IR REPORT 2006 2 NCsoft Corp. Online Game Publisher Seung Kwang Bldg., 143-8 Samsung-dong, Kangnam-gu, Seoul 135-090, KOREA Tel : +82-2-2186-3300 Fax : +82-2-2186-3393 www.ncsoft.net
CONTENTS 1. 1-1. 1-2. 03 04
1. 1-1. 1-1. : - - Infra (Game Masters) Hit-driven business MMOG ( ), 20~30 & &, 10~40 5-10 MMOG,, (2~3 ), 3
1. 1-2. 1-2. a. (2003~2006E) b. (2003~2008E) ( :, $) ( : $) 12,000 1,172 11,000 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 512 30.6% 156 17.9% Webboard Casual MMORPG 92 51.6% 263 CAGR 32% 726 28.7% 23.8% 208 173 47.5% 345 933 23.4% 32.9% 43.7% 218 307 407 19.9% 234 35.3% 414 44.8% 525 6,000 5,000 4,000 3,000 2,000 1,000 0 5,270 CAGR 27% 4,420 3,685 2,800 1,601 1,673 2003 2004 2005 2006 2007 2008 WorldWide 0 2003 2004 2005 2006(E) Source: KGDI ( ), NCsoft Online Game Market and Broadband Population (DFC Intelligence 2004, Game Industry Report by GITISS 2004) 4
CONTENTS 2. 2-1. 2-2. 2-3. Sales Trend 06 07 08
2. 2-1. 2-1. : 04 (2,890 ) 05 (3,390 ) 06E (3,960 ) (: ) (34,630) 12% / 11% (31,475) 39% (112,806) II 38% (110,609) (41,308) (34,265) 12% / 10% (29,265) 9% 34% (115,012) II 35% (118,953) 14% (56,000) 13% (53,000) 7% / 10% (38,000) (29,000) II 27% (113,000) 29% (107,000) 6
2. Company Overview 2-2. 2-2. : 04 (2,890 ) 05 (3,390 ) 06E (3,960 ) (: ) (30,345) 9% (40,000) 10% 12% (34,631) 16% (45,956) 72% (208,934) (17,914) 5% 20% (68,766) 57% (192,832) / 30% (118,000) 53% (209,000) 9% (28,946) 7% (29,000) (10%), (2%), (7%), (1%), 7
2. 2-3. Sales Trend 2-3. Sales Trend - 100% 12% 11% 13% 13% 14% 10% 7% 6% 80% 60% 37% 15% 39% 12% 39% 15% 38% 8% 41% 12% 7% 36% 19% 7% 15% 16% / 40% 34% 31% II 20% 51% 36% 36% 35% 38% 36% 32% 31% 0% 1Q, 04 2Q, 04 3Q, 04 4Q, 04 1Q, 05 2Q, 05 3Q, 05 4Q, 05 (: ) 1Q, 04 2Q, 04 3Q, 04 4Q, 04 1Q, 05 2Q, 05 3Q, 05 4Q, 05 53,891 68,556 66,791 65,652 65,504 72,188 81,289 90,557-31,258 27,786 27,497 26,265 28,573 28,387 28,219 29,833 - II 22,633 29,635 29,891 28,450 30,590 28,410 29,659 30,294 - / 0 11,135 9,403 10,937 6,341 5,806 6,412 15,706-0 9,585 16,999 14,724 7,364 8,065 9,798 9,403 9,101 7,592 6,467 6,105-7,363 6,695 6,376 5,582 4,608 3,792 3,286 3,487 - II 0 1,367 3,421 3,681 4,485 3,528 3,126 2,539-1 3 1 140 8 272 55 79 61,255 76,621 76,589 75,055 74,605 79,780 87,756 96,662 8
2. 2-3. Sales Trend 2-3. Sales Trend - 100% 80% 60% 12% 1% 11% 24% 13% 18% 13% 18% 12% 10% 1% 12% 9% 10% 4% 18% 7% 9% 7% 22% 6% 8% 8% 27% 40% 20% 87% 66% 69% 70% 65% 59% 55% 51% 0% 1Q, 04 2Q, 04 3Q, 04 4Q, 04 1Q, 05 2Q, 05 3Q, 05 4Q, 05 (: ) 1Q, 04 2Q, 04 3Q, 04 4Q, 04 1Q, 05 2Q, 05 3Q, 05 4Q, 05 61,255 76,621 76,589 75,055 74,605 79,780 87,756 96,662-60,867 58,323 62,572 61,803 57,889 54,477 54,616 54,796 ( ) 53,503 50,257 52,839 52,335 48,788 47,130 48,204 48,710 () 7,364 8,065 9,798 9,403 9,101 7,347 6,412 6,086-388 18,299 13,952 13,318 8,984 14,376 19,159 26,247-577 3,195 6,374 7,769-7,155 7,733 7,607 7,850 9
