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[General Article] City of Heroes: Profitable or Not?

BillMurphyBillMurphy Managing EditorBerea, OHPosts: 2,362MMORPG.COM Staff Uncommon

The closing of City of Heroes by NCSoft was a heartbreaker for many current and former players. In an investigative piece here at MMORPG.com, we take a look at the closure and whether or not CoH was a profitable game raising speculation about why it was closed in the end. Read on and then join the conversation in the comments.

In my most recent MMOFTW show, I chose the City of Heroes closure by NCsoft as one of the year’s top MMO-related news stories. In the segment, I mentioned that CoH was not profitable, and this is why it was shut down in November. Why? Because this is what we were told by NCsoft as one of the driving reasons behind the closure of the game.  Several readers reached out to tell me this was inaccurate.  But more than that, former Paragon Studios and NCsoft employees reached out to our own Rob Lashley to tell him what they believed to be true regarding the studio’s earnings in a phone interview.

Read more of Bill Murphy's and Rob Lashley's City of Heroes: Profitable or Not?.


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Comments

  • VolkanikVolkanik DOVERPosts: 8Member

    I really don't understand the need for the continual dissection of why City of Heroes was closed down.  Look at the player number figures from around Q3 of 2009 and you'll see a steady trend downward.  It was an old game that people gradually stopped playing.  Simple as that.

    I played the game for many years (it was my first MMO and the only one that held me more than a few months), so believe me when I say I was as saddened to see it go as anyone, but there seems to be an unwillingness by many to accept the very simple facts about its demise.

    Seriously, let it go already.

  • GrinnzGrinnz Utica, NYPosts: 310Member Uncommon
    I'm akin to believe they didn't want to fund CoH in light of their newer MMO's coming out, as it's resources could be put forth to maintaining the newer ones.

    image

  • GrakulenGrakulen Staff Writer St. Charles, MOPosts: 460MMORPG.COM Staff Uncommon
    There are a lot of people still seeking clarification around some of the financials surrounding the shut down. We had new information and wanted to share it with everyone.
  • victorbjrvictorbjr Quezon CityPosts: 185Member Uncommon

    Victor from Devil's Advocate here. Just wanted to say this was some intriguing reading just on the basis of the thought experiment alone.

     

    I'm earnestly hoping for a resurgence of this game in the future though. Here's to hoping,

     

    /heroicsalute

    A writer and gamer from the Philippines. Loves his mom dearly. :)

    Can also be found on http://www.gamesandgeekery.com

  • Rthuth434Rthuth434 uniondale, NYPosts: 346Member

    the game was NOT profitable. they were paying more in wages alone than the game pulled in for a few years now

  • gandalesgandales Pembroke Pines, FLPosts: 464Member
    I apologize for my previous writing, I didn't read through the end of the article. It is definitely a decent analysis. I still think that this mystery eventually will be clear out after a few years when it won't matter anymore.

     

     

  • erictlewiserictlewis Cottondale, ALPosts: 3,026Member Uncommon

    I sit here and wonder, if the game was truly making a profit then why shut it down. Usually you only shut down a game that is going down the toilet. In case we had a few games this year that should have been closed but are still going.

    So I am left to wonder why they did this as from what I could tell there were making a profit. So that leads to other questions to why.

  • superniceguysuperniceguy AnchorheadPosts: 2,278Member Uncommon
    Originally posted by Volkanik

    I really don't understand the need for the continual dissection of why City of Heroes was closed down.  Look at the player number figures from around Q3 of 2009 and you'll see a steady trend downward.  It was an old game that people gradually stopped playing.  Simple as that.

    I played the game for many years (it was my first MMO and the only one that held me more than a few months), so believe me when I say I was as saddened to see it go as anyone, but there seems to be an unwillingness by many to accept the very simple facts about its demise.

    Seriously, let it go already.

    Seriosuly, your first post is to come on and say that?

    This article does help to move on a bit. If this was not written, I think I still would be seriously hating NC Soft, because I strongly believed that it was making a profi, now it is 50/50. There is no confidence in saying whether it was profitable or not now, like it was 30 mins ago.

  • niceguy3978niceguy3978 Gainesville, FLPosts: 2,000Member
    I could be wrong, but isn't this the first time that NCSoft has come right out and said that the game was not profitable?  Before it seemed like it was just inferred from the fact that the game was shutting down.
  • Rthuth434Rthuth434 uniondale, NYPosts: 346Member
    their retention number was bullshit too, people would lapse their membership like crazy in that game and even uninstall it fo r long stretches.
  • cmgangrelcmgangrel DerbyPosts: 152Member

    This complies with to the notion that NCsoft tried to work with Paragon to make things work and keep the game alive, but the Q2 2012 Earnings Report seems to jive with our anonymous friend's claims. CoH seemed to, at least during that window, be bringing in around 3-4 million dollars a month in revenue. 

