Home > City of Heroes > NCSoft and Paragon Studios

NCSoft and Paragon Studios

January 5, 2013

A recent post on Massively caught my attention this morning; it was about another article on mmorpg.com with some information about the NCSoft & Paragon Studios debacle. The source of the information is supposedly anonymous former employees of NCSoft and Paragon Studios. The bullet point information presented in the article, from this source, is the following:

  • CoH was profitable even before they converted to Free to Play but were even more so after the conversion.
  • The studio’s total annual operating cost was 4 million USD.  They grossed 12 million in revenue annually.
  • NCSoft paid $8 million USD to buy CoH. They wanted $80 million USD to sell it. They only value it at $3 million for tax purposes.
  • CoH had a high retention rate. Subscribers had a stick rate of 95-98%.
  • NCSoft has no plans for a CoH 2.  Paragon wanted to do it but NCSoft was growing ever more uncomfortable with a Superhero IP, worried that it wouldn’t work in today’s market.
  • Brian Clayton tried to orchestrate a management buyout of Paragon starting over a year ago because it became progressively more difficult to deal with NCSoft. They had created a Kickstarter page and a campaign video, but it never went to press.
  • They (Paragon) had a second project in the works. It was a compromise to not being able to make CoH 2.  It was the show “Lost” meets Minecraft.  You crash-landed on an island and you were able to build your own fortress and weapons. You teamed up with other players to tackle the mysteries of the island.
  • NCSoft tried to work with Paragon, they really did.  But the profits were not what they needed to be, and CoH/Paragon were the weak link in NCsoft’s lineup moving forward.

Impact

The article continues with some comments from NCSoft’s director of Corporate Communications, Lincoln Davis. He pretty much says that all the financial information provided is inaccurate and that the studio was not profitable (studio, not the game City of Heroes). This is the first time I have seen any name behind any communication from NCSoft around this. Even though the second part of his comments essentially repeats some earlier statements released from the company, I do appreciate to actually see a name and a title.

I think 4 million USD sounds a bit low for a studio with 80 people in the Silicon Valley area. But it has been a few years since I was visiting there and I have not been involved in the game industry, so maybe it is accurate. I am not surprised that the stick rate is high, although as high as 95-98% I would never have thought, if those numbers are accurate. I know a number of people who paid the subscription fee even though they were not playing actively, but still…

I think the information is somewhat conflicting though. It both talks about it being progressively difficult to deal with NCSoft and that NCSoft really tried to work with Paragon Studios. Lincoln Davis also does not claim any of that information to be incorrect, or anything about attempts to buy out Paragon Studios or thoughts around City of Heroes 2, superhero MMOs etc.

The financial information does not point to why NCSoft behaved as jerks when they handled the shutdown though; this is an area I became more disappointed with NCSoft than the game closure alone. I suspect that the actual closure decision has more to do with political matters and possibly that Paragon Studios were increasingly being considered a disloyal studio to NCSoft. In Korea, loyalty matters. At least that would make the behaviour from NCSoft a bit more plausible.

Therefore I also believe that the efforts made that showed the player loyalty and affection for the game actually made an impact on NCSoft, even though it did not reverse their decision.

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Categories: City of Heroes
  1. January 5, 2013 at 21:42 | #1

    NCSoft’s stock is tanking, even more so with City of Heroes gone. I would think that $12,000,000 profit every year would have been a great reason to keep the game around, especially since it accounted for 40% of their North American income. The devs in the studio were notoriously underpaid and stuck by the game anyway. NCSoft was embarrassed by City of Heroes because all the “research” the Koreans did said that Americans wanted one of their grindy pvp oriented games to play. When City of Heroes became a huge success but was the oposite of what NCSoft thought we wanted they couldn’t handle it. It had nothing to do with Paragon Studios being non-complient, it was because they got an ego check and couldn’t handle it. Their new Blade and Soul game is a pay to win model game which was just beaten by a team of 4 in 6 hours. NCSoft gave up $12 million to protect their egoes. That’s not a company I want to be involved with. I will never buy another game from them or any studio that they fund and I would encourage others to do the same.

  2. January 5, 2013 at 22:31 | #2

    From saying nothing at all, to bald faced lies about ‘all avenues explored’ about selling the game, to backpedaling in the Korean media that they’re open to selling the IP, to trying to justify their financially incompetent decision… I’m not drinking the Kool-Aid and no other COH players are either. Judging by the tanking stock and how NCSoft company President Tael Jak Kim dumped all of his stock prior to announcing the closure it seems that investors aren’t drinking it either.
    Join us on Facebook. 599 members and growing daily.
    https://www.facebook.com/groups/BoycottNCSoft/

  3. January 6, 2013 at 01:45 | #3

    Ask yourself this, because you never step wrong when you “follow the money.”

