NCsoft Presentation. January 2011

Transcription

1 NCsoft Presentation January 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. Consolidated subsidiaries : NC Interactive (00%), NC Europe (00%), NC Japan (60%), NC Taiwan (85%) 2

3 Contents I. Overview. Industry Overview 2. Company Overview II. 3Q0 Earnings 3. Financial Highlight 4. Sales Breakdown 5. Costs Breakdown 6. Guidance for 200 III. Investment Point 7. Opportunity 8. Catalysts 9. Strength Appendix 0. Fee Structure. Parent Earnings 2. Summarized Financial Statements 3. Screenshots from B&S and GW2 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 Markets by Region 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(Annual Revenue Trend) Legacy products such as Lineage and Lineage2 remain solid or even keep growing. Another quantum leap expected with Blade & Soul and Guild Wars 2 starting from 20.,000,000 Royalty 900,000 Others 800,000 AION Guild Wars 700,000 City of Heroes/Villains Lineage2 600,000 Lineage 500, , ,000 Lineage2 AION GW CoH 252,00 9,682 (Unit : KRW in MN) B&S, GW ,000 52,754 0,600 8,953 9,206 3,54 47,2 Lineage 20,756 00,000 3,265 32,847 7,64 2,800 5,02 8,050,40 2,602 32, ,640 54, (E) 20(E) 202(E) Consolidated earnings presented since 2002 Revenues in 20 and 202 are not company s official target but an example of substantial growth. 6

7 22. Company Overview(Lineage) Lineage, the 2 years old legacy game, still enjoying longevity. Business model diversification like subscription plus ingame item sales leading to further growth. Annual Revenue Trend of Lineage Quarterly Revenue Trend of Lineage 300,000 (Unit : KRW in MN) 60,000 (Unit : KRW in MN) 250,000 50, ,000 40,000 Ingame item sales 50,000 Ingame item sales 30,000 5,225 50,050 47,507 00,000 50, ,847 32,033 8,050 7,64 3,265 5,02 2,602 2,800,40 54, ,640 20,000 0,000 28,088 29,35 29,023 28,887 26,605 27,48 25,5 40,483 Q 082Q 083Q 084Q 08Q 092Q 093Q 094Q 09Q 02Q 03Q 0 7

8 23. Company Overview(Development & Publishing Network) Top talented developers in Korea, Japan, and U.S Well organized publishing arms in major markets such as Japan, Taiwan, Europe, U.S, and China Europe NCsoft Europe (00%) Innova System (LineageII, AION) Korea NCsoft Corporation (Headquarters) Thailand NC True (49%, JV with True corp.) China NC China (00%) Shanda (AION) 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 8

9 24. 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 9

10 25. Company Overview(MMORPG line up) Released Games Lineage( 98) Lineage II( 03) City of Heroes( 04) Guild Wars( 05) City of Villains( 05) Aion( 08) Games to be released Several Unannounced Titles Blade & Soul in 20 Guild Wars 2 Carbine Studio Project 0

11 26. Company Overview(Casual games line up) Released Games Exteel( 05) Robot Action Dungeon Runners( 06) Action RPG Atrix( 07) Action Point Blank( 08) FPS/Shooter Lovebeat( 08) Rhythm & Dance Punch Monster( 0) Casual RPG Games to be released Several Unannounced Titles Dragonica Steel Dog Metal Black

12 3. Financial Highlights Sales and Operating Profit were down QoQ due to soft Lineage sales. Pretax Income and Net Income were up thanks to the low base in 2Q. 200,000 50,000 00,000 66,280 97,275 Sales 67,447 67,570 55,757 7% QoQ 6% YoY 00,000 80,000 60,000 40,000 56,569 Operating Profit 87,50 76,729 70,78 (Unit : KRW in MN) 55,22 22% QoQ 2% YoY 50,000 20,000 3Q 09 4Q 09 Q 0 2Q 0 3Q 0 3Q 09 4Q 09 Q 0 2Q 0 3Q 0 00,000 80,000 60,000 40,000 20,000 57,450 Pretax Income 89,275 78,400 4,932 6,959 48% QoQ 8% YoY 00,000 80,000 60,000 40,000 20,000 46,877 70,07 Net Income 58,237 30,392 47,302 56% QoQ % YoY 3Q 09 4Q 09 Q 0 2Q 0 3Q 0 3Q 09 4Q 09 Q 0 2Q 0 3Q 0 2

