn it into a profitable game would only highlight their failure. After all, if the game really wasn’t able to turn a profit, selling the game would be an extremely profitable move for them, as not only would they turn one last profit on the game, but they would be loading up potential competition with unsellable garbage. On the other hand, if they know the game can be made profitable, but don’t know how to do it, why not hire someone on that can?

    The whole situation just reeks of failure to me, but not failure on the developers part, failure of leadership. The developers did all they could, and then some. They just had no support from their management. NC Soft should be ashamed that they are consistently running games into the ground. They don’t really seem to know what they are doing, and don’t seem to want to learn from their mistakes, and those who fail to learn from their mistakes are doomed to repeat them, so who’s next?

    I’m pretty upset about the whole thing, not because I am losing a great game, well, a little bit of that, but mostly because NC Soft is hurting a lot of people with their mistakes, and I hate that most of all.

    • If there were two things I think that CoH/V should have improved, they would be:

      1) The speed of the combat – it did feel slow by comparisons to some other more recent titles; and

      2) The newbie / initial F2P experience. I felt that the restrictions placed on trialling / new F2P players were just too restrictive to ever get people engaged. I personally tried to get a number of people playing the game, only for them to talk about how not being able to chat or easily team up with people just turned them off.

      I don’t like the idea of CoH/V shutting down, but if you look at it from NCsoft’s perspective, they did try to get CoH/V growing again. Going Rogue was meant to be a fresh, new-player-grabbing box full of content that just didn’t work, and then even with the game going F2P there wasn’t an influx of new revenue.

      It may have been a marketing failure, but I did see a lot of ads and article for CoH/V: Freedom when it came out. I don’t think that Paragon Studios was ever great at communicating what was actually in new issues and as an ex-player I should have been receiving emails with every new issue to tell me why I should come back.

      • I just want to chime in and say I am in the same boat as steven here. I just cam back and got rehooked (i.e. subscribed/VIP and purchases) to the game 3 months ago and had no idea that all this new stuff was out. As far as I knew all that was new was GR and that was not enough of a draw for me to come back. I did not even know about the F2P change till a friend told me (and thusly my return to check it out)

        so in short yeah poor marketing

  7. UnSub, I’ve been in shock all weekend over this announcement. Just last Thursday, I posted a few questions for you about City of Heroes vs. Champions Online vs. DC Universe Online. I really find it hard to believe that City of Heroes has been around for almost nine years, with a dedicated community, and an active marketplace (new items each week, and new powersets every two months) and yet, NcSoft is pulling the plug — with only 91 days notice!

    If City of Heroes is folding, how can Champions Online keep going? IMHO, it is an absolutely terrible game (barely even an MMO, as I characterize the experience) with terrible controls, terrible animations, terrible UI, no endgame…very little “new” content this far down the road — and yet, and yet — City of Heroes is sunsetting, not Champions Online, or DC Universe Online for that matter?!?

    I guess the larger question is, with superheroes such a dynamic force in pop culture (The Avengers, The Dark Knight Rises, etc.) what’s your theory on why superheroes seem to be failing as a MMO genre? (At least you can’t say, oversaturation…not compared to the swords & sorcery and science fiction genres, anyway…)

    • DCUO does better on the PS3 than the PC and SOE did cut the development staff back to fit the revenue. Plus it probably gets a lot of new players in just thanks to the DC IP. I’ve got no idea how good financially it is, but SOE will do their best to keep it profitable.

      Cryptic has most likely cut the ChampO development staff down to bare bones. Their focus will be on Neverwinter and how much that needs to be a success. ChampO likely won’t be sunset because it helps Cryptic / PWE by just having it in the portfolio, even if they do nothing much with it. Plus since Cryptic actually owns the Champions IP, they are probably making some money off the RPG book sales (no idea how much though).

      It also seems that both SOE and PWE run more ‘portfolio’ style MMO operations (i.e. having a wide range of titles to choose from), while NCsoft only wants to run a ‘leadership’ style MMO operation (i.e. having fewer MMOs, but the best / biggest in a few areas).