CONTENTS 3. Why NCsoft? 3-1. 3-2. 3-3. Line-up 3-4. 11 13 14 17
3. Why NCsoft? 3-1. 3-1. - Online ( 03~ 05) MMOG ( 05 : 4,070 ) (2005 12 ) 4,500 4,000 3,500 3,000 Others SunnyYNK Webzen Blizzard Korea NCsoft 263 345 21% 9% 407 15% 3% 7% 187,786 2,500 2,000 1,500 16% 10% 22% 15% 27% 150,000 119,345 1,000 61% 48% 500 52% 100,000 80,000 0 2003 2004 2005 MMOG + Web Board Game + Casual game ( 05 : 9,330 ) 50,000 36,675 10,000 9,000 8,000 7,000 Others Blizzard NHN Neowiz Nexon NCsoft 726 933 27% 0 II WoW 6,000 5,000 512 29% 12% 10% Source: NCsoft Estimates 4,000 37% 12% 10% 7% 3,000 15% 15% 20% 8% 2,000 13% 1,000 29% 27% 21% 0 2003 2004 2005 11
3. Why NCsoft? 3-1. 3-1. -Global base MMOG (2005 12 ) - : 400 Publisher Worldwide Active Users (E) World of Warcraft Vivendi 5,000,000 Lineage NCsoft 2,296,911 Lineage II NCsoft 1,525,497 Final Fantasy XI Square-Enix 650,000 Guild Wars NCsoft 1,200,000 EverQuest Sony Online 454,000 RuneScape Jagex 379,000 Ragnarok (JP) Gungho/ Gravity 300,000 EverQuest II Sony Online 278,000 Star Wars Galaxies Sony Online 255,000 City of Heroes/Villains NCsoft 200,000 Dark Age of Camelot Mythic 175,000 Ultima Online EA 157,000 Toontown Online Disney 100,000 Eve Online CCP 57,929 PlanetSide Sony Online 54,000 The Sims online EA 35,500 (Source: MMOGCHART.Com, Compiled by NCsoft) 12
3. Why NCsoft? 3-2. 3-2. Austin Studios (2001 5 ) ArenaNet (2002 12 ) NCsoft Seoul Studios & II, NCRC (2004 9 ) Orange County (LA) Studios (2005 ) MMO NCsoft Japan K.K. (2006 1 ) 13
3. Why NCsoft? 3-3. 3-3. - MMOG Quality : ( 98) II( 03) ( 04) ( 05) ( 05) : Best Online Multiplayer Award ( E3, 03) / Multiplayer game of the year (Billboard, 04): Best Massively Multiplayer Game of 2005 Award (the Academy of Interactive Arts and Sciences) :, A Full Line-Up of Portfolio Games In The Pipeline ( 06) ( 06) Car Combat Sci-Fi Shooting ( ) III ( ) 1 (Orange County Studios) 2 (Studios in Austin, TX) 14
3. Why NCsoft? 3-3. 3-3. / SP Jam MMO 15
06. 1Q 2Q 3Q 4Q II III PlayNC (6 ) E3 show 4~6 / II III (, ) II III PlayNC () 16
3. Why NCsoft? 3-4. Strong Global Network 3-4. Global distribution Infrastructure & local content NCsoft Europe (100%) NCSina (JV with Sina,, 49%) NCRC (100%) () NCsoft NC Japan (JV with SoftBank,, 60%) NCsoft Japan (100%) Development Studio Publishing JV / Subs. Third Party Studio License Partner NC Interactive (100%) ArenaNet (100%) Cryptic, Net Devil NC Taiwan (JV with Gamania,, 49%) Gamania - Lineage NC True (JV with True corp., 49%) 17
CONTENTS 4.