13 4. Sales Breakdown Lineage dropped QoQ as some of the ingame item sales were spread over to 4Q. Both Lineage2 and AION remained solid. (Unit : KRW in MN) 80,000 50,000 20,000 90,000 60,000 30,000 Sales by Region 66,280 67,570 3,020 (8%) 2,784 (8%) 55,757 8,857 (5%) 5,536 (3%) 2,946 (8%) 7,805 (%) 5,50 (4%) 23,295 (4%) 8,522 (5%) 9,7 (2%) 7,007 (0%) 4,936 (9%) 7,668 (5%) Royalties 2,87 (8%) Taiwan 24,80 (5%) Japan Europe N. America 07,987 (64%) Korea 97,697 (63%) 79,922 (48%) 80,000 50,000 20,000 90,000 60,000 30,000 78,958 (52%) 37,352 (24%) 25,5 (6%) Sales by Games (excluding royalty) 53,260 54,786 2,245 (%) 2,679 (2%) 4,084 5,20 5,47 (3%) (3%) 3,49 (4%) (2%) 62,368 (40%) 29,903 (9%) 5,225 (33%) 42,8 (2%) 2,32 2,745 (2%) 5,709 (4%) 62,958 (44%) 28,594 (20%) 40,483 (28%) Others GW COH/V AION L2 L 3Q 09 2Q 0 3Q 0 3Q 09 2Q 0 3Q 0 L : Lineage L2 : Lineage 2 3

14 5. Costs Breakdown Payroll rose because of headcount increase and incentives. Advertising surged due to game shows, new expansion packs, and casual games release. (Unit : KRW in MN) 3Q 09 4Q 09 Q 0 2Q 0 3Q 0 QoQ YoY Payroll 53,086 53,32 48,642 50,36 52,705 5% % Sales variables costs 4,485 4,439 9,595 0,046 7,788 22% 46% Royalties,935 2,2,793 2,247,906 5% 2% Payment processing fees 5,282 6,628 5,743 5,270 4,52 4% 5% Sales commissions 2,733 2, % 00% Box production costs 3,709, , % 77% Other variables , % 38% Advertising 8,75 4,68,407,856 5, % 34% D&A 6,950 7,586 5,75 6,88 6,940 2% 0% Others(*) 26,440 29,748 25,360 28,447 27,374 4% 4% Total 09,7 09,765 90,78 96,852 00,545 4% 8% * 3Q0 Others : Bandwidth(2,903), Rent(2,455), Wage for outsourced staff(4,643), Outsourced R&D(84) etc. 4

15 6. Guidance for 200 (Unit : KRW in MN) 800,000 Sales & Operating Profit 800,000 Sales by Games 700, , , ,000~700, , ,742 49,87 8,674 7,26 22, ,000 50,000 24,000 9,000 9, , ,000 Revenues Operating Profit 400, , ,000 3% YoY Royalty Others GW COH/V AION 300, , ,000 ~ 250,000 L2 L 200, ,000 52,754 4,000 8% YoY 00,000 표준 표준 32,033 27,000 4% YoY 표준 표준 5

16 7. Opportunity Online platform is the fastest growing game platform.(36% vs. 5%). Despite the potential for growth, there are 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) Video CAGR 5%,600,400,200,000,082 (Unit : USD in MN),346, Arcade CAGR % Online CAGR 36% E 20E 202E (Source: Game White Paper 200, Ministry of Culture, Korea) CY2004 CY2005 CY2006 CY2007 CY2008 CY2009 (Source: Hudson Square Research) 6

17 8. Catalysts New growth drivers; Blade & Soul, Guild Wars 2 Business model diversification through microtransaction 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 7

