NCSoft's Q1 2017 Results Show A Shocking 74% Drop In Net Income

NCSoft's Q1 2017 financial results are in and they show a shocking 74% drop in net income—both quarter-over-quarter and year-over-year. The company's sales only dropped 16% quarter-over-quarter and 1% year-over-year, but other factors, including a decrease in online game sales and an increased number of employees, have lead to the dramatic decrease in profit. To illustrate just how low NCSoft's profits were this quarter, according to The Korea Times, it was projected that NCSoft's Q1 2017 operating profit would be 80 billion won; it ended up being a mere 30 billion won. Despite the drop in profit, NCSoft's stock climbed in trading in South Korea and is near record highs.

NCSoft partially attributes the drop in profits to Lineage's lowest quarter in quite some time. Lineage sales dropped a full 56.5% quarter-over-quarter and 34.7% year-over-year, bringing in only 51 billion won in sales. Aion is also on a downturn, whereas Blade and Soul, Guild Wars 2, and Lineage 2 remain steady in terms of sales. Blade and Soul's 13% increase this quarter is attributed to "the new fee scheme in Korea," as the game just went free-to-play in its home country this past December, and events celebrating the game's one year anniversary in the United States and Europe.

It is interesting to note that, despite declining sales overall, royalty revenues increased thanks to the success of Lineage 2: Revolution. In fact, this past quarter, royalties brought in more than twice as much revenue as sales in the United States and Europe combined.

Going forward, NCSoft is set to release Lineage M, which is said to be a complete mobile adaptation of the classic MMORPG, in mid-June. The Korea Times also notes that, in a conference call, the CFO revealed that the company plans to "release more diverse mobile and virtual reality (VR) games based on intellectual property of its existing games."

According to MMOCulture, the conference call also revealed that the Lineage Eternal development team has seen a change in leadership, with management stating that the game's Closed Beta state did not "reflect NCsoft’s characteristics." The team's new leaders are currently working on a new development schedule.