IR PRESENTATION. September 2011

Transcription

1 IR PRESENTATION September 20 NCSOFT Corporation 5737 Samsungdong, Kangnamgu, Seoul 35090, KOREA Tel: Fax : Copyright c NCSOFT Corporation. All Rights Reserved

2 Disclaimer Some of the information and data in the material have been prepared based on assumptions. There can be no assurance that the assumptions used by NCsoft are correct and even if they are, that the effect of such assumptions on NCsoft s business and results of operations will be as projected. Therefore, NCsoft will not be responsible for individual investment decisions based solely on this material. The financial results for 2Q 20 have been prepared on an unaudited basis, and may be subject to change during independent auditing process. Also, figures in this presentation is KIFRS based unless otherwise noted. Consolidated subsidiaries (KIFRS based) : NC Interactive(00%, US), Arenanet(00%, US), NC Europe(00%, UK), NC Japan(60%, JP), NCsoft Japan(00%, JP), NC Taiwan(85%, TW), NCsoft Corporation(Parent, KR), Next Play(65%, KR), NCsoft Service(00%, KR), Oraion Soft(00%, KR) 2

3 Contents I. Overview. Industry Overview 2. Company Overview II. 2Q Earnings 3. Financial Highlight 4. Sales Breakdown 5. Costs Breakdown 6. Guidance for 20 III. Investment Point 7. Opportunity 8. Catalysts 9. Strength Appendix 0. Fee Structure. Parent Earnings 2. Summarized Financial Statements 3. Concept art 3

4 . Industry Overview(Characteristics & Categories) General Characteristics of Online Game Industry Fastgrowing industry High margin business Low cultural barriers Multiyear cycle business Categories of Online Game MMOG (Massively Multiplayer Online Games) MOG (Multiplayer Online Games) Web Board Games Definition Main User Base Product Life Cycle Business Model Development cost Thousands of players play in an evolving virtual persistent world simultaneously over the internet Hardcore users Male, young adults Relatively long (50 years) Mainly subscription fees, box sales in some regions High development cost over long development period (4~5 years) Online games with limited number of players in a single game world at a time Midcore & light users Male & female, from teens to 40 s Generally shorter than MMOGs Ingame items sales, optional fees for premium contents Relatively low development cost, shorter development period Simple card games such as chess, poker, etc. 4

5 2. Industry Overview(Growth Projection) Online is the fastest growing game platform with 36% CAGR 2002~202 China is the fastest growing online game market with 56% CAGR 2002~202 Game Markets by Platform Online Game Market by Regions 50 (Unit : USD in BN) 25 (Unit : USD in BN) (Source : Game White Paper 200, Ministry of Culture, Korea) E20E202E Mobile Video PC Arcade Online E20E202E Others Japan Europe NA China Korea

6 2. Company Overview(NCsoft At A Glance) A leading gaming company boasting worldclass development capability and global publishing network Foundation : March, 997 CEO : BOD : Employees** : 3,000 Taek Jin Kim Taek Jin Kim(CEO) Hee Sang Lee(COO) Jaeho Lee(CFO) Byoung Moo Park* Myoung Oh* Yun Seok Seo* Global network : Korea, North America, Europe, Japan, Taiwan, Thailand Ownership** : Snapshot Services MMORPG Casual Games Web Games & Board Games Domestic institution 26.4% Individual 7.8% Foreign 3.3% Management 25% Tresury Stock 9% Game Portal Music Content * Outside Directors ** As of August 20 6

7 22. Company Overview(Annual Revenue Trend) Legacy products remain solid or even growing Another quantum leap expected with Blade & Soul, Guild Wars 2, and Wildstar,200,000,000, ,000 Royalty Others AION Guild Wars City of Heroes/Villains Lineage2 Lineage B&S, GW2... (Unit : KRW in MN) 600, , ,000 0 Lineage2 AION GW CoH 252,00 26,733 9,682 8,207 52,754 0,600 8,953 9,206 3,54 47,2 Lineage 20, ,640 3,265 32,847 7,64 2,800 5,02 8,050,40 2,602 32,033 8,89 54, (E) 202(E) Consolidated earnings presented since 2002 Revenues in 202 are not company s official guidance but an example of substantial growth. 7

