GW2 2Q 2023 Earnings

[gerberlyfe.9736]

On 8/9/2023 at 12:15 AM, Izzy.2951 said:

http://imgur.com/Tatvpe2.jpg

 

PD: Full article: http://irsvc.teletogether.com/ncsoft/pdf/ncsoft2023Q2_eng.pdf

 

On 8/9/2023 at 7:38 AM, Zok.4956 said:

Here's the updated image of quarterly sales since release:  
https://cdn.discordapp.com/attachments/685436537827098645/1138795199477321738/gw2-sales-2012q3-2023q2.png

 

On 8/9/2023 at 8:06 AM, Gibson.4036 said:

Except you also have to adjust that graph for inflation. Those 2023 KRW are worth more than those 2016 KRW. Inflation adjusted, they have more income than they’ve had over the last 8 years or so.

Sorry Mr. Gibson, you have inflation backwards. Almost all government currencies tend to lose value rather than gain value over time.

From an internet inflation calculator, ₩100 in 2012 has the same value as ₩121.2 in 2023. That means that the value of a single Won has declined about 18% in the past decade.

Thus, to know ANet's income in REAL terms since release you have to hold the 2012 values constant and decrease the 2023 bar by about 1/5 (with a gradation in the years between) to get a true sense of the value being generated by GW2.

That being said, this lines up with my general feeling that the developed world as a whole is 20% poorer since 2012 .. but that's a discussion for a different forum.

[Trejgon.9367]

1 hour ago, gkoogz.3089 said:

Sorry Mr. Gibson, you have inflation backwards. Almost all government currencies tend to lose value rather than gain value over time.

While inflation is definitely word he was thinking of, there is a point that using graphs in specific currency, that is different that the primary currencies used for generating revenue. AN is primarily dealing in USD/Euro, so the exchange rates between USD/KRW and Euro/KRW will affect the graph.

And I have just checked graphs for the last 3 years, and KRW is definitelly on an upward trend compared to USD, which means that same revenue on NA market for AN in Q4 2020 would display as less revenue in KRW in any quarter of 2023.

What it basically means is that just looking at the graphs expressed in KRW alone, provides misleading picture that omits important information.

Inflation is of course also an aspect to be taken into the consideration, but different currencies have different rates of inflation, and it would again require a massive cross reference to determine how much of impact did it have in this particular case.

 

TL:DR: the gross income graphs used in this thread are expressed in currency different to the ones used by AN, and therefore are incomplete picture that leaves the currency exchange and other factors out of the picture, therefore on their own and not reliable source of data to try to determine company's actual performance.

[Burnfall.9573]

"If you destroy the foundations of anything, the structure will collapse"

"The change will only happen outside once we change within ourselves"

It will only worsen until Anet make the changes within thus resulting in putting the players experience first before self-interest and profit to a  healthy fun competitive experience for the game, its players and for the community.

-no amount of money, paid commercial--advertisement, paid streamers, word of mouth...will change the outcome of the game until it happens.

Blaming everything will not resolve anything until after self-examination lead to the power to change...the results.

that is all.

https://www.youtube.com/shorts/bdHvRgXJ-j8

 

Edited August 11, 2023 by Burnfall.9573

[gerberlyfe.9736]

14 hours ago, Lord Trejgon.2809 said:

While inflation is definitely word he was thinking of, there is a point that using graphs in specific currency, that is different that the primary currencies used for generating revenue. AN is primarily dealing in USD/Euro, so the exchange rates between USD/KRW and Euro/KRW will affect the graph.

And I have just checked graphs for the last 3 years, and KRW is definitelly on an upward trend compared to USD, which means that same revenue on NA market for AN in Q4 2020 would display as less revenue in KRW in any quarter of 2023.

What it basically means is that just looking at the graphs expressed in KRW alone, provides misleading picture that omits important information.