    ----------------------------------------------------------------------------------------------------------------------------------

    The only part I have a problem with is the above section.

    You link to the financial report, and say that it was bringing in $3-$4million per month, when the report that you linked to says that the figure is around $3million per *quarter* (granted, with currency conversions whatever that figure can fluctuate). I calculated it myself (around the time of the closure) that the game was bringing in roughly (at least via the financial reports, in the same fashion that has been used by the players over *multiple* years... ) roughly $2.5million - $3million per quarter, and although it had been semi stable over the past year since freedom, there was still a general downward trend.

    The days of it bringing in $3-$4million per month were several years ago, when it was in its early stages of life.

     

  • Rthuth434Rthuth434 uniondale, NYPosts: 346Member
    Originally posted by erictlewis

    I sit here and wonder, if the game was truly making a profit then why shut it down. Usually you only shut down a game that is going down the toilet. In case we had a few games this year that should have been closed but are still going.

    So I am left to wonder why they did this as from what I could tell there were making a profit. So that leads to other questions to why.

    it wasn't pulling in any money. Lineage, Lineage 2, AION and Guild Wars were their only profitable games since over a year ago. CoH was breaking even with the cost of paying its developers...this isn't counting other expenses.

  • GishgeronGishgeron Princeton, KYPosts: 1,287Member
    Originally posted by erictlewis

    I sit here and wonder, if the game was truly making a profit then why shut it down. Usually you only shut down a game that is going down the toilet. In case we had a few games this year that should have been closed but are still going.

    So I am left to wonder why they did this as from what I could tell there were making a profit. So that leads to other questions to why.

      Simply making a profit is not enough, thats why.  Your overhead is going to increase each year.  If the game is already on a downward trend, and you have exhausted all your options to try and pull it back into an upward trend, then you have to make choices.  It WAS profitable.  It was getting less profitable each year, while the cost to maintain it was going up.  Before the game began to leech money from other ends of their company, they closed it.  This way they could use that money to help something else, instead of the other way around.

     

    image

  • PheonyxPheonyx Chandler, AZPosts: 8Member

    There's two versions of this story... the truth and NC Soft's side. Have you all forgotten that this is the same company that FORGED A RESIGNATION LETTER FROM RICHARD GARRIOTT TO SHUT DOWN TABULA RASA? Sorry, but they only put out that statement to try to save face.

     

    Those numbers that source gave seem to be correct, because the costs of the server hardware were paid off by the time City of Villains came about (ie. BEFORE NC Soft bought City of Heroes IP outright). The only costs involved was electricity for them and some staff onsite in Austin, which NC Austin ate anyway because that is where the servers for the US servers for their other games (like Aion) are located. NC Austin didn't lay anyone off when CoH shuttered, they just had a little less work to do.

    50K a year average salary per employee is rather high in the gaming industry... try closer to 30K average and you will be closer; 50K average per employee sounds right if you are Blizzard/Activision, not a smaller development house like Paragon Studios/NCSoft.

     

    One other thing:

     

    ...the businessmen at the company decided a more suitable fate was to end the game's life altogether rather than let it become a financial viability and 'wither on the vine' 

     

    The businessmen in NCSoft didn't want it to become a "financial viability"? So basically, they didn't want City of Heroes to be successful? Yep, that sounds like NC Soft. Viability is a good thing, not withering on the vine. Of course now, the story will will be edited to put in the negative word, but this is more along the lines of the truth when it comes to NC Soft: The MMO Killer. They'd rather kill the family friendly Western game that was City of Heroes in favor of the adult (ie soft-pr0n) heavily Eastern grind fare that comes in the form of Blade & Soul which I predict correctly will tank spectacularly in the Western market just like Aion did. Aion's US server population is about 40K, but City had 100K. I'm sorry... which game should have been axed?

     
     
     
     

    [color=blue]"The coward knows only death; the hero knows only life"- Kakita Toshimoko, Legend of the Five Rings CCG/RPG

  • Rthuth434Rthuth434 uniondale, NYPosts: 346Member
    hell, TSW was in danger of closure and they were making a small profit. Funcom itself was making more money this year than last...the game still was not going to work and there's a chance it still won't be around for as long as CoH was...
  • Rthuth434Rthuth434 uniondale, NYPosts: 346Member
    Originally posted by Pheonyx

    There's two versions of this story... the truth and NC Soft's side. Have you all forgotten that this is the same company that FORGED A RESIGNATION LETTER FROM RICHARD GARRIOTT TO SHUT DOWN TABULA RASA? Sorry, but they only put out that statement to try to save face.

