NCSoft and Paragon Studios
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.
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.