In the Era of High Exchange Rates, the Gaming Industry Smiles

Expecting Spillover Benefits Due to High Overseas Sales Ratio

Netmarble 'The Second Country'

[Asia Economy Reporter Seungjin Lee] On the 23rd, the dollar-won exchange rate surpassed 1,300 won intraday for the first time in over 13 years, creating tension across industries. Meanwhile, the gaming industry is expected to benefit from this.

Many major domestic game companies have overseas sales accounting for more than 50% of their total revenue. In particular, these game companies mainly target the North American market and provide game services there, so significant foreign exchange gains are expected when overseas revenue is converted into Korean won.

In the case of Netmarble, about 73% of its total sales last year were generated overseas. In the first quarter of this year, Netmarble's overseas sales ratio increased to 84%, with the North American region accounting for nearly half at 49%. This is due to the acquisition of SpinX, the world's third-largest social casino game company, in August last year, and the full reflection of related performance in the fourth quarter of the same year, which caused a sharp increase in North American sales. In addition, Netmarble is servicing games such as "The Seven Deadly Sins: Grand Cross" and "Blade & Soul Revolution" in the North American market, and recently released "Ni no Kuni: Cross Worlds."

However, the dollar-denominated loan Netmarble took out when acquiring SpinX is a burden. Netmarble secured more than 1.6 trillion won of the approximately 2.8 trillion won acquisition cost through domestic and international bank loans during the 100% acquisition of SpinX shares. Although the interest rate is relatively low in the low 2% range, the recent sharp rise in the dollar exchange rate has increased the loan amount. Nevertheless, since nearly half of the total sales are generated in North America and the release of "Seven Knights Revolution" is scheduled for next month, the overall outlook is positive.

Many other domestic game companies are also expected to enjoy windfall gains thanks to their high overseas sales ratios. As of last year, Wemade recorded 72%, Pearl Abyss 81%, and Smilegate 84% (based on 2020) in overseas sales ratios. Most of these game companies are focusing on the North American market.

Nexon, headquartered in Japan, is also expected to benefit from the strong dollar due to the continued weakness of the yen. Nexon's overseas sales ratio last year was 47%, and it plans to release the new fighting game "DNF Duel" to the global market on the 28th.