     

    Those numbers that source gave seem to be correct, because the costs of the server hardware were paid off by the time City of Villains came about (ie. BEFORE NC Soft bought City of Heroes IP outright). The only costs involved was electricity for them and some staff onsite in Austin, which NC Austin ate anyway because that is where the servers for the US servers for their other games (like Aion) are located. NC Austin didn't lay anyone off when CoH shuttered, they just had a little less work to do.

    50K a year average salary per employee is rather high in the gaming industry... try closer to 30K average and you will be closer; 50K average per employee sounds right if you are Blizzard/Activision, not a smaller development house like Paragon Studios/NCSoft.

     

    One other thing:

     

    ...the businessmen at the company decided a more suitable fate was to end the game's life altogether rather than let it become a financial viability and 'wither on the vine' 

     

    The businessmen in NCSoft didn't want it to become a "financial viability"? So basically, they didn't want City of Heroes to be successful? Yep, that sounds like NC Soft. Viability is a good thing, not withering on the vine. Of course now, the story will will be edited to put in the negative word, but this is more along the lines of the truth when it comes to NC Soft: The MMO Killer. They'd rather kill the family friendly Western game that was City of Heroes in favor of the adult (ie soft-pr0n) heavily Eastern grind fare that comes in the form of Blade & Soul which I predict correctly will tank spectacularly in the Western market just like Aion did. Aion's US server population is about 40K, but City had 100K. I'm sorry... which game should have been axed?

     
     
     
     

     

     

    yet all their reports show aion pulling in more money than CoH.

  • spitfire1064spitfire1064 malden, MAPosts: 61Member
    Originally posted by niceguy3978
    I could be wrong, but isn't this the first time that NCSoft has come right out and said that the game was not profitable?  Before it seemed like it was just inferred from the fact that the game was shutting down.

    Ya,Probably. They call this damage control.

    This game was making a profit, but look at the overall numbers and you will notice that COH compared to the rest of there games was a pimple on the bootie of a rhino, they had a shift in focus and decided to put there attention in the Asia market and over there COH is not popular at all for they don't get the whole superhero gig anyways.

    They were also not prepared for the backlash that cancelling that game brought, that's where the damage control comes in.

  • AkaisAkais Memphis, TNPosts: 274Member Common

    I'm inclined to think of this as an issue or profit margin rather than profit as well.

    NCSoft has a history of axing games that don't trend to their expectations when it comes to profit margin. 

    What I don't entirely understand is why the game couldn't get sold.

    It seems silly to me that NCSoft would turn down any potential profits able to be realized with the sale of a game with an installed and rather loyal fanbase. There are tons of companies that would pay handsomely for this. Likewise,  the IP is so niche that it's highly unlikely NCSoft will ever use it again constructively.

     

  • Rthuth434Rthuth434 uniondale, NYPosts: 346Member
    Originally posted by Akais

    I'm inclined to think of this as an issue or profit margin rather than profit as well.

    NCSoft has a history of axing games that don't trend to their expectations when it comes to profit margin. 

    What I don't entirely understand is why the game couldn't get sold.

    It seems silly to me that NCSoft would turn down any potential profits able to be realized with the sale of a game with an installed and rather loyal fanbase. There are tons of companies that would pay handsomely for this. Likewise,  the IP is so niche that it's highly unlikely NCSoft will ever use it again constructively.

     

     

    ...what if EA was looking to buy? i'd rathjer kill it then and most would agree. seriously couldn't have been any decent company looking to take it on. would you want to see a company like Ubisoft or Microsoft run a mmo again?

  • TanemundTanemund Orange, CTPosts: 102Member Uncommon

    It's hard to credit anonymous sources.  That goes double when the anonymous sources are saying things that everyone wants to believe in the first place.  Nothing sells like a conspiracy theory and nothing pushes a conspiracy theory like an anonymous source.

     

    Like it or not the fact we pay to play these games does not give us an ownership interest in them.  If the people who own the game want to shut the game down for any reason they have every right to shut it down.  "It's not making enough money" is a pretty good explanation of why the game was shut down.

     

    I like MMO hotstove as much as the next guy, but this milk is spilt.  I understand it's news, but it seems all we're doing is breading more mistrust and hatred for gaming companies here.  Actually that might make a good article; the love/hate relationship that exists between gamers and game makers.

    Many a small thing has been made large by the right kind of advertising.

  • TheQuinchTheQuinch Oz, SCPosts: 22Member

    Did I delete my own post? Oyyy... okay, let's try again.

    -cricks knuckles-

    Let's try to dissect this sucker. First, I'll try to quickly run through some of the anonymous info with what we've dug up before. Some of it is also anonymously sourced, so take it for what it's worth.

