NCSoft reports increased revenue but lower profits in Q3 results

City of Heroes creator NCSoft has announced the financial results for the third quarter of its 2005 fiscal year, revealing higher revenues than the same period last year but a 10 per cent decrease in net profits.

Total revenues were posted at Korean Won (KRW) 87.8 billion (EURO 71.1 million), an increase of ten percent on the company's Q2 results and a fifteen per cent rise on the same period last year.

Net profits rose by 57 per cent when compared to the second quarter, which is how the figures were posted in the company report. However, compared to the same period last year, the KRW 20.4 billion (EURO 16.5 million) posted is actually 10 percent lower.

The marketplace for NCSoft's Massively Multiplayer Online games is certainly becoming more diverse, and whilst the revenue makeup is still dominated by the Korean market (generating 55 percent of revenue); other territories across the world are also making a considerable contribution. North America generated 22 per cent of the revenue, Japan 9 per cent and Europe 7 per cent. The remaining 7 per cent was attributed to profits from royalties.

In terms of the games which generate the most profit for the firm, Lineage II leads the way with 36 per cent of profits; with the original 1998 game Lineage following close behind at 35 percent. The subscription-free Guild Wars accounts for 21 per cent, whilst critically acclaimed City of Heroes currently only generates 8 per cent of the company's revenue.

It is expected that the recent release of partner game, City of Villains, will contribute further to the profits and promote further revenue gain for the final quarter of 2005, though the company has cautiously labelled the fourth quarter as "typically a low-demand season."

In related news, NCSoft has been named as one of the major MMO creators under investigation by the Korean Fair Trade Commission after customer complaints relating to the severity of punishment for real-world trading of in-game MMO items.

According to a report by the Korean IT Industry Promotion Agency, several leading MMO creator's policies were under review for a number of unfair penalties and the severity of the punishment for minor violations, including perpetual seizure of accounts, terminating contracts for petty violations, and holding paying parents responsible by proxy for actions taken by their game-playing children.