8 23. Company Overview(Lineage) Global Online Game Publisher NCsoft Lineage, one of the legacy games, is now stronger than ever Hybrid biz model(subscription plus ingame item sales) driving further growth 300,000 Annual Revenue of Lineage 70,000 Quarterly Revenue of Lineage (Unit : KRW in MN) (Unit : KRW in MN) 250,000 60,000 66, ,000 50,000 5,68 50,000 Ingame item sales 8,89 40,000 30,000 Ingame item sales 50,050 47,955 40,95 42,459 38,52 00,000 50, ,640 32,033 32,847 8,050 7,64 3,265 5,02 2,602 2,800,40 54, ,000 0,000 29,023 Q 08 28,088 2Q 08 26,605 3Q 08 29,35 28,887 27,48 4Q 08 Q 09 2Q 09 25,5 3Q 09 4Q 09 Q 0 2Q 0 3Q 0 4Q 0 Q 2Q 8

9 24. Company Overview(Development & Publishing Network) Global Online Game Publisher NCsoft Top talented developers in Korea, Japan, and U.S Well organized publishing arms in major markets such as Japan, Taiwan, Europe, U.S Europe NCsoft Europe (00%) Innova System (LineageII, AION) Korea NCsoft Corporation (Headquarters) Thailand NC True (49%, JV with True corp.) China Shanda (AION) Tencent (B&S, Lineage, LineageII, Punch Monster ) Taiwan Japan NC Japan (60%, JV with Soft Bank) NCsoft Japan (00%) NC Taiwan (85%, JV with Gamania) Gamania (Lineage) The Philippines AMDG (Lineage II in Singapore, Malaysia, and the Philippines) North America NC Interactive (00%) Carbine Studio (belongs to NCsoft Corporation) North California Studio (belongs to NC Interactive) Arenanet (00%) Development Studio Publishing Entity Third Party Studio License Partner 9

10 25. Company Overview(Project Management System) Individual project level : Project Review Committee(PRC), Milestone Review Committee(MRC) Global portfolio level : Portfolio Steering Committee(PSC) Development Unit PRC Proposal Milestone~ (Prototype) Production (Alpha) Idea Game MRC Check Check Check PRC Project Approval Termination if necessary Mass Production Approval 0

11 3. Financial Highlights Sales and operating profit grew QoQ thanks to strong ingame item sales promotion of Lineage Sales Operating Profit 200,000 50,000 68,304 57,02 60,45 66,85 55,492 00,000 80,000 (Unit : KRW in MN) 00,000 50,000 7% QoQ % YoY 60,000 40,000 20,000 29,549 49,377 27,73 40,76 43,497 7% QoQ 47% YoY 2Q 0 3Q 0 4Q 0 Q 2Q 2Q 0 3Q 0 4Q 0 Q 2Q Pretax Income Net Income 00,000 00,000 80,000 80,000 60,000 40,000 20,000 34,699 54,925 33,553 49,423 60,000 46,72 4,359 39,503 40,000 34,457 24,737 27,393 6% QoQ 42% YoY 20% QoQ 20,000 67% YoY 2Q 0 3Q 0 4Q 0 Q 2Q 2Q 0 3Q 0 4Q 0 Q 2Q

12 4. Sales Breakdown Lineage recorded the highest quarterly revenue ever, boosted by the strong item sales promotions. Lineage2 and AION dropped due to slow seasonality. 80,000 50,000 20,000 90,000 60,000 68,304 Sales by Region 2,367 (7%) 55,492,429 (%) 5,393 (3%) 5,975 (0%) 7,523 (0%) 5,298 (3%) 8,522 (5%) 20,90 (3%) 4,936 (9%) 5,499 (4%) 7,26 (5%) 66,85 4,393 (9%) 5,708 (3%) 7,05 (0%) 5,04 6,90 (3%) (4%) Royalty Others Taiwan Japan Europe (7%) 7,694 N. America 08,33 (64%) 0,404 (65%) Korea 80,000 50,000 20,000 90,000 60,000 55,937 2,833 (2%) 5,20 (3%) 3,49 (2%) Sales by Games (excluding royalty) 62,70 (40%) 30,704 (20%) 39,57 3,4 (2%) 2,306 (2%) 3,05 (2%) 6,425 (44%) 30,82 (22%) ( 단위 : 백만원 ) (Unit : KRW in MN) 52,422 2,98 (2%) 2,253 (%) (2%) 2,787 54,259 (36%) 23,854 (6%) Others GW COH/V AION L2 L 30,000 30,000 5,68 (33%) 38,52 (28%) 66,287 (43%) 2Q 0 Q 2Q 2Q 0 Q 2Q L : Lineage COH/V : City of Heroes/Villains L2 : Lineage 2 GW : Guild Wars 2