    The rough revenue is on target - it can be confirmed through NCsoft's own revenue reports. Going hybrid-F2P was also a profitable move, publicly confirmed by devs on every occasion it was brought up. Retention rate was a little lower than stated here - around 90% monthly. Clayton also tried to arrange Paragon buying itself from NCsoft, confirmed by Positron in open interview. The existence of the side project was an open secret for years, though details have been scarce - this info is the most we've ever gotten, I think. The $80 million price tag was confirmed by parties who approached NCsoft, in addition to contractual provisions that nobody in their right mind would sign. No idea about the actual operating costs, but devs have confirmed before the shutdown that the pay was on the low end of the scale, and that CoH was mainly a labor of love for them.

    And now, on to our ever so lovable liars. Though I do so very much appreciate that they finally took the time to actually say something.

    "The studio was unprofitable before the shutdown." - Oddly enough, up until now, NCsoft has gone out of their way not to say that the studio was unprofitable. In each of their previous casualties - Auto Assault, Exteel, Dungeon Runners and Tabula Rasa - they cited low subscription numbers and lack of interest as the reason for the shutdown. City of Heroes was signed off with a "realignment of company focus and publishing support" which quite honestly means absolutely nothing. While they stopped publishing subscriber numbers some time ago, the revenue was equivalent to around 60,000 $15 a month subscribers, a healthy income by any standard.

    "While we looked to sell the franchise multiple times, we were unsuccessful in finding a suitable partner that we thought would support City of Heroes’ fans in a manner they were accustomed to for years to come." - Let's disregard the fact that the studio itself tried to buy itself out for the moment and analyze that sentence. It means that somehow, closing the game entirely and making sure that it stays closed is somehow preferable to it being sold to someone who might not live up to the expectations. Not only that, but that they still think they know the fans well enough to make that decision. Nevermind that now CoH's players nearly unanymously treat NCsoft with complete contempt.

    "but the game and community will remain in our memories" - Frankly, that's what we're counting on.

    "We truly thank our fans for their years of support and we hope they understand the difficult position we were in when making the final decision." - Given the fact that NCsoft has never given us a reason for making that decision in the first place, it's pretty hard to be sure we understand their position. But if the dots we've been connecting for the past four months are anything to judge by, I'm pretty sure that us understanding their position does not in any way help their case. Given the moonlit burial in the backyard the game was given, it's far more likely they were expecting everyone to quietly shuffle off to Guild Wars 2 rather than speak up, let alone shout.

  • spitfire1064spitfire1064 malden, MAPosts: 61Member
    Originally posted by Tanemund

    It's hard to credit anonymous sources.  That goes double when the anonymous sources are saying things that everyone wants to believe in the first place.  Nothing sells like a conspiracy theory and nothing pushes a conspiracy theory like an anonymous source.

     

    Like it or not the fact we pay to play these games does not give us an ownership interest in them.  If the people who own the game want to shut the game down for any reason they have every right to shut it down.  "It's not making enough money" is a pretty good explanation of why the game was shut down.

     

    I like MMO hotstove as much as the next guy, but this milk is spilt.  I understand it's news, but it seems all we're doing is breading more mistrust and hatred for gaming companies here.  Actually that might make a good article; the love/hate relationship that exists between gamers and game makers.

    He's anonymous cause if he gives his name he's gonna be taken to the cleaners.

  • jtcgsjtcgs New Port Richey, ILPosts: 1,777Member

    All I see is someone trying to vilify NCSoft.

    CoH did NOT have a high retention rate, that is why the servers were merged, because of the LOW POPULATIONS. Their forums were filled with complaints about how the game was losing too many players and they were ASKING for the servers to be merged to help with the population problems.

    That alone is enough to debunk what this person was saying as nothing more than a disgruntled employee...or fan, pretending to be one.

    “I hope we shall crush...in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country." ~Thomes Jefferson

  • spitfire1064spitfire1064 malden, MAPosts: 61Member
    Originally posted by jtcgs

    All I see is someone trying to vilify NCSoft.

    CoH did NOT have a high retention rate, that is why the servers were merged, because of the LOW POPULATIONS. Their forums were filled with complaints about how the game was losing too many players and they were ASKING for the servers to be merged to help with the population problems.

    That alone is enough to debunk what this person was saying as nothing more than a disgruntled employee...or fan, pretending to be one.

    Wait......when were the servers merged? when did i miss that?

  • StarsmanStarsman Reiserstown, MDPosts: 14Member
    Originally posted by Rthuth434 

    yet all their reports show aion pulling in more money than CoH.

    CoH was pulling about two times what  Guild Wars 1 was pulling (look at NCSoft reports.) Why is Guild Wars 1 still running then?

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