Game Companies Armed with 'New Weapons' Aim for Earnings Rebound

[Asia Economy Reporter Buaeri] The domestic gaming industry, which experienced sluggish performance in the first quarter due to rising labor costs and other factors, is aiming for a rebound in the second half of this year with new releases. Major game companies such as NCSoft, Netmarble, and Kakao Games are consecutively launching ambitious new titles, intensifying the "new release war."

Game Companies Aiming for a Counterattack

According to NCSoft on the 22nd, the new massively multiplayer online role-playing game (MMORPG) "Blade & Soul 2 (Bladesoul 2)" is in the final stages of development, targeting a late June release. NCSoft released mobile new titles such as "Pro Baseball H3" and "Trickster M" in April and May, and is now making a counterattack with Bladesoul 2. In particular, Bladesoul 2 carries high expectations at the company level, with NCSoft CEO Kim Taek-jin personally overseeing the game development. CEO Kim expressed confidence, saying, "We developed it aiming to reach the pinnacle of action," and "We succeeded in breaking through technical limits that were thought impossible." Bladesoul 2 has already surpassed 4 million pre-registrations.

Netmarble is challenging the long-standing throne of NCSoft's "Lineage brothers (Lineage M and Lineage 2M)" with the recently released "The Second Country: Crossworlds" on the 10th. According to Google Play on that day, The Second Country has been fluctuating between second and third place in sales rankings. On the 17th, it even surpassed the Lineage brothers to reach first place. Riding the success of The Second Country, Netmarble is also preparing to launch "Marvel Future Revolution" in the second half of the year. This game is the second collaboration with Marvel by the Netmarble Monster development team, who gained experience through "Marvel Future Fight," enjoyed by over 120 million players worldwide.

Kakao Games is in the final stages of development for its new title "Odin: Valhalla Rising," scheduled for release on the 29th. Odin, developed by Lionheart Studio, boasts top-notch graphics using Unreal Engine 4, 3D scanning, and motion capture technology. Odin has attracted 3 million pre-registrations, raising user expectations. In addition to Odin, Kakao Games will also service "Eternal Return" through Daum Games starting from the 22nd of next month.

Nexon is also preparing to launch "KartRider: Drift," "Cutzpel," and "Cosnova" in the second half of this year. Nexon is conducting nine new development projects aiming to create super intellectual properties (IPs). A Nexon official stated, "We are focusing the company's capabilities on creating super IPs."

"Performance Recovery Expected from Q2"

According to financial information firm FnGuide, game companies that faltered in the first quarter are expected to rebound in performance starting from the second quarter. NCSoft, which recorded an earnings shock due to poor performance in Q1, is expected to post sales of 592 billion KRW and operating profit of 166.1 billion KRW in Q2, reflecting the results of titles like Trickster M. These figures represent increases of 15.5% and 192.7% respectively compared to the previous quarter. Particularly, securities firms predict a high possibility of success for Bladesoul 2, estimating daily average sales of 3 billion KRW in Q3.

For Netmarble, operating profit is expected to decline somewhat in Q2 due to marketing expenses for new titles. Netmarble's Q2 sales are forecasted at 594.6 billion KRW, with operating profit at 42.5 billion KRW, a 21.7% decrease from the previous quarter. However, the market expects operating profit to recover to the 60 billion KRW range in Q3 when The Second Country's sales are fully reflected. Especially, The Second Country is off to a smooth start in Taiwan, Hong Kong, Japan, and other regions, making daily sales of 2.5 billion KRW achievable.

Kakao Games' Q2 performance is expected to be sales of 110.7 billion KRW and operating profit of 7 billion KRW. Kakao Games is also expected to attempt a rebound starting in Q3 when Odin's results are reflected. Sung Jong-hwa, a researcher at Ebest Investment & Securities, said, "With Odin's full contribution to sales, Q3 sales will sharply rebound," estimating the first quarter's daily average sales at 1.1 billion KRW. However, Nexon, which has no new releases, is expected to see somewhat sluggish performance in Q2. Nexon's Q2 sales are estimated at 610 billion KRW (59.6 billion yen), with operating profit at 167.7 billion KRW (16.4 billion yen), representing decreases of 32% and 62% respectively compared to the previous quarter.