      So, why are superhero MMOs failing? Partly because a lot of other MMOs are failing (which is an industry issue) and partly because superheroes are much, much harder to recreate than fantasy tropes. A comic book character can be “the holy trinity” of tank, mage and healer in their abilities, which requires a lot of juggling to get right.

      Plus superhero games need to feel ‘faster’ to play than is often expected with fantasy MMOs. I remember when CoH/V was called a ‘twitch’ title. They play more like action games, which can be a problem in an online environment.

      I’d also say that comic book characters are much more locked up in IP than the fantasy genre. People would talk about wanting a DC MMO or a Marvel MMO, not a superhero MMO. Yes, there are existing fantasy IP MMOs out there, but there doesn’t seem to be as tight a link – people are happy to play in the world of Azeroth, but want to be Wolverine. If they can’t play as / along side Wolverine, there just seems to be less interest in making / playing that title.

      • Its business model is anything but solid. Quarter-to-quarter they’re barely making money. The main issue is that they’re very blatant about their money grabs, (vampiristic would be a better term than solid) and the fact that leaving their subscription negates many of your purchases has long been a turn off for a good majority of would-be players. If they’d used something akin to DDO’s model it would probably actually be a huge money-maker for them. In addition, they do things now, like, offer a $50 freeform slot (basically giving you a gold character for life) and that will be a bump is sales revenue in the short term, but once a player has that, there’s no reason to buy much else for that character, so long-term it’ll hurt sales even more.

  8. Thank you for this in-depth analysis of the possible reasons for closing Paragon Studios, fully backed with supporting data. I appreciate the time you took to do this and share it with us.

    Many of the CoX community hope to–at the very least–preserve what currently exists of the City of… universe, and our efforts are detailed in the Titan Network forums. While we understand the slim chances we’re facing, we feel we must give our best effort to save the game we’ve called home for 8+ years.

    “We are heroes. This is what we do.” ~http://www.cohtitan.com/forum/index.php/topic,4882.0.html

    • It would be a shame to see CoH/V go, particularly because it doesn’t have to.

      Here’s hoping that TonyV receives a package in the mail that just so happens to contain everything software-related to run a CoH/V server.

  9. For someone who had a sizeable stable of PnP characters that begged to be rendered in digital form, CoH game was great fun initially, as those characters became real in MMO format.

    I played faithfully for maybe 2 or 3 years, then my playtime dropped to sporadic levels, and tapered off from there.

    The game had a good start, but I always felt it needed to go further, especially in terms of character power development and ability — and maybe there were design restrictions (or even technological restrictions) that made that all but impossible — but that didn’t change the fact that even by the time they’d reached 50, my characters still didn’t feel heroic enough. New content was simply different, it didn’t really feel any larger in scope or depth as I thought perhaps it should, and there were no changes in character power levels that allowed the feel of improvement on a meaningful level. Incarnate system was too little too late for me, and felt too much like a carrot for it to be interesting.

    Still, it was fun in the early days, I’ll always remember it fondly!

    • i’m a current subscriber of CoH and i just half to laugh a haters who like to complain about the game while obviously NOT being currently active. please go comment on other games you apparently don’t play. it’s too late to let you in on the i-trials that made a world of difference for our beloved 50’s characters.

      • Unfortunately, it was those trials (and the other things that added to the WoW-factor of the game that made a lot of people finally look elsewhere. The one reason very many people stayed as long as they did was the fact that we didn’t have raids, didn’t have a huge grind, and when Incarnates were announced, it was going to be story-based, not repeating trials ad naseum. Once we started getting the grind, that’s when the numbers dropped, and began the long road to where we are now.

    • As a current subscriber, I hate to agree but after reading many comments here and the article itself, as well as having more time to settle down after the news, the game just didn’t pull in the members it needed. I disagree with Wild that it is a ‘hater’ thing and if there is anyone we should listen to, it is the people that are not playing the game or played it but did not come back. The hardcore are not going anywhere but that audience is no longer self-sustaining. Time to go outside that little bubble…but it is too late for that and is a sad thing to realize now.