13 5. Costs Breakdown The high base in Q due to a hike in the employee benefit led to QoQ reduction in labor cost. Variable expense was up QoQ in line with the increasing sales. Marketing expense increased QoQ reflecting marketing campaigns like L2 updaterelated event. Other expense surged QoQ because of the oneoff donation to earthquake victims in Japan. * 2Q Others : Bandwidth costs(4,232), Rent(3,76), Wage for outsourced staff(2,933), Outsourced R&D(2,74), etc. (Unit : KRW in MN) 2Q 0 3Q 0 4Q 0 Q 2Q QoQ YoY Labor Cost 59,86 62,083 68,442 69,37 68,634 % 5% Variable expense 9,84 7,757 9,26 8,884 9,838 % 0% Payment processing fee 6,27 5,33 6,433 6,006 6,352 6% 2% Royalty expense 924,260,539,678,366 9% 48% Box production fee, , ,2 392% 23% Other variable, % 20% Marketing expense 2,394 6,74 4,77 3,36 3,968 27% 66% D&A 5,46 6,67 6,432 7,08 6,658 6% 29% Others(*) 28,28 27,377 3,660 26,554 28,04 5% % Sub Total 05,45 09,557 20,567 4,972 7,2 2% % Other Income 4,29 4,3 4,034 2,989 4,478 50% 8% Other Expense 37,468 2,208 6,69 2,793 0, % 7% Total 38,755 07,634 32,702 4,776 23,38 7% % 3

14 6. 20 Guidance Max 700 BN of revenues expected when item sales expansion and new games, etc. considered. Max 20 BN of OP expected with increase of development and marketing costs, etc. considered. 8,000 7, ~ 700 6,000 5,000 4,000 (Unit : KRW in BN) Revenues Operating Profit 3,000 2, ~ 20, FY 200 (IFRSadjusted) FY 20 (IFRSbased) * In order to enhance comparability, FY 200 earnings were adjusted based on IFRS. Notably, 33 BN KRW of oneoff lawsuit compensation was excluded from operating expenses. 4

15 7. Opportunity Online is the fastest growing game platform.(cagr 36%) Big potential for growth but only a few qualified players in the market Game Markets by Platform Annual Revenue Trend of Blizzard (The biggest online game company) Online Arcade PC Video Mobile (Unit : USD in BN),800,600,400 (Unit : USD in MN),646, Video CAGR 5%,200,082,96 50, Arcade CAGR % Online CAGR 36% E 20E 202E CY2004 CY2005 CY2006 CY2007 CY2008 CY2009 CY200 (Source: Game White Paper 200, Ministry of Culture, Korea) (Source: Hudson Square Research) 5

16 8. Catalysts New growth drivers : Blade & Soul, Guild Wars 2, Wild Star Hybrid business model (subscription + ingame item sales) Blade and Soul has... Guild Wars 2 has... A unique world view with Asian martial arts element As good actions and effects as console games Wider target audience through easy play Not only repetitive combats but also a variety of activities Well written stories and stunning visuals Other groundbreaking features that haven t been tried so far in MMOs A dynamic and interactive game experience Personalized storylines New depths of character customization An innovative combat system Intense player vs. player action A rich and fully realized fantasy world 6

17 82. Catalysts Blade & Soul s enhanced visibility by the largest st CBT ever in April and 2 nd CBT in August 20. AION s milestone st CBT in Korea 2 nd CBT in Korea 3 rd CBT in Korea OBT & Launch in Korea Launch in China Launch in Japan/Taiwan Launch in EU/US Oct ,000 testers April ,000 testers July ,000 testers OBT : Nov Launch : Nov April 2009 July 2009 Sep Blade & Soul s milestone st CBT in Korea 2 st CBT in Korea OBT & Launch in Korea Global launches expected to follow in major markets in 202 April 20 August 20 Yearend OBT/Launch expected 7

