NCsoft profits fall, based on increasing costs and expansion.
NCsoft's fourth quarter financial statements reveals a 43 percent fall in year-over-year net profits. The Korean game publisher raked in profits of $40.5 million on $361 million of sales revenue. Increasing costs, investments in titles and expanding the company for future growth were cited as causes in the drop in profits. Expenses related to Auto Assault, a failed MMOG, were written off. Lineage and Lineage II sales both dropped two percent in the fourth quarter. City of Heroes and City of Villains dropped a staggering 26 percent.
Chief Financial Officer Jaeho Lee remains optimistic for the future. "To accomplish this goal and establish a strong product pipeline, we plan on an 18 per cent year-to-year increase in the development budget this year as well. ... After several years of spending on development costs, we believe the fruits of these labours will finally begin paying off soon."
NCsoft has a slew of new products planned for release in 2007. Exteel and Dungeon Runners will be released in the first half of the year, followed by the Richard Garriot-led MMOG, Tabula Rasa, and the Korean Aion in the second half. Both Guild Wars and the NCsoft service, PlayNC, will receive upgrades in 2007. Corporate guidance indicates an expected $384 million to $394 million in 2007 sales revenue and an operating profit ranging between $45 million to $53 million.