  10. As of Wednesday night (Sept. 9th) almost 13,000 people have signed the petition at change.org, asking NcSoft to reconsider it’s decision to shut down the game. UnSub, I know signing an online petition is the bare minimum a person can do, but what’s the history of online petitions protesting the sunsetting of an MMO? Did Auto Assault, Dungeon Runners, Exteel, or Tabula Rasa gather 13,000 signatures in less than a week? What about Star Wars Galaxies, or the Matrix Online (those are the only two other now-defunct MMOs I can think of, off the top of my head)?

    The thing that strikes me about the closing of City of Heroes is, it has eight and a half years worth of players with memories of the game. While other games shut down, or went free-to-play MUCH quicker than City of Heroes, City of Heroes is almost a nostalgia item among its earliest subscribers! And nostalgia (like comfort food for the brain) is a powerful force when the item being threatened would be lost forever!

    • I honestly don’t know.

      Tabula Rasa had a site dedicated to saving it (http://www.changingwind.org/savetr/news.php) and there have certainly been petitions to save games NCsoft was going to close (http://www.petitiononline.com/aa4evaa/petition.html) but it does look like CoH/V is exceeding any of those cases.

      Star Wars Galaxies got over 5000 signatures (http://www.ipetitions.com/petition/saveswg/) so CoH/V is certainly doing better than that.

      News that Paragon Studios is talking to both investors and NCsoft management also paint a different picture to what I’ve seen in other NCsoft shutdowns. So there is always a chance that this time will be different.

      • To be fair, Auto Assault’s community was tiny. There was maybe 300 of us who were actually active on a daily basis. I don’t know what the subscriber base was at the time the decision was made to shut down but the game never got a very high number of players to begin with. The only thing that’s sad about AA was that NetDevil tried to buy it from NCSoft with plants to run it like they did Jumpgate but NCSoft refused to sell.

        Dungeon Runners and Exteel were both similar cases but were entire owned by NCSoft (as CoH is) and there was no partner company to try and buy them.

        I think in the case of City of Heroes, if Paragon Studios could find investors to revive the studio, purchase the IP, User Accounts, and Servers from NCSoft for a reasonable price, it could keep the studio running long enough to develop another title without costing them a lot of development time to maintain and add limited new features (such as a new power set every 6 months).

        The real question is will NCSoft be willing to sell at all?

      • I don’t know if NCsoft would be willing to sell.

        I would have said, “Almost definitely not” but the CoH/V community is going very hard at saving the game and that might change some people’s minds.

        But then the question becomes: sell to who?

      • Thanks for the financial analysis and for looking into previous efforts to save games set to close. As a player who still loves the game & the community it’s hard news to hear, but seeing how things measure up objectively does help me understand the decision. I still can’t say I’m ready to accept it & let CoH and it’s community disappear without a fight though.

        I found the information about previous efforts to save games heartening, but also tempered by the realization of how much of a fight it looks like we have before us.

        Once again, thank you for taking the time & making the effort to compile this information in an easily accessible & understandable format.

      • Thanks for the links, UnSub.

        I was worried you were going to say, SWG got 100,000 signatures on a petition in two days…so 15,000 in one week is nothing.

        Now I wonder how far this petition is going to go. If a thousand people a day say, Save our City of Heroes, at what point might NcSoft change its mind?

        “We are heroes. This is what we do.”

  11. Pingback: Can City of Heroes Be Saved? | Ardwulf's Lair

  12. For those stating that CoX didn’t develop enough after they left, they obviously haven’t played much since Freedom. Paragon Studios added as much new content in the past year as they have in 3 or 4 years. New or revamped zones, a whole bunch of new power sets, a lot of post-50 content (all things incarnate related including some great trials), tons of quality of life improvements (expandable enhancement trays, team transports, etc.), signature story arcs, and leveling was now faster than ever. I agree the game is complex for newbies because 8 years of development is tough to take in. On the other hand, playing the basic game is still pretty easy before getting into IOs and marketing and such. The biggest misstep was limiting some tells/interaction for free players, something since corrected, but too late now.