18 9. Strength Worldclass development capability and strong pipeline Global publishing network 3 years of operational knowhow and skills Wildstar..... Guild Wars 2 Blade and Soul AION Handson demo at PAX and GamesCom in 20 Lineage Launch: Sep. 998 Accumulated Sales: KRW,308 BN (launch~200) Service Country: 6 countries Latest Quarterly Sales: KRW 42 MN Lineage2 Launch: Oct Accumulated Sales: KRW 99 BN (launch~200) Service Country: 9 countries (EU counted as one) Latest Quarterly Sales: KRW 30 MN Launch : Nov Accumulated Sales: KRW 524 BN (launch~200) Service Country: 7 countries (EU counted as one) Latest Quarterly Sales: KRW 65 MN st CBT in April 20 2 nd CBT in August 20 Yearend OBT expected in 20 Handson demo at PAX and GamesCom in 200 Handson demo at PAX and GamesCom in 20 Yearend CBT expected in 20 8

19 Appendix 0. Fee Structure. Parent Earnings 2. Summarized Financial Statements 3. B&S screenshots 9

20 0. Fee Structures (Korea) L, L2, AION Global Online Game Publisher NCsoft Game Customer Products Content Price (Unit : KRW) Internet Café (B2B) Hourly Fee Coin system 3 second = G coin Lineage & Lineage2 Personal Account (B2C) Flat monthly Fee Flat monthly Fee & Hourly fee Prepaid monthly rate per account Unlimited usage Yellow(unlimited usage/7days): 9,000 Orange(unlimited usage/30days/item): 27,000 Purple(unlimited usage/90days): 64,000 Green(00 hrs/30days/5 items):27,000 Blue(300 hrs/30days/3 items): 27,000 Hourly fee Time coupon based on time units Payable by ARS (Audio Response System) 3 hrs : 3,000 5 hrs : 5,000 0 hrs : 8, hrs : 8,000 Internet Café (B2B) Hourly Fee Coin system 4 second = G coin AION Personal Account (B2C) Flat monthly Fee & Hourly fee Hourly fee Prepaid monthly rate per account Limited usage 30 days or 300 hrs : 9, days or 900 hrs : 47,520 Time coupon based on time units 3hrs : 3,000 30hrs : 2,000 20

21 02. Fee Structures (Overseas) L, L2 Global Online Game Publisher NCsoft Country Products Content Lineage Price Lineage II Price USA Flat monthly fee Subscription card Prepaid monthly rate per account Unlimited usage Month : US $ 5 3 Months : US $ 45 Box : US $ Month : US $ 5 Europe Flat monthly fee Subscription card Prepaid monthly rate per account Unlimited usage Box : ( ) Month : 2.99 ( 8.99 ) Japan Flat monthly fee Prepaid card Item sales Prepaid monthly rate per account Unlimited usage Based on period Free to Play (Item sales only) Month : JP 3,000 (US $ 25) 3 Months : JP 7,200 Internet Café Based on time units Hour : JP 40 Hour : JP 40 Taiwan Prepaid card Flat monthly fee Scratch coupon based on time units Unlimited usage 2 Hours : NT 20 Month : NT 369 (US $ 2) 2 Hours : NT 25 Month : NT 480 (US $ 5) China Flat monthly fee Prepaid card Item sales Scratch coupon based on time units Unlimited usage 25 Hours: RMB 0 (50P) Month : RMB 48 (800P) (US $ 6) * point = 0 minutes Free to Play (Item sales) 20 Hours : RMB 0 (50P) Month : RMB 48 (800P) (US $5) * point = 8 minutes Thailand Prepaid card Flat monthly fee Scratch coupon based on time units Unlimited usage True Money Cash Card(9hrs): Baht 50 True Money Cash Card(unlimited usage/0days): Baht 50 True Money Cash Card(unlimited usage/22days): Baht 300 2