Inflation is of course also an aspect to be taken into the consideration, but different currencies have different rates of inflation, and it would again require a massive cross reference to determine how much of impact did it have in this particular case.

 

TL:DR: the gross income graphs used in this thread are expressed in currency different to the ones used by AN, and therefore are incomplete picture that leaves the currency exchange and other factors out of the picture, therefore on their own and not reliable source of data to try to determine company's actual performance.

No. You're mistaken. Currency fluctuations do not affect the conclusions that we can draw from the graph of total income in Won. To understand the value being generated by GW2, you look at Won income. That's it.

Yes, currency fluctuations affect the total Won income, and might affect the understanding of revenue generated PER REGION, but since we have the total Won income, and because we NEVER had revenue broken down by region,  ALL currency fluctuations are captured because Anet does the conversion to Won, and so we can accurately observe the total value generated by GW2. Get smart or kitten.

[Trejgon.9367]

9 hours ago, gkoogz.3089 said:

No. You're mistaken. Currency fluctuations do not affect the conclusions that we can draw from the graph of total income in Won. To understand the value being generated by GW2, you look at Won income. That's it.

Yes, currency fluctuations affect the total Won income, and might affect the understanding of revenue generated PER REGION, but since we have the total Won income, and because we NEVER had revenue broken down by region,  ALL currency fluctuations are captured because Anet does the conversion to Won, and so we can accurately observe the total value generated by GW2. Get smart or kitten.

That post boils down to "you are wrong, because you are wrong", while completely ignoring example I provided (same income in big chunk of ANs area of operations - US - between two periods resulting in massive "drop" in KRW income simply due to the fact that 1 USD is worth less KRW in later period) and while completely ignoring the bit that AN's does not deal in KRW - they generate their sales in primarily two currencies USD and EUR (to my knowledge GW2's china income is counted separatelly but I may be wrong on that part).

You cannot simply dismiss impact of that fluctuation "because AN did the conversion". All that those graphs on their own allow you to judge, is exactly that - total income after conversion to KRW, which is not the same as company performance, because with how USD/EUR/KRW conversion rates are going, they can be increasing performance as a company, while still registering drops in total revenue expressed in KRW simply due to global economy shifts that are beyong their ability to impact.

And on final notes: we are not the target audience of those graphs, investors are target audience of those graphs, and as opposed to general forum users, investors most likely will have also information on global economic situation at hand which allows them to make better judgement of this simplified data.

[gerberlyfe.9736]

20 hours ago, Lord Trejgon.2809 said:

total income after conversion to KRW, which is not the same as company performance

HAHAHAHA. Ok, this highlighted is why you are wrong. The performance of GW2 is literally IS total income after conversion to KRW. That's literally the value they report for performance, that's the variable they are maximizing. That's the number every single person in the company is LEGALLY OBLIGATED TO MAXIMIZE, and should be the singular goal of their efforts, and the purpose of the entire organization and enterprise. Your conclusions are confused, and sad, because you have an fundamentally deficient understanding of how ArenaNet is organized as a business and the entire purpose GW2 as a product. I will repeat it to you. The performance of GW2 is inseparably, totally and completely, ultimately and singularly the number of KRW it generates. Yes, the performance somewhere along the way is affected by one or more FX conversions, but that conversion is already captured by the bar graph. That's why the ONLY relevant information you need to bring into that bar graph to understand the TRUE value generated by GW2 is the internal inflation of KRW over time and NOT the FX conversion.

To even begin addressing you, we have to understand the goal of business. That is to generate value. If ArenaNet is 100% owned by NCSoft (too lazy to check, but I think it is), then ultimately the performance of GW2 is measured by the KRW value generated by it AFTER it arrives in Korea plus the current account and local assets of ArenaNet, which are for our purposes arbitrary. I will repeat: It is ultimately the total value of the KRW generated that reflects the performance of GW2, not USD or EUR or any other currency. That's literally the metric used to measure performance. Thus, the only relevant external information you need to understand the total value generated by GW2, that is to say, the only external information you must modulate into the bar graph of "KRW generated over time by gw2" is KRW inflation, because that affects the total value presented. Not USD-KRW conversions, not EUR-KRW conversions, or anything else WHATSOEVER because that information is already captured in the height of that bar graph. 