    • you seem to forget 1 very important thing, all the things you listed were only deved for the the vips. while something could be bought from the free players. the majority was for the vips.
      even in i24 most of what was being deved was for the vips only. i was a 6 year vet. i forgot to upload some money to my cc. and i found out what they took away, they lumped the perm players with those they hoped would play from freedom.

  13. “Much better to try to convert current CoH/V players to titles like Guild Wars 2 than hand a competitor an existing title on the cheap that comes complete with a loyal fan base of something like 55k to 60k players.”

    If that is what they intended, I am doubtful it will work out for them. There are a great many people that will not in any way want to support NCSoft after how this was done, myself included. Emotional response? Sure, but NCSoft has done very little to explain the closure or to encourage existing CoX players about the final months of the game or given them even the smallest incentive to hop to GW2. I understand the reasons for the shut down, but in my opinion it was handled quite badly, especially for the studio and its employees. I’ve been through a small studio closure and a large studio entire team layoff. Both were handled in better fashion than what I am seeing from NCSoft. It is a foreign company though, so I guess the mindset it just that different.

    • It’s a practical response, not an emotional one. What’s the point of dropping more $$$ on an NCSoft game when they kill profit-making products without warning right before a highly anticipated content expansion? MMO play involves investment of time and money as much as MMO development. Just because you can’t really feasibly track it, doesn’t mean they won’t lose in the long run from alienated players. Remember that it’s 50,000 VIP subscribers right now. That doesn’t count the F2P players and it doesn’t count all of the people who’ve played it (many of whom come back to it – I did) over the years. This is a foolish move on NCSoft’s part, IMO. Behavior like this is the reason I avoid EA and it’s the reason I’ll avoid NCSoft in the future. It’s not an anger thing. I just don’t like having the rug pulled out from under me when I was just really starting to get into a groove with a game that’s continuing to make a profit.

  14. Pingback: CoH: To Save Or Not to Save? « Why I Game

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  18. They’ll never convert a CoH hardcore fan to an Guild Wars 2 fan. At best, by shutting down CoH they will cause players to leave the market entirely. At worst, they’ll give Champions Online an influx of new players.

    • If that’s the case, then either way they lose you with CoH/V shutting down. Keeping CoH/V going just to keep a small-ish player base may not be worth the cost, while selling CoH/V hands that player base to a competitor.

      • My point was, most likely, a hardcore fan of CoH is there because of the superheroes. Guild Wars is fantasy. If Sony were to shut down EverQuest, they actually have a decent chance of retaining customers because they have Vanguard and EQII – fantasy to fantasy. When they shut down Star Wars Galaxies, they probably just lost those players because they didn’t have another sci-fi-ish or Star Wars game for them to go to. Those people either left the market or went to a competitor. NCsoft doesn’t have anywhere for a fan of superheroes to go that isn’t a genre switch. If a person is there for the superheroes, they are more likely to go to Champions or DC Universe or sign up for the Marvel Heroes beta than they are to jump genres and stay an NCsoft customer.

        NCsoft’s best bet is to not close the studio, and instead look at adjusting the way F2P works with CoH to try to understand why it didn’t increase income the way it has for many other games by other studios.

      • Just a thought, but if they’re 1) Pulling up stakes and walking away from a North American market that’s small and unprofitable anyway and 2) Under significant financial stress as a company..

        Wouldn’t getting cash for something they’re going to be closing anyway be a good thing? Who cares if they lower the barrier for entry to a competitor if the competitor is in a market they don’t make any money in to begin with?

        NCSOFT: “We get to improve my bottom line now. We can’t make the game profitably, doubtful someone else could. Even if they can, the market they’re in is a drop in the bucket to us anyway.”

