By Cho Jin-seo
Online game giant NCsoft is to restructure its U.S. game studio in Austin, Texas, which has inflicted a massive loss to the parent company by failing in a six-year blockbuster project.
The company's chief financial officer Lee Jae-ho said last week that it was inevitable to reduce staff levels at the Texas subsidiary as the ``Tabula Rasa'' game has proven to be a financial disaster. Lee, however, said the project's leaders will keep their positions.
The damage control plan was announced after the company saw only 5 billion won of revenue from the game, which is believed to have cost the firm more than 100 billion won, one of the most distressing investments in the history of the Korean game industry. NCsoft's stock price plummeted to 38,600 won on Monday, the lowest in its history.
``Because of this disappointing result, some downsizing in Austin is inevitable,'' Lee said in a conference call with investors last Thursday. ``We are going to revamp our Austin development organization.''
The company's public relations office said that it has not been decided yet how many workers at the Austin office will be fired. ``We need enough of a workforce to provide maintenance for `Tabula Rasa,''' a spokeswoman said Monday. She said from now on new games will be developed at the corporate level, not as an individual project of the Austin studio.
NCsoft set up the Austin studio in 2002 and gave its project to famous American online game developer Richard Garriott and his brother Robert Garriott. The Garriott brothers received stocks worth 14 billion won each for the job. At its peak, the Austin subsidiary once had some 300 employees, making it the largest foreign operation of a Korean IT company.
The Texas operation didn't go smoothly. Richard Garriott restarted the ``Tabula Rasa'' project more than twice, devouring NCsoft's money earned from Korea and elsewhere. The final product was launched last fall in the United States, but the result was far from satisfying. The company reported a revenue of mere 5 billion won from the game last year and projected it will earn 15 billion won this year. Though the company didn't reveal how much it actually spent, industry watchers estimate the total cost will be more than 100 billion won.
``This could be a disappointing amount to our investors and even to myself,'' Lee said. ``Half a year ago I communicated with investors and analysts we had very high expectations for `Tabula Rasa.' After six months, I just put down 15 billion won as an annual revenue target and that's very disappointing. But I should admit that the actual result of `Tabula Rasa' has been disappointing.
``If you talk about our development cost we spent in the past several years, probably we are not making any money from this `Tabula Rasa' project. That should be the reality.''
NCsoft already replaced Robert Garriott from the chief position of the U.S. operation with Chris Chung, and the former is now ``free from day-to-day operations,'' Lee said. The company spokeswoman said Richard Garriott, the genius that NCsoft has counted on, will work to improve the ``Tabula Rasa'' service. Garriott is also on his personal mission to be a space tourist this year, being trained at a Russian space center from last month.