Currency conversions do affect the ultimate performance, but those conversions are ALREADY CAPTURED IN THE BAR GRAPH. ArenaNet would obviously uses the cash it generates locally in the US to fund its operating expenses before it returns its profits to NCSoft. That would maximize the ultimate KRW generated. But the performance is still measured by how much KRW arrives in Korea to be distributed to stakeholders. That's the variable they are maximizing.

If you're looking at the performance of GW2 / ArenaNet / NCSoft, you look at that bar chart. That's it. That's what the investor sees. That's LITERALLY the performance. An investor might look into public perceptions of the game, player counts, currency conversions, operating expenses, future plans, company culture, whatever else they want. THey might use that information to buy or sell a stake, or whatever. But the KRW that arrives in Korea is ultimately the conclusion, the final performance, and the result of their efforts. It's not possible for GW2 to be outperforming while that chart is going down or staying flat, because performance is literally defined by that bar regardless of all other variables, with the exception of KRW inflation because that affects the total value reflected by that bar.  Currency fluctuations are a cost of doing business just like tariffs, lawsuits, bad weather, labor costs, rent, the price of electricity, bad publicity or whatever else. Yes, if the KRW rises relative to USD, the all else being equal, KRW income will be lower than in previous years. But I will repeat that this information is already captured within the bar graph, and thus the ONLY relevant information you need to bring in to understand the performance of GW2 is KRW inflation ALONE.

Edited August 13, 2023 by gkoogz.3089

[Trejgon.9367]

Ok mister, since you want to play it this way 🙄.

Yes first and foremost business primary goal is to generate money for the investors. But as you are trying so hard to deny, there is way more to it than "ok our total income when converted to your currency is this". There is cost of obtaining that revenue to account for and general global economic situation to take into the account. You accuse me of having "fundamentally deficient understanding of how ArenaNet is organized as a business" but you yourself seems to lack in understanding of basics of how investments works. Your interpretation of the graph not only ignores global economic situation, which will be important factor to any investor worth his salt, but it also omitts the costs of generating that revenue, which would be needed to calculate the most important metric - return of investment. AN could be generating billions of KRW of income, and it would be extremely bad for investors, if the cost of it was 99% of that sum. Terrible return of investment, that would be in such graph presented as very good performance in such oversimplified graph, that you yourself are trying to present as the be all and end all of company performance. Total gross income is not and will never be, the defining performance factor, regardless of currency it is being expressed in.

You mention that every employee is legaly obliged to maximize the gross income expressed in KRW - that is factually incorrect. Unless you have access to specific personal contracts that are not public, and it had such a clause, which is extremely non-standard for any software related field. Each employee legal obligation are only to fullfill what is in their contract, and while for management employees it will be maximisation of performance, the performance is not just simply gross income in any specific currency. There is way more to it than that.

And in case you completely failed to notice a number of people in this thread was attempting to spin that graph into narration of AN loosing customers and sales, which is what Gibbons was likely trying to address, which was what I continued to try to get through to You, is not conclusion that can be made based of this graph alone.

I could write a bigger wall of text here detailing other possible scenarios how company could have better performance between those periods while having less gross income expressed in specific currency external to the operating environment of the company, as well as benefits of not having all your wealth in single basket of fund in any particular currency, but at this point I do not think that is worthy use of time for neither of us.

[vrauns.3215]

If the game was doing so bad, ncsoft would have never giving them the green light to create a 4th expansion.

Edited August 13, 2023 by vrauns.3215

[Forum Moderator.3419]

Hi Everyone,

I'm locking this thread as it's run its course. See you next quarter!

Regards.