        Seems like you’ve minimized the risk of competition and gotten a short term buck out of it at a time when a few short term bucks could make you look like a hero.

      • NCsoft isn’t entirely leaving the NA space – they still have a number of titles active, have just launched Guild Wars 2 and have Wildstar in development. There’s also the chance that NCsoft will want to come back with a localised Blade & Soul or something else that is similar.

        So keeping CoH/V around by selling it to a competitor could be a long-term negative strategy for NCsoft.

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  24. I think your numbers are only taking into account subscription dollars am I right? The graph you posted has “sub” in the name is why I ask. If that is true, and your math only takes into account subscription money, and STILL shows a profit, just think what the game is making off the paragon market .

    I myself and the three players I know in real life have spent over $100.00 since freedom launched. Im sure most players spend money as well.

    Do you have any numbers that take the paragon market into account?

    • The Active Subs refers to the time when NCsoft would actually list the active subscriber number in the Earnings Report. They stopped doing this quite a while back.

      As far as I’m aware, the revenue reported for CoH/V is all revenue collected from the game – subscriptions, RMTs, everything. Which is why the lack of revenue growth is concerning to NCsoft. They spent resources on converting CoH/V to F2P and roughly 12 months later there has been no growth at all.

      I’m also not sure how profitable Paragon Studios is to NCsoft. A lot of people call CoH/V a ‘profitable’ title, but it’s not clear to me exactly how profitable it is (or even if that secret second project actually ends up dragging Paragon Studios into the red).

  25. I would like to see some other numbers presented on sub dollars and market dollars each separately. I would also like to see something showing VIP subscribers as of 2 months ago or some such. Just that alone would give us an indication of whether or not the graph posted here is all profit or just subscription dollars.

    The most up to date estimates I’ve seen are 50K active subscriptions. That alone puts the number around 2.25 mil a quarter (eerily similar to your graph at 2.4 mil)

    I’d go out on a limb and say that the number is subs alone, and the market likely draws in an equal amount or more. Unless you have some links I haven’t seen, I’d say your research is not complete.

    • You do know that this information is coming directly from NCSoft’s published quarterly results as a public company, right? They have to disclose financial data as a publicly traded company. NCSoft is actually far more candid about breaking out revenue by title than almost any other publishers of MMOs.

      You just don’t want to admit that the game isn’t as popular as you would like to believe. It’s been dwindling for almost two years; the numbers don’t lie. I was even there for the last two years- there has been a general population decline, most of the people who came back for Freedom didn’t stay more than 2 months at most.

      NCSoft reports on total sales within a title across each of its titles, microtransactions, subscriptions, and box fees are all factored in together. I think it would be a very interesting notion to see what the average ‘freemium’ player pays per month in almost any F2P title, from an MMO business model perspective. It would give some interesting insight as to the nature of how effective microtransactions really are.

      The total sales are just that- total sales INCLUDING the market. It’s still not enough to justify keeping the lights on from a business perspective when you could do better in the stock market.

    • As Concerned Citizen says, the numbers are from NCsoft’s own Earnings Report. I’d love to know how many VIP subscribers CoH/V has, since that would provide further insight into what’s going on.

      If the Earnings Report only included sub revenue, I’m not sure we would have seen that spike around the launch of Freedom (unless a number of players came back, subscribed for a month and then left again).

  26. Yes the total subscribers did spike for a month after freedom, as concerned citizen said. Part of your arguments aginst mine contradict each other. It is my opinion that there is absolutely no way that either total subscribers dropped off on freedoms release, or that the paragon market got absolutely no revenue whatsoever.

    I think NCsofts data is not including micro-transactions in their games for some reason or another.

    • I don’t see the contradiction. All the data is there and seems to be well accounted for, if you will pardon the pun. Legally NCSoft as is obligated to report ALL sales. You seem to be unclear on the concept of ‘publicly traded company’ and ‘earnings reports’. Why on Earth would they not include higher sales in an earnings report when they reported a huge net loss in this most recent quarter? Not reporting sales would only have the effect of depressing their stock price/total valuation. Reporting increased sales would have minimized this loss. There are also mentions of shifting sales in all of their other microtransaction based titles directly impacting their current gains and losses.

