I got the news from Massively, but it’s everywhere: NCSoft is sunsetting City of Heroes before the end of the year, folding Paragon Studios and letting go of all staff, due to a "realignment of company focus and publishing support." While City of Heroes has always been a game I respected more than liked, there is no question that it has had a fine and decent run and contributed a great deal to the hobby both when it launched and afterward. Best wishes and speedy re-employemnt to all the fine and talented folks at Paragon who after years in the trenches, as usual, take it in the dumper so some suit can pay himself out a multi-million dollar bonus and buy a new yacht and a couple of rentboys.
As to the closure itself, I am wholly unshocked and even predicted that another high-profile title would fall this year. How I didn’t point to NCSoft’s stable of games as being particularly vulnerable possibilities is something I can’t quite reason out now.
My guess, based on the subtext of NCSoft’s announcement of a second-quarter loss, is that Aion, the company’s internally-developed baby, which took a revenue hit of about 35% over the preceding year despite a switch in most of the world to a f2p model, is tanking steadily and that City of Heroes is taking the hit in the name of tightening the corporate belt.
I don’t have any insider information regarding NCSoft’s finances. However, as a publicly traded company some of it has to be available for public perusal. And NCSoft has a whole took about at 16% hit in revenue over the same period… while at the same time, costs for development of Guild Wars 2 and for marketing the Korean launch of Blade & Soul were being accrued. Plus, in Q1, NCSoft bought $97 million (about two Rifts worth of development,) worth of interest in Korean casual game company Ntreev, leading to a 25% surge in total costs. In a situation like this a company might feel like it has to do something to reassure the shareholders that they have their money under control.
City of Heroes itself brought in just under 1% of the company’s total revenue in Q2, and the guts of what Paragon Studios was bringing in and paying out aren’t available. (As an aside, I note that Lineage 1 is still the company’s financial backbone, bringing in more revenue that both Lineage 2 and Aion combined.) But CoH seemed to many of us (from outside) to be a stable and healthy game. Perhaps not growing even with the f2p change, but not obviously in danger. And yet the NCSoft axe strikes again. Perhaps it wasn’t profitable, but NCSoft has shown in the past that it’s ready to be absolutely ruthless and final about closing titles that are insufficiently profitable. It’s shown no interest, ever, in trying to improve the market position of a title that didn’t do well right out of the gate. One might be inclined to take the f2p transitions of Aion and CoH as those kinds of efforts, but if so, it’s failed both times — Aion made 30% less money the quarter after it went f2p. So much for the “perfect f2p model” that some are touting as superior to those of games like EQ2 or LotRO — which are apparently working better for those titles.
Business is business. But the lesson for gamers should be clear: If you like any of NCSoft’s games, don’t get too attached. That applies to any MMO, really, for which you're dependent on an external publisher to continue providing game services. But especially for NCSoft's titles. Lesson #2 is "don't aspire to work in the video game industry, for it is a dreadful business." Unless you're lucky enough to snag a spot with one of the handful of companies that doesn't pull this kind of shit once a year.