18 9. Strength World class development capability and strong pipeline Global Publishing Network 2 years of operational knowhow and skills Guild Wars 2... Blade and Soul AION Lineage2 Lineage Launch: Sep. 998 Accumulated Sales: USD.3 BN (launch~3q0) Service Country: 6 countries Latest Quarterly Sales: USD 37 MN Launch: Oct Accumulated Sales: USD 0.8 BN (launch~3q0) Service Country: 9 countries (EU counted as one) Latest Quarterly Sales: USD 26 MN Launch : Nov Accumulated Sales: USD 0.44 BN (launch~3q0) Service Country: 7 countries (EU counted as one) Latest Quarterly Sales: USD 57 MN 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 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 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 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 City of Heroes/Villain Guild Wars 23

24 . Financial Highlights (Parent) Sales Operating Profit (Unit : KRW in MN) 50,000 00,000 50,000 06,035 38,864 32,49 32,98 00,000 22,42 80,000 68,339 7,09 68,873 60,000 58,36 8% QoQ 39,98 5% YoY 40,000 6% QoQ 46% YoY 20,000 3Q 09 4Q 09 Q 0 2Q 0 3Q 0 3Q 09 4Q 09 Q 0 2Q 0 3Q 0 Pretax Income Net Income 00,000 80,000 60,000 40,000 20,000 50,280 85,850 75,487 40,342 60,920 5% QoQ 2% YoY 00,000 80,000 60,000 40,000 20,000 42,929 70,07 58,237 30,392 47,302 56% QoQ 0% YoY 3Q 09 4Q 09 Q 0 2Q 0 3Q 0 3Q 09 4Q 09 Q 0 2Q 0 3Q 0 24

25 2. Sales Breakdown (Parent) (Unit : KRW in MN) Sales by Games Quarterly Royalty 50,000 35,000 00,000 50,000 06,035 26,3,875 36,360 32,98 24,922 2,247 42,355 5,886 22,42 24,445 2,426 43,056 5,824 Royalty Others AION L2 L 30,000 25,000 20,000 5,000 0,000 3,966 25,300 26,3 30,368 23,93 24,922 24,445 20,787 20,899 47,508 36,39 5,000 3Q 09 2Q 0 3Q 0 Q 09 2Q 09 3Q 09 4Q 09 Q 0 2Q 0 3Q 0 25

26 3. Costs Breakdown (Parent) (Unit : KRW in MN) 3Q 09 4Q 09 Q 0 2Q 0 3Q 0 QoQ YoY Payroll 4,50 40,880 38,37 39,384 40,798 4% 2% Sales variables costs 6,39 7,852 6,432 5,423 4,98 8% 2% Royalties ,4 864,265 46% 25% Payment processing fees 2,96 3,75 4,36 4,277 3,464 9% 7% Sales commissions 2,733 2, % 00% Other variables % 297% Advertising,426,83 958,5,86 62% 30% D&A 3,42 3,585 2,953 3,225 3,625 2% 6% Others 3,449 6,377 2,650 4,86 2,74 4% 5% Total 66,7 70,525 6,30 64,045 64,006 0% 3% 26

27 4. Equity Method Gain/Loss (Parent) (Unit : KRW in MN) 3Q 09 4Q 09 Q 0 2Q 0 3Q 0 QoQ YoY Domestic Subsidiaries (88) (4) (,670) (,037) (67) Orion Soft 35 (30) 67 (3) 85 4% Next Play (209) (43) (,795) (,349) (,32) Crazy Diamond (27) 60 8 (5) (40) NCsoft Service 207 (99) % 8% Zepetto 0 0 (5) % Overseas Subsidiaries 9,557 3,79 3,273 (,074) (,885) NC Interactive 2,388 2,44 (2,060) (2,73) (4,937) Arenanet NC Europe 4,047 8,35 2, % 79% NC Japan,546, % 74% Ncsoft Japan 84 (653) (307) (45) 8 9% NC China (98) % NC Taiwan,583,244, % 44% NC True % 676% Total 9,469 2,768,604 (2,) (2,556) 27