4. Global Infrastructure + Quality Local Content ( MMO ~ Casual ) (PC,, ) IP Creator / Licensor Attract NC : - NC ID - - : / / Retain NC 3 rd Party Games 19
CONTENTS 5. (2003~2006E) 5-1. & 5-2. 5-3. 21 22 23
5. 5-1. & 5-1. & 400,000 * : - 03,04: NCI, ArenaNet - 05: NCI, ArenaNet, NC Europe, NC Japan 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 2003 2004 2005 2006(E) :, $, % 2003 2004 2005 2006 (E) 169,208 289,521 338,803 396,000 37,563 97,139 76,632 66,000 (%) 22 34 23 17 31,204 97,375 84,567 73,000 (%) 18 34 25 18 31,667 74,086 66,678 56,200 21
5. 5-2. 5-2. :, $ 2003 2004 2005.12 194,602 302,590 324,292 56,085 65,246 132,822 250,687 367,836 457,114 20,112 44,298 55,693 13,092 4,526 5,741 33,204 48,823 61,434 217,483 331,964 395,118 9,410 10,032 10,177 84,626 132,583 143,353 121,816 186,361 253,039 1,631-9,964-13,211 2,323 250,687 367,836 457,114 22
5. 5-3. 5-3. :, $ 1Q, 2004 2Q,2004 3Q,2004 4Q, 2004 FY 2004 61,255 76,622 76,589 75,055 289,521 25,806 27,505 27,393 16,436 97,140 24,598 28,187 29,116 15,474 97,375 18,929 21,026 22,183 11,948 74,086 1Q, 2005 2Q,2005 3Q,2005 4Q, 2005 FY 2005 74,605 79,780 87,756 96,662 338,803 15,931 17,240 23,180 20,281 76,632 18,123 18,620 24,581 23,243 84,567 13,442 12,993 20,411 19,833 66,678 23
CONTENTS Business Model 25 30 33 36 39
(CEO) 1989. 2 1991. 2 1997~98 1985~89 1989 1989 1991~92 R&D Center 1995~96 ( ) 1998. 4 RD(Regional Director) 1999.12 99 2000. 1 100 2001. 11 FEER 2002. 9 e 25 25
(CTO) (CFO) 1987.2 1994.8 Univ. of Maryland 1994~1996 Mills College & 1996~2000 KAIST 2000~2005 CEO 2005.7~ NCsoft Chief Technology Officer 1989.2 1990 ~ 1994 Arthur Andersen & Co. sc, Senior Consultant 1994 ~ UN, Management Consultant (Office of Internal Oversight) 2000-2002 OpenTide CFO 2002-2004 Director (Head of M&A Department) 2004.10~ NCsoft Chief Finance Officer (Vice President & CCO) (CSO) 1993.2 1993~1996 1996~1998 Namo Interactive 1998~1999 Team Darkland 1999~ NCsoft, Chief Creative Officer 1987 KAIST 1987 ~ 1993 R&D, Senior 1993 ~ 1997, 1997 ~ 2000, 2000 ~ 2003, Solution & Ebusiness, Senior 2003 ~ NCsoft Chief Strategy Officer. 26
1983 MIT 1983 Origin Systems, Ultima 1992 Electronic Arts, E&Y Consulting 1992 ~ 1995 EA Robert Garriott (CEO, NC Interactive) 1995 ~ 2000 EA 04/2000 Destination Game 05/2001 NCsoft 1980 Akalabetha 1981 PC Ultima 1983 Origin Sysytems 1992 Electronic Arts 1997 Online Game Ultima Online, ~1999 Ultima 11 Richard Garriott (Executive Producer) 04/2000 EA Origin 04/2000 Destination Game 05/2001 NCsoft 27
1991 UCLA 1991 1993 Lost Vikings Rock & Roll Racing (/) 1994 ~ 1995 1, 2 -(/ ) (2 + 4) 1996 -(/ ) (5 ) Patrick Wyatt (ArenaNet) 1998 -(R&D /Senior ) (9 ) 2000 ArenaNet 2002 NCsoft 1995 1996 1996 ~ 1998, Michael O'Brien (ArenaNet) 1998 III ( ) 2000 ArenaNet 2002 NCsoft 1991 Trinity University 1991 Texas Instruments, 1994 R&D 1996 1997 () Jeff Strain (ArenaNet) 1998, (Senior ) 1999 ( / ) 2000 ArenaNet 2002 NCsoft 28