    Who stands to gain, and who stands to lose, by lying?

    On the one hand, we have former Paragoners, who have always been honest with us, and who have always listened to us. Most of whom finally have found new jobs, and thus have nothing to gain or lose by telling us the truth as long as their identity is protected. And who would not need their identity protected if what they had to say corroborated was in lockstep with NCsoft’s claims the game and Paragon Studios were losing money. They stand to gain NOTHING by lying. If they are actually proved to be lying, they lose their reputations.

    On the other hand, we have NCSoft, which has a history of outright lying, betrayal, and simple deceit that has gone on from the time they entered the US marketplace. Killing five MMOs, including Dungeon Runners and Auto Assault which both tried to buy themselves out and were shot down, and Tabula Rasa, in the process of which they created a fake “farewell letter” supposedly from Richard Garriott, while the man was in outer space. They stand to gain EVERYTHING by lying, as long as a few more people believe them. And if it is proved they are lying, they lose nothing, as their reputation in the West is already shot and bleeding out.

    I know who I trust.

    • January 6, 2013 at 01:56 | #4

      Actually, that is pretty much in line with my point – different virtues may be in conflict with each other and have different important depending on culture.

      In many Western countries, honesty is a more important virtue than loyalty. In Korea, loyalty would be more important than honesty; as described in the article I linked to.

      If there is a loyalty issue of some kind in this whole story, that would make some sense. It does not make things better in any way – but there may be some explanation.

  4. January 6, 2013 at 13:51 | #5

    There also may be the fact that NC Soft seems to be centered on the grinding / farming MMO’s in their current stable. Western influenced games like CoH required creativity and continued innovation than an active development studio like Paragon offered. As an aspiring writer, I enjoyed the story lines that were released and added to with each successive issue. I offer thanks to the Dev’s for allowing a new Hero, Villain or even Praetorian a chance to start out as a low powered rookie and ascend to greatness. From the beginnings of stopping street gangs and bank robberies to battling against the greatest heroes, villains and monsters the world had to offer. We could even transcend time and dimensions and step above the game’s level cap and beat ancient Elder Horrors and fight back against a Tyrant from a mirror universe gone wrong.

    Not only did NC Soft not show loyalty to their customers by continuing to support a game that they were willing to pay for, but they didn’t even offer forth a good reason to shutter the game. Many of their current offerings allowed the customer to buy the game for a set price and then play free on-line. They could have offered the same deal for their current City of Heroes subscribers who wished to have the same kind of access to the game and possible shunt their characters to a condensed set of servers.

    It is highly INSULTING that they treated their paying VIP customers this way, not to mention the F2P and yo-yo’ing Premium consumers. Their silence on the matter is childish, but one wonders what Nexon Co. Ltd.’s involvement in their decision making is. They own 14% of NC Soft and appear to be the largest share-holder. Did they exert their influence to close down a Western style MMO in favor of their content sparse offerings Guild Wars 2, Blade & Soul and WildStar. B&S looks to be a mash-up of DoA and Soul Calbur in a MMO setting that isn’t doing well even in its home country of S. Korea. Depending on NC Soft and Nexon Co. Ltd.s decisions, WildStar may be stillborn given NC Soft’s stock performance since the announced closure of CoH.

    While many players have gone to other MMO’s, many of the former CoH players are still mad at NC Soft and refuse to have anything further to do with them, Nexon Co. Ltd. and their products until they sell the CoH “intellectual property”. Some of us have even gone so far as to leave notes on NC Soft products in stores and on-line retailers, warning people about NC Soft which is now known as the “MMO Killer”

    • January 6, 2013 at 22:46 | #6

      I very much agree that the way NCSoft handled the whole shutdown situation has been quite bad. Given that they have shut down games before and have at least done a bit better at these times, one would have expected better customer handling.

      Which makes me believe that this was not a strategic or well-planned shutdown. Perhaps they may have discussed and considered it, but execution and timing probably was triggered by some other event, ahead of any potential plans for the studio’s and the games’ future (CIty of Heroes and the game in development).

  5. Red Warlock
    January 7, 2013 at 00:38 | #7

    What LOYALTY matters most? Customer loyalty.

    Poor, wounded NCSoft executives felt Paragon Studios staff weren’t loyal enough? NCSoft turned their back on customers,and that’s the ultimate disloyalty. Their arrogance is costing them.

    • January 7, 2013 at 00:59 | #8

      Customer loyalty and customer satisfaction should be a primary concern for any company, but that is not always the case.

      In particular public companies may end up focusing on shareholders and investors instead of the customers, which is the wrong approach.

