Good housekeeping yields profits, says Heath

Geoff Heath, MD of NCsoft Europe, has told GamesIndustry.biz that the secret behind NCsoft's latest financial results - particularly the increased profits at a time when sales remained flat - was down to "good housekeeping".

"With a bit of good housekeeping, we've got these evergreen products, we can contain the overheads and keep the profits going up. We run a fairly tight ship," he explained.

"Across the board, one of the benefits with the MMO business is that once you've invested in all of the servers that you need in order to run an MMO product, apart from any addition to those servers, by and large the infrastructure for each gameâ¦the depreciation runs out and we're improving our margins all the time."

Heath commented that the company was satisfied with the progress of recent portfolio addition Tabula Rasa, from Richard Garriott.

"I think Tabula Rasa did what we expected it to do - it is yet another genre that we've gone into, with our portfolio approach," he said.

"From day one we've seen the subscription numbers grow, we've seen the sales grow, and the other key thing for us is that once people have played it for a month, they're now subscribing, and that's the real test if a product's got longevity - we've seen the subscribers actually grow from there rather than decline."

And he added: "Something we've not said too much about so far is that we've launched the game in Russia, and it's number four in the PC chart, and we're quite excited about that. Certainly Russia's a territory that has a lot of interest there, broadband penetration is growing very rapidly, it's done very well there."

One of the more eye-opening sections of the company's results was the marked rise in sales for veteran title Lineage, something that Heath puts down to a loyal fan base and good support.

"I think the secret behind Lineage is that in its day it was the first of its kind, and also the fact that we do spend a huge amount of money on customer support and billing. In Korea, for instance - having been there a few times now - as a gamer you can actually go into a department in our building there and talk to somebody," he said.

"It just maintains loyal players. We've been doing some stats on City of Heroes in Europe, and we've found that the average playing time is 17 monthsâ¦which is almost as long as it's been out."

He also noted that while the proportion of sales in Europe was only 8 per cent of the group sales that was a good result for a business that's only been around for three years, while most of the rest of the group has been around for ten.

"But there is room for growth," he added. "I think that's true of the whole group - but from zero to 8 per cent in three years is okay - we've grown from five people to over 130 in that period of time.

"What we've done since we started is double the business every year, year-on-year. We'll continue to double the business for the foreseeable future.

"It's really the basis of our business, having the portfolio. We always say that we love the success of World of Warcraft - it's found customers all over the world that would probably have never played an online game.

"But sooner or later they will move on, and there's every chance they'll move on to one of our products. And if they get done with one of our products, they'll move on to another of our products."

Despite positive results this year the company has no plans to rest on its laurels, according to Heath. While there are significant content updates planned this year for City of Heroes, Tabula Rasa, Guild Wars and Lineage, work on new properties is well underway.

"[The NCsoft internal project is] underway, and we'd like to think we'll see it out next year. We've got Aion which we've announced will come out in Q4 of this year, and we'll work extremely hard to maintain all of the other existing products and grow them.

"The other thing that's gaining momentum within the group is what we're doing with the PlayStation 3, there's a lot of activity on that at the moment, and later this year we'll be making some quite exciting announcements [but] I don't think anything will come out this year."