28 5. Quarterly Sales by Subsidiaries (Parent) (Unit : KRW in MN) 3Q 09 4Q 09 Q 0 2Q 0 3Q 0 QoQ YoY NC Interactive 24,200 24,073 2,980 5,022 2,934 4% 47% Arenanet, , % 37% NC Europe 7,007 22,727,256 8,522 7,668 0% 55% NC Japan 23,294 25,747 8,884 7,806 9,226 8% 7% NC Taiwan 8,857 6,520 6,83 5,536 5,50 0% 38% NC China,970,935,687,429,362 5% 3% NC True,09,325,877 2,59 3,095 9% 84% 합계 77,495 83,37 53,527 52,389 50,478 4% 35% 28

29 2. Summarized B/S Consolidated Parent (Unit : KRW in MN) Q 200 Current Asset 303, ,52 746,359 Quick Assets 30,857 62,23 745,024 Inventories 2,022,308,335 Noncurrent Assets 24, ,86 254,333 Investment Assets 6,002 23,972 32,09 Property, Plant and Equipment 62,764 69,757 73,825 Intangible Assets 6,990,978 2,652 Others 8,924 23,54 35,747 Total Assets 58,559 85,382,000,692 Current Liabilities 83,45 87,344 59,450 Noncurrent Liabilities 0,989 5,987 58,867 Total Liabilities 94,34 203,33 28,37 Capital Stock 0,237 0,855 0,899 Capital Surplus 48, ,44 2,63 Capital Adjustments (92,852) (00,638) (02,795) Accumulated Other Comprehensive Income 5,048,865 2,629 Retained Earnings 342,987 58, ,57 Minority interest 0,530 3,405 5,96 Total Stockholders Equity 424, ,05 782,375 Total Liabilities and Stockholders Equity 58,559 85,382,000,692 (Unit : KRW in MN) Q 200 Current Asset 234, ,49 647,072 Quick Assets 234, , ,964 Inventories Noncurrent Assets 239,49 287, ,808 Investment Assets 65,483 08,389 5,67 Property, Plant and Equipment 54,9 56,655 60,05 Intangible Assets 4,990 2,65 3,568 Others 4,06 9,688 26,02 Total Assets 473, ,766 95,879 Current Liabilities 48,057 30,088 28,468 Noncurrent Liabilities 0,95 6,032 56,997 Total Liabilities 58,252 46,20 85,466 Capital Stock 0,237 0,855 0,899 Capital Surplus 48, ,44 2,63 Capital Adjustments (92,852) (00,638) (02,795) Accumulated Other Comprehensive Income 5,048,865 2,629 Retained Earnings 344,669 58, ,57 Total Stockholders Equity 45, , ,44 Total Liabilities and Stockholders Equity 473, ,766 95,879 29

30 22. Summarized P/L Consolidated Parent (Unit : KRW in MN) Q 200 Sales 346, , ,774 Cost of goods sold 08,549 53,996 07,68 Gross profit 238, , ,55 Selling & Administrative expense 88, ,747 80,497 Operating income 50, , ,659 Nonoperating income 22,709 23,544 29,234 Nonoperating expense 3,755 6,840 49,602 Income before income tax expenses 4,03 240,703 82,29 Income Taxes Expenses 3,346 52,408 44,793 Minority interest 2,038 4,06,567 Net income 25,630 84,89 35,93 (Unit : KRW in MN) Q 200 Sales 240, ,52 387,209 Cost of goods sold 63,493 89,489 59,074 Gross profit 76, , ,35 Selling & Administrative expense 3,50 63,482 30,07 Operating income 45,580 99,550 98,029 Nonoperating income 27,4 40,995 33,77 Nonoperating expense 35,385 3,309 55,05 Income before income tax expenses 37, ,236 76,748 Income Taxes Expenses 9,996 44,729 40,87 Net income 27,32 82,506 35,93 30

31 3. Screenshots(Blade & Soul) 3

32 3. Screenshots(Blade & Soul) 32

33 32. Screenshots(Guild Wars 2) 33

34 32. Screenshots(Guild Wars 2) 34

35 Thank you 35