NCSoft's Q1 Financials: Everything's Down, But That's OK, Right?

Having looked through a bunch of financial reports lately, I'm amused by how, no matter how bad a quarter might look, the language will always be positive. There's always a perfectly valid reason why the numbers are down, but don't worry! They'll be better soon, trust us! In the case of NCSoft's latest report for the first quarter of 2015, I'm actually willing to believe it.

If you compare Q1 2015 to Q1 2014, total sales for all NCSoft products are down 20%, while operating profit is down a staggering 49%. The report explains this away by saying

Sales and operating profit declined from a high base created in 4Q due to year-end promotions. However, both sales and operating profit are expected to rebound in 2H as momentum is created from new online and mobile game launches.

The "post-holiday blues" reasoning might have some merit, since year-over-year numbers -- comparing Q1 2015 to Q1 2014 -- are virtually the same across all counting methods. So maybe it really is just a cyclical, yearly thing.

Really, much of the damage comes from Lineage's slide. Sales for the game had been growing by leaps and bounds for the past year but dropped back to Earth in Q1, losing about 1/3 of its sales, going from about 96 billion Korean won to 66 billion KRW. Lineage II also dropped significantly, from 19.4 billion to 11 billion. Meanwhile, Aion, Blade & Soul, and Guild Wars 2 held mostly steady.

And WildStar? Down another 50% in sales, from 5.5 billion KRW to 2.6 KRW. That F2P/B2P transition can't come soon enough, even if some folks don't want to talk about it.

As is the case with most "down" financial reports, the overall tone of the document is one of optimism for the future and pointing out the positives. Hey, expenses are down! Blade & Soul is big in Taiwan! That Guild Wars 2 expansion sure looks swell! NCSoft has weathered worse dry spells before, so the company's probably OK with a slightly down quarter. After all, companies that are in financial trouble don't do stuff like this:

Labor costs increased in 1Q, due to a special one-off bonus paid to all employees.