22 03. Fee Structures (Overseas) AION Global Online Game Publisher NCsoft Country Products Content Box price Price USA Box Flat monthly fee Box Unlimited usage Box : US $ Monthly subscription : US $ 4.99 Europe Box Flat monthly fee Box Unlimited usage Box : UK Euro Monthly subscription : UK 8.99 Euro 2.99 Japan Flat monthly fee Prepaid monthly rate per account Based on period ) Lite : 30 days / 00hrs :,800 yen 2) Regular : 30days / 300hrs : 3,000 yen 3) Premium : 90days / unlimited : 7,800 yen 4) Legion Plus : 90days / unlimited : 7,800 yen Taiwan Flat monthly fee Prepaid card Prepaid monthly rate per account Scratch coupon based on time units Monthly subscription : NTD 430 Monthly subscription (3 months) : NTD,290 2 Hours : NTD 8 China Prepaid card Scratch coupon based on time units Hour: RMB

23 04. Fee Structures (Overseas) COX, GW Global Online Game Publisher NCsoft City of Heroes/Villain Guild Wars 23

24 . Financial Highlights (Parent) Global Online Game Publisher NCsoft Sales Operating Profit 50,000 32,98 22,42 27,448 26,93 40,48 00,000 (Unit : KRW in MN) 00,000 50,000 0% QoQ 5% YoY 80,000 60,000 40,000 36,670 57,577 4,850 52,602 63,852 2% QoQ 74% YoY 20,000 2Q 0 3Q 0 4Q 0 Q 2Q 2Q 0 3Q 0 4Q 0 Q 2Q 00,000 Pretax Income 00,000 Net Income 80,000 60,000 40,000 20,000 4,847 63,57 47,80 58,864 69,920 9% QoQ 67% YoY 80,000 60,000 40,000 20,000 32,489 48,439 40,004 47,470 56,656 9% QoQ 74% YoY 2Q 0 3Q 0 4Q 0 Q 2Q 2Q 0 3Q 0 4Q 0 Q 2Q 24

25 2. Sales Breakdown (Parent) Global Online Game Publisher NCsoft Sales by Games Quarterly Royalty 50,000 00,000 50,000 32,98 24,922 2,247 42,355 5,886 26,93 25,620 2,975 47,294 5,899 40,48 22,492 2,40 4,35,28 Royalty Others AION L2 L 30,000 25,000 20,000 5,000 0,000 23,93 24,922 (Unit : KRW in MN) 25,620 24,445 24,762 22,492 47,508 35,43 62,685 5,000 2Q 0 Q 2Q Q 0 2Q 0 3Q 0 4Q 0 Q 2Q 25

26 3. Costs Breakdown (Parent) (Unit : KRW in MN) 2Q 0 3Q 0 4Q 0 Q 2Q QoQ YoY Labor cost 40,75 42,242 47,46 48,649 49,304 % 2% Variable expense 5,46 4,962 5,656 6,8 6,074 % 2% Payment processing fee 4,27 3,457 3,972 4,389 4,664 6% 9% Royalty Expense 864,265,69,704,379 9% 60% Other variable % 89% Marketing expense,88 2,058 2,729,703 3,285 93% 76% D&A 2,073 2,297 2,694 2,9 3,38 8% 5% Others 5,064 2,765 6,60 3,995 5,557 % 3% Sub Total 64,457 64,324 74,655 73,375 77,359 5% 20% Other Income 3,004 2,725 68,552 3,276 % 9% Other Expense 34,795 2,965,56 2,506 2,23 2% 94% Total 96,248 64,564 85,598 74,329 76,296 3% 2% 26

27 4. Equity Method Gain/Loss (Parent) Global Online Game Publisher NCsoft (Unit : KRW in MN) 2Q 0 3Q 0 4Q 0 Q 2Q QoQ YoY Domestic Subsidiaries (,037) (67) (792) % Orion Soft (3) 85 (89) 40 (259) Next Play (,349) (,32) (,59) 0 0 Crazy Diamond (5) (40) % NCsoft Service 20 9 (204) 55 (8) Zepetto % 35% NC Dinos Baseball Club Overseas Subsidiaries (,074) (,885) (3,969) (6,756) (8,770) NC Interactive (2,73) (4,937) (3,982) (5,874) (5,235) Arenanet NC Europe (2,86) (2,40) (2,437) NC Japan (3,067) Ncsoft Japan (45) 8 (24) 0 (7) NC Taiwan (76),38 353% NC True % 8% Total (2,) (2,556) (4,760) (6,4) (8,203) 27