      Consider the possibility that the majority of Paragon Market purchases were not done by freemium players paying for points but instead by the 400 point per month stipend VIPs were issued. This effectively meant a net sales increase of zero dollars among their most established customer base, as the current subscribers did not necessarily increase their spending on the title. Total subscribers in City of Heroes have been in decline for more than two straight years.Freedom did see a very short bounce in people playing – for about a month. I remember several friends coming back, reupping their subscription because they hated the freemium restrictions, then leaving within the span of a month.

      I’ve seen a lot of conspiracy theories about City of Heroes being killed off for any number of reasons. The most likely truth, especially given the 3 cancelled projects given to Paragon Studios, is that NCSoft had little faith in their development house in continuing to make a reasonable return on investment. Their efforts over the last 2.5 years in a business sense would be considered a failure – Going Rogue was expensive to produce – and bombed. The largest single drop in revenue that the game has seen occured just after its launch. Freedom saw a tiny bump, then a return to normal levels. NCSoft was investing money in something that stubbornly refused to grow. They finally decided that it was not worth sustaining. Publicly traded companies are about growing profits- it is their first and primary ethical duty to their shareholders. Shareholders want to see their investment grow, not just sit there, otherwise they would just leave it in their bank accounts.

      I’m not a shareholder myself, but if I was I’d really have a hard time telling NCSoft not to kill off this long-underperforming title and studio in favor of something with a broader market base. You want to compain about this in a meaningful way? Buy up NCSoft’s stock. You would only need $3 billion to get a majority share.

  27. Pingback: City of Heroes / Villains: NCsoft Says Sale Not Going To Happen, Closure Happening on Schedule « Vicarious Existence

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  30. So, the instant CoH/V reaches a break-even point on profit, it’s canned… and that’s right and good because it’s all about the money.

    Then why can I still log into Everquest 1?
    They aren’t making a profit really. Or if they are it’s minimal. There were more people playing CoH then everquest. It’s called looking out for your most loyal customers, instead of kicking them in the gut because they’re slightly not numerous enough.

    They could have oh, I don’t know… scaled back Paragon Studios. If Paragon was working on another title as well as CoH, they could simply cut that title, and the staff associated with that. Heck, they could even scale CoH back to a ‘non-growing’ game, where no new content is created, but they keep the lights on… it would cost them just running electricity to their antique servers, and a skeleton crew to maintain them. They could literally drop the operating costs of keeping CoH “playable” to perhaps a $100,000/year.

    But no, this is NCsoft we’re talking about. This isn’t new behavior for them. Profits drop to ‘meh’, they shut down the game and erase everything the customers have emotionally invested in. Look at Tabula Rasa.

    And the CoH shutdown coincides with GW2 launching (which ncsoft hopes will be a big hit). NCsoft’s weak profits were primarily caused by the GW2 development & marketing cycle. And I’m *certain* that NCsoft hoped that they could just splice their CoH customers over to GW2 by timing the release & shutdown together.

    Sorry NCsoft. I didn’t bite. GW2 looks like a decent title, and there are some other titles from NCsoft that look interesting… but I’m done investing so many hours into a fictionverse which will be discarded for having weak profits. Or where the CEO’s believe they can herd me like cattle into a more profitable title instead. Where closing down the game (instead of continuing to minimally operate it) is seen as the business decision to make. NCsoft, you don’t know how to treat the consumers who *are* your market. Shutting down CoH lost you a customer for life. And I know firsthand that many other CoH players feel similarly. I did the math, you made over $1,000 from just myself with CoH over 6 years of subscription and various fluff purchases, and over $150 on Aion as well. But because you don’t know how to retire an MMO while still leaving it playable for your very most loyal customers, you’re not going to make anything from me again.

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