NCsoft Corporation, publisher of popular online games including Guild Wars, City of Heroes and Lineage, yesterday reported second quarter 2006 sales of $88.6m, operating income of US$1.8m, pre-tax income of US$4.1m and a net loss of $207,000. Some analysts raised concerns that the company was increasingly reliant on a strong but narrow revenue stream from Guild Wars.

Sales in North America and Europe have surged 70 per cent quarter on quarter, aided by brisk 'Guild Wars Chapter 2' sales in second quarter 2006, commented analysts from Seoul-based Hyundai Securities in a research note. Guild Wars Chapter 2 refers to the expansion pack 'Guild Wars: Factions', which added new regions, skills and missions to the game world.

NCsoft has successfully made the jump from a one-hit wonder, replacing Lineage with Guild Wars as its main revenue earner – few other massively multiplayer games companies have accomplished this much. But analysts warned that sales of the company's stronger games, like Lineage, Lineage II and City of Heroes were mostly down, with only Guild Wars and its successful expansion packs producing outstanding results.

"It is hard to expect NCsoft’s fundamentals to improve in the short term, as there are no highly anticipated games in the pipeline that can drive up sales at home and abroad, apart from 'Guild Wars Chapter 3', which should be launched in the fourth quarter of 2006 through subsidiaries in North America and Europe,” noted Hyundai Securities.

NCSoft's hopes of a summer hit with Auto Assault have not been realised. Operating income saw a downturn due to the one time write-off of approximately US$13.1m of costs related to sluggish sales of the multiplayer online car fighting and racing game, released in North America and Europe during the second quarter.

A new game, AION, could provide a much needed domestic boost for NCSoft in Korea. “We expect domestic sales to improve in earnest in the second quarter of 2007, as an open-beta service of much awaited AION seems possible in the first quarter of 2007,” commented Hyundai Securities.