Geoffrey Heath (CEO, NC Europe) 1962-1978 Music Industry, Music Publisher for many well known writers including John Lennon and Paul McCartney 1978 Activision 1986 Mindscape International 1994 Pearson PLC 2004 NCsoft Europe 2005 29
- 2004 6 2004 9 2004 12 2005 3 2005 6 2005 9 2005 12 42 42 42 43 43 43 43 147,960 146,301 135,075 149,946 151,113 150,863 187,786 469,267 420,295 397,010 405,133 374,386 385,851 456,212 1,685,100 1,489,335 1,298,718 1,197,295 1,166,001 1,220,491 1,627,159 20,072 20,224 20,123 19,953 20,547 20,704 20,977 774,849 823,697 859,780 897,278 976,849 1,030,154 826,590 242,281 215,539 250,266 251,483 257,385 256,758 309,452 2004 6 2004 9 2004 12 2005 3 2005 6 2005 9 2005 12 34 36 36 36 36 36 38 147,907 150,219 141,783 155,014 138,623 135,731 134,462 336,564 296,034 265,839 272,370 217,872 208,467 218,101 720,076 652,063 592,341 579,679 475,066 428,152 472,156 2004 6 2004 9 2004 12 2005 3 2005 6 2005 9 2005 12 6 6 6 6 6 6 6 17,064 17,315 13,614 16,864 13,498 12,550 14,534 36,104 35,519 30,994 28,957 26,524 24,992 26,742 77,438 77,889 70,885 86,431 68,182 69,538 74,671 2004 6 2004 9 2004 12 2005 3 2005 6 2005 9 2005 12 11 11 11 11 11 10 10 10,820 10,080 9,853 10,473 12,564 14,586 14,149 42,194 32,582 28,670 30,247 30,389 29,737 28,880 169,697 140,422 115,805 123,665 108,388 140,422 110,182 2004 6 2004 9 2004 12 2005 3 2005 6 2005 9 2005 12 3 3 3 3 3 3 3 1,321 1,277 1,451 1,660 2,205 1,844 2,200 4,483 4,388 7,221 4,667 5,359 4,951 5,189 7,191 7,089 7,634 7,623 8,586 6,760 9,059 30
- II 2004 6 2004 92004 122005 3 2005 6 2005 9 2005 12 28 30 32 32 32 33 33 110,215 127,850 123,587 109,381 104,900 109,814 119,345 336,534 352,863 330,213 309,504 274,801 281,657 276,239 1,078,491 1,140,717 1,037,068 1,004,145 926,535 944,372 730,837 162,870 180,641 169,701 167,427 151,997 165,239 174,170 2004 6 2004 92004 122005 3 2005 6 2005 9 2005 12 19 19 21 21 22 22 22 56,541 66,584 72,557 86,068 87,722 68,617 71,301 111,054 128,663 122,597 137,812 141,780 118,039 100,810 206,089 217,028 232,223 251,058 240,911 238,620 198,795 2004 6 2004 92004 122005 3 2005 6 2005 9 2005 12 8 9 9 9 10 10 10 27,441 33,926 36,200 33,745 39,727 35,381 40,088 51,298 59,687 49,887 52,104 66,019 49,947 48,684 113,279 82,625 82,409 86,260 104,797 102,774 105,097 2004 6 2004 92004 122005 3 2005 6 2005 9 2005 12 37 41 44 21 22 93,904 122,855 86,463 54,353 43,026 188,654 203,860 154,926 113,795 96,117 651,652 700,241 424,355 358,305 354,395 2004 6 2004 92004 122005 3 2005 6 2005 9 2005 12 8 8 9 9 9 9 9 21,631 21,970 17,781 20,912 22,493 23,923 28,309 43,958 41,386 31,118 37,223 38,389 37,339 45,000 76,421 76,262 61,835 65,644 66,138 66,975 76,435 2004 6 2004 92004 122005 3 2005 6 2005 9 2005 12 10 10 8 15,714 13,567 10,202 29,204 26,320 21,854 51,810 75,545 59,938 31
