NC and Krafton Armed with 'New Weapons', Breaking Through Crisis Head-On

[Asia Economy Reporter Kang Nahum] NCSoft and Krafton, which have faced crisis theories such as excessive monetization inducement and one-game risk, are aiming to turn the tide with global new releases next month. Each company plans to introduce new systems and technologies to their intellectual properties (IP) to capture the global 'Gamsim (gamer's heart)' as well as to ease domestic users' resentment.

According to the gaming industry on the 26th, Krafton will officially launch PUBG Studio's new title, BattleGrounds: New State, globally in over 200 countries on the 11th of next month. The game was developed with the goal of inheriting the gameplay of PUBG: Battlegrounds while presenting a next-generation mobile battle royale game with unique content and technology. Pre-registrations have surpassed 50 million, marking the highest pre-registration record in South Korean gaming history.

NCSoft will simultaneously launch the MMORPG new title Lineage W globally on the 4th of next month. Starting with 13 countries including Korea, Taiwan, Japan, Russia, Southeast Asia, and the Middle East, the release will later expand to North America, Europe, and South America. Lineage W has also attracted attention with over 13 million global pre-registrations.

Lineage W was strategically developed for global users under the concept of 'Worldwide.' It combines newly created 3D graphics with the original's 'quarter view' and 'cell/grid-based combat.' The storyline is set 130 years after the original Lineage universe.

◆ 'Monetization Controversy' NCSoft = Industry insiders evaluate that these leading Korean game companies have effectively placed their bets on global new releases to overcome the recent crisis theories. In particular, NCSoft is facing a crisis with declining brand value, stock price, and user attrition. According to the brand reputation rankings by the Korea Corporate Reputation Research Institute for 34 listed gaming companies on the 15th, the top three brand reputations this month were Krafton, Netmarble, and Pearl Abyss, respectively. NCSoft fell one rank from the previous month to 5th place. NCSoft, which had been competing for 1st or 2nd place for several months, failed to enter the top 3 for two consecutive months.

Until eight months ago, NCSoft's stock price was around 1 million KRW but has repeatedly declined, only beginning to rebound in mid-this month and currently trading around 620,000 KRW. During the same period, its market capitalization has evaporated by about 10 trillion KRW. The 'Lineage siblings' such as Lineage M and Lineage M2, which had held the top 1-2 sales rankings for years, lost their leading position to Odin: Valhalla Rising serviced by Kakao Games, and the ambitious Blade & Soul 2 has underperformed despite its release.

NCSoft expects the launch of Lineage W to be a turning point. The business model (BM), which was criticized for inducing excessive monetization, has also been innovated. NCSoft abolished the in-game fatigue system called the 'Einhasad system' to allow the game to be enjoyed widely without heavy spending. The company aims to win back the hearts of loyal users known as 'Linjeossi (Lineage + ajusshi)' and restore the former glory of Lineage.

◆ 'One-Game Risk' Krafton = Krafton carries the burden of overcoming the 'one-game risk.' Krafton's PUBG IP-related revenue accounts for over 80% of its total revenue, showing high dependence. The PC MMORPG new title Elion, ambitiously launched last December, practically failed to succeed, and currently, there are no games generating significant revenue except PUBG.

For this reason, Krafton's stock price has not risen as much as initially expected. Although the initial public offering (IPO) price band was set at the top end (498,000 KRW) during the August listing, the opening price was below the IPO price, leading to disappointing sell-offs, and it is currently trading sideways near the IPO price.

In this context, the release of BattleGrounds: New State, which inherits the gameplay of PUBG, is Krafton's direct breakthrough move. However, Krafton emphasizes differentiation from the original. Park Min-gyu, Krafton's general PD, said, "This will be a work that offers the best play experience by implementing graphics and physics effects technology never experienced in existing mobile games, a near-future 2051 setting adding uniqueness to the PUBG universe, and PC-level action in a mobile environment."