28 5. Quarterly Sales by Subsidiaries (Parent) Global Online Game Publisher NCsoft (Unit : KRW in MN) 2Q 0 3Q 0 4Q 0 Q 2Q QoQ YoY NC Interactive 5,022 2,934 8,06 7,24 6,972 3% 54% Arenanet, % 55% NC Europe 8,522 7,668 6,829 5,499 5,04 9% 4% NC Japan 7,806 9,226 23,462 20,056 7,267 4% 3% NC Taiwan 5,536 5,50 5,25 5,298 5,78 8% 3% NCsoft Japan,299,488 2,202,407,364 3% 5% NC True 2,59 3,095 4,060 4,629 4,292 7% 66% 합계 52,259 50,603 50,582 44,779 4,298 8% 2% 28

29 2. Summarized Statement of Financial Position Global Online Game Publisher NCsoft Consolidated (Unit : KRW in MN) Parent (Unit : KRW in MN) 200 H 20 Current Assets 728, ,567 Cash & cash equivalents 65,030 63,339 Shortterm financial instruments 53, ,46 Account receivables 67,47 66,364 Others 65,479 63,402 Noncurrent Assets 305,79 442,58 Investment Assets 84,232 8,203 Tangible Assets 98,376 33,778 Intangible Assets 0,06 30,60 Others 2,555 7,440 Total Assets,034,74,79,48 Current Liabilities 89, ,680 Borrowings 2,09 73,833 Other Payables 6,89 0,032 Current tax liabilities 29,035 4,758 Others 42,423 76,057 Noncurrent Liabilities 75,387 76,362 Defined benefit obligations 23,96 29,229 Longterm employee benefits 9,77,005 Others 42,250 36,28 Total Liabilities 265,053 35,043 Capital Stock 0,903,46 Other Paidup Capital 08,82 4,262 Other Components of Equity 3,804,230 Retained Earnings 632, ,825 Minority Interest Total Stockholders Equity 769,2 828,05 Total Liabilities and Stockholders Equity,034,74,79, H 20 Current Assets 65,33 673,722 Cash & cash equivalents 9,794 9,673 Shortterm financial instruments 530, ,000 Account receivables 58,546 55,865 Others 52,793 68,83 Noncurrent Assets 36,570 49,659 Investment Assets 46,753 59,808 Tangible Assets 79, ,75 Intangible Assets 24,33 23,780 Others 0,864 2,895 Total Assets,02,703,65,38 Current Liabilities 43,222 98,63 Borrowings 65,000 Other Payables 9,567 3,58 Current tax liabilities 30,86 8,458 Others 03,469 0,547 Noncurrent Liabilities 65,408 7,74 Defined benefit obligations 22,425 27,779 Longterm employee benefits 8,54 0,754 Others 34,442 32,64 Total Liabilities 208, ,336 Capital Stock 0,903 0,96 Other Paidup Capital 08,82,09 Other Components of Equity 3,804,230 Retained Earnings 680, ,809 Total Stockholders Equity 804, ,045 Total Liabilities and Stockholders Equity,02,703,65,38 29

30 22. Summarized Income Statement Global Online Game Publisher NCsoft Consolidated (Unit : KRW in MN) 200 H 20 Sales 655, ,307 Cost of Sales 44,809 69,579 Gross Profit 5, ,727 Selling & Administrative Expense 287,877 62,505 Other Income 3,922 7,467 Other Expense 60,369 3,476 Operating Income 76,772 84,23 Finance Income 2,979 2,373 Finance Expense Income before Income Tax Expense 98,28 96,45 Income Tax Expenses 50,795 22,493 Minority Interest 548 2,63 Net income 46,785 75,85 Parent (Unit : KRW in MN) 200 H 20 Sales 54, ,079 Cost of Sales 78,99 48,085 Gross Profit 435,666 28,994 Selling & Administrative Expense 83,70 02,649 Other Income 7,46 4,828 Other Expense 52,60 4,79 Operating Income 206,942 6,454 Finance Income 2,582 2,33 Finance Expense Income before Income Tax Expense 228,524 28,784 Income Tax Expenses 48,698 24,659 Net Income 79,826 04,26 30

31 3. Concept art(blade & Soul) Global Online Game Publisher NCsoft 3

32 32. Concept art(guild Wars 2) Global Online Game Publisher NCsoft 32

33 33. Concept art(wildstar) Global Online Game Publisher NCsoft 33

34 Thank you 34