- / 2004 6 2004 9 2004 12 2005 3 2005 6 2005 9 2005 12 11 11 11 15 15 15 15 31,085 26,870 15,741 21,283 20,911 22,340 23,730 69,011 68,073 45,318 56,366 59,969 59,133 66,775 169,925 163,053 124,435 140,481 162,922 150,068 194,000 2004 6 2004 9 2004 12 2005 3 2005 6 2005 9 2005 12 27,000 29,000 29,000 / 2004 6 2004 9 2004 12 2005 3 2005 6 2005 9 2005 12 650,000 1,000,000 1,270,000 32
(), II & ( :) & II PC (B2B) (IP) IP(PC), 1 Quantity Discount( ) 300,600,1,000, 3,000 IP 1 1-5IP : 60,000 6-10IP : 55,000 11~19IP : 50,000 20~29IP : 45,000 30IP : 40,000 300 : 80,000 600 : 150,000 1,000 : 250,000 3,000 : 700,000 1 : 27,000 3 : 64,000 (B2C) () ISP/OSP ISP :,,,,, : 20 3 : 3,000 ARS 5 10 : 5,000 : 8,000 30 : 18,000 PC (B2B) (One-time) 60,000 (B2C) (One-time) 45,000 33
(), II Content Lineage Price Lineage II Price 1 : US $ 15 4 : US $ 45 Box : US $ 49.99 1 : US $ 15 - Box : 49.99 ( 29.99 ) 1 : 12.99 ( 8.99 ) 1 : JP 2,000 (US $ 17) 10 : JP 500 1 : JP 3,000 (US $ 25) 3 : JP 5,400 PC 1 : JP 40 1 : JP 40 12 : NT 20 1 : NT 369 (US $ 12) 12 : NT 25 1 : NT 480 (US $ 15) 25 : RMB 10 (150P) 1 : RMB 42 (700P) (US $ 5) * 1 = 10 20 : RMB 10 (150P) 1 : RMB 60 (1000P) (US $7) * 1 = 8 15 : Baht 89 30 : Baht 149 1 : Baht 399 (US $10) 34
() Box : US $ 49.99 1 : US $ 15 3 : US $ 42 Box : 49.99 ( 29.99 ) 1 : 12.99 ( 8.99 ) 3 : 34.99 ( 23.99 ) () Box. Box : US $ 49.99 Box. Box : 49.99 ( 29.99 ) Box Flat monthly fee. Box : JP 5,980 (US $ 52) 1 : JP 980 (US $ 9) Box Flat monthly fee. Box : NT 1,280 (US $ 40) 1 : NT 369 (US $ 11.6) 35
* & 300,000 250,000 200,000 150,000 100,000 50,000 0 2001 2002 2003 2004 2005 :, $, % 2001 2002 2003 2004 2005 124,735 154,820 165,537 246,894 232,804 16,919 77,115 55,250 108,952 72,021 (%) 14 50 33 44 31 15,315 69,464 32,910 97,375 81,562 (%) 12 45 20 39 35 11,668 53,113 31,667 74,086 66,678 36
* :, $ 2003 2004 2005.12 166,140 273,339 270,038 82,930 83,760 151,522 249,070 357,099 421,560 18,494 33,571 22,462 13,092 4,516 5,741 31,586 38,087 28,203 217,483 319,013 393,357 9,410 10,032 10,177 84,626 132,583 143,353 121,816 186,361 253,039 1,631-9,964-13,211 249,070 357,099 421,560 37
* :, $ 1Q, 2003 2Q,2003 3Q, 2003 4Q, 2003 FY 2003 37,486 36,572 36,822 55,657 166,537 18,137 11,658 11,493 13,962 55,250 11,650 7,007 7,110 7,143 32,910 9,192 5,728 7,031 9,716 31,667 1Q, 2004 2Q,2004 3Q,2004 4Q, 2004 FY 2004 60,974 59,611 63,747 62,562 246,894 31,748 26,927 28,759 21,518 108,952 24,598 28,163 29,104 15,510 97,375 18,929 21,026 22,183 11,948 74,086 1Q, 2005 2Q,2005 3Q,2005 4Q, 2005 FY 2005 60,359 57,214 57,243 57,988 232,804 21,307 18,777 18,101 13,836 72,021 17,332 17,651 23,846 22,734 81,562 12,645 12,943 20,396 20,694 66,677 38
PC PC PC, IP Internet Access IP (/ ) 9 IP - KT, HTI, DACOM, Thrunet Lease Lines ISPs ISPs / :,, ARS,, 39