      I do believe there is a misplaced knee-jerk reaction to something here and speculating what the cause may be.

  6. Chad M. Kook
    January 7, 2013 at 15:49 | #9

    for people who care about loyalty they sure as hell had no loyalty to fans Fuck NCSoft

  7. January 7, 2013 at 17:34 | #10

    The most culturally significant thing is the underlying cause of all. Honor, NCSoft and it’s executives HAVE NONE. They had no loyalty to thier customers, NO reason and no cause to shut down a profitable game. AND ABSOLUTELY NO EXCUSE TO NOT SELL THE IP with reasonable offers on the table! That company and it’s executives are the worst example of corporate greed and hubris , compounding mistake after mistake with further mistakes. They are the lowest form of DISHONORABLE
    corporate scum and that company deserves nothing short of bankruptcy and oblivion!!!!

  8. Ezra Cohen
    January 9, 2013 at 06:54 | #11

    I am in full agreement with everything that has been said so far. City of Heroes was a long-running game, and its player base was devoted and faithful even with shinier new games in the MMO market. When NCSoft took on this game, they should have understood the value of such veteran customers.

    But apparently, anything that doesn’t fit into their view of “what their native players want” is wrong. Apparently, forming proper relations with customers abroad is wrong. Apparently, showing proper respect and honesty to those players if you decide to shut the game down is wrong. Apparently, selling an IP that you have NO INTENTION of ever using again, in order to appease the customers you turned your backs on, is wrong.

    NCSoft has spat in the faces of a devoted and talented design team who were working hard and making do with what they had. They have spat in the faces of customers who followed City of Heroes for 8 years. And they have spat in the face of common decency, in the name of their own market and their warped priority of loyalty over honesty. Why? Because of the petty belief that a superhero game, no matter HOW well-written or designed, is “unprofitable.” They have made no attempt to appease us by selling the IP back to another company, and try to appease us with empty excuses and petty reasons LONG after the fact.

    In short, NCSoft is a horrible company. And since they obviously don’t care about their position in the Western market, I suggest we start taking steps to capsize their Eastern market, as well. It’s time they found out that they can’t get away with this any longer. The Western market is meaningful, too…and they need to be dragged into the spotlight and be made to answer in full for their disloyalty to us.

  9. January 20, 2013 at 10:07 | #12

    The backlash alone from this debacle should send the company scrambling for damage control. Too bad, the game was good and would have played it more if not for my slow aging computer

  10. Vincent
    March 8, 2013 at 21:37 | #13

    I am not a 100% sure if this adds to the conversation, but I will tell my story here and you be the judge of these happenings. Aion went f2p in 2012 I wanna say. They added more and more stat enhancing items in the item mall. Opened up the server to more and more countries which of course in game led to language barriers and the usual “NO-BR’s Allowed”-crap

    I paid subscription per year and round and about halfway thru the year the game went f2p. I asked for a refund and after extensive correspondence and giving them the necessary details they shoved their NCoin down my throat.

    During the 3 years of game-play I would report bots, gold sellers and any cheaters. In the beginning my tone was friendly and hopeful they would be more aggressive in addressing these matters. In all honesty it fluctuated. Lately the botting and RMT seems a little less but still too much of it contaminates what is for all intense and purposes MY FUCKING GAME!

    My tone became more and more; how should I say this. Ah yes; I became a vinegar pissing cunt is the professional term I believe.

    I got about 2 warnings for abusive language which imho is bullshit (oops I did it again). Keep in mind there is a block function and a language filter in the game and Aion has a ESRB Teen rating. So in my lets be honest not so fucking humble opinion ppl have options enough to circumvent what they might find offensive.

    So today it happened. I got kicked out of a group because they did not want to wait for a quest they found futile and i wanted to finish. I rip them a new asshole in lfg as is tradition and I get a 72 hour ban. So I get cd due to those fuckers and I get banned because I swear because that all I can do since kicking some1 out of your group is not a banable offence or gets me a reset scroll or anything.

    The GM’s in Aion are retarded is all I have to say. Frustrated language gets punished while cheaters, hackers, goldbuyers get at the most a slap on the wrist. And they don’t refund money with basically the argument they can’t do basic math -.-
    Yet they recalculate the owed NCoin ever so fast…..

    I really feel like I got fucked up the ass with a beachumbrella right now so hence I spout my frustration with NCSoft here. For those of you who get hung up on the foul language I would like to ask you to look at the cause of the foul language. I can only tell you that in a matter of speaking I started out as a choirboy. Got violated by the Catholic priest (NCSoft). And ended up Andrew Dice Clay because of sheer frustration over being able to do NOTHING against this kind of bullshit but hurt their little virgin ears!

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